20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 20-F

(Mark One)

o Registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act of 1934

or

þ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 2009

or

o Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                                                    to                                                   

or

o Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report                                                                                 

Commission file number 001-33175

Sterlite Industries (India) Limited

(Exact Name of Registrant as specified in its charter)

Republic of India
(Jurisdiction of Incorporation or Organization) Vedanta, 75 Nehru Road
Vile Parle (East)
Mumbai, Maharashtra 400-099
India
(Address of Principal Executive Offices)

Rajiv Choubey
Company Secretary and Head Legal
Vedanta, 75 Nehru Road
Vile Parle (East)
Mumbai, Maharashtra 400-099
India
(91) 461 661 2123
rajiv.choubey@vedanta.co.in
(Name, Telephone, E-mail and/or facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

American Depositary Shares, each representing one equity share,
par value Rs. 2 per equity share
(Title of Class) New York Stock Exchange
(Name of Exchange On Which Registered)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
 
None
(Title of Class)

     Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

     As of March 31, 2009, 708,494,411 equity shares, par value Rs. 2 per equity share, were issued and outstanding, of which 75,678,479 equity shares were held in the form of 75,678,479 American Depositary Shares, or ADSs. Each ADS represents one equity share.

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ       No o

     If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o      No þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ      No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o      No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o  Non-accelerated filer o

     Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP þ International Financial Reporting Standards as issued
by the International Accounting Standards Board o Other o

     If “Other” has been checked in the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o          Item 18 o

     If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes o      No þ

TABLE OF CONTENTS

	PAGE
PART I		2
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		2
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE		3
ITEM 3. KEY INFORMATION		3
ITEM 4. INFORMATION ON THE COMPANY		25
ITEM 4A. UNRESOLVED STAFF COMMENTS		92
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS		92
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		123
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		130
ITEM 8. FINANCIAL INFORMATION		136
ITEM 9. THE OFFER AND LISTING		140
ITEM 10. ADDITIONAL INFORMATION		141
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		175
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		176
PART II		176
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		176
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		177
ITEM 15. CONTROLS AND PROCEDURES		177
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT		179
ITEM 16B. CODE OF ETHICS		179
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES		179
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		179
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		179
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT		179
ITEM 16G. CORPORATE GOVERNANCE		180
PART III		180
ITEM 17. FINANCIAL STATEMENTS		180
ITEM 18. FINANCIAL STATEMENTS		180
ITEM 19. EXHIBITS		180
SIGNATURES		185
INDEX TO FINANCIAL STATEMENTS		F-1
EX-4.42 Settlement and Purchase and Sale Agreement dated March 6, 2009.
EX-4.43 Amendment No.1 dated April 15, 2009 to the Settlement and Sales and Purchase Agreement dated March 6, 2009.
EX-4.44 Amendment No.2 effective as of April 22, 2009 to the Settlement and Sale and Purchase Agreement dated March 6, 2009, as amended on April 15, 2009.
EX-4.45 Amendment No.3 effective as of June 12, 2009 to the Settlement and Sale and Purchase Agreement dated March 6, 2009, as amended on April 15, 2009 and April 22, 2009.
EX-4.46 Sterlite Plan Agreement in Principle Term Sheet dated June 12, 2009.
EX-4.47 Credit Agreement Letter dated February 7, 2005 between India Foils Limited and ICICI Bank Limited.
EX-4.48 Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited in respect of the Rs.772.5 million term loan facility.
EX-4.49 Credit Agreement Letter dated August 4, 2005 between India Foils Limited and ICICI Bank Limited.
EX-4.50 Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited in respect of the Rs.250 million term loan facility.
EX-4.51 Rs.55,690 million Common Rupee Loan Agreement dated June 29, 2009 among Sterlite Energy Limited, the State Bank of India as facility agent and issuing bank, IDBI Trusteeship Services Limited.
EX-4.52 $140 million Term Loan Facility Agreement dated June 29, 2009 among Sterlite Energy Limited, India Infrastructure Finance (UK) Company Limited.
EX-4.53 Sponsor Support Agreement dated June 29, 2009 among Sterlite Industries (India) Limited, Sterlite Energy Limited, and the State Bank of India as facility agent.
EX-4.54 Term Sheet dated May 22, 2009 between Sterlite Industries (India) Limited and Vedanta Aluminium Limited relating to the subscription of 9.75% Non-Convertible Debentures.
EX-4.55 Agreement dated February 18, 2009 between the Orissa Mining Corporation Limited and Sterlite Industries (India) Limited.
EX-8.1 List of subsidiaries of Sterlite Industries (India) Limited.
EX-12.1 Certification by the Chief Executive Officer pursuant to 17 CFR 240. 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
EX-12.2 Certification by the Chief Financial Officer pursuant to 17 CFR 240. 15D-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
EX-13.1 Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-13.2 Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

i

CONVENTIONS USED IN THIS ANNUAL REPORT

     In this annual report, we refer to information regarding the copper, zinc and aluminum industries and our competitors from market research reports, analyst reports and other publicly available sources. Although we believe that this information is reliable, we have not independently verified the accuracy and completeness of the information. We caution you not to place undue reliance on this data.

     In this annual report, references to the “ADS offering” are to the initial public offering of our equity shares in the form of American Depositary Shares, or ADSs, each representing one equity share, in the United States completed in June 2007.

     In this annual report, references to “US” or the “United States” are to the United States of America, its territories and its possessions. References to “UK” are to the United Kingdom. References to “India” are to the Republic of India. References to “$,” “US$,” “dollars” or “US dollars” are to the legal currency of the United States, references to “Rs.,” “Rupees” or “Indian Rupees” are to the legal currency of India and references to “AUD,” “Australian dollars” or “A$” are to the legal currency of the Commonwealth of Australia. References to “¢” are to US cents. References to “lb” are to the imperial pounds (mass) equivalent to 0.4536 kilograms, references to “tons” are to metric tons, a unit of mass equivalent to 1,000 kilograms or 2,204.6 lb, references to “oz” are to ounces, with one kilogram being equivalent to 35.2740 oz and one ton equivalent to 32,000 oz, and references to “ha” are to hectares, a unit of area equal to 10,000 square meters or 107,639 square feet. Unless otherwise indicated, the accompanying financial information for our company has been prepared in accordance with US generally accepted accounting principles, or US GAAP, for the fiscal years ended March 31, 2007, 2008 and 2009. References to a particular “fiscal” year are to our fiscal year ended March 31 of that year. Our fiscal quarters end on June 30, September 30 and December 31. References to a year other than a “fiscal” year are to the calendar year ended December 31.

     We conduct our businesses both directly and through a consolidated group of companies that we have ownership interests in. See “Item 4. Information on the Company — A. History and Development of our Company” for more information on these companies and their relationships to us. Unless otherwise stated in this annual report or unless the context otherwise requires, references in this annual report to “we,” “us,” “our,” “Sterlite,” “our company” or “our consolidated group of companies” mean Sterlite Industries (India) Limited, its consolidated subsidiaries and its predecessors, collectively, including Monte Cello BV, or Monte Cello, Copper Mines of Tasmania Pty Ltd, or CMT, Thalanga Copper Mines Pty Ltd, or TCM, Bharat Aluminium Company Limited, or BALCO, Sterlite Energy Limited, or Sterlite Energy, Sterlite Opportunities and Ventures Limited, or SOVL, Hindustan Zinc Limited, or HZL, Fujairah Gold FZE, Sterlite (USA), Inc., or Sterlite USA, and Talwandi Sabo Power Limited, or TSPL. References in this annual report to “SIIL” mean Sterlite Industries (India) Limited. Our consolidated financial information does not include Vedanta Resources plc, or Vedanta, Vedanta Resources Holdings Limited, or VRHL, Konkola Copper Mines plc, or KCM, Twin Star Holdings Limited, or Twin Star, Welter Trading Limited, or Welter Trading, the Anil Agarwal Discretionary Trust, Onclave PTC Limited, or Onclave, The Madras Aluminium Company Limited, or MALCO, Sterlite Technologies Limited, or STL, Monte Cello Corporation NV, or MCNV, Twin Star Infrastructure Limited, Sesa Goa Limited, Sesa Industries Limited, and Vedanta Aluminium Limited, or Vedanta Aluminium, except that as to Vedanta Aluminium, our consolidated financial statements account for our 29.5% minority interest therein under the equity method of accounting, but Vedanta Aluminium is not otherwise included in our consolidated group of companies or our consolidated financial statements. References to the “Vedanta group” are to Vedanta and its subsidiaries.

     In this annual report, references to The London Metal Exchange Limited, or LME, price of copper, zinc or aluminum are to the cash seller and settlement price on the LME for copper, zinc or aluminum for the period indicated. References to primary market share in this annual report are to the market that includes sales by producers of metal from copper concentrate or alumina, as applicable, and do not include sales by producers of recycled metal or imports.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This annual report contains “forward-looking statements” as defined in the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our company and our industry. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “project,” “seek,” “should” and similar expressions. These forward-looking statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that, although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking

1

statements based on those assumptions could be materially incorrect. Factors which could cause these assumptions to be incorrect include, but are not limited to:

• a decline or volatility in the prices of or demand for copper, zinc or aluminum;

• events that could cause a decrease in our production of copper, zinc or aluminum;

• unavailability or increased costs of raw materials for our products;

• our actual economically recoverable copper ore, lead-zinc ore or bauxite reserves being lower than we have estimated;

• our ability to expand our business, effectively manage our growth or implement our strategy, including our planned entry into the commercial power business;

• our ability to retain our senior management team and hire and retain sufficiently skilled labor to support our operations;

• regulatory, legislative and judicial developments and future regulatory actions and conditions in our operating areas;

• increasing competition in the copper, zinc or aluminum industry;

• political or economic instability in India or around the region;

• worldwide economic and business conditions, including the unprecedented and challenging conditions recently;

• our ability to successfully consummate strategic acquisitions, including our proposed acquisition of substantially all of the operating assets of ASARCO LLC, or Asarco, a copper mining, smelting and refining company based in Tucson, Arizona, United States;

• the outcome of outstanding litigation in which we are involved;

• our ability to maintain good relations with our trade unions and avoid strikes and lock-outs;

• any actions of our controlling shareholder, Vedanta;

• our business’ future capital requirements and the availability of financing on favorable terms;

• the continuation of tax holidays, exemptions and deferred tax schemes we enjoy;

• changes in tariffs, royalties, customs duties and government assistance; and

• terrorist attacks and other acts of violence, natural disasters and other environmental conditions and outbreaks of infectious diseases and other public health concerns in India, Asia and elsewhere.

     These and other factors are more fully discussed in “Item 3. Key Information — D. Risk Factors,” “Item 5. Operating and Financial Review and Prospects” and elsewhere in this annual report. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions to any of these forward-looking statements to reflect future events or circumstances.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable

2

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable

ITEM 3. KEY INFORMATION

A. Selected Consolidated Financial Data

     The selected historical consolidated statements of operations, cash flows and other consolidated financial data presented below for fiscal 2007, 2008 and 2009, and the selected historical consolidated balance sheet data as of March 31, 2008 and 2009, have been derived from our audited consolidated financial statements, which have been audited by Deloitte Haskins & Sells, Mumbai, India, or Deloitte, our independent registered public accounting firm, and included elsewhere in this annual report. The selected historical consolidated statements of operations, cash flows and other consolidated financial data presented below for fiscal 2005 and 2006, and the selected historical consolidated balance sheet data as of March 31, 2006 and 2007, have been derived from our audited consolidated financial statements, which have also been audited by Deloitte, that are not included in this annual report.

     Our consolidated financial statements are prepared and presented in accordance with US GAAP. Our historical results do not necessarily indicate our expected results for any future period. The translations of Indian Rupee amounts to US dollars are solely for the convenience of the reader and are based on the noon buying rate of Rs. 50.87 per $1.00 and AUD 1.44 per $1.00 in the City of New York for cable transfers of Indian Rupees and the Australian dollar, respectively, as certified for customs purposes by the Federal Reserve Bank of New York on March 31, 2009. No representation is made that the Indian Rupee and Australian dollar amounts represent US dollar amounts or have been, could have been or could be converted into US dollars at such rates or any other rates.

     You should read the following information in conjunction with “Item 5. Operating and Financial Review and Prospects” and the consolidated financial statements included elsewhere in this annual report.

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

3

	Year Ended March 31,
	2005		2006		2007		2008		2009		2009
	(in millions, except share and per share data)
Basic earnings per share:(1)
Income from continuing operations	Rs.	11.74	Rs.	27.35	Rs.	84.78	Rs.	63.16	Rs.	41.7	$	0.82
Income from discontinued operations		0.48		0.67		0.15		—		—		—
Basic earnings per share	Rs.	12.22	Rs.	28.02	Rs.	84.93	Rs.	63.16	Rs.	41.7	$	0.82
Diluted earnings per share: (1)
Income from continuing operations	Rs.	11.57	Rs.	27.35	Rs.	84.78	Rs.	63.16	Rs.	41.7	$	0.82
Income from discontinued operations		0.48		0.67		0.15		—		—		—
Diluted earnings per share	Rs.	12.05	Rs.	28.02	Rs.	84.93	Rs.	63.16	Rs.	41.7	$	0.82
Weighted average number of equity shares used in computing earnings per share: (1)
Basic		455,343,743		553,216,634		558,494,411		674,478,018		708,494,411		708,494,411
Diluted		465,108,143		553,216,634		558,494,411		674,478,018		708,494,411		708,494,411
Dividend declared per share(2)	Rs.	3.00	Rs.	1.25	Rs.	4.00	Rs.	4.00	Rs.	3.50	$	0.07

Notes:
(1)	Earnings per share and weighted average number of equity shares used in computing earnings per share have been adjusted for the five-for-two stock split and one-for-one bonus issue effective May 12, 2006.
(2)	The dividend for fiscal 2006 was recommended by our board of directors on May 30, 2006 and approved by our shareholders at the general meeting held on September 20, 2006. The dividend paid for fiscal 2006 was paid after the five-for-two stock split and one-for-one bonus issue effective May 12, 2006. The interim dividend for fiscal 2007 was declared by our board of directors on November 15, 2006 and paid on December 11, 2006 to holders of record of our equity shares on December 7, 2006. On May 3, 2007, our board of directors recommended that the interim dividend should be considered as the final dividend for fiscal 2007. The dividend for fiscal 2008 was recommended by our board of directors on April 26, 2008 and approved by our shareholders at the general meeting held on August 22, 2008. On April 28, 2009, our board of directors recommended a final dividend of Rs. 3.50 ($0.07) per equity share for fiscal 2009, subject to shareholders’ approval at the next general meeting to be held before September 2009.

	As of March 31,
	2006		2007		2008		2009		2009
	(in millions)
Consolidated Balance Sheet Data:
Cash and cash equivalents	Rs.	9,258	Rs.	9,436	Rs.	12,363	Rs.	2,701	$	53.1
Total assets		167,539		225,881		376,179		443,086		8,710.2
Long-term debt, net of current portion		30,237		13,128		9,949		14,384		282.8
Short-term and current portion of long-term debt		4,390		8,353		10,190		20,202		397.1
Total shareholders’ equity		53,498		96,960		221,123		246,865		4,852.9

	Year Ended March 31,
	2005			2006			2007			2008			2009			2009
	(in millions)
Cash Flow Data:
Net cash provided by (used in):
Operating activities	Rs.	6,075		Rs.	19,595		Rs.	40,418		Rs.	(17,594	)	Rs.	78,204		$	1,537.3
Investing activities		(21,391	)		(16,676	)		(24,006	)		(56,404	)		(95,458	)		(1,876.5	)
Financing activities		17,321			375			(15,910	)		76,582			7,986			157.0
Other Consolidated Financial Data:
Net sales:
Copper	Rs.	34,508		Rs.	67,921		Rs.	115,192		Rs.	126,276		Rs.	116,525		$	2,290.7
Zinc		21,967			38,573			85,963			78,222			55,724			1,095.4
Aluminum		10,168			16,297			40,091			41,596			39,170			770.0
Power(1)		—			—			—			—			773			15.2
Corporate and others(1)		—			—			—			320			—			—
Total	Rs.	66,643		Rs.	122,791		Rs.	241,246		Rs.	246,414		Rs.	212,192		$	4,171.3
Operating income:
Copper	Rs.	2,440		Rs.	7,659		Rs.	17,235		Rs.	11,037		Rs.	10,557		$	207.5
Zinc		8,309			21,287			62,908			53,192			25,148			494.4
Aluminum		1,824			3,496			13,371			11,581			6,364			125.1
Power(1)		—			—			—			—			184			3.6
Corporate and others(1)		(1,177	)		(1,311	)		(3	)		(657	)		(6	)		(0.1	)
Total	Rs.	11,396		Rs.	31,131		Rs.	93,511		Rs.	75,153		Rs.	42,247		$	830.5
Segment profit:(2)
Copper	Rs.	3,899		Rs.	8,982		Rs.	17,689		Rs.	12,650		Rs.	12,574		$	247.2
Zinc		9,785			23,216			65,129			55,563			27,777			546.0
Aluminum		2,504			4,752			15,765			14,244			8,954			176.0
Power(1)		—			—			—			—			792			15.6
Corporate and others(1)		(100	)		(8	)		(2	)		384			132			2.6
Total	Rs.	16,088		Rs.	36,942		Rs.	98,581		Rs.	82,841		Rs.	50,229		$	987.4

4

Notes:

(1)

The corporate and other segment includes the results from the power segment for the periods prior to the year ended March 31, 2009.

(2)

Segment profit is calculated by adjusting operating income for depreciation, depletion and amortization, voluntary retirement scheme expenses, impairment of assets and guarantees, impairment of investments and loans and gain on sale of real estate, as applicable. Segment profit is not a recognized measurement under US GAAP. Our segment profit may not be comparable to similarly titled measures reported by other companies due to potential inconsistencies in the method of calculation. We have included our segment profit because we believe it is an indicative measure of our operating performance and is used by investors and analysts to evaluate companies in our industry. Our segment profit should be considered in addition to, and not as a substitute for, other measures of financial performance and liquidity reported in accordance with US GAAP. We believe that the inclusion of supplementary adjustments applied in our presentation of segment profit are appropriate because we believe it is a more indicative measure of our baseline performance as it excludes certain charges that our management considers to be outside of our core operating results. In addition, our segment profit is among the primary indicators that our management uses as a basis for planning and forecasting of future periods. The following table reconciles operating income to segment profit for the periods presented:

	Year Ended March 31,
	2005			2006			2007			2008			2009			2009
	(in millions)
Copper:
Operating income	Rs.	2,440		Rs.	7,659		Rs.	17,235		Rs.	11,037		Rs.	10,557		$	207.5
Plus:
Depreciation, depletion and amortization		1,239			1,323			1,440			1,613			2,017			39.7
Gain on sale of real estate		—			—			(986	)		—			—			—
Impairment of assets		220			—			—			—			—			—
Segment profit	Rs.	3,899		Rs.	8,982		Rs.	17,689		Rs.	12,650		Rs.	12,574		$	247.2
Zinc:
Operating income	Rs.	8,309		Rs.	21,287		Rs.	62,908		Rs.	53,192		Rs.	25,148		$	494.4
Plus:
Depreciation, depletion and amortization		1,290			1,929			2,124			2,371			2,629			51.6
Voluntary retirement scheme expenses		186			—			97			—			—			—
Segment profit	Rs.	9,785		Rs.	23,216		Rs.	65,129		Rs.	55,563		Rs.	27,777		$	546.0
Aluminum:
Operating income	Rs.	1,824		Rs.	3,496		Rs.	13,371		Rs.	11,581		Rs.	6,364		$	125.1
Plus:
Depreciation, depletion and amortization		680			1,256			2,394			2,663			2,590			50.9
Segment profit	Rs.	2,504		Rs.	4,752		Rs.	15,765		Rs.	14,244		Rs.	8,954		$	176.0
Power:(a)
Operating income	Rs.	—		Rs.	—		Rs.	—		Rs.	—		Rs.	184		$	3.6
Plus:
Depreciation, depletion and amortization		—			—			—			—			608			12.0
Segment profit	Rs.	—		Rs.	—		Rs.	—		Rs.	—		Rs.	792		$	15.6
Corporate and others:(a)
Operating income	Rs.	(1,177	)	Rs.	(1,311	)	Rs.	(3	)	Rs.	(657	)	Rs.	(6	)	$	(0.1	)
Plus:
Depreciation, depletion and amortization		21			3			1			413			1			0.0
Impairment of assets		1,056			—			—			—			—			—
Guarantees, impairment of investments and loan		—			1,300			—			628			137			2.7
Segment profit	Rs.	(100	)	Rs.	(8	)	Rs.	(2	)	Rs.	384		Rs.	132		$	2.6

(a) The corporate and other segment includes the results from the power segment for the periods prior to the year ended March 31, 2009.

5

	Year Ended March 31,
	2007			2008			2009
	(in US dollars per ton, except as indicated)
Market and Cost Data:
London Metal Exchange (LME) price:(1)
Copper	$	6,984		$	7,588		$	5,885
Zinc		3,581			2,992			1,563
Aluminum		2,663			2,620			2,234
Treatment charge and refining charge (TcRc):(2)
Copper		31.1	¢/lb		15.7	¢/lb		11.7	¢/lb
Cost of production:(3)
Copper smelting and refining(4)		6.1	¢/lb		1.8	¢/lb		3.1	¢/lb
Zinc(5)	$	862		$	884		$	710
Aluminum(6)	$	1,626			1,720			1,700

Notes:

(1)	Calculated as the daily average cash seller settlement price for the period.
(2)	Represents our average realized TcRc for the period.
(3)	Cost of production is not a recognized measure under US GAAP. We have included cost of production as a measure of effectiveness because we believe it is an indicative measure of our operating performance and is used by investors and analysts to evaluate companies in our industry. Our computation of cost of production should be considered in addition to, and not as a substitute for, other measures of financial performance and liquidity reported in accordance with US GAAP. We believe that the cost of production measure is a meaningful measure of our production cost efficiency as it is more indicative of our production or conversion costs and is a measure that our management considers to be controllable. Cost of production is a measure intended for monitoring the operating performance of our operations. This measure is presented by other non-ferrous metal companies, though our measure may not be comparable to similarly titled measures reported by other companies. Cost of production as reported for our metal products consists of direct cash cost of production and excludes non-cash cost and indirect cost (such as depreciation and interest payments), and are offset for any amounts we receive upon the sale of the by-products from the refining or smelting process. Cost of production is divided by the daily average exchange rate for the year to calculate US dollar cost of production per lb or per ton of metal as reported. The following table reconciles segment cost, calculated as segment sales less segment profit, to cost of production for the periods presented:

	Year Ended March 31,
	2007			2008			2009
	(in millions, except Production output and Cost of production)
Copper:
Segment sales	Rs.	115,192		Rs.	126,276		Rs.	116,670
Less:
Segment profit		(17,689	)		(12,650	)		(12,574	)
Segment cost		97,503			113,626			104,096
Less:
Purchased concentrate/rock		(91,489	)		(107,422	)		(95,478	)
By-product/free copper net sales		(1,935	)		(4,283	)		(4,337	)
Cost for downstream products		(938	)		(1,197	)		(1,613	)
Others, net		(1,236	)		(195	)		(1,690	)
Total expenses	Rs.	1,905		Rs.	529		Rs.	979
Production output (in tons)		312,720			339,294			312,833
Cost of production(a)	6.1¢/lb			1.8¢/lb			3.1¢/lb

6

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

(a) Exchange rates used in calculating cost of production were based on the daily Reserve Bank of India, or RBI, reference rates for the years ended March 31, 2007, 2008 and 2009 of Rs. 45.29 per $1.00, Rs. 40.24 per $1.00, and Rs. 45.91 per $1.00, respectively.

(4)	Cost of production relates only to our custom smelting and refining operations and consists of the cost of converting copper concentrate into copper cathodes, including the cost of freight of copper anodes from Tuticorin to Silvassa and excluding the benefit of the phosphoric acid plant. Revenue earned from the sale of sulphuric acid and copper metal recovered in excess of paid copper metal are deducted from the cash costs. The total cash costs are divided by the total number of pounds of copper metal produced to calculate the cost of production per pound of copper metal produced.
(5)	Our zinc operations are fully integrated. As a result, cost of production of zinc consists of the total direct cost of producing zinc from the mines and smelters, including extracting ore from the mines, converting the ore into zinc concentrate and smelting to produce zinc ingots. Our zinc segment includes lead and silver. Silver is a by-product of lead and accordingly, there are no additional processing costs for silver. Revenue earned from the sale of silver is reported as profit in this segment. Revenue earned from the sale of sulphuric acid is deducted from the total costs to calculate the total cash costs to HZL of producing zinc metal. Royalties paid are included in the cost of production of zinc. The total cash cost is divided by the total number of tons of zinc metal produced to calculate the cost of production per ton of zinc metal produced. HZL’s cost of production in the last month of fiscal 2009, or its exit cost of production for fiscal 2009, was $594 per ton.
(6)	Cost of production of aluminum for BALCO’s smelters includes the cost of producing bauxite and conversion of bauxite into aluminum metal, for the portion of BALCO’s operations that are integrated from production of bauxite to aluminum metal, and the cost of conversion of alumina into aluminum metal, for the portion of BALCO’s operations where alumina is sourced from third parties. Cost of production of aluminum consists of total direct cash costs. Revenue earned from the sale of by-products, such as vanadium, reduces the total cash costs. The total cost is divided by the total quantity of hot metal produced to calculate the cost of production per ton of aluminum hot metal produced. Hot metal production output is used instead of the cast metal production output disclosed elsewhere in this annual report in calculating cost of production as the hot metal production, which excludes the value-added cost of casting, is the measure generally used in the aluminum metal industry for calculating cost of production. In response to recent global economic conditions and a decline in commodity prices, starting in February 2009, BALCO suspended part of its operations at its 100,000 tons per annum, or tpa, aluminum smelter and ceased operations at this smelter on June 5, 2009. As the 100,000 tpa aluminum smelter had a higher cost of production than the newer (and remaining) 245,000 tpa smelter, and partly as a result of efforts by BALCO to decrease its operating costs in response to the recent global economic conditions, BALCO’s exit cost of production for fiscal 2009 was $1,146 per ton.

B. Capitalization and Indebtedness

     Not applicable

C. Reasons for the Offer and Use of Proceeds

     Not applicable

7

D. Risk Factors

     This annual report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those described in the following risk factors and elsewhere in this annual report. If any of the following risks actually occur, our business, financial condition and results of operations could suffer and the trading price of our ADSs could decline.

Risks Relating to Our Business

Our copper and aluminum businesses depend upon third party suppliers for a substantial portion of their copper concentrate and alumina requirements, and their profitability and operating margins depend upon the market prices for those raw materials.

     Our copper and aluminum businesses source a majority of their copper concentrate and alumina requirements from third parties. For example, in fiscal 2009, we sourced 92.0% of our copper requirements and BALCO sourced in excess of 72.0% of its alumina requirements from third parties. As a result, profitability and operating margins of our copper and aluminum businesses depend upon our ability to obtain the required copper concentrate and alumina at prices that are low relative to the market prices of the copper and aluminum products that we sell.

     We purchase copper concentrate at the LME price for copper metal for the relevant quotational period less a TcRc that we negotiate with our suppliers but which is influenced by the prevailing market rate for the TcRc. The TcRc has historically fluctuated independently and significantly from the copper LME price. We attempt to make the LME price a pass through for us as both our copper concentrate purchases and sales of finished copper products are based on LME prices. Nevertheless, we are also exposed to differences in the LME price between the quotational periods for the purchase of copper concentrate and sale of the finished copper products, and any decline in the copper LME price between these periods will adversely affect us. We attempt to hedge against such risks, but are still exposed to timing and quantity mismatches. In addition, some of our long-term copper concentrate supply agreements provide for a TcRc that is a percentage of the prevailing LME price, and hence would fluctuate with the LME price, or provide our third party supplier with price participation terms linked to LME prices. See “Item 5. Operating and Financial Review and Prospects — Factors Affecting Results of Operations — Metal Prices and Copper TcRc.” On March 6, 2009, we and Asarco signed an agreement for us to purchase substantially all the operating assets of Asarco. The agreement remains subject to approval by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. If this acquisition is completed, our copper reserves would be substantially increased and our results of operations in future periods would be increasingly dependent upon the LME price of copper metal. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

     We purchase alumina from third party suppliers through short-term contracts and on the spot market. The market price for alumina has historically fluctuated independently and significantly from the market price of aluminum. See “Item 5. Operating and Financial Review and Prospects — Factors Affecting Results of Operations — Metal Prices and Copper TcRc — Zinc and Aluminum.” Both the market prices of the copper concentrate and alumina that we purchase and the market prices of the copper and aluminum metals that we sell have experienced volatility in the past, and any increases in the market prices of these raw materials relative to the market prices of the metals that we sell would adversely affect the profitability and operating margins of our copper and aluminum businesses, which could have a material and adverse effect on our results of operations and financial condition.

Our operations are subject to operating risks that could result in decreased production, increased cost of production and increased cost of or disruptions in transportation, which could adversely affect our revenue, results of operations and financial condition.

     We are subject to operating conditions and events beyond our control that could, among other things, increase our mining, transportation or production costs, disrupt or halt operations at our mines and production facilities permanently or for varying lengths of time or interrupt the transport of our products to our customers. These conditions and events include:

• Disruptions in mining and production due to equipment failures, unexpected maintenance problems and other interruptions. All of our operations are vulnerable to disruptions. Our aluminum smelters are particularly vulnerable to disruptions in the supply of power which, even if lasting only a few hours, can cause the contents of the furnaces or cells to solidify, which would necessitate a plant closure and a shutdown in operations for a significant period, as well as involve expensive repairs. For example, power interruptions caused BALCO to partially suspend operations at its 245,000 tpa aluminum smelter at Korba in May 2006, and as a result of this interruption the smelter did not become fully operational again until November 2006. Similarly, our Tuticorin copper refining and smelting facility had a four-day delay in ramp-up following a scheduled maintenance shutdown between April and May 2008 due to stabilization issues faced during the post-shutdown ramp-up and an unscheduled 34-day interruption in production between November and December 2008 due to damage in a cooling tower as a result of the collapse of its foundation. CMT’s Mt. Lyell processing plant had an unscheduled shutdown for 20 days in September 2008 in order to make structural repairs and reinforcements. The losses from these interruptions include lost production, repair costs and other expenses.

• Availability of raw materials for energy requirements. Any shortage of or increase in the prices of any of the raw materials needed to satisfy our businesses’ energy requirements may interrupt our operations or increase our cost of production. We are particularly dependent on coal, which is used in many of our captive power plants. Our aluminum business, which has high energy consumption due to the energy-intensive nature of aluminum smelting, is significantly dependent on receiving allocations from Coal India Limited, or Coal India, the government-owned coal monopoly in India, and its subsidiaries. A shortage of coal from April 2005 led Coal India to reduce the amount of coal supplied to all of its non-utility customers, including BALCO. As a result, BALCO was forced to utilize higher-priced imported coal and coal from non-linkage sources, which resulted in higher power generation costs.

8

• Availability of water. The mining operations of our zinc and aluminum businesses and our captive power plants depend upon the supply of a significant amount of water. There is no assurance that the water required will continue to be available in sufficient quantities or that the cost of water will not increase. For example, BALCO is currently in a dispute with the National Thermal Power Corporation Limited, or NTPC, regarding the right of way for a water pipeline that provides one of BALCO’s captive power plants access to a body of water adjacent to NTPC premises. Arbitration proceedings commenced on May 18, 2009 and are ongoing. An unfavorable resolution to this dispute may significantly increase BALCO’s costs of obtaining water for that power plant.

• Disruptions to or increased costs of transport services. We depend upon seaborne freight, rail, trucking, overland conveyor and other systems to deliver bauxite, alumina, zinc concentrate, copper concentrate, coal and other supplies to our operations and to deliver our products to customers. Any disruption to or increase in the cost of these transport services, including as a result of interruptions that decrease the availability of these transport services or as a result of increases in demand for transport services from our competitors or from other businesses, or any failure of these transport services to be expanded in a timely manner to support an expansion of our operations, could have a material adverse effect on our operations and operating results.

• Accidents at mines, smelters, refineries, cargo terminals and related facilities. Any accidents or explosions causing personal injury, property damage or environmental damage at or to our mines, smelters, refineries, cargo terminals and related facilities may result in expensive litigation, imposition of penalties and sanctions or suspension or revocation of permits and licenses. Risks associated with our open-pit mining operations include flooding of the open-pit, collapses of the open-pit wall and operation of large open-pit mining and rock transportation equipment. Risks associated with our underground mining operations include underground fires and explosions (including those caused by flammable gas), cave-ins or ground falls, discharges of gases or toxic chemicals, flooding, sinkhole formation and ground subsidence and underground drilling, blasting and removal and processing of ore. Injuries to and deaths of workers at our mines and facilities have occurred in the past and may occur in the future. We are required by law to compensate employees for work-related injuries. Failure to make adequate provisions for our workers’ compensation liabilities could harm our future operating results.

• Strikes and industrial actions or disputes. The majority of the total workforce of our consolidated group of companies is unionized. Strikes and industrial actions or disputes have in the past and may in the future lead to business interruptions and halts in production. For example, the trade unions of BALCO initiated a 67-day-long strike in May 2001 in opposition to the divestment of equity shares of BALCO by the Government of India. We also experienced short strikes and work stoppages in 2005 and 2006. In addition, we may be subject to union demands and litigation for pay raises and increased benefits, and our existing arrangements with trade unions may not be renewed on terms favorable to us, or at all. The wage settlement agreements entered into by HZL and BALCO with their respective unions expired on July 1, 2007 and April 1, 2009, respectively. We are currently in negotiations with these unions to renew the wage settlement agreements and work is therefore ongoing at HZL and BALCO without collective agreements. Other work stoppages or other labor-related developments, including the introduction of new labor regulations in India or Australia, may occur in the future.

     The occurrence of any one or more of these conditions or events could have a material adverse effect on our results of operations and financial condition.

We are substantially dependent upon our Rampura Agucha zinc mine, and any interruption in our operations at that mine could have a material adverse effect on our results of operations and financial condition.

     Our Rampura Agucha zinc mine produced 91% of the total mined metal in zinc concentrate that we produced in fiscal 2009 and constituted 76% of our proven and probable zinc reserves as of March 31, 2009. Our zinc business provided 59.5% of our operating income in fiscal 2009. Our results of operations have been and are expected to continue to be substantially dependent on the reserves and low cost of production of our Rampura Agucha mine, and any interruption in our operations at the mine for any reason could have a material adverse effect on the results of operations and financial condition of our business as a whole.

If we are unable to secure additional reserves of copper, zinc and bauxite that can be mined at competitive costs or cannot mine existing reserves at competitive costs, our profitability and operating margins could decline.

     If our existing copper, zinc and bauxite reserves cannot be mined at competitive costs or if we cannot secure additional reserves that can be mined at competitive costs, we may become more dependent upon third parties for copper concentrate, zinc concentrate and alumina. Because our mineral reserves decline as we mine the ore, our future profitability and operating margins depend upon our ability to access mineral reserves that have geological characteristics enabling mining at competitive costs. Replacement reserves may not be available when required or, if available, may not be of a quality capable of being mined at costs comparable to the existing or exhausted mines.

     We may not be able to accurately assess the geological characteristics of any reserves that we acquire, which may adversely affect our profitability and financial condition. Because the value of reserves is calculated based on that part of our mineral deposits that are economically and legally exploitable at the time of the reserve calculation, a decrease in commodity prices of the metals may result in a reduction in the value of any mineral reserves that we do obtain as less of the mineral deposits contained therein would be economically exploitable at the lower prices. Exhaustion of reserves at particular mines may also have an adverse effect on our operating results that is disproportionate to the percentage of overall production represented by such mines. Further, with depletion of reserves, we will face higher unit extraction costs per mine.

     Our ability to obtain additional reserves in the future could be limited by restrictions under our existing or future debt agreements, competition from other copper, zinc and aluminum companies, lack of suitable acquisition candidates, government regulatory and licensing restrictions, difficulties in obtaining mining leases and surface rights or the inability to acquire such properties on commercially reasonable terms, or at all. To increase production from our existing bauxite and lead-zinc mines, we must apply for governmental approvals, which we may not be able to obtain in a timely manner, or at all.

9

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

     Capital requirements. We require capital for, among other purposes, expanding our operations, making acquisitions, managing acquired assets, acquiring new equipment, maintaining the condition of our existing equipment and maintaining compliance with environmental laws and regulations. To the extent that cash generated internally and cash available under our existing credit facilities are not sufficient to fund our capital requirements, we will require additional debt or equity financing, which may not be available on favorable terms, or at all. Since the second half of 2008, this uncertainty has increased due to the disruption in the global financial markets. See “ — Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations — Recent global economic conditions have been unprecedented and challenging and have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs.” Future debt financing, if available, may result in increased finance charges, increased financial leverage, decreased income available to fund further acquisitions and expansions and the imposition of restrictive covenants on our business and operations. In addition, future debt financing may limit our ability to withstand competitive pressures and render us more vulnerable to economic downturns. If we fail to generate or obtain sufficient additional capital in the future, we could be forced to reduce or delay capital expenditures, sell assets or restructure or refinance our indebtedness.

     In light of this, our planned and any proposed future expansions and projects may be materially and adversely affected if we are unable to obtain funding for such capital expenditures on satisfactory terms, or at all, including as a result of any of our existing facilities becoming repayable before its due date. In addition, there can be no assurance that our planned or any proposed future expansions and projects will be completed on time or within budget, which may adversely affect our cash flow. These expansions and projects include those described in “Item 4. Information on the Company — B. Business Overview — Our Business — Competitive Strengths — Strong pipeline of growth projects.”

     Cost overruns and delays. Our current and future projects may be significantly delayed by failure to receive regulatory approvals or renewal of approvals, failure to obtain sufficient funding, technical difficulties due to human resource, technological or other resource constraints or for other unforeseen reasons, events or circumstances. As a result, these projects may incur significant cost overruns and may not be completed on time, or at all. Our decision to undertake or continue any of these projects will be based on assumptions of future demand for our products which may not materialize. As a consequence of project delays, cost overruns, changes in demand for our products and other reasons, we may not achieve the reductions in the cost of production or other economic benefits expected from these projects, which could adversely affect our business, financial condition and results of operations.

     Demands on management. Our efforts to continue our growth will place significant demands on our management and other resources and we will be required to continue to improve operational, financial and other internal controls, both in India and elsewhere. Our ability to maintain and grow our existing business and integrate new businesses will depend on our ability to maintain the necessary management resources and on our ability to attract, train and retain personnel with skills that enable us to keep pace with growing demands and evolving industry standards. We are in particular dependent to a large degree on the continued service and performance of our senior management team and other key team members in our business units. These key personnel possess technical and business capabilities that are difficult to replace. The loss or diminution in the services of members of our senior management or other key team members, or our failure otherwise to maintain the necessary management and other resources to maintain and grow our business, could have a material adverse effect on our results of operations, financial condition and prospects.

     Acquisition risks. As part of our growth strategy, we intend to continue to pursue acquisitions to expand our business. There can be no assurance that we will be able to identify suitable acquisition, strategic investment or joint venture opportunities, obtain the financing necessary to complete and support such acquisitions or investments, integrate such businesses or investments or that any business acquired will be profitable. If we attempt to acquire non-Indian companies, we may not be able to satisfy certain Indian regulatory requirements for such acquisitions and may need to obtain the prior approval of the RBI which we may not be able to obtain. In addition, acquisitions and investments involve a number of risks, including possible adverse effects on our operating results, diversion of management’s attention, failure to retain key personnel, risks associated with unanticipated events or liabilities and difficulties in the assimilation of the operations, technologies, systems, services and products of the acquired businesses or investments. Any failure to achieve successful integration of such acquisitions or investments could have a material adverse effect on our business, results of operations or financial condition.

     On March 6, 2009, we and Asarco signed an agreement for us to purchase substantially all the operating assets of Asarco. We had previously signed an agreement to acquire substantially all the operating assets of Asarco on May 30, 2008, following which in October 2008, due to the financial turmoil, the steep fall in copper prices and adverse global economic conditions, we and Asarco entered into discussions to renegotiate the prior agreement. The current agreement to acquire Asarco follows such renegotiation of the prior agreement and remains subject to approval by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. We cannot assure you that the acquisition as renegotiated will be completed, or that, if completed, we will be successful in integrating the acquired business into our existing businesses or that the acquired business will be profitable. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

10

If we do not continue to invest in new technologies and equipment, our technologies and equipment may become obsolete and our cost of production may increase relative to our competitors, which would have a material adverse effect on our ability to compete, results of operations, financial condition and prospects.

     Our profitability and competitiveness are in large part dependent upon our ability to maintain a low cost of production as we sell commodity products with prices we are unable to influence. Unless we continue to invest in newer technologies and equipment and are successful at integrating such newer technologies and equipment to make our operations more efficient, our cost of production relative to our competitors may increase and we may cease to be profitable or competitive. However, newer technologies and equipment are expensive and the necessary investments may be substantial. Moreover, such investments entail additional risks as to whether the newer technologies and equipment will reduce our cost of production sufficiently to justify the capital expenditures to obtain them. Any failure to make sufficient or the right investments in newer technologies and equipment or in integrating such newer technologies and equipment into our operations could have a material adverse effect on our ability to compete and our financial condition, results of operations and prospects.

We are developing our commercial power generation business, a line of business in which we have limited experience, from which we may never recover our investment or realize a profit and which may result in our management’s focus being diverted from our core copper, zinc and aluminum businesses.

     In August 2006, our shareholders approved a new strategy for us to enter into the commercial power generation business in India. We are investing approximately Rs. 82,000 million ($1,612.0 million) to build a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The project is being pursued by our wholly-owned subsidiary Sterlite Energy. Commissioning of this project will be carried out in stages and is expected to begin in the third quarter of fiscal 2010, with full completion anticipated by the second quarter of fiscal 2011. For more information, see “Item 4. Information on the Company — B. Business Overview — Our Business — Our Commercial Power Generation Business — Our Plans for Commercial Power Generation.”

     In July 2008, Sterlite Energy succeeded in an international bidding process and was awarded the project for the construction of a 1,980 MW coal-based commercial thermal power plant at Talwandi Sabo in the State of Punjab in India at an estimated cost of Rs. 92,450 million ($1,817.4 million). Commissioning of this project will be carried out in stages and is expected to be completed in April 2013. On September 1, 2008, Sterlite Energy completed the acquisition of Talwandi Sabo Power Limited, or TSPL, for a purchase price of Rs. 3,868.4 million ($76.0 million). For more information, see “Item 4. Information on the Company — B. Business Overview — Our Business — Our Commercial Power Generation Business — Our Plans for Commercial Power Generation.”

     In addition, HZL’s board of directors has approved the establishment of wind power plants with a combined capacity of up to 300 MW at an estimated cost of Rs. 16,000 million ($314.5 million). Wind power plants with a combined power generation capacity of 123.2 MW have been commissioned in the States of Gujarat and Karnataka in India at a total cost of Rs. 6,030 million ($118.5 million) and have been fully operational since July 2008.

     Although we have some experience building and managing captive power plants to provide a significant percentage of the power requirements of our copper, zinc and aluminum businesses, and in March 2007 commissioned our first wind power plant, we have limited experience building, operating and managing wind power plants and competing in the commercial power generation business. In addition to the significant capital investment, our management’s focus will also be directed towards this new business.

     In particular, the building of coal-based power facilities is a long and capital-intensive process, with typically several years elapsing and significant capital investment required between the time that a decision to commence a project is made and the commencement of commercial operations. The completion targets for our projects and any other projects we may undertake are estimates and are subject to numerous risks and uncertainties, such as:

• We may face many uncertainties, including regulatory requirements and restrictions which may change by the time our planned power facility is completed. These may include a change in the tariff policy, which may have an adverse impact on our revenues and reduce our margins. We may also face delays in the development of our power plants and any coal mines we may seek to develop, as other coal and power companies in India and Southeast Asia recently have, as a result of protests or other obstructive or delaying activities by displaced persons and others who may oppose such developments.

• We must obtain the consent of certain of our lenders to commence a new business, and there can be no assurance that we will obtain such consents.

• We will be dependent upon third parties for the construction, delivery and commissioning of the power facilities, the supply and testing of equipment and transmission and distribution of any power we produce.

• We do not have our own coal mines, and given recent shortages in coal supplies in India, we may also not be successful at procuring an adequate supply of coal at sufficiently attractive prices, or at all, for our power plant to operate and generate a return on our investment.

• We may face opposition to our projects by local communities where these projects are located or from special interest groups, including as a result of the perceived negative impact of coal mines and coal-based power plants to the environment or any required displacement and resettlement of individuals and families in the area of a project.

• The commercial power generation business is highly competitive and we will be competing with established commercial power generation companies, including NTPC, the Tata Power Company Limited, or Tata Power, and Reliance Energy Limited, with significant resources and many years of experience in the commercial power generation business.

     There can be no assurance that we will recover our investment in this new business, that we will realize a profit from this new business or that diverting our management’s attention to this new business will not have a material adverse effect on our existing copper, zinc and aluminum businesses, any of which results may have a material adverse effect on our results of operations, financial condition and prospects.

11

If any power facilities we build and operate as part of our commercial power generation business do not meet operating performance requirements and agreed norms as may be set out in our agreements, or otherwise do not operate as planned, we may incur increased costs and penalties and our revenue may be adversely affected.

     Operating power plants involves many operational risks, including the breakdown or failure of generation equipment or other equipment or processes, labor disputes, fuel interruption and operating performance below expected levels. However, the power purchase agreements and other agreements we may enter into may require us to guarantee certain minimum performance standards, such as plant availability and generation capacity, to the power purchasers. If our facilities do not meet the required performance standards, the power purchasers with whom we have power purchase agreements may not reimburse us for any increased costs arising as a result of our plants’ failure to operate within the agreed norms, which in turn may affect our results of operations. In addition to the performance requirements specified in our power purchase and other agreements, national and state regulatory bodies and other statutory and government mandated authorities may from time to time impose minimum performance standards upon us. Failure to meet these requirements could expose us to the risk of penalties.

Our proposed acquisition of Asarco faces competition from other potential acquirors, is uncertain and on which investors should not place undue reliance, and if it is not completed, we may be sued by Asarco based on our prior agreement to acquire Asarco.

     On March 6, 2009, we and Asarco signed an agreement for us to purchase substantially all the operating assets of Asarco. We had previously signed an agreement to acquire substantially all the operating assets of Asarco on May 30, 2008, following which in October 2008, due to the financial turmoil, the steep fall in copper prices and adverse global economic conditions, we and Asarco entered into discussions to renegotiate the prior agreement. The current agreement to acquire Asarco follows such renegotiation of the prior agreement and its consummation remains contingent upon the confirmation of a Chapter 11 plan of reorganization proposed by Asarco and sponsored by our wholly owned subsidiary Sterlite (USA) Inc., or Sterlite USA, by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

     Our proposed acquisition of Asarco is uncertain and investors should not place undue reliance upon it. Two other potential acquirors, namely, Asarco Incorporated along with Americas Mining Corporation, subsidiaries of Grupo México, S.A.B. de C.V., or Grupo México, and Harbinger Capital Partners Master Fund I Ltd, have also submitted proposed reorganization plans. The US Bankruptcy Court allowed such reorganization plans to be considered along with the reorganization plan proposed by Asarco and sponsored by Sterlite USA, and submission of a joint disclosure statement containing the three reorganization plans proposed by all three parties. At a court hearing on July 2, 2009, the US Bankruptcy Court approved the adequacy of the joint disclosure statement. The three reorganization plans have been submitted to Asarco’s creditors for their approval. The US Bankruptcy Court will decide which proponent’s plan will be confirmed based on, among other things, whether the plan (i) meets the statutory requirements for confirmation under the US Bankruptcy Code, (ii) treats creditors more fairly than the others, (iii) is more feasible than the others, and (iv) is preferred by creditors based upon responses expressed in their ballots. The decision is expected to be made following a hearing which is currently scheduled from August 10, 2009 through August 19, 2009.

     If either of the other two potential acquirors is selected, we will not be able to acquire Asarco and we may be sued by Asarco under certain circumstances. Each of the other two potential acquirors has included in its proposed reorganization plan that all potential claims held by Asarco against Sterlite and Sterlite USA for, among other things, alleged breach of the original May 30, 2008 agreement, will be distributed to a trust for the benefit of the creditors of Asarco, which trust will prosecute such claims for the benefit of the creditors. Grupo México, in its proposed reorganization plan, has estimated the value of Asarco’s claims against Sterlite and Sterlite USA to be in the range of $400 million to $3 billion, subject to mitigating factors. Those factors may include the ultimate purchase price for the assets being sold by Asarco, adjustments to the ultimate purchase price due to changes in value of working capital as provided in the original May 30, 2008 agreement and changes in the value of assumed liabilities. Asarco discloses in the joint disclosure statement its view that the recovery, if any, against such potential claims may be approximately $100 million. Accordingly, if we are not selected as the winning plan proponent, we will likely be the defendant of breach of contract claims demanding the payment of significant damages. Any adverse judgment or settlement would likely have a material adverse effect on our business, results of operations, financial condition and prospects. Our current agreement with Asarco provides for the settlement and release of any potential claims against us arising out of our original May 30, 2008 agreement, but that agreement will only be effective if the reorganization plan proposed by Asarco and sponsored by Sterlite USA is confirmed.

     If we are successful in acquiring Asarco, we will be subject to a number of risks, including risks relating to the size of the acquisition, the acquisition price, our ability to integrate the acquired business, an increase in the geographic scope of our operations that exposes us to extensive laws and regulations in the United States and our ability to retain the senior management team and key employees of the acquired business.

     If we are selected as the winning plan proponent for Asarco and our proposed acquisition of Asarco is completed, we will be subject to a number of additional risks that could adversely affect our business, financial condition and results of operations, which may in turn affect the value of our common stock after the closing of the transaction. These risks include the following:

• It is a substantial acquisition and shareholders cannot be certain that we are paying an appropriate price for Asarco. The Asarco acquisition will be the largest acquisition in the history of our company, representing a significant investment of our company’s resources. While we have performed what we believe to be adequate diligence with respect to Asarco, as we are purchasing Asarco out of bankruptcy, the information available to us has been more limited than might otherwise be the case. In addition, as with any acquisition, we cannot be certain that we have adequately accounted for all of the costs and risks of the acquired business in the price we have negotiated. Similarly, our shareholders cannot be certain that the price we are paying is an appropriate price. Further, there can be no assurance the price we have currently negotiated will be the final purchase price for the acquisition as the purchase consideration has been increased previously, from $1.7 billion to $1.87 billion, mainly in line with expected changes in working capital at closing, as agreed on June 12, 2009, and may be increased in the future.

• Integration of Asarco’s business. We may be unsuccessful in integrating Asarco’s business and operations with our own in an effective and efficient manner, which may cause us to fail to achieve the anticipated benefits of the acquisition and harm our business. The difficulties of combining the two companies’ businesses potentially will include, among other things:

¡	the necessity of coordinating geographically separated organizations and addressing possible differences in corporate cultures and management philosophies, and the integration of certain operations following the transaction will require the dedication of significant management resources, which may temporarily distract management’s attention from the day-to-day business of our company;
¡	any inability of our management to integrate successfully the operations of Asarco or to adapt to the copper mining, smelting and refining business in the United States; and
¡	any inability of our management to cause best practices to be applied to the business we are acquiring.

12

• The geographic scope of our business will be increased to include the United States. Asarco’s business and assets are located in the United States. If the acquisition is completed, we will be subject to extensive laws and regulations governing exploration, development, production, occupational health, mine safety, toxic substances, waste disposal, protection and remediation of the environment, protection of endangered and protected species, and other related matters in the United States, including the US Federal Clean Air Act and the US Federal Resource Conservation and Recovery Act, as well as local and state laws in the states of Arizona and Texas. Our business will also become subject to political, economic and social conditions in the United States. Because we presently have no significant operations in the United States, these risks are different from and in addition to those to which our business has historically been exposed.

• We may be unsuccessful in retaining the senior management team and other key employees at Asarco. The success of our acquisition will depend in part upon our ability to retain the senior management team and other key employees at Asarco. Competition for qualified personnel can be very intense. In addition, senior management and key employees may depart because of issues relating to the uncertainty or difficulty associated with the integration of Asarco or a desire not to remain with our company. Accordingly, no assurance can be given that we will be able to retain senior management and key employees at Asarco to the extent necessary to successfully integrate its business with ours and make the acquired business profitable.

The Government of India may allege a breach of a covenant by our subsidiary SOVL and seek to exercise a put or call right with respect to shares of HZL, which may result in substantial litigation and serious financial harm to our business, results of operations, financial condition and prospects.

     It has been reported in the media that the Government of India is considering asserting that our subsidiary, SOVL, has breached a covenant under the shareholders’ agreement between the Government of India and SOVL with respect to HZL. Under the terms of the shareholders’ agreement, SOVL agreed that it would take all steps to ensure that HZL would implement a 100,000 tpa greenfield zinc smelter plant at Kapasan, Chittorgarh District, State of Rajasthan, or the Kapasan Project, within a period of five years from April 11, 2002. The shareholders’ agreement further provided that if SOVL, within a period of one year from April 11, 2002, reviewed the feasibility of the Kapasan Project and determined that the Kapasan Project was not in the best economic interests of HZL, which determination was required to be supported by the report of an independent expert, and the board of directors of HZL, in the exercise of such board’s good faith and reasonable judgment, confirmed that in light of the then existing circumstances it was not in the best economic interest of HZL to implement the Kapasan Project, then SOVL would not be obligated to ensure that HZL implement the Kapasan Project.

     By a letter dated April 4, 2003, the managing director of HZL notified the Government of India that the board of directors of HZL had reviewed its expansion plans and had approved a brownfield expansion of its smelting capacity at Chanderiya by setting up a new 170,000 tpa zinc smelter. Furthermore, the April 4, 2003 letter informed the Government of India that the Kapasan Project would not be undertaken and that considering the very significant cost advantage of undertaking the brownfield expansion at Chanderiya as compared to the Kapasan Project, the report of an independent expert may not be required. Although the expansion at Chanderiya was reviewed and approved by the HZL board of directors at its meetings held on January 24, 2003, April 16, 2003 and April 25, 2003, the minutes of the HZL board meetings did not reflect that a review of the feasibility of the Kapasan Project had occurred within a period of one year from April 11, 2002, that the HZL board had, in its good faith and reasonable judgment, confirmed that the Kapasan Project was not in the best economic interests of HZL, or that the report of an independent expert would not be obtained. Over two years later, in a letter dated November 10, 2005, the Government of India responded to the letter sent by HZL on April 4, 2003 and requested that HZL provide it with a copy of the report of the independent expert on the basis of which SOVL concluded that the Kapasan Project was not in the best economic interest of HZL. The Government of India also requested a copy of the minutes of the meeting of the HZL board of directors related to the decision not to pursue the Kapasan Project. In a letter dated December 1, 2005, the Government of India repeated its request for the documentation specified in its November 10, 2005 letter to HZL. HZL responded to the Government of India in a letter dated December 7, 2005 and provided extracts of the minutes of the HZL board meetings held on January 24, 2003, April 16, 2003 and April 25, 2003, related to the review and approval of the brownfield expansion at Chanderiya. HZL did not obtain a report of an independent expert related to the Kapasan Project, and accordingly did not provide such a report to the Government of India. Since December 7, 2005, we have not received any further communication from the Government of India in relation to the Kapasan Project or a notice asserting that SOVL has breached the covenant under the provisions of the shareholders’ agreement between the Government of India and SOVL with respect to HZL.

     If the Government of India claims that SOVL has breached the covenant related to the Kapasan Project under the shareholders’ agreement between the Government of India and SOVL resulting in litigation, and it was determined that SOVL had breached such covenant triggering an event of default, the Government of India, under the terms of the shareholders’ agreement, may become entitled to the right, which is exercisable at any time within 90 days of the day it became aware of such event of default, to either sell any or all of the shares of HZL held by the Government of India to SOVL at a price equivalent to 150% of the market value of such shares, or purchase any or all of the shares of HZL held by SOVL at a price equivalent to 50% of the market value of such shares. Based solely on the closing market price of HZL’s shares on the National Stock Exchange of India Limited, or the NSE, on July 3, 2009 of Rs. 602.75 ($11.85) per share, if the Government of India were determined to have, and were to exercise, a right to sell all of its 124,795,059 shares of HZL at a price equivalent to 150% of their market value, we would be required to pay Rs. 112,830 million ($2,218.0 million) for those shares, and if the Government of India were determined to have, and were to exercise, a right to purchase all of the 274,315,431 shares of HZL held by SOVL at a price equivalent to 50% of their market value, we would receive Rs. 82,672 million ($1,625.2 million) for those shares.

     If the Government of India were to assert that an event of default occurred and seek to exercise a put or call right with respect to shares of HZL, we may face expensive and time-consuming litigation over the matter, uncertainty as to the future of our zinc business, an inability to exercise our call option to acquire the Government of India’s remaining 29.5% ownership interest in HZL and the possibility of serious financial harm if we were unsuccessful in litigation, any of which may have a material adverse effect on our business, results of operations, financial condition and prospects.

13

Our option to purchase the Government of India’s remaining shares in HZL may be challenged.

     A public interest litigation was filed in 2003 against the Government of India, HZL, SOVL and others, challenging the Government of India’s divestment of 64.9% of HZL to Sterlite. The petitioner in this public interest litigation has since filed an application to withdraw the case and, as of May 13, 2009, the Supreme Court of India has allowed the case to be withdrawn.

     There can be no assurance that a challenge will not be made to any future divestment of shares in HZL by the Government of India. In addition, there can be no assurance that the Government of India will not undertake a public offer of its shares, which it has the right to do, and complete the public offer prior to the exercise of our call option. Even if we seek to exercise our call option to acquire the Government of India’s remaining ownership interest in HZL, there can be no assurance that such an acquisition by us will not be challenged, including a challenge on the same grounds as those raised in respect of our exercise of the BALCO call option discussed below. Any adverse ruling may preclude or delay us from exercising our option to increase our ownership interest in HZL, and such outcome would be likely to have a material adverse effect upon our operational flexibility, results of operations and prospects. Alternatively, we may only be able to acquire the Government of India’s remaining ownership interest in HZL at a price in excess of the market value or fair value of those shares, which could have a material adverse effect on our results of operations and financial condition. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

The Government of India has disputed our exercise of the call option to purchase its remaining 49.0% ownership interest in BALCO.

     Under the terms of the shareholders’ agreement between us and the Government of India, we were granted an option to acquire the shares of BALCO held by the Government of India at the time of exercise. We exercised this option on March 19, 2004. However, the Government of India has contested the purchase price and validity of the option. As negotiations for an amicable resolution were unsuccessful, on direction of the court, arbitrators were appointed by the parties, as provided for under the terms of the shareholders’ agreement. Arbitration proceedings commenced on February 16, 2009 and we submitted our claim statement to the arbitrators. The Government of India has been directed by the arbitrators to file its reply to our claim statement by July 10, 2009. The next hearing on this matter has been scheduled for August 26, 2009. Notwithstanding the outcome of the dispute, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

     There is no assurance that the outcome of the arbitration proceedings will be favorable to us. In the event of an unfavorable outcome, we may be unable to purchase the Government of India’s remaining 49.0% stake in BALCO or may be required to pay a higher purchase price, which may adversely affect our operational flexibility, results of operations and prospects.

Appeal proceedings in the High Court of Bombay have been brought by the Securities and Exchange Board of India, or SEBI, to overrule a decision by the Securities Appellate Tribunal, or SAT, that we have not violated regulations prohibiting fraudulent and unfair trading practices.

     In April 2001, SEBI ordered prosecution proceedings to be brought against us, alleging that we have violated regulations prohibiting fraudulent and unfair trading practices and also passed an order prohibiting us from accessing the capital markets for a period of two years. This order of SEBI was overruled by the SAT on October 22, 2001 on the basis of a lack of sufficient material evidence to establish that we had, directly or indirectly, engaged in market manipulation and that SEBI had exercised its jurisdiction incorrectly in prohibiting us from accessing the capital markets. On November 9, 2001, SEBI appealed to the High Court of Bombay. A hearing date has not been fixed.

     SEBI’s order was based on its finding that we had manipulated the price of our shares in connection with our proposed acquisition of shares in Indian Aluminium Company Limited, or INDAL, and our proposed open offer to the shareholders of INDAL in 1998. SEBI also alleged that MALCO, our associate company, provided funds to an entity we allegedly controlled to enable its associate to purchase our shares, as part of a connected price manipulation exercise.

     In the event the High Court of Bombay decides the above matters unfavorably against us, we may be prohibited from accessing the capital markets for a period of two years and may become liable to pay penalties. Further, certain of our key officers and directors may be imprisoned, which would have an adverse effect on our business and operations.

     In addition to the civil proceedings, SEBI also initiated criminal proceedings before the Court of the Metropolitan Magistrate, Mumbai, against us, our Non-Executive Chairman, Mr. Anil Agarwal, Mr. Tarun Jain, one of our directors until March 31, 2009, and the chief financial officer of MALCO at the time of the alleged price manipulation. When SEBI’s order was overturned in October 2001, we filed a petition before the High Court of Bombay to quash those criminal proceedings on the grounds that the SAT had overruled SEBI’s order on price manipulation. An order has been passed by the High Court of Bombay in our favor, granting an interim stay of the criminal proceedings. The matter is pending at the stage of final arguments. The next date of hearing has not yet been notified. If we and the individuals named in the criminal proceedings do not prevail before the High Court of Bombay, our business and operations may be materially and adversely affected.

14

We are involved in a number of litigation matters, both civil and criminal in nature, and any final judgments against us could have a material adverse effect on our business, results of operations, financial condition and prospects.

     We are involved in a variety of litigation matters, including matters relating to alleged violations of environmental and tax laws and alleged price manipulation of our equity shares on the NSE and the Bombay Stock Exchange Limited, or the BSE. A final judgment against us or our directors in one or more of these disputes may result in damages being awarded that we must pay or injunctions against us, or criminal proceedings being instituted against us or our directors, which may require us to cease or limit certain of our operations and have a material adverse effect on our business, results of operations, financial condition and prospects. For a detailed discussion of material litigation matters pending against us, see “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

Defects in title or loss of any leasehold interests in our properties could limit our ability to conduct operations on our properties or result in significant unanticipated costs.

     Our ability to mine the land on which we have been granted mining lease rights is dependent on the surface rights that we acquire separately and subsequently to the grant of mining lease rights and generally over only part of the land leased. Additional surface rights may be negotiated separately with landowners, though there is no guarantee that these rights will be granted. Although we expect to be able to continue to obtain additional surface rights in the future in the ordinary course, any delay in obtaining or inability to obtain surface rights could negatively affect our financial condition and results of operations.

     A significant part of our mining operations are carried out on leasehold properties. Our right to mine some of our reserves may be materially and adversely affected if defects in title or boundary disputes exist or if a lease expires and is not renewed or if a lease is terminated due to our failure to comply with its conditions. Any challenge to our title or leasehold interests could delay our mining operations and could ultimately result in the loss of some or all of our interests. Also, in any such case, the investigation and resolution of title issues would divert management’s time from our business and our results of operations could be adversely affected. Further, if we mine on property that we do not own or lease, we could incur liability for such mining.

     We can also be subject to claims challenging our title to our non-mine properties. For example, BALCO is currently engaged in a dispute with the State Government of Chhattisgarh regarding alleged encroachment on state-owned land at its Korba facility. On February 6, 2009, a single bench of the Chhattisgarh High Court held that BALCO is in legal possession of the land and is required to pay premium and rent on the land according to the rates offered by the Government of Chhattisgarh in 1968. The State Government of Chhattisgarh has challenged this order in an appeal before the division bench of the Chhattisgarh High Court. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

Our operations are subject to extensive governmental and environmental regulations which have in the past and could in the future cause us to incur significant costs or liabilities or interrupt or close our operations, any of which events may adversely affect our results of operations.

     Numerous governmental permits, approvals and leases are required for our operations as the industries in which we operate and seek to operate are subject to numerous laws and extensive regulation by national, state and local authorities. Failure to comply with any laws or regulations or to obtain or renew the necessary permits, approvals and leases may result in the loss of the right to mine or operate our facilities, the assessment of administrative, civil or criminal penalties, the imposition of cleanup or site restoration costs and liens, the imposition of costly compliance procedures, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could have the effect of closing or limiting production from our operations. In addition, a significant number of approvals are required from government authorities for metals and mining and commercial power generation projects, and any such approvals may be subject to challenge. We are currently primarily subject to laws and regulations relating to our operations in India and Australia, but if our announced agreement to purchase substantially all the operating assets of Asarco is completed, we will also be subject to extensive laws and regulations governing exploration, development, production, occupational health, mine safety, toxic substances, waste disposal, protection and remediation of the environment, protection of endangered and protected species, and other related matters in the United States, including the US Federal Clean Air Act and the US

15

Federal Resource Conservation and Recovery Act, as well as local and state laws in the states of Arizona and Texas. Our business, financial condition, results of operations and prospects may be materially and adversely affected by any of a number of significant legal and regulatory matters to which we are subject. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings” and “Item 4. Information on the Company — B. Business Overview — Our Business — Regulatory Matters.”

     The costs, liabilities and requirements associated with complying with existing and future laws and regulations may be substantial and time-consuming and may delay the commencement or continuation of exploration, mining or production activities. For example, a gas leak at HZL’s sulphuric acid plant in Chanderiya caused the Rajasthan State Pollution Control Board to shut down the entire plant for a period of 12 days in November 2005. Environmental regulations may also subject us to substantial costs and liabilities for the closure of our mines and other facilities.

     New legislation or regulations may be adopted in the future that may materially and adversely affect our operations, our cost structure or our customers’ ability to use our products. New legislation or regulations, or different or more stringent interpretation or enforcement of existing laws and regulations, may also require us or our customers to change operations significantly or incur increased costs, which could have a material adverse effect on our results of operations or financial condition.

Any increase in competition in our target markets could result in lower prices or sales volumes of the copper, zinc and aluminum products we produce, which may cause our profitability to suffer.

     There is substantial competition in the copper, zinc and aluminum industries, both in India and internationally, and we expect this to continue. Our competitors in the copper, zinc and aluminum markets outside India include major international producers. Certain of these international producers have significantly larger scale of operations, greater financial resources and manufacturing and technological capabilities, more established and larger marketing and sales organizations and larger technical staffs than we do.

     In the Indian copper market, we compete primarily against Hindalco Industries Limited, or Hindalco, the government-owned Hindustan Copper Limited, or Hindustan Copper, and imports. In the Indian zinc market, we compete primarily against imports. In the Indian aluminum market, we compete primarily against National Aluminium Company Limited, or NALCO, a Government of India enterprise, Hindalco, MALCO, a subsidiary of Vedanta, and imports. Many of our competitors are also expanding their production capacities. If domestic demand is not sufficient to absorb these increases in capacity, our competitors could reduce their prices, which may force us to do the same or cause us to lose market share or sell our products in overseas markets at lower prices. If our announced agreement to purchase substantially all the operating assets of Asarco is completed, we will compete primarily against Freeport-McMoRan Copper & Gold Inc., or Freeport-McMoRan, Nexans Energy USA Inc., Caraíba Metais S.A., Southwire Company and Grupo México in the United States and international copper markets.

     The end-user markets for our metal products are highly competitive. Copper competes with a number of other materials, including aluminum and plastics. Zinc metal faces competition as a result of substitution of materials, including aluminum, stainless steel and other alloys, plastics and other materials being substituted for galvanized steel and epoxies, paints and other chemicals being used to treat steel in place of galvanization in the construction market. Aluminum competes with materials such as plastic, steel, iron, glass and paper, among others, for various applications. In the past, customers have demonstrated a willingness to substitute other materials for copper, zinc and aluminum. The willingness of customers to accept substitutes could have a material adverse effect on our business, results of operations and prospects.

Our insurance coverage may prove inadequate to satisfy future claims against us.

     We maintain insurance which we believe is typical in our industry in India and Australia and in amounts which we believe to be commercially appropriate. Nevertheless, we may become subject to liabilities, including liabilities for pollution or other hazards, against which we have not insured adequately or at all or cannot insure. Our insurance policies contain exclusions and limitations on coverage. In addition, our insurance policies may not continue to be available at economically acceptable premiums, or at all. As a result, our insurance coverage may not cover the extent of any claims against us, including for environmental or industrial accidents or pollution. See “Item 4. Information on the Company — B. Business Overview — Our Business — Insurance.”

16

Third party interests in our subsidiary companies and restrictions due to stock exchange listings of our subsidiary companies will restrict our ability to deal freely with our subsidiaries, which may have a material adverse effect on our operations.

     We do not wholly own all of our operating subsidiaries. Although we have management control of HZL and BALCO, and we intend to increase our ownership interests in both, each of these companies has other shareholders who, in some cases, hold substantial interests in them. The minority interests in our subsidiaries and the listing of HZL on the NSE and the BSE may limit our ability to increase our equity interests in these subsidiaries, combine similar operations, utilize synergies that may exist between the operations of different subsidiaries or reorganize the structure of our business in a tax effective manner. For example, the Government of India, which is a minority shareholder in each of HZL and BALCO, has entered into shareholders’ agreements for HZL and BALCO and it is a term of the shareholders’ agreements that HZL and BALCO may not grant loans to companies which are under the same management as HZL or BALCO, as the case may be, without the prior consent of the Government of India. In addition, the Government of India has the right to appoint directors and has veto power over certain management decisions. These restrictions on our ability to deal freely with our subsidiaries caused by the minority interests may have a material adverse effect on our results of operations or financial condition as our ability to move funds among the different parts of our business will be restricted and we will be unable to access cash held in HZL or BALCO except through dividend payments by HZL and BALCO which would be payable to all shareholders. This will limit our ability to make payments of interest and principal in respect of financial liabilities and obligations which we have undertaken on behalf of our consolidated group of companies. Further, pursuant to the requirements for the continued listing of the shares of HZL on the NSE and BSE, in the event we exercise our call option to acquire the Government of India’s remaining ownership interest in HZL, we would have to either divest a portion of our shareholding in HZL within a period of one year from the acquisition such that the minimum public shareholding requirement of 10% is complied with or delist HZL’s shares from the NSE and BSE by making an offer to purchase the equity shares held by the remaining HZL’s shareholders at a price determined by way of a reverse book-build process, which could adversely impact our financial condition and results of operations. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

We may be liable for additional taxes if the tax holidays, exemptions and tax deferral schemes which we currently benefit from expire without renewal, and the benefits of the tax holidays, exemptions and tax deferral schemes are limited by the minimum alternative tax, or MAT.

     We currently benefit from significant tax holidays, exemptions and tax deferral schemes. These tax holidays, exemptions and tax deferral schemes are for limited periods. For example, HZL’s captive power plant at Debari benefits from tax exemptions on the profits generated from transfers of power to HZL’s other units, which are expected to generate substantial savings through fiscal 2013.

     The captive power plants in our copper business benefit from tax exemptions on the profits generated from transfers of power to the smelter which are expected to generate savings through fiscal 2014. These tax incentives resulted in a decrease in our effective tax rate compared to the tax rate that we estimate would have applied if these incentives had not been available. Our copper refinery and copper rod plant at Tuticorin and our two hydrometallurgical zinc smelters at Chanderiya with a capacity of 210,000 tpa each have been awarded the status of export oriented units, under which we are eligible for tax exemptions on raw materials, capital goods procured and finished goods sold until June 1, 2011. There can be no assurance that these tax holidays or exemptions will be renewed when they expire or that any applications we make for new tax holidays or exemptions will be successful. Although tax exemptions for export oriented units have been extended in the Government of India’s Budget for 2008-2009, any further extensions would be at the discretion of the new Government of India. The Government of India’s Budget for 2009-2010 has recently been presented by the new Government of India which proposed that the tax exemptions for export oriented units be extended by one more year. The Budget for 2009-2010 is pending the approval of the Indian Parliament. Accordingly, there can be no assurance that such tax exemptions will be extended. Similarly, the tax exemptions for captive power plants expire on March 31, 2010 and unless extended, new captive power plants will not be eligible for such tax exemptions. Captive power plants will continue to have the benefit of any existing tax exemptions after March 31, 2010 until such tax exemptions expire. The expiry or loss of existing tax holidays, exemptions and tax deferral schemes or the failure to obtain new tax holidays, exemptions or tax deferral schemes will likely increase our tax obligations and any increase could have a material adverse effect on our financial condition or results of operations.

     In addition, we are subject to a MAT which sets a minimum amount of tax that must be paid each year based on our book profits. The effective MAT rate is 11.3% as of the date of this annual report. The MAT prevents us from taking full advantage of any tax holidays, exemptions or tax deferral schemes that may be available to us.

Shortage of skilled labor in the metals and mining industry could increase our costs and limit our ability to maintain or expand our operations, which could adversely affect our results of operations.

     Mining and metal refining, smelting and fabrication operations require a skilled and experienced labor force. If we experience a shortage of skilled and experienced labor, our labor productivity could decrease and costs could increase, our operations may be interrupted or we may be unable to maintain our current production or increase our production as otherwise planned, which could have a material adverse effect on our results of operations, financial condition and business prospects.

17

Risks Relating to Our Industry

Commodity prices and the copper TcRc may be volatile, which would affect our revenue, results of operations and financial condition.

     Historically, the international commodity prices for copper, zinc and aluminum and the prevailing market TcRc rate for copper have been volatile and subject to wide fluctuations in response to relatively minor changes in the supply of, and demand for, such commodities, market uncertainties, the overall performance of world or regional economies and the related cyclicality in industries we directly serve and a variety of other factors. For example, due at least in part to the adverse global economic conditions in the last year, between March 31, 2008 and March 31, 2009, the average LME prices of copper, zinc and aluminum decreased by 22.4%, 47.8% and 14.8%, respectively. Between March 31, 2009 and June 30, 2009, the average LME prices of copper, zinc and aluminum decreased by 20.5%, 5.6% and 33.4%, respectively. Commodity prices and the market TcRc rate for copper may continue to be volatile and subject to wide fluctuations in the future. A decline in the prices we receive for our copper, zinc or aluminum metals and in the market TcRc rate for copper would adversely affect our revenue and results of operations, and a sustained drop would have a material adverse effect on our revenue, results of operations and financial condition.

Our ore reserves are estimates based on a number of assumptions, any changes to which may require us to lower our estimated reserves.

     The ore reserves stated in this annual report are estimates and represent the quantity of copper, zinc, lead and bauxite that we believed, as of March 31, 2009, could be mined, processed, recovered and sold at prices sufficient to cover the estimated future total costs of production, remaining investment and anticipated additional capital expenditures. These estimates are subject to numerous uncertainties inherent in estimating quantities of reserves and could vary in the future as a result of actual exploration and production results, depletion, new information on geology and fluctuations in production, operating and other costs and economic parameters such as metal prices, smelter treatment charges and exchange rates, many of which are beyond our control. As a result, you should not place undue reliance on the reserve data contained in this annual report. In the event that any of these assumptions turn out to be incorrect, we may need to revise our ore reserves downwards and this may adversely affect our life-of-mine plans and consequently the total value of our mining asset base, which could increase our costs and decrease our profitability.

Changes in tariffs, royalties, customs duties and government assistance may reduce our Indian market domestic premium, which would adversely affect our profitability and results of operations.

     Copper, zinc and aluminum are sold in the Indian market at a premium to the international market prices of these metals due to tariffs payable on the import of such metals. The Government of India may reduce or abolish customs duties on copper and aluminum in the future, although the timing and extent of such reductions cannot be predicted. As we sell the majority of the commodities we produce in India, any reduction in Indian tariffs on imports will decrease the premiums we receive in respect of those sales. Our profitability is dependent to a small extent on the continuation of import duties and any reduction would have an adverse effect on our results of operations and financial condition.

     We pay royalties to the State Governments of Chhattisgarh and Rajasthan based on our extraction of bauxite and lead-zinc ore, respectively, and to the State Government of Tasmania in Australia based on our extraction of copper ore. Most significant of these is the royalty that HZL is required to pay to the State Government of Rajasthan, where all of HZL’s mines are located, at a rate of 6.6% of the LME zinc metal price payable on the zinc metal contained in the ore produced and 5.0% of the LME lead metal price payable on the lead metal contained in the ore produced. The royalties we pay are subject to change. Any upward revision to the royalty rates being charged currently may adversely affect our profitability. Additionally, the Department of Mines and Geology of the State of Rajasthan has raised additional demands for payment through several show cause notices to HZL for mining minerals associated with lead and zinc such as cadmium and silver. Any upward revision to the royalty rates being charged currently or payment of additional royalty for mining of associated minerals may adversely affect our profitability. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings — Demands against HZL by Department of Mines and Geology.”

     Indian exports of copper, aluminum and zinc receive assistance premiums from the Government of India, which have been reduced since 2002. These export assistance premiums have been reduced in recent years and may be further reduced in the future. Any reduction in these premiums will decrease the revenue we receive from export sales and may have a material adverse effect on our results of operations or financial condition. See “Item 5. Operating and Financial Review and Prospects — Factors Affecting Results of Operations — Government Policy.”

18

Regulation of greenhouse gas emissions effects and climate change issues may adversely affect our operations and markets.

     Our mining, smelting and refining operations are energy intensive and depend heavily on electricity, thermal coal, diesel fuel and fuel oil. In addition, our commercial power generation business depends on coal-fired power plants. Many scientists believe that emissions from the combustion of carbon-based fuels contribute to greenhouse effects and therefore potentially to climate change.

     A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the potential impacts of climate change. International treaties or agreements may also result in increasing regulation of greenhouse gas emissions, including the introduction of carbon emissions trading mechanisms, in jurisdictions in which we operate. Any such regulation will likely result in increased future energy and compliance costs. From a medium and long-term perspective, we are likely to see an increase in costs relating to our assets that emit significant amounts of greenhouse gases as a result of these regulatory initiatives. These regulatory initiatives will be either voluntary or mandatory and may impact our operations directly or through our suppliers or customers. Assessments of the potential impact of future climate change regulation are uncertain, given the wide scope of potential regulatory change in countries in which we operate.

     The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances. These may include changes in rainfall patterns, water shortages, changing sea levels, changing storm patterns and intensities, and changing temperatures. These effects may adversely impact the cost, production and financial performance of our operations.

Risks Relating to Our Relationship with Vedanta

We are controlled by Vedanta and your ability to influence matters requiring shareholder approval will be extremely limited.

     We are a majority-owned and controlled subsidiary of Vedanta. Vedanta is in turn 59.4%-owned by Volcan Investments Limited, or Volcan. Volcan is a holding company 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave PTC Limited, or Onclave, is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that seeks to enable Vedanta to carry on its business independently of Volcan, its direct and indirect shareholders, and their respective associates, or collectively, the Volcan Parties. See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Parties — Vedanta.” However, we cannot assure you that the relationship agreement will be effective at insulating Vedanta, and in turn us, from being influenced or controlled by the Volcan Parties, which influence or control could have a material adverse effect on the holders of our equity shares and ADSs.

     As long as Vedanta, through its subsidiaries, owns a majority of our outstanding equity shares, Vedanta will have the ability to control or influence significant matters requiring board approval and to take shareholder action without the vote of any other shareholder, and the holders of our equity shares and ADSs will not be able to affect the outcome of any shareholder vote. Vedanta will have the ability to control all matters affecting us.

     In the event Vedanta ceases to be our majority shareholder, we will be required to immediately repay some of our outstanding long-term debt.

     Vedanta’s voting control may discourage transactions involving a change of control of us, including transactions in which holders of our equity shares and ADSs might otherwise receive a premium therefor over the then-current market prices. Vedanta is not prohibited from selling a controlling interest in us to a third party and may do so without the approval of holders of our equity shares and ADSs and without providing for a purchase of our equity shares or ADSs. Accordingly, our equity shares and ADSs may be worth less than they would be if Vedanta did not maintain voting control over us.

19

Vedanta may decide to allocate business opportunities to other members of the Vedanta group instead of to us, which may have a material adverse effect on our business, results of operations, financial condition and prospects.

     Vedanta’s control of us means it can determine the allocation of business opportunities among us, itself and its other subsidiaries. For example, as of June 30, 2009, Vedanta owned 79.4% of Konkola Copper Mines plc, or KCM, an integrated copper producer in Zambia, 93.6% of MALCO, an aluminum metals and mining company in India with which we compete, and 70.5% of Vedanta Aluminium Limited, or Vedanta Aluminium, an alumina refining and aluminum smelting business. As Vedanta controls KCM, MALCO, Vedanta Aluminium and us, it determines the allocation of business opportunities among, as well as strategies and actions of, KCM, MALCO, Vedanta Aluminium and us. Vedanta may determine to have KCM, MALCO, Vedanta Aluminium or another of its subsidiaries, instead of us, pursue business opportunities in the copper, zinc, aluminum or commercial power generation business, or any other business, or cause such companies or us to undertake corporate strategies, the effect of which is to benefit such companies instead of us and which could be detrimental to our interests. If Vedanta were to take any such actions, our business, results of operations, financial condition and prospects could be materially and adversely affected and the value of our equity shares and the ADSs may decline.

We have issued several guarantees as security for the obligations of certain of our subsidiaries and other companies within the Vedanta group and we will have liability under these guarantees in the event of any failure by such entities to perform their obligations, which could have a material adverse effect on our results of operations and financial condition.

     We have issued several guarantees in respect of the obligations of certain of our subsidiaries and other companies within the Vedanta group, including guarantees issued as security for loan obligations, credit facilities or issuance of customs duty bonds for import of capital equipment at concessional rates of duties. Our outstanding guarantees cover obligations aggregating Rs. 47,160 million ($927.1 million) as of March 31, 2009, the liabilities for which have not been recorded in our consolidated financial statements. We will have a liability in the event that any of these entities fails to perform its obligations under the loan agreements, credit facilities or bonds, which could have a material adverse effect on our results of operations and financial condition. See “Item 5. Operating and Financial Review and Prospects — Guarantees.”

Any disputes that arise between us and Vedanta or other companies in the Vedanta group could harm our business operations.

     Disputes may arise between Vedanta or other companies in the Vedanta group and us in a number of areas, including:

• intercompany agreements setting forth services and prices for services between us and Vedanta or other companies in the Vedanta group;

• business combinations involving us;

• sales or distributions by Vedanta of all or any portion of its ownership interest in us; or

• business opportunities that may be attractive to us and Vedanta, or other companies in the Vedanta group.

     We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

     Our agreements with Vedanta and other companies in the Vedanta group may be amended upon agreement between the parties. As we are controlled by Vedanta, Vedanta may require us to agree to amendments to these agreements that may be less favorable to us than the original terms of the agreements.

Some of our directors and executive officers may have conflicts of interest because of their ownership of Vedanta shares, options to acquire Vedanta shares and positions with Vedanta.

     Some of our directors and executive officers own Vedanta shares and options to purchase Vedanta shares, including through their continued participation in the Vedanta Long-Term Incentive Plan 2003, or the Vedanta LTIP. In addition, some of our directors and executive officers are directors or executive officers of Vedanta. Ownership of Vedanta shares and options to purchase Vedanta shares and the presence of an executive officer of Vedanta on our board of directors could create, or appear to create, potential conflicts of interest and other issues with respect to their fiduciary duties to us when our directors and officers are faced with decisions that could have different implications for Vedanta than for us.

     In addition, we are a party to a shared services agreement with Vedanta and certain other subsidiaries of Vedanta under which our management’s time and services are shared between the Vedanta group and us. As a result, our management, including our senior management, is not solely focused on our business and may be distracted by, or have conflicts as a result of, the demands of Vedanta or other businesses within the Vedanta group, which may materially and adversely affect our business, results of operations and financial condition. For more information on the shared services agreement, see “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

20

Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations

A substantial portion of our assets and operations are located in India and we are subject to regulatory, economic, social and political uncertainties in India.

     We are incorporated in India. Our primary operating subsidiaries, HZL, BALCO and Sterlite Energy, as well as our associate company, Vedanta Aluminium, are also incorporated in India. A substantial portion of our assets and employees are located in India and we intend to continue to develop and expand our facilities in India. Consequently, our financial performance and the market price of our ADSs will be affected by changes in exchange rates and controls, interest rates, changes in government policies, including taxation policies, social and civil unrest and other political, social and economic developments in or affecting India.

     The Government of India has exercised and continues to exercise significant influence over many aspects of the Indian economy. Since 1991, successive Indian governments have pursued policies of economic liberalization, including by significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will continue. The present government, formed in May 2004 and re-elected in May 2009, has taken initiatives that support the continued economic liberalization policies that have been pursued by previous governments. The present government continues to be a multiparty coalition and therefore there is no assurance that it will be able to generate sufficient cross-party support to implement its liberalization policies. The rate of economic liberalization could change, and specific laws and policies affecting metals and mining companies, foreign investments, currency exchange rates and other matters affecting investment in India could change as well. Further, protests against privatizations and government corruption scandals, which have occurred in the past, could slow the pace of liberalization and deregulation. Given the changes in government policy on divestments, there can be no assurance that any of the proposed privatizations which we may be interested in pursuing will be implemented or completed in the near future, or at all. A significant change in India’s policy of economic liberalization and deregulation could adversely affect business and economic conditions in India generally and our business in particular if new restrictions on the private sector are introduced or if existing restrictions are increased.

Recent global economic conditions have been unprecedented and challenging and have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs.

     Recent global market and economic conditions have been unprecedented and challenging with tighter credit conditions and recession in most major economies continuing into 2009. Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market volatility and diminished expectations for western and emerging economies. In the second half of 2008, added concerns fueled by the United States government conservatorship of the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, the declared bankruptcy of Lehman Brothers Holdings Inc., the United States government financial assistance to American International Group Inc., Citigroup Inc., Bank of America and other federal government interventions in the United States financial system led to increased market uncertainty and instability in both United States and international capital and credit markets. These conditions, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have contributed to volatility of unprecedented levels.

     As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide credit to businesses and consumers. These factors have led to a decrease in spending by businesses and consumers alike, and corresponding decreases in global infrastructure spending and commodity prices. Continued turbulence in the United States and international markets and economies and prolonged declines in business consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to refinance maturing liabilities and access the capital markets to meet liquidity needs. These global market and economic conditions have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs. For example, in response to recent global economic conditions and a decline in commodity prices, we have ceased operations at one of our aluminum smelters at the Korba complex which may have a material adverse effect on our business and financial performance.

21

As the domestic Indian market constitutes the major source of our revenue, the downturn in the rate of economic growth in India due to the unprecedented and challenging global market and economic conditions, or any other such downturn for any other reason, will be detrimental to our results of operations.

     In fiscal 2009, approximately 66.1% of our net sales were derived from commodities that we sold to customers in India. The performance and growth of our business are necessarily dependent on the health of the overall Indian economy. Any downturn in the rate of economic growth in India, whether due to political instability or regional conflicts, economic slowdown elsewhere in the world or otherwise, may have a material adverse effect on demand for the commodities we produce. The Indian economy, following a period of significant growth, has more recently been adversely affected by the unprecedented and challenging global market and economic conditions that has caused and may continue to cause a downturn in the rate of economic growth in India. The Indian economy is also largely driven by the performance of the agriculture sector, which depends on the quality of the monsoon, which is difficult to predict. In the past, economic slowdowns have harmed manufacturing industries, including companies engaged in the copper, zinc and aluminum sectors, as well as the customers of manufacturing industries. The current economic slowdown has had and could continue to have, and any future slowdown in the Indian economy could have, a material adverse effect on our financial condition and results of operations.

Terrorist attacks and other acts of violence involving India or other neighboring countries could adversely affect our operations directly, or may result in a more general loss of customer confidence and reduced investment in these countries that reduces the demand for our products, which would have a material adverse effect on our business, results of operations, financial condition and cash flows.

     Terrorist attacks and other acts of violence or war involving India or other neighboring countries may adversely affect the Indian markets and the worldwide financial markets. In recent years, there have been incidents in and near India such as the November 2008 terrorist shootings and bombings in Mumbai, the July 2006 bombings of suburban trains in Mumbai and other terrorist attacks in Mumbai, Delhi and other parts of India, a terrorist attack on the Indian Parliament, troop mobilizations and military confrontations in Kashmir and along the India/Pakistan border and an aggravated geopolitical situation in the region. In addition, South Asia more generally has experienced instances of civil unrest and hostilities among neighboring countries from time to time. The occurrence of any of any such terrorist attacks or acts of violence or war in the future may disrupt communications, make travel more difficult, create the perception that investments in Indian companies involve a high degree of risk and result in a loss of business confidence, which could potentially lead to economic recession and generally have an adverse effect on our business, results of operations, financial condition and cash flows. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that were protracted or involved the threat or use of nuclear weapons, we might not be able to continue our operations. Our insurance policies for a substantial part of our business do not cover terrorist attacks or business interruptions from terrorist attacks or for other reasons. As a result, any terrorist attacks or other acts of violence or war or deterioration in international relations may result in investor concern regarding regional stability which could adversely affect the price of our equity shares and ADSs.

If natural disasters or environmental conditions in India, including floods and earthquakes, affect our mining and production facilities, our revenue could decline.

     Our mines and production facilities are spread across India, and our sales force is spread throughout the country. Natural calamities such as floods, rains, heavy downpours (such as heavy downpours in Tuticorin in 2008 which caused the closure of our Tuticorin facilities for 2-3 days, as well as the rains in Mumbai and other parts of the State of Maharashtra in 2005 and other states in 2006) and earthquakes could disrupt our mining and production activities and distribution chains and damage our storage facilities. Other regions in India have also experienced floods, earthquakes, tsunamis and droughts in recent years. In December 2004, Southeast Asia, including the eastern coast of India, experienced a massive tsunami, and in October 2005, the State of Jammu and Kashmir experienced an earthquake, both of which events caused significant loss of life and property damage. Substantially all of our facilities and employees are located in India and there can be no assurance that we will not be affected by natural disasters in the future. In addition, if there were a drought or general water shortage in India or any part of India where our operations are located, the Government of India or local, state or other authorities may restrict water supplies to us and other industrial operations in order to maintain water supplies for drinking and other public necessities which would cause us to reduce or close our operations.

22

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

     Although substantially all of our revenue is tied to commodity prices that are typically priced by reference to the US dollar, most of our expenses are incurred and paid in Indian Rupees or Australian dollars. In addition, in fiscal 2009, approximately 33.9% of our net sales were derived from commodities that we sold to customers outside India. The exchange rates between the Indian Rupee and the US dollar, and between the Australian dollar and the US dollar have changed substantially in recent years and may fluctuate substantially in the future. Our results of operations could be adversely affected if the US dollar depreciates against the Indian Rupee or Australian dollar or the Indian Rupee or Australian dollar appreciates against the US dollar. We seek to mitigate the impact of short-term movements in currency on our business by hedging most of our near-term exposures. Typically, most of our exposures with a maturity of less than two years are hedged completely. However, large or prolonged movements in exchange rates may have a material adverse effect on our results of operations and financial condition.

If India’s inflation worsens or the prices of oil or other raw materials rise, we may not be able to pass the resulting increased costs to our customers and this may adversely affect our profitability or cause us to suffer operating losses.

     India has recently experienced fluctuating wholesale price inflation compared to historical levels due to the global economic downturn. In addition, international prices of crude oil have recently experienced significant volatility, including a rise to historical highs that increased transportation costs followed more recently by a significant decline as global economic conditions have deteriorated. Inflation, increased transportation costs and an increase in energy prices generally, which may be caused by a rise in the price of oil, or an increase in the price of thermal coal in particular, could cause our costs for raw material inputs required for production of our products to increase, which would adversely affect our financial condition and results of operations if we cannot pass these added costs along to customers.

Stringent labor laws in India may adversely affect our profitability.

     India has stringent labor legislation that protects the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and imposes financial obligations on employers upon employee layoffs. This makes it difficult for us to maintain flexible human resource policies, discharge employees or downsize, which may adversely affect our business and profitability.

As a foreign private issuer and a “controlled company” within the meaning of the New York Stock Exchange, or NYSE, rules, we are subject to different NYSE rules than non-controlled domestic US issuers. Consequently, the corporate governance standards which we are required to adhere to are different than those applicable to such companies, which may limit the information available to, and the shareholder rights of, holders of our ADSs.

     We qualify as a “controlled company” within the meaning of the NYSE rules as Vedanta has effective control of a majority of our equity shares. This will allow Vedanta to, among other things, control the composition of our board of directors and direct our management and policies.

     As a foreign private issuer and a “controlled company,” we are exempt from complying with certain corporate governance requirements of the NYSE, including the requirement that a majority of our board of directors consist of independent directors. As the corporate governance standards applicable to us are different than those applicable to domestic non-controlled US issuers, holders of our equity shares and ADSs may not have the same protections afforded under the NYSE rules as shareholders of companies that do not have such exemptions. It is also possible that the Agarwal family’s significant ownership interest of us as a result of its majority ownership of Vedanta’s majority shareholder, Volcan, could adversely affect investors’ perceptions of our corporate governance. For a summary of the differences between the corporate governance standards applicable to us as a listed company in India and as a foreign private issuer and “controlled company” in the United States and such standards applicable to a domestic non-controlled US issuer, see “Item 10. Additional Information — B. Memorandum and Articles of Association — Comparison of Corporate Governance Standards.”

There are certain differences in shareholder rights and protections between the laws of India and the United States and between governance standards for a US public company and a foreign private issuer such as us.

     We are incorporated in India and investors should be aware that there are certain differences in the shareholder rights and protections between the laws of India and the United States. There are also certain differences in the corporate governance standards for a domestic US issuer and those applicable to a foreign private issuer such as us. See “Item 10. Additional Information — B. Memorandum and Articles of Association — Comparison of Shareholders’ Rights.”

23

     SEBI and the various Indian stock exchanges are responsible for improving and setting standards for disclosure and other regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters. Nevertheless, there may be less information made publicly available in respect of Indian companies than is regularly made available by public companies in the United States as a result of differences between the level of regulation and monitoring of the Indian securities markets and of the transparency of the activities of investors and brokers in India compared to the United States. Similarly, our disclosure obligations under the rules of the NSE and BSE on which our equity shares are listed may be less than the disclosure obligations of public companies on the NYSE.

Risks Relating to our ADSs

Substantial future sales of our equity shares or ADSs in the public market, or the perception of such sales, could cause the market price of our ADSs to fall.

     If our existing shareholders sell a substantial number of our equity shares in the open market, or if there is a perception that such sale or distribution could occur, the market price of our equity shares and ADSs could be adversely affected. These sales, or the perception that these sales could occur, also might make it more difficult for us to sell securities in the future at a time or at a price that we deem appropriate or pay for acquisitions using our equity securities.

     As of June 30, 2009, we had 708,494,411 equity shares outstanding, including 66,802,214 equity shares represented by 66,802,214 ADSs. Of our outstanding equity shares, 708,494,411 were freely tradable on the NSE and BSE as of June 30, 2009. Furthermore, Vedanta, through Twin Star and MALCO, continued to have effective control over 436,919,733 of our outstanding equity shares, which represented 61.7% of our outstanding share capital as of June 30, 2009.

Fluctuations in the exchange rate between the Indian Rupee and the US dollar could have a material adverse effect on the value of our ADSs, independent of our actual operating results.

     The price of the ADSs is quoted in dollars. Our equity shares are quoted in Indian Rupees on the NSE and BSE. Any dividends in respect of our equity shares will be paid in Indian Rupees and subsequently converted into US dollars for distribution to ADS holders.

     Currency exchange rate fluctuations will affect the dollar equivalent of the Indian Rupee price of our equity shares on the NSE and BSE and, as a result, the prices of our ADSs, as well as the US dollar value of the proceeds a holder would receive upon the sale in India of any of our equity shares withdrawn from the depositary under the deposit agreement and the US dollar value of any cash dividends we pay on our equity shares. Holders may not be able to convert Indian Rupee proceeds into US dollars or any other currency, and there is no guarantee of the rate at which any such conversion will occur, if at all. Currency exchange rate fluctuations will also affect the value received by ADS holders from any dividends paid by us in respect of our equity shares. Holders of our ADSs will bear all of the risks with respect to a decline in the value of the Indian Rupee as compared to the US dollar, which would adversely affect the price of our ADSs and the US dollar value of any dividends we pay that are received by ADS holders.

Transfers of the underlying shares by persons resident outside India to residents of India are subject to certain pricing norms.

     Under current Indian regulations, subject to certain conditions, no prior regulatory approval is required for the sale of any equity shares, including any equity shares withdrawn from the ADS facilities, by a person resident outside India to a resident of India. However, certain reporting requirements would need to be complied with by the parties to the sale transaction. Also, the prior approval of the RBI would be required in the event of a sale of the equity shares underlying our ADSs by a non-resident investor to a resident investor if the sale price is greater than the maximum price set by the RBI under Indian foreign exchange laws. Any such approval required from the RBI or any other government agency may not be obtained on terms favorable to a non-resident investor, or at all.

24

Holders of ADSs may be restricted in their ability to exercise preemptive rights under Indian law and thereby may suffer future dilution of their ownership positions.

     Under the Indian Companies Act, 1956, or the Indian Companies Act, the holders of equity shares of a company incorporated in India have a preemptive right to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares by the company, unless the preemptive rights have been waived by adopting a special resolution passed by 75% of the shareholders present and voting at a general meeting. Holders of ADSs may be unable to exercise preemptive rights for the underlying equity shares of the ADSs unless a registration statement under the Securities Act of 1933, as amended, or the Securities Act, is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to prepare and file such a registration statement and our decision to do so will depend on the costs and potential liabilities associated with any such registration statement, as well as any other factors we consider appropriate at the time. No assurance can be given that we would file a registration statement under these circumstances. If we issue any such securities in the future, such securities may be issued to the depositary, which may sell the securities for the benefit of the holders of the ADSs. The value the depositary would receive from the sale of such securities cannot be predicted. To the extent that holders of ADSs are unable to exercise preemptive rights granted in respect of our equity shares represented by their ADSs, their proportional ownership interests in us would be diluted.

We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax consequences to US Holders.

A non-United States corporation will be considered a passive foreign investment company, or PFIC, for any taxable year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the total value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets, including cash, that produce or are held for the production of passive income, or passive assets. For this purpose, the total value of our assets generally will be determined by reference to the market price of our equity shares and ADSs. Based on the market prices of our equity shares and ADSs and the composition of our income and assets, including goodwill, we do not believe we were a PFIC for United States federal income tax purposes for our taxable year ended March 31, 2009. However, the application of the asset test described above is subject to ambiguity in several respects and, therefore, the US Internal Revenue Service may assert that, contrary to our belief, due to the decrease in our share value and the amount of cash and other passive assets we held during the taxable year ended March 31, 2009, at least 50% of the total value of our assets was attributable to assets producing passive income and, as a result, we were a PFIC for such taxable year. In addition, we must make a separate determination each taxable year as to whether we are a PFIC (after the close of each taxable year). A decrease in the market value of our equity shares and ADSs and/or an increase in cash or other passive assets (see “Item 5. Operating and Financial Review and Prospects — Recent Developments — Raising of Additional Capital”) would increase the relative percentage of our passive assets. Accordingly, we cannot assure you that we will not be a PFIC for the taxable year that will end on March 31, 2010 or any future taxable year. If we were a PFIC for any taxable year during which a US Holder (as defined under “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation”) holds an ADS or an equity share, certain adverse United States federal income tax consequences could apply to the US Holder. See “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation — Passive Foreign Investment Company.” US Holders are urged to consult their own tax advisors regarding the potential application of the PFIC rules to their ownership of ADSs or equity shares and the availability and advisability of any elections.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of our Company

     Sterlite Industries (India) Limited was incorporated on September 8, 1975 under the laws of India and maintains a registered office at SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin, State of Tamil Nadu 628 002, India. Our principal executive office is located at Vedanta, 75 Nehru Road, Vile Parle (East), Mumbai, Maharashtra 400 099, India and the telephone number for this office is (91-22) 6646-1000. Our website address is www.sterlite-industries.com. Information contained on our website, or the website of any of our subsidiaries or affiliates, including Vedanta and other members of the Vedanta group, is not a part of this annual report. Our agent for service in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

     We were acquired by Mr. Anil Agarwal and his family in 1979 and have grown from a small wire and cable manufacturing company to one of India’s leading non-ferrous metals and mining companies. In 1988, we completed an initial public offering of our shares in India to finance in part our first polythene insulated jelly filled copper telephone cables plant. As part of our strategy to concentrate on businesses with high growth potential, we discontinued production of polyvinyl chloride power and control cables and enamelled copper wires in 1990 and in 1991 commissioned a continuous cast copper rod plant.

     In 1997, in order to obtain captive sources of copper for our copper rod plant, we commissioned the first privately developed copper smelter in India at Tuticorin.

     In 2000, we acquired CMT, which owns the Mt. Lyell copper mine in Australia. CMT had been acquired by Monte Cello BV, or Monte Cello, in 1999, and we acquired it through our acquisition of Monte Cello from a subsidiary of Twin Star in 2000.

25

     In July 2000, our telecommunications cables and optical fiber business was spun-off into a new company, Sterlite Technologies Limited, or STL. The Agarwal family has substantial interests in STL. STL is not a part of our group of companies.

     We acquired our aluminum business through our acquisition of a 51.0% interest in BALCO from the Government of India on March 2, 2001. On March 19, 2004, we gave notice to exercise our call option to purchase the Government of India’s remaining 49.0% shareholding in BALCO at a price determined in accordance with the shareholders’ agreement entered into by us and the Government of India. The exercise of this option has been contested by the Government of India. Further, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “— B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information.

     On April 11, 2002, we acquired through SOVL a 26.0% interest in HZL from the Government of India and a further 20.0% interest through an open market offer. On November 12, 2003, we acquired through SOVL a further 18.9% interest in HZL following the exercise of a call option granted by the Government of India, taking our interest in HZL to 64.9%. In addition, SOVL has a call option, which became exercisable beginning on April 11, 2007, to acquire the Government of India’s remaining ownership interest in HZL.

     On October 3, 2006, we acquired 100% of Sterlite Energy from Twin Star Infrastructure Limited, Mr. Anil Agarwal and Mr. Dwarka Prasad Agarwal, one of our directors until March 31, 2009, for a total consideration of Rs. 4.9 million ($0.1 million). Sterlite Energy is our subsidiary through which we are setting up a thermal coal-based 2,400 MW power facility in the State of Orissa.

     In June 2007, we completed an initial public offering of our shares in the form of ADSs in the US and our ADSs were listed on the NYSE. Vedanta’s ownership interest, held through its subsidiaries, decreased to 59.9%.

     On March 6, 2009, we announced that we had signed an agreement to purchase substantially all the operating assets of Asarco. We had previously signed an agreement to acquire substantially all the operating assets of Asarco on May 30, 2008, following which in October 2008, due to the financial turmoil, the steep fall in copper prices and adverse global economic conditions, we and Asarco entered into discussions to renegotiate the prior agreement. The current agreement to acquire Asarco follows such renegotiation of the prior agreement. On June 12, 2009, we agreed to increase the purchase consideration from $1.7 billion to $1.87 billion, mostly related to an expected increase in working capital on the closing date. The purchase consideration consists of a cash payment of $1.1 billion on closing and a senior secured non-interest promissory note for $770 million, payable over a period of nine years. This agreement remains subject to approval by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

     Our equity shares are listed and traded on the NSE and BSE. Our equity shares have been included in S&P CNX Nifty, a diversified index of 50 Indian stocks listed on the NSE, since April 5, 2007 and have been included in BSE Sensex, a diversified index of 30 Indian stocks listed on the BSE, since July 28, 2008. Our ADSs are quoted on the NYSE (NYSE: SLT).

     We are a majority-owned and controlled subsidiary of Vedanta, a public company in the United Kingdom listed on the London Stock Exchange plc, or LSE, and included in the FTSE 100 Index. Vedanta is a leading metals and mining company with operations in copper, zinc and aluminum located primarily in India, though with a copper business in Zambia. We and Vedanta share a common management team with a common strategic vision, and we form the core of Vedanta’s operations.

     Vedanta is 59.4%-owned by Volcan, a holding company 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that seeks to enable Vedanta to carry on its business independently of the Volcan Parties. See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Parties — Vedanta.”

     Our capital expenditures spent in fiscal 2007, 2008 and 2009 were $588.4 million, $635.4 million and $808.1 million, respectively. See “Item 5. Operating and Financial Review and Prospects — Off-Balance Sheet Arrangements — Capital Expenditures and Commitments” for more information.

26

B. Business Overview

OUR INDUSTRY

     Unless otherwise indicated, all data relating to the copper, zinc and aluminum industries contained in this annual report is primarily derived from Brook Hunt & Associates Ltd, or Brook Hunt, and other industry sources.

     Unless otherwise indicated, all financial and statistical data relating to the power industry in India in the following discussion is derived from the Ministry of Power’s Annual Report (2005-06, 2006-07 and 2007-08), the Central Electricity Authority of India’s General Review (2004-05 and 2007-08), and the Ministry of Power website. The data may have been re-classified for the purpose of presentation. Unless otherwise indicated, the data presented excludes captive power generation capacity and captive power generation. The term “units” as used herein refers to kilowatt-hours (kWh).

Copper

Global Copper Market

     Background

     Copper is a non-magnetic, reddish-colored metal with a high electrical and thermal conductivity (among pure metals at room temperature, only silver has a higher electrical conductivity), high tensile strength and resistance to corrosion.

     Copper consumption has three main product groups: copper wire rods, copper alloy products and other copper products. The predominant intermediate use of copper has been the production of copper wire rods, which accounted for approximately half of total copper production in 2007. Copper rods are used in wire and cable products such as energy cables, building wires and magnet wires. Copper alloy products were the next largest users of copper in 2007, followed by other copper products, which include non-electrical applications such as tubes for air conditioners and refrigerators, foils for printed circuit boards and other industrial and consumer applications.

     In the global copper consumer market in 2008, the construction segment accounted for 35% of copper consumption, followed by the electronic products segment (32%), the industrial machinery segment (12%), the transportation equipment segment (11%) and the consumer products segment (10%).

     The copper industry has three broad categories of producers:

• Miners, which mine the copper ore and produce copper concentrate;

• Custom smelters, which smelt and refine copper concentrate to produce copper metal; and

• Integrated producers, which mine copper ore from captive mines and produce copper metal either through smelting and refining or through leaching.

27

     Refined Copper Consumption

     Global copper consumption increased from 17.5 million tons in 2006 to 17.9 million tons in 2007, then increased to 18.0 million tons globally in 2008. The 2.6% increase from 2006 to 2007 was in part due to a recovery in Chinese demand which reflected re-stocking throughout the whole supply chain following de-stocking in 2006, and the country’s ongoing urbanization and infrastructure development as well as the continual demand for copper intensive products on the back of rising incomes. These last two factors were also responsible for supporting double digit growth in Indian demand during 2007. This consumption growth was slightly offset by a decline in demand growth in Western Europe by 6.7% and Japanese consumption by 3.0% due to a general slowdown in these economies. Consumption increased marginally to 18.0 million tons in 2008. In 2008, renewed demand in China and India, increased by 9.0% and 5.2%, respectively, was partially offset by a decline in demand in Western Europe and Japan, which decreased by 6.8% and 5.4 %, respectively, due to a slowdown in these economies.

     Asia (including the Middle East), Western Europe and North America together accounted for 86% of global copper consumption in 2008. Europe and North America accounted for over 60% of copper consumption during the 1980s, but strong growth in Asia, led by China and Japan, has since significantly changed global consumption patterns. With a compound annual growth rate of 7.2% between 2003 and 2007, Asia has been the fastest growing copper market in the world. Strong growth in Asia (including the Middle East), Russia and the Commonwealth of Independent States, or CIS, and Eastern European countries is expected from 2011 onwards following a recovery in demand from the current slowdown.

     The following table sets forth the regional consumption pattern of refined copper from 2005 to 2008:

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

Notes:

(1)	Rest of Asia is Asia excluding China and India, but including the Middle East.
(2)	Central and Eastern Europe.

Source: Brook Hunt Copper Metal Service Report, May 2009.

     Copper Supply

     Global mine production is the principal source of copper, with scrap recycling accounting for only a minor part of the aggregate supplies. The five largest copper mining countries were Chile (34.4%), the United States (8.6%), Peru (7.9%), China (6.1%) and Australia (5.7%), which together accounted for approximately 63% of the total copper mined worldwide in 2008. Less than 50% of global copper mine production is integrated, with the remainder sold in the custom smelting market. The five largest copper mining companies in 2008 were Corporación Nacional del Cobre, Chile, or Codelco, Freeport-McMoRan, BHP Billiton Limited, or BHP Billiton, Xstrata AG, or Xstrata, and Rio Tinto Alcan Ltd, or Rio Tinto.

     The major smelting locations include China (20.4%), Japan (10.7%), Chile (10.6%), Russia (5.2%) and India (4.8%), which together accounted for 51.7% of global production and thus are major importers of copper concentrate in 2008. The five largest refined copper producing countries were China (20.6%), Chile (16.7%), Japan (8.4%), the United States (7.1%) and Russia (4.8%), which together accounted for about 57.4% of the total copper produced worldwide in 2008. The five largest copper smelting companies in 2008 were Codelco, Xstrata, Aurubis AG, Nippon Mining and Metals Co. Ltd and Freeport-McMoran, while the five largest copper refining companies in 2008 were Codelco, Freeport-McMoran, Aurubis AG, Xstrata, and Nippon Mining Metals Co. Ltd.

     Global refined copper production increased from 17.3 million tons in 2006 to 18.0 million tons in 2007, an increase of 4.1%, and to 18.4 million tons in 2008, an increase of 2.0% over 2007. There was a production surplus over consumption during 2007 and 2008.

28

     The following table sets forth the regional production pattern of refined copper from 2005 to 2008:

	Year Ended December 31,
	2005					2006					2007					2008
Region	Volume		%			Volume		%			Volume		%			Volume		%
	(thousands of tons, except percentages)
Latin America		3,985		24.0	%		3,906		22.6	%		3,953		22.0	%		4,070		22.2	%
Rest of Asia(1)		2,738		16.5			2,953		17.1			2,995		16.6			2,927		15.9
China		2,600		15.6			3,003		17.4			3,497		19.4			3,779		20.6
CEE(2) and CIS		2,166		13.1			2,173		12.6			2,123		11.8			2,087		11.4
North America		1,775		10.7			1,758		10.2			1,786		9.9			1,733		9.4
Western Europe		1,841		11.1			1,877		10.9			1,846		10.3			1,945		10.6
Africa		528		3.2			567		3.3			638		3.5			645		3.5
Australia		461		2.8			430		2.5			443		2.5			502		2.7
India		499		3.0			629		3.6			722		4.0			683		3.7
Total		16,593		100.0	%		17,296		100.0	%		18,003		100.0	%		18,371		100.0

Notes:

(1)	Rest of Asia is Asia excluding China and India, but including the Middle East.
(2)	Central and Eastern Europe.

Source: Brook Hunt Copper Metal Service Report, May 2009.

     Pricing

     Copper is traded on the LME. Although prices are determined by LME price movements, producers normally charge a regional premium that is market driven. The significant price increase in 2006 resulted from healthy demand growth and supply, due to limited ore availability and labor disruptions at several of the large mines. Strong imports into China due to increased domestic consumption in 2007 reduced international inventories and saw the price trade above $7,000 per ton for most of the second and third quarters of 2007. The same trend continued in the first nine months of 2008, but in the fourth quarter of 2008 the price decreased to below $4,000 per ton mainly due to the turmoil in the financial markets and the fall in global demand. The following table sets forth the movement in copper prices from 1999 to 2008:

	Year Ended December 31,
	1999		2000		2001			2002			2003		2004		2005		2006		2007		2008
	($ per ton, except percentages)
LME Cash Price($)		1,573		1,814		1,577			1,557			1,779		2,869		3,683		6,729		7,124		6,966
% Change		—		15.3		(13.1	)		(1.3	)		14.3		61.2		28.4		82.7		5.9		(2.2	)

Source: LME.

     The LME copper cash price was $4,035 per ton as of March 31, 2009 and $5,108 per ton as of June 30, 2009.

     For custom smelters, TcRc rates have a significant impact on profitability as prices for copper concentrate are equal to the LME price net of TcRc and prices of finished copper products are equal to the LME price plus a premium. A significant proportion of concentrates are sold under frame contracts and TcRc is negotiated annually. The main aspects of the contract that are subject to negotiation are the TcRcs that are expressed in US dollars per dry metric ton, or dmt, of concentrate (the Tc) and in cents per pound of payable copper (the Rc) and, until recently (under long-term contracts) price participation. The TcRc rates are influenced by the demand-supply situation in the concentrate market, prevailing and forecasted LME prices and mining and freight costs.

     Since 2006, TcRcs have fallen significantly, reflecting a continuing tightening in the physical concentrate demand/supply balance. The annual negotiations for copper concentrate TcRc charges (excluding price participation, if any) between the Japanese smelters and BHP Billiton (which traditionally set the market benchmark) settled at $45.00 per ton and $0.05 per pound in 2008, a significant drop from the $60.00 per ton and $0.06 per pound terms agreed for 2007.

     The following table sets forth the movement in copper TcRc from 1999 to 2008:

	Year Ended December 31,
	1999		2000		2001		2002			2003			2004			2005		2006		2007			2008
	(US cents per lb, except percentages)
TcRc(1)		15.3		15.9		17.4		15.5			13.9			13.0			29.6		45.9		15.4			11.5
% Change		—		3.9		9.4		(10.9	)		(10.3	)		(6.5	)		127.7		55.1		(66.4	)		(24.7	)

Note:

(1) Includes price participation, if any.

Source: Brook Hunt Copper Metal Service Report.

     The TcRc for long-term settlements for the Japanese smelters in 2009 is expected to be 19.3 ¢/lb, according to Brook Hunt.

29

Indian Copper Market

     Background

     The Indian copper industry consists primarily of custom smelters as there are limited copper deposits in the country. The available deposits are owned by the government-owned Hindustan Copper, which was the only producer in India until 1995. Since then, the industry has transformed significantly with our entry and the entry of Birla Copper, now owned by Hindalco. Hindalco had a primary market share by production volume of 48.0% and we had a primary market share by production volume of 45.7% in fiscal 2009 according to the International Copper Promotion Council, India, or ICPCI, with the remainder of the primary copper market served by Hindustan Copper (5.8%) and SWIL Limited (0.6%). Primary copper refining output in India has grown at a compound annual growth rate of 11.0% from 499,000 tons in 2005 to 683,000 tons in 2008.

     Consumption Pattern

     From 2005 to 2008, consumption in the Indian primary copper market increased at a compound annual growth rate of 14.3%. The consumption by the electronics and power segments witnessed growth at a compound annual growth rate of 3.3% during fiscal years 2002 to 2008. The total domestic demand for primary copper is estimated to have increased from 415,000 tons in 2005 to 598,000 tons in 2008, a compound annual growth rate of 12.9% over three years. In addition, the demand for copper in India is expected to grow from 598,000 tons in 2008 to 1.2 million tons in 2020, representing a compound annual growth rate of 5.8%. This compares to world demand for copper, which Brook Hunt estimates will grow from 18.0 million tons in 2008 to 24.7 million tons in 2020, representing a compound annual growth rate of 2.7%, according to Brook Hunt.

     Pricing and Tariff

     Indian copper prices track global prices as the metal is priced on the basis of landed costs of imported metal. Copper imports in India are currently subject to a customs duty of 5.0% and an additional surcharge of 3.0% of the customs duty. The customs duty has been reduced in a series of steps from 25.0% in 2003 to 5.0% in January 2007. Indian producers are also able to charge a regional premium, which is market driven.

Market Outlook

     Global Copper Outlook

     The rapidly developing Asian market is expected to drive copper consumption growth. The countries from Asia that are contributing to this rapid growth are primarily China and India. Copper demand is expected to continue to be dominated by its use in electric wires and cables. Global refined consumption of copper is expected to decrease from approximately 18.0 million tons in 2008 to 17.4 million tons in 2009, a decrease of 3.2%.

     Anticipated mine production capacity expansions are barely sufficient to match the forecast smelter production and the world is expected to remain in a copper concentrate supply deficit for 2009. China is rapidly expanding its copper smelting and refining capacities. However, its domestic mining supplies fall well short of its smelter demands and thus China will continue to remain a major importer of copper concentrate. Apart from China, major smelting and refining capacity expansions are expected in India, Zambia, Kazakhstan, Congo DR, Brazil, Malaysia and Bulgaria.

     To meet the forecast copper demand, copper smelting capacity is expected to grow until 2013. The major projects expected to contribute to copper smelting capacity include Olympic Dam (Australia), Ventanas (Chile), Oyu Tolgoi (Mongolia), Chagres Expansion (Chile) and El Sewedy (Egypt).

     The catalyst for any meaningful recovery in long-term TcRcs will be a rationalization, or at least restructuring, of the custom smelting industry. Until then, TcRcs are likely to remain well below their previous long-term average.

     Indian Copper Outlook

     The Indian market outlook is expected to remain positive, with strong growth in key user segments such as power, construction and engineering. Domestic consumption is expected to marginally decrease by 2% from 2008 to 2009 and then increase by 4.5% from

30

2009 to 2010, primarily driven by rising living standards and the development of the domestic power sector. Growing industrialization and regulatory reforms are attracting huge investments to the power sector and the transmission and distribution segments. Increased residential and infrastructure development is also expected to generate demand for copper. Growth in domestic copper demand is expected to be lower than the historical averages, largely on account of negative growth in the telecom cable segment which continues to suffer from increasing penetration of the cellular telecommunication industry and low prices of optic fibers in the international markets.

Zinc

Global Zinc Market

     Background

     Zinc is a moderately reactive bluish-white metal that tarnishes in moist air, producing a layer of carbonate. It reacts with acids and alkalis and other non-metals. Zinc is the fourth most common metal in worldwide annual production, trailing only iron, aluminum and copper in worldwide annual production.

     The principal use for zinc in the western world is galvanizing, which involves coating steel with zinc to guard against corrosion. Galvanizing, including sheet, tube, wire and general galvanizing, accounted for approximately 50% of world consumption of zinc in 2008. The main end-use industries for galvanized steel products are the automobile manufacturing, domestic appliance manufacturing and construction industries, and it is these industries on which zinc consumption ultimately depends. Other major uses for zinc include brass semis and castings (17%), die-casting alloys (17%) and oxides and chemicals (10%). Alloys are principally used in toys, vehicles and hardware.

     The zinc industry has three broad categories of producers:

• Miners, which mine the lead-zinc ore and produce zinc concentrate for sale to smelters, and usually receive payment for 85% of the zinc contained in the concentrate less a Tc;

• Smelters, which purchase concentrate and sell refined metal, with some smelters also having some integrated production downstream; and

• Integrated producers, which are involved in both the mining and smelting of zinc.

     Most integrated producers are only partially integrated and therefore need to either buy or sell some concentrate. Only approximately one-third of total western world zinc production can be attributed to integrated producers.

     Zinc Consumption

     Global zinc consumption increased from 11.2 million tons in 2006 to 11.4 million tons in 2007, an increase of 2.5%, and then decreased by 2.0% to 11.2 million tons in 2008, according to Brook Hunt Zinc Metal Services Report, March 2009. The decrease in 2008 was a result of the slowdown of the world economy. The key growth driver is demand from the steel galvanizing market. In both absolute and percentage terms, galvanizing is forecast to be the fastest growing end use with the principal applications being found in the construction and automotive industries. By 2020, it is expected to account for 55% of global zinc usage.

     Asia, Europe and North America together accounted for approximately 89.9% of global zinc consumption in 2008. With a compound annual growth rate of 5.2% between 2005 and 2008, Asia has been the fastest growing zinc market in the world. Driven by continuing strong growth in China and other regional markets, strong growth in Asia is expected to continue over the next few years.

31

     The following table sets forth the regional consumption pattern of refined zinc from 2005 to 2008:

	Year Ended December 31,
	2005					2006					2007					2008
Region	Volume		%			Volume		%			Volume		%			Volume		%
	(thousands of tons, except percentages)
Europe		2,716		25.0	%		2,843		25.5	%		2,894		25.2	%		2,592		23.1	%
China		2,853		26.9			3,166		28.4			3,531		30.8			3,795		33.9
India		388		3.7			428		3.8			469		4.1			479		4.3
Rest of Asia(1)		2,219		20.9			2,190		19.6			2,149		18.7			2,075		18.5
North America		1,365		12.9			1,409		12.6			1,275		11.1			1,131		10.1
Latin America		623		5.9			647		5.8			673		5.9			671		6.0
Oceania		262		2.5			273		2.4			284		2.5			284		2.5
Africa		185		1.7			193		1.7			198		1.7			178		1.6
Total		10,611		100.0	%		11,149		100.0	%		11,473		100.0	%		11,205		100.0	%

Note:

(1) Rest of Asia is Asia excluding China and India, but including the Middle East.

Source: Brook Hunt Zinc Metal Services Report, March 2009

     Zinc Supply

     There are zinc mining operations in approximately 50 countries. The five largest zinc mining countries are China (26.9%), Peru (13.5%), Australia (13.1%), the United States (6.6%) and Canada (6.5%), which together accounted for 66.6% of total zinc mined worldwide in 2008. India accounted for about 5.3% of the global mine output in 2008. Mine production has fallen in North America in the last few years as a result of mine closures, which has resulted principally from reserve exhaustion and also from economic pressures. The five largest zinc mining companies in 2008 were Xstrata (9.5%), Teck Cominco Limited (6.3%), our majority-owned subsidiary, HZL (5.7%), Oz Minerals Limited (5.6%) and Glencore International AG (3.7%).

     Australia and Peru are the largest net exporters, and Peru is the world’s largest supplier of zinc concentrate. Much of this is supplied through traders rather than sold directly to smelters. The largest importing region is Western Europe, followed by China, South Korea and Japan. The main custom smelters are located in these regions.

     Zinc smelting is less geographically concentrated than zinc mining. With a production of 3.9 million tons of zinc in 2008, China is the largest single zinc-producing country in the world. The other major zinc producing countries and regions include Europe and Canada, which along with China account for approximately 65.0% of total global zinc production. The four largest zinc producing companies in 2008 were Nyrstar NV, or Nyrstar (7.9%), Korea Zinc Company Limited (7.3%), Xstrata (6.4%) and HZL (5.4%), which together accounted for about 27.0% of the total zinc produced worldwide in 2008.

     The zinc manufacturing industry continues to exhibit a degree of fragmentation. The recent trend towards industry consolidation is expected to continue in the current favorable pricing environment, as evidenced by the recent merger of the smelting assets of Umicore SA and Zinifex Limited to form Nyrstar, the acquisition of Falconbridge Ltd. by Xstrata and the potential acquisition of Oz Minerals Limited by China Minmetals Corporation.

     The following table sets forth the regional production pattern of refined zinc from 2005 to 2008:

	Year Ended December 31,
	2005					2006					2007					2008
Region	Volume		%			Volume		%			Volume		%			Volume		%
						(thousands of tons, except percentages)
Europe		2,538		25.1	%		2,436		23.3	%		2,474		22.2	%		2,454		21.3	%
China		2,761		27.4			3,163		30.2			3,728		33.4			3,909		34.0
India		302		3.0			410		3.9			444		4.0			595		5.2
Rest of Asia(1)		1,903		18.9			1,907		18.2			1,893		17.0			1,944		16.9
North America		1,056		10.5			1,079		10.3			1,057		9.5			1,018		8.8
Latin America		807		8.0			766		7.3			778		7.0			802		7.0
Australia		456		4.5			461		4.4			501		4.5			506		4.4
Africa		273		2.7			256		2.4			286		2.6			280		2.4
Total		10,095		100.0	%		10,475		100.0	%		11,162		100.0	%		11,541		100.0	%

Note:

(1) Rest of Asia is Asia excluding China and India, but including the Middle East.

Source: Brook Hunt Zinc Metal Services Report, March 2009.

32

     Pricing

     Zinc is traded on the LME. Although prices are determined by LME price movements, producers normally charge a regional premium that is market driven. A surge of large mine start-ups in the period from 1999 to 2000 led to substantial global zinc supply surpluses and a build-up of commercial stocks from 2002 to 2003. As a result, the refined zinc price slumped, reaching a low of $779 per ton in 2002. The most vulnerable mines closed down during this period. However, China’s consumption growth increased rapidly and in 2004, refined zinc consumption surpassed production. With strong consumption growth and rapidly falling commercial stocks, zinc prices appreciated strongly in 2004 and 2005. A fundamentally strong market in 2006, also fueled by speculation as base metals, including zinc, were increasingly traded like financial instruments, saw a market deficit of 659,000 tons and prices reaching a peak of $4,620 per ton in November 2006.

     Zinc prices declined in 2007 and continued to decline during 2008 as the metal market remained in surplus throughout 2008. The LME cash price for zinc in October 2008 averaged $1,301 per ton, an approximate 70% decline in value from its peak reached in 2006. A wave of zinc mine closings and cutbacks (particularly in Australia, Canada, and the United States) began mid-2008 as prices began to fall below operating costs, and a few smelters announced production cutbacks towards the end of the year in order to prevent an accumulation of stocks. Mines in New York and Tennessee closed in 2008 because of low zinc prices.

     The following table sets forth the movement in zinc prices from 1999 to 2008:

	Year Ended December 31,
Zinc Prices	1999		2000		2001			2002			2003		2004		2005		2006		2007			2008
	($ per ton, except percentages)
LME Cash Price		1,076		1,128		885			778			827		1,047		1,381		3,274		3,240			1,874
% Change		5.1		4.8		(21.5	)		(12.1	)		6.3		26.6		31.9		137.0		(1.0	)		(42.2	)

Source: LME.

     The LME zinc cash price was $1,301 per ton as of March 31, 2009 and $1,554 per ton as of June 30, 2009. This reflects a modest surplus in the concentrate market in 2008 due to the significant investments in new mine and smelter capacities in preceding years and a fall in demand due to the global economic slowdown. The marginal cash cost of production, which represents the cost of production at the 85^th percentile of worldwide production, for 2009 is expected to be $1,232 per ton of zinc, according to Brook Hunt.

Indian Zinc Market

     Background

     The Indian zinc industry has only two producers. The leading producer is our majority-owned subsidiary, HZL, which had a 79.0% market share by production volume in India in fiscal 2009, according to the India Lead Zinc Development Association, or ILZDA. HZL has a refining capacity of 669,000 tpa. The other producer is Binani Zinc Limited, or Binani Zinc, which has a refining capacity of 38,000 tpa.

     Consumption Pattern

     Consumption of refined zinc in India reached 479,000 tons in 2008, a marginal increase of 2.0% from the previous year. The principal use of zinc in the Indian market is in the galvanizing sector, which currently accounts for an estimated 70% of total consumption. Galvanization is primarily used for tube, sheet and structural products. The other significant end-user of zinc in India is the alloys sector. This contrasts with western world consumption trends, where galvanizing, although still the most common use of zinc, is relatively less important and increased demand has been seen for die-casting alloys, and reflects the emphasis of the Government of India’s current five-year economic program on infrastructure. With expected infrastructure development such as roads, irrigation, construction, oil and gas and ports, there is expected to be increased demand for steel, thus providing significant opportunities for zinc in India.

     According to Brook Hunt, the demand for zinc in India is expected to grow from 479,000 tons in 2008 to 1.0 million tons in 2020, representing a compound annual growth rate of 6.5%. This compares to world demand for zinc, which Brook Hunt estimates will grow from 11.2 million tons in 2008 to 16.0 million tons in 2020, representing a compound annual growth rate of 3.0%.

     Pricing and Tariff

     Indian zinc prices track global prices as the metal is priced on the basis of the landed costs of imported metal. Zinc imports in India are subject to a basic customs duty. The customs duty was reduced in a series of steps from 25.0% in 2003 to 0.0% in 2008, and was then reintroduced for periods on and after January 3, 2009 at the rate of 5.0%. Indian producers are also able to charge a regional premium, which is market driven.

33

Market Outlook

     Global Zinc Outlook

     According to Brook Hunt, the combination of stronger economic growth and restocking will result in zinc consumption growth increasing to an average of 6.5% per annum in 2011 and 2012. This increase in consumption will compensate for the current downturn and result in global zinc consumption growing at an average rate 1.5% per annum over the period from 2008 to 2012. The rate of consumption growth is forecast to decrease in subsequent years with global consumption forecast to contract by 1.6% in 2019, the year in which Brook Hunt also forecasts the next global economic downturn. For the period from 2012 to 2020 consumption growth is forecast to average at 3.7% per annum. As a result of these growth rates, global zinc consumption is forecast to reach 16.0 million tons in 2020, an increase of 4.6 million tons from 2007.

     In 2008, several mining companies were committed to mining projects that the previously strong resources sector and high metals prices made feasible, but the global economic crisis and concentrate supply shortages caused many of these mining companies to shut down or reduce the scale of their operations instead. Smelter expansions have also continued worldwide, but major smelter expansions and construction of new smelters have been deferred, except in China and India. Global zinc production is expected to decrease from 11.5 million tons in 2008 to 10.7 million tons in 2010, as smelters exercise producer discipline and match output to market demand.

     Indian Zinc Outlook

     The Indian market outlook is expected to remain positive, with strong growth in key user segments such as sheet galvanizing and zinc alloys for the construction segment. Domestic consumption increased by 2.0% to 479,000 tons in 2008 and consumption growth for the period from 2008 to 2010 is forecast to average 7.3% per annum.

Aluminum

Global Aluminum Market

     Background

     Aluminum is lightweight in relation to its strength, durability and resistance to corrosion. It can be extruded, rolled, formed and painted for a wide variety of uses. According to Brook Hunt, four end-use sectors accounted for approximately 77% of aluminum consumption globally in 2008: construction, transport, packaging and electricals. The remaining 23% is accounted for by a wide variety of applications including machinery and equipment and consumer durables. Aluminum is also increasingly substituted for steel in the automobile industry to reduce weight and improve fuel economy.

     The raw material from which aluminum is produced is bauxite, which is a very common mineral found mainly in tropical regions. It normally occurs close to the surface and can be mined by open-pit methods. The bauxite is refined into alumina. Typically, bauxite ranges from 35% to 60% contained alumina. There are several different types of bauxite, and alumina refineries are usually designed to treat a specific type. The majority of alumina refineries are therefore integrated with mines.

     Aluminum Consumption

     According to the Brook Hunt Aluminium Metal Service Report, May 2009, world primary aluminum consumption increased from 34.4 million tons in 2006 to 38.0 million tons in 2007, an increase of 10.4%, and then remained at this level in 2008. This growth was primarily due to increased demand in China, which between 2005 and 2008 saw demand increase at a compound annual growth rate of 22.0%, compared to a a decline of 1.2% for world demand excluding China. Demand in North America rose just 0.6% between 2005 and 2006 and then decreased by 7.2% from 2006 to 2007 while in Western Europe the compound annual growth rate in demand between 2005 and 2007 was 4.9%, in both cases reflecting the impact of a slowing economy in these regions. From 2007 to 2008, primary aluminum consumption in North America and Western Europe decreased by 8.2% and 3.9%, respectively, reflecting the effects of the global economic crisis.

34

     The following table sets forth the regional consumption of primary aluminum from 2005 to 2008:

	Year Ended December 31,
	2005					2006					2007					2008
Region	Volume		%			Volume		%			Volume		%			Volume		%
	(thousands of tons, except percentages)
North America		7,175		22.5	%		7,219		20.9	%		6,698		17.6	%		6,152		16.2	%
Western Europe		6,512		20.4			6,797		19.8			7,160		18.9			6,883		18.1
China		7,083		22.2			8,790		25.6			12,300		32.4			12,854		33.9
Rest of Asia(1)		6,162		19.3			6,299		18.3			6,260		16.5			6,142		16.2
CEE(2)		1,800		5.6			1,972		5.7			1,918		5.0			1,840		4.8
Latin America		1,338		4.2			1,364		4.0			1,502		4.0			1,681		4.4
India		958		3.0			1,080		3.1			1,207		3.2			1,312		3.5
Oceania		451		1.4			422		1.2			444		1.2			461		1.2
Africa		426		1.3			466		1.3			492		1.3			641		1.7
Total		31,905		100.0	%		34,408		100.0	%		37,981		100.0	%		37,966		100.0	%

Notes:
(1)	Rest of Asia is Asia excluding China and India, but including the Middle East.
(2)	Central and Eastern Europe.
Source: Brook Hunt Aluminium Metal Service Report, May 2009.

     Aluminum Supply

     Aluminum production has become increasingly more concentrated in recent years, with the leading ten producers accounting for 53.8% of world primary aluminum production in 2008 as reported by Brook Hunt. According to Brook Hunt, the five largest primary aluminum producing companies in 2008 were United Company RUSAL Ltd., or UC RUSAL (11.2%), Rio Tinto Alcan (10.2%), Alcoa Inc., or Alcoa (10.1%), Aluminium Corporation of China Limited, or CHALCO (7.0%) and Hydro Aluminium (4.1%), which together accounted for approximately 42.6% of the total refined aluminum produced worldwide.

     Global production of primary aluminum increased from 34.0 million tons in 2006 to 38.1 million tons in 2007, an increase of 12.4%, and then further increased to 39.6 million tons in 2008, an increase of 3.9% over 2007. In 2008, North America, Western Europe and China together accounted for approximately 59.6%, with China alone accounting for 33.3%, of global primary aluminum production. Asia has shown the largest annual increases in consumption of primary aluminum, driven largely by increased industrial consumption in China, which has emerged as the largest aluminum consuming nation, accounting for 32.4% and 33.9% of global primary aluminum consumption in 2007 and 2008, respectively.

     Although the total consumption of primary aluminum in Asia has increased from 2007, the global economic downturn has caused the global consumption of primary aluminum to remain the same from 2007 to 2008 and be expected to fall by 8.3% from 2008 to 2009. The five largest aluminum producing countries were China (33.3%), Russia (10.6%), Canada (7.9%), the United States (6.7%) and Australia (5.0%), which together accounted for 63.5% of the total aluminum produced worldwide in 2008.

     The following table sets forth the actual and estimated regional production of primary aluminum from 2005 to 2008:

	Year Ended December 31,
	2005					2006					2007					2008
Region	Volume		%			Volume		%			Volume		%			Volume		%
	(thousands of tons, except percentages)
China		7,806		24.4	%		9,349		27.6	%		12,588		33.0	%		13,177		33.3	%
North America		5,382		16.8			5,333		15.7			5,643		14.8			5,781		14.6
CEE(2)		4,627		14.5			4,678		13.8			4,899		12.8			5,101		12.9
Western Europe		4,345		13.6			4,174		12.3			4,321		11.3			4,627		11.7
Latin America		2,390		7.5			2,493		7.4			2,559		6.7			2,663		6.7
Oceania		2,252		7.0			2,274		6.7			2,316		6.1			2,297		5.8
Rest of Asia(1)		2,447		7.7			2,626		7.7			2,763		7.2			2,994		7.4
Africa		1,753		5.5			1,865		5.5			1,815		4.8			1,715		4.3
India		965		3.0			1,115		3.3			1,222		3.2			1,296		3.3
Total		31,968		100.0	%		33,907		100.0	%		38,127		100.0	%		39,602		100.0	%

Notes:
(1)	Rest of Asia is Asia excluding China and India, but including the Middle East.
(2)	Central and Eastern Europe.

Source: Brook Hunt Aluminium Metal Service Report, May 2009.

35

     Notwithstanding the rise in aluminum production and capacities in the region, aluminum supplies in Asia have lagged behind demand, resulting in a supply deficit of 2.9 million tons during 2008. During this period, China had a surplus of 0.3 million tons while the rest of Asia had a deficit of 3.2 million tons. However, this situation is likely to change with the decrease in demand of primary aluminum due to the downturn in the global markets in 2009.

     Alumina

     Alumina is a key raw material for aluminum production. Generally it takes two tons of alumina to produce one ton of primary aluminum. The five largest alumina producing companies are UC RUSAL (12.9%), CHALCO (12.0%), Alcoa (11.0%), Rio Tinto Alcan (10.4%) and Alumina Limited (6.7%), which together accounted for approximately 53.0% of the total alumina produced worldwide in 2008.

     The following table sets forth the regional production of alumina from 2005 to 2008:

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

Notes:
(1)	Rest of Asia is Asia excluding China and India.
(2)	Central and Eastern Europe.

Source: Brook Hunt Aluminium Metal Service Report, May 2009.

     The sharp increase in alumina production in China in 2006 turned the global alumina market from a deficit in 2005 to a surplus in 2006. In 2007, China's alumina demand grew at 34.6%, pushing global demand growth up 13.0% for the year and relatively weaker supply during the year reduced the surplus of alumina to 156,000 tons. In 2008, the surplus of alumina increased to 3,241,000 tons.

     The following table sets forth the demand-supply balance for alumina from 2005 to 2008:

	Year Ended December 31,
	2005			2006		2007		2008
	(thousands of tons)
Global Alumina Surplus/(Deficit)		(1,657	)		1,704		156		3,241

Source: Brook Hunt Aluminium Metal Service Report, May 2009.

     Bauxite

     Bauxite, the principal raw material used in the production of alumina, is typically open-pit mined in very large-scale operations. Between 2.0-3.6 dry tons of bauxite are usually required to make one ton of alumina (depending on ore type, alumina content and variables such as proportion of reactive silica and organic matter). Based on data from US Geological Survey, Guinea has the largest bauxite reserves in the world (25%), followed by Australia (21%), Vietnam (12%), Jamaica (7%), Brazil (7%), China (5%) and India (3%).

     Pricing

     Aluminum is an LME traded metal. It is either sold directly to consumers or on a terminal market. The price is based on the LME price but producers are also able to charge a regional price premium, which generally reflects the cost of obtaining the metal from an alternative source.

36

     Alumina prices are negotiated on an individual basis between buyers and sellers but are usually determined by reference to the LME price for aluminum. The negotiated agreements generally take the form of long-term contracts, but fixed prices can be negotiated for shorter periods and a relatively small spot market also exists.

     The following table sets forth the movement in aluminum and alumina prices from 1999 to 2008:

	Year Ended December 31,
	1999			2000			2001			2002			2003			2004			2005			2006			2007			2008
	($ per ton, except percentages)
Aluminum
LME Cash Price(1)	$	1,362		$	1,549		$	1,444		$	1,349		$	1,432		$	1,716		$	1,897		$	2,566		$	2,639		$	2,571
% Change		0.4			13.8			(6.8	)		(6.6	)		6.1			19.9			10.5			35.3			2.8			(2.6	)
Alumina
Spot Price(2)	$	203		$	284		$	149		$	148		$	283		$	420		$	468		$	420		$	353		$	362
% Change		9.7			39.9			(47.5	)		(0.7	)		91.2			48.4			11.4			(10.3	)		(16.0	)		2.5
Alumina/Aluminum(%)		14.9	%		18.3	%		10.3	%		11.0	%		19.8	%		24.5	%		24.7	%		16.4	%		13.4	%		14.1	%

(1)	Source: LME.
(2)	Source: Bloomberg, Metal Bulletin; alumina metallurgical grade spot Free on Board, or FOB, average for the year.

     The LME aluminum cash price was $1,365 per ton as of March 31, 2009 and $1,616 per ton as of June 30, 2009. The marginal cash cost of production, which represents the cost of production at the 85^th percentile of worldwide production, for 2009 is expected to be $1,681 per ton of aluminum, according to Brook Hunt.

     While aluminum prices have risen by 79.6% from 2003 to 2008, rampant demand in China and the increasing exposure of commodities to fund activity in 2007 resulted in cash LME aluminum prices recording their highest annual average since 1983 at $2,639 per ton. The global alumina market was relatively balanced in 2007. Starting in August 2008, aluminum prices began to decline due to a decrease in global demand and aluminum prices fell to $1,454 per ton as of December 31, 2008.

     Besides alumina, power is the other key cost of production for aluminum. Lack of sufficient power and a high cost of power resulted in the curtailment of aluminum production in North America in 2002 and in China in 2004 and 2005. This was a major factor in the increase of aluminum prices.

Indian Aluminum Market

     Background

     The domestic Indian aluminum industry consists of five primary producers: Hindalco, NALCO, a Government of India enterprise, BALCO, MALCO and Vedanta Aluminium. Hindalco had the largest market share in fiscal 2009 of 39%, followed by BALCO, NALCO, Vedanta Aluminium and MALCO with market shares of 28%, 28%, 3% and 2%, respectively, according to the Aluminium Association of India, or AAI.

     According to the US Geological Survey, India has the seventh largest reserves of bauxite ore in the world, with total recoverable reserves estimated at 2,170 million tons. These bauxite ore reserves are high grade and require less energy to refine, thus resulting in significant cost advantages for Indian aluminum producers.

     Supply and Demand

     Primary aluminum production in India increased at a compound annual growth rate of 10.1% from 0.97 million tons in 2005 to 1.29 million tons in 2008. The majority of aluminum produced in India is consumed in the building and construction, transport, electrical appliance and equipment and packaging industries, with limited exports to countries including Singapore, Taiwan and the United Arab Emirates, or the UAE.

     Indian demand for primary aluminum increased at a compound annual growth rate of 10.9% from 0.96 million tons in 2005 to 1.31 million tons in 2008.

     The electrical segment, which accounts for a large part of total aluminum consumption, uses aluminum in overhead conductors, transformer coils, bus bars and foil wraps for power cables. With its low weight and price, aluminum has significant competitive advantages over copper in the manufacture of overhead conductors. For example, the low weight of aluminum leads to savings in the investments required in transmission line towers in terms of strength and cable span (distance between towers). As a result, conductors for overhead power transmission are made exclusively of aluminum. Transport is also a major consumer, contributing approximately 22% of demand in 2005 but average aluminum use in Indian-made automobiles is still approximately one-third of that in western-made automobiles. The underlying dynamics for these sectors are expected to be robust domestically, with the electrical, automobile and construction sections expected to grow at a compound annual growth rate of 5.2%, 11.0% and 14.0% between 2007 and 2011, respectively.

     Pricing and Tariff

     Domestic aluminum prices track global price trends as producers usually price the metal at a marginal discount to the landed cost of imported metal. Though value-added product prices also track metal price movement, they usually have relatively less volatility and command a premium reflecting the degree of value addition and quality, as indicated by the brand.

     Aluminum imports are currently subject to a basic customs duty of 5.0% and an educational cess of 2.0% and secondary and higher education cess of 1% of the customs duty. The customs duty has been reduced in a series of steps from 15.0% in 2003 to 5.0% in 2007. In addition, the Government of India has also imposed a safeguard duty of 35% on imports of aluminum flat rolled products to protect domestic producers from imports from China.

37

Market Outlook

     Global Aluminum Outlook

     According to Brook Hunt, primary aluminum production is expected to decrease by 7.4% between 2007 and 2010. This is due to production cuts announced by various producers throughout the world which are intended to reduce the supply demand gap created by the global economic downturn. However, primary aluminum production is expected to decrease by 5.2% from 2009 to 2010.

     After six years of strong growth led by China, in 2008 the downturn in the cycle for aluminum production began. In China, growth in the production of aluminum fell from 34.6% from 2006 to 2007 to 4.7% from 2007 to 2008. By the end of 2008, declining demand for aluminum from North America, Japan and Europe saw growth in aluminum production stagnate.

     At the beginning of 2008, global consumption of aluminum was expected to continue to rise but at a growth rate lower than the 10.4% that occurred between 2006 and 2007. The decline in consumption is expected to continue in 2009 with global aluminum consumption forecast to fall 8.3%. Aluminum consumption is expected to increase by 1.8% from 2009 to 2010.

     Indian Aluminum Outlook

     According to Brook Hunt’s June 2009 report, over the next four to five years, the domestic demand for the aluminum industry is expected to grow at a compound annual growth rate of 8.5%, primarily driven by expected growth in consumer demand as a result of higher disposable incomes and investment in infrastructure by the Government of India.

     In addition, with the enactment of the Indian Electricity Act, 2003 and the opening up of power markets, the adequacy of transmission facilities has become a critical point for market efficiency and development. The Government of India’s commitment to “Power for All” by 2012, capacity additions from 9,500 MW to 37,000 MW by 2012 in inter-regional transmission and distribution, and investments of Rs. 2 trillion ($50.0 billion) in transmission and distribution are all expected to translate into a higher consumption of aluminum.

     According to Brook Hunt, economic growth in India is less reliant on external demand and as a consequence India is likely to be less affected by the global downturn than more export-driven economies. Nevertheless, the recession in the world’s mature economies is weighing on demand for Indian goods and industrial production contracted year on year in December 2008 and in January 2009, at modest declines of 0.6% and 0.5%, respectively. The Government of India has responded to the global downturn with two fiscal stimulus packages and these should cushion, but not halt, the decline. According to Brook Hunt, industrial production will fall by 1% in 2009 with growth forecast to resume in 2010. Despite the decline in industrial production, the Indian government’s infrastructure investments will support aluminum consumption. Following growth of 7% in 2008, India’s primary aluminum consumption is expected to decrease marginally by 1.5% in 2009 before recovering to grow 6.5% in 2010. As the global economy begins to recover, growth is expected to increase to 7.7% in 2011 and 10.9% in 2012. In the longer term, consumption of aluminum in India is expected to rise from 1.3 million tons in 2008 to 3.4 million tons in 2020, representing a compound annual growth rate of 8.3%, making India the world’s largest national market, after China and the US. This compares to world demand for aluminum, which Brook Hunt estimates will grow from 38.0 million tons in 2008 to 57.1 million tons in 2020, representing a compound annual growth rate of 3.5%.

Commercial Power Generation Business

Industry Overview

     The Indian Electricity Act, 2003 was enacted in order to eliminate the multiple legislation governing the electricity generation, transmission and distribution sectors and to enhance the scope of power sector reforms aimed at addressing systemic deficiencies in the Indian power industry. The key provisions of the Indian Electricity Act, 2003 allowed for de-licensing of power generation, open access in power transmission and distribution, unbundling of State Electricity Boards, or SEBs, compulsory metering of all consumers and more stringent penalties for the theft of electricity. It also included provisions to facilitate captive power plants.

     However, the pace of implementation of these reforms varies across states. The Indian Electricity Act, 2003 read with the National Tariff Policy, or NTP, notified in January 2006 also mandates that all future power purchases by distribution licensees must be based on competitive bidding to obtain the benefits of reduced capital costs and efficiency of operations through competition.

Installed Capacities

     As of March 31, 2009, India’s power system had an installed generation capacity of approximately 147,965 MW. The Central Power Sector Utilities of India, accounted for approximately 33.1% of total power generation capacity as of March 31, 2009, while the various state entities and private sector companies accounted for approximately 51.4% and 15.5%, respectively.

MW	Central		State		Private		Total		Share of Total
	(MW)
Thermal		36,259		46,812		10,654		93,725		63.34	%
Hydro		8,592		27,056		1,230		36,878		24.92	%
Nuclear		4,120		—		—		4,120		2.78	%
Renewable Energy Source		—		2,248		10,995		13,242		8.95	%
Total		48,971		76,116		22,879		147,965		100.0	%

Source: Central Electricity Authority of India.

38

     A significant majority of India’s power requirements are dependent upon thermal coal-fired power plants. According to the Indian Bureau of Mines, or IBM, the total copper ore, lead-zinc ore, and bauxite resources of India are estimated at 1.4 billion tons, 0.5 billion tons, and 3.3 billion tons, respectively, as of April 2005. According to the Geological Survey of India, the total coal resources of India are 264.5 billion tons as of April 1, 2008 and according to the Energy Information Agency, a statistical agency of the United States government, India has the fourth largest coal reserves in the world as of 2007. The following table sets forth the coal reserves for the Indian states with the largest coal reserves:

Indian states with more than 8 billion tons of coal reserves	Total Coal Reserves
	(in billion tons)
Charttisgarh		41.4
Jharkhand		73.9
Orissa		62.0
West Bengal		27.8
Andhra Pradesh		17.1
Madhya Pradesh		19.8
Maharashtra		9.1

Source: Ministry of Coal of the Government of India.

Future Capacity Additions

     To sustain the strong recent economic growth in India, the Ministry of Power of the Government of India has set an ambitious target of providing “Power for All,” with a target of achieving an installed capacity of 212,000 MW by 2012 by adding over 100,000 MW of generation capacity from 2007 to 2012. An additional 64,035 MW is required from the current installed capacity to reach the target of 212,000  MW of installed capacity.

     The power sector in India is characterized by under-investment and resulting supply constraints, as a result of which, the power section in India suffers significant levels of energy deficits. The Indian Electricity Act, 2003 was enacted in order to consolidate multiple legislations covering various aspects of the power sector and to enhance the scope of power sector reforms. Reforms to national tariff policy in India in 2003 made it mandatory for power requirements to be procured via a transparent competitive bidding process as per the guidelines issued by the Ministry of Power of the Government of India.

     In order to accelerate the development of power plants in India, the Government of India has proposed the setting up of nine Ultra Mega Power Projects, or UMPPs. Each project will be 4,000 MW and will use coal as fuel. The Government of India will ensure land and environmental clearances, fuel linkage, offtake agreements and a payment security mechanism to ensure smooth implementation. Each of these projects is expected to be commissioned from 2008 to 2012, four of which have already been awarded. Tata Power has been awarded the Mundra UMPP in Gujarat and Reliance Power has won three UMPPs, Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand.

     According to the Central Electricity Authority of India, 78,577 MW of capacity additions were announced during the Eleventh Plan (2007-2012) and it expects 86,500 MW of capacity additions in the Twelfth Plan (2012-2017). In order to maintain its current rate of growth, India requires faster capacity additions in the Eleventh Plan. Further, additions to generation capacity will require concomitant capacity additions in transmissions and distributions as well. Total investments of around Rs. 6.7 trillion ($166.6 billion) in the power sector in the Eleventh Plan (2007-2012) are expected.

Transmission and Distribution

     In India, the transmissions and distributions system is comprised of state grids, regional grids (which are formed by interconnecting neighboring state grids) and distribution networks. The distribution networks and the state grids are mostly owned and operated by the SEBs or state governments through SEBs, while most of the inter-state transmission links are owned and operated by the Power Grid Corporation of India Limited. These regional grids facilitate transfers of power from power-surplus states to power-deficit states and are gradually being integrated to form a national grid. The existing inter-regional power transfer capacity of 17,000 MW is expected to be enhanced to 37,150 MW by the end of the Eleventh Plan (2012).

     With the enactment of the Indian Electricity Act, 2003 and the recently notified guidelines for competitive bidding in transmission projects, private investment was permitted in power transmission which became recognized as an independent activity. Power distribution in the States of Delhi and Orissa has been privatized and distribution networks are now operated by private utilities companies such as Tata Power, CESC Limited, Reliance Energy Limited, Torrent Power AEC & SEC and Noida Power Company Limited, and a number of other distribution companies.

39

Consumption

     Although electricity generation capacity has increased substantially in recent years, the demand for electricity in India still substantially exceeds available generation supply. The following charts show the gap between the total electricity required versus total electricity made available from fiscal 1998 to 2009.

Power: Demand and Supply

Power: Peak Demand and Supply

Source: Ministry of Power of the Government of India.

     The industrial, domestic and agriculture sectors are the main consumers of electrical energy, with the industrial sector consuming 44%, domestic consumption of 25% and agriculture consuming over 24% of total electrical energy in fiscal 2007.

     Overall power demand increased at a compound annual growth rate of around 5% in the last decade from 1996-97 to 2007-08. There has been a shift in the demand for electricity from various sectors — the share of the industrial sector has declined steadily, and agricultural consumption, after peaking at 31% in 1995-96, declined to 22% in 2005-06. On the other hand, domestic household demand witnessed a steady increase from 19% in 1995-96 to 24% in 2005-06. The following chart shows power consumption by sector in percentage terms, for the period 2005 to 2006.

Power: Category-wise Consumption (2005-06)

Source: Central Electricity Authority of India.

40

     According to the forecasts of the Seventeenth Electric Power Survey, energy demand will increase at a compound annual growth rate of 8.5% to 964 billion kWh, during the Tenth Five-year plan period (2008-12). Peak demand is projected to increase at a compound annual growth rate of 9.6% to 167.1 billion kWh over the same period. The Eleventh Five-year plan (2007-2012) envisages energy demand to grow at a compound annual growth rate of 7%. The following graph shows the expected demand for power for the period 2003 to 2022.

Source: Central Electricity Authority of India (Seventeenth Electric Power Survey).

     While per capita consumption in India has grown significantly, it continues to lag behind power consumption in other leading developed and emerging economies by a large margin. The Ministry of Power of the Government of India is projecting a per capita consumption of over 1,000 kWh/year in 2012.

     The following charts compare per capita electricity consumption in India, other countries and the world average consumption.

Per Capita World Consumption (2006)

Note:
(1)	Countries that are members of the Organization for Economic Co-operation and Development, or OECD (http://www.oecd.org).

Source: International Energy Agency, Key World Energy Statistics 2008 (2006 data).

India Growth Pattern Over Years

Source: Ministry of Power of the Government of India.

41

Power Trading

     Power trading takes place between suppliers with surplus capacity and areas with deficits. Recent regulatory developments include the announcement of rules and provisions for open access and licensing related to interstate trading in electricity to promote competition. Several entities, including PTC India Limited (formerly Power Trading Corporation of India Limited), NTPC’s subsidiary, NTPC Vidyut Vyapar Nigam Limited, and Tata Power Trading Company Private Limited have started trading operations or have applied for trading licenses.

Tariff Setting

     Until the end of 2005, the tariff regime in India for all electricity generators was regulated and determined by either the Central Electricity Regulatory Commission, or CERC, or the State Electricity Regulatory Commissions that set the tariff on a cost-plus basis consisting of a capacity charge, a variable energy charge and an unscheduled interchange charge. The tariff regime guaranteed a fixed return on equity to the generators and treated all costs as pass through in the tariff.

     In order to improve efficiency and provide cheaper electricity cost to consumers and at the same time attract adequate investments and accelerate development in the power sector, the Government of India notified the NTP in January 2006 with the key objectives of:

• ensuring availability of electricity to consumers at reasonable and competitive rates;

• promoting transparency, consistency and predictability in regulatory approvals across jurisdictions and minimising the perception of regulatory risks; and

• promoting competition, efficiency in operations and improvement in quality of supply.

     To achieve these objectives, the NTP mandated that power procurement for future requirements by all distribution licensees should be through a transparent competitive bidding mechanism using the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees, dated January 19, 2005, issued by the Ministry of Power of the Government of India. Further, to facilitate a transparent competitive bidding mechanism, an availability-based tariff mechanism has also been introduced whereby the electricity tariffs are split into two parts comprising a fixed capacity charge and a variable energy charge. The fixed cost elements like interest on loans, return on equity, depreciation, operations and maintenance expenses, insurance, taxes and interest on working capital are covered by the capacity charge. The variable cost (that is, fuel cost) of the power plant for generating energy is covered by the energy charge.

     The NTP also provides that power purchase agreements should ensure adequate and bankable payment security arrangements like letters of credit and escrow of cash flows for the benefit of the generating companies. In case of persisting default, generating companies may sell power to other buyers.

Government Initiatives

     Historically, management of the power sector by SEBs was driven by local populist politics that caused the financial health of central and state utilities to deteriorate, which led to under-investment, continued loss and theft and cash leakage. In response, the Government of India launched a combination of regulatory and development initiatives which, among other measures, made anti-theft laws more stringent, prohibited unfunded subsidies and required 100% metering in all states.

     Initiatives have also been introduced to address poor transmissions and distributions infrastructure and dilapidated metering systems. These initiatives include concessional loans from the Government of India to fund up to half the costs of state transmissions and distributions projects and incentive payments to the states linked to the reduction in annual cash losses of the SEBs.

     The Accelerated Power Development and Reform Program, or APDRP, was implemented to accelerate reforms in the distribution sector by giving incentives and loans to state utilities to reduce Aggregate Technical and Commercial losses and outage interruptions. The APDRP has not been as successful as was initially planned. The Ministry of Finance has finalized a new APDRP, the Re-Structured Accelerated Power Development and Reform Program, or R-APDRP. The focus of the R-APDRP is on actual, demonstrable performance in terms of sustained loss reduction. Establishment of reliable and automated systems for sustained collection of accurate base line data, and the adoption of information technology in the areas of energy accounting, will be essential before taking up distribution strengthening projects. The R-APDRP is intended to cover urban areas, towns and cities with populations of over 30,000 people (10,000 in the case of special category states). In addition, in certain dense rural areas with significant loads, works of separation of agricultural feeders from domestic and industrial feeders and of high voltage distribution systems (11 kilovolt) will also be taken up.

42

OUR BUSINESS

Overview

     We are one of India’s largest non-ferrous metals and mining companies. We are one of the two custom copper smelters in India, with a 45.7% primary market share by production volume in India in fiscal 2009, according to ICPCI, the leading and only integrated zinc producer with a 79.0% market share by production volume of the Indian zinc market in fiscal 2009, according to the ILZDA, and one of the five primary producers of aluminum with a 28.0% primary market share by production volume in India in fiscal 2009, according to the AAI. In addition to our three primary businesses of copper, zinc and aluminum, we are also developing a commercial power generation business in India that leverages our experience in building and managing captive power plants used to support our primary businesses. We believe our experience in operating and expanding our business in India will allow us to continue to capitalize on attractive growth opportunities arising from India’s large mineral reserves, relatively low cost of operations and large and inexpensive labor and talent pools. We believe we are also well positioned to take advantage of the growth in industrial production and investments in infrastructure in India, China, Southeast Asia and the Middle East, which we expect will continue to create strong demand for metals.

     Our copper business is principally one of custom smelting. We were one of the top fifteen custom copper smelters worldwide in 2008 and one of the largest in India by production volume in fiscal 2008, according to Brook Hunt. We own the Mt. Lyell copper mine in Tasmania, Australia, which provides a small percentage of our copper concentrate requirements. Our operations also include a copper smelter, two copper refineries, three copper rod plants, a doré anode plant, sulphuric and phosphoric acid plants, and captive power plants at our facilities in Silvassa and Tuticorin in India, as well as a precious metal refinery at Fujairah in the UAE. In addition, on March 6, 2009, we and Asarco, a US-based copper mining, smelting and refining company, signed an agreement for us to acquire substantially all of the operating assets of Asarco for $1.7 billion. On June 12, 2009, we agreed to increase the purchase consideration to $1.87 billion, mostly related to an expected increase in working capital on the closing date. The purchase consideration consists of a cash payment of $1.1 billion on closing and a senior secured non-interest bearing promissory note for $770 million, payable over a period of nine years. The agreement remains subject to approval by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. As a result, there can be no assurance that court approval will be obtained or that the proposed acquisition will be concluded. If this acquisition is completed, we will acquire ownership of Asarco’s three open-pit copper mines, which had estimated reserves of 5.2 million tons of contained copper as of January 2008, associated mills, solvent extraction and electrowinning, or SX-EW, plant and a copper smelter in the State of Arizona, United States and a copper refinery, rod plant, cake plant and precious metals plant in the State of Texas, United States. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

     Our fully-integrated zinc business is owned and operated by HZL, in which we have a 64.9% ownership interest. HZL is India’s leading zinc producer with a 79.0% market share by production volume of the Indian zinc market in fiscal 2009, according to the ILZDA. HZL was the world’s third largest zinc mining company in 2008 based on zinc mine production and is also one of the top ten lead mining companies by production volume worldwide, according to Brook Hunt. HZL’s Rampura Agucha mine was the largest lead-zinc mine in the world in terms of contained zinc deposits on a production basis and the fourth largest on a reserve basis, according to Brook Hunt. HZL was in the lowest cost quartile in terms of all zinc mining operations worldwide in 2008, the fourth largest producer of zinc worldwide and the largest integrated producer of zinc worldwide based on production volumes in 2008, according to Brook Hunt. In addition, HZL’s new Chanderiya hydrometallurgical zinc smelter was the third largest smelter on a production basis worldwide in 2008, according to Brook Hunt. We have a 64.9% ownership interest in HZL, with the remainder owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). It is our current intention to exercise our call option to acquire the Government of India’s remaining ownership interest in HZL. HZL’s operations include four lead-zinc mines, three zinc smelters, one lead smelter, one lead-zinc smelter, three sulphuric acid plants, one silver refinery, and captive power plants at our Chanderiya and Debari facilities in Northwest India, one zinc smelter and a sulphuric acid plant at our Vizag facility in Southeast India and one zinc ingot melting and casting plant at Haridwar in North India.

     Our aluminum business is primarily owned and operated by BALCO, in which we have a 51.0% ownership interest. BALCO is one of the five primary producers of aluminum in India and had a 28.0% primary market share by production volume in India in fiscal 2009, according to AAI. We have exercised our option to acquire the Government of India’s remaining 49.0% ownership interest, although the exercise is currently subject to dispute. Further, the Government of India has the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. BALCO’s partially integrated operations include two bauxite mines, captive power plants and refining, smelting and fabrication facilities at our Korba facility in Central India. BALCO’s 245,000 tpa Korba aluminum smelter was in the lowest cost quartile in terms of all aluminum smelter operations worldwide in 2007, according to Brook Hunt. BALCO’s operations benefit from relatively cost effective access to power, the most significant cost component in aluminum smelting due to the power-intensive nature of the process. This is to a considerable extent due to BALCO being an energy-integrated aluminum producer. BALCO received a coal block allocation of 211.0 million tons for use in its captive power plants in November 2007. In addition, BALCO is seeking to build a thermal coal-based 1,200 MW captive power facility, along with an integrated coal mine, in the State of Chhattisgarh.

43

     In addition, we are expanding our aluminum business through Vedanta Aluminium. We hold a 29.5% minority interest in Vedanta Aluminium, a 70.5%-owned subsidiary of Vedanta. Vedanta Aluminium is intended to be a fully integrated alumina and aluminum producer with a 1.0 million tpa, expandable to 1.4 million tpa subject to governmental approvals, alumina refinery at Lanjigarh in the State of Orissa in Eastern India, with an associated 75 MW captive power plant, expandable to 90 MW. In March 2007, Vedanta Aluminium began the progressive commissioning of the 1.0 million tpa greenfield alumina refinery. The Lanjigarh alumina refinery started production from a single stream operation and produced 585,597 tons of alumina in fiscal 2009. The second production stream of the Lanjigarh alumina refinery was commissioned in April 2009. Further, Vedanta Aluminium is expanding its alumina refining capacity at the Lanjigarh refinery from 1.4 million tpa to 2.0 million tpa through debottlenecking, which is expected to be completed by March 2010, and from 2.0 million tpa to 5.0 million tpa by constructing a second 3.0 million tpa refinery with an associated 210 MW coal-based captive power plant, which are expected to be commissioned by mid-2011. Vedanta Aluminium is in the process of obtaining all governmental approvals for these expansion projects. In addition, Vedanta Aluminium is building a greenfield 500,000 tpa aluminum smelter, together with an associated 1,215 MW coal-based captive power plant, in Jharsuguda in the State of Orissa. The project will be implemented in two phases of 250,000 tpa each. Commissioning of the first phase commenced in May 2008, six months ahead of schedule, and was fully commissioned in May 2009. The second phase is expected to be progressively commissioned from June 2009 through the end of fiscal 2010, subject to governmental approvals. The commissioning of the captive power plant units is scheduled to meet the power requirements of the new Jharsuguda smelter and all other power requirements of the facility. Vedanta Aluminium is also setting up another 1,250,000 tpa aluminum smelter in Jharsuguda which is expected to be progressively commissioned from March 2010 and to be completed by September 2012.

     We have been building and managing captive power plants since 1997. As of May 31, 2009, the total power generating capacity of our captive power plants and wind power plants was 2,078.7 MW, including six thermal coal-based captive power plants with a total power generation capacity of 1,604 MW that we built within the last five years. In August 2006, our shareholders approved a new strategy for us to enter into the commercial power generation business in India. Our wholly-owned subsidiary Sterlite Energy is investing approximately Rs. 82,000 million ($1,612.0 million) to build a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The project is expected to be progressively commissioned starting in the third quarter of fiscal 2010, with full completion anticipated by the second quarter of fiscal 2011. Sterlite Energy is building this power facility in the State of Orissa, which has abundant coal resources estimated at 65.3 billion tons as of April 1, 2008, according to the Geological Survey of India 2008. In addition, in July 2008, Sterlite Energy was awarded the tender for a project to build a 1,980 MW thermal coal-based commercial power plant at Talwandi Sabo, in the State of Punjab, India, by the Government of Punjab. The project is expected to be completed in April 2013.

Competitive Strengths

     We believe that we have the following competitive strengths:

High quality assets and resources making us a low-cost producer

     We believe that our business has assets of global size and scale. Our costs of production in our Indian copper, zinc and aluminum businesses are competitive with those of leading metals and mining companies in the world, which we believe is enabled by our high quality assets, operational skills and experience and the integrated nature of our operations. Specifically:

• Our Tuticorin smelter was one of the top fifteen custom copper smelters worldwide in 2008, and one of the largest in India by production volume in fiscal 2008, according to Brook Hunt.

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

44

• Our aluminum business’ operations are fully integrated with respect to their power requirements through their captive power plants. BALCO’s 245,000 tpa Korba aluminum smelter was in the lowest cost quartile in terms of all aluminum smelter operations worldwide in 2007, according to Brook Hunt. In November 2007, BALCO received a coal block allocation of 211.0 million tons for use in its captive power plants. In March 2007, Vedanta Aluminium began the progressive commissioning of a 1.0 million tpa greenfield alumina refinery project in Lanjigarh and an associated 75 MW captive power plant, expandable to 1.4 million tpa and 90 MW, respectively, subject to governmental approvals. The Lanjigarh alumina refinery has started production from a single stream operation and produced 585,597 tons of alumina in fiscal 2009. The second production stream of the Lanjigarh alumina refinery was commissioned in April 2009.

     We are seeking to further lower our costs across all our operations. Factors contributing to our success in lowering our costs of production include:

• our focus on continually reducing manufacturing costs and seeking operational efficiency improvements;

• our building and managing our own captive power plants to supply a substantial majority of the power requirements of our operations; and

• the relatively large and inexpensive labor and talent pools in India.

     We view strict cost management and increases in productivity as fundamental aspects of our day-to-day operations and continually seek to improve efficiency.

Leading non-ferrous metals and mining company in India with a diversified product portfolio

     We have substantial market share across the copper, zinc and aluminum metals markets in India. Specifically:

• we are one of two custom copper smelters in India, with a 45.7% primary market share by production volume in India in fiscal 2009, according to ICPCI;

• HZL is India’s only integrated zinc producer and had a 79.0% market share by production volume in India in fiscal 2009, according to ILZDA; and

• BALCO is one of the five primary producers of aluminum in India and had a 28.0% primary market share by production volume in India in fiscal 2009, according to AAI.

     According to Brook Hunt, the demand for copper, zinc and aluminum in India is expected to grow from 598,000 tons, 479,000 tons and 1.3 million tons in 2008 to 1.2 million  tons, 1.0 million tons and 3.4 million tons in 2020, representing compound annual growth rates of 5.8%, 6.5% and 8.3%, respectively. This compares to world demand for copper, zinc and aluminum, which Brook Hunt estimates will grow from 18.0 million tons, 11.2 million tons and 38.0 million tons in 2008 to 24.7 million tons, 16.0 million tons and 57.1 million tons in 2020, representing compound annual growth rates of 2.7%, 3.0% and 3.5%, respectively.

     With our copper, zinc and aluminum businesses representing 54.9%, 26.3% and 18.4% of our net sales and 25.0%, 59.5% and 15.1% of our operating income in fiscal 2009, respectively, we believe that we have a diversified product portfolio and intend to further diversify our business through our planned entry into the commercial power generation business.

Ideally positioned to capitalize on India’s growth and resource potential

     We believe that our experience operating and expanding our business in India will allow us to capitalize on attractive growth opportunities arising from factors including:

• India’s large mineral reserves. According to the IBM, the total copper ore, lead-zinc ore, and bauxite resources of India are estimated at 1.4 billion tons, 0.5 billion tons, and 3.3 billion tons, respectively, as of April 1, 2005. According to the Geological Survey of India, the total coal resources of India are 264.5 billion tons as of April 1, 2008, and according to the Energy Information Agency, a statistical agency of the United States government, India has the fourth largest coal reserves in the world as of 2007. In addition, according to the US Geological Survey, India’s bauxite reserves are the seventh largest in the world with total recoverable reserves estimated at 2,170 million tons.

45

• India’s economic growth and proximity to other growing economies. India is one of the fastest growing large economies in the world with a real gross domestic product growth of 6.7% in fiscal 2009 and an expected growth in real gross domestic product of 7.0% in fiscal 2010, according to the Government of India, Economic Survey (2008 to 2009). That growth has been fueled in significant part by domestic demand, with exports accounting for only approximately 23% of India’s real gross domestic product in fiscal 2009, according to the Government of India’s Ministry of Statistics and Programme Implementation. In addition, the Government of India plans to spend approximately $514 billion on infrastructure between 2007 and 2012, including approximately $167 billion on the power segment, according to the Government of India’s Eleventh Five-Year Plan (2007-2012) (exchange rate used in the plan for calculating infrastructure and power segments spending was Rs. 40 = $1.00). As such, we believe that our focus on the metals and power segments will allow us to directly benefit from demand in India and from the other growing economies in China, Southeast Asia and the Middle East.

• India’s large and inexpensive labor and talent pools. India has, compared to other industrialized nations, low labor costs as a result of its large and skilled labor pool and the availability of many well-educated professionals.

Strong pipeline of growth projects

     We possess a strong portfolio of greenfield and brownfield projects that we intend to pursue:

• Zinc segment: HZL has Rs. 28,800 million ($566.1 million) of expansion projects to increase its total lead-zinc capacity to 1,065,000 tpa with fully integrated mining and captive power generation capacities. These projects include:

• establishing two brownfield smelters which are expected to increase the production capacities of zinc and lead by approximately 210,000 tons and 100,000 tons, respectively, at Rajpura Dariba in the State of Rajasthan, both of which are expected to be completed by mid-2010;

• setting up an associated captive power plant with a capacity of 160 MW at Rajpura Dariba, which is expected to be completed by mid-2010;

• expanding ore production capacity at the Rampura Agucha mine from approximately 5.0 million tpa to 6.0 million tpa, which is scheduled for completion in mid-2010, and at the Sindesar Khurd mine from approximately 0.3 million tpa to 1.5 million tpa, which is scheduled to be progressively completed from mid-2010. The ramp portal connecting the Sindesar Khurd mine surface to the ore body has been completed and resources have been mobilized to achieve accelerated mine development;

• HZL is expected to start mining activity at the Kayar mine progressively from mid-2010, with the mine expected to have a production capacity of 360,000 tpa; and

• increasing silver production from the current levels of approximately 105 tpa to approximately 500 tpa, primarily from the Sindesar Khurd mine where silver occurs at approximately 200 parts per million, or ppm.

• Aluminum segment: Our aluminum segment projects are being undertaken both at our subsidiary, BALCO, and by Vedanta Aluminium, a 70.5%-owned subsidiary of Vedanta in which we have 29.5% ownership interest:

• In order to enhance aluminum production capacity to 1.0 million tons, BALCO entered into a memorandum of understanding with the State Government of Chhattisgarh on August 8, 2007, for a potential investment to build an aluminum smelter with a capacity of 650,000 tpa at Chhattisgarh, at an estimated cost of Rs. 81,000 million ($1,592.3 million). BALCO has commenced the implementation process of the first phase of expansion for setting up a 325,000 tpa aluminum smelter which uses pre-baked technology from the Guiyang Aluminium — Magnesium Design & Research Institute, or GAMI, of China. The first production stream from the 325,000 tpa aluminum smelter is expected in October 2010 and the target date of completion is by September 2011. In addition, BALCO is building a 1,200 MW coal-based captive power plant in Chhattisgarh at an estimated cost of Rs. 46,500 million ($914.1 million). The first phase of the power plant is expected to be commissioned by June 2010 and the second phase is expected to be completed by September 2011.

• Vedanta Aluminium is building a greenfield 500,000 tpa aluminum smelter, together with an associated 1,215 MW captive power plant, in Jharsuguda in the State of Orissa, in two phases of 250,000 tpa each at an estimated project cost of Rs. 95,583 million ($1,879.0 million). Commissioning of the first phase commenced in May 2008, six months ahead of schedule, and was fully commissioned in May 2009. The second phase is expected to be progressively commissioned from June 2009 through the end of fiscal 2010, subject to the receipt of governmental approvals. The associated 1,215 MW thermal coal-based captive power plant will consist of nine units of 135 MW each, five of which have been commissioned as part of the first phase. The commissioning of the captive power plant units is scheduled to meet the power requirements of the new Jharsuguda smelter and all other power requirements of the facility. In addition, Vedanta Aluminium is spending an estimated Rs. 116,800 million ($2,296.0 million) to construct a second 1,250,000 tpa aluminum smelter in Jharsuguda which is expected to be progressive commissioned from March 2010 and to be completed by September 2012.

46

• Power segment: We are executing our plan to enter the commercial power generation business with Sterlite Energy’s construction of a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa at an estimated cost of Rs. 82,000 million ($1,612.0 million). The project is expected to be progressively commissioned starting in the third quarter of fiscal 2010, with full completion anticipated by the second quarter of fiscal 2011. We have obtained coal block allocations of 112.2 million tons from the Ministry of Coal to support this facility. Further, in July 2008, Sterlite Energy was awarded the tender for a project to build a 1,980 MW thermal coal-based commercial power plant at Talwandi Sabo, in the State of Punjab, India, by the Government of Punjab. The project is expected to be completed in April 2013.

Experience for entry into commercial power generation business in India

     We have been building and managing captive power plants in India since 1997 and as of May 31, 2009, are managing captive power plants and wind power plants with a total power generation capacity of 2,078.7 MW, including six thermal coal-based captive power plants with a total power generation capacity of 1,604 MW that we built within the last five years. In August 2006, our shareholders approved a new strategy for us to enter into the commercial power generation business in India. Demand for power in India to support its growing economy has in recent years exceeded supply. Per capita consumption of power in India, despite having increased significantly in recent years, continues to lag behind power consumption in other leading developed and emerging economies by a large margin. See “— Our Industry — Commercial Power Generation Business — Consumption.” In addition, it has large coal resources of 264.5 billion tons as of April 1, 2008, according to the Geological Survey of India, and the coal industry is in the process of government deregulation that is expected to increase the availability of coal for power generation, among other uses. We believe these factors make the commercial power generation business an attractive growth opportunity in India and that, by leveraging our project execution and operating skills and experience in building and managing captive power plants, we can compete successfully in this business.

Experienced and entrepreneurial management team with outstanding track record

     Our senior management has significant experience in all aspects of our business and has transformed us from a small wire and cable manufacturing company in the early 1980s into our current status as a leading non-ferrous metals and mining company in India. Mr. Anil Agarwal, our founder, remains involved in overseeing our business as our Non-Executive Chairman. Our experienced and focused management and dedicated project execution teams have a proven track record of:

• selecting attractive acquisition opportunities and successfully improving the operations and profitability of acquired businesses; and

• successfully implementing capital-intensive projects to increase our production capacities.

     We acquired our zinc business through our acquisition of HZL and our aluminum business through our acquisition of BALCO. In both instances, we have been successful at increasing production levels from the existing assets by improving operational efficiencies, lowering the costs of production by commissioning captive power plants and growing the businesses through capacity expansions, specifically:

• increasing HZL’s production from 172,140 tpa of zinc ingots and 214,447 tpa of zinc mined metal content when we acquired HZL in 2002 to 217,836 tpa of zinc ingots and 651,494 tpa of zinc mined metal content in fiscal 2009, representing an increase of 26.5% and 203.8%, respectively, by increasing the production of HZL’s original two hydrometallurgical zinc smelters, one lead-zinc smelter and four lead-zinc mines; and

• increasing the production of BALCO’s original aluminum smelter from 89,164 tpa when we acquired management control of BALCO in 2001 to 106,283 tpa in fiscal 2009, representing an increase of 19.2%.

47

     We utilize project monitoring and assurance systems to facilitate timely execution of our projects, a number of which have been completed ahead of time and on budget. In addition, we have established relationships with leading domestic and international vendors that support our expansion projects. We have successfully completed expansion projects across our copper, zinc and aluminum businesses on which we have spent Rs. 290,696 million ($5,714.5 million) since fiscal 2003, including:

• increasing the lead metal capacity of HZL’s lead-zinc smelter at Chanderiya from 35,000 tpa to 85,000 tpa in February 2006;

• increasing the copper anode capacity of our Tuticorin copper smelter from 180,000 tpa to 300,000 tpa in 2005 and then to 400,000 tpa in November 2006;

• increasing the Korba facility by adding a new 245,000 tpa aluminum smelter to bring the total installed capacity to 345,000 tpa of aluminum in November 2006;

• completing a brownfield expansion with the addition of HZL’s two hydrometallurgical zinc smelters with a capacity of 170,000 tpa each, together with coal-based captive power plants of 154 MW and 80 MW at Chanderiya in May 2005 and December 2007, respectively. The capacities of the zinc smelters were further increased to 210,000 tpa through improvements to the operational efficiencies of both smelters in April 2008;

• increasing the capacity of the Rampura Agucha lead-zinc mine and processing plant from 2.0 million tpa to 5.0 million tpa of ore to supply the brownfield zinc smelter expansion at Chanderiya between 2003 and 2008;

• completing our wind power plants at Gujarat and Karnataka with a total power generation capacity of 123.2 MW between 2007 and July 2008;

• commissioning a third concentrator at Rampura Agucha in May 2008 and an 80 MW captive power plant at Zawar in December 2008 which has lowered our power generation costs, as we have replaced relatively higher cost purchases from the local SEB with our own power generation facilities; and

• increasing the capacity of HZL’s Debari smelter from 80,000 tpa to 88,000 tpa through a project commissioned in April 2008 to improve operational efficiencies.

Ability and capacity to finance world-class projects

     We have generated strong cash flows in recent years due to our volume growth, high commodity prices and our cost reduction measures. Moreover, we have a strong balance sheet with low leverage. We believe that holding substantial cash and current assets and maintaining low leverage are important to provide sufficient liquidity and to meet the cash outflow requirements of our capacity expansion projects in the event of any adverse movements in commodity prices.

Strategy

     Our goal is to generate strong financial returns and create a world-class metals and mining company. Our strategy is to continue to grow our business by completing our existing expansion projects as well as setting up new greenfield and brownfield projects. We intend to take advantage of our low-cost base, expand our position in India as a supplier of copper, zinc and aluminum products and further develop our exports of these products. We are also leveraging our experience in building and managing captive power plants to develop a commercial power generation business in India and will continue to closely monitor the Indian resource markets in our existing lines of business as well as new opportunities such as iron ore and coal. Key elements of our strategy include:

Continuing focus on asset optimization and reducing the cost of production

     We are currently in the top decile in terms of cost of production in our zinc business, and we intend to continue to improve our production processes and methods and increase operational efficiencies to further reduce our costs of production in all our businesses. Our current initiatives include:

• seeking improvements in operations to maximize throughput and plant availability to achieve production increases at our existing facilities with minimum capital expenditures to optimize our asset utilization;

48

• reducing energy costs and consumption, including through continued investment in advanced technologies to reduce power consumption in the refining and smelting processes and in captive power plants to provide the required power;

• increasing automation to reduce the manpower required for a given level of production volume;

• a strong exploration effort seeking to increase the reserves, particularly in our zinc ore business;

• continuing to improve recovery ratios such that more finished product is obtained from a given amount of raw material;

• reducing purchase costs, including by entering into long-term contracts for raw materials, making investments in mining operations and optimizing the mix of raw material sourcing between long-term contracts, mining operations and the commodities spot markets to address fluctuations in demand and supply;

• securing additional sources of coal through coal block allocations and coal linkages for use in power plants, such as the coal block allocations of 211.0 million tons we received from the Ministry of Coal for use in BALCO’s captive power plants and of 31.5 million tons we received from the Madanpur Coal Block for use in HZL’s captive power plants;

• seeking better utilization of by-products, including through adding additional processing capabilities to produce end-products from the by-products that can be sold at higher prices and help lower the cost of production of our core metals; and

• reducing greenhouse gas emissions from our operations through various projects, including for example our recent installation of a back pressure turbine for utilizing waste gases of the roaster plant at one of our zinc smelters at Chanderiya, a project from which we have 22,744 voluntary emission reduction credits from July 1, 2005 until March 30, 2007 and received 15,614 carbon emission reduction credits from March 31, 2008 until February 29, 2009. Our wind power projects have also been registered for carbon emission reduction credits.

     Recent successes as a result of these initiatives include:

• increased zinc production volume from fiscal 2008 to fiscal 2009;

• an increase in reserves at HZL’s Rampura Agucha mine from 63.6 million tons as of March 31, 2008 to 67.9 million tons as of March 31, 2009; and

• stable cost of production in most of our businesses notwithstanding inflationary cost pressures across the metals and mining industry generally, particularly with respect to logistics and energy costs.

Increasing our capacities through greenfield and brownfield projects

     We intend to continue to increase our capacities through the construction of new facilities. We believe that increasing our capacities is critical to enable us to continue to capitalize upon the growing demand for metals in India and abroad, particularly in China, Southeast Asia and the Middle East. We seek to implement our expansion projects quickly and with the minimum necessary capital costs in order to generate a high internal rate of return on the projects.

     As of March 31, 2009, we had total production capacities of 400,000 tpa of copper cathodes, 669,000 tpa of zinc, 85,000 tpa of lead and 345,000 tpa of aluminum. Our goal is to achieve 1.0 million tpa of total production capacity in each of our base metals through our existing and future expansion projects, while implementing our expansion projects at industry leading benchmark capital costs, within budget and ahead of schedule. We believe we have made significant progress towards achieving this goal, though there can be no assurance that we will be able to achieve such production capacity for each of our businesses. See “— Competitive Strengths — Strong pipeline of growth projects.”

Leveraging our project execution and operating skills and experience in building and managing captive power plants to develop a commercial power generation business

     The demand for power in India to support its growing economy has in recent years exceeded supply. Per capita consumption of power in India, despite significant increases in recent years, continues to lag behind other leading developed and emerging economies by a large margin. India has large thermal coal resources and the coal industry is in the process of government deregulation that is expected to increase the availability of coal for power generation, among other uses. We believe these factors make the commercial power generation business an attractive growth opportunity in India and that, by leveraging our project execution and operating skills and experience in building and managing captive power plants, and by applying our mining experience to the mining of the coal blocks we are seeking to have allotted to us to reduce the costs of our proposed commercial power generation business, we can compete successfully in this business. In addition, we believe that our entry into the commercial power generation business will allow us to establish ourselves and gain specific experience in coal mining as the power industry is one of only three industries in India, the others being iron/steel and cement, where captive coal mining by non-governmental entities is permitted. We believe this would help position us to more broadly enter the coal mining business if it is eventually opened to entry by non-governmental entities as part of a Government of India deregulation initiative. See “ — Our Commercial Power Generation Business.”

49

Seeking further growth and acquisition opportunities that leverage our transactional, project execution and operational skills and experience

     Our successful acquisitions of HZL and BALCO have contributed substantially to our growth. We continually seek new growth and acquisition opportunities in the metals and mining and related businesses, including through government privatization programs in India, where we can leverage our skills and experience. We continue to closely monitor the resource markets in our existing lines of business as well as seek out opportunities in complementary businesses such as coal mining. By selecting the opportunities for growth and acquisition carefully and leveraging our skills and experience, we expect to continue to expand our business while maintaining a strong balance sheet and investment grade credit profile. A recent example of our pursuit of this strategy was our execution of an agreement with Asarco, a US-based copper mining, smelting and refining company, on March 6, 2009 for the sale to us of substantially all the operating assets of Asarco. We believe that the Asarco assets, which include three open-pit copper mines, which had estimated reserves of 5.2 million tons of contained copper as of January 2008, associated mills, SX-EW plant and a copper smelter in the State of Arizona, United States, and a copper refinery, rod plant, cake plant and precious metals plant in the State of Texas, United States, will be a good strategic fit with our existing copper business. The agreement is subject to approval of the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

Consolidating our corporate structure and increasing our direct ownership of our underlying businesses to derive additional synergies as an integrated group

     We have consolidated and are continuing to seek to increase our direct ownership of our underlying businesses to simplify and derive additional synergies as an integrated group, in particular by acquiring major shareholders to consolidate our corporate structure to simplify and more closely integrate our operations. As part of this strategy we continue to seek to increase our direct ownership of our underlying businesses to derive additional synergies as an integrated group. In March 2004, we exercised our option to acquire the Government of India’s remaining 49.0% ownership interest in BALCO in order to make BALCO a wholly-owned subsidiary, though the exercise of this option has been contested by the Government of India and the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. We own 64.9% of HZL and we intend to acquire from the Government of India a further 29.5% of the shares in HZL (or 26.0% if the Government of India exercises in full its right to sell 3.5% of HZL to HZL employees), which is exercisable so long as the Government of India has not sold its remaining interest pursuant to a public offer. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Our option to purchase the Government of India’s remaining shares in HZL may be challenged” and “— Options to Increase Interests in HZL and BALCO.” It has been reported in the media that the Government of India is considering asserting a breach of a covenant by our subsidiary SOVL and may seek to exercise a put or call right with respect to shares of HZL. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — The Government of India may allege a breach of a covenant by our subsidiary SOVL and seek to exercise a put or call right with respect to shares of HZL, which may result in substantial litigation and serious financial harm to our business, results of operations, financial condition and prospects.” If the Government of India makes such an assertion, we intend to contest it and believe we have meritorious defenses.

Basis of Presentation of Ore Reserves

     Our reported ore reserves are derived following a systematic evaluation of geological data and a series of technical and economic studies by our geologists and engineers and an audit of the results for the ore reserves of HZL and BALCO by the independent consulting firms of SRK Consulting (UK) Ltd and SRK (Australasia) Pty Ltd, which are together referred to herein as SRK. Our reported ore reserves at the Mt. Lyell mine are based on our internal estimates. The results are reported in compliance with Industry Guide 7 of the US Securities and Exchange Commission, or the SEC.

     An “ore reserve” is economically mineable and includes diluting materials and allowances for losses, which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore reserves are sub-divided in order of increasing confidence into probable ore reserves and proven ore reserves.

     We retained SRK to conduct independent reviews of our ore reserve estimates (excluding CMT) as of March 31, 2009 at the Rampura Agucha, Rajpura Dariba and Zawar lead-zinc mines, and the Mainpat and Bodai-Daldali bauxite mines. SRK visited the HZL sites in 2009 and the BALCO sites in March 2008 and in both instances reviewed the methodology and data used to develop the ore reserve estimates. The geological information at Mt. Lyell and Rampura Agucha are modeled using conventional computerized models, the information at Rajpura Dariba is modeled using a proprietary modeling system, and the information at Zawar and the bauxite mines is modeled using paper based sections. SRK conducted a series of checks at the HZL and BALCO mines to verify that the resulting estimate of the quantity and quality of ore present was appropriate.

     In addition to the ore reserves, we have identified further mineral deposits as either extensions to or in addition to our existing operations that are subject to ongoing exploration and evaluation.

50

Our Copper Business

Overview

     Our copper business is principally one of custom smelting and includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant, copper rod plant and doré anode plant at Tuticorin in Southern India and a refinery and two copper rod plants at Silvassa in Western India. In addition, we own the Mt. Lyell copper mine in Tasmania, Australia, which provided approximately 8% of our copper concentrate requirements in fiscal 2009. We also have a precious metal refinery at Fujairah in the UAE that produces gold and silver ingots, which was commissioned in March 2009.

     As a custom smelter, we buy copper concentrate at LME-linked prices for copper less a TcRc that is negotiated with suppliers. We sell refined copper at LME-linked prices in the domestic and export markets. The TcRc is influenced by global copper concentrate demand, supply of copper smelting and refining capacity, LME trends, LME-linked price participation and other factors. We source our concentrate from various global suppliers and our Australian mine.

     In recent years, we have improved the operating performance of our copper business by improving operational efficiencies and reducing unit costs, including reducing power costs by constructing a captive power plant at Tuticorin. We intend to further improve the operating performance of our copper business by continuing to reduce unit operating costs through improvements in recovery rates, lowering power and transport costs, achieving economies of scale and the achievement of other operational efficiencies.

Principal Products

     Copper Cathode

     Our copper cathodes are square shaped with purity levels of 99.99% copper. These cathodes meet international quality standards and are registered as LME “A” Grade. The major uses of copper cathodes are in the manufacture of copper rods for the wire and cable industry and copper tubes for consumer durable goods. Copper cathodes are also used for making alloys like brass, bronze and alloy steel, with applications in defense and construction.

     Copper Rods

     Our copper continuous cast rods meet all the requirements of international quality standards. Our copper rods are currently used primarily for power and communication cables, transformers and magnet wires.

     Sulphuric Acid

     We produce sulphuric acid at our sulphuric acid plant through conversion of sulphur dioxide gas that is generated from the copper smelter. A significant amount of the sulphuric acid is consumed by our phosphoric acid plant in the production of phosphoric acid, and the remainder of the sulphuric acid is sold to fertilizer manufacturers and other industries.

     Phosphoric Acid

     We produce phosphoric acid at our phosphoric acid plant by chemical reaction of sulphuric acid and rock phosphate, which we import. Phosphoric acid is sold to fertilizer manufacturers and other industries.

     Doré Anodes

     We produce doré anodes at our doré anode plant by treating anode slimes produced as a by-product of our copper smelting operations. The doré anodes are shipped to our precious metal refinery at Fujairah in the UAE where they are refined to extract gold, silver, platinum and palladium.

     Other By-products

     Other by-products of our copper smelting operations are gypsum and anode slimes, which we sell to third parties.

51

Our Production Process

     Our copper business has a number of elements which are summarized in the following diagram and explained in greater detail below:

     Supply of Copper Concentrate

     As a custom smelter, we source a significant majority of our copper concentrate from third party suppliers at the LME price less a TcRc. Approximately 8.0% of our copper concentrate was sourced from our own mine in Tasmania, Australia in fiscal 2009. All of the copper concentrate used in our operations, whether from our own mine in Australia or from third party suppliers, is imported through the port of Tuticorin in Southern India and transported by road to our Tuticorin smelter.

     Tuticorin Smelter

     Our Tuticorin smelter processes copper concentrate by combining it with silica flux and lime, where required, and feeding it into the IsaSmelt^TM furnaces. The furnaces smelt the copper concentrate, producing copper matte, slag and sulphur dioxide gas. The slag and the copper matte flow into a holding furnace, where they are separated. The slag is further smelted to extract additional copper matte and then the remaining slag is discarded. The copper matte is transferred to a converter, where it is oxidized to produce blister copper. The blister copper is fed into the anode furnace where additional sulphur dioxide is removed and the copper is cast as copper anodes.

     Tuticorin Acid Plants

     The sulphur dioxide gas produced from the IsaSmelt^TM furnaces at Tuticorin in the process of creating copper anodes is fed through the sulphuric acid plant at Tuticorin to be converted into sulphuric acid. Most of the sulphuric acid is further treated in our phosphoric acid plant to be converted into phosphoric acid. Both the sulphuric acid and the phosphoric acid are sold primarily to fertilizer manufacturers. The treatment of the sulphur dioxide gas creates sulphuric acid and phosphoric acid by-products, including gypsum, from the copper smelting process and avoids the release of the harmful sulphur dioxide gas.

     Silvassa and Tuticorin Refineries

     In the refineries at Silvassa and Tuticorin, which use IsaProcess^TM technology, copper anodes are electrolytically refined to produce copper cathodes with a purity of 99.99% and slimes, which are treated further in a slimes treatment plant to recover additional copper. The residual slimes are sold to third parties. Copper cathodes are either sold to customers or sent to our copper rod plants.

     Silvassa and Tuticorin Copper Rod Plants

     In our copper rod plants, copper cathodes are first melted in a furnace and cast in a casting machine, and then extruded and passed through a cooling system that begins solidification of copper into 51x38 mm or 54x38 mm copper bars. The resulting copper bars are gradually stretched in a rolling mill to achieve the desired diameter. The rolled bar is then cooled and sprayed with a preservation agent and collected in a rod coil that is compacted and sent to customers.

     Doré Anode Plant

     In our doré anode plant, which was commissioned in February 2009, roasted anode slime is mixed with soda and borax and fed into a furnace known as the TROF converter. The TROF converter takes care of the smelting, reduction and refining steps in the same furnace, which saves energy when compared to a conventional furnace. After smelting, silver poor slag is poured off from the TROF converter and the doré metal is refined by blowing oxygen into the metal bath. Thereafter, the refined doré metal is cast into doré anodes each weighing 16.5 kilograms. Off-gases are led in a controlled way from the TROF converter into a bag filter and scrubber before being released into the atmosphere.

     Precious Metal Refinery

     In our precious metal refinery, doré anodes are refined into silver metal using an electrolytic process and further refined into gold metal by employing a leaching process, which uses concentrated hydrochloric acid, to remove gold metal from the gold mud produced during the electrolytic process. Platinum, palladium and other impurities, which are dissolved in the leaching process, are precipitated as concentrate.

     Delivery to Customers

     The copper cathodes, copper rods, phosphoric acid and other by-products are shipped for export or transported by road to customers in India. Doré anodes are shipped to Fujairah Gold FZE in the UAE.

Principal Facilities

     Overview

     The following map shows the locations of each of our copper mines and production facilities and the reserves or production capacities, as applicable, as of March 31, 2009:

52

     The following map shows the location of our Tuticorin facility in the State of Tamil Nadu:

     The following map shows the location of our Silvassa facility in the union territory of Dadra and Nagar Haveli:

     The following map shows the location of the Mt. Lyell mine in Tasmania:

     Our Copper Mine

     The Mt. Lyell mine is located at Queenstown on the west coast of Tasmania, Australia, approximately 164 kilometers south of Burnie and approximately 260 kilometers northeast of Hobart. Mt. Lyell has well-established infrastructure as mining has been conducted in the area since 1883. The town of Queenstown, originally established to service the mines, continues to provide a range of mining services which are supplemented from Burnie and Hobart. Mt. Lyell is connected by paved public road to Burnie and Hobart. There is a rail connection to the port of Burnie.

     The Mt. Lyell mine is owned and operated under the terms and conditions as stipulated in Mining Leases 1M95 and 5M95 granted by the State Government of Tasmania. Mining Lease 1M95 was granted on January 1, 1995 for a period of 15 years and Mining Lease 5M95 was granted on February 1, 1995 for a period of 14 years and 11 months. Both are renewable and are subject to the terms and conditions specified in the Mineral Resources Development Act, 1995, as amended, of Australia. Mining Lease 1M95 and Mining Lease 5M95 both expire in January 2010 and we intend to renew these leases. The mine is also covered by the Copper Mines of Tasmania Pty Ltd (Agreement) Act 1999, which, in conjunction with an agreement between the State Government of Tasmania and CMT entered into pursuant to that Act, limits CMT’s environmental liabilities to the impact of current operations, thereby insulating CMT from any historical legacy claims.

     The Mt. Lyell mining district was first discovered in 1883 and 15 separate orebodies have been mined over its life. It is estimated that in excess of 100 million tons of ore has been extracted from the district. Monte Cello acquired CMT in 1999 from Mt. Lyell Mining Company Limited, or MLMC, formerly Gold Mines of Australia, when MLMC entered into voluntary administration due to hedging difficulties. Since Monte Cello took over the mine, annual production has increased from 2.2 million tpa in fiscal 2000 to 2.6 million tpa in fiscal 2009. We acquired Monte Cello, and with it CMT, from a subsidiary of Twin Star in 2000.

53

     The principal deposits in the Mt. Lyell region are all of the volcanic disseminated pyrite-chalcopyrite type, which accounts for 86% of the known ore in the region. The geology of the Mt. Lyell mine consists of a series of intercalated felsic to mafic-intermediate volcanics. Lithologies are highly altered quartz-sericite-chlorite volcanics with individual units delineated largely by the relative abundance of phyllosilicates. Volcaniclastic and rhyolitic lithologies occur sporadically throughout the sequence, as does pervasive iron mineralization in the form of haematite, magnetite and siderite.

     Chalcopyrite is the principal ore mineral and occurs chiefly in higher grade lenses enveloped by lower grade halos. The overall structure of Mt. Lyell is that of a steeply dipping overturned limb of a large anticline. The hanging wall (stratigraphic footwall) of the ore body consists of weakly mineralized chloritic schists with disseminated pyrite. The footwall is sharply defined by the Great Lyell Fault — Owen Conglomerate contact which truncates the ore body at its southern end.

     All mining operations at CMT are undertaken by contractors while the processing and mill maintenance operations are undertaken by CMT employees. A sub-level caving underground mining method is used at the Prince Lyell ore body. Ore is loaded into trucks by front end loader at draw points and then transported to the underground crusher and skip loading area. Crushed ore is then hauled via the Prince Lyell shaft and unloaded onto a conveyor feeding the ore bin at the Mt. Lyell processing plant. At the processing plant, the ore is crushed and ground prior to processing by floatation to produce copper concentrate, which is then filtered to form a cake and trucked to the Melba Flats railway siding for transport to the port of Burnie. The concentrate is stored at Burnie until it is loaded into ships for transport to the port of Tuticorin in south India from where it is trucked to the Tuticorin smelter.

     The tailings dam is a valley-fill type and excess water is discharged via a spillway. The water quality is sampled before the water is released from the site. The tailings are deposited on beaches some 300 meters from the dam spillway. CMT’s accepted closure plan is to flood the tailings which will require CMT to raise the tailings dam wall.

     CMT has an active exploration and evaluation program at Mt. Lyell which involves upgrading resources below the Prince Lyell reserves and testing additional exploration targets on the mining lease. The Western Tharsis deposit lies to the west of the Prince Lyell ore body, but CMT has not yet committed to its development. Additional targets include Tasman & Crown, Glen Lyell, Copper Clays and NW Geophysics.

     The processing plant is approximately 30 years old and has been partially refurbished following our acquisition with the addition of crushers, a float cell and a regrind mill at the surface. While the condition of the plant is ageing, maintenance is carried out as required to ensure that the process plant remains in safe and efficient condition.

     Power at the mine is supplied through an electricity supply agreement with Aurora Energy Pty Ltd to supply approximately 112 GW per hour at a combination of fixed and variable rates until September 30, 2010. There is a plentiful supply of water from mine water and storm water captured on the tailings dam.

     The gross value of fixed assets, including capital works-in-progress, was approximately AUD 102.4 million (Rs. 3,617.4 million or $71.1 million) as of March 31, 2009.

     In fiscal 2009, Mt. Lyell mined and processed 2.4 million tons of ore at a grade of 1.3% copper to produce 98,761 dmt of copper concentrate, which also contained 15,675 ounces of gold and 135,953 ounces of silver. Although the grade of copper at Mt. Lyell is low, it produces a clean concentrate that is valuable in the smelting process. Based on reserves as of March 31, 2009 and anticipated production, the estimated mine life at Mt. Lyell is approximately four years from April 1, 2009.

     The economic cut-off grade is defined using the metal prices of $3,889 per ton of copper and $800 per ounce of gold. The cut-off grades are based on copper grades with the gold credit deducted from the operating costs. The reserves are derived from stopes which are designed such that the limits of the stope are defined by a cut-off grade of 1.0% copper and have an average grade that exceeds 1.0% copper. The revenue derivation of the cut-off grade includes the gold credit. The break-even cut-off grade of 0.75% copper is the grade that makes enough margin to cover the fixed and variable costs while the actual or operational cut-off grade used is 1.0% copper. CMT operates on a 1.0% copper operational cut-off grade in practice, preferring to take a higher revenue at the expense of a longer mine life. A stope drawpoint is drawn until the average grade of the broken material drops below the operational cut-off grade of 1.0% copper.

     The reserves at CMT in the proven reserve category are defined by drill-holes spaced at 30 meters intervals while the probable reserves are generally defined by drill-holes spaced at 60 meters intervals, though some blocks between 1,415 meters and 1,440 meters

54

have a drill-hole spacing of 30 meters and have been classified as probable reserves as there is less certainty of the modifying factors since the detailed mine design has not yet been completed.

     CMT does not use a copper equivalent calculation for the determination of stope limits as the relationship between the copper and gold grades is essentially linear, allowing the gold credits to be deducted from operating costs.

     The proportion of sub-economic dilution in the reserves varies with the amount of internal dilution and the amount of over-draw. Due to the caving process mixing ore from previous levels, remnant material and material from mineralized halo, it is difficult to determine the level of external dilution, leading CMT to derive the modifying factors from the reconciliation of historical production against the grade and tonnage of the primary ore mined.

     For fiscal 2009, the metallurgical recovery was 90.2% for copper, 65.5% for gold and 62.9% for silver. For fiscal 2009, the contract mining and milling cost was AUD 2,963 ($2,057.64 or Rs. 104,672) per ton, administration and environment cost was AUD 413 ($286.81 or Rs. 14,590) per ton and transportation cost was AUD 448 ($311.11 or Rs. 15,826) per ton. Correspondingly the TcRc was AUD 398 ($276.39 or Rs. 14,060) per ton.

     The following table sets out our proven and probable copper reserves as of March 31, 2009. The figures show the split between the ore derived from primary, or in-situ, ore and secondary ore, which consists of broken fresh ore from previous levels, remnants of ore from the open-pit side wall and pillars remaining from a former mining method together with sub-economic dilution from the mineralized material surrounding the ore body. The quantity and grade of the secondary ore was determined from the analysis of historical production. The estimate of the quantity and grade of the remnant material has been evaluated from previous studies and only uses a small proportion of this source of ore. Consequently, we believe that this allowance can be sustained for the forecast life of the reserves.

		Proven Reserve				Probable Reserve				Total Proven and Probable Reserves
		Quantity		Copper Grade		Quantity		Copper Grade		Quantity		Copper Grade
Mine	Source	(million tons)		(%)		(million tons)		(%)		(million tons)		(%)
Mt. Lyell	In-situ ore		3.0		1.48		1.6		1.52		4.6		1.49
	Secondary ore		—		—		6.5		1.15		6.5		1.15
	Surface stockpile		0.2		1.25		—		—		0.2		1.25
Total			3.2		1.47		8.1		1.22		11.3		1.29

     Our Smelter and Refineries

     Overview

     The following table sets forth the total capacities as of March 31, 2009 at our Tuticorin and Silvassa facilities:

	Capacity
Facility	Copper Anode(1)		Copper Cathode(2)		Copper Rods(2)		Sulphuric Acid(3)		Phosphoric Acid(3)		Captive Power
					(tpa)						(MW)
Tuticorin		400,000		205,000		90,000		1,300,000		230,000		46.5
Silvassa		—		195,000		150,000		—		—		—
Total		400,000		400,000		240,000		1,300,000		230,000		46.5

Notes:
(1)	Copper anode is an intermediate product produced by copper smelters and is not sold to customers. It is used for the production of copper cathode by copper refineries. Approximately one ton of copper anode is required for the production of one ton of copper cathode.
(2)	Copper cathode is used as a starting material for copper rods. Approximately one ton of copper cathode is required for the production of one ton of copper rods.
(3)	Sulphuric acid is used as a starting material for phosphoric acid. Approximately 2.8 tons of sulphuric acid are required for the production of one ton of phosphoric acid.

     Tuticorin

     Our Tuticorin facility, established in 1997, is located approximately 17 kilometers inland from the port of Tuticorin in Tamil Nadu in Southern India. Tuticorin is one of India’s largest copper smelters based on production volume in fiscal 2008. Our Tuticorin facility currently

55

consists of a 400,000 tpa copper smelter, a 205,000 tpa copper refinery, a 90,000 tpa copper rod plant, a 1,300,000 tpa sulphuric acid plant, a 230,000 tpa phosphoric acid plant, a 700 tpa doré anode plant and two captive power plants with capacities of 22.5MW and 24.0MW, respectively.

     The captive power plants with a total capacity of 46.5MW, together with a further 11.2 MW generated from the smelter waste heat boiler, meet most of the facility’s power requirements. The remaining power requirements of the facility, which amount to approximately 22.5% of its total power requirements in fiscal 2009, are obtained from the state power grid. Our captive power plants at Tuticorin operate on low sulphur heavy stock procured through long-term contracts with various oil companies.

     The smelter at the Tuticorin facility utilizes IsaSmelt^TM furnace technology. The refinery uses IsaProcess^TM technology to produce copper cathode and the copper rod plant uses Properzi Continuously Cast and Rolled, or CCR, copper rod technology from Continuus-Properzi S.p.A., Italy, to produce copper rods.

     Silvassa

     Our Silvassa facility, established in 1997, is located approximately 140 kilometers from Mumbai in the union territory of Dadra and Nagar Haveli in Western India. Our Silvassa facility currently consists of a 195,000 tpa copper refinery and two copper rod plants with a total installed capacity of 150,000 tpa of copper rods. Its refinery uses IsaProcess^TM technology in the production of copper cathode and its copper rod plants use Properzi CCR copper rod technology. Our Silvassa facility draws on the state power grid to satisfy its power requirements.

     Fujairah

     Fujairah Gold FZE is located in the Fujairah Free Zone-2. Our Fujairah facility is strategically located 130 kilometers east of Dubai and is on the coast of the Arabian Sea. Fujairah Gold FZE recently completed its precious metal refinery project at a cost of $5.0 million. The precious metal refinery was commissioned in March 2009 and began production in April 2009, with a capacity of 20 tons of gold and 85 tons of silver. Outotec oyj, Finland, the pioneer in providing technology for extraction and refining of precious metals, supplied the technology for the precious metal refinery. Fujairah Gold FZE is also executing a copper rods project at its Fujairah facility, which is expected to be completed by the end of 2009 with a capacity of 100,000 tpa. Continuus Properzi S.p.A., Italy, is supplying the rod mill equipment for this project, and the copper cathode required for the copper rod plant is expected to be sourced from the smelters of the Vedanta group.

Production Volumes

     The following table sets out our total production from Tuticorin and Silvassa for the three years ended March 31, 2009:

		Year Ended March 31,
Facility	Product	2007		2008		2009
				(tons)
Tuticorin	Copper anode(1)		313,117		335,652		313,284
	Sulphuric acid(2)		946,539		1,027,771		987,511
	Phosphoric acid(2)		172,125		152,401		163,607
	Copper cathode(3)		150,565		162,940		139,706
	Copper rods(3)		53,660		81,698		76,292
Silvassa	Copper cathode(3)		162,155		176,354		173,127
	Copper rods(3)		124,222		143,060		143,587
Total	Copper anode		313,117		335,652		313,284
	Copper cathode		312,720		339,294		312,833
	Copper rods		177,882		224,758		219,879
	Sulphuric acid		946,539		1,027,771		987,511
	Phosphoric acid		172,125		152,401		163,607

Notes:
(1)	Copper anode is an intermediate product produced by copper smelters and is not sold to customers. It is used for the production of copper cathode by copper refineries. Approximately one ton of copper anode is required for the production of one ton of copper cathode.
(2)	Sulphuric acid is used as a starting material for phosphoric acid. Approximately 2.8 tons of sulphuric acid are required for the production of one ton of phosphoric acid.
(3)	Copper cathode is used as a starting material for copper rods. Approximately one ton of copper cathode is required for the production of one ton of copper rods.

     The following table sets out CMT’s copper extraction from the Mt. Lyell mine for the three years ended March 31, 2009:

		Year Ended March 31,
Mine (Type of Mine)	Product	2007			2008			2009
		(tons, except for percentages)
Mt. Lyell (Underground)	Ore mined		2,486,525			2,545,504			2,558,094
	Ore grade		1.3	%		1.2	%		1.5	%
	Copper recovery		91.0	%		90.9	%		90.2	%
	Copper concentrate		100,966			99,388			98,761
	Copper in concentrate		28,378			27,952			27,421

56

Principal Raw Materials

     Overview

     The principal inputs of our copper business are copper concentrate, rock phosphate and power. We have in the past been able to secure an adequate supply of the principal inputs for our copper production.

     Copper Concentrate

     Copper concentrate is the principal raw material of our copper smelter. In fiscal 2009, we sourced 92.0% of our copper concentrate requirements from third party suppliers, either through long-term contracts or on spot markets. We purchase copper concentrate at the LME price less a TcRc that we negotiate with our suppliers but which is influenced by the prevailing market rate for the TcRc. In fiscal 2009, we sourced only 8.0% of our copper concentrate requirements from our own mines in Australia. We expect the percentage we purchase from third party suppliers to increase in future periods as the reserves of our Mt. Lyell copper mine are expected to be exhausted by fiscal 2013. We expect the percentage we purchase from third party suppliers to also increase in future periods to the extent we seek to increase our copper smelting and refining capacity.

     In general, our long-term agreements run for a period of three to five years, and are renewable at the end of the period. The quantity of supply for each contract year is fixed at the beginning of the year and terms like TcRc and freight differential are negotiated each year depending upon market conditions. In fiscal 2009, we sourced approximately 62.0% of our copper concentrate requirements through long-term agreements.

     We also purchase copper concentrate on a spot basis to fill any gaps in our requirements based on production needs for quantity and quality. These deals are struck on the best possible TcRc during the period and are specific for short-term supply. In fiscal 2009, we sourced approximately 38.0% of our copper concentrate requirements through spot purchases.

     Rock Phosphate

     Our rock phosphate is currently sourced primarily from Jordan pursuant to contracts renewed on an annual basis, with pricing fixed for the year. These contracts provide for minimum supply quantities with an option to increase if required. We utilize other sources in Egypt, Israel and Algeria to procure additional rock phosphate as required.

     Power

     The electricity requirements of our copper smelter and refinery at Tuticorin are primarily met by the on-site captive power plants. Our captive power plants at Tuticorin operate on furnace oil that is procured through long-term contracts with various oil companies. We have outsourced the day-to-day operation and maintenance of our captive power plants at Tuticorin. Our Silvassa facility relies on the state power grid for its power requirements.

Distribution, Logistics and Transport

     Copper concentrate from the Mt. Lyell processing facility is transported by road to a rail head and then transported by rail to the port of Burnie, Tasmania, from which it is shipped to the port of Tuticorin in India. Copper concentrate sourced from both our Mt. Lyell processing facility and from third parties is received at the port of Tuticorin and then transported by road to the Tuticorin facility.

57

     Once processed at the Tuticorin facility, copper anodes are either refined at Tuticorin or transported by road to Silvassa. Copper cathodes, copper rods, sulphuric acid, phosphoric acid and other by-products are shipped for export or transported by road to customers in India.

Sales and Marketing

     The ten largest customers of our copper business accounted for approximately 33.9%, 16.8% and 32.5% of our copper business net sales in fiscal 2007, 2008 and 2009, respectively. No customer accounted for greater than 10% of our copper net sales in any of the last three fiscal years.

     Our copper sales and marketing head office is located in Mumbai, and we have field sales and marketing offices in most major metropolitan centers in India. We sell our copper rods and cathodes in both the domestic and export markets. In fiscal 2007, 2008 and 2009, exports accounted for approximately 63%, 56% and 39% of the net sales of our copper business, respectively. Our export sales were primarily to China, Japan, the Philippines, Singapore, South Korea, Taiwan, Thailand and various countries in the Middle East. We also sell phosphoric acid and other by-products in both the domestic and export markets.

     Domestic sales are normally conducted on the basis of a fixed price for a given month that we determine from time to time on the basis of average LME price for the month, as well as domestic supply and demand conditions. The price for copper we sell in India is normally higher than the price we charge in the export markets due to the tariff structure on costs, smaller order sizes that domestic customers place and the packaging, storing and truck loading expenses that we incur when supplying domestic customers.

     Our export sales of copper are made on the basis of both long-term sales agreements and spot sales. The sales prices of our copper exports include the LME price plus a producer’s premium. We do not enter into fixed price long-term copper sales agreements with our customers.

Market Share and Competition

     We are one of the two custom copper smelters in India and had a 45.7% primary market share by production volume in India in fiscal 2009, according to ICPCI. The other custom copper smelter in India is Hindalco, which had a primary market share by volume in India of 48.0% in fiscal 2009. The remainder of the primary copper market in India was served by Hindustan Copper (5.8%) and SWIL Limited (0.6%) in fiscal 2009.

     Copper is a commodity product and we compete primarily on the basis of price and service, with price being the most important consideration when supplies of copper are abundant. Our metal products also compete with other materials, including aluminum and plastics, that can be used in similar applications by end-users. Copper is sold directly to consumers or on terminal markets such as the LME. Prices are established based on the LME price, though as a regional producer we are able to charge a premium to the LME price which reflects the cost of obtaining the metal from an alternative source.

Our Zinc Business

Overview

     Our zinc business is owned and operated by HZL. HZL’s fully-integrated zinc operations include four lead-zinc mines, three hydrometallurgical zinc smelters, one lead smelter, one lead-zinc smelter, three sulphuric acid plants and one silver refinery in the State of Rajasthan in Northwest India, one hydrometallurgical zinc smelter and one sulphuric acid plant in the State of Andhra Pradesh in Southeast India and one zinc ingot melting and casting plant at Haridwar in the State of Uttrakhand in North India. HZL’s mines supply all of its concentrate requirements and allow HZL to also export surplus zinc and lead concentrates.

     We first acquired an interest in HZL in April 2002 and since then have significantly improved its operating performance through expansion and by improving operational efficiencies and reducing unit costs. HZL intends to improve its operating performance further by:

• benefiting from low-cost production available from its two hydrometallurgical zinc smelters with capacity of 210,000 tpa each at Chanderiya commissioned in May 2005 and December 2007, and expanded in April 2008 together with associated captive power plants at Chanderiya;

• increasing the total zinc smelting production capacity;

58

• increasing the percentage of concentrates being sourced from its Rampura Agucha mine as compared to its other mines to lower its cost of obtaining zinc concentrate;

• continuing its initiatives to improve operational efficiencies at its existing operations;

• reducing power costs;

• reducing the size of its workforce including through a voluntary retirement plan; and

• increasing productivity and upgrading existing technology.

     We have a 64.9% ownership interest in HZL, with the remainder owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). We currently hold a call option to acquire the Government of India’s remaining ownership interest at a fair market value to be determined by an independent appraiser. This call option is exercisable so long as the Government of India has not sold its remaining interest pursuant to a public offer. See “— Options to Increase Interests in HZL and BALCO” for more information.

Principal Products

     Zinc

     We produce and sell zinc ingots in all three international standard grades: Special High Grade (SHG — 99.994%), High Grade (HG — 99.95%) and Prime Western (PW — 98%). We sell most of our zinc ingots to Indian steel producers for galvanizing steel to improve its durability. Some of our zinc is also sold to alloy, dry cell battery, die casting and chemical manufacturers.

     Lead

     We produce and sell lead ingots of 99.99% purity primarily to battery manufacturers and to a small extent to chemical manufacturers.

     Sulphuric Acid

     Sulphuric acid is a by-product of our zinc and lead smelting operations. We sell sulphuric acid to fertilizer manufacturers and other industries.

     Silver

     Silver is a by-product of our lead smelting operations. We produce and sell silver ingots primarily to industrial users of silver.

Our Production Process

     Our zinc business has a number of elements which are summarized in the following diagram and explained in greater detail below:

     Lead-Zinc Mines

     HZL sources all of the lead-zinc ore required for its business from its Rampura Agucha open-pit mine and the Zawar and Rajpura Dariba (including Sindesar Khurd) underground mines in Northwest India. Lead-zinc ore extracted from the mines is conveyed to on-site concentrators and beneficiation plants that process the ore into zinc and lead concentrates. With its low strip ratio and good ore mineralogy providing a high metal recovery ratio, the Rampura Agucha mine accounted for 91% of HZL’s total mined metal in zinc concentrate produced in fiscal 2009, with the Zawar and Rajpura Dariba mines accounting for the remaining 4% and 5%, respectively. The zinc and lead concentrates are then transported by road to the nearby Chanderiya and Debari smelters and by rail and road to the Vizag smelter in Southeast India. HZL has also sold surplus zinc and lead concentrates from its mines to third party smelters.

59

     Our current IBM approvals for the Rampura Agucha mine, the Zawar mine and the Rajpura Dariba mine limit our extraction of lead-zinc ore from the mines to approximately 5.0 million tpa, 1.2 million tpa and 0.9 million tpa, respectively, in fiscal 2010.

     Zinc Smelters

     HZL has two types of zinc smelters, hydrometallurgical and pyrometallurgical. Four of HZL’s smelters are hydrometallurgical and one of HZL’s smelters is pyrometallurgical.

     The hydrometallurgical smelting process is a roast, leach and electrowin, or RLE, process. Zinc concentrate is first oxidized in the roaster and the gases generated are cleaned and sent to the sulphuric acid plant. The primary output from the roaster, called calcine, is sent to the leaching plant to produce a zinc sulphate solution that is then passed through a cold/hot purification process to produce purified zinc sulphate solution. The purified zinc solution then goes through an electrolysis process to produce zinc cathodes. Finally, the zinc cathodes are melted and cast into zinc ingots.

     The pyrometallurgical smelter uses the Imperial Smelting Process, ISP^TM, which process starts with sintering, where a mixture consisting of lead and zinc concentrates and fluxes is passed through the sinter machine to remove the sulphur. The gases generated from the sintering process are sent to the sulphuric acid plant. The de-sulphurized output of the sinter machine is broken for size reduction before being fed into an Imperial Smelting Furnace, or ISF, where it is smelted with preheated metcoke and air. During the smelting process, molten lead trickles down to the bottom of the ISF and zinc rises up as vapor. The vapor is passed into a condenser where it is then absorbed back into the molten lead. The molten lead is cooled to separate out the zinc, which is then passed through a process of double distillation and condensation through which any remaining lead is removed to produce pure zinc metal which is cast into ingots. The lead removed through this process is sent to the pyrometallurgical lead smelter.

     Lead Smelters

     HZL has two lead smelters, one of which uses the pyrometallurgical ISF^TM process and is part of the pyrometallurgical zinc smelter described above and the other of which uses Ausmelt^TM technology.

     The pyrometallurgical process involves the smelting of lead and zinc together as described under “— Zinc Smelters.” Lead removed from the pyrometallurgical process is sent for further refining where it passes through a series of processes to remove impurities. In this process, silver is also produced as a by-product. The refined lead is cast into lead ingots.

     HZL’s Ausmelt^TM lead plant is based on Top Submerged Lance technology where lead concentrate is smelted directly in a vertical furnace along with flux. Lead bullion produced in this process is then treated in the lead refinery plant to produce high purity lead ingots. Off-gas containing sulphur dioxide gas is then cleaned and treated in the sulphuric acid plant.

     Delivery to Customers

     The zinc, lead and silver ingots and the sulphuric acid by-product are transported by road to customers in India. Zinc ingots are also shipped for export.

60

Principal Facilities

     Overview

     The following map shows the locations of HZL’s lead-zinc mines and production facilities and the reserves or production capacities, as applicable, as of March 31, 2009:

     The following map shows the locations of HZL’s facilities in the State of Rajasthan:

     The following map shows details of the locations of HZL’s facilities in the State of Rajasthan:

     The following map shows the location of HZL’s facility at Vizag in the State of Andhra Pradesh:

61

     Mines

     Rampura Agucha

     The Rampura Agucha zinc mine is located in Gulabpura, District Bhilwara in the State of Rajasthan, Northwestern India. It can be accessed by paved road from the major centers of Udaipur, approximately 225 kilometers to the south, and Jaipur, the capital of the State of Rajasthan, which lies approximately 235 kilometers to the north. The nearest railway to the mine lies approximately five kilometers to the west. This railway provides access to Jaipur in the north and Chittorgarh in the south where the Chanderiya lead-zinc smelting facility is located.

     The Rampura Agucha deposit was the largest lead-zinc mine in the world in terms of contained zinc deposits on a production basis and the fourth largest on a reserve basis in 2008, according to Brook Hunt. It is a sediment-hosted zinc deposit which lies within gneisses and schists of the Precambrian Mangalwar Complex. The main ore body is 1.5 kilometers long and has a width ranging from five meters to 120 meters with an average of approximately 58 meters. It extends from the surface with recent exploration intersecting up to 15-meter wide mineralized zones at depths of over 900 meters. The southern boundary of the ore body is sharp and steeply dipping while the northern margin is characterized by a thinning mineralized zone. Grades remain relatively consistent with depth. The ore body consists of sphalerite and galena, with localized concentrations of pyrite, arsenopyrite, pyrrhotite and tetrahedrite-tennantite.

     The Rampura Agucha mine is India’s largest producer of lead and zinc ore and one of the largest producers in the world. The ore body is mined by open-pit methods. The capacity of the mine and concentrator was expanded between 2003 and 2008 from 2.4 million tpa to 5.0 million tpa at a cost of Rs. 4,318 million ($84.9 million) through the purchase of additional mining equipment, upgrades to the truck fleet, improvements to the operational efficiency of the plant and the installation of a new semi-autogenous, or SAG, mill and ball mill circuit. Further expansion projects are ongoing to increase the capacity of the Rampura Agucha mine to 6.0 million tpa by mid-2010.

     Mining at Rampura Agucha is a simple drill and blast, load and haul sequence using 95-ton trucks and nine and 15-cubic meter excavators. Ore is trucked to the primary crusher at the mill and waste is trucked to the waste dump. The mining equipment is all owner-operated. The processing facility is a conventional crushing, milling and differential lead-zinc floatation plant which was commissioned in 1991. Ore from the open-pit is crushed in a series of three crushing circuits and then milled in three identical milling circuits, comprising a rod mill in open circuit and a ball mill in closed circuit. The milled ore is then sent to the lead flotation circuit which includes roughing, scavenging and three stages of cleaning. The lead concentrates are thickened and filtered ahead of storage and transport to the Chanderiya lead smelter. The lead flotation tails proceed to zinc flotation which comprises roughing, scavenging and four stages of cleaning. Zinc concentrates are thickened and filtered ahead of storage and transport to all three of the HZL zinc smelters. Zinc flotation tails are thickened ahead of disposal to the tailings dam.

     Exploration at Rampura Agucha since 2004 has resulted in significant increases in the reserves at the mine. Following an extensive drilling program (139 holes, approximately 70,200 meters) to convert resources to reserves, better define the boundaries of the ore body, add resources and conduct open-pit re-optimization, as well as the commencement of potential underground mine project work, the reserve was increased by 27.8 million tons to 67.9 million tons as of March 31, 2009 with an average grade of 13.4% zinc and 1.9% lead after depletion. The drill spacing for the definition of proven reserves was approximately 50 meters by 50 meters while for probable reserves was 100 meters by 100 meters in the open-pit.

     The Rampura Agucha open-pit mine was commissioned in 1991 by HZL and operated as a state-owned enterprise until 2002 when HZL was acquired by us. The low strip ratio and good ore minerology of the mine provide a high metal recovery ratio and a low overall cost of production for zinc concentrate extracted from the mine. An on-site concentrator is used to produce zinc and lead concentrates which are shipped mainly to HZL’s smelters though surplus concentrates are exported through the port of Kandla. The mining and processing facilities are modern and in good condition.

     In fiscal 2009, 5.0 million tons of ore at 13.1% zinc and 1.9% lead were mined from Rampura Agucha, which produced 1.1 million tons of zinc concentrate at 53.1% zinc and 92,151 tons of lead concentrate at 61.8% lead and 834 grams per ton silver. Approximately 36,023,393 tons of waste were removed giving a strip ratio of 7.27 tons of waste per ton of ore mined. Approximately 92.0% of the zinc was recovered to the zinc concentrate, while 60.6% of the lead and 63.0% of the silver was recovered from the lead concentrate.

     The 12-square kilometers mining lease was granted by the State Government of Rajasthan and runs until March 2020. Mining leases are governed in accordance with the Mineral Concession Rules 1960 and the Mineral Conservation and Development Rules, 1988. We have also obtained consents under various environmental laws to operate the mine. We recently applied for a new prospecting permit covering the surrounding area as the ore body is dipping towards the eastern limit of the mining lease and the deepest intersection is approaching the current leasehold boundary. HZL commenced production at the mine in 1991. Since then, approximately 35 million tons of ore, with an ore grade of 12.8% zinc and 1.9% lead, respectively, have been extracted from the open-pit mine.

     Power is supplied from two 154 MW and 80 MW captive power plants at Chanderiya with two backup 5 MW generators on-site and a 14.5 MW captive power plant that was transferred from Debari in March 2009. Water to the site is pumped 57 kilometers from radial wells in the Banas River. A water extraction permit has been granted, which provides sufficient water for a production rate of approximately 5.0 million tpa.

     The gross book value of the Rampura Agucha mine’s fixed assets and mining equipment was approximately Rs. 7,793 million ($153.2 million) as of March 31, 2009.

     HZL estimates the remaining mine life at Rampura Agucha based on reserves as of March 31, 2009 and current and anticipated production to be over 20 years from April 1, 2009. In 2004, HZL commissioned the first exploration program since the mine opened and since then have increased the reserves at Rampura Agucha by approximately 69% after depletion. HZL also believes that additional mineralization exists in an extension in the depth and breadth of the established resource boundary and exploration drilling is continuing to evaluate the potential of this deeper mineralization.

     An economic feasibility study was carried out in September 2008 based on an industry standard Lerch Grossman open-pit optimization algorithm using Whittle software 4X. The treatment charges considered were $270 per ton of zinc concentrate and $210 per ton of lead concentrate. A dilution factor of 3% and a mining recovery factor of 96% were also applied.

62

     Additionally, a sensitivity analysis was carried out between $1,000 to $2,500 per ton of zinc. The result determined that an ultimate pit shell of 372 meters remains close to the optimal. The base metal prices used for the case study were $1,650 per ton for zinc and $1,190 per ton for lead.

     In fiscal 2009, 60,249 dmt of zinc concentrate at a grade of 52.6% was sold to third parties from the Rampura Agucha mine. The revenue realized from zinc concentrate sales was Rs. 1,074 million ($21.1 million). In fiscal 2009, 32,424 dmt lead concentrate at a grade of 58.8% was sold to third parties from the Rampura Agucha mine. The revenue realized from lead concentrate sales was Rs. 1,327 million ($26.1 million).

     Rajpura Dariba

     Rajpura Dariba is a medium sized underground lead-zinc mine and processing facility located approximately 75 kilometers by paved road northeast of Udaipur in the Rajsamand district of Rajasthan, northwestern India. Roads to Chittorgarh and Udaipur are used to transport concentrates to the HZL smelters at Chanderiya and Debari. The railway is used to transport concentrate to the HZL smelter at Vizag on the east coast of India.

     The ore at Rajpura Dariba occurs in the north, south and east lenses which are typically 25 meters to 50 meters thick, are conformable with the stratigraphy and dip approximately 60 degrees to the east. The lenses have strike lengths of 1,200 meters, 500 meters and 600 meters, respectively. They lie within a synclinal structure with a north-south axis, which is overturned to the west with steep easterly dips. The lead and zinc mineralization is hosted within silicified dolomites and graphite mica schists. The main ore minerals are galena and sphalerite, with minor amounts of pyrite, pyrrhotite and silver bearing tetrahedrite-tennantite.

     Mining at Rajpura Dariba commenced in 1983 and is carried out using the Vertical Crater Retreat method and blasting hole mining method with mined out stopes backfilled with cemented classified mill tailings. In certain areas the ground conditions adversely affect slope stability and dilution. These ground conditions are the result of the weak graphitic nature of the shear zone combined with the dissolution of fractured and sheared dolomites by percolating acidic groundwater derived for overlying adjacent oxidized zones. HZL’s Rajpura Dariba’s mine permit is valid until May 2010. HZL has already submitted an application for renewal of the Rajpura Dariba mine permit.

     The mine is serviced by two vertical shafts approximately 600 meters deep. The main shaft is six meters in diameter and the auxiliary shaft is 4.5 meters in diameter. The main shaft has the capacity to hoist 1.0 million tpa of ore and is equipped with a modern multi-rope Koepe winder. All personnel and materials are hoisted in a large counterbalanced cage which is operated by the koepe winder. The surface infrastructure includes ventilation fans, compressors and ore loading facilities.

     The ore is crushed underground before being hoisted to the surface. It is then crushed again and milled before undergoing a lead flotation process incorporating roughing, scavenging and three stages of cleaning. A facility exists at the mine to direct lead rougher concentrate to multi-gravity separators in order to reduce the graphite levels in the final concentrate as required. The final lead concentrate is thickened and filtered and subsequently stored and sent to HZL’s Chanderiya lead smelters.

     Lead flotation tails are sent to the zinc flotation process, which comprises roughing, scavenging and three stages of cleaning. The facility is able to direct zinc rougher concentrate to column flotation cells to reduce silica levels in the final concentrate if required. Zinc concentrates are thickened, filtered and stored prior to dispatch to HZL smelters. Zinc flotation tails proceed to a backfill plant where they are cycloned with the underflow proceeding to intermediate storage where cement is added in preparation for use as underground fill. The cyclone overflow is thickened to recover water ahead of disposal in the tailings dam.

     Power for the mine is supplied largely from HZL’s captive power plants at Chanderiya and through a contract with Ajmer Vidyut Vitran Nigam Limited. Water is sourced via a 22-kilometer long pipeline from the Matri Kundia Dam on the seasonal Banas River as well as from underground. Water supply has been erratic in the past requiring supplemental supplies to be delivered by truck.

63

     The gross book value of the Rajpura Dariba mine’s fixed assets and mining equipment was approximately Rs. 2,149 million ($42.2 million) as of March 31, 2009.

     HZL estimates the remaining life of the mine based on reserves as of March 31, 2009 and current production to be approximately 13 years from April 1, 2009. An exploration program is also underway to identify new resources with the potential to be upgraded to reserves, and has been and continues to be focused on maintaining the reserve position after annual mining depletion. The drill spacing for proven reserves was some 30 meters while for probable reserves was less than 60 meters.

     The average grade for each individual stope was defined using standard parameters for internal waste and dilution and a geological cut-off grade of 3% combined lead and zinc, though the mineralization generally has a sharp natural contact. The economic cut-off grade was then calculated based on a zinc price of $1,000 per ton and a lead price of $700 per ton, treatment charges of $130 per ton for zinc concentrate and $140 per ton for lead concentrate and fiscal 2006 cost and performance levels. The in-situ quantities and qualities were adjusted by applying a mining loss factor of 10%, a dilution factor of between 12% and 20% depending on ground conditions, with a further grade adjustment of (0.2)% for lead, (0.3)% for zinc and five grams per ton silver. These parameters are based on a reconciliation of historical production. This analysis showed that at these prices the diluted in-situ cut-off grade should be 5.4% combined lead and zinc. Stopes with average grades below this economic cut-off grade were excluded from the reserve estimate. The final reserve estimate is the sum of the stopes with an average grade above the economic cut-off limit. As the stopes are all accessed using the existing infrastructure and as there is sufficient capacity on the tailings dam, the capital expenditure was limited to the replacement of mining equipment and was therefore considered not to have a material impact on the cut-off grade.

     The latest addition to the Rajpura Dariba mining operation is the Sindesar Khurd underground mine deposit that was explored during the years 1992 to 1995. Mine production began at the Sindesar Khurd mine in April 2006 and HZL’s mining permit is valid until 2029.

     The Sindesar Khurd mine is a small scale underground mine. The deposit lies five kilometers north of and is on the same geological belt as the Rajpura Dariba mine. Ore from the mine is fed to the Rajpura Dariba mill and processing plant. The two mines are connected by all-weather tar road. The proven and probable reserves for the Sindesar Khurd mine as of March 31, 2009 of 6.39 million tons at 5.31% zinc and 2.76% lead are quoted in the figures for Rajpura Dariba.

     The Sindesar Khurd ore body is conformable with the host stratigraphy. The mineralization lies within silicified dolomite and graphite mica schist which are overlain by quartzite. The deposit has been drilled to a depth of approximately 800 meters below surface and the ore body is traced over approximately two kilometers along the strike with an 800 meters vertical extension. While the deposit is still open in depth in the southern extension of the present mine block, the area below the mine block and towards the north extension only has narrow and low to moderate grade mineralization intersected.

     Access to the mine is through an incline shaft and ramp from the surface while ore is hauled up the inclined shaft through the ramp. The ore body is accessed via horizontal drives on three levels. The long-hole open stoping mining method is used.

     Exploration at the south part of Sindesar Khurd has been ongoing since March 2005 with a drilling program aimed at increasing the size of the resource. As of March 31, 2008, a total of 45 holes have been drilled, the deepest being 700 meters below surface.

     The actual production achieved by the Rajpura Dariba mines, which includes the Sindesar Khurd mine, in fiscal 2009 was 783,288 tons of ore at 4.9% zinc and 1.8% lead ore mined to produce 59,671 tons of zinc concentrate at 47.4% zinc, 17,744 tons of lead concentrate at 52.0% lead and 2,837 grams per ton of silver and 8,687 tons of bulk concentrate with 38.1% zinc and 11.2% lead, with 81.8% of the zinc being recovered in the zinc concentrate and 74.3% of the lead and 61.9% of the silver being recovered in the lead concentrate.

     In fiscal 2009, 16,013 dmt of zinc concentrate at a grade of 46.5% was sold to third parties from the Rajpura Dariba mines. The revenue realized from zinc concentrate sales was Rs. 324 million ($6.4 million). In fiscal 2009, 24,075 dmt of lead concentrate at a grade of 52.5% was sold to third parties from the Rajpura Dariba mines. The revenue realized from lead concentrate sales was Rs. 1,924 million ($37.8 million).

     Zawar

     Zawar consists of four separate mines, Baroi, Zawarmala, Mochia and Balaria. The deposit is located approximately 60 kilometers south of the city of Udaipur in the district of Udaipur in Rajasthan, in northwestern India. It is accessed by paved road from Udaipur in the north and Ahmedabad, the capital of the State of Gujarat, to the south. All of the deposits lie within a 36.2 square kilometers

64

mining lease granted by the State Government of Rajasthan, which is due for renewal in 2010. We have filed applications for renewal of the leases at Zawar. The Mochia and Balaria mines pre-date, and are not governed by, current environmental clearance regulations, though HZL has consents to operate the mines under the Air and Water Acts, renewed through September 30, 2009 by the Rajasthan State Pollution Control Board. Renewal applications for these consents are typically submitted three months prior to their expiration. We submitted our renewal applications in July 2009.

     The four deposits at Zawar are hosted by low grade metamorphosed sediments consisting of greywackes, phyllites, dolomites and quartzites that unconformably overlay the Pre-Cambrian basement. The zinc-lead-pyrite mineralization is strata bound and occurs as vein-stringers reflecting the high level of fractures within the more competent dolomites. There are multiple ore bodies that are complex in some areas as the lenses split and enclose waste rock. The ore bodies are steeply dipping.

     Zawar uses the open stoping mining method for the majority of its production with shrinkage stoping being used where the ore body geometry dictates.

     Ore processing is carried out in a conventional comminution and differential lead-zinc flotation plant that comprises two separate circuits. The first was commissioned in 1971, the second in 1977 and then the first was refurbished in 2001. The ore is crushed underground and then hoisted to the surface before being crushed and milled to 74 microns. Milled ore is conveyed separately to two lead flotation circuits and undergoes a process incorporating roughing, scavenging and cleaning. Final lead concentrate is thickened and filtered then stored before dispatch to the Chanderiya lead smelters. Lead flotation tails proceed to two zinc flotation circuits comprising roughing, scavenging and cleaning. Zinc concentrates are thickened and filtered, then stored and dispatched to the Debari and Chanderiya zinc smelters. Zinc flotation tails are thickened and then disposed of in a valley fill type tailings dam.

     The actual production achieved in fiscal 2009 was 944,300 tons of ore mined at 3.3% zinc and 2.0% lead to produce 29,257 ton of zinc concentrate at 54.5% zinc, 15,049 tons of lead concentrate at 66.5% lead and 840 grams per ton of silver and 29,924 tons of bulk concentrate with 40.9% zinc and 21.9% lead, with 89.4% of the zinc being recovered in the zinc concentrate and 87.3% of the lead and 75.2% of the silver being recovered in the lead concentrate.

     Power is supplied through a combination of an 80 MW thermal coal-based captive power plant commissioned in December 2008 and a 6 MW captive power plant. Power from the 80 MW thermal coal-based captive power plant is supplied to our Debari hydrometallurgical zinc smelter and any excess power is sold to third parties. Water consumption is controlled by an active water conservation program with supplemental water supplies sourced from a dedicated 300 million cubic foot dam. The process plant is in a reasonable structural, electrical and mechanical condition and a planned maintenance program is in place.

     The gross book value of the Zawar fixed assets and mining equipment was approximately Rs. 1,350 million ($26.5 million) as of March 31, 2009. HZL constructed a new 80 MW thermal coal-based captive power plant at Zawar for Rs. 3,077 million ($60.5 million).

     Based on reserves as of March 31, 2009 and annual production levels, HZL estimates the remaining life of the Zawar operation to be approximately 19 years from April 1, 2009. A surface drilling program is underway to locate deeper resources below the haulage level. The focus of mine exploration at Zawar has been maintenance of reserves following mining depletion. Drilling is carried out on a grid of between 25 meters and 30 meters which is then infilled to 12 meters and 15 meters immediately prior to development. This past exploration has outlined additional in-mine mineral resources which require further delineation to add to reserves and further extend the mine life. Two approaches were used to determine the reserves. For some of the proven reserves, the stope limits had been designed and the mineable quantities were then derived by applying a mining recovery factor of 90% and a dilution factor of 10%. For the remaining proven reserves and all of the probable reserves, the mineable quantities were adjusted further by applying an additional mining recovery factor of 60% to reflect the impact of leaving pillars and an additional dilution factor of 15% to reflect the effect of internal waste.

     The average grade for each individual stope was defined using standard parameters for internal waste and dilution and a geological cut-off grade of 3% combined lead and zinc. The economic cut-off grade was then calculated based on a zinc price of $1,000 per ton, a lead price of $700 per ton, treatment charges of $130 per ton for zinc concentrate and $140 per ton for lead concentrate and fiscal 2006 cost and performance levels. This analysis showed that at these prices, the diluted cut-off grade should be 3.6% combined lead and zinc. Stopes with average grades below this economic cut-off grade were excluded from the reserve estimate. The final reserve estimate is the sum of the stopes with an average grade above the economic cut-off limit. As the stopes are all accessed using the existing infrastructure and as there is sufficient capacity on the tailings dam, the capital expenditure was limited to the replacement of mining equipment and was therefore considered not to have a material impact on the cut-off grade.

     In fiscal 2009, no zinc or lead concentrate was sold to third parties from the Zawar mine.

65

Summary of Mine Reserves

     The following table sets out HZL’s proven and probable zinc and lead reserves as of March 31, 2009:

	Proven Reserve								Probable Reserve								Total Proven and Probable Reserves
			Zinc		Lead		Silver				Zinc		Lead		Silver				Zinc		Lead		Silver
Mine	Quantity		Grade		Grade		Grade		Quantity		Grade		Grade		Grade		Quantity		Grade		Grade		Grade
	(million tons)		(%)		(%)		(g/t Ag)		(million tons)		(%)		(%)		(g/t Ag)		(million tons)		(%)		(%)		(g/t Ag)
Rampura Agucha		9.2		13.95		2.28		—		58.7		13.27		1.81		56.0		67.9		13.36		1.87		48.4
Rajpura Dariba		3.6		5.87		1.33		102.0		3.8		6.64		1.79		64.0		7.4		6.26		1.56		82.6
Sindesar Khurd		0.9		5.87		2.55		166.0		5.5		5.23		2.79		140.0		6.4		5.32		2.76		143.5
Zawar		3.7		4.00		2.03		—		3.5		3.52		2.06		—		7.3		3.77		2.04		0.0
Total		17.4		9.74		2.04		29.3		71.5		11.82		1.90		60.2		88.9		11.41		1.93		54.1

     Smelters

     Overview

     The following table sets forth the total capacities as of March 31, 2009 at HZL’s Chanderiya, Debari, Vizag and Zawar facilities:

	Capacity
Facility	Zinc		Lead		Silver		Sulphuric Acid		Captive Power
			(tpa)						(MW)
Chanderiya		525,000		85,000		150		828,500		248.5
Debari		88,000		—		—		419,000		14.5
Vizag		56,000		—		—		91,000		—
Zawar		—		—		—		—		86.0
Total		669,000		85,000		150		1,338,500		349.0

     Chanderiya

     The Chanderiya facility is located approximately 120 kilometers east of Udaipur in the State of Rajasthan in Northwest India. The facility contains four smelters, two associated captive power plants, two sulphuric acid plants, and a silver refinery:

• An ISP^TM pyrometallurgical lead-zinc smelter with a capacity of 105,000 tpa of zinc and 35,000 tpa of lead that was commissioned in 1991;

• Two RLE hydrometallurgical zinc smelters with a capacity of 170,000 tpa each that were commissioned in May 2005 and December 2007. Pursuant to the improvement in operational efficiencies which was completed in April 2008, the zinc smelting capacity increased by 40,000 tpa to 210,000 tpa each;

• An Ausmelt^TM lead smelter with a capacity of 50,000 tpa that was commissioned in February 2006;

• Associated 154 MW and 80 MW coal-based captive power plants commissioned in May 2005 and April 2008, respectively;

• A 14.5 MW fuel based captive power plant transferred from Debari in March 2009 and which was originally commissioned at Debari in March 2003;

• Two sulphuric acid plants with a total capacity of 828,500 tpa of sulphuric acid; and

• A silver refinery with a capacity of 150 tpa silver ingots.

     Concentrate requirements for the facility are supplied by HZL’s mines. The 154 MW, 80 MW and 14.5 MW captive power plants at Chanderiya and 80 MW captive power plant at Zawar provide all of the power for the facility. The captive power plants require approximately 130,000 tons of coal per month, which we procure through tenders and from the domestic market, with contracts made on the basis of one to three shipments of 50,000 to 70,000 tons each and the particulars depending on price and other circumstances. The coal is imported from a number of third party suppliers. In addition, HZL secured in January 2006, as part of a consortium with five other partners, the award of a coal block from the Madanpur Coal Block which is expected to help meet the coal requirements of its captive power plants in the future. HZL’s share of the coal block is 31.5 million tons which, according to the Ministry of Coal of the Government of India, are proved reserves with ash content ranging from 28.7% to 47.0% and with gross calorific value ranging from 3,865 Kcal/kg to 5,597 Kcal/kg. On June 16, 2008, the Ministry of Coal of the Government of India approved our mining plan. HZL has also been awarded 1.625 million tons of coal linkage by the Ministry of Coal of the Government of India, which will enable us to source coal from mines of South Eastern Coalfields Limited, or SECL, a subsidiary of Coal India.

66

     Debari

     The Debari hydrometallurgical zinc smelter is located approximately 12 kilometers east of Udaipur in the State of Rajasthan. The hydrometallurgical zinc smelter was commissioned in 1968, uses RLE technology and has a capacity of 80,000 tpa which was increased to 88,000 tpa in April 2008 pursuant to improvements made to its operational efficiencies. The Debari facility also includes a 419,000 tpa sulphuric acid plant. A majority of the power requirements of the facility is sourced from the coal-based captive power plant at Chanderiya and the balance is sourced from an on-site liquid fuel-based 14.5 MW captive power plant commissioned in March 2003. The liquid fuel is procured from domestic oil-producing companies through a tender process for a yearly contract.

     Vizag

     The Vizag hydrometallurgical zinc smelter is located approximately 17 kilometers from the Vizag inner harbor on the Bay of Bengal in the State of Andhra Pradesh in Southeast India. The hydrometallurgical zinc smelter was commissioned in 1977, uses older RLE technology and has a capacity of 56,000 tpa. The Vizag facility also includes a 91,000 tpa sulphuric acid plant. HZL obtains approximately 50% of the facility’s power requirements from Andhra Pradesh Gas Power Corporation Limited, a gas utility company in which HZL holds an 8.0% equity interest. The remaining power is obtained from the Transmission Company of Andhra Pradesh, a government-owned enterprise.

     Haridwar

     We have a 210,000 tpa zinc ingot melting and casting plant in Haridwar in the State of Uttarakhand, of which 105,000 tpa has been commissioned in July 2008. This plant was established at a cost of Rs. 830.0 million ($16.3 million).

Production Volumes

     The following table sets out HZL’s total production from its Chanderiya, Debari and Vizag facilities for the three years ended March 31, 2009:

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

Notes:
(1)	Includes production capitalized in fiscal 2008 of 1,154 tons.
(2)	Excludes lead containing a high content of silver (High Silver lead) produced from the pyrometallurgical lead-zinc smelter for captive use, which was 5,634 tons, 5,319 tons and 5,009 tons in fiscal 2007, 2008 and 2009, respectively.

67

     The following table sets out HZL’s total ore, zinc concentrate, lead concentrate and bulk concentrate production for the three years ended March 31, 2009:

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

Note:
(1)	Bulk concentrate is concentrate that contains both zinc and lead.

Principal Raw Materials

     The principal inputs of HZL’s zinc smelting business are zinc and lead concentrates and power. HZL has in the past been able to secure an adequate supply of the principal inputs for its business.

     Zinc and Lead Concentrates

     Zinc and lead concentrates are the principal raw material of HZL’s smelters. HZL’s lead-zinc mines have provided all of its requirements for zinc and lead concentrates in the past. We expect HZL’s mines to continue to provide all of its zinc and lead concentrate requirements for the foreseeable future.

     Power

     Most of HZL’s operations are powered by the coal-based captive power plants at Chanderiya, for which HZL imports the necessary thermal coal from a number of third party suppliers. HZL has outsourced the day-to-day operation and maintenance of its captive power plants at Chanderiya, Debari and Zawar. In January 2006, HZL secured, as part of a consortium with five other partners, the award of a coal block from the Madanpur Coal Block which is expected to help meet the coal requirements of its captive power plants in the future. HZL’s share of the coal block is approximately 31.5 million tons which, according to the Ministry of Coal of the Government of India, are proven reserves with ash content ranging from 28.7% to 47.0% and with gross calorific value ranging from 3,865 Kcal/kg to 5,597 Kcal/kg. On June 16, 2008, the Ministry of Coal of the Government of India approved our mining plan. HZL has also been awarded 1.625 million tons of coal linkage by the Ministry of Coal of the Government of India, which will enable us to source coal from mines of SECL.

68

     HZL’s remaining operations source their required power from liquid fuel-based captive power plants or from local power companies. The liquid fuel is sourced from third party suppliers on yearly contracts.

     Metallurgical Coke

     In addition, HZL’s pyrometallurgical smelter at Chanderiya requires metallurgical coke that is used in the smelting process. HZL currently sources its metallurgical coke requirements from third parties under long-term contracts and the open market.

Distribution, Logistics and Transport

     Zinc and lead concentrates from HZL’s lead-zinc mines are transported to the Chanderiya and Debari smelters by road. Zinc concentrate from HZL’s mines is also transported by road, or a combination of road and rail, to the Vizag smelter, which is located approximately 1,200 kilometers southeast of the mines. Zinc concentrate may also be shipped for export. Zinc and lead ingots and silver, and sulphuric acid by-products are transported by road to customers in India.

Sales and Marketing

     HZL’s ten largest customers accounted for approximately 47.0%, 36.4% and 23.6% of its net sales in fiscal 2007, 2008 and 2009, respectively. No customer accounted for greater than 10% of HZL’s net sales in fiscal 2007, 2008 or 2009.

     HZL’s marketing office is located in Mumbai, and it has field sales and marketing offices in most major metropolitan centers in India. In fiscal 2009, HZL sold approximately 65% of the zinc and lead metal it produces in the Indian market and exports approximately 35%.

     Approximately 97% of the zinc metal that HZL produced in fiscal 2009 was sold under annual contracts specifying quantity, grade and price, with the remainder sold on the spot market. In some of the contracts, a premium over the LME price is fixed while in other contracts sales take place at a price equal to HZL’s list price less an agreed discount. HZL’s list prices are based on the LME prices, the prevailing market premium, tariffs and logistics costs. HZL periodically revises its list prices based on LME price trends. Thus, the price that HZL receives for its zinc is dependent upon, and subject to fluctuations in, the LME price.

Projects and Developments

     HZL has expansion projects in the amount of approximately Rs. 28,800 million ($566.1 million) to increase its total integrated lead-zinc capacity to 1,065,000 tpa with fully integrated mining and captive power generation capacities. These projects include:

• Establishing two brownfield smelters which are expected to increase the production capacities of zinc and lead by approximately 210,000 tons and 100,000 tons, respectively, at HZL’s Rajpura Dariba complex in the State of Rajasthan in Northwest India, and which are expected to be completed by mid-2010;

• Expanding its ore production capacity at the Rampura Agucha mine from approximately 5.0 million tpa to 6.0 million tpa, which is scheduled for completion in mid-2010, and at the Sindesar Khurd mine from approximately 0.3 million tpa to 1.5 million tpa, which is scheduled to be progressively completed from mid-2010. The ramp portal connecting the Sindesar Khurd mine surface to the ore body has been completed and resources have been mobilized to achieve accelerated mine development;

• Starting mining activity at the Kayar mine which is expected to begin progressively from mid-2010 and to have a production capacity of 360,000 tpa;

• Setting up an associated captive thermal power plant with a capacity of 160 MW at Rajpura Dariba which is expected to be completed by mid-2010; and

• Increasing its silver production from the current levels of approximately 105 tpa to approximately 500 tpa in large part from additional production at the Sindesar Khurd mine.

     These projects are expected to be financed by internal sources and/or debt financing.

69

Market Share and Competition

     HZL is the only integrated zinc producer in India and had a market share by volume of the Indian zinc market of 79.0% in fiscal 2009, according to ILZDA. The only other zinc producer in India, but which is not integrated and depends on imports of zinc concentrate, is Binani Zinc. In fiscal 2009, Binani Zinc had an Indian market share of 7.0% of zinc production, according to ILZDA. Imports and secondary sources accounted for the remaining 13.0% market share.

     Zinc is a commodity product and HZL competes primarily on the basis of price, time of delivery and location. Zinc metal also faces competition as a result of substitution of materials, including aluminum, stainless steel and other alloys, plastics and other materials being substituted for galvanized steel and epoxies, paints and other chemicals being used to treat steel in place of galvanization in the construction market.

     HZL is the only primary lead producer in India, with competition coming from imports which provide a substantial majority of the lead consumed in India. Lead is a commodity product and HZL competes primarily on the basis of price, time of delivery and location.

Our Aluminum Business

Overview

     Our aluminum business is owned and operated by BALCO. BALCO’s partially integrated aluminum operations are comprised of two bauxite mines and the Korba facility, which includes an alumina refinery, a 245,000 tpa aluminum smelter, two captive power plants and a fabrication facility, all of which are located in the State of Chhattisgarh in Central India. During fiscal 2009 and until June 5, 2009, BALCO also operated a 100,000 tpa aluminum smelter.

     We acquired our interest in BALCO in 2001 and have since worked to improve its operating performance through expansions and by improving operational efficiencies and reducing unit costs of production. BALCO currently sources in excess of 72% of the alumina required for its smelters from third party suppliers on both the Indian and international markets, including from Vedanta Aluminium, with the remainder provided by its alumina refinery. BALCO’s bauxite mines provide all of the bauxite required for BALCO’s alumina refinery. BALCO intends to further improve its operating performance by continuing to reduce unit operating costs at the Korba facility, including by lowering power consumption and improving the operating efficiency of the captive power plant. BALCO also intends to focus on the production of fabricated products with higher margins.

     We own a 51.0% ownership interest in BALCO and have management control of the company. The remainder of BALCO is owned by the Government of India, which established BALCO in 1965. We acquired our interest in BALCO from the Government of India on March 2, 2001. On March 19, 2004, we exercised an option to acquire the Government of India’s remaining ownership interest. The exercise of this option has been contested by the Government of India. Further, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “— Options to Increase Interests in HZL and BALCO” for more information.

Principal Products

     Primary Aluminum

     Primary aluminum is produced from the smelting of metallurgical grade alumina. BALCO produces primary aluminum in the form of ingots and wire rods for sale. Ingots are used extensively for aluminum castings and fabrication in the construction and transportation industries. Wire rods are used in various electrical applications especially in the form of electrical conductors and cables.

     Rolled Products

     Rolled products, namely coils and sheets, are value-added products that BALCO produces from primary aluminum. Rolled products are used for a variety of purposes in different industries, including aluminum foil manufacturing, printing, transportation, consumer durables, building and architecture, electrical and communications, packaging and general engineering industries.

     By-products

     Vanadium sludge is a by-product of the alumina refining process and primarily used in the manufacture of vanadium-based ferro alloys.

70

Production Process

     BALCO’s business has a number of elements which are summarized in the following diagram and explained in greater detail below:

* In response to recent global economic conditions and a decline in commodity prices, starting in February 2009, BALCO suspended part of its operations at the 100,000 tpa aluminum smelter. Operations at this aluminum smelter ceased on June 5, 2009. At this aluminum smelter, alumina from the refinery was dissolved in an electrolytic bath in a large carbon or graphite lined steel pot. An electric current was passed through it to produce aluminum metal using VSS technology.

     Bauxite Mines

     BALCO has two captive bauxite mines, Mainpat and Bodai-Daldali, that provide all of its bauxite requirements for its alumina refinery. See “— Additional Supply of Alumina.” As the bauxite deposits at these mines occur close to the surface, they are mined by open-pit methods. The mining operation employed is semi-mechanized, where bauxite sorting and sizing are carried out through manual labor. Overburden, which is in the form of soil and laterite, is first excavated by a combination of a shovel or excavator and a dumper in order to expose the bauxite ore. The bauxite ore is then drilled and blasted. The blasted ore is sorted according to grade at the mine-face, and the rejected ore is back-filled into the mine. The overburden is then returned and the area is leveled and reforested. The sorted ore is transported by road to the Korba complex for further processing.

     Alumina Refinery

     BALCO’s alumina refinery at Korba uses the conventional high pressure Bayer process to produce alumina from bauxite. In the Bayer process, caustic soda is used to extract the alumina content from ground bauxite, at temperatures suitable for the particular mineralogy of bauxite, after which the resultant sodium aluminate solution is separated from the undissolved residue called red mud. The solution is then subjected to seeded precipitation to produce alumina hydrate, which is then calcined into alumina and transported to the smelter.

     Additional Supply of Alumina

     The additional alumina required for BALCO’s smelters in excess of the capacity of its alumina refinery is obtained by purchasing alumina on both the domestic Indian market, including from Vedanta Aluminium, and international markets. Alumina purchased from third party suppliers is transported by road to BALCO’s smelters at Korba. In addition, BALCO also sends bauxite to Vedanta Aluminium for conversion into alumina, which is returned to BALCO for use in its smelters, for which a conversion fee linked to market rates is paid to Vedanta Aluminium.

     Aluminum Smelters

     BALCO’s 245,000 tpa aluminum smelter uses pre-baked technology from GAMI of China. In this pre-baked process, alumina is converted into primary aluminum through a smelting process using electrolytic reduction. The reduction process takes place in a reduction cell, referred to as the pot, where alumina is reduced to molten aluminum. From the pot-line, the molten aluminum is sent to the fabrication facility.

     During fiscal 2009 and until June 5, 2009, BALCO also operated a 100,000 tpa aluminum smelter that uses Vertical Stud Soderberg, or VSS, technology to produce aluminum from alumina. Alumina is dissolved in an electrolytic bath of molten cryolite (sodium aluminum fluoride) in a large carbon or graphite lined steel container known as a “pot.” An electric current is passed through the electrolyte at low voltage but at a very high current. The electric current flows between a carbon anode (positive), made of petroleum coke and pitch, and a cathode (negative), formed by the thick carbon or graphite lining of the pot. Molten aluminum is deposited at the bottom of the pot and is siphoned off periodically. The molten aluminum is then taken to a holding furnace, cleaned and sent to the fabrication facility. In response to recent global economic conditions and a decline in commodity prices, starting in February 2009, BALCO suspended part of its operations at the 100,000 tpa aluminum smelter. Operations at this aluminum smelter ceased on June 5, 2009. The surplus power generated by the captive power plants at the Korba facility is sold to the CSEB and other third parties.

     Fabrication Facility

     BALCO’s fabrication facility, consisting of a cast house and a sheet rolling shop, processes the molten aluminum from the smelters into ingots, wire rods and rolled products. The cast house uses continuous rod casters from Continuus-Properzi S.p.A. and has a foundry which has twin-roll continuous casters with a spinning nozzle inert flotation, or SNIF, degasser and hydraulically driven semi-continuous ingot casting machine to produce ingots and wire rods. Molten metal is cast into slabs and either hot-rolled and sold as hot-rolled sheets or converted into cold-rolled sheets in the cold rolling mills. Alternatively, molten metal is directly used in strip casting and then fed to the cold rolling mills to convert it into cold-rolled sheets or coils.

     Delivery to Customers

     Ingots, wire rods and rolled products are transported by trucks to customers in India and to ports for export.

71

Principal Facilities

     Overview

     The following map shows the locations of BALCO’s mines and production facilities and the reserves or production capacities, as applicable, as of March 31, 2009:

* Operations partially suspended from February 2009 and ceased on June 5, 2009.

     The following map shows details of the locations of BALCO’s facilities in the State of Chhattisgarh:

72

     Bauxite Mines

     Chhattisgarh Mines

     The Chhattisgarh mines and deposits comprise the operating mines at Mainpat and Bodai-Daldali. Mainpat is an open-pit bauxite mine located approximately 170 kilometers from the Korba complex in the Surguja district of the State of Chhattisgarh in central India. The Mainpat mine was commissioned in 1993 and lies within a mining lease granted by the Government of India which is due for renewal on July 8, 2012. The mining lease covers an area of 6.39 square kilometers. The bauxite extraction limit for the mine approved by the IBM is 750,000 tpa. The Bodai-Daldali deposits are located approximately 260 kilometers from Korba in the Kawardhha district of the State of Chhattisgarh. Bodai-Daldali was commissioned in 2004 by BALCO and lies within a 6.3 square kilometers renewable mining lease that is valid until March 27, 2017. The bauxite extraction limit for Bodai-Daldali approved by the IBM is 1,250,000 tpa.

     The Chhattisgarh bauxite deposits are situated on a series of steep sided plateau at an elevation of approximately 1,000 meters, for Mainpat, and approximately 500 meters, for Bodai-Daldali, above the surrounding land. The bauxite generally is one meter to three meters thick and lies within a laterite sequence overlying thick Tertiary basalts of the Deccan Traps. The cover of laterite and thin topsoil is up to five meters thick but is generally less than two meters. The bauxite outcrops around much of the plateau rims and is also visible as boulders strewn across fields topping the edge of the plateau.

     A typical profile of the Chhattisgarh deposits comprises topsoil and soft overburden above the laterite. The upper laterite consists of hard, loose or indurated bauxite pebbles and boulders with a clear contact with the underlying hard bauxites. The bauxite occurs in discontinuous lenses up to six meters in thickness with laterite infilling joints and fractures with the bauxite. The contact with the softer lower laterite is usually gradational and irregular.

     The bauxite is hard to very hard with a natural moisture content of 5% to 10%, an in-situ density of 2.3 tons to 2.4 tons per cubic meter and a low porosity (less than 2%). It comprises primarily gibbsite with boehmite and minor diaspore. The reactive silica content is low and iron is present in the form of hematite and aluminous goethite. The average grade of the bauxite is, at present, approximately 47% aluminum oxide (available alumina is approximately 41%) and silica levels of less than 4%.

     All mining and transportation at Mainpat is undertaken by contractors. One thin top soil layer is removed by excavator and is either transported to an adjacent storage point or an area that is being backfilled. The laterite layer is drilled and blasted. The overburden is then removed by backhoe excavators and 15-ton trucks. Broken ore is hand-sorted, leaving waste material behind. Ore productivity is around two tons per person per day in the dry season, dropping to around 1.25 tons per person per day in the wet season. Excavator loading is employed in areas where bauxite deposit is more consistent.

     The ore pile is loaded by hand into non-tipping 16 to 25-ton trucks. Loaded trucks undertake a one-way trip of approximately 210 kilometers via public roads to the offloading point at BALCO’s Korba plant. The journey takes approximately six to seven hours depending upon truck condition and road conditions which are highly variable, ranging from seven-meter wide, drained, cambered, smooth bitumen highways to non-surfaced, ungraded, three meter wide dirt tracks. In May 2009, BALCO commissioned an extensive road building and improvement program to reduce the average one-way haul distance from approximately 250 kilometers to approximately 140 kilometers. At Mainpat’s processing site, the trucks are unloaded manually and the bauxite is bulldozed onto an armored pan feeder conveyor, where it is fed into the crusher.

     The current exploration drilling program is based on a 50-meter square pattern and is reduced to 25 meter centers for detailed mine planning. Sampling is normally in 0.40 meter lengths and core is currently split and retained for future reference. Bauxite samples are tested for silica and aluminum oxide at laboratories situated on site and at the Korba plant. Selected samples are re-assayed as part of a quality control program.

     Since commencing operations, the Mainpat mine has produced approximately 5.5 million tons of bauxite, with production in fiscal 2009 totaling approximately 571,422 tons at 44.7% aluminum oxide. Our operations are subject to extensive governmental and environmental regulations which have in the past and could in the future cause us to incur significant costs or liabilities or interrupt or close our operations.

     Power and water requirements at Mainpat are minimal and can be supplied by small on-site diesel generators and from boreholes in the mine.

     BALCO estimates the reserves at Mainpat as of March 31, 2009 to be 3.3 million tons and, based on current and anticipated production rates, expects that the mine will continue to operate for approximately five years from April 1, 2009.

     Total production at the Bodai-Daldali mine since the commencement of production has been 1,220,847 tons of bauxite, with production in fiscal 2009 totaling approximately 300,250 tons at 49.1% aluminum oxide. As at the Mainpat mine, manual sorting and sizing of ore is carried out due to the bauxite occurring as boulders, though trials for mechanized crushing and screening on-site are planned. Power is supplied by on-site diesel generators and ground water provides the water requirements for the mine.

     BALCO estimates the reserves at Bodai-Daldali as of March 31, 2009 to be 3.8 million tons and, based on current and anticipated production rates, expects that the mine will continue to operate for approximately five years from April 1, 2009.

     A cut-off grade of 44% aluminum oxide was used to define the reserves at BALCO’s mines, which cut-off grade was primarily defined by geological limits. As the bauxite is hand-sorted and the mining recovery adjustment factor is based on reconciliation studies, there is a high degree of confidence in the cut-off limits. Also, BALCO’s operations are vertically integrated and all bauxite mined at the Mainpat and Bodai-Daldali mines is only suitable for use at BALCO’s Korba alumina refinery. Consequently, the economic feasibility of the reserves depends on the economic feasibility of the company. Based on current costs and historical prices, BALCO’s operations are forecast to remain profitable and therefore the deposits at the Mainpat and Bodai-Daldali mines fulfill the requirements for being classified as reserves.

73

     The reserves as of March 31, 2009 at BALCO’s mines at Mainpat and Bodai-Daldali have been determined by verifying that the integrated operation is economic at an aluminum price of $2,502 per ton, which is the average metal price for the three fiscal years ending March 31, 2009.

     A drill hole spacing of 50 meters by 50 meters is used to determine the proven reserves while a drill hole spacing of 100 meters by 100 meters is used to determine the probable reserves.

     The mining dilution and mining recovery factors applied to determine the reserves at the Mainpat mine are 6.4% and 62.0%, respectively, while the factors applied at the Bodai-Daldali mine are 5.0% and 65.0%, respectively. The parameters for Mainpat are derived from the reconciliation of actual production against the geological model, while the parameters for Bodai-Daldali are based on estimates.

     For fiscal 2009, the smelting and refining recovery from the mines for the production of alumina was at 76.9%. In fiscal 2009, all mining and transportation of the bauxite was done by contractors and the total cost for this was Rs. 972 ($19.1) per ton of bauxite.

     For fiscal 2009, the stripping ratio at the Mainpat mine was 1.0:2.3 with 2.3 tons of waste overburden being removed to mine one ton of ore, while the stripping ratio at the Bodai-Daldali mine was 1.0:2.9 with 2.9 tons of waste overburden being removed to mine one ton of ore. The strip ratio for the remaining reserves at Mainpat is 4.8 tons of waste per ton of ore while at Bodai-Daldali it is 5.0 tons of waste per ton of ore.

     Summary of Bauxite Mine Reserves

     The following table sets out BALCO’s proven and probable bauxite reserves as of March 31, 2009:

	Proven Reserves				Probable Reserves				Total Proven and Probable Reserves
Mine	Quantity		Oxide		Quantity		Oxide		Quantity		Oxide
	(million tons)		(%)		(million tons)		(%)		(million tons)		(%)
Mainpat		3.5		46.3		—		—		3.5		46.3
Bodai-Daldali		3.3		46.4		0.4		46.0		3.8		46.3
Total		6.8		46.3		0.4		46.0		7.3		46.3

     Korba Facility

     Overview

     BALCO’s Korba facility is located at Korba in the State of Chhattisgarh in Central India and consists of one alumina refinery, two aluminum smelters, two captive power plants and a fabrication facility. The following table sets forth the total capacities as of March 31, 2009 at BALCO’s Korba facility:

	Capacity
Facility	Alumina(1)		Aluminum		Captive Power
	(tpa)				(MW)
Korba		200,000		345,000(2)		810

Notes:
(1)	Alumina is used for production of aluminum. Approximately two tons of alumina is required for the production of one ton of aluminum.
(2)	Includes 100,000 tpa of capacity from BALCO’s older aluminum smelter that uses VSS technology and which ceased operations on June 5, 2009.

      Refinery

     The Korba alumina refinery was commissioned in 1973, uses the conventional high pressure Bayer process and has a capacity of 200,000 tpa of alumina.

      Smelters

     There are two aluminum smelters at Korba. The newer smelter, which uses pre-baked GAMI technology and has a capacity of 245,000 tpa, was commissioned in November 2006. The older smelter was commissioned in 1975, uses the VSS technology to produce aluminum from alumina and has a capacity of 100,000 tpa. In response to recent global economic conditions and a decline in commodity prices, starting in February 2009, BALCO suspended part of its operations at the 100,000 tpa aluminum smelter. The 100,000 tpa aluminum smelter ceased operations on June 5, 2009.

74

     Fabrication Facility

     The fabrication facility at Korba has two parts, a cast house and a sheet rolling shop.

     Cast House

     The cast house uses continuous rod casters from Continuus-Properzi S.p.A. and has a foundry which has twin-roll continuous casters with a SNIF degasser and hydraulically driven semi-continuous ingot casting machine to produce ingots and wire rods.

     Sheet Rolling Shop

     The sheet rolling shop has three parts: a hot rolling mill with a capacity of 75,000 tpa, an older cold rolling mill with a capacity of 30,000 tpa and a newer cold rolling mill commissioned in 2004 with a capacity of 36,000 tpa. Molten metal is cast into slabs and then either hot-rolled and sold as hot-rolled sheets or converted into cold-rolled sheets in the cold rolling mills. Alternatively, molten metal is directly used in strip casting and then fed to the cold rolling mills to convert it into cold-rolled sheets or coils.

     Captive Power Plants

     Smelting requires a substantial continuous supply of power and interruptions can cause molten metal to solidify and damage or destroy the pots. Power for the Korba facility is for the most part provided by the older coal-based 270 MW captive power plant commissioned in 1988 together with a newer coal-based 540 MW captive power plant commissioned in March 2006. Thermal coal is a key raw material required for the operation of BALCO’s captive power plants. In April 2008, BALCO entered into two five-year coal supply agreements with SECL for the supply of thermal coal by SECL to BALCO, which represents approximately 66% of its thermal coal requirements, with the remainder obtained through open market purchases and imports of coal.

Production Volumes

     The following table sets out BALCO’s total production from its Korba facility for the three years ended March 31, 2009:

		Year Ended March 31,
Facility	Product	2007		2008		2009
				(tons)
Korba	Alumina(1)		222,395		217,185		197,947
	Ingots		182,921		195,795		172,263
	Rods		72,981		101,183		127,120
	Rolled products		57,287		61,693		57,399
Total(2)			313,189		358,671		356,782

Notes:
(1)	Reflects alumina production. Alumina that is produced is used in production of aluminum and rolled products. Additional alumina needed for production of aluminum is purchased from third parties and not reflected in alumina production numbers. Approximately two tons of alumina is required for the production of one ton of aluminum.
(2)	Reflects total of ingots, rods and rolled products.

     The following table sets out the total bauxite ore production for each of BALCO’s mines for the three years ended March 31, 2009:

		Year Ended March 31,
Mine (Type of Mine)	Product	2007			2008			2009
		(tons, except for percentages)
Mainpat (Open-pit)	Bauxite ore mined		665,495			628,925			571,422
	Ore grade		45.6	%		45.2	%		44.7	%
Bodai-Daldali (Open-pit)	Bauxite ore mined		331,950			520,109			300,250
	Ore grade		50.0	%		49.5	%		49.1	%
Total			997,445			1,149,034			871,672

75

Principal Raw Materials

     The principal inputs of BALCO’s operations are bauxite, alumina, power, carbon, caustic soda and certain other raw materials. BALCO has in the past been able to secure an adequate supply of the principal inputs for its business.

     Bauxite

     Bauxite is the primary raw material used in the production of alumina. BALCO sources the bauxite required for its alumina refinery from its own mines.

     Alumina

     Alumina is the primary raw material used in the production of aluminum. BALCO currently sources in excess of 72% of its alumina required for its smelters from third party suppliers on both the Indian and international markets, including from Vedanta Aluminium, with the remainder provided by its alumina refinery. The alumina sourced externally is metallurgical grade calcined alumina with a minimum alumina content of 98.6% on a dry basis. In fiscal 2007, 2008 and 2009, BALCO purchased 384,150 tons, 309,460 tons and 112,017 tons of alumina at an average price of $378, $398 and $365 per ton, respectively, on a Cost, Insurance and Freight (CIF) basis at the port of Vizag, India.

     Power

     Smelting primary aluminum requires a substantial, continuous supply of electricity. A reliable and inexpensive supply of electricity, therefore, significantly affects the viability and profitability of aluminum smelting operations. As a result, power is a key input at BALCO’s Korba facility, where it is provided by two coal-based captive power plants of 270 MW and 540 MW, respectively. Our captive power plants have historically been dependant upon coal allocations from Coal India. In November 2007, BALCO received a coal block allocation of 211.0 million tons for use in its captive power plants. Power for BALCO’s mines is provided by on-site diesel generators. However, if such allocation is not available, BALCO will continue to source coal from third parties.

     Water

     Water is also an important input for BALCO’s captive power plants. BALCO sources its water requirements at Korba from a nearby canal, with the water transported by pipelines. BALCO is currently in a dispute with NTPC regarding the right of way for its water pipeline that supplies water to its 270 MW captive power plant, which has been built through NTPC premises. Arbitration proceedings commenced on May 18, 2009 and are ongoing. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Our operations are subject to operating risks that could result in decreased production, increased cost of production and increased cost of or disruptions in transportation, which could adversely affect our revenue, results of operations and financial condition.”

     Carbon

     Carbon is an important raw material to the aluminum smelting process. Carbon is used in the process of electrolysis, in the form of cathodes and anodes, with the latter the biggest component of BALCO’s carbon costs. Anodes are made up of carbonaceous material of high purity. For pre-baked anodes, green carbon paste made of calcined petroleum coke and coal tar pitch is compacted or pressed into the required form. These anodes are baked before their use in electrolytic cells, or pots.

     BALCO has in-house facilities to manufacture carbon anodes to meet its entire carbon anode requirements. Calcined petroleum coke, coal tar pitch and fuel oil, which are the key ingredients for the manufacture of carbon anodes, are sourced primarily from the Indian market. There is an adequate supply of these raw materials in India, though their prices are generally determined by movements in global prices.

     Caustic Soda

     Caustic soda is a key raw material used to dissolve the bauxite in the alumina refining process. The caustic soda requirement varies significantly depending on the silica content of the bauxite and the technology employed. BALCO sources its caustic soda requirements from various domestic manufacturers.

76

     Other Raw Materials

     BALCO also uses other raw materials such as fluorides and other chemicals. For these raw materials, there are several sources of supplies in the domestic markets and BALCO does not foresee any difficulty in securing supplies when needed.

Distribution, Logistics and Transport

     Bauxite mined from the Mainpat and Bodai-Daldali mines is transported by road approximately 170 kilometers and 260 kilometers, respectively, from the mines to the Korba facility. Alumina purchased from third party suppliers is obtained from a combination of domestic sources and imports, and is transported to the Korba facility by road from domestic third party suppliers or ports. BALCO’s aluminum products are transported from the Korba facility to domestic customers through a combination of road and rail, and shipped for export.

Sales and Marketing

     BALCO’s ten largest customers accounted for approximately 39.9%, 37.2% and 44.6% of its net sales in fiscal 2007, 2008 and 2009, respectively. No customer accounted for greater than 10% of BALCO’s net sales in the last three fiscal years.

     BALCO’s sales and marketing head office is located in Mumbai, and it has field sales and marketing offices in most major metropolitan centers in India. Currently, BALCO sells its products primarily in the Indian market, with limited focus on exports. However, with the commissioning of the new aluminum smelter, a significant part of the additional production is sold in the export market. BALCO’s key customers include conductor manufacturers, state road transport corporations, railways, defense contractors and electrical equipment and machinery manufacturers.

     Domestic sales are normally conducted on the basis of a fixed price for a given month that BALCO determines from time to time on the basis of average LME price for the month, as well as domestic supply and demand conditions. The price for aluminum BALCO sells in India is normally higher than the price it charges in the export markets due to the tariff structure, smaller order sizes that domestic customers place and the packaging, storing and truck loading expenses incurred when supplying domestic customers.

     BALCO’s export sales of aluminum are currently on a spot basis at a price based on the LME price plus a premium.

Projects and Developments

     On October 7, 2006, BALCO entered into a memorandum of understanding with the State Government of Chhattisgarh, India, and the CSEB under which, among other things, feasibility studies will be undertaken to build a thermal coal-based 1,200 MW captive power facility, along with an integrated coal mine, in the State of Chhattisgarh at an estimated cost of Rs. 46,500 million ($914.1 million). BALCO has entered into four engineering, procurement and construction contracts with SEPCO Electric Power Construction Corporation in relation to this project. The board of directors of BALCO, at its meeting held on January 9, 2008, approved the entry by BALCO into further procurement contracts for the supply of equipment in connection with this project. Subsequently, in September 2008, BALCO entered into an implementation agreement with the State Government of Chhattisgarh setting forth the details for the implementation of this project. The project is expected to be commissioned by June 2010, with the second phase being completed by September 2011.

     In addition, on August 8, 2007, BALCO entered into a memorandum of understanding with the State Government of Chhattisgarh for a potential investment to build an aluminum smelter with a capacity of 650,000 tpa at Chhattisgarh at an estimated cost of Rs. 81,000 million ($1,592.3 million). The first of two phases of this project has been commenced by BALCO with the setting up of a 325,000 tpa aluminum smelter, which uses pre-baked GAMI technology. BALCO has received environmental clearance for both phases of the project. Construction has commenced and the first production stream from the 325,000 tpa aluminum smelter is expected in October 2010. The first phase is also expected to be completed by September 2011.

     The estimated cost of building the 325,000 tpa aluminum smelter and 1,200 MW captive power facility is Rs. 76,900 million ($1,511.7 million). As of March 31, 2009, Rs. 13,224 million ($260.0 million) has been spent.

Market Share and Competition

     BALCO is one of the five primary producers of aluminum in India and had a primary market share of 28% in fiscal 2009, according to AAI. BALCO’s competitors (and their respective primary market shares by volume in India in fiscal 2009) are Hindalco (39%), NALCO, a Government of India enterprise (28%), and Vedanta Aluminium (3%) and MALCO (2%), subsidiaries of Vedanta.

     Aluminum ingots, wire rods and rolled products are commodity products and BALCO competes primarily on the basis of price and service, with price being the most important consideration when supplies are abundant. Aluminum competes with other materials, particularly plastic, steel, iron, glass, and paper, among others, for various applications. In the past, customers have demonstrated a willingness to substitute other materials for aluminum.

77

Vedanta Aluminium

Overview

     We hold a 29.5% ownership interest in Vedanta Aluminium. The other 70.5% of Vedanta Aluminium is owned by Vedanta. Vedanta Aluminium is not part of our consolidated group of companies.

     In October 2004, Vedanta Aluminium entered into an agreement with the Orissa Mining Corporation Limited, or OMC, regarding the establishment of the alumina refinery, an aluminum smelter and associated captive power plants in the Lanjigarh and Jharsuguda districts.

Projects and Developments

     Lanjigarh Alumina Refinery

     Vedanta Aluminium has entered into an agreement with Orissa Mining Corporation Ltd, or OMC, regarding the establishment of an alumina refinery, an aluminum smelter and an associated captive power plant in the Lanjigarh district, which is located approximately 450 kilometres from BALCO’s Korba facility. In November 2007, the Supreme Court of India directed that we enter into an arrangement with OMC to operate the bauxite mines in place of Vedanta Aluminium. As such, subject to the OMC obtaining a mining lease for the Lanjigarh bauxite mines, OMC and we have agreed to set up a joint venture company to operate the mines. It is proposed that OMC will own 26% of the joint venture company and we will own the remaining 74%. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings — Petitions have been filed in the Supreme Court of India and the High Court of Orissa to seek the cessation of construction of Vedanta Aluminium’s refinery in Lanjigarh and related mining operations in Niyamgiri Hills.”

     Vedanta Aluminium is intended to be a fully integrated alumina and aluminum producer with a 1.0 million tpa greenfield alumina refinery and an associated 75 MW captive power plant, expandable to 1.4 million tpa and 90 MW, respectively, subject to governmental approvals, at Lanjigarh, in the State of Orissa in Eastern India. The refinery will be completed in two phases of 700,000 tpa each. In March 2007, Vedanta Aluminium began the progressive commissioning of the 1.0 million tpa greenfield alumina refinery. The refinery started production from a single stream operation and produced 585,597 tons of alumina in fiscal 2009. The second production stream of the Lanjigarh alumina refinery was commissioned in April 2009. The estimated cost of the project is Rs. 44,000 million ($864.9 million). As of March 31, 2009, Rs. 41,054 million ($807.0 million) has been spent.

      In addition, Vedanta Aluminium is investing an estimated Rs. 68,800 million ($1,352.5 million) to expand its alumina refining capacity at Lanjigarh to 5.0 million tpa by increasing the capacity of the current alumina refinery from 1.4 million tpa to 2.0 million tpa by March 2010 through debottlenecking and by constructing a second 3.0 million tpa alumina refinery and an associated 210 MW captive power plant. The 3.0 million tpa refinery and an associated 210 MW captive power plant are expected to be commissioned by mid-2011. Vedanta Aluminium has entered into contracts with suppliers for a majority of the equipment and machinery to construct the new refinery and is in the process of obtaining all governmental approvals for the project. As of March 31, 2009, Rs. 4,065 million ($79.9 million) has been spent on the project.

     On August 8, 2008, the Supreme Court of India granted us clearance for our forest diversion proposal for the conversion of 660,749 hectares of forest land from forestry use to mining use, allowing us to source bauxite which has been mined on the Niyamgiri Hills in Lanjigarh. Pursuant to the Supreme Court order, we were required to pay the higher of 5% of annual profits before tax and interest from the Lanjigarh project and Rs. 100 million per annum (commencing April 2007), as a contribution for scheduled area development, as well as Rs. 122 million towards tribal development and Rs. 1,055.3 million plus expenses towards a wildlife management plan for conservation and the management of wildlife around the Lanjigarh bauxite mine. As of March 23, 2009, an amount of Rs. 1,211.8 million has been remitted to Compensatory Afforestation Fund and Rs. 200 million has been deposited with OMC in compliance with the Supreme Court order. On December 11, 2008, the Ministry of Environment and Forests, or MoEF, granted in-principal approval under the Forest (Conservation) Act, 1980, or the Forest Act, and we are currently in the process of complying with the conditions specified in the MoEF’s approval. On April 28, 2009, the MoEF granted us environmental clearance for the mining of bauxite. We expect to receive bauxite mined from the Niyamgiri Hills via a conveyor by mid-2010.

     Jharsuguda Aluminum Smelter

      500,000 tpa Aluminum Smelter

     Vedanta Aluminium is investing an estimated Rs. 95,583 million ($1,879.0 million) in the Jharsuguda project, which involves the setting up of a greenfield 500,000 tpa aluminum smelter, together with an associated thermal coal-based 1,215 MW captive power plant, in Jharsuguda, Orissa in India. Vedanta Aluminium has obtained funding for the entire estimated cost of the project. As of March 31, 2009, Rs. 87,043 million ($1,711.1 million) has been spent on the project. We have received environmental approvals for the project. Commissioning of the first phase commenced in May 2008, six months ahead of schedule, and was fully commissioned in May 2009. Vedanta Aluminium produced 82,030 tons of aluminum from the first phase in fiscal 2009. The second phase is expected to be progressively commissioned from June 2009 through the end of fiscal 2010, subject to the receipt of governmental approvals. The associated thermal coal-based captive power plant will consist of nine units of 135 MW each, five of which have been commissioned as part of the first phase. The commissioning of the captive power plant units is scheduled to meet the power requirements of the new Jharsuguda smelter and all other power requirements of the facility.

78

     1,250,000 tpa Aluminum Smelter

     Vedanta Aluminium is investing an estimated Rs. 116,800 million ($2,296.0 million) to set up a 1,250,000 tpa aluminum smelter. As of March 31, 2009, Rs. 17,223 million ($338.6 million) has been spent on the project. Vedanta Aluminium’s investment in Jharsuguda includes the costs of building the smelter and all necessary infrastructure including railway networks, water pipelines and a township for employees. In addition, Vedanta Aluminium is considering building a 1,980 MW coal-based captive power plant to provide all the power requirements of its 1,250,000 tpa smelter at an estimated cost of Rs. 80,000 million ($1,572.6 million). It received formal approval to set up a special economic zone in a portion of the area on February 27, 2009. This special economic zone is a designated duty-free enclave approved by the Government of India which is treated as foreign territory for purposes of trade operations, duties and tariffs. The 1,250,000 tpa aluminum smelter is expected to be progressively commissioned from March 2010 and to be completed by September 2012 and Vedanta Aluminium expects to produce 150,000 tons of aluminum ingots in 2010. Subject to certain conditions, there is no customs duty or excise duty for the import or procurement of capital goods, raw materials, consumables, spares and other products into the special economic zone. There is a 100% income tax exemption for a period of five years, a 50% income tax exemption for a further period of five years and a further exemption for up to 50% of profits that are reinvested into the zone for a period of five years under Section 10AA of the Income Tax Act, 1961, or the Income Tax Act.

Our Commercial Power Generation Business

Overview

     Although electricity generation capacity has increased substantially in recent years, the demand for power in India to support its growing economy has in recent years exceeded, and continues to substantially exceed, the available generation supply. Per capita consumption of power in India, despite significant increases in recent years, continues to lag behind power consumption in other leading developed and emerging economies by a large margin. See “— Our Industry — Commercial Power Generation Business — Consumption.” India has large coal resources of 264.5 billion tons as of April 1, 2008, according to Geological Survey of India, and the coal industry is in a process of government deregulation that is expected to increase the availability of coal for power generation, among other uses. To sustain the recent economic growth in India, the Ministry of Power in India has set a target to provide an installed capacity of 212,000 MW by 2012 by adding approximately 100,000 MW of generation capacity from the 2007 installed capacity. As part of the planned target of approximately 100,000 MW of additional capacity by 2012, the Government of India has proposed setting up nine UMPPs. Each of these projects is expected to be commissioned during the period from 2008 to 2012 and four have already been awarded as of March 31, 2009.

     We believe that these factors make the commercial power generation business an attractive growth opportunity for us to diversify our business and that, by leveraging our project execution and operating skills and experience in building and managing power plants and by applying our mining experience to the mining of coal blocks that we have been and will continue to seek to have allotted to us by the Government of India, we may compete successfully in this business.

Our Experience with Captive Power Plants

     We have been building and managing captive power plants since 1997. As of May 31, 2009, the total power generating capacity of our captive power plants and wind power plants, including the captive power plants of our 29.5%-owned subsidiary Vedanta Aluminium, was 2,078.7 MW, including six thermal coal-based captive power plants with a total power generation capacity of 1,604 MW that we built within the last five years.

     The following table sets forth information relating to our and Vedanta Aluminium’s existing power plants as of May 31, 2009:

Fiscal Year Commissioned	Capacity		Location		Fuel Used
	(MW)
1988(1)		270	Korba		Thermal coal
1997		24	Tuticorin		Liquid fuel
2003		14.5	Debari		Liquid fuel
2003		6	Zawar		Liquid fuel
2003		14.5	Chanderiya	(2)	Liquid fuel
2005		22.5	Tuticorin		Liquid fuel
2005		154	Chanderiya		Thermal coal
2006		540	Korba		Thermal coal
2007		75(3)	Lanjigarh		Thermal coal
2007		107.2	Gujarat and Karnataka		Wind(4)
2008		80	Chanderiya		Thermal coal
2009		80	Zawar		Thermal Coal
2009		16	Gujarat and Karnataka		Wind(4)
2009	675(3)		Jharsuguda		Thermal Coal
		2,078.7

Notes:
(1)	Commissioned by BALCO prior to our acquisition of BALCO in 2001.
(2)	Transferred from Debari to Chanderiya in March 2009.
(3)	Captive power plant of Vedanta Aluminium, our 29.5%-owned subsidiary that is 70.5%-owned and controlled by Vedanta. The Lanjigarh captive power plant is expandable to 90 MW, subject to government approvals.
(4)	Our wind power plants are not for captive use.

79

     We have the following power plants under construction:

• HZL’s 160 MW coal-based captive power plant at the Rajpura Dariba mines which is currently under construction and which is expected to be commissioned in mid-2010.

• BALCO’s 1,200 MW thermal coal-based captive power plant in the State of Chhattisgarh which is expected to be completed by September 2011.

• Sterlite Energy’s 2,400 MW thermal coal-based power plant in Jharsuguda in the State of Orissa which is expected to be progressively commissioned starting in the third quarter of fiscal 2010 and is expected to be completed by the second quarter of fiscal 2011.

     In addition, Vedanta Aluminium is setting up a 210 MW coal-based captive power plant at its second 3.0 million alumina refinery which is expected to be commissioned by mid-2011. Vedanta Aluminium continues to set up its 1,215 MW (comprised of nine units of 135 MW each) coal-based captive power plant at Jharsuguda. Five of the nine units, representing 675 MW of power generation capacity, were commissioned by May 2009 as part of the first phase and the remaining four units of 135 MW each are expected to be commissioned in 2010.

Our Plans for Commercial Power Generation

     Sterlite Energy — Orissa

     In August 2006, our shareholders approved a new strategy for us to enter into the power generation business in India. Sterlite Energy is investing approximately Rs. 82,000 million ($1,612.0 million) to build a 2,400 MW thermal coal-based sub-critical power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. As of March 31, 2009, Rs. 39,121 million ($769.0 million) has been spent on the project. The project is expected to be progressively commissioned starting in the third quarter of fiscal 2010, with full completion anticipated by the second quarter of fiscal 2011. This project is expected to be financed by internal sources and/or debt financing.

     Sterlite Energy is building this power facility in the State of Orissa, which has abundant coal resources estimated at 65.3 billion tons as of April 1, 2008, according to the Geological Survey of India 2008. According to the Energy Information Administration, a statistical agency of the United States Department of Energy, India has the fourth largest coal reserves in the world. According to the Ministry of Coal of the Government of India, the State of Orissa has approximately 24.7% of India’s coal resources of 264.5 billion tons as of April 1, 2008. The plant would require approximately 13.2 million tpa of coal. Sterlite Energy has applied to the Ministry of Coal for allotments of coal blocks and long-term coal linkages. In January 2008, the Ministry of Coal jointly allocated the coal blocks in the Rampia and Dip Side Rampia in the State of Orissa to six companies, including Sterlite Energy. Sterlite Energy’s proportionate share would be 112.2 million tons. The six companies have entered into an agreement regarding the joint allocation through a joint venture company incorporated in February 2008. We expect the development of the mines to take between three and five years. Additionally, Sterlite Energy has been allotted a coal linkage for the Jharsuguda project to meet the coal requirements of one of the units of 600 MW of the 2,400 MW power facility. The arrangements for obtaining the coal requirement for the remaining three units are currently in progress.

     Further, on September 26, 2006, Sterlite Energy entered into a memorandum of understanding with the State Government of Orissa under which the government has agreed to assist us in our acquisition of approximately 3,000 acres of land for the power facility, including the rehabilitation and resettlement of persons to be displaced, the obtaining of environmental clearances, the allocation of coal blocks, long-term coal linkages, water allocations and the sourcing of power during the construction period. The process of making arrangements for railway marshalling yard, coal stockpile, ash pond and other required facilities is currently underway. Pursuant to the memorandum of understanding, on September 28, 2006, Sterlite Energy entered into a power purchase agreement with the Grid Corporation of Orissa Limited, or GridCo, a nominee of the State Government of Orissa, which provides for approximately 600 MW of power to be supplied to the State Government of Orissa each year over a five-year period. The power purchase agreement also provides that all power generated by the power plant prior to commercial operations and, thereafter, the power generated from the facility in excess of a plant load factor of 80% will be made available to GridCo at a variable price plus a variable incentive to be determined by the CERC. The power generated from the plant would be sold to entities including SEBs and power trading companies. In order to sell the power to more than one state, we would be required to create an evacuation system through a 400 kilovolt power transmission line and a substation approximately 200 kilometers from the facility.

80

     Sterlite Energy — Talwandi Sabo

     In July 2008, Sterlite Energy succeeded in an international bidding process and was awarded the project for the construction of a 1,980 MW coal-based thermal commercial power plant at Talwandi Sabo in the State of Punjab in India. The State of Punjab has a power deficit of supply versus demand, according to the Northern Regional Power Committee of the Government of India. All necessary approvals for the project have been obtained and commissioning of this project will be carried out in stages and is expected to be completed in April 2013 at an estimated cost of Rs. 92,450 million ($1,817.4 million). On September 1, 2008, Sterlite Energy completed the acquisition of TSPL for a purchase price of Rs. 3,868.4 million ($76.0 million). In September 2008, TSPL entered into a long-term power purchase agreement with the Punjab State Electricity Board for the sale of power from the completed power plant. This project is expected to be financed by internal sources and/or debt financing.

     HZL — Wind Power Plants

     HZL’s board of directors has approved the establishment of wind power plants with a combined capacity of up to 300 MW at an estimated cost of Rs. 16,000 million ($314.5 million). As of March 31, 2009, wind power plants with a combined power generation capacity of 123.2 MW have been commissioned in the States of Gujarat and Karnataka in India at a total cost of Rs. 6,030 million ($118.5 million). The electricity from these wind power plants is sold to SEBs. This project is funded through internal accruals and will benefit from the various tax incentives available under the Income Tax Act.

     Other Opportunities in Power

     Vedanta Aluminium entered into an agreement on October 1, 2007 with GridCo for the sale of excess power from one unit of its 75 MW captive power plant at Lanjigarh with a capacity of 30 MW. In addition, Vedanta Aluminium is considering building a 1,980 MW coal-based captive power plant to provide all the power requirements of its 1,250,000 tpa smelter in Jharsuguda in the State of Orissa, at an estimated cost of Rs. 80,000 million ($1,572.6 million).

     Sterlite Energy intends to participate in projects relating to the generation of coal-based thermal power and ancillary activities, including UMPPs or other projects announced by the Government of India or any state government. A recent initiative of the Ministry of Power of the Government of India offers private developers an opportunity to establish a number of UMPP’s. Private developers will be selected on the basis of competitive bidding and under the initiative, will have the benefit of the assured purchase of power generated and payment security mechanisms. Four of such UMPPs have been awarded.

Risks in Commercial Power Business

     There will be risks involved in entering into the commercial power generation business. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — We are developing our commercial power generation business, a line of business in which we have limited experience, from which we may never recover our investment or realize a profit and which may result in our management’s focus being diverted from our core copper, zinc and aluminum businesses” and “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — If any power facilities we build and operate as part of our commercial power generation business do not meet operating performance requirements and agreed norms as may be set out in our agreements, or otherwise do not operate as planned, we may incur increased costs and penalties and our revenue may be adversely affected” for more details.

Exploration and Development Activities

     We are engaged in ongoing exploration activities to locate additional ore bodies in India and Australia. We spent approximately Rs. 406 million ($8.0 million) in fiscal 2009 on exploration.

     The focus of our exploration has been sediment hosted zinc deposits in India. Bauxite exploration concentrates on delineating and evaluating known deposits within economic transport distance of our alumina refinery at Korba.

81

Options to Increase Interests in HZL and BALCO

Call Options Over Shares in HZL

     On April 11, 2002, we acquired a 26.0% interest in HZL from the Government of India through our subsidiary SOVL. At the time of the acquisition, we owned 80.0% of SOVL and STL owned the remaining 20.0%. In February 2003, STL transferred its 20.0% interest in SOVL to us and SOVL became our wholly-owned subsidiary. SOVL subsequently acquired a further 20.0% interest in HZL through an open market offer. The total cash consideration paid by SOVL for the acquisition of the 46.0% interest in HZL was Rs. 7,776 million.

     Upon SOVL’s acquisition of the 26.0% interest in HZL, the Government of India and SOVL entered into a shareholders’ agreement to regulate, among other things, the management of HZL and dealings in HZL’s shares. The shareholders’ agreement provides that as long as SOVL holds at least 26.0% of the share capital of HZL, SOVL is entitled to appoint one more director to the board of HZL than the Government of India and is entitled to appoint the managing director. In addition, as long as the shareholders’ agreement remains in force, the Government of India has the right to appoint at least one director to the board of HZL.

     There are also various other matters reserved for approval by both the Government of India and SOVL, including amendments to HZL’s Articles of Association, the commencement of a new business, non-pre-emptive issues of shares or convertible debentures, a discounted rights issue and the granting of loans or provision of guarantees or security to other companies under the same management as HZL.

     Under the shareholders’ agreement, the Government of India also granted SOVL two call options to acquire all the shares in HZL held by the Government of India at the time of exercise. SOVL exercised the first call option on August 29, 2003 and acquired an additional 18.9% of HZL’s issued share capital at a cost of Rs. 3,239 million on November 12, 2003, taking our interest in HZL to 64.9%.

     The shareholders’ agreement provides that prior to selling shares in HZL to a third party, either party must first issue a sale notice offering those shares to the other party at the price it intends to sell them to the third party. However, a transfer of shares, representing not more than 5.0% of the equity share capital of HZL, by the Government of India to the employees of HZL is not subject to such right of first refusal by SOVL. The Government of India has transferred shares representing 1.5% of HZL’s share capital to the employees of HZL. The shareholders’ agreement also provides that if the Government of India proposes to make a sale of its shares in HZL by a public offer prior to the exercise of SOVL’s second call option, then SOVL shall have no right of first refusal.

     The second call option provides SOVL a right to acquire the Government of India’s remaining 29.5% shareholding in HZL, subject to the right of the Government of India to transfer up to 3.5% of the issued share capital of HZL to employees of HZL, in which case the number of shares that SOVL may purchase under the second call option will be reduced accordingly. This call option became exercisable on April 11, 2007 and remains exercisable thereafter so long as the Government of India has not sold its remaining interest pursuant to a public offer of its shares. Under the shareholders’ agreement, upon the issuance of a notice of exercise of the second call option by us to the Government of India, we shall be under an obligation to complete the purchase of the shares, if any, then held by the Government of India, within a period of 60 days from the date of such notice. The exercise price for the second call option will be equal to the fair market value of the shares as determined by an independent appraiser. In determining the fair market value of the shares, the independent appraiser may take into consideration a number of factors including, but not limited to, discounted cash flows, valuation multiples of comparable transactions, trading multiples of comparable companies, SEBI guidelines and principles of valuation, the minority status of the shares, the contractual rights of the shares and the current market price of the shares. Based solely on the market price of HZL’s shares on the NSE on July 3, 2009 of Rs. 602.75 ($11.85) per share, and not including the other factors that the independent appraiser may consider, one possible estimation of the exercise price to acquire all of the Government of India’s 124,795,059 shares of HZL would be Rs. 112,830 million ($2,218.0 million). If the Government of India sells its remaining ownership interest in HZL through a public offer, we may look into alternative means of increasing our ownership interest in HZL.

     It has been reported in the media that the Government of India is considering asserting a breach of a covenant by our subsidiary SOVL and may seek to exercise a put or call right with respect to shares of HZL. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — The Government of India may allege a breach of a covenant by our subsidiary SOVL and seek to exercise a put or call right with respect to shares of HZL, which may result in substantial litigation and serious financial harm to our business, results of operations, financial condition and prospects.” If the Government of India makes such an assertion, we intend to contest it and believe we have meritorious defenses.

82

Call Option Over Shares in BALCO

     On March 2, 2001, we acquired a 51.0% interest in BALCO from the Government of India for a cash consideration of Rs. 5,532 million. On the same day, we entered into a shareholders’ agreement with the Government of India and BALCO to regulate, among other things, the management of BALCO and dealings in BALCO’s shares. The shareholders’ agreement provides that as long as we hold at least 51.0% of the share capital of BALCO, we are entitled to appoint one more director to the board of BALCO than the Government of India and are entitled to appoint the managing director. There are various other matters reserved for approval by both the Government of India and us under the shareholders’ agreement, including amendments to BALCO’s Articles of Association, the commencement of a new business, non-pre-emptive issues of shares or convertible debentures and the provision of loans or guarantees or security to other companies under the same management as BALCO.

     Under the shareholders’ agreement, if either the Government of India or we wish to sell our shares in BALCO to a third party, the selling party must first offer the shares to the other party at the same price at which it is proposing to sell the shares to a third party. The other party shall then have the right to purchase all, but not less than all, of the shares so offered. If a shareholder does not exercise its first right of refusal it shall have a tag along right to participate in the sale pro rata and on the same terms as the selling party, except that if the sale is by the Government of India by way of public offer the tag along right will not apply. However, a transfer of shares representing not more than 5.0% of the equity share capital of BALCO by the Government of India to the employees of BALCO is not subject to such right of first refusal by Sterlite.

     The Government of India also granted to us an option to acquire the remaining shares in BALCO held by the Government of India at the time of exercise. The exercise price is the higher of:

• the fair value of the shares on the exercise date, as determined by an independent valuer; and

• the original sale price (Rs. 49.01 per share) ($0.96 per share) together with interest at a rate of 14% per annum compounded half yearly from March 2, 2001 through the exercise date, less all dividends received by the Government of India since March 2, 2001 through the exercise date.

     Based on a valuation report commissioned by the Government of India and us in December 2007, the fair value of the remaining shares in BALCO held by the Government of India was Rs. 12,438 million ($244.5 million).

     Under the terms of the shareholders’ agreement between us and the Government of India, we were granted an option to acquire the shares of BALCO held by the Government of India at the time of exercise. We exercised this call option on March 19, 2004. However, the Government of India has contested the purchase price and validity of the option, contending that the restriction imposed by the shareholders’ agreement on the transfer of shares violates Section 111A of the Indian Companies Act. As negotiations for an amicable resolution were unsuccessful, on direction of the court, arbitrators were appointed by the parties, as provided for under the terms of the shareholders’ agreement. Arbitration proceedings commenced on February 16, 2009 and we submitted our claim statement to the arbitrators. The Government of India has been directed by the arbitrators to file its reply to our claim statement by July 10, 2009. The next hearing on this matter has been scheduled for August 26, 2009. Notwithstanding the outcome of the dispute, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

     See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — The Government of India has disputed our exercise of the call option to purchase its remaining 49.0% ownership interest in BALCO.”

Employees

     As of March 31, 2009, we had 13,368 employees as follows:

Company	Location	Primary Company Function	Total Employees
Copper Sterlite Industries (India) Limited	India	Copper smelting and refining		1,231
Copper Mines of Tasmania Pty Ltd.	Australia	Copper mining		98
Zinc Hindustan Zinc Limited	India	Zinc and lead production		6,661
Aluminum
Bharat Aluminium Company Limited	India	Aluminum production		5,310
Power Sterlite Energy Limited	India	Commercial power generation		68

83

     The majority of our workforce is unionized. Employees of HZL and BALCO are members of registered trade unions such as Bharat Aluminum Mazdoor Sangh for BALCO and Hindustan Zinc Workers Federation for HZL, and are affiliated with national trade unions such as the Indian National Trade Union Congress. We believe that relations with our employees and unions are good, though we have in the past and may in the future experience strikes and industrial actions or disputes. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Our operations are subject to operating risks that could result in decreased production, increased cost of production and increased cost of or disruptions in transportation, which could adversely affect our revenue, results of operations and financial condition.”

     We have a strong ongoing institutional commitment to the health and safety of our employees for achieving sustainable development in harmony with the communities and environments in which we operate. Proactively complying with and exceeding the requirements of regulatory guidelines, utilizing environment friendly technologies in our expansions and modernizations and implementing programs to support communities around our facilities are integral part of to our business strategy. Most of our mines, refineries and smelters in India are both International Standards Organization (ISO) 14001 and Occupational Health and Safety Assessment Series (OHSAS) 18001 certified. We are committed to providing a healthy and safe working environment, to promoting empowerment, commitment and accountability of our employees and to being an equal opportunity employer. We actively initiate and participate in a variety of programs to contribute to the health, education and livelihood of the people in the local communities in which we operate, including through support of schools, educational programs and centers, women empowerment programs, hospitals and health centers. We constantly seek out and invest in new technologies and operational improvements to minimize the impact of our operations on the environment, including energy conservation measures, reductions in sulphur dioxide gas and other air emissions, water conservation and recycling measures and proper residue management. We also invest in programs to promote reforestation and better agricultural practices.

Insurance

     We maintain property insurance which protects against losses relating to our assets arising from fire, earthquakes or terrorism and freight insurance which protects against losses relating to the transport of our equipment, product inventory and concentrates. However, our insurance does not cover other potential risks associated with our operations. In particular, we do not have insurance for certain types of environmental hazards, such as pollution or other hazards arising from our disposal of waste products. The occurrence of a significant adverse event, the risks of which are not fully covered by insurance, could have a material adverse effect on our financial condition or results of operations. Moreover, no assurance can be given that we will be able to maintain existing levels of insurance in the future at the same rates. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Our insurance coverage may prove inadequate to satisfy future claims against us.”

     We and our directors and officers are subject to US securities and other laws. In order to attract and retain qualified board members and executive officers, we have obtained directors’ and officers’ liability insurance. There can be no assurance that we will be able to maintain directors’ and officers’ liability insurance at a reasonable cost, or at all.

Regulatory Matters

Mining Laws

     The Mines and Minerals (Development and Regulations) Act, 1957, as amended, or the MMDR Act, the Mineral Concession Rules, 1960, as amended, or the MC Rules, and the Mineral Conservation and Development Rules, 1988, as amended, or the MCD Rules, govern mining rights and the operations of mines in India. The MMDR Act was enacted to provide for the development and regulation of mines and minerals under the control of India and it lays down the substantive law pertaining to the grant, renewal and termination of reconnaissance, mining and prospecting licenses. The MCD Rules outline the procedures for obtaining a prospecting license or the mining lease, the terms and conditions of such licenses and the model form in which they are to be issued. The MCD Rules lay down guidelines for ensuring mining is carried out in a scientific and environmentally friendly manner.

     The Government of India announced the National Mineral Policy in 1993, which was amended in 2008, to sustain and develop mineral resources so as to ensure their adequate supply for the present needs and future requirements of India in a manner which will minimize the adverse effects of

84

mineral development on the forest, environment and ecology through appropriate protective measures. The aim of the National Mineral Policy is to achieve zero waste mining and the extraction and utilization of the entire run of mines within a framework of sustainable development through the establishment of a resource inventory and registry to be maintained by the IBM, manpower development through education and training, infrastructure development in mineral bearing areas and the facilitation of financial support for mining. At the same time, the Government of India also made various amendments to India’s mining laws and regulations to reflect the principles underlying the National Mineral Policy.

     Grant of a Mining Lease

     Only the government of the applicable state may grant a mining lease. The mining lease agreement governs the terms on which the lessee may use the land for the purpose of mining operations. If the land on which the mines are located belongs to private parties, the lessee must acquire the surface rights relating to the land from such private parties. If a private party refuses to grant the required surface rights to the lessee, the lessee is entitled to inform the state government and deposit with the state government compensation for the acquisition of the surface rights. If the state government deems that such amount is fair and reasonable, the state government has the power to order a private party to permit the lessee to enter the land and carry out such operations as may be necessary for the purpose of mining. For determining what constitutes a fair amount of compensation payable to the private party, state governments are guided by the principles of the Land Acquisition Act, 1894, as amended, or Land Acquisition Act, which generally governs the acquisition of land by governments from private individuals. In case of land owned by the government, the surface right to operate in the lease area is granted by the government upon application as per the norms of that state government.

     If the mining operations in respect of any mining lease results in the displacement of any persons, the consent of such affected persons, and their resettlement and rehabilitation as well as payment of benefits in accordance with the guidelines of the applicable state government, including payment for the acquired land owned by those displaced persons, needs to be settled or obtained before the commencement of the mining project. In respect of minerals listed in the First Schedule of the MMDR Act, prior approval of the Government of India is required to be obtained by the state government for entering into the mining lease. The approval of the Government of India is granted on the basis of the recommendations of the state governments, although the Government of India has the discretion to overlook the recommendation of the state governments. On receiving the clearance of the Government of India, the state government grants the final mining lease and prospecting license. The lease can be executed only after obtaining the mine plan approval from the IBM, which is valid for a period of five years. A mining lease for a mineral or prescribed group of associated minerals cannot exceed a total area of 10 square kilometers. Further, in a state (province), one person cannot acquire mining leases covering a total area of more than 10 square kilometers. However, the Government of India may, if necessary in the interest of development of any mineral, relax this requirement.

     The maximum term of a mining lease is 30 years and the minimum term is 20 years. A mining lease may be renewed for further periods of 20 years or less at the option of the lessee. Renewals are subject to the lessee not being in default of any applicable laws, including environmental laws. The MC Rules provide that if a lessee uses the minerals for its own industry, then such lessee is generally entitled to a renewal of its mining lease for a period of 20 years, unless it applies for a lesser period. The lessee is required to apply to the relevant state government for the renewal of the mining lease at least one year prior to the expiry of the mining lease. Any delay in applying for a renewal of the mining lease may be waived by the applicable state government provided that the application for renewal is made prior to expiry of the mining lease. In the event that the state government does not make any orders relating to an application for renewal prior to the expiration of the mining lease, the mining lease is deemed to be extended until such time the state government makes the order on the application for renewal.

     Protection of the Environment

     The MMDR Act also deals with the measures required to be taken by the lessee for the protection and conservation of the environment from the adverse effects of mining. The MCD Rules require every lessee to take all possible precautions for the protection of the environment and control of pollution while conducting mining operations in any area. The required environmental protection measures include, among others, prevention of water pollution, measures in respect of surface water, total suspended solids, ground water pH, chemicals and suspended particulate matter in respect of air pollution, noise levels, slope stability and impact on flora and fauna and the local habitation.

85

     Labor Conditions

     Working conditions of mine laborers are regulated by the Mines Act, 1952, as amended from time to time, which sets forth standards of work, including number of hours of work, leave requirements, medical examination, weekly days of rest, night shift requirements and other requirements to ensure the health and safety of workers employed in mines.

     Royalties

     Royalties on the minerals extracted or a dead rent component, whichever is higher, are payable to the relevant state government by the lessee in accordance with the MMDR Act. The mineral royalty is payable in respect of an operating mine from which minerals are removed or consumed and is computed in accordance with a prescribed formula. The Government of India has been granted broad powers to modify the royalty scheme under the MMDR Act, but may not do so more than once every three years.

     In addition, the lessee must pay the occupier of the surface land over the mining lease an annual compensation determined by the state government. The amount depends on whether the land is agricultural or non-agricultural.

Environment Laws

     Our business is subject to environmental laws and regulations. The applicability of these laws and regulations varies from operation to operation and is also dependent on the jurisdiction in which we operate. Compliance with relevant environmental laws is the responsibility of the occupier or operator of the facilities.

     Our operations require various environmental and other permits covering, among other things, water use and discharges, stream diversions, solid waste disposal and air and other emissions. Major environmental laws applicable to our operations include:

     The Environment (Protection) Act, 1986 (“EPA”)

     The EPA is an umbrella legislation in respect of the various environmental protection laws in India. The EPA vests the Government of India with the power to take any measure it deems necessary or expedient for protecting and improving the quality of the environment and preventing and controlling environmental pollution. Penalties for violation of the EPA include fines up to Rs. 100,000 or imprisonment of up to five years, or both.

     The Environment Impact Assessment Notification No: 1533(E), 2006 (“EIA Notification”)

     The EIA Notification issued under the EPA and the Environment (Protection) Rules, 1986 provides that the prior approval of the MoEF is required in the event any new project in certain specified areas is proposed to be undertaken. To obtain an environmental clearance, we must first obtain a no-objection certificate from the applicable State Pollution Control Board. This is granted after a notified public hearing, submission and approval of an environment impact assessment report that sets out the operating parameters such as the permissible pollution load and any mitigating measures for the mine or production facility and an environmental management plan.

     Forest (Conservation) Act, 1980 (“Forest Act”)

     The Forest Act requires consent from the relevant authorities prior to clearing forests by felling trees. The final clearance in respect of both forests and the environment is given by the Government of India, through the MoEF. However, all applications have to be made through the respective state governments who will recommend the application to the Government of India. The penalties for non-compliance can include closure of the mine or prohibition of mining activity, stoppage of the supply of energy, water or other services and monetary penalties on and imprisonment of the persons in charge of the conduct of the business of the company.

     Hazardous Wastes (Management and Handling) Rules, 1989 (“Hazardous Wastes Rules”)

     The Hazardous Wastes Rules aim to regulate the proper collection, reception, treatment, storage and disposal of hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous waste to dispose such waste without adverse effect on the environment, including through the proper collection, treatment, storage and disposal of such waste. Every occupier and operator of a facility generating hazardous waste must obtain an approval from the relevant State Pollution Control Board. The occupier is liable for damages caused to the environment resulting from the improper handling and disposal of hazardous waste and any fine that may be levied by the respective State Pollution Control Boards.

86

     Water (Prevention and Control of Pollution) Act, 1974 (“Water Act”)

     The Water Act aims to prevent and control water pollution as well as restore water quality by establishing and empowering State Pollution Control Boards. Under the Water Act, any individual, industry or institution discharging industrial or domestic waste water must obtain the consent of the relevant State Pollution Control Board, which is empowered to establish standards and conditions that are required to be complied with. If the required standards and conditions are not complied with, the State Pollution Control Board may serve a notice on the concerned person, cause the local Magistrates to pass an injunction to restrain the activities of such person and impose fines.

     Water (Prevention and Control of Pollution) Cess Act, 1977 (“Water Cess Act”)

     Under the Water Cess Act, a lessee engaged in mining is required to pay a surcharge calculated based on the amount of water consumed and the purpose for which the water is used. A rebate of up to 25% on the surcharge payable is available to those industries which install any plant for the treatment of sewage or trade effluent, provided that they consume water within the quantity prescribed for that category of industries and also comply with the effluent standards prescribed under the Water Act or the EPA. Penalties for non compliance include imprisonment of any person in contravention of the provisions of the Water Cess Act for a period up to six months or a fine of Rs. 1,000, or both.

     Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”)

     Pursuant to the provisions of the Air Act, any individual, industry or institution responsible for emitting smoke or gases by way of use of fuel or chemical reactions must obtain the consent of the relevant State Pollution Control Board prior to commencing any mining or manufacturing activity. The State Pollution Control Board is required to grant consent within a period of four months of receipt of an application, but may impose conditions relating to pollution control equipment to be installed at the facilities and the quantity of emissions permitted. The penalties for the failure to comply with the provisions of the Air Act include imprisonment of up to seven years and the payment of a fine as may be deemed appropriate.

Employment and Labor Laws

     We are subject to various labor, health and safety laws which govern the terms of employment of the our laborers at our mining and manufacturing facilities, their working conditions, the benefits available to them and the general relationship between our management and such laborers. These include:

     The Industrial Disputes Act, 1947 (“IDA”)

     The IDA seeks to preempt industrial tensions in an establishment and, provide the mechanics of dispute resolution, collective bargaining and the investigation and settlement of industrial disputes between unions and companies. While the IDA provides for the voluntary reference of industrial disputes to arbitration, it also empowers the appropriate government agency to refer industrial disputes for compulsory adjudication and prohibit strikes and lock-outs during the pendency of conciliation proceedings before a board of conciliation or adjudication proceedings before a labor court.

     Contract Labor (Regulation and Abolition) Act, 1970 (“CLRA”)

     The CLRA has been enacted to regulate the employment of contract labor. The CLRA applies to every establishment in which 20 or more workmen are employed or were employed on any day of the preceding 12 months as contract labor. The CLRA vests the responsibility on the principal employer of an establishment to register as an establishment that engages contract labor. Likewise, every contractor to whom the CLRA applies must obtain a license and may not undertake or execute any work through contract laborers except in accordance with the license issued.

     To ensure the welfare and health of contract labor, the CLRA imposes certain obligations on the contractor in relation to establishment of canteens, rest rooms, drinking water, washing facilities, first aid and other facilities and payment of wages. However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide these facilities within a prescribed time period.

87

     Employee State Insurance Act, 1948 (“ESIA”)

     The ESIA requires the provision of certain benefits to employees or their beneficiaries in the event of sickness, maternity, disability or employment injury. Every factory or establishment to which the ESIA applies is required to be registered in the manner prescribed under the ESIA. Every employee, including casual and temporary employees, whether employed directly or through a contractor, who is in receipt of wages up to Rs. 6,500 per month, is entitled to be insured under the ESIA. The ESIA contemplates the payment of a contribution by the principal employer and each employee to the Employee State Insurance Corporation.

     Payment of Wages Act, 1936 (“PWA”)

     The PWA regulates the payment of wages to certain classes of employed persons and makes every employer responsible for the payment of wages to persons employed by such employer. No deductions are permitted from, nor is any fine permitted to be levied on wages earned by a person employed except as provided under the PWA.

     Minimum Wages Act, 1948 (“MWA”)

     The MWA provides for a minimum wage payable by employers to employees. Under the MWA, every employer is required to pay the minimum wage to all employees, whether for skilled, unskilled, manual or clerical work, in accordance with the minimum rates of wages that have been fixed and revised under the MWA. Workmen are to be paid for overtime at overtime rates stipulated by the appropriate government. Contravention of the provisions of this legislation may result in imprisonment up to six months or a fine up to Rs. 500 or both.

     Workmen’s Compensation Act, 1923 (“WCA”)

     The WCA makes every employer liable to pay compensation if injury, disability or death is caused to a workman (including those employed through a contractor) due to an accident arising out of or in the course of his employment. If the employer fails to pay the compensation due under the WCA within one month from the date it falls due, the commissioner may direct the employer to pay the compensation amount along with interest and impose a penalty for non-payment.

     Payment of Gratuity Act, 1972 (“PGA”)

     Under the PGA, an employee who has been in continuous service for a period of five years is eligible for gratuity upon retirement or resignation. The entitlement to gratuity in the event of superannuation or death or disablement due to accident or disease, will not be contingent on an employee having completed five years of continuous service. The maximum amount of gratuity payable must not exceed Rs. 350,000.

     An employee in a factory is said to be in “continuous service” for a certain period notwithstanding that his service has been interrupted during that period by sickness, accident, leave, absence without leave, lay-off, strike, lock-out or cessation of work not due to the fault to of the employee. The employee is also deemed to be in continuous service if the employee has worked (in an establishment that works for at least six days in a week) for at least 240 days in a period of 12 months or 120 days in a period of six months immediately preceding the date of reckoning.

     Payment of Bonus Act, 1965 (“PBA”)

     The PBA provides for the payment of a minimum annual bonus to all employees regardless of whether the employer has made a profit or a loss in the accounting year in which the bonus is payable. Under the PBA every employer is bound to pay to every employee, in respect of the relevant accounting year, a minimum bonus equal to 8.33% of the salary or wage earned by the employee during the accounting year or Rs. 100, whichever is higher. If the allocable surplus, as defined in the PBA, available to an employer in any accounting year exceeds the aggregate amount of minimum bonus payable to the employees, the employer is bound to pay bonuses at a higher rate which is in proportion to the salary or wage earned by the employee and the allocable surplus during the accounting year, subject to a maximum of 20% of such salary or wage. Contravention of the provisions of the PBA by a company will be punishable by imprisonment for up to six months or a fine of up to Rs. 1,000, or both, against persons in charge of, and responsible to the company for, the conduct of the business of the company at the time of contravention.

     Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPFA”)

     The EPFA creates provident funds for the benefit of employees in factories and other establishments. Contributions are required to be made by employers and employees to a provident fund and pension fund established and maintained by the Government of India.

88

The employer is responsible for deducting employees’ contributions from the wages of employees and remitting the employees’ as well as its own contributions to the relevant fund. The EPFA empowers the Government of India to frame various funds such as the “Employees Provident Fund Scheme,” the “Employees Deposit-linked Insurance Scheme” and the “Employees Family Pension Scheme.”

Other Laws

     Land Acquisition Act, 1894 (“Land Acquisition Act”)

     As per the provisions of the Land Acquisition Act, the central government or appropriate state government is empowered to acquire any land from private persons for ‘public purpose’ subject to payment of compensation to the persons from whom the land is so acquired. The Land Acquisition Act further prescribes the manner in which such acquisition may be made by the central government or the appropriate state government. Additionally, any person having an interest in such land has the right to object to such proposed acquisition.

89

C. Corporate Structure

     The following diagram summarizes the corporate structure of our consolidated group of companies and our relationship with Vedanta and other key entities as of June 30, 2009:*

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

90

Notes:

(1)	Volcan is owned and controlled by the Anil Agarwal Discretionary Trust. Onclave, is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned by the Anil Agarwal Discretionary Trust.
(2)	SOVL has a call option to acquire from the Government of India a further 29.5% of HZL (or 26.0% if the Government of India exercises in full its right to sell 3.5% of HZL to HZL employees) which remains exercisable so long as the Government of India has not sold its remaining shares pursuant to a public offer. See “— B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information.
(3)	We exercised our option to acquire the remaining 49.0% of BALCO owned by the Government of India on March 19, 2004. The exercise of this option has been contested by the Government of India. The Government of India has the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “— B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information.

     The principal members of our consolidated group of companies are as follows:

• Sterlite Industries (India) Limited. We are incorporated in Kolkata, State of West Bengal, India, our registered office is in Tuticorin, State of Tamil Nadu, India and we are headquartered in Mumbai. We have been a public listed company in India since 1988 and our equity shares are listed and traded on the NSE and BSE. Our ADSs are listed on the NYSE. Vedanta, through Twin Star and MALCO, owns 61.5% of our issued share capital and has management control of us. Vedanta’s 61.5% ownership interest in us is equal to the sum of Twin Star’s 58.1% ownership interest in us plus 93.6% of the 3.6% ownership interest in us of MALCO (reflecting Vedanta’s 93.6% ownership interest in MALCO). We are a majority-owned and controlled subsidiary of Vedanta. The remainder of our share capital is held by Bhadram Janhit Shalika (previously known as the SIL Employees Welfare Trust), Life Insurance Corporation of India, or LIC, and other institutional and public shareholders (38.3%). We operate our copper business within Sterlite, except for our Australian copper mine, which is owned and operated by our wholly-owned subsidiary CMT.

• Bharat Aluminium Company Limited. BALCO is incorporated in New Delhi, State of Delhi, India and is headquartered at Korba in the State of Chhattisgarh. We own 51.0% of BALCO’s share capital and have management control of the company. The Government of India owns the remaining 49.0%. We exercised an option to acquire the Government of India’s remaining ownership interest in BALCO on March 19, 2004, which has been contested by the Government of India. Further, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “— B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information. BALCO owns and operates our aluminum business.

• Hindustan Zinc Limited. HZL is incorporated in Jaipur, State of Rajasthan, India and is headquartered in Udaipur in Rajasthan. HZL is listed on the NSE and BSE. We own 64.9% of HZL’s share capital through our wholly-owned subsidiary SOVL. The remainder of HZL’s share capital is owned by the Government of India (29.5%) and institutional and public shareholders and employees of HZL (5.6%). Through SOVL, we have management control of HZL, which owns and operates our zinc business, and own a call option to acquire the Government of India’s remaining ownership interest at a fair market value to be determined by an independent appraiser. This call option is exercisable so long as the Government of India has not sold its remaining interest pursuant to a public offer. See “— B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information.

• Sterlite Energy Limited. Sterlite Energy is incorporated in Mumbai, State of Maharashtra, India, and its registered office is located in Tuticorin, State of Tamil Nadu. Sterlite Energy is our wholly-owned subsidiary.

     The key entities that control us are as follows:

• Volcan Investments Limited. Volcan was incorporated in the Bahamas on November 25, 1992, and is owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, controls the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that regulates the ongoing relationship among them. Volcan owns approximately 59.4% of the issued ordinary share capital of Vedanta.

91

• Vedanta Resources plc. On April 22, 2003, Vedanta was created as a new company wholly-owned by Volcan. We and a number of other companies owned directly or indirectly by the Agarwal family at that time became subsidiaries of Vedanta. On December 10, 2003, Vedanta completed an initial public offering of its shares in the United Kingdom and its shares were listed on the LSE. Volcan’s ownership interest in Vedanta is 59.4% as of June 30, 2009. Vedanta is a leading metals and mining company that is listed on the LSE and included in the FTSE 100 Index. We are a majority-owned and controlled subsidiary of Vedanta. We are a party to a shared services agreement with Vedanta and other entities regarding the sharing of management services. See “Item 7. Major Shareholders and Related Party Transactions.” In 2004, Vedanta, through its wholly-owned subsidiary, Vedanta Resources Holdings Limited, or VRHL, acquired 51.0% of KCM, which is incorporated in Zambia. In April 2008, Vedanta acquired a further 28.4% of KCM. KCM is the largest copper metals and mining company in Zambia and exports substantially all of its copper production to the Middle East and Southeast Asia. KCM competes with us on the world copper markets. In April 2007, Vedanta acquired a 51.0% controlling interest in Sesa Goa Limited, which was incorporated in India, is India’s largest private sector iron ore producer and exports substantially all of its iron ore production to leading global steel companies in China, Europe and Japan.

• The Madras Aluminium Company Limited. MALCO was incorporated in 1960 in the State of Tamil Nadu, India where it is also headquartered. MALCO was delisted from the NSE and BSE on June 19, 2009. Vedanta has management control of MALCO. MALCO is a fully integrated aluminum producer and its alumina and aluminum products are primarily sold in the domestic Indian market. MALCO, a competitor of BALCO, had a primary market share in the Indian market of 2% by volume in fiscal 2009, compared to 28% by volume for BALCO and 3% by volume of Vedanta Aluminium, according to AAI.

     We also have an associate company, Vedanta Aluminium, which is incorporated in the State of Maharashtra, India, and is 70.5%-owned by Vedanta through Twin Star and Welter Trading Limited, following a Rs. 4,421 million investment in March 2005. In September 2008, Twin Star sold 25% of its interest in Vedanta Aluminium to Welter Trading Limited, a wholly-owned subsidiary of Twin Star. We own the remaining 29.5% minority interest in Vedanta Aluminium. Vedanta Aluminium is part of Vedanta’s consolidated group of companies but is not part of our consolidated group of companies. Vedanta Aluminium is commissioning a new alumina refinery and setting up a 500,000 tpa aluminum smelter. See “— B. Business Overview — Our Business — Overview.”

D. Property, Plant and Equipment

     See “— B. Business Overview — Our Business — Our Copper Business — Principal Facilities,” "— B. Business Overview — Our Business — Our Zinc Business — Principal Facilities” and “— B. Business Overview — Our Business — Our Aluminum Business — Principal Facilities.”

ITEM 4A. UNRESOLVED STAFF COMMENTS

     Not applicable

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     The following discussion of our business, financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. Some of the statements in the following discussion are forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth under “Item 3. Key Information — D. Risk Factors” and elsewhere in this annual report.

Overview

     We are a non-ferrous metals and mining company with operations in India and Australia. We also have a minority interest in Vedanta Aluminium, an alumina refining and aluminum smelting company, and are developing a commercial power generation business in India that leverages our experience in building and managing captive power plants used to support our copper, zinc and aluminum businesses. We have experienced significant growth in recent years through various expansion projects which have expanded our copper smelting business, by acquiring our zinc and aluminum businesses in 2002 and 2001, respectively, through the Government of India privatization programs and by successfully growing our acquired businesses. We believe our experience in operating and expanding our business in India will allow us to continue to capitalize on attractive growth opportunities arising from India’s large mineral reserves, relatively low cost of operations and large and inexpensive labor and talent pools.

92

     Our net sales and operating income decreased from Rs. 246,414 million and Rs. 75,153 million in fiscal 2008 to Rs. 212,192 million ($4,171.3 million) and Rs. 42,247 million ($830.5 million) in fiscal 2009, representing decreases of 13.9% and 43.8%, respectively.

     The following tables are derived from our selected consolidated financial data and set forth:

• the net sales for each of our business segments as a percentage of our net sales on a consolidated basis;

• the operating income for each of our business segments as a percentage of our operating income on a consolidated basis; and

• the segment profit, calculated by adjusting operating income for depreciation, depletion and amortization, voluntary retirement scheme expenses, impairment of assets and guarantees, impairment of investments and loans and gain on sale of real estate, as applicable, for each of our business segments as a percentage of our segment profit on a consolidated basis.

	Year Ended March 31,
	2007			2008			2009
Net Sales:
Copper		47.8	%		51.3	%		54.9	%
Zinc		35.6			31.7			26.3
Aluminum		16.6			16.9			18.4
Power(1)		—			—			0.4
Corporate and others(1)		—			0.1			—
Total		100.0	%		100.0	%		100.0	%
Operating income:
Copper		18.4	%		14.7	%		25.0	%
Zinc		67.3			70.8			59.5
Aluminum		14.3			15.4			15.1
Power(1)		—			—			0.4
Corporate and others(1)		—			(0.9)			(0.0	)
Total		100.0	%		100.0	%		100.0	%
Segment profit:(2)
Copper		17.9	%		15.2	%		25.0	%
Zinc		66.1			67.1			55.3
Aluminum		16.0			17.2			17.8
Power(1)		—			—			1.6
Corporate and others(1)		—			0.5			0.3
Total		100.0	%		100.0	%		100.0	%

Notes:

(1)

The corporate and other segment includes the results from the power segment for the periods prior to the year ended March 31, 2009.

(2)

Segment profit is calculated by adjusting operating income for depreciation, depletion and amortization, voluntary retirement scheme expenses, guarantees, impairment of investments and loans and gain on sale of real estate, as applicable. Segment profit is not a recognized measurement under US GAAP. Our segment profit may not be comparable to similarly titled measures reported by other companies due to potential inconsistencies in the method of calculation. We have included our segment profit because we believe it is an indicative measure of our operating performance and is used by investors and analysts to evaluate companies in our industry. Our segment profit should be considered in addition to, and not as a substitute for, other measures of financial performance and liquidity reported in accordance with US GAAP. We believe that the inclusion of supplementary adjustments applied in our presentation of segment profit are appropriate because we believe it is a more indicative measure of our baseline performance as it excludes certain charges that our management considers to be outside of our core operating results. In addition, our segment profit is among the primary indicators that our management uses as a basis for planning and forecasting of future periods. The following table reconciles operating income to segment profit for the periods presented:

93

	Year Ended March 31,
	2007			2008			2009			2009
Copper:
Operating income	Rs.	17,235		Rs.	11,037		Rs.	10,557		$	207.5
Plus:
Depreciation, depletion and amortization		1,440			1,613			2,017			39.7
Gain on sale of real estate		(986	)		—			—			—
Segment profit	Rs.	17,689		Rs.	12,650		Rs.	12,574		$	247.2
Zinc:
Operating income	Rs.	62,908		Rs.	53,192		Rs.	25,148		$	494.4
Plus:
Depreciation, depletion and amortization		2,124			2,371			2,629			51.6
Voluntary retirement scheme expenses		97			—			—			—
Segment profit	Rs.	65,129		Rs.	55,563		Rs.	27,777		$	546.0
Aluminum:
Operating income	Rs.	13,371		Rs.	11,581		Rs.	6,364		$	125.1
Plus:
Depreciation, depletion and amortization		2,394			2,663			2,590			50.9
Segment profit	Rs.	15,765		Rs.	14,244		Rs.	8,954		$	176.0
Power:(a)
Operating income	Rs.	—		Rs.	—		Rs.	184		$	3.6
Plus:
Depreciation, depletion and amortization		—			—			608			12.0
Segment profit	Rs.	—		Rs.	—		Rs.	792		$	15.6
Corporate and Others:(a)
Operating income	Rs.	(3	)	Rs.	(657	)	Rs.	(6	)	$	(0.1	)
Plus:
Depreciation, depletion and amortization		1			413			1			(0.0	)
Guarantees, impairment of investments and loans		—			628			137			2.7
Segment profit	Rs.	(2	)	Rs.	384		Rs.	132		$	2.6

    (a) The corporate and other segment includes the results from the power segment for the periods prior to the year ended March 31, 2009.

Business Summary

     Our company is comprised of the following business segments:

• Copper. Our wholly-owned copper business is principally one of custom smelting and includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant, a copper rod plant, a doré anode plant and two captive power plants at Tuticorin in the State of Tamil Nadu in Southern India and a refinery and two copper rod plants at Silvassa in Western India. In addition, we own the Mt. Lyell copper mine in Tasmania, Australia, which provides a small percentage of our copper concentrate requirements, and a precious metal refinery in Fujairah in the UAE. Our primary products are copper cathodes and copper rods. Net sales and operating income of our copper business have decreased from Rs. 126,276 million and Rs. 11,037 million in fiscal 2008 to Rs. 116,525 million ($2,290.7 million) and Rs. 10,557 million ($207.5 million) in fiscal 2009, representing decreases of 7.7% and 4.3%, respectively.

• Zinc. Our zinc business is owned and operated by HZL, India’s leading zinc producer with a 79.0% market share by production volume of the Indian zinc market in fiscal 2009, according to ILZDA. We have a 64.9% ownership interest in HZL. The remainder of HZL is owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). HZL is a fully integrated zinc producer with operations including four lead-zinc mines, three hydrometallurgical zinc smelters, one lead smelter, one lead-zinc smelter, three sulphuric acid plants, a silver refinery and five captive power plants in the State of Rajasthan in Northwest India, one hydrometallurgical zinc smelter and a sulphuric acid plant in the state of Andhra Pradesh in Southeast India, and a zinc ingot melting and casting plant at Haridwar in the State of Uttarakhand in North India. HZL’s primary products are zinc and lead ingots. Net sales and operating income of our zinc business have decreased from Rs. 78,222 million and Rs. 53,192 million in fiscal 2008 to Rs. 55,724 million ($1,095.4 million) and Rs. 25,148 million ($494.4 million) in fiscal 2009, representing decreases of 28.8% and 52.7%, respectively.

• Aluminum. Our aluminum business is primarily owned and operated by BALCO. We have a 51.0% ownership interest in BALCO. The remainder of BALCO is owned by the Government of India. We have exercised our option to acquire the Government of India’s remaining 49.0% ownership interest, though the exercise of this option has been contested by the Government of India and the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. BALCO’s operations include two bauxite mines, one alumina refinery, two aluminum smelters, a fabrication facility and two captive power plants in the State of Chhattisgarh in Central India. BALCO’s primary products are aluminum ingots, rods and rolled products. Net sales and operating income of our aluminum business have decreased from Rs. 41,596 million and Rs. 11,581 million in fiscal 2008 to Rs. 39,170 million ($770.0 million) and Rs. 6,364 million ($125.1 million) in fiscal 2009, representing decreases of 5.8% and 45.1%, respectively.

94

• Power. Our commercial power generation business segment is one that we are developing primarily through our wholly-owned subsidiary, Sterlite Energy. Sterlite Energy is building a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The project is expected to be progressively commissioned starting in the third quarter of fiscal 2010, with full completion anticipated by the second quarter of fiscal 2011. We have obtained coal block allocations of 112.2 million tons from the Ministry of Coal of the Government of India to support this facility. Further, in July 2008, Sterlite Energy was awarded the tender for a project to build a 1,980 MW thermal coal-based commercial power plant at Talwandi Sabo, in the State of Punjab, India, by the Government of Punjab. The project is expected to be completed in April 2013. Our commercial power generation business also includes the 123.2 MW of wind power plants commissioned by our 64.9%-owned subsidiary HZL and any additional wind power plants that HZL may commission as part of the 300 MW of wind power plants approved by HZL’s board of directors. Net sales and operating income in our commercial power generation business segment was Rs. 773 million ($15.2 million) and Rs. 184 million ($3.6 million), respectively, in fiscal 2009. Our power business is still under development, and we expect to have meaningful operating results for our commercial power generation business segment in fiscal 2010, when Sterlite Energy’s first power project is expected to begin commissioning.

• Corporate and Others. Our corporate and other business segment primarily includes our equity investment in Vedanta Aluminium. We hold a 29.5% minority interest in Vedanta Aluminium, which is not consolidated into our financial results and which is accounted for as an equity investment.

Recent Developments

Asarco Acquisition

     On March 6, 2009, we and Asarco, a copper mining, smelting and refining company based in Tucson, Arizona, United States, signed an agreement for us to acquire substantially all of the operating assets of Asarco for $1.7 billion, which on June 12, 2009 we agreed to increase to $1.87 billion, mostly related to an expected increase in working capital on the closing date. Previously, on May 30, 2008, we had signed an agreement to acquire substantially all of the operating assets of Asarco for $2.6 billion in cash following an auction process. Then, in October 2008, due to the financial turmoil, the steep fall in copper prices and adverse global economic conditions, we and Asarco entered into discussions to renegotiate the prior agreement. The current agreement to acquire Asarco follows such renegotiation of the prior agreement and its consummation remains contingent upon the confirmation of a Chapter 11 plan of reorganization proposed by Asarco and sponsored by our wholly owned subsidiary Sterlite USA by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. As a result, there can be no assurance that court approval will be obtained or that the proposed acquisition will be concluded.

     The purchase consideration under the current agreement to acquire Asarco consists of a cash payment of $1.1 billion on closing and a senior secured non-interest bearing promissory note for $770 million, payable over a period of nine years as follows: $20 million per year from the end of the second year for a period of seven years, and a terminal payment of $630 million at the end of the ninth year, totaling to $770 million. In the event that the annual average daily copper prices in a particular year exceed $6,000 per ton, the annual payment in that year will be proportionately increased subject to a cap of $85.56 million per year and the terminal payment will be correspondingly reduced, keeping the total payment under the promissory note at $770 million. The principal amount of the promissory note will be adjusted upwards for any further increase in working capital at closing. The obligations under the promissory note are secured against the assets being acquired and are without recourse to us. We plan to finance the acquisition through a mix of debt and existing cash resources.

     Two other potential acquirors, namely, Asarco Incorporated, along with Americas Mining Corporation, subsidiaries of Grupo México, and Harbinger Capital Partners Master Fund I Ltd, have also submitted proposed reorganization plans. The US Bankruptcy Court allowed such reorganization plans to be considered along with the reorganization plan proposed by Asarco and sponsored by Sterlite USA, and submission of a joint disclosure statement containing the three reorganization plans proposed by all three parties. At a court hearing on July 2, 2009, the US Bankruptcy Court approved the adequacy of the joint disclosure statement. The three reorganization plans have been submitted to Asarco’s creditors for their approval. The US Bankruptcy Court will decide which plan proponent will be confirmed based on, among other things, whether the plan (i) meets the statutory requirements for confirmation under the US Bankruptcy Code, (ii) treats creditors more fairly than the others, (iii) is more feasible than the others, and (iv) is preferred by creditors based upon responses expressed in their ballots. The decision is expected to be made following a hearing which is currently scheduled from August 10, 2009 through August 19, 2009. If we are selected as the winning plan proponent for Asarco, we expect to close the transaction shortly thereafter.

     Asarco, formerly known as the American Smelting and Refining Company, is over 100 years old and is currently the third largest copper producer in the United States. It has a refining capacity of approximately 500,000 tons of refined copper and produced approximately 241,000 tons of refined copper in 2008. Asarco’s mines have estimated reserves of 5.2 million tons of contained copper as of January 2008. For the year ended December 31, 2008, Asarco had total revenues of $1.9 billion and profit before tax of $393 million. The integrated assets proposed to be acquired by us include three open-pit copper mines and a copper smelter in the State of Arizona, United States, and a copper refinery, rod plant, cake plant and precious metals plant located in the State of Texas, United States. We will assume Asarco’s operating liabilities, but not the legacy liabilities for asbestos and environmental claims for Asarco’s ceased operations. The consideration being paid is towards the gross fixed assets and working capital of Asarco.

     We believe that Asarco will be a strategic fit with our existing copper business by:

• leveraging our operational and project execution skills to develop and optimize Asarco’s mines and plants;

• providing access to attractive mining assets with a long life;

• providing geographic diversification through entry into the North American market; and

• providing a stable operating and financial platform for Asarco.

     We have made deposits towards the purchase of substantially all the operating assets of Asarco, consisting of a $50 million letter of credit given as a deposit at the time of signing the original agreement in May 2008, a $50 million deposit made at the time the current agreement was entered into in March 2009 and a $25 million deposit made on May 15, 2009 after the approval by the US Bankruptcy Court of the adequacy of the disclosure statement submitted by us in support of the reorganization plan proposed by Asarco and sponsored by Sterlite USA. The deposits will be credited towards the consideration due on closing.

95

     Separately, we have agreed with the representatives appointed pursuant to Asarco’s reorganization proceedings under Chapter 11 of the US Bankruptcy Code to represent all persons with asbestos claims and demands against Asarco and/or its subsidiary debtors, or the Asbestos Claimants, and Asarco to grant a put option to the asbestos settlement trust to be established, or the Asbestos Trust, pursuant to which the Asbestos Trust shall be entitled to sell to us its interest (expected to be approximately 27%), or the Asbestos Litigation Interest, in the Brownsville judgment against the Americas Mining Corporation, a subsidiary of Grupo México, or the Brownsville Judgment, which was awarded by the US District Court for Southern District of Texas, Brownsville Division, against Americas Mining Corporation requiring it to return to Asarco 260.09 million common stock of Southern Copper Corporation, together with past dividends received with interest, worth over $6.0 billion in aggregate. The Asbestos Litigation Interest in the Brownsville Judgment is to be distributed for the benefit of all Asbestos Claimants. The grant of put option would be subject to the approval and consummation of the reorganization plan proposed by Asarco and sponsored by Sterlite USA. The put option is exercisable by the Asbestos Trust at any time after the end of the second year from the effective date of the approved reorganization plan, or the Effective Date, through the end of the fourth year from the Effective Date at the price of $160 million less the amount of any receipt or other recovery on account of the Asbestos Litigation Interest prior to the exercise of the put option. We do not expect any obligation on account of this agreement.

Raising of Additional Capital

     On June 15, 2009, our board of directors approved resolutions authorizing us to seek the approval of our shareholders for the raising of additional capital through the domestic Indian or international markets. According to the resolutions, we have convened an extraordinary general meeting to be held on July 11, 2009 to seek shareholder approval authorizing us to issue securities representing up to 25% of our currently outstanding and paid-up share capital.

Factors Affecting Results of Operations

     Our results of operations are primarily affected by commodity prices, our cost of production, our production output, government policy in India and exchange rates.

Metal Prices and Copper TcRc

     Overview

     Our results of operations are significantly affected by the TcRc of copper in our copper business and the commodity prices of the metals that we produce, which are based on LME prices, in our zinc and aluminum businesses. Both the TcRc of copper and the commodity prices of the metals we produce can vary significantly when supply of and demand for copper smelting and refining capacity and the metals we produce fluctuate. While copper smelters and metal producers are unable to influence the market rate of the TcRc or commodity prices directly, events such as changes in copper smelting or commodity production capacities, temporary price reductions or other attempts to capture market share by individual smelters and metal producers, including by our consolidated group of companies, may have an effect on market prices. Moreover, the prices realized by us can, to some extent, be affected by the particular terms we are able to negotiate for the contractual arrangements we enter into with buyers. Price variations and market cycles, including recent volatility for both LME prices and the copper TcRc, have historically influenced, and are expected to continue to influence, our financial performance.

     Recent global market and economic conditions have been unprecedented and challenging with tighter credit conditions and recession in most major economies continuing into 2009. These conditions, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have contributed to volatility of unprecedented levels. As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected, leading to decreased spending by businesses and consumers and, in turn, corresponding decreases in global infrastructure spending and commodity prices. Between fiscal 2008 and 2009, we experienced significant declines in TcRc and commodity prices as follows:

• A 25.1% decrease in the average realized TcRc in our copper business and a 22.4% decrease in the daily average LME price of copper, which decreases were due to copper’s use in a broad range of industries adversely affected by the economic downturn, including construction, electronic products, industrial machinery, transportation equipment and consumer products, with construction and electronic products, being the most significant drivers of copper consumption and the construction industry being one of the most adversely affected industries.

• A 47.8% decrease in the daily average zinc LME price, which decrease was particularly significant as the primary driver of zinc demand is the steel galvanizing market, which has principal applications in the construction and automotive industries, two of the industries most adversely affected by the recent global economic downturn.

• A 14.8% decrease in the daily average aluminum LME price, which decrease was, as with copper and zinc, due to aluminum’s use being concentrated in industries adversely affected by the global economic downturn, specifically construction, electricals, transport and packaging. The daily average aluminum LME price would have likely decreased considerably more than it did if it were not for continued strong demand from China.

These decreases were, in the case of copper TcRc and the daily average zinc LME price, following significant declines between fiscal 2007 and 2008.

     The outlook for the copper TcRc and copper, zinc and aluminum commodity prices remains uncertain in the short to medium term, and further decreases, including as a consequence of continued challenging, or a further deterioration in, global market and economic conditions, would have a further adverse impact upon our financial performance. For a further discussion of global market and economic conditions and the risks to our business, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations — Recent global economic conditions have been unprecedented and challenging and have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs.”

96

     Copper

     The net sales of our copper business fluctuate based on the volume of our sales and the LME price of copper. However, as our copper business is primarily one of custom smelting and refining, with only a small percentage of our copper concentrate requirements sourced from our own mine, the profitability of our copper business is significantly dependent upon the market rate of the TcRc. We purchase copper concentrate at the LME-linked price for the relevant quotational period less a TcRc that we negotiate with our suppliers but which is influenced by the prevailing market rate for the TcRc. The market rate for the TcRc is significantly dependent upon the availability of copper concentrate, worldwide copper smelting capacity and transportation costs. The TcRc that we are able to negotiate is also substantially influenced by the TcRc terms established by certain large Japanese custom smelters. The profitability of our copper business as to the portion of our copper business where we source copper concentrate from third parties, which accounted for 92.0% of our copper concentrate requirements in fiscal 2009, is thus dependent upon the amount by which the TcRc we are able to negotiate exceeds our smelting and refining costs. The profitability of our copper operations is also affected by the prices we receive upon the sale of by-products, such as sulphuric acid and precious metals, which are generated during the copper smelting and refining process. The prices we receive for by-products can vary significantly, including as a result of changes in supply and demand and local market factors in the location the by-product is produced. The following table sets forth the average TcRc that we have realized for each of the last three fiscal years:

	Year Ended March 31,
	2007		2008		2009
	(in US cents per pound)
Copper TcRc		31.1¢		15.7¢		11.7¢

     The LME price of copper affects our profitability as to the portion of our copper business where we source copper concentrate from our own mine, which accounted for 8.0% of our copper concentrate requirements in fiscal 2009 and which is expected to decrease as a percentage in the future as the reserves of our sole remaining copper mine, Mt. Lyell in Tasmania, Australia, are expected to be exhausted by fiscal 2013 and to the extent we seek to increase our copper smelting and refining capacity. The following table sets forth the daily average copper LME price for each of the last three fiscal years:

	Year Ended March 31,
	2007		2008		2009
	(in US dollars per ton)
Copper LME	$	6,984	$	7,588	$	5,885

     Zinc and Aluminum

     The net sales of our zinc and aluminum businesses fluctuate based on the volume of our sales and the respective LME prices of zinc and aluminum. Our zinc business is fully integrated, so its profitability is dependent upon the difference between the LME price of zinc and our cost of production, which includes the costs of mining and smelting. BALCO is a partially integrated producer and in fiscal 2009 sourced in excess of 72% of its alumina requirements from third party suppliers, including 19% from international and domestic suppliers and 53% from Vedanta Aluminium, with the remaining 28% provided by BALCO’s own bauxite mines and alumina refinery. Going forward, we expect BALCO to source a majority of its alumina requirements from Vedanta Aluminium and its own bauxite mines and alumina refinery. For the portion of our aluminum business where the alumina is sourced from BALCO’s own bauxite mines and alumina refinery, profitability is dependent upon the LME price of aluminum less our cost of production, which includes the costs of bauxite mining, the refining of bauxite into alumina and the smelting of alumina into aluminum. For the portion of our aluminum business where alumina is sourced from third parties, including Vedanta Aluminium, profitability is dependent upon the LME price of aluminum less the cost of the sourced alumina and our cost of production. The following table sets forth the daily average zinc and aluminum LME prices for each of the last three fiscal years:

	Year Ended March 31,
	2007		2008		2009
	(in US dollars per ton)
Zinc LME	$	3,581	$	2,992	$	1,563
Aluminum LME		2,663		2,620		2,234

     India Market Premium

     Generally, our products sold in India are sold at a premium to the LME market price due to a number of factors including the customs duties levied on imports by the Government of India, the costs to transport metals to India and regional market conditions. See “— Government Policy.” As a result, we endeavor to sell as large a quantity of our products as possible in India.

     Hedging

     We have historically engaged in hedging strategies to a limited extent to partially mitigate our exposure to fluctuations in commodity prices, as further described in “Item 11. Quantitative and Qualitative Disclosures About Market Risk — Qualitative Analysis — Commodity Price Risk.”

Cost of Production

     Our results of operations are, to a significant degree, dependent upon our ability to efficiently run our operations and maintain low costs of production. Efficiencies relating to recovery of metal from the ore, process improvements, by-product management and increasing productivity help drive our costs down. Costs associated with mining and metal production include energy costs, ore extraction and processing costs at our captive mines, labor costs and other manufacturing expenses. Cost of production also includes cost of alumina for our aluminum business, as described under “— Metal Prices and Copper TcRc.” Cost of production does not include the cost of copper concentrate for our copper business, though such cost is included in our cost of sales.

97

     Energy cost is the most significant component of the cost of production in our metal production businesses. Most of our power requirements are met by captive power plants, which are primarily coal-fueled. Thermal coal, diesel fuel and fuel oil, which are used to operate our power plants, and metcoke, which is used in the zinc smelting process, are currently sourced from a combination of long-term and spot contracts. Our aluminum business, which has high energy consumption due to the power-intensive nature of aluminum smelting, sources approximately 66% of its thermal coal requirement from a subsidiary of Coal India under a five-year supply agreement entered into in August 2006. Shortages of coal at Coal India may require that a greater amount of higher priced imported coal be utilized. For example, in April 2005, a shortage of coal led Coal India to reduce the amount of coal supplied to all its customers, except utilities, including BALCO, forcing BALCO to utilize higher priced imported coal. However, in January 2006, we were allotted a 31.5 million ton share in the Madanpur Coal Block for use in HZL’s captive power plant. We intend to begin operations at the Madanpur Coal Block by March 2010. In addition, in November 2007, we were allotted a 211.0 million ton share of a coal block by the Ministry of Coal for use in BALCO’s captive power plant. Any change in coal prices or the mix of coal that is utilized, primarily whether the coal is sourced locally or imported, can affect the cost of generating power.

     For our zinc business and the portions of our copper and aluminum businesses where we source the ore from our own mines, ore extraction and processing costs affect our cost of production. In our zinc and copper businesses, the ore extraction and processing costs to produce concentrates are generally a small percentage of our overall cost of production of the finished metals. In our aluminum business, the bauxite ore extraction cost is not significant but the refining cost to produce alumina from bauxite ore represents approximately one-third of the cost of production of aluminum. In addition, a significant cost of production in our zinc business is the royalty that HZL pays on the lead-zinc ore that is mined, which royalty is a function of the LME prices of zinc and lead. See “— Government Policy — Taxes and Royalties.”

     Labor costs are principally a function of the number of employees and increases in compensation from time to time. Improvements in labor productivity in recent years have resulted in a decrease in the per-unit labor costs. We outsource a majority of BALCO’s and Copper Mines of Tasmania Pty Ltd’s, or CMT’s, mining operations, a substantial portion of HZL’s mining operations and a limited number of functions at our copper, zinc and aluminum smelting operations to third party contractors.

     Other manufacturing expenses include, among other things, additional materials and consumables that are used in the production processes and routine maintenance to sustain ongoing operations. None of these represents a significant portion of our costs of production.

     Cost of production as reported for our metal products includes an offset for any amounts we receive upon the sale of the by-products from the refining or smelting processes. We divide our cost of production by the daily average exchange rate for the year to calculate the US dollar cost of production per lb or ton of metal as reported.

     The following table sets forth our average realized TcRc and cost of production for each of our metals for each of the last three fiscal years:

	Year Ended March 31,
	2007			2008			2009
	(in US dollars per ton, except as indicated)
Treatment charge and refining charge (TcRc):(1)		31.1	¢/lb		15.7	¢/lb		11.7	¢/lb
Cost of production:(2)
Copper smelting and refining(3)		6.1	¢/lb		1.8	¢/lb		3.1	¢/lb
Zinc(4)	$	862		$	884		$	710
Aluminum(5)		1,626			1,720			1,700

Notes:
(1)	Represents our average realized TcRc for the period.
(2)	Cost of production is not a recognized measure under US GAAP. We have included cost of production as a measure of effectiveness because we believe it is an indicative measure of our operating performance and is used by investors and analysts to evaluate companies in our industry. Our computation of cost of production should be considered in addition to, and not as a substitute for, other measures of financial performance and liquidity reported in accordance with US GAAP. We believe that the cost of production measure is a meaningful measure of our production cost efficiency as it is more indicative of our production or conversion costs and is a measure that our management considers to be controllable. Cost of production is a measure intended for monitoring the operating performance of our operations. This measure is presented by other non-ferrous metal companies, though our measure may not be comparable to similarly titled measures reported by other companies. Cost of production as reported for our metal products consists of direct cash cost of production and excludes non-cash cost and indirect cost (such as depreciation and interest payments), and are offset for any amounts we receive upon the sale of the by-products from the refining or smelting process. Cost of production is divided by the daily average exchange rate for the year to calculate US dollar cost of production per lb or per ton of metal as reported. The following table reconciles segment cost, calculated as segment sales less segment profit, to cost of production for the periods presented:

	Year Ended March 31,
	2007			2008			2009
	(in millions, except Production output and Cost of production)
Copper:
Segment sales	Rs.	115,192		Rs.	126,276		Rs.	116,670
Less:
Segment profit		(17,689	)		(12,650	)		(12,574	)
Segment cost		97,503			113,626			104,096
Less:
Purchased concentrate/rock		(91,489	)		(107,422	)		(95,478	)
By-product/free copper net sales		(1,935	)		(4,283	)		(4,337	)
Cost for downstream products		(938	)		(1,197	)		(1,613	)
Others, net		(1,236	)		(195	)		(1,690	)
Total expenses	Rs.	1,905		Rs.	529		Rs.	979
Production output (in tons)		312,720			339,294			312,833
Cost of production(a)		6.1	¢/lb		1.8	¢/lb		3.1	¢/lb

98

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

(a) Exchange rates used in calculating cost of production were based on the daily RBI reference rates for the years ended March 31, 2007, 2008 and 2009 of Rs. 45.29 per $1.00, Rs. 40.24 per $1.00, and Rs. 45.91 per $1.00, respectively.

(3)	Cost of production relates only to our custom smelting and refining operations and consists of the cost of converting copper concentrate into copper cathodes, including the cost of freight of copper anodes from Tuticorin to Silvassa and excluding the benefit of the phosphoric acid plant. Revenues earned from the sale of sulphuric acid and copper metal recovered in excess of paid copper metal are deducted from the cash costs. The total cash costs are divided by the total number of pounds of copper metal produced to calculate the cost of production per pound of copper metal produced.
(4)	Our zinc operations are fully integrated. As a result, cost of production of zinc consists of the total direct cost of producing zinc from the mines and smelters, including extracting ore from the mines, converting the ore into zinc concentrate and smelting to produce zinc ingots. Our zinc segment includes lead and silver. Silver is a by-product of lead and accordingly, there are no additional processing costs for silver. Revenue earned from the sale of silver is reported as profit in this segment. Revenue earned from the sale of sulphuric acid is deducted from the total costs to calculate the total cash costs to HZL of producing zinc metal. Royalties paid are included in the cost of production of zinc. The total cash cost is divided by the total number of tons of zinc metal produced to calculate the cost of production per ton of zinc metal produced. HZL's cost of production in the last month of fiscal 2009, or its exit cost of production for fiscal 2009, was $594 per ton.
(5)	Cost of production of aluminum for BALCO’s smelters includes the cost of producing bauxite and conversion of bauxite into aluminum metal, for the portion of BALCO’s operations that are integrated from production of bauxite to aluminum metal, and the cost of conversion of alumina into aluminum metal, for the portion of BALCO’s operations where alumina is sourced from third parties. Cost of production of aluminum consists of total direct cash costs. Revenue earned from the sale of by-products, such as vanadium, reduces the total cash costs. The total cost is divided by the total quantity of hot metal produced to calculate the cost of production per ton of aluminum hot metal produced. Hot metal production output is used instead of the cast metal production output disclosed elsewhere in this annual report in calculating cost of production as the hot metal production, which excludes the value-added cost of casting, is the measure generally used in the aluminum metal industry for calculating cost of production. In response to recent global economic conditions and a decline in commodity prices, starting in February 2009, BALCO suspended part of its operations at its 100,000 tpa aluminum smelter and ceased operations at this smelter on June 5, 2009. As the 100,000 tpa aluminum smelter had a higher cost of production than the newer (and remaining) 245,000 tpa smelter, and partly as a result of efforts by BALCO to decrease its operating costs in response to the recent global economic conditions, BALCO’s exit cost of production for fiscal 2009 was $1,146 per ton.

99

Production Volume and Mix

     Production volume has a substantial effect on our results of operations. We are generally able to sell all of the products we can produce, so our net sales generally fluctuate as a result of changes in our production volumes. Production volumes depend on our production capacities, which have increased in recent years across all of our businesses. For our mining operations, production volumes also depend upon the quality and consistency of the ore. Per-unit production costs are significantly affected by changes in production volumes in that higher volumes of production generally reduce the per-unit production costs. Therefore, our production volumes are a key factor in determining our overall cost competitiveness. We have benefited from significant economies of scale as we have increased production volumes in recent years, though production volumes for a number of our primary products in our copper and aluminum businesses were flat or decreased between fiscal 2008 and fiscal 2009 due to planned and unplanned shut downs. The following table summarizes our production volumes for our primary products for the last three fiscal years:

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

Notes:
(1)	Copper cathode is used as a starting material for copper rods. Approximately one ton of copper cathode is required for the production of one ton of copper rods.
(2)	Includes production capitalized in fiscal 2008 of 1,154 tons.
(3)	Excludes tolled metal in fiscal 2007 of 251 tons.

     In addition, the mix of products we produce can have a substantial impact on our results of operations as we have different operating margins in each of our businesses, and within each business our operating margins vary between the lower margins of primary metals and the higher margins of value-added products such as copper rods and aluminum rolled products. For example, copper cathodes are converted in our copper rod plant into copper rods, a value-added product which has a higher margin than copper cathodes. As copper rods have higher margins, we endeavor to sell as large a percentage of copper rods as possible. As the production volume of our various products fluctuate primarily based on market demand and our production capacity for such products, the percentage of our revenue from those products will also fluctuate between higher and lower margin products, which will in turn cause our operating income and operating margins to fluctuate.

     Periodically, our facilities are shut down for planned and unplanned repairs and maintenance which temporarily reduces our production volume.

Government Policy

     India Customs Duties

     We sell our products in India at a premium to the LME price, due in part to the customs duties payable on imported products. Our profitability is affected by the levels of customs duties as we price our products sold in India generally on an import-parity basis. We also pay a premium on certain raw materials that we import or which are sourced locally but which are priced on an import-parity basis as a result of customs duties, with copper concentrate, coal, petroleum products, alumina, carbon and caustic soda being the primary examples. The following table sets forth the customs duties that were applicable for the periods indicated:

	January 22, 2007			April 29, 2008 to			January 3, 2009
	to April 28, 2008			January 2, 2009			to present
Copper		5.0	%		5.0	%		5.0	%
Copper concentrate		2.0	%		2.0	%		2.0	%
Zinc		5.0	%		0.0	%		5.0	%
Aluminum		5.0	%		5.0	%		5.0	%

100

     In addition, the Finance Act (2 of 2004) of India, which has been in effect since July 8, 2004, levies an additional surcharge at the rate of 2.0% of the total customs duty payable which has been further increased to 3.0% of the total customs duty payable effective March 1, 2007. We are also liable to pay an additional duty of customs (CVD), of 8.0% of the assessable value and basic custom duty, which is levied on imports in India.

     In January 2004, the special additional duty, or SAD, of 4% which was also levied on imports of copper, zinc and aluminum was abolished, reducing the effective customs duties levied on all imports. The Government of India may reduce or abolish customs duties on copper and aluminum in the future, although the timing and extent of such reductions cannot be predicted. As we sell the majority of the commodities we produce in India, any further reduction in Indian tariffs on imports will decrease the premiums we receive in respect of those sales. Our profitability is dependent to a small extent on the continuation of import duties and any reduction would have an adverse effect on our results of operations and financial condition.

     Export Incentives

     The Government of India provides a variety of export incentives to Indian companies. Indian exports of copper, aluminum and zinc receive assistance premiums from the Government of India. Export incentives do not outweigh the Indian market price premiums. Accordingly, notwithstanding the export incentives, we endeavor to sell as large a quantity of our products as possible domestically.

     In fiscal 2007, 2008 and 2009, exports accounted for 63.4%, 56.6% and 39.2%, respectively, of our copper business’ net sales. The following table sets forth the export assistance premiums, either as Indian Rupees per ton of exports or as a percentage of the FOB value of exports, on copper cathode and copper rods for the period indicated:

	July 15, 2006 to Present
	(percentage of FOB value of exports)
Copper cathode		2.2	%(1)
Copper rods		2.2	%(2)

Notes:
(1)	Subject to a cap of Rs. 7,500 per ton.
(2)	Subject to a cap of Rs. 7,760 per ton.

     In fiscal 2007, 2008 and 2009, exports accounted for 49.7%, 31.5% and 35.1%, respectively, of our zinc business’ net sales. The following table sets forth the export assistance premiums, as a percentage of the FOB value of exports, on zinc concentrate, zinc ingots and lead concentrate for the periods indicated:

	April 1, 2007			October 9, 2007 to						November 5, 2008
	to October 8, 2007			November 3, 2008			November 4, 2008			to Present
	(percentage of FOB value of exports)
Zinc concentrate		5.0	%		3.0	%		2.0	%		3.0	%
Zinc ingots		7.0	%		5.0	%		4.0	%		5.0	%
Lead concentrate		5.0	%		3.0	%		3.0	%		3.0	%

     In fiscal 2007, 2008 and 2009, exports accounted for 28.0%, 24.7% and 16.9%, respectively, of our aluminum business’ net sales. The following table sets forth the export assistance premiums, as a percentage of the FOB value of exports, on aluminum ingots, aluminum rods and aluminum rolled products for the periods indicated:

	April 1, 2007 to October 8, 2007			October 9, 2007 to Present
	(percentage of FOB value of exports)
Aluminum ingots		5.0	%		3.0	%
Aluminum rods		5.0	%		5.0	%
Aluminum rolled products		6.0	%		4.0	%

     The Government of India may further reduce export incentives in the future, which would adversely affect our results of operations.

101

     Taxes and Royalties

     Income tax on Indian companies is presently charged, and during fiscal 2009 was charged, at a statutory rate of 30.0% plus a surcharge of 10.0% on the tax and has an additional charge of 3.0% on the tax including surcharge, which results in an effective statutory tax rate of 34.0%. We have in the past had an effective tax rate lower than the statutory rate, benefiting from tax incentives on infrastructure projects in specific locations.

     Profits of companies in India are subject to either regular income tax or a MAT, whichever is greater. The MAT rate is currently, and during fiscal 2009 was, 11.33% of the book profits as prepared under generally accepted accounting principles in India, or Indian GAAP. Amounts paid as MAT may be applied towards regular income taxes payable in any of the succeeding seven years subject to certain conditions.

     A tax on dividends declared and distributed by Indian companies is charged at an effective tax rate of 17.0%. This tax is payable by the company distributing the dividends. Dividends from our subsidiaries to us are also subject to this tax, though we do not pay income tax upon the receipt of any such dividends.

     We currently pay an excise duty of 8.0% (prior to December 6, 2008, the excise duty was 14%, and from December 6, 2008 to February 23, 2009, the excise duty was 10%) and an additional charge of 3.0% on the excise duty based on all of our domestic production intended for domestic sale. We charge the excise duty and additional charge to our domestic customers.

     We are also subject to government royalties. We pay royalties to the State Governments of Chhattisgarh and Rajasthan in India based on our extraction of bauxite and lead-zinc ore. Most significant of these is the royalty that HZL is currently required to pay to the State of Rajasthan, where all of HZL’s mines are located, at a rate of 6.6% of the zinc LME price payable on the zinc metal contained in the ore produced and 5.0% of the lead LME price payable on the lead metal contained in the ore produced. The royalties paid by BALCO on extraction of bauxite are not material to our results of operations. We also pay royalties to the State Government of Tasmania in Australia based on the operations at CMT at a rate equal to the sum of 1.6% of the net sales plus 0.4 times the profit multiplied by the profit margin over net sales, subject to a cap of 5.0% of net sales.

     There are several tax incentives available to companies operating in India, including the following:

• profits from newly established units in special economic zones are entitled to a tax holiday for a specified period;

• profits from newly constructed power plants (including for captive use) benefit from a tax holiday for a specified period;

• investments in projects where alternative energy such as wind energy is generated can claim large tax depreciation in the first year of operations; and

• income from investment in mutual funds is exempt from a tax subject to certain deductions.

     We have benefited from these tax incentives. Such benefits have resulted in lower effective tax rates, both within SIIL and in some of our operating subsidiaries such as BALCO and HZL. HZL’s new export unit, effective from the quarter ended June 30, 2008, has benefited from its 100% export unit status, where profits on export sales are exempt from tax for a specified period. BALCO and HZL have considerable investments in captive power plants enjoying tax exemptions, and HZL has also benefited from establishing wind energy generating projects. HZL also benefits from a tax holiday exemption with respect to its newly commissioned zinc ingot melting and casting plant at Haridwar in the State of Uttrakhand in North India. In addition, a large part of SIIL’s and HZL’s investment of surplus cash are in tax exempt instruments.

Exchange Rates

     We sell commodities that are typically priced by reference to US dollar prices. However, a majority of our direct costs in our zinc and aluminum businesses and our smelting and refining costs in our copper business are incurred in Indian Rupees and to a much lesser extent in Australian dollars. Also, all costs with respect to imported material for all our businesses are generally incurred in US dollars. As a result, an increase in the value of the US dollar compared to the Indian Rupee, and to a lesser extent the Australian dollar, is generally beneficial to our results of operations, except to the extent that the increase results in increased costs of copper concentrate, alumina and other imported materials for our businesses. A decrease in the value of the US dollar relative to the Indian Rupee or Australian dollar has the opposite effect on our results of operations. For more information on the fluctuations in the value of the Indian Rupee against the US dollar and the Australian dollar, see “Item 10. Additional Information — D. Exchange Controls — Exchange Rates.”

102

Power Business

     We expect our future results of operations to be affected by our entry into the commercial power generation business. The effect of this new business will depend on the timing of and our success in executing this plan. See “Item 4. Information on the Company — B. Business Overview — Our Business — Our Commercial Power Generation Business” for additional details on our plans for this future business.

Critical Accounting Estimates

     The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with US GAAP. In the course of preparing these financial statements, our management has made estimates based on, and assumptions that impact, the amounts recognized in our consolidated financial statements. For a discussion of our significant accounting policies, see note 2 to our consolidated financial statements included in this annual report. We believe the critical accounting estimates described below are those that are both important to reflect our financial condition and results and require difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Mine Properties

     Exploration and evaluation expenditures are written off in the year in which they are incurred. The costs of mine properties, which include the costs of acquiring and developing mine properties and mineral rights, are capitalized and included in property, plant and equipment under the heading “Mine properties” in the year in which they are incurred.

     When it is determined that a mining property has begun production of saleable minerals extracted from an ore body, all further pre-production primary development expenditures are capitalized as part of the cost of the mining property until the mining property begins production of saleable minerals. From the time mining property is capable of producing saleable minerals the capitalized mining property costs are amortized on a unit-of-production basis over the total estimated remaining commercial reserves of each property or group of properties.

     Stripping costs or secondary development expenditures incurred during the production stage of operations of an ore body are included in the costs of the ore extracted during the period that the stripping costs are incurred. Secondary development costs refer to expenses incurred after the mining property has begun production of saleable minerals extracted from an ore body. Such costs include the costs of removal of overburden and other mine waste materials to access mineral deposits incurred during the production phase of a mine.

     When mine property is abandoned, the cumulative capitalized costs relating to the property are written off in the period of abandonment.

     Commercial reserves are proven and probable reserves. Changes in the commercial reserves affecting unit of production calculations are accounted for prospectively over the revised remaining reserves. Proven and probable reserve quantities attributable to stockpiled inventory are classified as inventory and are not included in the total proven and probable reserve quantities used in the units of production depreciation, depletion and amortization calculations.

Useful Economic Lives of Assets and Impairment

     Property, plant and equipment, other than mine properties, are depreciated over their useful economic lives. Our management reviews the useful economic lives at least once a year and any changes could affect the depreciation rates prospectively and hence the asset carrying values.

103

     We also review our property, plant and equipment, including mine properties, for possible impairment if there are events or changes in circumstances that indicate that the carrying value of an asset may not be recoverable and exceeds its fair value. In assessing property, plant and equipment for impairment, factors leading to significant reductions in profits such as changes in commodity prices, our business plans and significant downward revisions in the estimated mining reserves are taken into consideration. The carrying value of the assets and associated mining reserves is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the assets. This involves management estimate of commodity prices, market demand and supply, economic and regulatory climates, long-term mine plans and other factors. Any subsequent changes to cash flow due to changes in the above mentioned factors could impact on the carrying value of the assets.

Asset Retirement Obligations

     Liabilities have been recognized for costs associated with restoration and rehabilitation of mine sites as the obligation to incur such costs arises and when a reasonable estimate of such costs can be made. Such costs are typical of extractive industries and they are normally incurred at the end of the life of the mine. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities. The costs of restoration are capitalized when incurred, reflecting our obligations at that time, and a corresponding liability is created. The capitalized asset is charged to the income statement over the life of the asset through depreciation and the accretion of the discount on the liability over the life of the operation. Management estimates are based on local legislation and/or other agreements. The actual costs and cash outflows may differ from estimates because of changes in laws and regulations, changes in prices, analysis of site conditions and changes in restoration technology.

Commitments, Contingencies and Guarantees

     We also have significant capital commitments in relation to various capital projects which are not recognized on the balance sheet. In the normal course of business, contingent liabilities may arise from litigation and other claims against us. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the consolidated financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which we are involved, it is not expected that such contingencies will have a materially adverse effect on our financial position or profitability.

Income Tax

     In preparing our consolidated financial statements, we recognize income taxes in each of the jurisdictions in which we operate. In each jurisdiction, we estimate the actual amount of taxes currently payable or receivable. We also estimate the tax bases of assets and liabilities based on estimates, and such estimates may change when the tax returns are prepared. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to the year when the asset is realized or the liability is settled based on tax rates (and tax laws) that have been enacted as of the balance sheet date. We do not record deferred taxes on unremitted earnings of foreign subsidiaries, based on timing of the reversal of the temporary differences where it is probable that the temporary differences will not reverse in the foreseeable future or management intends to reinvest such unremitted earnings indefinitely. Deferred tax assets are reviewed for recoverability and a valuation allowance is recorded against deferred tax assets to the extent that it is more likely than not that the deferred tax asset will not be realized. If we determine that we will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced with a credit to income tax expense.

     We evaluate each tax position to determine if it is more likely than not that a tax position is sustainable, based on its technical merits. If a tax position does not meet the “more-likely-than-not” standard, a liability is established. Additionally, for a position that is determined to be “more-likely-than-not” sustainable, we measure the benefit at the highest cumulative probability of being realized and establish a liability for the remaining portion. A material change in the tax liabilities could have an impact on our results.

104

Results of Operations

Overview

     Consolidated Statement of Operations Data

     The following table is derived from our selected consolidated financial data and sets forth our historical operating results as a percentage of net sales for the periods indicated:

	Year Ended March 31,
	2007			2008			2009
Consolidated Statement of Operations Data:
Net sales		100.0	%		100.0	%		100.0	%
Other operating revenues		0.9			1.1			1.7
Total revenue		100.9			101.1			101.7
Cost of sales		(60.0	)		(66.9	)		(77.6	)
Selling and distribution expenses		(1.4	)		(1.5	)		(1.8	)
General and administration expenses		(1.1	)		(1.9	)		(2.4	)
Other income/(expenses):
Gain on sale of real estate		0.4			—			—
Voluntary retirement scheme expenses		(0.0	)		—			—
Guarantees, impairment of investments and loans		—			(0.3	)		(0.1	)
Operating income		38.8			30.5			19.8
Interest and dividend income		0.9			2.7			7.9
Interest expense		(1.8	)		(1.4	)		(3.2	)
Net realized and unrealized investment gains		0.9			1.8			1.1
Income before income taxes, minority interests and equity in net (loss)/income of associate		38.8			33.6			25.6
Income taxes
Current		(9.6	)		(7.5	)		(3.8	)
Deferred		(0.8	)		(1.3	)		0.8
Income after income taxes, before minority interests and equity in net (loss)/income of associate		28.4			24.8			22.6
Minority interests		(8.7	)		(7.7	)		(5.8	)
Equity in net (loss)/income of associate, net of taxes		0.0			0.2			(2.8	)
Net income		19.7	%		17.3	%		14.0	%

     Net Sales by Geographic Location

     The primary markets for our products are India and the Far East. Our exports to the Far East are primarily to China, South Korea, Singapore and Thailand. Other markets include a variety of countries mostly in the Middle East and Europe. We endeavor to sell as large a quantity of our products as possible in India due to the Indian market premium that we receive on sales in India. The following table sets forth our net sales from each of our primary markets and our net sales from each of our primary markets as a percentage of our total net sales for the periods indicated:

	Year Ended March 31,
	2007					2008					2009
	(in millions, except percentages)
			% of					% of							% of
	Net Sales		Net Sales			Net Sales		Net Sales			Net Sales		Net Sales		Net Sales
India	Rs.	114,222		47.3	%	Rs.	140,503		57.0	%	Rs.	140,330	$	2,758.6		66.1	%
Far East(1)		69,624		28.9			62,303		25.3			27,803		546.6		13.1
Other(2)		57,400		23.8			43,608		17.7			44,059		866.1		20.8
Total	Rs.	241,246		100.0	%	Rs.	246,414		100.0	%	Rs.	212,192	$	4,171.3		100.0	%

Notes:
(1)	Far East includes a number of countries, primarily China, South Korea, Singapore and Thailand.
(2)	Other includes Kenya, Nigeria, Ethiopia, Algeria, Sudan, Morocco, Namibia, Egypt, Oman, UAE, Turkey, Qatar, Saudi Arabia, Syria, Israel, Bangladesh, Sri Lanka, Pakistan, Belgium, France, Germany, Italy, Jordan, the UK, The Netherlands, Luxembourg, Rotterdam, Spain, Sweden, Switzerland, Australia, Cameroon, Malawi and Iran.

105

     Customer Concentration

     The following table sets forth for the periods indicated:

• the percentage of our net sales accounted for by our ten largest customers on a consolidated basis; and

• for each of our three primary businesses, the percentage of the net sales of such business accounted for by the ten largest customers of such business.

	Year Ended March 31,
	2007			2008			2009
Consolidated		22.2	%		26.5	%		32.4	%
Copper		33.9			16.8			32.5
Zinc		47.0			36.4			23.6
Aluminum		39.9			37.2			44.6

     No single customer accounted for 10% or more of our net sales on a consolidated basis or for any of our primary businesses in any of the periods indicated.

Comparison of Years Ended March 31, 2008 and March 31, 2009

     Net Sales, Other Operating Revenues and Operating Income

     Consolidated

     Net sales decreased from Rs. 246,414 million in fiscal 2008 to Rs. 212,192 million ($4,171.3 million) in fiscal 2009, a decrease of Rs. 34,222 million, or 13.9%. Net sales decreased primarily as a result of lower daily average copper, zinc and aluminum LME prices in fiscal 2009 compared to fiscal 2008 and decreased sales volume in our copper business due to lower copper cathode production as a result of a planned bi-annual plant maintenance shut down for 26 days in May and June 2008 and an unplanned 34-day interruption in production between November and December 2008 due to damage in a cooling tower at the Tuticorin facility in November 2008 as a result of collapses in its foundation. The decrease in net sales was partially offset by a depreciation of the Indian Rupee against the US dollar by 14.1%. The net sales of our copper, zinc and aluminum businesses decreased by 7.7%, 28.8% and 5.8%, respectively, with the increase in the sales volume in our zinc business being more than fully offset by lower zinc and lead LME prices.

     Other operating revenues increased from Rs. 2,616 million in fiscal 2008 to Rs. 3,683 million ($72.4 million) in fiscal 2009, an increase of Rs. 1,067 million, or 40.8%. The increase was primarily due to increased sales of surplus electric power from BALCO’s captive power plants at Korba due to the planned permanent shut down of 204 out of 408 pots in the old Korba smelter in February and March 2009 due to the smelter’s higher cost of production and the recognition of Rs. 491 million in amounts due to us from an insurance policy covering loss on profit on account of the unplanned shut down of the cooling tower at the Tuticorin facility, which covered a substantial portion of our estimated losses.

     Operating income decreased from Rs. 75,153 million in fiscal 2008 to Rs. 42,247 million ($830.5 million) in fiscal 2009, a decrease of Rs. 32,906 million, or 43.8%. The decrease was due to a decrease in TcRc rates for our copper smelting business by 25.1%, a decrease in by-product realization in our copper business and a decline in the daily average copper, zinc and aluminum LME prices, partially offset by a depreciation of the Indian Rupee against the US dollar. Operating margin decreased from 30.5% in fiscal 2008 to 19.8% in fiscal 2009 as a result of a decrease in the operating margins in our zinc and aluminum business due to decreases in the daily average zinc and aluminum LME prices. Contributing factors to our consolidated operating income were as follows:

• Cost of sales decreased slightly from Rs. 164,869 million in fiscal 2008 to Rs. 164,566 million ($3,235.1 million) in fiscal 2009, a decrease of Rs. 303 million, or 0.2%. Cost of sales decreased primarily due to a reduction in global commodity and crude prices, lower input prices and lower production volumes in our copper and aluminum business, which was partly offset by higher realization from the sale of by-products in our zinc business. Cost of sales as a percentage of net sales increased from 66.9% in fiscal 2008 to 77.6% in fiscal 2009 primarily due to the significant decrease in net sales, due in significant part to lower daily average copper, zinc and aluminum LME prices in fiscal 2009, as compared to only a slight decrease in the cost of sales.

• Selling and distribution expenses increased slightly from Rs. 3,808 million in fiscal 2008 to Rs. 3,847 million ($75.6 million) in fiscal 2009, an increase of Rs. 39 million, or 1.0%. This increase was due to increased sales volumes in our zinc business as some of the selling and distribution expenses are proportional to the sales volume. As a percentage of net sales, however, selling and distribution expenses increased from 1.5% in fiscal 2008 to 1.8% in fiscal 2009.

• General and administrative expenses increased from Rs. 4,572 million in fiscal 2008 to Rs. 5,078 million ($99.8 million) in fiscal 2009, an increase of Rs. 506 million, or 11.1%, primarily as a result of an increase in exploration and technical consultancy costs at HZL and an increase in salaries and other general costs as a result of expansion of our business. As a percentage of net sales, general and administrative expenses increased from 1.9% in fiscal 2008 to 2.4% in fiscal 2009. These expenses increased primarily in our zinc and aluminum business as a result of an increase in capacities and the scale of our operations.

106

• Pursuant to the approval of the Board for Industrial and Financial Reconstruction, or BIFR, for the rehabilitation scheme of India Foils Limited, or IFL, in fiscal 2009, we were allotted preference shares of IFL amounting to Rs. 1,520 million in payment of the net loans and guarantees aggregating to Rs. 1,549 million that were devolved on us in fiscal 2009. Thereafter, in November 2008, we sold the preference shares for a nominal value and incurred a loss of Rs. 1,520 million ($29.9 million). Other expenses for guarantees, impairment of investments and loans in fiscal 2009 represent the difference of Rs. 137 million between the loss of Rs. 1,520 million on the sale of the preference shares, an additional charge of Rs. 29 million and the write-back of the provision of Rs. 1,412 million made previously. In fiscal 2008, other expenses for guarantees, impairment of investments and loans was Rs. 628 million, due to provisions made for corporate guarantees provided to banks and financial institutions.

• Depreciation, depletion and amortization increased from Rs. 7,060 million in fiscal 2008 to Rs. 7,845 million ($154.2 million) in fiscal 2009, an increase of Rs. 785 million, or 11.1%. This increase related primarily to the capitalization of our expanded capacities in our zinc and aluminum businesses.

     Copper

     Net sales in the copper segment decreased from Rs. 126,276 million in fiscal 2008 to Rs. 116,525 million ($2,290.7 million) in fiscal 2009, a decrease of Rs. 9,751 million, or 7.7%. This decrease was primarily due to a reduction in sales volume due to lower copper cathode production, lower by-product realization and lower daily average copper LME prices in fiscal 2009 compared to fiscal 2008, which was partially offset by a depreciation of the Indian Rupee against the US dollar by 14.1% between fiscal 2008 and 2009. Specifically:

• Copper cathode production decreased from 339,294 tons in fiscal 2008 to 312,833 tons in fiscal 2009, a decrease of 7.8%. This decrease was primarily due to the planned bi-annual plant maintenance shut down for 26 days in May and June 2008 and stabilization issues faced during the post shut down ramp up. In fiscal 2009 we recognized Rs. 491 million in amounts due to us from an insurance policy covering loss of profit on account of an unplanned 34-day interruption in production between November and December 2008 due to damage to the cooling tower at our Tuticorin facility, which covered a substantial portion of our estimated losses. Copper cathode sales decreased from 112,410 tons in fiscal 2008 to 92,163 tons in fiscal 2009, a decrease of 18.0%, due to lower production.

• Production of copper rods decreased from 224,758 tons in fiscal 2008 to 219,879 tons in fiscal 2009, a decrease of 2.2%, due to the planned bi-annual plant maintenance shut down for 26 days in May and June 2008. Copper rod sales decreased from 224,662 tons in fiscal 2008 to 220,409 tons in fiscal 2009, a decrease of 1.9%. The decrease in sales was due to the decrease in production.

• Sales of copper in the Indian market increased from 157,037 tons in fiscal 2008 to 198,457 tons in fiscal 2009, an increase of 26.4%, and our exports decreased from 180,035 tons in fiscal 2008 to 114,115 tons in fiscal 2009, a decrease of 36.6%. We endeavor to sell as large a quantity of our products as possible domestically, where we receive an Indian market premium. Our domestic sales as a percentage of total sales increased from 46.6% in fiscal 2008 to 63.5% in fiscal 2009 as the demand in the domestic market increased while our production volume decreased.

• The daily average copper cash settlement price on the LME decreased from $7,588 per ton in fiscal 2008 to $5,885 per ton in fiscal 2009, a decrease of 22.4%.

     Operating income in the copper segment decreased from Rs. 11,037 million in fiscal 2008 to Rs. 10,557 million ($207.5 million) in fiscal 2009, a decrease of Rs. 480 million, or 4.3%. Operating margin increased from 8.7% in fiscal 2008 to 9.1% in fiscal 2009. The decrease in operating income was primarily due to significantly reduced TcRc rates, lower copper LME prices and steep fall in by-product realization, which was partially offset by a depreciation of the Indian Rupee against the US dollar by 14.1% between fiscal 2008 and 2009. In particular:

• TcRc rates decreased from an average of 15.7¢/lb realized in fiscal 2008 as compared to an average of 11.7¢/lb realized in fiscal 2009 as a result of a global weakening of the TcRc market resulting in a significant decrease in the market TcRc rate.

• Cost of production, which consists of cost of smelting and refining costs, increased significantly from 1.8¢/lb in fiscal 2008 to 3.1¢/lb in fiscal 2009, primarily due to lower realization on the sale of sulphuric acid by-product.

• Lower copper LME prices contributed to decreased profitability of our mining operations.

107

     Zinc

     Net sales in the zinc segment decreased from Rs. 78,222 million in fiscal 2008 to Rs. 55,724 million ($1,095.4 million) in fiscal 2009, a decrease of Rs. 22,498 million, or 28.8%. This decrease was primarily due to a 47.8 % decrease in the daily average zinc LME price in fiscal 2009 as compared to fiscal 2008, partially offset by an increase in sales volume enabled by increased production, higher by-product realization and a depreciation of the Indian Rupee against the US dollar by 14.1% between fiscal 2008 and 2009. Specifically:

• Zinc ingot production increased from 426,323 tons in fiscal 2008 to 551,724 tons in fiscal 2009, an increase of 29.4%, as a result of increased production from HZL’s second 210,000 tpa hydrometallurgical zinc smelter at Chanderiya that was commissioned in December 2007. The second hydrometallurgical zinc smelter at Chanderiya produced 103,980 tons of zinc ingots in fiscal 2009 as compared to 42,071 tons in fiscal 2008 as production from the smelter was ramped up. Zinc ingot sales increased from 425,531 tons in fiscal 2008 to 552,328 tons in fiscal 2009, an increase of 29.8%, enabled by the higher production.

• Zinc ingot sales in the domestic market decreased from 337,672 tons in fiscal 2008 to 331,704 tons in fiscal 2009, a decrease of 1.8%, primarily due to a significant decrease in the production and sales of galvanized plain and corrugated sheets. There was a net decrease of 9.9% in production and 6.7% in sales in galvanized iron in fiscal 2009 as compared to fiscal 2008. The color coated industry’s performance decreased 24% in fiscal 2009 as compared to fiscal 2008. Indian galvanized plain and corrugated sheets exports to the United States and Europe accounted for approximately 60% of total Indian galvanized plain and corrugated sheets exports. As a result of the global economic downturn, the automobile, housing and consumer durables sectors in Europe and the United States were severely affected and the export oriented demand of Indian galvanized plain and corrugated sheets was reduced substantially, resulting in a fall of galvanized plain and corrugated sheet production and, as a result, a reduction in the demand for zinc. Our domestic sales as a percentage of total sales decreased from 79.4% in fiscal 2008 to 60.1% in fiscal 2009 as the demand in the domestic market decreased. Export sales increased from 87,860 tons of zinc in fiscal 2008 to 220,627 tons of zinc in fiscal 2009, an increase of 151%, as a result of the reduction in domestic demand which left more zinc available for export. The zinc markets in the Middle East, South East Asia and Far East Asia were also further developed. HZL’s LME registration also increased the marketability of our zinc products.

• The daily average zinc cash settlement price on the LME decreased from $2,992 per ton in fiscal 2008 to $1,563 per ton in fiscal 2009, a decrease of 47.8%.

• We also sold surplus zinc concentrate of 231,797 dmt in fiscal 2008 and 76,261 dmt in fiscal 2009 to third parties, a decrease of 67.1%. The decrease was due to increased internal consumption of zinc concentrate with the commissioning of our second hydrometallurgical zinc smelter at Chanderiya in December 2007. We sold surplus lead concentrate of 65,418 dmt in fiscal 2008 and 56,487 dmt in fiscal 2009 to third parties, a decrease of 13.7%, due to the improved production of lead through ISP^TM at the pyrometallurgical smelter which involved higher consumption of lead to produce metal with a higher concentration of lead in fiscal 2009.

• Lead ingot production increased from 58,247 tons in fiscal 2008 to 60,323 tons in fiscal 2009, an increase of 3.6%, as a result of improved production of lead from the pyrometallurgical process. Lead ingot sales increased from 58,298 tons in fiscal 2008 to 60,564 tons in fiscal 2009, an increase of 3.9%, enabled by the increase in production.

• Silver ingot production increased from 80,405 kg in fiscal 2008 to 105,555 kg in fiscal 2009, an increase of 30.7%, with silver ingot sales at similar levels to production. Combined with a 5.1% decrease in the average silver London Bullion Metal Association, or LBMA, price in fiscal 2009 as compared to fiscal 2008, net sales from the sale of silver ingots increased from Rs. 1,583 million in fiscal 2008 to Rs. 2,099 million ($41.3 million) in fiscal 2009, an increase of 32.6%.

• The daily average lead cash settlement price on the LME decreased from $2,875 per ton in fiscal 2008 to $1,660 per ton in fiscal 2009, a decrease of 42.3%.

     Operating income in the zinc segment decreased from Rs. 53,192 million in fiscal 2008 to Rs. 25,148 million ($494.4 million) in fiscal 2009, a decrease of Rs. 28,044 million, or 52.7%. Operating margin decreased from 68.0% in fiscal 2008 to 45.1% in fiscal 2009. The decrease in operating income was primarily due to the decrease in the daily average zinc and lead LME prices of 47.8 % and 42.3%, respectively, between fiscal 2008 and fiscal 2009, which was partially offset by a 29.8% increase in sales volume, the depreciation of the Indian Rupee against the US dollar and improved cost performance arising from increased operating efficiency.

108

     Aluminum

     Net sales to external customers in the aluminum segment decreased from Rs. 41,596 million in fiscal 2008 to Rs. 39,170 million ($770.0 million) in fiscal 2009, a decrease of Rs. 2,426 million, or 5.8%. This decrease was primarily due to a 14.8% decrease in daily average aluminum LME prices in fiscal 2009 compared to fiscal 2008, partially offset by a depreciation of the Indian Rupee against the US dollar by 14.1% between fiscal 2008 and 2009. Specifically:

• Aluminum production decreased slightly by 0.5%, from 358,671 tons in fiscal 2008 to 356,782 tons in fiscal 2009. Our new Korba smelter of 245,000 tpa capacity increased production from 249,392 tons in fiscal 2008 to 250,499 tons in fiscal 2009, which was fully offset by the decrease in the existing smelter production from 109,279 tons in fiscal 2008 to 106,283 tons in fiscal 2009, primarily due to the planned permanent shutdown of 204 out of 408 pots at the old Korba smelter in February and March 2009 due to the smelter’s higher cost of production. The export of power in fiscal 2009 increased to 320 million units from 194 million units in fiscal 2008, due to the sale of surplus power from captive power plants during the period that the old Korba smelter was partially shut down.

• Aluminum sales decreased from 358,328 tons in fiscal 2008 to 356,512 tons in fiscal 2009, a decrease of 0.5%. Sales of aluminum ingots decreased from 195,785 tons in fiscal 2008 to 172,173 tons in fiscal 2009, a decrease of 12.1%, as a result of the partial shut down of the old Korba smelter in the fourth quarter of fiscal 2009 due to higher operational costs. Wire rod sales increased from 101,316 tons in fiscal 2008 to 127,019 tons in fiscal 2009, an increase of 25.4%, as a result of increased production due to the addition of a wire rod mill at the new Korba smelter and increased demand for this product, particularly in the electrical sector, and reflects our continued focus on the sale of value-added products. Rolled product sales decreased from 61,693 tons in fiscal 2008 to 57,399 tons in fiscal 2009, a decrease of 7.0%, primarily due to decreased demand in the construction and transport sector.

• Aluminum sales in the domestic market increased from 265,839 tons in fiscal 2008 to 289,991 tons in fiscal 2009, an increase of 9.1%, as a result of increased demand in the electrical sector. Our aluminum exports decreased from 92,489 tons in fiscal 2008 to 66,523 tons in fiscal 2009, a decrease of 28.1%, as a result of lower premiums globally and higher demand in the domestic market. We endeavor to sell as large a quantity of our products as possible domestically, where we receive an Indian market premium. Our domestic sales as a percentage of total sales increased from 74.2% in fiscal 2008 to 81.3% in fiscal 2009 as the demand in the domestic market increased while our production volume decreased slightly.

• The daily average aluminum cash settlement price on the LME declined from $2,620 per ton in fiscal 2008 to $2,234 per ton in fiscal 2009, a decrease of 14.8%.

     Operating income in the aluminum segment decreased from Rs. 11,581 million in fiscal 2008 to Rs. 6,364 million ($125.1 million) in fiscal 2009, a decrease of Rs. 5,217 million, or 45.1%. Operating margin decreased from 27.8% in fiscal 2008 to 16.2% in fiscal 2009. The decrease in operating income was primarily due to a decrease in the daily average aluminum LME price.

     Power

Operating income in our commercial power generation business segment was Rs. 184 million ($3.6 million) in fiscal 2009. Our power business is still under development and we expect to have meaningful operating results for our commercial power generation business segment in fiscal 2010, when Sterlite Energy’s first power project is expected to begin commissioning.

     Corporate and Others

     Operating loss in our corporate and other business segment was Rs. 6 million ($0.1 million) in fiscal 2009.

     Interest and Dividend Income

     Interest and dividend income increased from Rs. 6,548 million in fiscal 2008 to Rs. 16,728 million ($328.8 million) in fiscal 2009, an increase of Rs. 10,180 million, or 155.5%, primarily due to interest income on the proceeds from our ADS offering that we have currently invested and an operating surplus in HZL of Rs. 21,960 million that we have invested.

     Interest Expense

     Interest expense increased from Rs. 3,386 million in fiscal 2008 to Rs. 6,874 million ($135.1 million) in fiscal 2009, an increase of Rs. 3,488 million, or 103.0%. The increase in interest expense was primarily due to an increase in our outstanding debt in fiscal 2009.

109

     Net Realized and Unrealized Investment Gains

     Net realized and unrealized investment gains decreased from Rs. 4,511 million in fiscal 2008 to Rs. 2,254 million ($44.3 million) in fiscal 2009, a decrease of Rs. 2,257 million, or 50.0%, primarily due to unfavorable market conditions.

     Income Taxes

     Income taxes decreased from Rs. 21,624 million in fiscal 2008 to Rs. 6,446 million ($126.7 million) in fiscal 2009. Our effective income tax rate, calculated as income taxes owed divided by our income before income taxes, minority interests and equity in net (loss)/income of associate, was 26.1% in fiscal 2008 and 11.9% in fiscal 2009. The effective tax rate was lower in fiscal 2009 due to higher tax exemptions on the copper refinery and copper rod plant at Tuticorin, tax exemptions on the export oriented unit at HZL, tax holiday exemptions on the new zinc ingot melting and casting plant at Haridwar in the State of Uttrakhand, tax exemptions on the newly commissioned 16 MW wind power plant and 80 MW captive power plant at our zinc business, deferred tax on equity in net loss of associate and higher tax free dividend and investment income.

     Minority Interests

     Minority interests as a percentage of net profits decreased from 31.2% in fiscal 2008 to 25.8% in fiscal 2009. This decrease was primarily due to lower profits in our zinc and aluminum businesses.

     Equity in Net (Loss)/Income of Associate, Net of Tax

     Equity in net income of associate, net of tax was Rs. 491 million in fiscal 2008 as compared to a net loss of Rs. 6,001 million ($118.0 million) in fiscal 2009, which primarily related to foreign exchange losses.

Comparison of Years Ended March 31, 2007 and March 31, 2008

     Net Sales, Other Operating Revenues and Operating Income

     Consolidated

     Net sales increased from Rs. 241,246 million in fiscal 2007 to Rs. 246,414 million in fiscal 2008, an increase of Rs. 5,168 million, or 2.1%. Net sales increased primarily as a result of increased sales volume enabled by increased production across all of our businesses and higher daily average copper LME prices in fiscal 2008 compared to fiscal 2007, partially offset by lower daily average zinc LME prices in fiscal 2008 compared to fiscal 2007. The net sales of our copper and aluminum businesses increased by 9.6% and 3.8%, respectively, while the net sales of our zinc business decreased by 9.0%.

     Other operating revenues increased from Rs. 2,251 million in fiscal 2007 to Rs. 2,616 million in fiscal 2008, an increase of Rs. 365 million, or 16.2%. The increase was primarily due to increased sales of by-products that are not included in cost of production.

     Operating income decreased from Rs. 93,511 million in fiscal 2007 to Rs. 75,153 million in fiscal 2008, a decrease of Rs. 18,358 million, or 19.6%. The decrease was due to a decrease in TcRc rates for our copper smelting business by 49.6%, a decline in the daily average zinc and aluminum LME prices and an appreciation of the Indian Rupee against the US dollar by 11.1%, partially offset by higher sales volumes across all our businesses and an increase in the daily average copper LME price. Operating margin decreased from 38.8% in fiscal 2007 to 30.5% in fiscal 2008 as a result of lower TcRc rates for our copper smelting business, a decline in the daily average zinc and aluminum LME prices and appreciation of the Indian Rupee against the US dollar, partially offset by an increase in the daily average copper LME price. Contributing factors to our consolidated operating income were as follows:

• Cost of sales increased from Rs. 144,798 million in fiscal 2007 to Rs. 164,869 million in fiscal 2008, an increase of Rs. 20,071 million, or 13.9%. Cost of sales increased primarily due to increases in production volumes across all our businesses and higher cost of purchased copper concentrate, resulting from higher daily average copper LME prices. The increases in production volume were primarily due to a capacity expansion at our Tuticorin facility in our copper business, our new Korba smelter in our aluminum business and our second new hydrometallurgical zinc smelter at Chanderiya in our zinc business. Cost of sales as a percentage of net sales increased from 60.0% in fiscal 2007 to 66.9% in fiscal 2008, primarily due to higher commodity prices relative to the costs of production.

• Selling and distribution expenses increased from Rs. 3,444 million in fiscal 2007 to Rs. 3,808 million in fiscal 2008, an increase of Rs. 364 million, or 10.6%. This increase was due to increased sales volumes across all our businesses as most of

110

	the selling and distribution expenses are proportional to the sales volume. As a percentage of net sales, however, selling and distribution expenses increased marginally from 1.4% in fiscal 2007 to 1.5% in fiscal 2008.
•	General and administrative expenses increased from Rs. 2,633 million in fiscal 2007 to Rs. 4,572 million in fiscal 2008, an increase of Rs. 1,939 million, or 73.6%, primarily as a result of an increase in exploration and technical consultancy costs at HZL and an increase in salaries and other general costs as a result of expansion of our business. As a percentage of net sales, general and administrative expenses increased from 1.1% in fiscal 2007 to 1.9% in fiscal 2008. These expenses increased primarily in our zinc and aluminum business as a result of an increase in capacities and scale of operations.
•	We did not have a gain on sale of real estate in fiscal 2008, compared to Rs. 986 million in fiscal 2007 from the sale of property in Mumbai comprising land and building for an amount of Rs. 1,000 million.
•	We did not incur any voluntary retirement scheme expenses in fiscal 2008, compared to Rs. 97 million in fiscal 2007.
•	We incurred guarantees, impairment of investments and loans in fiscal 2008 of Rs. 628 million, compared to nil in fiscal 2007. This was due to provisions made for corporate guarantees provided to banks and financial institutions.
•	Depreciation, depletion and amortization increased from Rs. 5,959 million in fiscal 2007 to Rs. 7,060 million in fiscal 2008, an increase of Rs. 1,101 million, or 18.5%. This increase related primarily to the capitalization of our expanded capacities in our copper, zinc, aluminum and wind power businesses.

     Copper

     Net sales in the copper segment increased from Rs. 115,192 million in fiscal 2007 to Rs. 126,276 million in fiscal 2008, an increase of Rs. 11,084 million, or 9.6%. This increase was primarily due to an increase in sales volume enabled by increased production, higher daily average copper LME prices and a higher percentage of sales of copper rods. Specifically:

• Copper cathode production increased from 312,720 tons in fiscal 2007 to 339,294 tons in fiscal 2008, an increase of 8.5%, enabled by a capacity expansion at our Tuticorin facility which increased the anode and cathode capacities to 400,000 tpa in November 2006. Copper cathode sales decreased from 133,402 tons in fiscal 2007 to 112,411 tons in fiscal 2008, a decrease of 15.7%, as we converted a higher percentage of our copper cathode production into copper rods in fiscal 2008 as compared to fiscal 2007.

• Production of copper rods increased from 177,882 tons in fiscal 2007 to 224,758 tons in fiscal 2008, an increase of 26.4%. This increase in production was enabled by the increase in rod plant capacity at Tuticorin in the second half of fiscal 2007. Copper rod sales increased from 177,746 tons in fiscal 2007 to 224,662 tons in fiscal 2008, an increase of 26.4%. The increase in sales was due to the increase in production.

• Sales of copper in the Indian market increased from 116,522 tons in fiscal 2007 to 157,037 tons in fiscal 2008, an increase of 34.8%, and our exports decreased from 194,626 tons in fiscal 2007 to 180,035 tons in fiscal 2008, a decrease of 7.5%. We endeavor to sell as large a quantity of our products as possible domestically, where we receive an Indian market premium. Our domestic sales as a percentage of total sales increased from 37.5% in fiscal 2007 to 46.6% in fiscal 2008 as the demand in the domestic market increased more rapidly than our production volume growth.

• The daily average copper cash settlement price on the LME increased from $6,984 per ton in fiscal 2007 to $7,588 per ton in fiscal 2008, an increase of 8.6%.

     Operating income in the copper segment decreased from Rs. 17,235 million in fiscal 2007 to Rs. 11,037 million in fiscal 2008, a decrease of Rs. 6,198 million, or 36.0%. Operating margin decreased from 15.0% in fiscal 2007 to 8.7% in fiscal 2008. The decrease in operating income was primarily due to significantly reduced TcRc rates and the 11.1% appreciation of the Indian Rupee against the US dollar between fiscal 2007 and fiscal 2008, partially offset by an increase in sales volume combined with a lower cost of production resulting from improved copper recovery, improved by-product management and higher realization on the sale of sulphuric acid by-product and contribution from the phosphoric and precious metals businesses. In particular:

• TcRc rates decreased from an average of 31.1¢/lb realized in fiscal 2007 to an average of 15.7¢/lb realized in fiscal 2008 as a result of a global weakening of the TcRc market resulting in a significant decrease in the market TcRc rate.

111

• Cost of production, which consists of cost of smelting and refining costs, was reduced significantly from 6.1¢/lb in fiscal 2007 to 1.8¢/lb in fiscal 2008, primarily due to improved copper recovery, improved by-product management and higher realization on the sale of sulphuric acid by-product.

• Higher copper LME prices contributed to increased profitability of our mining operations, which was partially offset by slightly reduced production at our sole remaining copper mine, Mt. Lyell.

• We earned a profit of Rs. 986 million in fiscal 2007 from the sale of real estate in Mumbai, with no such profit in fiscal 2008.

     Zinc

     Net sales in the zinc segment decreased from Rs. 85,963 million in fiscal 2007 to Rs. 78,222 million in fiscal 2008, a decrease of Rs. 7,741 million, or 9.0%. This decrease was primarily due to a 16.4 % decrease in the daily average zinc LME price, a decrease in the sales of zinc concentrates to third parties and a reduction in Indian customs duty from 7.5% to 5.0% in January 2007, partially offset by an increase in sales volume enabled by increased production. Specifically:

• Zinc ingot production increased from 348,316 tons in fiscal 2007 to 426,323 tons in fiscal 2008, an increase of 22.4%, as a result of the contribution of a full year’s production from our first hydrometallurgical zinc smelter at Chanderiya and the contribution from our second hydrometallurgical zinc smelter at Chanderiya which was commissioned in December 2007, in addition to marginal increases in production from other smelters. Zinc ingot sales increased from 349,615 tons in fiscal 2007 to 425,531 tons in fiscal 2008, an increase of 21.7%, enabled by higher production.

• Zinc ingot sales in the domestic market increased from 204,286 tons in fiscal 2007 to 337,672 tons in fiscal 2008, an increase of 65.3%. We endeavor to sell as large a quantity of our products as possible domestically, where we receive an Indian market premium. Our domestic sales as a percentage of total sales increased from 58.4% in fiscal 2007 to 79.4% in fiscal 2008 as the demand in the domestic market increased more rapidly than our production volume growth.

• The daily average zinc cash settlement price on the LME decreased from $3,581 per ton in fiscal 2007 to $2,992 per ton in fiscal 2008, a decrease of 16.4%.

• We also sold surplus zinc concentrate of 254,249 dmt in fiscal 2007 and 231,797 dmt in fiscal 2008 to third parties, a decrease of 8.8%. The decrease was due to increased internal consumption of zinc concentrate with the commissioning of our second hydrometallurgical zinc smelter at Chanderiya in December 2007. We sold surplus lead concentrate of 59,050 dmt in fiscal 2007 and 65,418 dmt in fiscal 2008 to third parties, an increase of 10.8%, which was enabled by higher mining output in fiscal 2008.

• Lead ingot production increased from 44,552 tons in fiscal 2007 to 58,247 tons in fiscal 2008, an increase of 30.7%, as a result of increased production from the Ausmelt^TM plant. Lead ingot sales increased from 44,916 tons in fiscal 2007 to 58,298 tons in fiscal 2008, an increase of 29.8%.

• Silver ingot production increased from 51,296 kg in fiscal 2007 to 80,405 kg in fiscal 2008, an increase of 56.7%, with silver ingot sales at similar levels to production. Combined with a 16.1% increase in the average silver LBMA price in fiscal 2008 as compared to fiscal 2007, net sales from the sale of silver ingots increased from Rs. 920 million in fiscal 2007 to Rs. 1,583 million in fiscal 2008, an increase of 72.1%.

• The daily average lead cash settlement price on the LME increased from $1,426 per ton in fiscal 2007 to $2,875 per ton in fiscal 2008, an increase of 101.6%.

     Operating income in the zinc segment decreased from Rs. 62,908 million in fiscal 2007 to Rs. 53,192 million in fiscal 2008, a decrease of Rs. 9,716 million, or 15.4%. Operating margin decreased from 73.2% in fiscal 2007 to 68.0% in fiscal 2008. The decrease in operating income was primarily due to the 16.4 % decrease in the daily average zinc LME price between fiscal 2007 and fiscal 2008 and lower sales of zinc concentrate, partially offset by a 21.7% increase in sales volume from fiscal 2007 to fiscal 2008.

     Aluminum

     Net sales to external customers in the aluminum segment increased from Rs. 40,091 million in fiscal 2007 to Rs. 41,596 million in fiscal 2008, an increase of Rs. 1,505 million, or 3.8%. This increase was primarily due to an increase in sales volume enabled by increased production, partially offset by a marginal decline in the daily average aluminum LME price and a reduction in Indian customs duty from 7.5% to 5.0% in January 2007. Primary and contributing factors to the increase include the following:

112

• Aluminum production increased from 313,189 tons in fiscal 2007 to 358,671 tons in fiscal 2008, an increase of 14.5%, as our new Korba smelter of 245,000 tpa capacity increased production from 207,643 tons in fiscal 2007 to 249,392 tons in fiscal 2008. The existing smelter production increased from 105,546 tons in fiscal 2007 to 109,279 tons in fiscal 2008, an increase of 3.5%, primarily due to improvements in operational efficiency. Due to higher production volume from the new smelter, wheeling income from the sale of surplus power was reduced in fiscal 2008 as compared to fiscal 2007.

• Aluminum sales increased from 315,002 tons in fiscal 2007 to 358,328 tons in fiscal 2008, an increase of 13.8%. Sales of aluminum ingots increased from 184,482 tons in fiscal 2007 to 195,785 tons in fiscal 2008, an increase of 6.1%, as production from the new Korba smelter was primarily sold in ingot form. Wire rod sales increased from 72,948 tons in fiscal 2007 to 101,316 tons in fiscal 2008, an increase of 38.9% as a result of increased production due to the addition of two wire rod mills at the new Korba smelter. Rolled product sales increased from 57,572 tons in fiscal 2007 to 61,227 tons in fiscal 2008, an increase of 6.3%. The increases in sales of wire rods and rolled products reflect increased demand for these products, particularly in the electrical and construction sectors, and our continued focus on the sale of value-added products.

• Aluminum sales in the domestic market increased from 224,163 tons in fiscal 2007 to 265,839 tons in fiscal 2008, an increase of 18.6%, as a result of increased production. Our aluminum exports increased from 90,839 tons in fiscal 2007 to 92,489 tons in fiscal 2008. We endeavor to sell as large a quantity of our products as possible domestically, where we receive an Indian market premium. Our domestic sales as a percentage of total sales increased from 71.2% in fiscal 2007 to 74.2% in fiscal 2008 as the demand in the domestic market increased more rapidly than our production volume growth.

• The daily average aluminum cash settlement price on the LME declined marginally from $2,663 per ton in fiscal 2007 to $2,620 per ton in fiscal 2008, a decrease of 1.6%.

     Operating income in the aluminum segment decreased from Rs. 13,371 million in fiscal 2007 to Rs. 11,581 million in fiscal 2008, a decrease of Rs. 1,790 million, or 13.4%. Operating margin decreased from 33.4% in fiscal 2007 to 27.8% in fiscal 2008. The decrease in operating income was primarily due to the increased cost of production as a result of the appreciation of the Indian Rupee against the US dollar by 11.1% between fiscal 2007 and 2008 and higher cost of coal and a decrease in the daily average aluminum LME price.

     Power

     Our power business is still under development and we had no operating results for our commercial power generation business segment in fiscal 2008.

     Corporate and Others

     Operating loss in our corporate and other business segment increased from Rs. 3 million in fiscal 2007 to Rs. 657 million in fiscal 2008. Operating loss in fiscal 2008 was due to provisions made for corporate guarantees provided to banks and financial institutions.

     Interest and Dividend Income

     Interest and dividend income increased from Rs. 2,072 million in fiscal 2007 to Rs. 6,548 million in fiscal 2008, an increase of Rs. 4,476 million, or 216.0%, primarily due to interest income on the proceeds from our ADS offering that we have currently invested.

     Interest Expense

     Interest expense decreased from Rs. 4,329 million in fiscal 2007 to Rs. 3,386 million in fiscal 2008, a decrease of Rs. 943 million, or 21.8%. The decrease in interest expense was primarily due to a reduction in outstanding debt due to early repayment of some borrowings and reductions in interest rates in the second half of fiscal 2008.

     Net Realized and Unrealized Investment Gains

     Net realized and unrealized investment gains increased from Rs. 2,280 million in fiscal 2007 to Rs. 4,511 million in fiscal 2008, an increase of Rs. 2,231 million, or 97.9%, primarily due to income earned from investment of the proceeds of our $2.0 billion offering of equity shares represented by ADSs in June 2007. This increase was also due to higher income earned from surplus cash invested by HZL, income earned from the investment of cash generated during the year, fair value gains on investments and improvement in yield on the investment of our cash.

113

     Income Taxes

     Income taxes decreased from Rs. 25,159 million in fiscal 2007 to Rs. 21,624 million in fiscal 2008. Our effective income tax rate, calculated as income taxes owed divided by our income before income taxes, minority interests and equity in net (loss)/income of associate, was 26.9% in fiscal 2007 and 26.1% in fiscal 2008. The effective tax rate was lower in fiscal 2008 due to higher tax exemptions in the copper refinery and copper rod plant at Tuticorin which were classified as export oriented units for only six months in fiscal 2007 while the tax exemptions were enjoyed for the entirety of fiscal 2008. Further, tax holiday exemptions on the newly commissioned 68.8 MW wind power plant and 154 MW captive power plant at our zinc business and 540 MW captive power plant at our aluminum business, and higher tax free dividend and investment income, resulted in a lower effective tax rate.

     Minority Interests

     Minority interests as a percentage of net profits increased from 30.8% in fiscal 2007 to 31.2% in fiscal 2008. This increase was as a result of a change in the profit mix between subsidiaries.

     Equity in Net (Loss)/Income of Associate, Net of Taxes

     Equity in net income of associate was Rs. 24 million in fiscal 2007 as compared to a net income of Rs. 491 million in fiscal 2008, which primarily related to foreign exchange gains on foreign currency loans to Vedanta Aluminium.

     Income from Divested Business, Net of Tax

     Income from divested business, net of tax decreased from Rs. 86 million in fiscal 2007 to nil in fiscal 2008. The income from divested business in fiscal 2007 was from our aluminum conductor business that we sold to STL, a company owned and controlled by Volcan, for Rs. 1,485 million, which was agreed upon on June 30, 2006. The sale of this non-core business was approved by our shareholders on September 30, 2006. The loss on account of this sale was Rs. 105 million, which was recorded as an adjustment to additional paid-in capital in shareholders’ equity as this was a transaction between companies under common control.

Liquidity and Capital Resources

Liquidity

     As of March 31, 2009, we had cash and short-term investments and deposits totaling Rs. 189,003 million ($3,715.4 million), net cash and no significant near-term debt redemption obligations, and SIIL had, on a standalone basis, cash and short-term investments totaling Rs. 80,922 million ($1,590.1 million). We expect that our current cash and short-term investments and deposits, together with our cash flows from operations, will be our principal sources of cash to satisfy our capital requirements for the next few years. We may also obtain cash to satisfy our capital requirements from shareholder contributions to our share capital, offerings of our equity shares or ADSs or external financing sources. While we believe that our current and anticipated sources of cash will be adequate to satisfy our capital requirements, recent global market and economic conditions have increased the cost of and decreased the availability of credit and adversely affected the financial markets and economy in India, the United States and most other western and emerging economies, which in turn has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations — Recent global economic conditions have been unprecedented and challenging and have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs.” As a result, we have had and may continue to have reduced cash flows from operations, and we cannot be certain that we will be able to obtain cash from shareholder contributions to our share capital, offerings of our equity shares or ADSs or external financing sources on favorable terms, or at all.

Capital Requirements

     Our principal capital requirements include:

• capital expenditures, towards expansion of capacities in existing businesses including modernization of facilities;

• the establishment of our planned commercial power generation business;

• consolidation of our ownership in our various subsidiaries; and

• acquisitions of complementary businesses that we determine to be attractive opportunities, including Asarco.

     We continue to consider increasing capacities of our existing businesses through greenfield and brownfield projects and through acquisitions as one of our major growth strategies, though we are actively monitoring global market and economic conditions and the outlook for commodity prices, as well as our current and anticipated liquidity positions, as we constantly evaluate our desired rate of growth in pursuing this strategy.

     Our business is heavily dependent on plant and machinery for the production of our copper, zinc and aluminum products, as well as investments in our mining operations and our planned commercial power generation business. Investments to maintain and expand production facilities are, accordingly, an important priority and have a significant effect on our cash flows and future results of operations. We spent Rs. 25,362 million in fiscal 2007, Rs. 25,430 million in fiscal 2008 and Rs. 41,105 million ($808.1 million) in fiscal 2009, largely on our capacity expansion and new projects across our zinc, aluminum and energy businesses.

114

     We currently expect capital expenditures of approximately Rs. 27,410 million ($538.8 million) over the next year by HZL to complete brownfield expansion projects to increase HZL’s zinc production capacity by 210,000 tpa and lead production capacity by 100,000 tpa, to add a 160 MW captive power plant and increase mining output, which would increase HZL’s zinc-lead production capacity to 1,065,000 tpa with fully integrated mining and captive power generation capacities. These projects are being undertaken at HZL’s Rajpura Dariba complex which is expected to be completed by mid-2010, and at the Rampura Agucha, Sindesar Khurd and Kayar mines in the State of Rajasthan in Northwest India at an estimated cost for the entire project of Rs. 28,800 million ($566.1 million). The expansion of ore production capacity at the Rampura Agucha mine is scheduled for completion in mid-2010. The expansion at the Sindesar Kurd mine is scheduled to be progressively completed from mid-2010. The Kayar mine is expected to start mining activity progressively from mid-2010.

     In October 2006, BALCO entered into a memorandum of understanding with the Government of Chhattisgarh, India, and the CSEB to build a thermal coal-based 1,200 MW power facility, along with an integrated coal mine, in the State of Chhattisgarh. In September 2008, BALCO entered into an implementation agreement with the Government of Chhattisgarh, India, setting forth the details for the implementation of the project. The estimated cost of this project is Rs. 46,500 million ($914.1 million). The first phase of this project is expected to be commissioned by June 2010, with the second phase being completed by September 2011. The capital expenditures made on this project as March 31, 2009 are Rs. 12,830 million.

     On August 8, 2007, BALCO entered into a memorandum of understanding with the State Government of Chhattisgarh for a potential investment to build an aluminum smelter with a capacity of 650,000 tpa at Chhattisgarh at an estimated cost of Rs. 81,000 million ($1,592.3 million). The completion of this project would increase BALCO’s total production capacity to 1.0 million tpa. The first of two phases of this project has been commenced by BALCO with the setting up of a 325,000 tpa aluminum smelter, which uses pre-baked GAMI technology. BALCO has received environmental clearance for both phases of the project. Construction has commenced and the first production stream from the 325,000 tpa aluminum smelter is expected in October 2010. The first phase is expected to be completed by September 2011.

      The estimated cost of building the 325,000 tpa aluminum smelter and 1,200 MW captive power facility is Rs. 76,900 million ($1,511.7 million). As of March 31, 2009, Rs. 13,224 million ($260.0 million) has been spent.

     In fiscal 2010 and 2011, we have scheduled loan repayment obligations, denominated in a mix of Indian Rupees and US dollars of Rs. 13,171 million ($258.9 million) and Rs. 2,557 million ($50.3 million), respectively, for various outstanding long-term loans. We plan to finance our capital expenditures and our loan repayment obligations out of our cash flows from operations and financing activities. Our failure to make planned expenditures could adversely affect our ability to maintain or enhance our competitive position and develop higher margin products.

     Consistent with our strategy to consolidate our ownership interests in our key subsidiaries, we intend to exercise our call option to acquire the Government of India’s 29.5% ownership interest in HZL (or 26.0% if the Government of India exercises in full its right to sell 3.5% of HZL to HZL employees), which is exercisable so long as the Government of India has not sold its remaining interest pursuant to a public offer of its shares. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information. The option value will be the fair market value determined by an independent appraiser, and will entail significant capital requirements. Based solely on the market price of HZL’s shares on the NSE on July 3, 2009 of Rs. 602.75 ($11.85) per share, and not including the other factors that the independent appraiser may consider, one possible estimation of the exercise price to acquire all of the Government of India’s 124,795,059 shares of HZL would be Rs. 112,830 million ($2,218.0 million). If the Government of India sells its remaining ownership interest in HZL through a public offer, we may look into alternative means of increasing our ownership interest in HZL.

     In addition, we have exercised our option to acquire the Government of India’s remaining 49.0% ownership interest in BALCO, though the exercise of this option has been contested by the Government of India and the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information.

     We may in the future make acquisitions of mines, plants or minerals and metals businesses that complement or enhance our existing businesses. For example, on March 6, 2009, we announced that we had signed a definitive agreement to purchase substantially all of the operating assets of Asarco, a Tucson based mining, smelting and refining company, for $1.7 billion. On June 12, 2009, we agreed to increase the purchase consideration to $1.87 billion, mostly related to an expected increase in working capital on the closing date. Asarco, currently the third largest copper producer in the United States, produced 241,000 tons of refined copper in 2008 and had total revenue of approximately $1.9 billion for the year ended December 31, 2008. Asarco’s mines currently have estimated reserves of 5.2 million tons of contained copper. We will finance the asset acquisition through a mix of debt and existing cash resources. The asset acquisition is on a cash free and debt free basis. We will assume operating liabilities but not legacy liabilities for asbestos and environmental claims for ceased operations. The integrated assets to be acquired include three open-pit copper mines and a copper smelter in Arizona and a copper refinery, rod and cake plant and precious metals plant in Texas. The agreement is subject to the approval of the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. There can, however, be no assurance that court approval will be obtained or that the proposed sale will be concluded. See “—Recent Developments.”

115

     We have consistently paid dividends and have declared dividends of Rs. 2,834 million for fiscal 2008 and Rs. 2,480 million ($48.8 million) for fiscal 2009.

Capital Resources

     We plan to finance our capital requirements through a mix of cash flows from operating and financing activities. We do not depend on off-balance sheet financing arrangements.

Net Cash Provided by or Used in Operating Activities

     Net cash provided by continuing operating activities was Rs. 78,204 million ($1,537.3 million) in fiscal 2009 compared to net cash used by continuing operating activities of Rs. 17,594 million in fiscal 2008 and net cash provided by operating activities of Rs. 40,418 million in fiscal 2007. The cash provided by operating assets and liabilities in fiscal 2009 was Rs. 27,706 million ($544.6 million), primarily consisting of Rs. 8,548 million ($168.0 million) from short-term investments. The cash provided by working capital in fiscal 2009 was Rs. 19,158 million ($376.6 million), primarily consisting of Rs. 6,715 million ($132.0 million) and Rs. 8,738 million ($171.8 million) resulting from reductions in account receivables and inventories, respectively, and Rs. 4,108 million ($80.8 million) resulting from an increase in accounts payable and accrued expenses. Cash generation decreased in fiscal 2008 primarily on account of lower operating income across all our businesses, with our zinc business accounting for a substantial portion of this decrease. The cash used in operating assets and liabilities in fiscal 2008 was Rs. 85,179 million, primarily consisting of Rs. 88,021 million towards short-term investments, which was partially offset by cash provided by working capital of Rs. 2,842 million. For fiscal 2007, the cash used in operating assets and liabilities was Rs. 32,750 million, of which Rs. 24,174 million was towards short-term investments. Cash used for working capital purposes was Rs. 8,576 million in fiscal 2007, which consisted of an increase in accounts receivables, other current and non-current assets, and inventories which were partially offset by an increase in accounts payable and accrued expenses and other current and non-current liabilities. We believe our current working capital is sufficient for our present capital requirements.

Net Cash Used in Investing Activities

     Net cash used in investing activities was Rs. 24,006 million in fiscal 2007, Rs. 56,404 million in fiscal 2008 and Rs. 95,458 million ($1,876.5 million) in fiscal 2009. The major part of the cash used in investing activities for fiscal 2007 and 2008 was towards our expansion projects across our copper, zinc and aluminum businesses, and for fiscal 2009, on our zinc, aluminum and commercial power generation businesses. We also used cash to meet ongoing maintenance capital expenditure requirements.

     In fiscal 2009, we spent Rs. 12,763 million ($250.9 million) on capital expenditures on HZL’s second hydrometallurgical zinc smelter and an additional captive power plant at Chanderiya, HZL’s construction of wind power plants and a project to increase the capacity of HZL’s Debari smelter from 80,000 tpa to 88,000 tpa through improvements in operational efficiencies. We also spent Rs. 18,612 million ($365.9 million) on Sterlite Energy’s construction of a thermal coal-based 2,400 MW power facility. In addition, we advanced Rs. 11,450 million ($225.1 million) to Vedanta Aluminium for its expansion projects, and Rs. 3,931 million ($77.3 million) to KCM. We used Rs. 36,923 million ($725.8 million) towards investing in short term investments. In fiscal 2008, we spent Rs. 13,536 million on capital expenditures, mainly on HZL’s second hydrometallurgical zinc smelter and an additional captive power plant at Chanderiya, HZL’s construction of wind power plants and an 88,000 tpa debottlenecking project at HZL. We also spent Rs. 8,040 million on Sterlite Energy’s construction of a thermal coal-based 2,400 MW power facility and invested Rs. 16,000 million in, and advanced Rs. 3,890 million to, Vedanta Aluminium for its expansion projects. In fiscal 2007, we spent Rs. 25,362 million on capital expenditures, mainly on our capacity expansion projects to add a second new zinc smelter and an additional 80 MW captive power plant at Chanderiya, HZL’s construction of wind power plants and Sterlite Energy’s construction of a thermal coal-based 2,400 MW power facility. We also realized Rs. 1,171 million from sale of property, plant and equipment, primarily from the sale of a property consisting of land and buildings in Mumbai for Rs. 1,000 million and Rs. 1,485 million from the sale of our aluminum conductor business. In addition, we paid Rs. 1,315 million to subscribe to a rights issue by Vedanta Aluminium to maintain our 29.5% ownership interest in that company.

Net Cash Provided by or Used in Financing Activities

     Net cash provided by financing activities was Rs. 7,986 million ($157.0 million) in fiscal 2009, primarily as a result of the net proceeds from long-term and short-term debts of Rs. 15,388 million ($302.5 million) which were partially offset by repayment of working capital loan of Rs. 3,588 million ($70.5 million) and payment of dividends of Rs. 3,812 million ($74.9 million). Net cash provided by financing activities was Rs. 76,582 million in fiscal 2008 primarily as a result of proceeds from the ADS offering, net of expense, of Rs. 80,506 million which were partially offset by net repayment of debt of Rs. 2,928 million and by the payment of dividends of Rs. 1,030 million. Net cash used in financing activities was Rs. 15,910 million in fiscal 2007 primarily as a result of a net repayment of debt of Rs. 11,451 million and by a payment of dividends of Rs. 4,450 million.

116

     Besides existing facilities, we had undrawn facilities in excess of Rs. 60,937 million ($1,197.9 million) available to us as of March 31, 2009.

     We tap both the domestic and offshore markets for our long-term funding needs. Since we have sizeable imports and exports, we access both import and export credits, based on cost effectiveness, both in the Indian Rupee and in foreign currencies, to finance our short-term working capital requirements. We have in place both secured and unsecured borrowings, with our secured borrowings being generally Indian Rupee denominated bonds.

     We have tapped different segments of borrowing resources, including banks and capital markets, both in India and overseas. We have credit ratings of above investment grade from the local rating agencies such as Credit Rating Information Services of India Limited and ICRA Limited. We therefore have not had, and do not believe that we will have, difficulty in gaining access to short-term and long-term financing sufficient to meet our current requirements.

Outstanding Loans

     The principal loans held by us and our subsidiaries, and the amounts outstanding thereunder, as of March 31, 2009 were as follows:

Working Capital Loans

     We have credit facilities from various banks for meeting working capital requirements, generally in the form of credit lines for establishing letters of credit, packing credit in foreign currency, or PCFC, cash credit and issuing bank guarantees. Amounts due under working capital loans as of March 31, 2008 and March 31, 2009 were Rs. 6,119 million and Rs. 2,531 million ($49.8 million), respectively. The Rs. 2,531 million ($49.8 million) in working capital loans due as of March 31, 2009 consisted of Rs. 2,038 million ($40.1 million) under a US dollar denominated PCFC loan and Rs. 493 million ($9.7 million) under a cash credit facility. Interest on the PCFC facility is based on the London Inter-Bank Offer Rate, or LIBOR, plus 375 basis points. The working capital loans are secured against the inventories and trade accounts receivables.

Foreign Currency Loans

     We had a US dollar denominated unsecured term loan facility of $92.6 million, which was entered into in March 2006 to refinance our foreign currency loans with various banks. This facility consisted of a Tranche A of $67.6 million which was repaid in June 2007 and a Tranche B of $25.0 million which was repaid in September 2008. As per the loan agreement, in April 2006, we converted these loans into Japanese Yen loans amounting to Tranche A of Japanese Yen 8,012.6 million and Tranche B of Japanese Yen 2,862.5 million. The rate of interest payable under this facility was Japanese Yen LIBOR plus 44 basis points. The amount due under this facility as of March 31, 2009 was nil.

     We had an unsecured term loan facility of Japanese Yen 3,570 million and $19.7 million, which was entered into in September 2005 to refinance foreign currency borrowings made in August 2002. The entire loan has been repaid on or prior to March 31, 2009. The rate of interest payable on the Japanese Yen facility was Japanese Yen LIBOR plus 42 basis points and on the US dollar denominated facility is LIBOR plus 42 basis points. The balance under this facility as of March 31, 2008 and March 31, 2009 were Rs. 443 million and nil, respectively.

     In November 2008, BALCO obtained a US dollar denominated unsecured loan facility of $25 million from DBS Bank Ltd, arranged by DBS Bank Ltd, Mumbai Branch, to meet our capital expenditure requirement on projects. The rate of interest payable on this facility is LIBOR plus 345 basis points. The loan is repayable in three equal yearly installments beginning November 2013. The amount due under this facility as of March 31, 2009 was $25.0 million (Rs.1,271.8 million). This is an unsecured facility.

117

Term Loans

     As of March 31, 2009, we had seven term loans which consist of two term loans from ABN AMRO Bank N.V., or ABN AMRO, two term loans from the Industrial Development Bank of India, or IDBI, two term loans from ICICI Bank Limited, or ICICI Bank, and one term loan from the State Bank of India, or SBI.

     In September 2003 and August 2004, BALCO obtained two syndicated Indian Rupee fixed rate term loan facilities from ABN AMRO totaling Rs. 17,000 million to meet capital expenditure requirements of projects, of which Rs. 15,904 million has been drawn down at an average interest rate of 7.3% per annum. The weighted average interest rate on the loan outstanding is 8.4%. These facilities are secured by a first charge on the movable and immovable properties, present and future tangible or intangible assets and other than current assets of BALCO. The first loan of Rs. 10,000 million is repayable in 12 quarterly installments beginning in January 2007. An amount of Rs. 8,490 million was repaid under the first loan by March 31, 2009. The second loan of Rs. 7,000 million, of which Rs. 5,904 million has been drawn down, is repayable in eight quarterly installments commencing from May 2009 and as of September 12, 2008, Rs. 2,127 million of the second loan has been prepaid. As of March 31, 2009, we had repaid Rs. 10,617 million ($208.7 million) of these loans and the balance outstanding was Rs. 5,287 million ($103.9 million).

     Pursuant to the approval of the BIFR for the rehabilitation scheme of IFL in November 2008, we took over two loans aggregating Rs. 1,022.5 million granted by ICICI Bank, on the same terms and conditions by way of two novation agreements entered into among us, IFL and ICICI Bank. The first loan of Rs. 1,020 million, of which Rs. 772.5 million was transferred to us pursuant to the novation agreement, has an interest rate of 10% per annum and is repayable in 12 quarterly installments beginning from November 2008, of which Rs. 124 million was paid by March 31, 2009. The second loan of Rs. 250 million has an interest rate of 10% per annum and is repayable in 16 quarterly installments beginning from November 2008, of which Rs. 31 million was repaid by March 31, 2009. As of March 31, 2009, we had repaid Rs. 155 million ($3.0 million) of these loans, out of the total loan amount of Rs. 1,022.5 million, and the balance outstanding was Rs. 868 million ($17.1 million). These loans are unsecured.

     In September 2008, Sterlite Energy obtained an Indian Rupee fixed rate term loan from IDBI totaling Rs. 5,000 million. Sterlite Energy has not repaid this loan as it had entered into another Indian Rupee term loan facility with, among others, IDBI, on June 29, 2009 pursuant to which Sterlite Energy and IDBI agreed that all amounts drawn down by Sterlite Energy under this loan facility will be deemed to be a draw down under the new term loan facility from the initial draw down date of the new term loan facility. See “— Principal loans entered into by us and our subsidiaries after March 31, 2009.” The first draw down of Rs. 1,500 million was made in September 2008, has an interest rate of 12% per annum and is repayable in June 2009. The second draw down of Rs. 1,000 million was obtained in December 2008, had an interest rate of 12.75% per annum, which has been reset to 12.0% per annum with effect from March 11, 2009, and is repayable in December 2009. As of March 31, 2009, the balance due under the loans was Rs. 2,500 million ($49.1 million). These loans are unsecured.

     In January 2009, Sterlite Energy obtained another Indian Rupee fixed rate term loan facility of Rs. 5,000 million from the SBI, of which Rs. 2,000 million had been drawn down. The interest rate of the loan is 12.0% per annum. The purpose of the loan is to meet capital expenditure requirements on projects. As of March 31, 2009, the balance due under the loan was Rs. 2,000 million ($39.3 million). This is an unsecured loan.

Buyers’ Credit

     In fiscal 2009, Sterlite Energy had utilized extended credit terms relating to purchases of property, plant and equipment for our projects. As of March 31, 2009, the outstanding balance due was Rs. 11,451 million ($225.1 million). These loans bear interest at LIBOR plus 154 basis points. SBI has a lien of a fixed deposit of Rs. 1,950 million ($38.3 million) as security over this loan. The remaining balance of Rs. 9,453 million ($185.8 million) is unsecured.

     In fiscal 2009, BALCO had utilized buyers’ credit facility for meeting project expenditure requirements. As of March 31, 2009, the outstanding balance due under this facility was Rs. 1,260 million ($24.8 million). These loans bear interest at LIBOR plus 325 basis points. These are unsecured debts.

Non-Convertible Debentures

     In April 2003, we issued Rs. 1,000 million ($19.7 million) in Indian Rupee denominated non-convertible debentures to LIC. The debentures were issued in two tranches. Tranche A, in the amount of Rs. 400 million ($7.9 million), is due in April 2010 and Tranche B, in the amount of Rs. 600 million ($11.8 million), is due in April 2013. Interest payable on these debentures are linked to annualized Government of India security rates. The applicable interest rate is 9.25% per annum. These debentures are secured by certain of our immovable properties.

     In November 2008, BALCO issued Rs. 5,000 million ($98.3 million) in Indian Rupee denominated non-convertible debentures to LIC. The debentures are repayable in three equal yearly installments beginning in November 2013. The applicable interest rate is 12.25% per annum. The debentures are secured and have a pari passu charge on BALCO’s movable and immovable properties and present and future tangible or intangible assets, other than BALCO’s current assets to the extent of 1.33 times the issued amount of the debentures.

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

     We and our subsidiaries have entered into the following principal loans after March 31, 2009:

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

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

     It is a condition precedent under the Rs. 55,690 million term loan and the $140.0 million term loan that Sterlite Energy obtains, among other things, certain corporate authorizations and clearances prior to the lenders thereto making available the facilities to Sterlite Energy. Sterlite Energy is in the process of obtaining these authorizations and clearances.

118

Export Obligations

     We have export obligations of Rs. 60,487 million ($1,189.1 million) over the next eight years on account of concessional rates received on import duties paid on capital goods under the Export Promotion Capital Goods Scheme enacted by the Government of India. If we are unable to meet these obligations, the liability would be Rs. 8,417 million ($165.5 million), reduced in proportion to actual exports. Due to the remote likelihood of our being unable to meet our export obligations, we do not anticipate a loss with respect to these obligations and hence have not made any provision in our consolidated financial statements.

Guarantees

     As of March 31, 2009, we have given the following guarantees:

• Guarantees on the issuance of customs and excise duty bonds amounting to Rs. 879 million ($17.3 million) for import of goods including capital equipment at concessional rates of duty. We do not anticipate any liability on these guarantees.

• Corporate guarantee of Rs. 21,000 million ($412.8 million) on behalf of Vedanta Aluminium for obtaining credit facilities. We also issued corporate guarantees totaling of Rs. 14,704 million ($289.1 million) for importing capital equipment at concessional rates of duty under the Export Promotion Capital Goods Scheme enacted by the Government of India and Rs. 134 million ($2.6 million) for raw material imports. Vedanta Aluminium is obligated to export goods worth eight times the value of concessions enjoyed in a period of eight years following the date of import, failing which we will be liable to pay the dues to the Government of India. As of March 31, 2009, we determined that we have no liability on either of these corporate guarantees.

• Bank guarantee of AUD 5.0 million (Rs. 175 million or $3.4 million) in favor of the Ministry for Economic Development, Energy and Resources of Australia as a security against rehabilitation liability on behalf of CMT. This guarantee is backed up by the issuance of a corporate guarantee of Rs. 320 million ($6.3 million). These liabilities are fully recognized in the consolidated financial statements. We do not anticipate any additional liability on this guarantee.

• Bank indemnity guarantees amounting to AUD 2.9 million (Rs. 100 million or $2.0 million) in favor of the State Government of Queensland, Australia, as a security against rehabilitation liabilities that are expected to occur at the closure of the mine. The environmental liability has been fully recognized in our consolidated financial statements. We do not anticipate any additional liability on these guarantees.

• Performance bank guarantees amounting to Rs. 2,809 million ($55.2 million). These guarantees are issued in the normal course of business while bidding for supply contracts or in lieu of advances received from customers. The guarantees have varying maturity dates normally ranging from six months to three years. These are contractual guarantees and are enforceable if the terms and conditions of the contracts are not met and the maximum liability on these contracts is the amount mentioned above. We do not anticipate any liability on these guarantees.

• Bank guarantees for securing supplies of materials and services in the normal course of business amounting to Rs. 2,047 million ($40.2 million). We have also issued bank guarantees in the normal course of business for an aggregate value of Rs. 493 million ($9.7 million) for litigations, against provisional valuation and for other liabilities. We do not anticipate any liability on these guarantees.

• Two irrevocable letters of credit of $50 million each in favor of Asarco, one of which we gave as a security deposit at the time of signing the previous agreement with Asarco on February 4, 2009 and the second of which we gave as an additional security deposit at the time of signing the current agreement with Asarco on March 6, 2009.

     Our outstanding guarantees cover obligations aggregating Rs. 47,160 million ($927.1 million) as of March 31, 2009, the liabilities for which have not been recorded in our consolidated financial statements.

     After March 31, 2009, we have given a third irrevocable letter of credit of $25 million in favor of Asarco on May 15, 2009 after the approval by the US Bankruptcy Court of the adequacy of the disclosure statement submitted by Asarco in support of the reorganization plan proposed by Asarco and sponsored by Sterlite USA.

119

Contractual Obligations

     The following table sets out our total future commitments to settle contractual obligations as of March 31, 2009:

	Payment Due by Period
	Total				Less than 1 Year				1-3 Years				3-5 Years				More than 5 Years
	(in millions)
Bank loans and borrowings	Rs.	34,586	$	679.9	Rs.	20,202	$	397.1	Rs.	9,688	$	190.5	Rs.	—	$	—	Rs.	4,696	$	92.3
Capital commitments		67,607		1,329.0		39,211		770.8		28,391		558.1		5		0.1		—		—
Total	Rs.	102,193	$	2,008.9	Rs.	59,413	$	1,167.9	Rs.	38,079	$	748.6	Rs.	5	$	0.1	Rs.	4,696	$	92.3

     Our total future commitments to settle contractual obligations as of March 31, 2009 were Rs. 102,193 million ($2,008.9 million), representing a Rs. 321 million ($6.3 million) increase as compared to our total future commitments to settle contractual obligations as of March 31, 2008.

     We also have commitments to purchase copper concentrate for our copper custom smelting operations. These commitments are based on future copper LME prices which are not ascertainable as of the date of this annual report.

Off-Balance Sheet Arrangements

     In the normal course of business, we enter into certain capital commitments and also give certain financial guarantees. The aggregate amount of indemnities and other guarantees, on which we do not expect any material losses, was Rs. 55,577 million ($1,092.5 million) as of March 31, 2009. Details of our guarantees are set out in “— Guarantees.” Details of our capital expenditures and commitments and contingencies are as follows:

Capital Expenditures and Commitments

     Our principal financing requirements primarily include:

• capital expenditures, towards expansion of capacities in existing businesses including modernization of facilities;

• the establishment of our planned commercial power generation business;

• consolidation of our ownership in our various subsidiaries; and

• acquisitions of complementary businesses that we determine to be attractive opportunities.

     The following table shows our capital expenditures spent in fiscal 2007, 2008 and 2009:

	For Year Ended March 31,
	2007		2008		2009
	(in millions)
Capital Expenditures	$	588.4	$	635.4	$	808.1

     We had significant capital commitments as of March 31, 2009 amounting to Rs. 67,607 million ($1,329.0 million) related primarily to capacity expansion projects, including commitments amounting to Rs. 27,496 million ($540.5 million) for our new commercial power generation business. See “Item 4. Information on the Company — B. Business Overview — Our Business — Our Zinc Business — Projects and Developments” and “Item 4. Information on the Company — B. Business Overview — Our Business — Our Aluminum Business — Projects and Developments.”

     In response to the recent global economic conditions and a decline in commodity prices, we have reduced our planned capital expenditures by deferring some of our expansion projects and by reducing the costs of our ongoing projects.

Contingencies

     We are from time to time subject to litigation and other legal proceedings. Certain of our operating subsidiaries have been named as parties to legal actions by third party claimants and by the Indian sales tax, excise and related tax authorities for additional sales tax, excise and indirect duties. These claims primarily relate either to the assessable values of sales and purchases or to incomplete documentation supporting our tax returns. The total claim related to these tax liabilities is Rs. 4,410 million ($86.7 million). We have evaluated these contingencies and estimate that it is probable that some of these claims may result in loss contingencies and hence have recorded Rs. 101 million ($2.0 million) as current liabilities as of March 31, 2009.

120

     The claims by third party claimants amounted to Rs. 4,807 million ($94.5 million) as of March 31, 2009. No liability has been recorded against these claims, based on our expectation that none of these claims will become our obligations. We intend to vigorously defend these claims. Although the results of legal actions cannot be predicted with certainty, it is the opinion of our management, after taking appropriate legal advice, that the likelihood of these claims becoming our obligations is remote and, as a result, the resolution of these claims will not have a material adverse effect, if any, on our business, financial condition or results of operations. Therefore, we have not recorded any additional liability in relation to litigation matters in the accompanying consolidated financial statements.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”

     In September 2006, the Financial Accounting Standards Board, or FASB, issued SFAS No. 157, “Fair Value Measurements,” or SFAS 157. This Statement defines fair value, establishes a framework for measuring fair value in US GAAP, and expands disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The adoption of the standard did not have a material effect on our consolidated financial position or results of operation.

     In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157,” or FSP 157-2. FSP 157-2 delays the effective date of SFAS 157 for non financial assets and non financial liabilities, except for certain items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We are currently evaluating the impact of SFAS 157 on our consolidated financial position and results of operation for items within the scope of FSP 157-2, which becomes effective beginning with our first quarter of 2010.

     In April 2009, the FASB issued FASB Staff Position No. FAS 157-4, “Determining Fair Value,” or FSP 157-4. FSP 157-4 defines when market activity declines. FSP 157-4 provides guidance on estimating fair value of an asset or liability when volume and level of activity significantly decreases and identifying transactions that are not orderly. We are currently evaluating the impact of SFAS 157-4 on our consolidated financial position and results of operation for items within the scope of FSP 157-4, which will become effective beginning with our first quarter of 2010.

SFAS No 159, “The Fair Value Option for Financial Assets and Financial Liabilities —Including an amendment of FASB Statement No. 115”

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115,” or SFAS 159. SFAS 159 permits entities to choose to measure many financial instruments at fair value. The objective of this Statement is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. This standard is effective for fiscal years beginning after November 15, 2007. We have elected not to value any of our financials assets and liabilities other than those required by the Standard prior to SFAS 159.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51”

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51,” or SFAS 160. SFAS 160 improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard is effective for fiscal years beginning on or after December 15, 2008. Upon adoption of SFAS 160, minority interests shall be reported within shareholders’ equity.

SFAS No 141 (R), “Business Combination”

     In December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combination,” or SFAS 141(R). SFAS 141(R) improves the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This standard is effective for fiscal years beginning on or after December 15, 2008. Our management is currently evaluating the impact, if any, the adoption of SFAS 141(R) will have on our financial reporting and disclosures.

121

SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”

     In March 2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133,” or SFAS 161, which modifies and expands the disclosure requirements for derivative instruments and hedging activities. SFAS 161 requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation and requires quantitative disclosures about fair value amounts and gains and losses on derivative instruments. It also requires disclosures about credit-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. Our management is currently evaluating the impact, if any, the adoption of SFAS 161 will have on our financial reporting and disclosures.

FASB Staff Position No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”

     In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” or FAS 115-2 and FAS 124-2. The objective of an other-than-temporary impairment analysis under existing U.S. GAAP is to determine whether the holder of an investment in a debt or equity security for which changes in fair value are not regularly recognized in earnings (such as securities classified as held-to-maturity or available-for-sale) should recognize a loss in earnings when the investment is impaired. An investment is impaired if the fair value of the investment is less than its amortized cost basis. We are currently evaluating the impact of FAS 115-2 and FAS 124-2 on our consolidated financial position and results of operation for items within the scope of FAS 115-2 and FAS 124-2 which becomes effective beginning with our first quarter of 2010.

FASB Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”

     In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” or FAS 107-1 and APB 28-1. FAS 107-1 and APB 28-1 amends FASB Statement No. 107, “Disclosures about Fair Value of Financial Instruments,” to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FAS 107-1 and APB 28-1 also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial information at interim reporting periods. We are currently evaluating the impact of FAS 107-1 and APB 28-1 on our consolidated financial position and results of operation for items within the scope of FAS 115-2 and FAS 124-2 which become effective beginning with our first quarter of 2010

FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”

     In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets,” or FSP 142-3. This guidance is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets,” or SFAS 142, and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R when the underlying arrangement includes renewal or extension of terms that would require substantial costs or result in a material modification to the asset upon renewal or extension. Companies estimating the useful life of a recognized intangible asset must now consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension as adjusted for FAS 142’s entity-specific factors. FSP 142-3 is effective for us beginning April 1, 2009. We will be required to adopt this FSP prospectively for all assets acquired after April 1, 2009 and early adoption is prohibited. Its effects on future periods will depend on the nature and specific facts of assets acquired subject to FAS No. 142.

FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”

     In December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets,” or FSP 132(R)-1. This guidance amends FAS No. 132(R), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to require more detailed disclosures about the fair value measurements of employers’ plan assets including (a) investment policies and strategies; (b) major categories of plan assets; (c) information about valuation techniques and inputs to those techniques, including the fair value hierarchy classifications (as defined by FAS No. 157) of the major categories of plan assets; (d) the effects of fair value measurements using significant unobservable inputs (level 3) on changes in plan assets; and (e) significant concentrations of risk within plan assets. The disclosures required by the FSP is effective for us beginning April 1, 2009. This statement does not impact the consolidated financial results as it is disclosure-only in nature.

FSP SFAS 165, “Subsequent Events”

     In May 2009, the FASB issued FSP SFAS No. 165, “Subsequent Events,” or SFAS 165, which provides guidance on accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for fiscal years and interim periods ending after June 15, 2009. Our management is currently evaluating the impact, if any, the adoption of SFAS 165 will have on our financial reporting and disclosure.

FSP SFAS 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”

     In June 2009, FASB issued FSP SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles,” or SFAS 168. This guidance replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles,” or SFAS 162. The FASB Accounting Standards Codification will be the source of authoritative US GAAP recognized by the FASB to be applied by non-governmental entities. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of SFAS 168, the FASB Accounting Standards Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the FASB Accounting Standards Codification will become non-authoritative. SFAS 168 is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009. Once the FASB Accounting Standards Codification is in effect, all of its content will carry the same level of authority, effectively superseding SFAS 162. The issuance of SFAS 168 (and the FASB Accounting Standards Codification) will not change US GAAP except for certain non-public non-governmental entities and accordingly, the adoption of SFAS 168 will not have any impact on our financial reporting and disclosures.

FASB Staff Position No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”

     In April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies,” or FSP 141(R)-1, to amend and clarify the initial recognition and measurement, subsequent measurement and accounting, and related disclosures arising from contingencies in a business combination under SFAS 141(R). Our management is currently evaluating the impact, if any, the adoption of FSP 141(R)-1 will have on our financial reporting and disclosures, which will become effective beginning with our first quarter of 2010.

Emerging Issues Task Force (“EITF”) 08-6, “Equity Method Investment Accounting Considerations”

     In November 2008, the FASB issued EITF 08-6, “Equity Method Investment Accounting Considerations,” or EITF 08-6, which clarifies the accounting for transactions such as Change in Level of Ownership or Degree of Influence and contingent consideration, and impairment considerations involving equity method investments. Our management is currently evaluating the impact, if any, the adoption of EITF 08-6 will have on our financial reporting and disclosures, which will become effective beginning with our first quarter of 2010.

EITF 08-7, “Accounting for Defensive Intangible Assets”

In November 2008, the FASB issued EITF 08-7, “Accounting for Defensive Intangible Assets,” or EITF 08-7, to clarify the accounting of acquired intangible assets in situations in which an entity does not intend to actively use the asset but intends to hold (lock up) the asset to prevent others from obtaining access to the asset (a defensive intangible asset), except for intangible assets that are used in research and development activities. Our management is currently evaluating the impact, if any, the adoption of EITF 08-7 will have on our financial reporting and disclosures, which will become effective beginning with our first quarter of 2010.

122

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

     Our board of directors consists of six directors.

     The following table sets forth the name, age (as of June 30, 2009) and position of each of our directors, executive officers and significant employees as of the date hereof:

Name	Age		Position
Directors
Anil Agarwal(1)		56	Non-Executive Chairman
Navin Agarwal(2)		48	Executive Vice-Chairman
Dindayal Jalan(2)(3)(4)(5)		52	Whole Time Director
Berjis Minoo Desai(4)(5)(6)(7)(8)		52	Non-Executive Director
Gautam Bhailal Doshi(1)(5)(7)(9)		56	Non-Executive Director
Sandeep H. Junnarkar(6)(7)(10)		57	Non-Executive Director
Executive Officers
Mahendra Singh Mehta		53	Group Chief Executive Officer
Rajagopal Kishore Kumar(11)		46	Chief Executive Officer, SIIL and Chief Executive Officer, Copper and Zinc Divisions
Vinod Bhandawat(12)		41	Chief Financial Officer
Tarun Jain(13)		49	Director of Finance
A. Thirunavukkarasu		48	Group Head of Corporate Human Resource
Dilip Golani		43	President and Group Head of Management Assurance
Other Significant Employees
Copper Business
Jeyakumar Janakaraj		38	Chief Executive Officer, CMT
Puneet Jagatramka		37	Chief Marketing Officer, Copper and Zinc Divisions
C.V. Krishnan		59	Head of Business Development, SIIL
Zinc Business
Akhilesh Joshi(2)		55	Chief Operating Officer and Whole Time Director, HZL
Shyam Lal Bajaj		55	Chief Financial Officer, HZL
Aluminum Business
Mansoor Siddiqi		55	Chief Executive Officer, Aluminum Division
V. Ramanathan		49	Chief Financial Officer, Aluminum Division
Pramod Suri(2)		51	Chief Executive Officer — Operations, Aluminum Division and Whole Time Director, BALCO
Gunjan Gupta(2)		42	Chief Executive Officer and Whole Time Director, BALCO
Power Business
Pankaj Khanna		43	Executive Director — Jharsuguda

Notes:
(1)	Member of the Remuneration Committee.
(2)	A “Whole Time Director” is a director who is employed full-time in rendering services to the management of the company with respect to which he is a director. An individual can be a whole time director with respect to only one company, although he or she may accept the position of non-whole time director in other companies. In addition to Messrs. Dindayal Jalan, Akhilesh Joshi and Gunjan Gupta, Mr. Navin Agarwal is also considered to be a Whole Time Director.
(3)	Appointed as a Whole Time Director with effect from December 24, 2008. In addition, Mr. Jalan was our Chief Financial Officer prior to June 15, 2009.
(4)	Member of the Shareholders’ and Investors’ Grievance Committee.
(5)	Member of the Share and Debenture Transfer Committee.
(6)	Member of the Audit Committee.
(7)	Independent director.
(8)	Chairman of the Remuneration Committee.
(9)	Chairman of the Audit Committee.
(10)	Chairman of the Shareholders’ and Investors’ Grievance Committee.
(11)	Appointed as Chief Executive Officer of SIIL with effect from October 1, 2008.
(12)	Appointed as our Chief Financial Officer with effect from June 15, 2009.
(13)	Resigned as Whole Time Director with effect from March 31, 2009, following which he is no longer a director of our company. However, he remains an executive officer of the company as our Director of Finance.

Directors

     Anil Agarwal, who founded the Vedanta group in 1976, is our Non-Executive Chairman and was appointed to our board of directors in 1978. Mr. Agarwal is based in the United Kingdom. In addition to his role as Non-Executive Chairman, Mr. Agarwal is also the executive chairman of Vedanta and a director of BALCO, STL, SOVL, Sterlite Energy, Vedanta Aluminium, CMT, TCM, VRHL, Vedanta Resources Investment Limited, Finsider International Company Limited and Sterlite Paper Limited, or SPL. Mr. Agarwal was previously our Chairman and Managing Director and Chief Executive Officer from 1980 until the expiration of his term in October 2004. Mr. Agarwal was also the chief executive officer of Vedanta from December 2003 to March 2005. Mr. Agarwal has over 33 years of experience as an industrialist and has been instrumental in our growth and development since our inception. Mr. Agarwal is the son of Mr. Dwarka Prasad Agarwal, one of our directors until March 31, 2009, and the brother of Mr. Navin Agarwal. The business address of Mr. Agarwal is 75 Nehru Road, Vile Parle (East), Mumbai, Maharashtra 400099, India.

123

     Navin Agarwal is our Executive Vice-Chairman and was appointed to our board of directors in August 2003. Mr. Agarwal is based in Mumbai, India. His responsibilities as Executive Vice-Chairman include executing our business strategy and managing the overall performance and growth of our organization. Mr. Agarwal joined our company at its inception. In addition to his role as Executive Vice-Chairman, Mr. Agarwal is also the chairman of KCM and MALCO, the deputy executive chairman of Vedanta and a director of BALCO, HZL, Vedanta Aluminium, SPL, Sterlite Iron & Steel Company Limited, Sterlite Infrastructure Private Limited, Sterlite Infrastructure Holdings Private Limited, Sterlite Energy and Finsider International Company Limited. As between these various positions, Mr. Agarwal is principally employed by us and devotes most of his time to matters relating to us, though under the shared services agreement described in “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions” he does from time to time spend a small percentage of his time on matters relating to Vedanta and its subsidiaries. Mr. Agarwal has over 20 years of experience in general management and commercial matters. Mr. Agarwal has completed the Owner/President Management Program at Harvard University and has a Bachelor of Commerce from Sydenham College, Mumbai, India. Mr. Agarwal is the son of Mr. Dwarka Prasad Agarwal and the brother of Mr. Anil Agarwal. The business address of Mr. Agarwal is 75 Nehru Road, Vile Parle (East), Mumbai, Maharashtra 400099, India.

     Dindayal Jalan is our Whole Time Director. Mr. Jalan joined our company as the president of our Australian operations and was responsible for the business and operations of CMT and TCM from January 2001 to February 2002 before becoming our chief financial officer (metals). He was appointed as our chief financial officer in March 2003 and held that position until June 2009. Mr. Jalan has been the chief financial officer of Vedanta since October 2005. Mr. Jalan is also a director of SOVL, Vedanta Resources Finance Limited, Vedanta Resources Finance Cyprus Limited, Vedanta Resources Jersey Ltd., TCM, CMT and TSPL. Mr. Jalan has over 30 years of experience working in various companies in the engineering, mining and non-ferrous metals industries. Mr. Jalan received a Bachelor of Commerce from Gorakhpur University, India and is a member of the Institute of Chartered Accountants of India.

     Berjis Minoo Desai is our Non-Executive Director and was appointed to our board of directors in January 2003. Mr. Desai is based in Mumbai, India. Mr. Desai is a solicitor and has been the managing partner of Messrs J. Sagar Associates since April 2003 specializing in mergers and acquisitions, securities, financial and international business laws and international commercial arbitration. Prior to that, Mr. Desai was a partner at Messrs Udwadia, Udeshi & Desai from 1997 to 2003. Mr. Desai has a Bachelor of Arts and a Bachelor of Law from the University of Mumbai and a Master of Law from the University of Cambridge, UK. Mr. Desai is also a director of several companies including The Great Eastern Shipping Company Limited, NOCIL Limited, Praj Industries Limited, Emcure Pharmaceuticals Limited, Greatship (India) Limited, Centrum Capital Limited and Deepak Nitrate Limited. The business address of Mr. Desai is Vakil’s House, 18 Sprott Road, Ballard Estate, Mumbai, Maharashtra 400001, India.

      Gautam Bhailal Doshi is our Non-Executive Director and was appointed to our board of directors in December 2001. Mr. Doshi is based in Mumbai, India. Mr. Doshi is a chartered accountant. Since August 2005, he has been the group managing director of the Reliance ADA Group Limited. Prior to that, he was a partner of RSM & Co. in India from September 1997 to July 2005. Mr. Doshi has more than 25 years of experience in the areas of audit, finance and accounting. Mr. Doshi has a Bachelor of Commerce from the University of Mumbai and a Master of Commerce from the University of Mumbai and is a Fellow Member of the Institute of Chartered Accountants of India. Mr. Doshi is also a director of Adlabs Films Limited, Piramal Life Sciences Limited, Reliance Anil Dhirubhai Ambani Group Limited, Reliance Big TV Limited, Reliance Communications Infrastructure Limited, Reliance Life Insurance Company Limited, Reliance Telecom Limited, Sonata Investments Limited, Connect Capital Private Limited, Nahata Film Infotain Private Limited, Reliance Homes Finance Private Limited and Telecom Infrastructure Finance Private Limited. The business address of Mr. Doshi is Reliance Centre, 3rd Floor, 19 Walchand Hirachand Marg, Ballard Estate, Mumbai, Maharashtra 400038, India.

     Sandeep H. Junnarkar is our Non-Executive Director and was appointed to our board of directors in June 2001. Mr. Junnarkar is based in Mumbai, India. Mr. Junnarkar is a solicitor and a partner of Messrs Junnarkar & Associates. Prior to that, he was a partner at Messrs Kanga & Co. from 1981 until 2002. Mr. Junnarkar specializes in banking and corporate law and regularly advises on all aspects of exchange control under the Foreign Exchange Management Act, 1999, as amended, or FEMA, and the Securities Contracts (Regulation) Act, 1956, or the SCRA. Mr. Junnarkar has a Bachelor of Law from the University of Mumbai and is a member of the Bombay Incorporated Law Society. Mr. Junnarkar is also a director of Everest Industries Limited, Excel Crop Care Limited, IL&FS Infrastructure Development Corpn. Ltd., Jai Corp. Ltd, Jai Realty Ventures Limited, Reliance Industrial Infrastructure Limited, Reliance Industrial Investments & Holdings Limited, Reliance Ports and Terminals Limited, Reliance Utilities Limited and Sunshield Chemicals Limited. The business address of Mr. Junnarkar is 311/312 Embassy Centre, Nariman Point, Mumbai, Maharashtra 400021 India.

Executive Officers

     Mahendra Singh Mehta is our Group Chief Executive Officer. Mr. Mehta joined our group in April 2000 and held various leadership positions within our group, including as the chief executive officer and director of HZL and as our commercial director for base metals. Prior to joining our group, Mr. Mehta worked with Lloyds Steel Industries Ltd where he handled a wide portfolio of responsibilities, including marketing, procurement, working capital finance and projects. Mr. Mehta is also the chief executive officer of Vedanta and was appointed as a director of Vedanta in October 2008. In addition, he is a director of HZL and TSPL. Mr. Mehta has a Bachelor of Mechanical Engineering from MBM Engineering College, Jodhpur, and a Master of Business Administration from the Indian Institute of Management, Ahmedabad.

     Rajagopal Kishore Kumar is the Chief Executive Officer of SIIL and the Chief Executive Officer of our Copper and Zinc Divisions. He has been responsible for the overall management of our copper and zinc businesses since December 2006 and October 2008, respectively, and was appointed as the Chief Executive Officer of our consolidated group of companies in October 2008. Mr. Kumar joined our company in April 2003 as vice president of marketing for HZL and became senior vice president of marketing for our Copper Division from June 2004 to December 2006, where he was responsible for copper marketing and concentrate procurement. Prior to joining our company, Mr. Kumar was employed by Hindustan Lever Ltd for 12 years. Mr. Kumar has a Bachelor of Commerce from Kolkata University and is a member of the Institute of Chartered Accountants of India.

124

     Vinod Bhandawat is our Chief Financial Officer. Mr. Bhandawat joined the Vedanta group in 1998 and has held various positions, including acting as the chief financial officer of KCM from December 2005 to May 2009. He was appointed as our Chief Financial Officer in June 2009. Prior to joining the Vedanta group, Mr. Bhandawat was employed in various positions by companies with operations in India, including holding the positions of manager — accounts with Century Enka Ltd. and business controller with ABB Ltd. (formally Asea Brown Boveri). Mr. Bhandawat has a Bachelor of Commerce from Calcutta University and is a member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India.

     Tarun Jain is our Director of Finance. Mr. Jain joined Sterlite in 1984 and has over 25 years of experience in the corporate finance, audit and accounting, tax and secretarial practice. He is responsible for our strategic financial matters, including finance and accounting, legal and regulatory compliance and risk management. Mr. Jain is a graduate of the Institute of Cost and Works Accountants of India and a Fellow Member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. Mr. Jain is also a director of Sterlite USA, BALCO, Vedanta Aluminium, SOVL, and Twin Star.

     A. Thirunavukkarasu is our Group Head of Corporate Human Resources. Mr. Thirunavukkarasu is responsible for the strategic and operational aspects of human resources. He joined our company in April 2004. Mr. Thirunavukkarasu was SIIL’s general manager of human resources and subsequently became the senior vice president of human resources for our Copper Division until July 2007 when he became our Group Head of Corporate Human Resources. Prior to that, Mr. Thirunavukkarasu has held various positions in the human resources departments of several companies including Hindustan Levers Limited, English Electric Co. of India Ltd. and TVS Electronics Limited. Mr. Thirunavukkarasu has a Master in Social Work from Loyola College, Chennai.

     Dilip Golani is our President and Group Head of Management Assurance. Mr. Golani joined our company in 2000 as the head of our management assurance department before becoming the head of our performance improvement department from August 2004 to August 2005. From September to December 2005, Mr. Golani was also appointed as the head of marketing for HZL and subsequently, in December 2005, he took up the position as head of management assurance for HZL. [Prior to joining our company in April 2000, Mr. Dilip was working with Unilever. He was member of the Unilever corporate audit team responsible for auditing the Unilever group companies in Central Asia, Middle East and Africa regions. Mr. Dilip was also responsible for managing operations and marketing functions for one of the export businesses of Hindustan Unilever Limited.] Mr. Dilip has over 21 years experience and has worked with organizations such as Ranbaxy Laboratories Limited and Union Carbide India Limited. Mr. Golani has a Bachelor of Engineering from Motilal National Institute of Technology, Allahabad and a Post-Graduate Diploma in Industrial Engineering from the National Institute of Industrial Engineering.

Other Significant Employees

     Copper Business

     Jeyakumar Janakaraj is the Chief Executive Officer of CMT. Mr. Janakaraj joined our group in September 1995 as a mechanical engineer in our copper division at Tuticorin. He subsequently joined HZL as a senior manager in July 2002 and worked in various capacities, including as head of projects for HZL’s mines and smelters. Prior to joining our group, Mr. Janakaraj was with Essar Steel from 1992 to 1995 as a junior engineer. In September 2006, Mr. Janakaraj was awarded a Gold Medal by the Indian Institute of Metals, Kolkatta, for his significant contributions to the non-ferrous metallurgical industry. Mr. Janakaraj is also a director of operations for KCM. Mr. Janakaraj has a Bachelor of Mechanical Engineering from the PSG College of Technology, Bharathiar University, Coimbatore.

     Puneet Jagatramka is the Chief Marketing Officer of our Copper and Zinc Divisions and is responsible for marketing our copper, zinc, lead and silver metal products, as well as copper concentrate procurement. Mr. Jagatramka joined our group in December 1997 and has held various leadership positions within our group in the areas of marketing and procurement. Prior to that, he was at EL-O-Matic (India) Pvt Ltd, part of the Poonawalla Group, as a purchase engineer. Mr. Jagatramka has a Bachelor of Mechanical Engineering from Bhilai Institute of Technology, Bhilai, and a Post-Graduate Diploma in Management from the Symbiosis Centre for Management and Human Resource Development, Pune.

     C.V. Krishnan is the Head of Business Development of SIIL. Prior to that, he was the managing director of our Power Division and has been responsible for the overall management and development of our commercial power generation business since October 2006. Prior to that, Mr. Krishnan was the chief executive officer and managing director of KCM. Mr. Krishnan was responsible for KCM’s copper business in Zambia from February 2005 to October 2006. From October 2003 to January 2005, Mr. Krishnan was chief executive officer for Shankar Netralaya Medical Research Foundation, Chennai, a non-governmental organization and non-profit trust hospital. Prior to that, he was our chief executive officer, metals, from October 2001 to October 2003. Mr. Krishnan was a director of our company and of HZL from October 2001 to February 2005. Mr. Krishnan has been a director of KCM since February 2005. Prior to joining our company in May 1999, he was the chief executive officer and managing director of Essar Power Limited. Mr. Krishnan has over 30 years of work experience and has held senior positions in Larsen & Toubro Limited, A.F. Ferguson & Co., Shriram Fertilizers & Chemicals Limited and E.I.D Parry Limited. Mr. Krishnan has a Bachelor of Technology from the Indian Institute of Technology, Chennai and a Masters of Business Administration from the Indian Institute of Management, Ahmedabad.

     Zinc Business

     Akhilesh Joshi is the Chief Operating Officer and Whole Time Director of HZL. He joined HZL in 1976 as an assistant engineering for mining and worked in various capacities at both underground and opencast mines of HZL. Mr. Joshi became the general manager of HZL when HZL became a part of the Vedanta group. He has also served as the unit head — RAM and became senior vice president (mines) in April 2008. Mr. Joshi played a significant role in the expansion projects for the Rampura Agucha mine and is in charge of the mining activities at HZL. Mr. Joshi has a Bachelor of Engineering (Mining) from M.B.M. Engineering College, Jodhpur.

     Shyam Lal Bajaj is the Chief Financial Officer of HZL and is responsible for its finance and accounting functions and its information technology, legal, insurance, compliance and treasury departments. Mr. Bajaj joined our group in June 1995 as general manager of SIIL. Prior to his present appointment in December 2005, he was the chief financial officer of Sterlite Optical and Technologies Limited. Prior to that, Mr. Bajaj held various positions at S.S. Kothari & Co., SAE (India) Limited and most recently, as the deputy general manager of MP Iron Steel Co., a unit of Hindurstan Development Corporation Limited. Mr. Bajaj is a member of the Institute of Chartered Accountants of India.

     Aluminum Business

     Mansoor Siddiqi is the Chief Executive Officer of our Aluminum Division and is responsible for the overall management of our aluminum business. Mr. Siddiqi joined our group in 1991. Prior to his present appointment, he was the director of projects for our group and was in charge of managing our expansion projects in our aluminum business. Prior to joining our group, Mr. Siddiqi worked at Hindustan Copper Limited and has 28 years of experience in various areas of operations and project management. Mr. Siddiqi has a Bachelor of Technology from the Indian Institute of Technology, Delhi, and a Diploma in Management from the All India Management Association, Delhi.

     V. Ramanathan is the Chief Financial Officer of our Aluminum Division and is responsible for the finance and accounting functions at BALCO and our associated company, Vedanta Aluminium, including management assurance, legal and compliance and corporate secretarial. Mr. Ramanathan joined our group in 1992. Prior to that, he was with Combiatore Agro Industries Ltd and Malabar Building Ltd. Mr. Ramanathan has a Bachelor of Science from the Madras University and is a member of the Institute of Chartered Accountants of India.

125

     Pramod Suri is the Chief Executive Officer — Operations of our Aluminum Division and Whole Time Director of BALCO. He is responsible for the overall operations of BALCO and Vedanta Aluminium. Prior to that, from 2004, Mr. Suri was the senior vice president of operations and head of BALCO’s 245,000 tpa aluminum smelter at Korba. Prior to joining our group in March 2004, Mr. Suri held various positions at the Indian Aluminum Company Limited, CEAT Ltd and Goodyear South Asia Tyres Pvt Ltd. Mr Suri has a Master of Chemistry from the Indian Institute of Technology, Delhi.

     Gunjan Gupta is the Chief Executive Officer and Whole Time Director of BALCO. Mr. Gupta joined BALCO in 2005 and served as the vice president of marketing and the business head for the 245,000 tpa smelter complex at Korba. He became chief executive officer of BALCO in March 2008 before becoming our Chief Executive Officer and Whole Time Director of BALCO in October 2008. Mr. Gupta has worked in various positions including business development, sales and business process re-engineering at Tata Steel and Arcelor Mittal. Mr. Gupta worked in the sales and marketing division of Tata Steel from 1990 to 1999. From 1999 to 2002, he joined SIIL in the sales and marketing division and became the head of copper marketing. During the period from 2002 to 2003, Mr. Gupta joined BALCO and MALCO in the aluminum sales and marketing division. Mr. Gupta joined Arcelor Mittal Steel in the sales and marketing division and he has worked with the Arcelor Mittal Group from 2003 to 2006. He has served as director of global sales and long steel products in several central and eastern European plants, including in the Czech Republic, Poland, Romania, Bosnia and Herzegovina. Mr. Gupta has a Bachelor of Chemical Engineering from the Indian Institute of Technology, Roorkee and a Master of Business Administration from the Faculty of Management Studies, Delhi.

     Power Business

     Pankaj Khanna is the Executive Director — Jharsuguda and is responsible for projects implementation and the operations of Sterlite Energy at Jharsuguda. Prior to his present appointment in April 2009, he was the chief operating officer of Vedanta Aluminium. Mr. Khanna joined the Vedanta group in 2001 as chief project manager of Sterlite Technologies Limited. Prior to that, he worked at Samtel Color Ltd for 12 years as its divisional manager. Mr. Khanna has a Bachelor of Mechanical Engineering from the Indian Institute of Technology, Kanpur

B. Compensation

Compensation of Directors and Executive Officers

     The aggregate compensation we paid our executive directors and executive officers for fiscal 2009 was Rs. 220 million ($4.3 million), which includes Rs. 180 million ($3.5 million) paid towards salary, bonuses, allowances and non-cash payments, Rs. 26 million ($0.5 million) paid by us to Vedanta for the fair value of share options granted to our executive directors and executive officers under the Vedanta LTIP, and Rs. 14 million ($0.3 million) paid towards benefits such as contributions to the provident fund and superannuation fund. The total compensation paid to our most highly compensated executive during fiscal 2009 was Rs. 72 million ($1.4 million) (of which Rs. 59 million ($1.2 million) comprised salary, bonuses and allowances, Rs. 7 million ($0.1 million) comprised payment by us to Vedanta for the fair value of share options granted under the Vedanta LTIP, and Rs. 6 million ($0.1 million) comprised benefits such as contribution to the provident fund and superannuation fund.

     The following table sets forth the compensation paid to our directors and executive officers in fiscal 2009, where the disclosure of compensation is required on an individual basis in India or is otherwise publicly disclosed by us:

	Salary, Bonuses,		Fair Value of Share		Contribution to
	Allowances and		Options granted under		Provident and
Name	Perquisites		the Vedanta LTIP		Superannuation Funds
	(in million)
Navin Agarwal	Rs.	59.09	Rs.	6.57	Rs.	6.08
Kuldip Kumar Kaura (1)		38.18		4.63		1.16
Dindayal Jalan		13.58		2.89		1.10
Mahendra Singh Mehta		14.19		2.89		0.93
Rajagopal Kishore Kumar(3)		10.20		1.80		0.88
Tarun Jain (2)		28.95		4.63		2.76
A. Thirunavukkarasu		6.76		1.35		0.37
Dilip Golani		9.29		1.66		0.51

Notes:
(1)	Mr. Kuldip Kumar Kaura ceased to be our Managing Director and Chief Executive Officer effective October 1, 2008 on the expiration of his employment contract. Mr. Rajagopal Kishore Kumar is our new Chief Executive Officer.
(2)	Resigned as Whole Time Director with effect from March 31, 2009, following which he is no longer a director of our company. However, he remains an executive officer of the company as our Director of Finance.
(3)	Appointed as Chief Executive Officer of SIIL with effect from October 1, 2008.

     The aggregate compensation paid or payable to our non-executive directors for fiscal 2009 was Rs. 5 million ($0.1 million), which comprised Rs. 1 million in sitting fees and Rs. 4 million ($0.1 million) in commissions.

     We adopted the Vedanta LTIP in February 2004. Under the Vedanta LTIP, our directors and executive officers will be granted share awards which will entitle them to acquire the ordinary shares of Vedanta based on the performance of Vedanta’s total shareholder return against a peer group of companies comprising the FTSE Worldwide Mining Index (excluding precious metals) measured over a three-year performance period and Vedanta’s financial performance.

Outstanding Awards or Options

     As of March 31, 2009, our directors and executive officers as a group held awards vested under the Vedanta LTIP to acquire an aggregate of 240,500 ordinary shares of Vedanta representing approximately 0.1% of Vedanta’s share capital. The awards are exercisable at the end of the three-year performance period commencing from the date of each grant at an exercise price of $0.10 per ordinary share. The awards expire six months after their date of grant. For more information, see “— Vedanta Long-Term Incentive Plan.”

Employee Benefit Plans

     We maintain employee benefit plans in the form of certain statutory and welfare schemes covering substantially all of our employees. As of March 31, 2009, the total amount set aside by us to provide pension, retirement or similar benefits was Rs. 711 million ($14.0 million).

126

Provident Fund

     In accordance with Indian law, all of our employees in India are entitled to receive benefits under the Provident Fund, a defined contribution plan to which both we and the employee contribute monthly at a pre-determined rate (currently 12.0% of the employee’s base salary). These contributions are made to the Government Provident Fund and we have no further obligation under this fund apart from our monthly contributions. We contributed an aggregate Rs. 249 million, Rs. 277 million and Rs. 286 million ($5.6 million) in fiscal 2007, 2008 and 2009, respectively.

Gratuity

     In accordance with Indian law, we provide for gratuity pursuant to a defined benefit retirement plan covering all of our employees in India. Our gratuity plan provides for a lump sum payment to vested employees on retirement or on termination of employment in an amount based on the employee’s salary and length of service with us. The gratuity plan provides a lump sum payment to vested employees at retirement, disability or termination of employment, in an amount based on the employee’s last drawn salary and the number of years of employment with us. The assets of the plan, to the extent the plan is funded, are held in separate funds managed by LIC and a full actuarial valuation of the plan is performed on an annual basis. Our liability for the gratuity plan was Rs. 576 million, Rs. 614 million and Rs. 668 million ($13.1 million) in fiscal 2007, 2008 and 2009, respectively.

Superannuation Fund

     It is our current policy for all of our non-unionized employees in a managerial position and above to pay into a superannuation fund a sum equal to 15.0% of their annual base salary which is payable to the employee in a lump sum upon his retirement or termination of employment. We contributed an aggregate of Rs. 8 million, Rs. 18 million and Rs. 19 million ($0.4 million) in fiscal 2007, 2008 and 2009, respectively.

Compensated Absence

     Our liability for compensated absences is determined on an actual basis for the entire unused vacation balance standing to the credit of each employee at each calendar year-end. Contributions to such liability are charged to income in the year in which they accrue. Liability for the compensated absences was Rs. 338 million, Rs. 615 million and Rs. 729 million ($14.3 million) in fiscal 2007, 2008 and 2009, respectively.

Vedanta Long-Term Incentive Plan

     We are a participating company in the Vedanta LTIP which was adopted by Vedanta to grant share options to its employees or employees of its subsidiaries. Awards under the plan may be granted to any employee of Vedanta or any of its subsidiaries who is not within six months of such employee’s normal retirement date.

     The Vedanta LTIP is consistent with our reward philosophy, which aims to provide superior rewards for outstanding performance, and to provide a high proportion of “at risk” remuneration for executive directors and senior employees. The maximum value of Vedanta ordinary shares which may be conditionally awarded in any financial year to a participant in the Vedanta LTIP who is an executive director is restricted to 100% of that executive director’s annual base salary.

     The performance target which currently applies to vesting of awards is our performance as measured against comparative total shareholder return against a peer group of companies comprising the FTSE Worldwide Mining Index (excluding precious metals).

     During fiscal 2009, options to acquire 240,500 Vedanta ordinary shares under the Vedanta LTIP vested to our directors and executive officers. Of these, options to acquire 150,400 and 90,100 Vedanta ordinary shares were granted on February 1, 2006 and November 15, 2007, respectively, with an exercise price of $0.10 per ordinary share.

Limitations on Liability and Indemnification Matters

     Section 201 of the Indian Companies Act provides that a company may indemnify any director, officer or auditor against any liability incurred by such director, officer or auditor in defending any civil or criminal proceedings, in which a judgment is given in favor of such director, officer or auditor or in which he or she is acquitted or discharged or in connection with application made by a director or an officer to the High Court of the relevant state for relief, because he or she has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, in which relief has been granted by the High Court of the relevant state.

     Section 201 also provides that, except for such indemnity described above, any provision, whether contained in the articles of association of a company or in an agreement with the company or in any other instrument, for exempting any director, officer or auditor of the company from, or indemnifying him or her against, any liability which, by any rule of law, would otherwise attach to such director, officer or auditor in respect of any negligence, default, misfeasance, breach of duty or breach of trust of which he or she may be guilty in relation to the company, shall be void.

C. Board Practices

Composition of the Board

     Our board of directors currently consists of six directors. Three of our six directors, namely, Mr. Berjis Minoo Desai, Mr. Gautam Bhailal Doshi and Mr. Sandeep H. Junnarkar, satisfy the “independence” requirements of the NYSE rules.

     Under the Indian Companies Act, our shareholders must approve the salary, bonus and benefits of all directors at an annual general meeting of the shareholders. Mr. Navin Agarwal, Mr. Tarun Jain and Mr. Dindayal Jalan have entered into service contracts with us which will expire on July 31, 2013, November 23, 2009 and December 23, 2010, respectively. However, either we or the director may terminate the respective service contract upon 90 days’ notice to the other party or payment in lieu of. None of their service contracts provide for benefits upon termination of their employment.

     Under the service contracts, each of Messrs. Agarwal, Jain and Jalan is entitled to be paid a basic salary, performance incentives to be determined by our board of directors and perquisites including a housing allowance, medical and insurance reimbursement, club membership fees reimbursement and leave travel concessions for himself and his family. The basic salaries of Messrs. Agarwal, Jain and Jalan in fiscal 2009 were Rs. 1.9 million ($0.04 million), Rs. 0.9 million ($0.02 million) and Rs. 0.3 million ($0.01 million) per month, respectively. In addition, Mr. Agarwal is entitled to be paid a commission based on our net profits for a particular fiscal year as determined by our board of directors, subject to a maximum allowable under Indian law. Each of Messrs. Kaura, Jalan and Jain is entitled to receive a bonus equal to 20% of his respective basic salary. Mr.  Tarun Jain resigned as our Whole Time Director with effect from March 31, 2009.

127

     Mr. Kuldip Kumar Kaura, our Managing Director and Chief Executive Officer until October 1, 2008, had also entered into a service contract with us which expired on September 30, 2008. That service contract had terms like those described generally above for Messrs. Agarwal, Jain and Jalan. The basic salary of Mr. Kaura in fiscal 2009 was Rs. 0.7 million ($0.01 million). Mr. Kaura was entitled to receive a bonus equal to 20% of his basic salary. Mr. Kaura was also entitled to a special completion bonus based on his performance at the end of the term of his service contract, subject to a maximum allowable under Indian law. At the completion of his service contract, Mr. Kaura received a special completion bonus of Rs. 12.5 million.

     The rest of our directors have no fixed term of office and they serve as directors on our board of directors until their resignation or removal from office by a resolution of our shareholders, until they cease to be directors by virtue of the provision of law or they are disqualified by law or our articles of association from being directors.

Committees of the Board

     Our equity shares are currently listed and traded on the NSE and the BSE, and our ADSs are currently listed and traded on the NYSE. In addition to compliance with the NYSE corporate governance rules applicable to us as a foreign private issuer, we maintain our corporate governance arrangements in accordance with Indian regulations for companies listed on the NSE and the BSE. In particular, we have established an audit committee and a remuneration committee in accordance with Indian corporate governance requirements.

     Our board of directors currently has an audit committee, a remuneration committee and a shareholders’ and investors’ grievance committee, which have the composition and general responsibilities described below.

     Audit Committee

     The audit committee consists of three directors: Mr. Gautam Bhailal Doshi (Chairman), Mr. Berjis Minoo Desai and Mr. Sandeep H. Junnarkar. Each of Messrs. Desai, Doshi and Junnarkar satisfies the “independence” requirements of Rule 10A-3 of the Securities Exchange Act of 1934 as amended, or the Exchange Act and the NYSE rules. The principal duties and responsibilities of our audit committee are as follows:

• to serve as an independent and objective party to monitor our financial reporting process and internal control systems;

• to review and appraise the audit efforts of our independent accountants and exercise ultimate authority over the relationship between us and our independent accountants; and

• to provide an open avenue of communication among the independent accountants, financial and senior management and the board of directors.

     The audit committee has the power to investigate any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties. Mr. Gautam Doshi serves as our audit committee financial expert within the requirements of the rules promulgated by the SEC relating to listed-company audit committees.

     The audit committee held six meetings in fiscal 2009.

     Remuneration Committee

     The remuneration committee consists of three directors: Mr. Berjis Minoo Desai (Chairman), Mr. Gautam Bhailal Doshi and Mr. Anil Agarwal. Two of the three directors on our remuneration committee are independent directors, namely, Messrs. Desai and Doshi. The scope of this committee’s duties include determining the compensation and commission to be paid to and the terms of appointment of each of our executive directors, taking into account our profits and performance, external competitive environment and our growth plans.

     The remuneration committee held three meetings in fiscal 2009.

     Share and Debenture Transfer Committee

     The share and debenture transfer committee consists of three directors: Mr. Dindayal Jalan, Mr. Gautam Bhailai Doshi and Mr. Berjis Minoo Desai. Two of the three directors on our share and debenture transfer committee are independent directors, namely, Mr. Gautam Bhailai Doshi and Mr. Berjis Minoo Desai. The principal duties and responsibilities of this committee are to approve transfers of shares or debentures and to consider stock splits and consolidation requests received from our shareholders.

     The share and debenture transfer committee held 22 meetings in fiscal 2009.

128

     Shareholders’ and Investors’ Grievance Committee

     The shareholders’ and investors’ grievance committee consists of three directors: Mr. Sandeep H. Junnarkar (Chairman), Mr. Berjis Minoo Desai and Mr. Dindayal Jalan. Mr. Dindayal Jalan was appointed as a member of the shareholders’ and investors’ grievance committee effective April 27, 2009. Two of three directors on our shareholders’ and investors’ grievance committee are independent directors, namely, Messrs. Junnarkar and Desai. The principal duties and responsibilities of this committee are to oversee the reports received from the registrar and transfer agent and to facilitate the prompt and effective resolution of complaints from our shareholders and investors.

     The shareholders’ and investors’ grievance committee held three meetings in fiscal 2009.

D. Employees

     See “Item 4. Information on the Company — B. Business Overview — Our Business — Employees.”

E. Share Ownership for Directors and Executive Officers

     The following table sets forth information with respect to the beneficial ownership of our equity shares as of June 30, 2009 by each of our directors and all our directors and executive officers as a group. As used in this table, beneficial ownership means the sole or shared power to vote or direct the voting or to dispose of or direct the sale of any security. A person is deemed to be the beneficial owner of securities that can be acquired within 60 days upon the exercise of any option, warrant or right. Equity shares subject to options, warrants or rights that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding the options, warrants or rights, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages as of June 30, 2009 are based on an aggregate of 708,494,411 equity shares outstanding as of that date.

	Equity Shares Beneficially Owned
Name	Number		Percent
Anil Agarwal(1)		436,919,733		61.7	%
Navin Agarwal		—		—
Kuldip Kumar Kaura(2)		—		—
Tarun Jain(3)		—		—
Dindayal Jalan(4)		—		—
Dwarka Prasad Agarwal(3)		—		—
Berjis Minoo Desai		—		—
Gautam Bhailal Doshi		—		—
Sandeep H. Junnarkar		18,000		*
Ishwarlal Patwari(5)		—		—
Mahendra Singh Mehta		250		*
Rajagopal Kishore Kumar(6)		—		—
Vinod Bhandawat(7)		—		—
A. Thirunavukkarasu		—		—
Dilip Golani		250		*
All our directors and executive officers as a group (15 persons)		436,938,233		61.7	%

Notes:
*	Represents beneficial ownership of less than 1.0%.
(1)	Consists of 436,919,733 equity shares beneficially owned by Vedanta. Volcan owns 59.4% of the issued ordinary share capital of Vedanta. Volcan is 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that regulates the ongoing relationship among them. See “ Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Parties — Vedanta.” As a result of this agreement, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal disclaim beneficial ownership of the shares beneficially owned by Vedanta.
(2)	Mr. Kuldip Kumar Kaura, ceased to be our Managing Director and Chief Executive Officer effective October 1, 2008, on the expiry of his employment contract. Mr. Rajagopal Kishore Kumar is our new Chief Executive Officer.
(3)	Resigned as Whole Time Director effective March 31, 2009, following which he is no longer a director of the Company. However, he remains an executive officer of the company as our Director of Finance.
(4)	Appointed as Whole Time Director effective December 24, 2008.
(5)	Mr. Ishwarlal Patwari passed away and ceased be a director of the Company on July 8, 2008.
(6)	Appointed as Chief Executive Officer of SIIL with effect from October 1, 2008.
(7)	Appointed as Chief Financial Officer with effect from June 15, 2009.

129

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

     The following table sets forth information regarding beneficial ownership of our equity shares as of June 30, 2009 held by each person who is known to us to have 5.0% or more beneficial share ownership based on an aggregate of 708,494,411 equity shares outstanding as of that date.

     Beneficial ownership is determined in accordance with the SEC rules and includes shares over which the indicated beneficial owner exercises voting and/or investment power or receives the economic benefit of ownership of such securities. Equity shares subject to options currently exercisable or exercisable within 60 days are deemed outstanding for the purposes of computing the percentage ownership of the person holding the options but are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

	Number of Shares		Percentage
Name of Beneficial Owner	Beneficially Owned		Beneficially Owned
Vedanta Resources plc(1)		436,919,733		61.7	%

Note:

(1)

Vedanta has beneficial ownership of 436,919,733 equity shares, consisting of 411,306,333 equity shares held by Twin Star and 25,613,400 equity shares held by MALCO. Twin Star is the owner of 93.6% of the outstanding shares of MALCO and is a controlling shareholder of MALCO. Therefore, our shares beneficially owned by MALCO are also deemed to be beneficially owned by Twin Star. Twin Star is a wholly-owned subsidiary of VRHL, and VRHL is in turn a wholly-owned subsidiary of Vedanta; accordingly, our shares beneficially owned by Twin Star may be regarded as being beneficially owned by VRHL and Vedanta. Volcan owns 59.4% of the issued ordinary share capital of Vedanta. Volcan is 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that may be beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that regulates the ongoing relationship among them. See“— B. Related Party Transactions — Related Parties — Vedanta.” As a result of this agreement, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal disclaim beneficial ownership of the shares beneficially owned by Vedanta.

     As of June 30, 2009, there were approximately 102,782 holders of our equity shares of which 64 have registered addresses in the United States. As of the same date, 66,802,214 of our ADSs representing 66,802,214 equity shares, representing 9.4% of our outstanding equity shares, were held by a total of 12 registered holders of record with addresses in and outside of the US. Since certain of these equity shares and ADSs were held by brokers or other nominees, the number of record holders in the US may not be representative of the number of beneficial holders or where the beneficial holders are resident. Each of our equity shares is entitled to one vote on all matters that require a vote of shareholders, and none of our shareholders has any contractual or other special voting rights.

B. Related Party Transactions

     The following is a summary of material transactions we have engaged in with our controlling shareholder, Vedanta, and its subsidiaries and other related parties, including those in which we or our management have a significant equity interest. In addition, the following contains a discussion of how we intend to handle conflicts of interest and allocations of business opportunities between us and our affiliates, directors and executive officers. For further discussion of related party transactions, see note 26 to our consolidated financial statements included elsewhere in this annual report.

Related Parties

Volcan and the Agarwal Family

     Volcan owns 59.4% of Vedanta. Volcan is 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, is the protector of the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that regulates the ongoing relationship among them. See “— Vedanta.” Mr. Anil Agarwal, his father, Mr. Dwarka Prasad Agarwal, one of our directors until March 31, 2009, and his son, Mr. Agnivesh Agarwal, the Non-Executive Chairman of HZL, also have a controlling interest in STL, a publicly listed company in India which was spun-off from the Vedanta group in July 2000, except for nominal interests in STL held by MALCO and us.

130

Vedanta

     As of June 30, 2009, Vedanta had beneficial ownership of 436,919,733 of our equity shares, including 411,306,333 equity shares (58.1%) held by Twin Star and 25,613,400 equity shares (3.6%) held by MALCO. Twin Star is the owner of 93.6% of the outstanding shares of MALCO and is a controlling shareholder of MALCO. Therefore, the shares beneficially owned by MALCO are also beneficially owned by Twin Star. Twin Star is a wholly-owned subsidiary of VRHL, and VRHL is in turn a wholly-owned subsidiary of Vedanta. As a result, Vedanta is the beneficial owner of 61.7% of our equity shares.

     Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement. The principal purpose of the relationship agreement is to enable Vedanta to carry on its business independently of Volcan and its direct and indirect shareholders, and their respective associates, or the Volcan Parties, as required by the listing rules of the Financial Services Authority of the United Kingdom, or FSA, and to ensure that transactions and relationships, including all matters that are the subject of the shared services agreement (as described below) with the Volcan Parties are at arm’s length and on a normal commercial basis. The relationship agreement will terminate in respect of Volcan at such time as each of the Volcan Parties, acting individually or jointly by agreement, cease to be a controlling shareholder of Vedanta for the purposes of the listing rules of the FSA or if Vedanta is de-listed from the LSE. In addition, the relationship agreement will terminate in respect of Onclave and Mr. Anil Agarwal if any of them individually or acting jointly ceases to be a controlling shareholder of Vedanta or Volcan. Currently, a controlling shareholder of a company for the purposes of the listing rules of the FSA is any person (or persons acting jointly by agreement whether formal or otherwise) who is entitled to exercise, or to control the exercise of, 30% or more of the rights to vote at general meetings of such company or is able to control the appointment of directors who are able to exercise a majority of the votes at board meetings of such company.

     Under the relationship agreement:

• The parties agree to ensure that Vedanta is capable, at all times, of carrying on its business independently of the Volcan Parties as required by the listing rules of the FSA;

• Vedanta’s board of directors and nominations committee and any other committee of Vedanta’s board of directors (other than the audit committee or the remuneration committee or any committee which may be established by the board of directors in connection with a specific transaction, the constitution of which is approved by the board of directors) to which significant powers, authorities or discretions are delegated shall at all times comprise a majority of directors who are independent of the Volcan Parties and who are free from any business or other relationship with the Volcan Parties which could materially interfere with the exercise of the director’s judgment concerning Vedanta;

• Vedanta’s remuneration committee and audit committee shall at all times consist only of non-executive directors;

• Volcan is entitled to nominate for appointment to the board of directors of Vedanta such number of persons as is one less than the number of directors who are independent of the Volcan Parties and who are free from any business or other relationship with the Volcan Parties which could materially interfere with the exercise of the director’s judgment concerning Vedanta;

• Neither Mr. Anil Agarwal nor any non-independent directors shall be permitted, unless the independent directors agree otherwise, to vote on any resolutions of Vedanta’s board of directors or of a committee of the board to approve the entry into, variation, amendment, novation or abrogation or enforcement of any contract, arrangement or transaction with any of the Volcan Parties;

• Volcan shall not exercise voting rights attaching to its shares in Vedanta or any resolution to approve the entry into, variation, amendment, novation or abrogation of any transactions or arrangements between Vedanta and the Volcan Parties;

• The Volcan Parties represented and warranted to Vedanta that at the time of the execution of the relationship agreement they did not own, directly or indirectly, any interests in the smelting, refining, mining or sale of any base metals or mineral otherwise than through Vedanta or any member of the Vedanta group;

• The Volcan Parties agreed to, directly or indirectly, acquire or otherwise invest in any company, business, business operation or other enterprise which engages in the smelting, refining or mining of base metals or minerals only through Vedanta or other member of the Vedanta group. However, this agreement does not prevent, restrict or limit:

131

• the acquisition or ownership by the Volcan Parties of not more than 5% in aggregate of any class of shares, debentures or other securities in issue from time to time of any company which engages in the smelting, refining or mining of base metals or minerals which is for the time being listed on any stock exchange; or

• the acquisition or ownership, directly or indirectly, by the Volcan Parties of any interest in, a base metal or mineral property or asset (together with any associated property, plant and equipment), which is not adjacent or geographically proximate to an existing property or operation of Vedanta group so as to give them operational synergies, where the acquisition cost (including assumed indebtedness), including any related capital expenditures committed at the date of acquisition for the following 12 months, is equal to $50 million or less, for which purpose any acquisitions of two or more related or adjacent base metal or mineral properties or assets shall be aggregated when calculating the acquisition cost, provided that the relevant interested party (i) is not an officer or director of a Vedanta group company; and (ii) before acquiring such property or asset, first made the opportunity to acquire such property or asset available to the Vedanta group, with a reasonable period for the independent directors of Vedanta to consider the opportunity, on terms no less favorable than those on which they are proposed to be acquired by the interested party and a majority of the independent directors has determined that the Vedanta group should not make the acquisition; and

• Transactions and relationships between Vedanta and the Volcan Parties must be conducted at arm’s length and on a normal commercial basis, including those to be provided under the shared services agreement.

Related Transactions

Shared Services Agreement — STL, Sterlite Gold Limited, Vedanta and Sterlite

     We entered into a shared services agreement dated December 5, 2003 with STL, Sterlite Gold Limited, or Sterlite Gold, which was an affiliated company at that time, and Vedanta as part of Vedanta’s listing on the LSE in December 2003. Under this agreement, we and Vedanta agreed to continue to provide STL and Sterlite Gold with certain advisory services on an ongoing basis consisting primarily of access to certain of the directors, officers and employees of the Vedanta group. In fiscal 2007, 2008 and 2009, we received Rs. 450,933, Rs. 730,770 and Rs. 36,210 ($711.8) from STL, respectively, under the shared services agreement. In fiscal 2007, we received Rs. 392,205 from Sterlite Gold under the shared services agreement. We did not receive any amount from Sterlite Gold in fiscal 2008. On September 27, 2007, Vedanta sold its entire interest in Sterlite Gold to an unaffiliated third party, and as of such date Sterlite Gold ceased to be an affiliated company of ours.

     Under the shared services agreement:

• a party may terminate the shared services agreement or a particular service which is provided pursuant to the shared services agreement if another party commits a material breach of the shared services agreement or upon another party becoming subject to or entering into arrangements in the context of insolvency. A party may also terminate a particular service on three months’ notice;

• the services under the shared services agreement will be provided by us or Vedanta, as the case may be, to STL and Sterlite Gold and the transactions between the parties will be on an arm’s length basis;

• the cost of access to certain of the directors, officers and employees of such member of the Vedanta group shall be paid by STL or Sterlite Gold, as the case may be, to us or Vedanta, as appropriate; and

• the cost of the services provided pursuant to the shared services agreement is calculated by apportioning the total salary cost to us or the Vedanta group of the employment of the relevant director, officer or employee to STL or Sterlite Gold, as appropriate based on the time spent for each such member of the Vedanta group.

     On April 13, 2006, a letter agreement was executed by Vedanta, Sterlite Gold, STL and us, to:

• amend the list of employees of Vedanta who may be hired under the shared services agreement to reflect only those individuals who actually performed the services;

• amend the amount to be paid to Vedanta based on estimated cost plus 20%; and

132

• allow only 25% of Mr. Anil Agarwal’s salary costs to be taken into account when determining the charge to STL and Sterlite Gold, to reflect the limited services provided to STL and Sterlite Gold since the listing of Vedanta.

Representative Office Agreement — Vedanta and Sterlite

     We entered into a representative office agreement with Vedanta on March 29, 2005 under which Vedanta agreed to provide technical and commercial materials to us to enable us to promote our business or raise funds overseas, and to be our non-exclusive overseas representative, for which we have agreed to pay an amount of $2.0 million (Rs. 101.7 million) per year to Vedanta. This agreement was effective until March 31, 2009 and we are currently in discussions with Vedanta regarding the renewal of this agreement.

Consultancy Agreement — Vedanta and Sterlite

     We entered into a consultancy agreement with Vedanta on March 29, 2005 under which Vedanta agreed to provide strategic planning and consultancy services to us and our subsidiaries in various areas of business such that we are able to finalize and implement our plans for growth and are able to raise the necessary finances. The terms of this agreement were negotiated by us and Vedanta and we believe them to be fair and reasonable, though this agreement was not negotiated on an arm’s length basis. Under this agreement, Vedanta has agreed to make certain of its employees available to us and we have agreed to pay a service fee to Vedanta on the basis of, among other things, the amount of time spent in providing the services and associated costs, with a mark-up of 40%. The anticipated fee used for reference in the agreement, which is based on a relevant proportion of the expected annual budgeted costs for fiscal 2005 plus the mark-up of 40%, is $3.0 million (Rs. 152.6 million) per year. This agreement was effective from April 1, 2004 to March 1, 2009, and we are currently in discussions with Vedanta regarding the renewal of this agreement.

Sale of Aluminum Conductor Business — Sterlite and STL

     On August 30, 2006, we entered into an agreement to sell our aluminum conductor business, also known as our power transmission line division, as a going concern on an “as is where is basis,” subject to existing encumbrances and charges and together with the power transmission line division’s assets, debts, and liabilities, to STL for a consideration of Rs. 1,485 million ($29.2 million). The terms of this transaction were negotiated between us and STL on an arm’s length basis, with an independent appraiser hired to establish the sale price. Under the terms of the agreement, we may not carry on or engage, directly or indirectly, in any business which competes with any part of the power transmission line division business for a period of five years from the completion of the sale. The sale of this non-core business was approved by our shareholders on September 30, 2006.

Issuance of Equity Shares by Vedanta Aluminium — Sterlite, Twin Star and Vedanta Aluminium

     Prior to March 2005, Vedanta Aluminium was a wholly-owned subsidiary of ours that was part of our consolidated group of companies. In March 2005, Vedanta Aluminium issued equity shares to Twin Star in exchange for consideration of Rs. 4,421 million from Twin Star. As a result of this sale of equity shares by Vedanta Aluminium, Twin Star acquired a 70.5% ownership interest in Vedanta Aluminium and we ceased to consolidate Vedanta Aluminium in our consolidated financial statements. The terms of this sale were negotiated between Vedanta Aluminium and Twin Star on an arm’s length basis, with an independent appraiser hired to establish the sale price. During fiscal 2007, Vedanta Aluminium issued to us 1,133,737 equity shares of par value Rs. 10 per equity share for cash at a price of Rs. 1,160 per equity share on a rights basis. Accordingly, we paid a sum of Rs. 1,315 million ($25.9 million). We subscribed for our full proportionate share so as to maintain our shareholding in Vedanta Aluminium at 29.5%.

Issuance of Debentures by Vedanta Aluminium — Sterlite and Vedanta Aluminium

     In fiscal 2008, pursuant to two memoranda of understanding entered into between Vedanta Aluminium and us on August 29, 2007 and December 23, 2007, Vedanta Aluminium issued to us 1.6 billion zero per cent optionally fully convertible debentures at par value of Rs. 10 per debenture. Accordingly, we paid a sum of Rs. 16,000 million ($314.5 million). The debentures are convertible in full or in part into equity shares at such premium as may be determined by a merchant banker or any other expert agency in the field based on fair value at any time within five years from the date of allotment unless we request for an extension of the redemption date by up to five years. Debentures that have not been converted to equity shares prior to the redemption date shall be redeemed on the fifth anniversary of the date of allotment of such debentures, or at the expiry of the extension period. In September 2008, 265,840,200 debentures of Rs. 2,658 million ($52.3) had been converted into 1,772,268 equity shares of Rs. 10 each at a premium of Rs. 1,490 per share. As of March 31, 2009, 1,334,159,800 debentures of Rs. 13,342 million ($262.3 million) were outstanding.

     In fiscal 2009, pursuant to a term sheet for the issue of 15,000 non-convertible debentures at par value of Rs. 1.0 million per debenture, Vedanta Aluminium issued to us 6,850 such debentures. Interest at the rate of 9.75% is payable semi-annually. Accordingly, we paid a sum of Rs. 6,850 million ($134.7 million). In April and May 2009, Vedanta Aluminium issued the remaining 8,150 debentures to us and we paid a sum of Rs. 8,150 million ($160.2 million). The debentures are redeemable at par one year from the date of allotment.

133

Loan Agreement — Sterlite and Vedanta Aluminium

     We entered into a loan agreement with Vedanta Aluminium on February 4, 2008, under which we agreed to lend to Vedanta Aluminium Rs. 10 billion ($196.6 million) for a term of ten years. As of March 31, 2009, the amount outstanding under the loan was approximately Rs. 8.5 billion ($167.1 million). Interest is payable in arrears on the outstanding amount of the loan at the prevailing RBI bank rate plus 2% per annum every quarter on January 1, April 1, July 1 and October 1, until the loan is fully repaid. The entire loan together with all interest accrued thereon shall be repaid on or before the expiry of 10 years from the date of the last disbursement of the loan which shall be no later than March 31, 2010.

Guarantees — Sterlite, CMT, TCM and Vedanta Aluminium

     We have provided guarantees on behalf of CMT, TCM and Vedanta Aluminium. See “Item 5. Operating and Financial Review and Prospects — Guarantees.”

Acquisition of Sterlite Energy — Twin Star Infrastructure Limited, Mr. Anil Agarwal, Mr. Dwarka Prasad Agarwal and Sterlite

     We acquired 100% of the outstanding shares of Sterlite Energy on October 3, 2006 from Twin Star Infrastructure Limited, Mr. Anil Agarwal and Mr. Dwarka Prasad Agarwal, one of our directors until March 31, 2009, for a total consideration of Rs. 4.9 million ($0.1 million), an amount equal to the par value of all of the outstanding shares of Sterlite Energy. The terms of the acquisition were negotiated on an arm’s length basis and were reviewed and approved by our board of directors, with the interested directors, Mr. Anil Agarwal and Mr. Dwarka Prasad Agarwal, abstaining from the vote.

Issuance of Debentures by Sterlite Energy — Sterlite and Sterlite Energy

     In fiscal 2007, Sterlite Energy issued to us 586 million zero per cent optionally fully convertible debentures at par value of Rs. 10 per debenture. Accordingly, we paid a sum of Rs. 5,860 million ($115.2 million). The debentures are convertible in full or in part into equity shares at a mutually agreed premium at any time prior to the redemption date of the debentures. Debentures that have not been converted into equity shares prior to the redemption date shall be redeemed on the fifth anniversary of the date of allotment of such debentures. On November 5, 2007, we exercised our option to convert all the debentures into 586 million equity shares of Sterlite Energy.

     In fiscal 2008, Sterlite Energy issued to us 60 million zero per cent optionally fully convertible debentures of par value Rs. 100 each. We paid a total sum of Rs. 1,650 million ($32.4 million) in three tranches as part payment for the debentures. The debentures are convertible in full or in part into equity shares at at par value. Debentures that have not been converted into equity shares prior to the redemption date shall be redeemed on the fifth anniversary of the date of allotment of such debentures. On October 3, 2007, Sterlite Energy sub-divided its shares and reduced the par value of its equity shares from Rs. 100 to Rs. 10. On November 5, 2007, we exercised our option to convert all the debentures into 600 million partly paid up equity shares of Sterlite Energy with a par value of Rs. 10 each. As the equity shares issued to us were partly paid up, Sterlite Equity subsequently made a call for, and we made payment of, the balance sum of Rs. 4,350 million ($85.5 million) as full payment for the entire par value of each equity share.

Sponsor Support Agreement — Sterlite and Sterlite Energy

     We entered into a sponsor support agreement on June 29, 2009 with Sterlite Energy and the State Bank of India, as facility agent, in connection with the Rs. 55,690 million ($1,094.8 million) term loan facility granted to Sterlite Energy by a syndicate of banks to finance its construction of a 2,400 MW thermal coal-based power facility in Jharsuguda in the State of Orissa. Under the sponsor support agreement, we undertook to, among other things, contribute Rs. 20,500 million ($403.0 million) to the capital of Sterlite Energy by subscribing for additional shares in order to ensure that Sterlite Energy’s debt to equity ratio does not exceed 75:25 during the term of the facility, meet any project cost overruns by contributing additional capital or by providing or arranging for unsecured and subordinated loans to be made available to Sterlite Energy, retain control of Sterlite Energy until the loan is fully repaid, meet all export obligations as required under the Export Promotion of Capital Good Scheme, fund the development of the coal blocks in Rampia and Dip Side Rampia in the State of Orissa that were jointly allocated by the Ministry of Coal to Sterlite Energy and other companies, and in the event that Sterlite Energy is unable to timely discharge its obligations under the loan agreement due to the occurrence of certain events, to provide additional funds to Sterlite Energy in order to enable Sterlite Energy to meet those obligations. In addition, we agreed to indemnify the lenders, the security trustee and the facility agent against all losses and claims incurred by them as a result of any breach of the loan agreement by Sterlite Energy.

Payable to Monte Cello Corporation NV — Monte Cello Corporation NV and CMT

     Under the terms of the acquisition of CMT by Monte Cello in 1999, a loan in principal amount of AUD 105.9 million payable to Citibank, N.A. was assigned to Monte Cello Corporation NV, or MCNV. We acquired Monte Cello from Twin Star in 2000, and with it CMT and its loan payable to MCNV, a wholly-owned subsidiary of Twin Star. The terms of the loan were renegotiated by CMT and Citibank, N.A. immediately before it was assigned to MCNV. The loan is interest free and is subordinated to all other of CMT’s secured creditors. Repayments under the loan are made only if CMT has surplus cash, defined as residual cash following the payment of secured creditors. As of March 31, 2009, the total amount payable by CMT to MCNV under this loan was Rs. 570 million ($11.2 million).

Conflicts of Interest and Allocations of Business Opportunities

     From time to time, conflicts of interest have in the past and will in the future arise between us and our affiliates, including our controlling shareholder, Vedanta, and other companies controlled by Vedanta, our directors and our executive officers. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Relationship with Vedanta.” With respect to transactions between us and our affiliates, directors and executive officers that involve conflicts of interests, we have in the past undertaken and will continue in the future to undertake such transactions in compliance with the rules for interested or related party transactions of the LSE on which Vedanta is listed, the NYSE on which our ADSs are listed and the NSE and BSE.

134

     The rules applicable to LSE-listed companies, which would apply to transactions between us and the controlling shareholders of Vedanta, namely Volcan and the Agarwal family, require that the details of a related party transaction be notified to a regulatory information service and disclosed to the FSA as soon as possible after the terms of the transaction are agreed upon. There is also a requirement that a circular containing information about the related party transaction be sent to all shareholders and that their approval of the related party transaction be obtained either before the transaction is entered into or, if the transaction is conditional on shareholder approval, before the transaction is completed. The related party and its associates must be excluded from voting on the related party transactions. The requirement of shareholder approval does not apply to transactions where the gross assets of the transaction as a percentage of the gross assets of the listed company, the profits attributable to the assets of the transaction as a percentage of the profits of the listed company, the consideration for the transaction as a percentage of the aggregate market value of all the ordinary shares (excluding treasury shares) of the listed company and the gross capital of the company or business being acquired as a percentage of the gross capital of the listed company, does not exceed 5%. However, the listed company must, before entering into the related party transaction, inform the FSA of the details of the proposed related party transaction, provide the FSA with a written confirmation from an independent adviser acceptable to the FSA that the terms of the proposed related party transaction with the related party are fair and reasonable as far as the shareholders of the listed company are concerned and undertake in writing to the FSA to include details of the related party transaction in the listed company’s next published annual accounts, including, if relevant, the identity of the related party, the value of the consideration for the transaction or arrangement and all other relevant circumstances. Related party transactions where all the above percentage ratios are 0.25% or less have no requirements under the rules applicable to LSE-listed companies. Where several separate transactions occur between a company and the same related party during a 12-month period, the transactions must be aggregated for the purpose of applying the percentage ratio tests.

     As part of our listing with the NYSE, we were required to confirm to the NYSE that we will appropriately review and oversee related party transactions on an ongoing basis. These related party transactions include transactions between us and our controlling shareholder, Vedanta, and its affiliates. The NYSE reviews the public filings of its listed companies as to related party transactions. Under the rules of the NYSE, we are required to have an independent audit committee comprised entirely of independent directors. We have had an independent audit committee comprised entirely of independent directors since our ADS offering in June 2007. One of the functions of the independent audit committee is to review any related party transactions by us or any of our subsidiaries or affiliates. In addition, under the rules of the NYSE, we are required to obtain shareholder approval for any issuance of our equity shares, or securities convertible into or exercisable for our equity shares, to any related party, except that such approval would not be required for sales of our equity shares to our controlling shareholder or its affiliates in an amount not to exceed 5% of the number of our equity shares outstanding prior to such issuance and at a price equal to or greater than the higher of the book or market value of our equity shares.

     Under the listing agreements we have entered into with the NSE and BSE, we are required to ensure that our disclosures in relation to material and significant related party transactions in our annual reports are in compliance with Indian GAAP. Specifically, we are required to place before the audit committee and publish in our annual reports a statement in summary form of the related party transactions entered into by us during the previous fiscal year, providing details of whether such transactions were undertaken in the ordinary course of business and details of material individual transactions with related parties or others which were not on an arm’s length basis, together with our management’s justification for such transactions. Under the listing agreements, our audit committee is required to review and discuss with the management the disclosures of any related party transactions, as defined under Indian GAAP, in our annual financial statements.

     We also have used and will continue to use independent appraisers in appropriate circumstances to help determine the terms of related party transactions. We have had and will continue to have an audit committee comprised entirely of independent directors which is responsible for reviewing any related-party transaction by us or any of our subsidiaries or affiliates.

     We are continually seeking to identify and pursue business opportunities. However, Vedanta, as our controlling shareholder, has the power to determine in its sole discretion what corporate opportunities we may pursue and whether to pursue a corporate opportunity itself or through one of its other subsidiaries, which may benefit such companies instead of us and which could be detrimental to our interests. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Relationship with Vedanta — Vedanta may decide to allocate business opportunities to other members of the Vedanta group instead of to us, which may have a material adverse effect on our business, results of operations, financial condition and prospects.” Vedanta has in the past allocated and expects in the future to allocate corporate opportunities among itself and its various subsidiaries based on a number of factors, including the nature of the opportunity, the availability of funds at the relevant subsidiary to pursue the opportunity and which subsidiary it believes can most successfully take advantage of the opportunity.

135

C. Interest of Experts and Counsel

     Not applicable

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

     Please see Item 18 for a list of the financial statements filed as part of this annual report.

Legal Proceedings

     Except as described below, there are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened, of which we are aware) which we believe could reasonably be expected to have a material adverse effect on our results of operations or financial position. See note 20 to our consolidated financial statements included elsewhere in this annual report for more information.

We have commenced proceedings against the Government of India which has disputed our exercise of the call option to purchase its remaining 49.0% ownership interest in BALCO.

     Certain proceedings are ongoing before an arbitral tribunal constituted in accordance with the terms of the shareholders’ agreement between us and the Government of India with respect to our exercise of our call option to acquire the remaining shares of BALCO held by the Government of India. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

Appeal proceedings in the High Court of Bombay brought by SEBI to overrule a decision by the SAT that we have not violated regulations prohibiting fraudulent and unfair trading practices.

     In April 2001, SEBI ordered prosecution proceedings to be brought against us, alleging that we have violated regulations prohibiting fraudulent and unfair trading practices and also passed an order prohibiting us from accessing the capital markets for a period of two years. This order of SEBI was overruled by the SAT on October 22, 2001 on the basis of lack of sufficient material evidence to establish that we had, directly or indirectly, engaged in market manipulation and that SEBI had exercised its jurisdiction incorrectly in prohibiting us from accessing the capital markets. On November 9, 2001, SEBI appealed to the High Court of Bombay. In addition, SEBI has initiated criminal proceedings against us, our Non-Executive Chairman, Mr. Anil Agarwal, Mr. Tarun Jain, one of our directors until March 31, 2009, and the Chief Financial Officer of MALCO at the time of the alleged price manipulation, which proceedings have been stayed by the High Court of Bombay pending final arguments. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Appeal proceedings in the High Court of Bombay have been brought by Securities and Exchange Board of India, or SEBI, to overrule a decision by the Securities Appellate Tribunal, or SAT, that we have not violated regulations prohibiting fraudulent and unfair trading practices.”

We are involved in certain litigation seeking cancellation of permits and environmental approval for the alleged violation of certain air, water and hazardous waste management regulations at our Tuticorin plant.

     We are defendants in a number of writ petitions filed before the High Court of Madras by the National Trust for Clean Environment and certain private citizens in relation to the operations of our smelter at Tuticorin in the State of Tamil Nadu, India. These writ petitions allege that sulphur dioxide emissions from our copper smelting operations at Tuticorin are causing air, water and hazardous waste pollution resulting in damage to the marine ecosystem and the lives of people living in and around Tuticorin. The petitioners are seeking an order from the High Court of Madras for discontinuation of our current operations at Tuticorin and revocation of the environmental permits granted to us by the Tamil Nadu Pollution Control Board, or TNPCB, and the MoEF in relation to our Tuticorin smelter plant.

     Further, following an inspection of our Tuticorin unit on September 12, 2005, the TNPCB issued three show cause notices alleging violations of air, water and hazardous waste pollution standards at the Tuticorin plant. These notices alleged that we have failed to meet the conditions set out in the environmental consents granted for our operations, including the failure to implement purifying and monitoring systems, limit the size of certain disposal facilities and maintain sufficient storage and waste disposal facilities. The show cause notices require us to show cause as to why an order of closure of the Tuticorin plant should not be passed against us and why penal action under the relevant environmental legislations should not be taken. We have responded to the notices by contesting these allegations on the grounds that all the necessary conditions of the consent letters had been complied with. If the TNPCB rejects our responses, the TNPCB may initiate penal action against us, which could lead to imposition of fines, initiation of criminal proceedings against those directly in charge of and responsible for the conduct of our business, stoppage of water, electricity or other services to Tuticorin or order closure of the plant. Further, if the orders of the TNPCB are not complied with, the TNPCB is authorized to initiate eviction processes. The TNPCB has not responded to date. However, the TNPCB has continued to grant us consent clearance for our operations in 2007, 2008 and 2009 and we have applied for the renewal of these consents for 2010.

136

Petitions have been filed in the Supreme Court of India and the High Court of Orissa to seek the cessation of construction of Vedanta Aluminium’s refinery in Lanjigarh and related mining operations in Niyamgiri Hills.

     In 2004, a writ petition was filed against us, Vedanta Aluminium, the State of Orissa, the Republic of India, OMC, Orissa Industrial Development Corporation, and others by a private individual before the High Court of Orissa. The petition alleges that the proposed grant of the mining lease by the OMC to Vedanta Aluminium and us to mine bauxite in the Niyamgiri Hills at Lanjigarh in the State of Orissa would violate the provisions of the Forest Act. The petition further alleges that the felling of trees and construction of the alumina refinery by us and Vedanta Aluminium and the development of the mine is in violation of the Forest Act and would have an adverse impact on the environment. The petition sought, among other things, to restrain the grant of the mining lease to mine bauxite in the Niyamgiri Hills at Lanjigarh in the State of Orissa by the OMC to Vedanta Aluminium and us, to declare the memorandum of understanding entered into between the OMC and Vedanta Aluminium void, a court direction for the immediate cessation of construction of the alumina refinery by Vedanta Aluminium and an unspecified amount of compensation from us and Vedanta Aluminium for damage caused to the environment. The court has not yet admitted this matter for hearing.

     Certain non-governmental organizations and individuals filed interlocutory applications in 2004 alleging violations of forest conservation laws by Vedanta Aluminium’s refinery project at Lanjigarh and the related mining operations in the Niyamgiri Hills. These interlocutory applications were filed in an environment-related public interest litigation brought before the Supreme Court of India. A Central Empowered Committee, or CEC, set up by the Supreme Court of India, issued a report dated September 21, 2005 which expressed the view that the MoEF should not have permitted the alumina refinery project to commence construction before undertaking an in-depth study about the ecological effects of the proposed bauxite mine on the ecology surrounding the Niyamgiri Hills and that the project would result in the displacement of indigenous tribals. The CEC further stated that Vedanta Aluminium was in violation of certain environmental clearances granted by the MoEF to Vedanta Aluminium for the construction of the alumina refinery and recommended that the Supreme Court of India revoke such clearances and prohibit further work on the project. The Supreme Court of India directed that an in-depth report be prepared on the matter by the MoEF.

     The Supreme Court, after obtaining a detailed a report on the impact of flora, fauna and tribal habitation due to bauxite mining from the MoEF and the State of Orissa, passed an order in November 2007, rejecting Vedanta Aluminium’s application to commence operations. The order of the Supreme Court provided that if the State of Orissa, OMC and we jointly agree to the rehabilitation package proposed by the court, and we notify the court that we are agreeable to the package, the court may consider granting clearance to the project. All parties have filed affidavits confirming their commitment to the rehabilitation package. Pursuant to the rehabilitation package, we have set up a joint venture company, the Lanjigarh Scheduled Area Development Foundation, in which it is proposed that the State Government of Orissa and OMC will have a 51% ownership interest, to operate the mines. On August 8, 2008, the Supreme Court of India granted us clearance for our forest diversion proposal for the conversion of 660,749 hectares of forest land from forestry use to mining use, allowing us to source bauxite which has been mined on Niyamgiri Hills in Lanjigarh. Pursuant to the Supreme Court order, we were required to pay the higher of 5% of annual profits before tax and interest from the Lanjigarh project and Rs. 100 million per annum (commencing April 2007), as a contribution for scheduled area development, as well as Rs. 122 million towards tribal development and Rs. 1,055.3 million plus expenses towards a wildlife management plan for conservation and the management of wildlife around the Lanjigarh bauxite mine. As of March 23, 2009, an amount of Rs. 1,211.8 million has been remitted to Compensatory Afforestation Fund and Rs. 200 million has been deposited with OMC. in compliance with the Supreme Court order. On December 11, 2008, the MoEF granted in-principal approval under the Forest Act and we are currently in the process of complying with the conditions specified in the MoEF’s approval. On April 28, 2009, the MoEF granted us environmental clearance for the mining of bauxite.

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

     BALCO has occupied certain land on which the Korba facility is situated since its establishment, which is the subject matter of a dispute for alleged encroachment by BALCO on government-owned land, among others.

     BALCO petitioned the High Court of Chhattisgarh in 1996 to direct the State Government of Chhattisgarh to execute a lease deed in respect of this land in BALCO’s favor. The High Court of Chhattisgarh passed an interim order in 2004 directing that the State Government of Chhattisgarh take no action against BALCO.

137

     In 2005, in response to several show cause notices issued against BALCO alleging encroachment of government land, BALCO filed an amendment petition with the High Court of Chhattisgarh seeking to quash these show cause notices. The High Court of Chhattisgarh directed that the status quo be maintained and that BALCO should not engage in any deforestation activities on the land until the next hearing date, which has not yet been determined. By clarificatory order dated July 2, 2007, the High Court of Chhattisgarh directed that BALCO may continue construction and engage in deforestation activities after receipt of the requisite environmental approvals. The petition has been adjourned until the disposal of the public interest writ petition filed by an organization known as “Sarthak” before the Supreme Court.

     BALCO has no formal lease deed in relation to this land. BALCO is currently engaged in a dispute with the State Government of Chhattisgarh regarding alleged encroachment on state-owned land at its Korba facility. On February 6, 2009, a single bench of the Chhattisgarh High Court held that BALCO is in legal possession of the land and is required to pay premium and rent on the land according to the rates offered by the Government of Chhattisgarh in 1968. The State Government of Chhattisgarh has challenged this order in an appeal before the division bench of the Chhattisgarh High Court. The matter is listed for hearing on July 28, 2009.

     A public interest writ petition has also been filed by Sarthak before the Supreme Court of India alleging encroachment by BALCO over the land on which the Korba facility is situated. It alleges that the land is classified as forest land and belongs to the State Government of Chhattisgarh and that BALCO has engaged in illegal felling of trees on that land. The Supreme Court of India has directed the petition to be listed before the Forest Bench of the Supreme Court of India. The Forest Bench has directed the CEC to submit a report on the petition. The CEC submitted a report on the petition to the Supreme Court of India on October 17, 2007, recommending that BALCO be directed to seek ex-post facto approval under the Forest Act for the allotment and non forestry use of the land in possession. The matter is listed to be heard on July 16, 2009 for an interim application by BALCO for clearing the expansion on the land area limited to its proposed expansion.

BALCO is involved in arbitration proceedings relating to a power purchase agreement with the CSEB and has initiated arbitration proceedings against the CSEB.

     BALCO had entered into a power purchase agreement dated May 25, 2006 with the CSEB for the sale of electricity by BALCO to the CSEB. The CSEB had on November 14, 2006 issued a letter stating that it had overpaid BALCO a sum of Rs. 529 million ($13.2 million) due to the quantum of load factor pursuant to which payment had been made having been incorrectly calculated, and that the definition that should have been applied is as provided in the Chhattisgarh Electricity Supply Code. BALCO in its reply dated November 24, 2006 had contested such position and stated that as no fixed quantum of electricity was to be supplied, the definition as laid down in the Chhattisgarh Electricity Supply Code should not be applicable, and further that such definition would be applicable only in those instances where the supply of electricity is between the consumer and the distribution licensee. Subsequently, on August 2, 2007, BALCO filed an arbitration petition against the CSEB reiterating its position and further stating that the power purchase agreement was entered into between the parties on the basis of the stipulations of the Chhattisgarh State Electricity Regulatory Commission. The arbitrator granted an order in favor of BALCO. However in view of a Supreme Court judgement mandating that all disputes between a power generator and distributor be subject to arbitration or adjudication by the State Electricity Commission under Section 86 of the Indian Electricity Act, 2003, the matter has been referred to the Chhattisgarh State Electricity Regulatory Commission which has decided to adjudicate the matter. The hearing was held on June 25, 2009 pursuant to which the Chhattisgarh State Electricity Regulatory Commission granted an order in favor of BALCO.

Demands against HZL by Department of Mines and Geology.

     The Department of Mines and Geology of the State of Rajasthan issued several show cause notices in August, September and October 2006, aggregating Rs. 3,339 million ($65.6 million) in demand, to HZL in relation to alleged unlawful occupation and unauthorized mining of associated minerals other than zinc and lead at its Rampura Agucha, Rajpura Dariba and Zawar mines in Rajasthan, during the period from July 1968 to March 2006. In addition, the department has also demanded an aggregate of Rs. 48 million ($0.9 million) by way of alleged arrears in royalty payments at such mines on the grounds that the royalty payments had been incorrectly computed by HZL during the period from April 1971 to March 2000. HZL has filed writ petitions in the High Court of Rajasthan in Jodhpur and obtained a stay in respect of these demands in October and November 2006. The next hearing date has been set for October 7, 2009.

     Additionally, a writ petition was filed by HZL in October 2006 against the State Government of Rajasthan and the Union of India through the Department of Mines and Geology and others before the High Court of Rajasthan at Jodhpur with regards to a demand notice dated October 20, 2006 issued by the Mining Engineer of Rajasthan to HZL. As per the terms of the notice, the Department of Mines and Geology stated that the mining lease granted to HZL was for the extraction of zinc and lead but that HZL was also extracting cadmium and silver and was thus in violation of the terms of the lease for the Rampura Agucha mine. The Department of

138

Mines and Geology has claimed Rs. 2,435.9 million ($47.9 million) as the price to be recovered from HZL for the extraction of cadmium and silver. HZL asserted in its writ petition that the lease was granted for lead, zinc and associated minerals and that cadmium and silver are associated minerals. Further, it has stated that the contested minerals are found alongside lead and silver in an inseparable form and cannot be extracted separately. It has also submitted that it has been paying the royalty on cadmium and silver, which has been duly accepted by the Department of Mines and Geology without objection. The High Court issued an order in October 2006 granting a stay and restrained the Department of Mines and Geology from undertaking any coercive measures to recover the penalty. In January 2007, the High Court issued another order granting the Department of Mines and Geology more time to file their reply and the High Court also directed the Department of Mines and Geology not to issue any orders canceling the lease. The next hearing date has not yet been set and this matter is currently pending.

Certain of our subsidiaries have been named in legal actions by third party claimants and by Indian sales tax, excise and related tax authorities for additional sales tax, excise and indirect duties.

     Certain of our subsidiaries have been named as parties to legal actions where the claims primarily relate to either the assessable values of sales and purchases or to incomplete documentation supporting our tax returns. We have ongoing disputes with income tax authorities relating to the tax treatment of certain items. The total claims on account of the disputes with sales tax, excise and related tax authorities is Rs. 4,410 million ($86.7 million), of which Rs. 101 million ($2.0 million) has been recorded as current liabilities as of March 31, 2009. The claims by third party claimants amounted to Rs. 4,807 million ($94.5 million) as of March 31, 2009. We have not recorded any of these claims as current liabilities.

Dividend Policy

     Under Indian law, a company declares dividends (including interim dividends) upon a recommendation by its board of directors and approval by a majority of the shareholders at the annual general meeting of shareholders held within six months of the end of each fiscal year. However, while final dividends can be paid out by a company only after such dividends have been recommended by the board of directors and approved by shareholders, interim dividends can be paid out with only a recommendation by the board of directors, though such action is subject to subsequent sanction by the shareholders at the annual general meeting held within six months from the end of the fiscal year. The shareholders have the right to decrease but not to increase the dividend amount recommended by the board of directors.

     Under Indian law, a company is allowed to pay dividends (including interim dividends), in excess of 10.0% of its paid-up capital in any year from profits for that year only if it transfers a specified percentage of the profits of that year to reserves. We make such transfers for any dividends we pay to general reserves.

     If profits for that year are insufficient to declare dividends (including interim dividends), the dividends for that year may be declared and paid out from accumulated profits on the following conditions:

• the rate of dividend to be declared shall not exceed the average of the rates at which dividends were declared in the five years immediately preceding that year or 10.0% of our paid-up share capital, whichever is less;

• the total amount to be drawn from the accumulated profits earned in previous years and transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of our paid-up share capital and net reserves, and the amount so drawn shall first be utilized to set off the losses incurred in the financial year before any dividend in respect of preference or equity share is declared; and

• the balance of the reserves after such withdrawal shall not fall below 15.0% of our paid-up share capital.

     Dividends (including interim dividends) must be paid within 30 days from the date of the declaration and any dividend which remains unpaid or unclaimed after that period must be transferred within seven days to a special unpaid dividend account held at a scheduled bank. We must transfer any money which remains unpaid or unclaimed for seven years from the date of such transfer to the Investor Education and Protection Fund established by the Government of India.

     The tax rates imposed on us in respect of dividends paid in prior periods have varied. Currently, the effective tax rate on dividends is 17.0%, which is a direct tax paid by us. Taxes on dividends are not payable by our shareholders and are not withheld or deducted from the dividend payments set forth above.

     Future dividends will depend on our revenue, cash flows, financial condition (including capital position) and other factors. ADS holders will be entitled to receive dividends payable in respect of the equity shares represented by ADSs. Cash dividends in respect of the equity shares represented by your ADSs will be paid to the depositary in Indian Rupees and, except as otherwise described under the deposit agreement governing the issuance of our ADSs, will be converted by the depositary into dollars. The depositary will distribute these proceeds to you. The equity shares represented by ADSs will rank equally with all other equity shares in respect of dividends. ADS holders will bear all of the currency exchange rate risk of the conversion of any dividends from Indian Rupees to dollars, and a decline in the value of the Indian Rupee as compared to the dollar would reduce the dollar value of any dividends we pay that are received by ADS holders.

B. Significant Changes

     There has been no significant subsequent event following the close of the last financial year up to the date of this annual report that are known to us and require disclosure in this annual report for which disclosure was not made in this annual report.

139

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

     Our ADSs evidenced by American Depositary Receipts, or ADRs, commenced trading on the NYSE, on June 20, 2007 at an initial offering price of $13.44 per ADS. The ADRs evidencing ADSs were issued by our depositary, Citibank, N.A., pursuant to a deposit agreement. As of March 31, 2009, 708,494,411 of our equity shares were outstanding (including the 75,678,479 equity shares underlying our 75,678,479 ADSs outstanding as of such date). All our equity shares are registered shares.

     Our outstanding equity shares are currently listed and traded on the NSE and BSE. For information regarding conditions in the Indian securities markets, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations.” Our equity shares were previously listed on the Calcutta Stock Exchange Association Limited and were voluntarily delisted on May 9, 2008.

     The following table shows:

• the reported high and low trading prices for our ADSs on the NYSE;

• the imputed high and low trading prices for our equity shares, translated into US dollars, based on the Indian Rupee prices for such equity shares as quoted in the official list of each of the NSE and BSE and the noon buying rate of the Federal Reserve Bank of New York on the last business day of each period presented; and

• the average of the aggregate trading volume of our ADSs on the NYSE and our equity shares on the NSE and BSE,

all as adjusted to reflect the five-for-two stock split on May 5, 2006.

					Average												Average
					NYSE Daily						Average						BSE Daily
					ADS		NSE Price				NSE Daily Equity		BSE Price				Equity Share
	NYSE Price Per ADS				Trading		Per Equity Share				Share Trading		Per Equity Share				Trading
	High		Low		Volume		High		Low		Volume		High		Low		Volume
Fiscal Year
2005	$	—	$	—		—	$	7.45	$	3.48		27,633	$	7.44	$	3.06		32,489
2006		—		—		—		15.90		5.00		91,999		15.91		5.14		46,686
2007		—		—		—		27.28		5.96		1,936,458		27.38		6.00		744,241
2008(1)		28.97		11.12		1,807,316		29.18		10.23		1,443,249		28.73		10.23		331,833
2009		23.00		3.12		1,227,508		23.06		3.40		2,420,215		22.24		3.39		746,960
2010(2)		14.93		6.70		1,446,308		15.39		7.26		3,770,209		15.48		7.24		909,329
Fiscal Quarters
2008
1st Quarter(1)		15.14		14.00		3,651,575		15.18		10.23		952,915		15.09		10.23		322,680
2nd Quarter		19.00		11.12		1,499,510		19.67		12.65		851,020		19.72		12.65		224,672
3rd Quarter		28.97		18.03		2,299,630		29.18		18.37		2,353,671		28.73		18.31		483,089
4th Quarter		27.05		16.31		1,366,820		27.05		13.87		1,365,643		27.11		14.00		294,562
2009
1st Quarter		23.00		15.89		914,672		23.06		15.37		1,060,814		22.24		15.38		222,175
2nd Quarter		16.20		8.07		1,325,088		15.58		8.62		2,190,515		15.54		8.64		668,435
3rd Quarter		9.10		3.12		1,377,791		9.07		3.40		3,099,156		9.03		3.39		1,157,369
4th Quarter		7.29		4.23		1,295,675		7.46		4.23		3,249,537		7.45		4.60		1,002,546
2010
1st Quarter		14.93		6.70		1,446,308		15.39		7.26		3,770,209		15.48		7.24		909,329
Last Six Months
January 2009		6.79		4.65		1,303,355		6.95		4.82		2,925,030		6.94		4.81		970,690
February 2009		5.87		4.55		1,426,695		5.70		4.37		2,874,295		5.70		4.67		850,184
March 2009		7.29		4.23		1,175,541		7.46		4.23		3,930,525		7.45		4.60		1,179,145
April 2009		8.72		6.70		1,301,448		8.68		6.97		4,026,612		8.73		6.95		980,718
May 2009		13.27		8.35		1,745,075		13.51		8.92		4,099,055		13.48		8.86		1,058,265
June 2009		14.93		11.35		1,312,977		15.39		11.63		3,273,128		15.48		11.65		718,769

Notes:
(1)	From June 20, 2007 for trading prices for our ADSs on the NYSE.
(2)	Through June 30, 2009.

140

B. Plan of Distribution

     Not applicable

C. Markets

     Our ADSs are listed on the NYSE under the symbol “SLT”.

D. Selling Shareholders

     Not applicable

E. Dilution

     Not applicable

F. Expenses of the Issue

     Not applicable

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

     Not applicable

B. Memorandum and Articles of Association

General

     We were incorporated in Kolkata, the State of West Bengal, India, as a public company on September 8, 1975 as “Rainbow Investment Limited.” Our name was subsequently changed to “Sterlite Cables Limited” on October 19, 1976 and finally to “Sterlite Industries (India) Limited” on February 28, 1986. Our company identification number is L65990TN1975PLC062634. Our registered office is presently situated in the State of Tamil Nadu at SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin, State of Tamil Nadu 628 002, India.

     Our register of members is maintained at our registered office.

141

     Our activities are regulated by our Memorandum and Articles of Association. Our current Memorandum and Articles of Association were recently amended by a special resolution of our shareholders passed in December 2007. In addition to our Memorandum and Articles of Association, our activities are regulated by certain legislation, including the Indian Companies Act, the SCRA and the Securities Contracts (Regulation) Rules, 1957, as amended, or the SCR Rules.

     Our Memorandum of Association permits us to engage in a wide variety of activities, including all of the activities that we are currently engaged in or intend to be engaged in, as well as other activities that we currently have no intention of engaging in. Our objects are set out at clause 3 of our Memorandum of Association.

Share Capital

     Our authorized share capital is Rs. 1,850 million, divided into 925 million equity shares of par value Rs. 2 per equity share. As of March 31, 2009 and June 30, 2009, our issued share capital was Rs. 1,417.0 million, divided into 708,494,411 equity shares of par value Rs. 2 per equity share.

Changes in Capital or our Memorandum of Association and Articles of Association

     Subject to the Indian Companies Act and our Articles of Association, we may, by passing an ordinary resolution or a special resolution, as applicable, at a general meeting or through postal ballot:

• increase our authorized or paid up share capital;

• consolidate all or any part of our shares into a smaller number of shares each with a larger par value;

• split all or any part of our shares into a larger number of shares each with a smaller par value;

• convert any of our paid-up shares into stock, and reconvert any stock into any number of paid-up shares of any denomination;

• cancel shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person, and diminish the amount of the authorized share capital by the amount of the shares so cancelled;

• reduce our issued share capital; or

• alter our Memorandum of Association or Articles of Association.

Directors

     Under our Articles of Association, a director is not required to hold any qualification shares. There is no age limit requirement for the retirement of the directors.

     Any director who is directly or indirectly interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into by us or on our behalf is required to disclose the nature of his interest at a meeting of the board of directors and such interested director shall not participate in any discussion of, or vote on, any contract, arrangement or proposal in which he is interested. In addition, we are prohibited from making loans, directly or indirectly, or providing any guarantee or security, directly or indirectly, in connection with any loans made by a third party, to our directors without the prior approval of the Central Government.

142

General Meetings of Shareholders

     There are two types of general meetings of shareholders, an annual general meeting and an extraordinary general meeting. We must convene our annual general meeting within six months of the end of each financial year and must ensure that the intervening period between two annual general meetings does not exceed 15 months. The Registrar of Companies may extend this period in special circumstances at our request. Extraordinary general meetings may be convened at any time by our directors at their discretion or at the request of our shareholders holding in the aggregate not less than 10% of our paid-up capital. A notice in writing to convene a general meeting must set out the date, time, place and agenda of the meeting and must be provided to shareholders at least 21 days prior to the date of the proposed meeting. The requirement of the 21 days’ notice in writing may be waived if consent to shorter notice is received from all shareholders entitled to vote at the annual general meeting or, in the case of an extraordinary general meeting, from shareholders holding not less than 95% of our paid-up capital. General meetings are generally held at our registered office. Business may be transacted at a general meeting only when a quorum of shareholders is present. Five persons entitled to attend and to vote on the business to be transacted, each being a member or a proxy for a member or a duly authorized representative of a corporation which is a member, will constitute a quorum.

     The annual general meetings deal with and dispose of all matters prescribed by our Articles of Association and by the Indian Companies Act, including the following:

• the consideration of our annual financial statements and report of our directors and auditors;

• the election of directors;

• the appointment of auditors and the fixing of their remuneration;

• the authorization of dividends; and

• the transaction of any other business of which notice has been given.

Division of Shares

     The Indian Companies Act provides that a company may sub-divide its share capital if its Articles of Association authorize the company to do so by adopting an ordinary resolution in its general meeting.

     Our Articles of Association allow us in a general meeting to alter our Memorandum of Association and subdivide all or any of our equity shares into a larger number of shares with a smaller par value than originally fixed by the Memorandum of Association.

Voting Rights

     Subject to any special terms as to voting on which any shares may have been issued, every shareholder entitled to vote who is present in person (including any corporation present by its duly authorized representative) shall on a show of hands have one vote and every shareholder present in person or by proxy shall on a poll have one vote for each share of which he is the holder. In the case of joint holders, only one of them may vote and in the absence of election as to who is to vote, the vote of the senior of the joint holders who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. Seniority is determined by the order in which the names appear in the register of members.

     Voting is by show of hands unless a poll is ordered by the chairman of the meeting, who is generally the chairman of our board of directors but may be another director or other person selected by our board or the shareholders present at the meeting in the absence of the chairman, or demanded by a shareholder or shareholders holding at least 10% of the voting rights or holding paid-up capital of at

143

least Rs. 50,000 (i.e. 25,000 shares of Rs. 2 each). Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by proxy shall be proportionate to the capital paid-up on each share against our total paid-up capital. In the case of a tie vote, the chairman of the meeting, who is generally the chairman of our board of directors, has the right to cast a tie-breaking vote.

     A shareholder may appoint any person (whether or not a shareholder) to act as his proxy to vote on a poll at any meeting of shareholders (or of any class of shareholders) in respect of all or a particular number of the shares held by him. A shareholder may appoint more than one person to act as his proxy and each such person shall act as proxy for the shareholder for the number of shares specified in the instrument appointing the person a proxy. The instrument appointing a proxy must be delivered to our registered office at least 48 hours prior to the meeting or in case of a poll, not less than 24 hours before the time appointed for taking of the poll. If a shareholder appoints more than one person to act as his proxy, each instrument appointing a proxy shall specify the number of shares held by the shareholder for which the relevant person is appointed as his proxy. A proxy does not have a right to speak at meetings. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings. Such a representative is not considered a proxy and he has the same rights as the shareholder by which he was appointed to speak at a meeting and vote at a meeting in respect of the number of shares held by the shareholder, including on a show of hands and a poll.

     Subject to the Articles of Association and the Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001, as amended, the Indian Companies Act allows a public company to issue shares with different rights as to dividend, voting or otherwise, provided that it has distributable profits as specified under the Indian Companies Act for a period of three financial years immediately preceding the issue of such shares and has filed its annual accounts and annual returns for the immediately preceding three years.

Quorum

     Our Articles of Association provide that a quorum for a general meeting is at least five shareholders entitled to vote and present in person.

Shareholder Resolutions

     An ordinary resolution requires the affirmative vote of a majority of our shareholders entitled to vote in person or by proxy at a general meeting.

     A special resolution requires the affirmative vote of not less than three-fourths of our shareholders entitled to vote in person or by proxy at a general meeting and casting a vote. The Indian Companies Act provides that to amend the Articles of Association, a special resolution approving such an amendment must be passed in a general meeting. Certain amendments, including a change in the name of the company, reduction of share capital, approval of variation of rights of special classes of shares and dissolution of the company require a special resolution.

     Further, the Indian Companies Act requires certain resolutions such as those listed below to be voted on only by a postal ballot:

• amendments of the memorandum of association to alter the objects of the company and to change the registered office of the company under Section 146 of the Indian Companies Act;

• alteration of the articles of association in relation to insertion of provisions defining private company;

• the issue of shares with differential rights with respect to voting, dividend or otherwise;

• the sale of the whole or substantially the whole of an undertaking of the company;

• providing loans, extending guarantees or providing a security in excess of the limits prescribed under Section 372A of the Indian Companies Act;

• varying the rights of the holders of any class of shares or debentures or other securities;

• the election of a director by minority shareholders; and

• the buy-back of shares.

Dividends

     Under the Indian Companies Act, unless the board of directors recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. The board of directors may also declare interim dividends that do not need to be approved by the shareholders. A company pays dividends recommended by the board of directors and approved by a majority of the shareholders at the annual general meeting of shareholders held within six months of the end of each fiscal year. The shareholders have the right to decrease but not increase the dividend amount recommended by the board of directors. Pursuant to a recent amendment to the listing agreement, listed companies are required to declare and disclose the dividends paid on a per share basis only. The dividend recommended by the board of directors and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid up value of their equity shares. The Indian Companies Act provides that shares of a company of the same class must receive equal dividend treatment. Dividends can only be paid in cash to the registered shareholder at a record date fixed on or prior to the annual general meeting or to his order or his banker’s order. No shareholder is entitled to a dividend while any lien in respect of unpaid calls on any of such shareholder’s shares is outstanding.

     These distributions and payments are required to be paid to shareholders within 30 days of the annual general meeting where the resolution for declaration of dividends is approved. The dividend so declared is required to be deposited in a separate bank account within a period of five days from the date of declaration of such dividend. All dividends unpaid or unclaimed within a period of 30 days from the date of declaration of such dividend must be transferred within seven days of the end of such period to a special unpaid dividend account held at a scheduled bank. Any dividend which remains unpaid or unclaimed for a period of seven years from the date of the transfer to a scheduled bank must be transferred to the Investor Education and Protection Fund established by the Government of India and following such transfer, no claim shall lie against the Company or the Investor Education and Protection Fund. Under the Indian Companies Act, dividends in respect of a fiscal year may be paid out of the profits of a company in that fiscal year or out of the undistributed profits of previous fiscal years or both, after providing for depreciation in a manner provided for in the Indian Companies Act.

144

     Under the Indian Companies Act, we are only allowed to pay dividends in excess of 10% of our paid-up capital in respect of any fiscal year from our profits for that year after we have transferred to our reserves a percentage of our profits for that year ranging between 2.5% to 10% depending on the rate of dividend proposed to be declared in that year in accordance with the Companies (Transfer of Profits to Reserves) Rules, 1975. “Reserves” are defined in the Guidance Note on Terms Used in Financial Statements issued by the Institute of Chartered Accountants of India as the portion of earnings, receipts or other surpluses of an enterprise (whether capital or revenue) appropriated by the management for a general or specific purpose other than a provision for depreciation or diminution in the value of assets or for a known liability. The Indian Companies Act and the Companies (Declaration of Dividend out of Reserves) Rules, 1975 provide that if profits for that year are insufficient to declare dividends, the dividends for that year may be declared and paid out from our accumulated profits transferred by us to our reserves, subject to the following conditions:

• the rate of dividend to be declared shall not exceed the lesser of 10% of our paid-up capital or the average of the rates at which dividends were declared in the five years immediately preceding that year;

• the total amount to be drawn from the accumulated profits may not exceed 10% of the sum of our paid-up capital and free reserves and any amount so drawn shall first be used to set off any losses incurred in that financial year; and

• the balance of our reserves following such withdrawal shall not fall below 15% of our paid-up capital.

Distribution of Assets on a Winding-up

     In accordance with the Indian Companies Act, all surplus assets remaining after payments are made to employees, statutory creditors, tax and revenue authorities, secured and unsecured creditors and the holders of any preference shares (though not in that order), shall be distributed among our equity shareholders in proportion to the amount paid up or credited as paid-up on such shares at the commencement of the winding-up.

Transfer of Shares

     Under the Indian Companies Act, the shares of a public company are freely transferable, unless such a transfer contravenes applicable law or the regulations issued by the SEBI or the Sick Industrial Companies (Special Provisions) Act, 1985, as amended, or the SICA. The transferor is deemed to remain the holder until the transferee’s name is entered in the register of members.

     In the case of shares held in physical form, we will register any transfers of equity shares in the register of members upon lodgment of the duly completed share transfer form, the relevant share certificate, or if there is no certificate, the letter of allotment, in respect of shares to be transferred together with duly stamped share transfer forms. In respect of electronic transfers, the depository transfers shares by entering the name of the purchaser in its register as the beneficial owner of the shares. In turn, we then enter the name of the depository in our records as the registered owner of the shares. The beneficial owner is entitled to all the rights and benefits and is subject to the liabilities attached to the shares held by the depository on his or her or its behalf.

     Equity shares held through depositories are transferred in the form of book entries or in electronic form in accordance with the regulations laid down by SEBI. These regulations provide the regime for the functioning of the depositories and the participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system.

     SEBI requires that our equity shares for trading and settlement purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange. Transfers of equity shares in book-entry form require both the seller and the purchaser of the equity shares to establish accounts with depository participants appointed by depositories established under the Depositories Act, 1996. Charges for opening an account with a depository participant, transaction charges for each trade and custodian charges for securities held in each account vary depending upon the practice of each depository participant.

     The depository transfers equity shares by entering the name of the purchaser in its books as the beneficial owner of the equity shares. In turn, we will enter the name of the depository in our records as the registered owner of the equity shares. The beneficial owner is entitled to all the rights and benefits as well as the liabilities with respect to the equity shares that are held by the depository. The register and index of beneficial owners maintained by our depository is deemed to be a register and index of our members and debenture holders under the Depositories Act, 1996. Transfers of beneficial ownership held through a depository are exempt from stamp duty. For this purpose, we have entered into an agreement for depository services with the National Securities Depository Limited and the Central Depository Services India Limited.

145

     The requirement to hold the equity shares in book-entry form will apply to the ADS holders when the equity shares are withdrawn from the depositary facility upon surrender of the ADSs. In order to trade the equity shares in the Indian market, the withdrawing ADS holder will be required to comply with the procedures described above.

     Our Articles of Association provide for certain restrictions on the transfer of equity shares, including granting power to the board of directors in certain circumstances, to refuse to register or acknowledge a transfer of equity shares or other securities issued by us. Under the listing agreements with the NSE and BSE on which our equity shares are listed, in the event we have not effected the transfer of shares within one month or where we have failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of one month, we are required to compensate the aggrieved party for the opportunity loss caused during the period of delay.

     If a company without sufficient cause refuses to register a transfer of equity shares within two months from the date on which the instrument of transfer is delivered to the company, the transferee may appeal to the Company Law Board, or the CLB, seeking to register the transfer of equity shares. The CLB may, in its discretion, issue an interim order suspending the voting rights attached to the relevant equity shares before completing its investigation of the alleged contravention.

     In addition, the Indian Companies Act provides that the CLB may direct a rectification of the register of members for a transfer of equity shares which is in contravention of SEBI regulations or the SICA or any similar law, upon an application by the company, a participant, a depository incorporated in India, an investor or SEBI.

     Under the Companies (Second Amendment) Act, 2002, it is proposed that the CLB be replaced with the National Law Tribunal with effect from a date that is yet to be notified.

Disclosure of Ownership Interest

     Section 187C of the Indian Companies Act requires that beneficial owners of shares of companies who are not registered as holders of those shares must make a declaration to the company specifying the nature of his or her or its interest, particulars of the registered holder of such shares and such other particulars as may be prescribed. Any lien, charge, promissory note or other collateral agreement created, executed or entered into with respect to any equity share by its registered owner, or any hypothecation by the registered owner of any equity share, shall not be enforceable by the beneficial owner or any person claiming through the beneficial owner if such declaration is not made. Failure by a person to comply with Section 187C will not affect the company’s obligation to register a transfer of shares or to pay any dividends to the registered holder of any shares in respect of which the declaration has not been made.

     Any investor who fails to comply with these requirements may be liable for a fine of up to Rs. 1,000 for each day such failure continues. Additionally, if the company fails to comply with the provisions of Section 187C, then the company and every defaulting officer may be liable for a fine of up to Rs. 100 for each day the default continues.

Alteration of Shareholder Rights

     Under the Indian Companies Act, and subject to the provisions of the articles of association of a company and the relevant rules as issued by the Ministry of Corporate Affairs, where the share capital of a company is divided into different classes of shares, the rights of any class of shareholders can only be altered or varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class, by a special resolution passed at a general meeting of the holders of the issued shares of that class, or pursuant to a judicial order sanctioning a compromise or arrangement between the company and such class of shareholders.

Share Register and Record Dates

     We maintain our register of members at our registered office and all transfers of shares should be notified to us at such address. Our register of members is open to inspection during business hours by shareholders without charge and by other persons upon payment of a fee as prescribed under the applicable law.

     The register and index of beneficial owners maintained by a depository under the Depositories Act, 1996 is deemed to be an index of members and register and index of debenture holders. We recognize as shareholders only those persons who appear on our register of members and we do not recognize any person holding any equity share or part thereof on trust, whether express, implied or constructive.

     To determine which shareholders are entitled to specified shareholder rights, we may close the register of members. For the purpose of determining who our shareholders are, our register of members may be closed for periods not exceeding 45 days in any one

146

year or 30 days at any one time. In order to determine our shareholders’ entitlement to dividends, it is our general practice to close the register of members for approximately ten to 20 days before the annual general meeting. The date on which this period begins is the record date. Under the listing agreements with each of the stock exchanges on which our equity shares are listed, we may, upon giving at least seven working days’ advance notice to the stock exchange, set a record date and/or close the register of members. The trading of our equity shares and the delivery of shares certificates may continue while the register of members is closed.

Annual Report

     At least 21 days before an annual general meeting, we must circulate our annual report, which comprises of either a detailed or abridged version of our audited financial accounts, our directors’ report, our corporate governance report, and our auditor’s report, to the shareholders along with a notice convening the annual general meeting. In addition, we must furnish to the exchanges quarterly unaudited or audited results within 30 days after the end of each accounting quarter. In respect of results for the fourth quarter of that financial year, we can opt to publish audited results for the entire year within three months, and thus will not be required to publish unaudited results for the last quarter within 30 days. We are also required to send copies of our annual report to the NSE and BSE and to publish our financial results in at least one English language daily newspaper circulating in the whole or substantially the whole of India and also in a daily newspaper published in the language of the region where our registered office is situated. We are also required under the Indian Companies Act to make available upon the request of any shareholder our complete balance sheet and profit and loss account.

     Under the Indian Companies Act, we must file with the Registrar of Companies our balance sheet and profit and loss account within 30 days of the date on which the balance sheet and profit and loss account were laid before the annual general meeting and our annual return within 60 days of the conclusion of that meeting.

Borrowing Powers

     Our directors may raise, borrow or secure the payment of any sums of money for our purposes as they deem appropriate without the consent of a majority of the shareholders in a general meeting, provided that, the aggregate of the monies to be borrowed and the principal amount outstanding in respect of monies raised, borrowed or secured by us does not exceed the aggregate of our paid up share capital plus free reserves.

Issue of Equity Shares and Pre-emptive Rights

     Subject to the provisions of the Indian Companies Act and our Articles of Association and to any special rights attaching to any of our equity shares, we may increase our share capital by the allotment or issue of new equity shares with preferred, deferred or other special rights or restrictions regarding dividends, voting, return of capital or other matters as we may from time to time determine by special resolution. We may issue preference shares that are redeemable or are liable to be redeemed at our option or the option of the holder in accordance with our Articles of Association.

     Under the Indian Companies Act, new equity shares shall first be offered to existing shareholders in proportion to the amount they have paid up on their equity shares on the record date. The offer shall be made by written notice specifying:

• the right, exercisable by the shareholders of record, to renounce the equity shares offered in favor of any other person;

• the number of equity shares offered; and

• the period of the offer, which may not be less than 15 days from the date of the offer. If the offer is not accepted, it is deemed to have been declined.

     The offer is deemed to include a right exercisable by the person concerned to renounce the shares offered to him in favor of any other person. Our board of directors is permitted to distribute equity shares not accepted by existing shareholders in the manner it deems beneficial for us in accordance with our Articles of Association. Holders of ADSs may not be able to participate in any such offer.

     However, under the provisions of the Indian Companies Act, new equity shares may be offered to non-shareholders, if this has been approved by a special resolution or by an ordinary resolution with the Government of India’s permission.

147

Capitalization of Profits and Reserves

     Our Articles of Association allow our directors, with the approval of our shareholders by an ordinary resolution, to capitalize any part of the amount standing to the credit of our reserve accounts or to the credit of our profit and loss account or otherwise available for distribution. Any sum which is capitalized shall be appropriated among our shareholders in the same proportion as if such sum had been distributed by way of dividend. This sum shall not be paid out in cash and shall be applied in the following manner:

• paying up any amount remaining unpaid on the shares held by our shareholders; or

• issuing to our shareholders, fully paid bonus equity shares (issued either at par or a premium).

     Any issue of bonus equity shares would be subject to the SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended, or SEBI Guidelines, which provide that:

• no company shall, pending the conversion of convertible securities, issue any bonus equity shares unless a similar benefit is extended to the holders of such convertible securities through a reservation of equity shares in proportion to such conversion;

• the bonus issue shall be made out of free reserves built out of genuine profits or share premium collected in cash only;

• bonus equity shares cannot be issued unless all the partly paid up equity shares have been fully paid-up;

• the company has not defaulted in the payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption of such debentures;

• a declaration of bonus equity shares in lieu of dividend cannot be made;

• the company shall have sufficient reason to believe that it has not defaulted in the payment of statutory dues of the employees such as contribution to provident fund, gratuity and bonus;

• any reserves created by a revaluation of fixed assets shall not be capitalized;

• the articles of association of the company must contain provisions for the capitalization of reserves; and

• the bonus issue must be implemented within two months from the date of approval by the board of directors.

Purchase of Own Equity Shares

     A company may reduce its capital in accordance with the Indian Companies Act and the regulations issued by SEBI by way of a share buy-back out of its free reserves or securities premium account or the proceeds of any shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back) subject to certain conditions, including:

• the buy-back must be authorized by the company’s Articles of Association;

• a special resolution authorizing the buy-back must be passed in a general meeting;

• the buy-back is limited to 25% of the company’s total paid up capital and free reserves in a fiscal year;

• the ratio of debt owed is not more than twice the capital and free reserves after such buy-back;

• the shares or other specified securities for share buy-back are fully paid-up; and

• the buy-back is in accordance with the SEBI (Buy-Back of Securities) Regulations, 1998, as amended.

     The first two conditions mentioned above would not be applicable if the number of equity shares bought back is less than 10% of our total paid up equity capital and free reserves and if such buy-back is authorized by the board of directors, provided that no buy-back shall be made within 365 days from the date of any previous buy-back. If such buy-back constitutes more than 10% of the total paid-up equity capital and free reserves of the company, it must be authorized by a special resolution of the company in general meeting. Our Articles of Association permit us to buy-back our equity shares.

     Any equity shares which have been bought back by us must be extinguished within seven days. Further, we will not be permitted to buy-back any securities for a period of one year or to issue new securities of the same kind for six months except by way of a bonus issue or in discharge of our existing obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference

148

shares or debentures into equity. A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company including its own subsidiary companies or in the event of non-compliance with certain other provisions of the Indian Companies Act.

     ADS holders will be eligible to participate in a share buy-back in certain cases. An ADS holder may acquire equity shares by withdrawing them from the depositary facility and then selling those equity shares back to us in accordance with the provisions of applicable law as discussed above. ADS holders should note that equity shares withdrawn from the depositary facility may only be redeposited into the depositary facility under certain limited circumstances as specified under the guidelines issued by the Government of India and the RBI relating to a sponsored ADS facility and fungibililty of ADSs. See “— D. Exchange Controls.”

     There can be no assurance that the equity shares offered by an ADS investor in any buy-back of equity shares by us will be accepted by us. The position regarding regulatory approvals required for ADS holders to participate in a buy-back is not clear. ADS investors are advised to consult their Indian legal advisers prior to participating in any buy-back by us, including in relation to any regulatory approvals and tax issues relating to the share buy-back.

Rights of Minority Shareholders

     The Indian Companies Act provides mechanisms for the protection of the rights of the minority shareholder. Where the share capital of a company is divided into different classes of shares and there has been variation in the rights attached to the shares of any class, the holders of not less than 10% of the issued shares of that class, who did not vote in favor of a resolution for the variation, have the right to apply to the CLB to have the variation cancelled and such variation shall not have any effect unless confirmed by the CLB.

     Further, under the Indian Companies Act, shareholders holding not less than 10% of the issued share capital or shareholders representing not less than 10% of the total number of members or 100 members, whichever is lesser, provided that they have paid all calls and other sums due on their shares, have the right to apply to the CLB for an order to bring an end to the matter complained of, on the following grounds of oppression or mismanagement:

• that the company’s affairs are being conducted in a manner prejudicial to public interest or in a manner oppressive to any member or members or in a manner prejudicial to the interests of the company; or

• that a material change has taken place in the management or control of the company, whether by a change in its board of directors or management or in the ownership of the company’s shares and by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company.

Provisions on Squeeze Out of Minority Shareholders

     Under the Indian Companies Act, where an arrangement or contract involving a transfer of shares or any class of shares of a company to another company has been approved by holders holding not less than 90% in value of such class of shares, the transferee company has the right to give notice to any dissenting shareholder, within a specified time and in a prescribed manner, that it desires to acquire its shares.

     Unless the CLB, upon an application made by a dissenting shareholder within a month of the aforementioned notice, orders otherwise, the transferee company has the right to acquire the shares of the dissenting shareholder on the same terms as those offered to the other shares to be transferred under the arrangement or contract.

     Where, in pursuance of any such arrangement or contract, shares in a company are transferred to another company, and those shares, together with any other shares held by the transferee company (or its nominee or subsidiary company) in the transferor company, constitute not less than 90% in value of the shares, the transferee company is required to give notice of such fact to any remaining shareholders within a month of such transfer. Any such remaining shareholder may within three months of the notice from the transferee company, require the transferee company to acquire its shares. Where such notice is given by such remaining shareholder, the transferee company is bound to acquire those shares on the same terms as provided for under the arrangement or contract for the transfer of the other shares of the transferor company or on such terms as may be agreed or on terms that the CLB (upon an application of either the transferee company or the shareholder) thinks fit to order.

149

Book-Entry Shares and Liquidity

     Our equity shares are compulsorily traded in book-entry form and are available for trading under both depository systems in India, namely, the National Securities Depository Limited and Central Depository Services (India) Limited. The International Securities Identification Number (ISIN) for our equity shares is INE 268A01031.

Comparison of Shareholders’ Rights

     We are incorporated under the laws of India. The following discussion summarizes certain material differences between the rights of holders of our equity shares and the rights of holders of the common stock of a typical corporation incorporated under the laws of the State of Delaware which result from differences in governing documents and the laws of India and Delaware. The rights of holders of our ADSs differ in certain respects from those of holders of our equity shares.

     This discussion does not purport to be a complete statement of the rights of holders of our equity shares under applicable law in India and our amended and restated Memorandum and Articles of Association or the rights of holders of the common stock of a typical corporation under applicable Delaware law and a typical certificate of incorporation and bylaws.

Delaware Law	Indian Law
Annual and Special Meetings of Shareholders
Shareholders of a Delaware corporation generally do not have the right to call meetings of shareholders unless that right is granted in the certificate of incorporation or bylaws. However, if a corporation fails to hold its annual meeting within a period of 30 days after the date designated for the annual meeting, or if no date has been designated for a period of 13 months after its last annual meeting, the Delaware Court of Chancery may order a meeting to be held upon the application of a shareholder.	While shareholders of a company do not have any right to call for an annual general meeting, shareholders holding one-tenth of the voting share capital of the company have a right to request an extraordinary general meeting. However, in the event the company defaults in holding an annual general meeting within 15 months from the date of its last annual general meeting, the Government of India may order a meeting to be held upon the application of any shareholder.
Quorum Requirements for Meetings of Shareholders
A Delaware corporation’s certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting.	Our Articles of Association specify that five members personally present constitute the quorum required to conduct business at a general meeting, which is consistent with Indian law requirements.
Board of Directors
A typical certificate of incorporation and bylaws would provide that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation.	Our Articles of Association provide that unless otherwise determined by the shareholders at a general meeting, the number of directors shall not be less than three or more than 12. Under Indian law, the appointment and removal of directors (other than additional directors) is required to be approved by the shareholders. There is no concept under Indian law as to division of the board of directors into different classes or cumulative voting.
Removal of Directors
A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board).	Under Indian law, a director of a company, other than a director appointed by the Government of India, may be removed by the affirmative vote of shareholders holding a majority of the voting share capital, provided that a special notice of the resolution to remove the director is given in accordance with the provisions of the Indian Companies Act. Under our Articles of Association, any director who has been appointed by any persons pursuant to the provisions of an agreement with us may be removed at any time by such person.

150

Delaware Law	Indian Law
Filling Vacancies on the Board of Directors
A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires.	The board of directors has the power to fill a vacancy on the board and any director so appointed shall hold office only so long as the vacating director would have held such office if no vacancy had occurred.
Interested Director Transactions
Under Delaware law, some contracts or transactions in which one or more of a Delaware corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. For an interested director transaction not to be voided, either the stockholders or the board of directors must approve in good faith any such contract or transaction after full disclosure of the material facts or the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum.	Under Indian law, contracts or arrangements in which one or more directors of an Indian company has an interest are not void or voidable because of such interest, provided that certain conditions, such as obtaining the required approval of the board of directors and disclosing the nature of the interest to the board of directors, are satisfied. Subject to a few exceptions, for an interested director transaction not to be voided, (a) the interested director is required to disclose the nature of his concern or interest at a meeting of the board of directors; (b) the board of directors is required to grant its consent to the contract or arrangement; (c) the interested director is not permitted to take part in the discussion of, or vote on, the contract or arrangement; and (d) the approval of the Government of India is required to be obtained in the event the paid up share capital of the company is more than Rs. 10 million. An interested director is not to be counted for the purposes of quorum at the time of any such discussion or vote and if the interested director does vote, the vote shall be void. The contravention of relevant provisions is punishable with fine.

151

Delaware Law	Indian Law
Cumulative Voting
Delaware law does not require that a Delaware corporation provide for cumulative voting. However, the certificate of incorporation of a Delaware corporation may provide that shareholders of any class or classes or of any series may vote cumulatively either at all elections or at elections under specified circumstances.	There is no concept of cumulative voting under Indian law.
Shareholder Action Without a Meeting
Unless otherwise specified in a Delaware corporation’s certificate of incorporation, any action required or permitted to be taken by shareholders at an annual or special meeting may be taken by shareholders without a meeting, without notice and without a vote, if consents, in writing, setting forth the action, are signed by shareholders with not less than the minimum number of votes that would be necessary to authorize the action at a meeting. All consents must be dated. No consent is effective unless, within 60 days of the earliest dated consent delivered to the corporation, written consents signed by a sufficient number of holders to take the action are delivered to the corporation.	There is no concept of shareholder action without a meeting under Indian law.
Business Combinations
With certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a Delaware corporation must be approved by the board of directors and a majority (unless the certificate of incorporation requires a higher percentage) of the outstanding shares entitled to vote thereon.	The sale, lease or disposal of all or substantially all of the assets of an Indian company must be approved by the board of directors and shareholders holding a majority of the voting share capital of the company.
Delaware law also requires a special vote of stockholders in connection with a business combination with an “interested stockholder” as defined in Section 203 of the Delaware General Corporation Law. See “— Interested Stockholders” below.	Under the Indian Companies Act, the merger of two companies is required to be approved by a court of competent jurisdiction and by a three-fourths majority of each class of shareholders and creditors of the company present and voting at the meetings held to approve the merger.
Interested Stockholders
Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an “interested stockholder” for three years following the time that the stockholder becomes an interested stockholder. Subject to specified exceptions, an “interested stockholder” is a person or group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years.	Indian law does not prohibit corporate transactions but does require disclosure of related party transactions in the financial statements of the company. Under applicable accounting standards in India, during the time that a related party transaction exists, a company is required to disclose the name of the related parties, describe the relationship between the parties, describe the nature of the transactions and disclose the volume of the transactions either as an amount or as an appropriate proportion, the amounts or appropriate proportions of outstanding items pertaining to related parties at the balance sheet date and provisions for doubtful debts due from such parties at that date and the amounts written off or written back in the period in respect of debts due from or to related parties.
A Delaware corporation may elect to “opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation or its bylaws, or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption.	Transactions undertaken between a company and a person having a substantial interest in the company would qualify as a related party transaction and would be required to be disclosed under applicable accounting standards in India. Under such accounting standards, a party is considered to have a substantial interest in a company if that party owns, directly or indirectly, 20% or more of the voting power in the company.

152

Delaware Law	Indian Law
Limitations on Personal Liability of Directors
A Delaware corporation may include in its certificate of incorporation provisions limiting the personal liability of its directors to the corporation or its shareholders for monetary damages for many types of breach of fiduciary duty. However, these provisions may not limit liability for any breach of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, the authorization of unlawful dividends, shares repurchases or shares barring redemptions, or any transaction from which a director derived an improper personal benefit. A typical certificate of incorporation would also provide that if Delaware law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by Delaware law as so amended. However, these provisions would not be likely to bar claims arising under US federal securities laws.	Generally, Indian law provides that directors are not personally liable in respect of contracts of the company. However, where a director acts without the approval or ratification of the company, such director may be personally liable. Directors are also personally liable for breach of trust or misfeasance, both civilly and in some cases criminally. The Indian Companies Act contains certain provisions making directors personally liable to discharge certain monetary obligations in their capacity as directors, such as the non-refund of share application monies or excess application monies within the time limit stipulated by the Indian Companies Act. Similarly, the Indian Companies Act provides for civil liability of directors for misstatements in a prospectus issued by the company that has been signed by the directors, including the obligation to pay compensation to any persons subscribing to the shares of the company on the faith of statements made in the prospectus. Directors’ and officers’ liability insurance policies are available in India. However, the permissible coverage under such policies is subject to the same limitations as on the ability of the company to indemnify its directors as described under “— Indemnification of Directors and Officers.”
Indemnification of Directors and Officers
Under Delaware law, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any third party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person: •   acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and	Under Indian law, subject to specified exceptions, any provision, whether contained in the Articles of Association of a company or in any agreement, exempting or indemnifying any director, officer or auditor of the company against any liability in respect of any negligence, default, breach of duty or breach of trust which would by law otherwise attach to such director, officer or auditor, shall be void. However, pursuant to the exceptions permitted under Indian law, our Articles of Association provide for indemnification of any officer or agent against any liability incurred by such person in successfully defending any proceeding, whether civil or criminal, in which such person is acquitted in whole or in part on the grounds that such person had acted honestly and reasonably, or in connection with an application made by an officer or agent to the High Court of the relevant state for relief for reason that he or she has a reason to apprehend that any proceeding may be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust in which relief has been granted by such High Court.
•   in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Delaware law permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled

153

Delaware Law	Indian Law
to indemnity for the expenses which the court deems to be proper.
To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware law to indemnify such person for reasonable expenses incurred thereby. Expenses (including attorneys’ fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified.
Appraisal Rights
A shareholder of a Delaware corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which the shareholder may receive cash in the amount of the fair value of the shares held by that shareholder (as determined by a court) in lieu of the consideration the shareholder would otherwise receive in the transaction.	There is no concept of appraisal rights under Indian law.
Shareholder Suits
Under Delaware law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation, including for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under Delaware law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under established Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. Delaware law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile. In such derivative and class actions, the court has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action.	Under the Indian Companies Act, shareholders holding not less than one tenth of the issued share capital, shareholders representing not less than one tenth of the total number of members or one hundred members, provided that they have paid all calls and other sums due on their shares, have the right to request the CLB, a statutory body, for an order or injunction as to the taking or not taking of an action by the company on the following grounds of oppression or mismanagement: (a) that the company’s affairs are being conducted in a manner prejudicial to public interest, in a manner oppressive to any member or members or in a manner prejudicial to the interests of the company; and (b) that a material change has taken place in the management or control of the company, whether by a change in the board of directors or management or in the ownership of the company’s shares, and by reason of such change it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company.
Inspection of Books and Records
All shareholders of a Delaware corporation have the right, upon written demand, to inspect or obtain copies of the corporation’s shares ledger and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.	Pursuant to our Articles of Association, our board of directors has the authority to determine whether and to what extent and at what times and places and under what conditions or regulations our books are open to the inspection of the shareholders. Further, no shareholder of the company has the right to inspect any record of the company except as conferred under law or authorized by the board of directors or by the shareholders in a general meeting. The books containing the minutes of the proceedings of any general

154

Delaware Law	Indian Law
	meetings of the shareholders are required to be kept at the registered office of the company and such materials are to be opened for inspection by any shareholder, without charge, subject to reasonable restrictions which may be imposed by a company’s articles or the general meeting of the shareholders. If an inspection is refused, the company and every officer of the company in default will be punishable with a fine. Under Indian law, the audited financial statements for the relevant financial year, the directors’ report and the auditors’ report are required to be provided to the shareholders before the annual general meeting.
Amendment of Governing Documents
Under Delaware law, amendments to a corporation’s certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by Delaware law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of Delaware law. Under Delaware law, the board of directors may amend bylaws if so authorized in the charter. The stockholders of a Delaware corporation also have the power to amend bylaws.	Under Indian Law, subject to certain specified amendments that require the additional approval of the central government, a company may make amendments to its articles with the approval of shareholders holding not less than 75% of the shares of the company.
Distributions and Dividends; Repurchases and Redemptions
Delaware law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. Under Delaware law, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem those shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced.	Under Indian law, a company may only pay a dividend in an amount in excess of 10% of its paid up capital out of the profits of that year after it has transferred to the reserves of the company a percentage of its profits for that year ranging between 2.5% to 10% depending on the rate of dividend proposed to be declared in that year. If the profits for a year are insufficient, the dividend for that year may be declared out of the accumulated profits earned in previous years and transferred to reserves, subject to the following conditions: (i) the rate of dividend to be declared may not exceed the lesser of the average of the rates at which dividends were declared in the five years immediately preceding the year, or 10% of paid-up capital; (ii) the total amount to be drawn from the accumulated profits from previous years and transferred to the reserves may not exceed an amount equivalent to one tenth of the paid-up capital and free reserves and the amount so drawn is first to be used to set off the losses incurred in the financial year before any dividends in respect of preference or equity shares; and (iii) the balance of reserves after withdrawals must not be below 15% of paid-up capital. Shareholders have a right to claim a dividend, after such dividend has been declared by the company at a general meeting. Shareholders also have a right to claim the interim dividends, which may be declared only pursuant to a resolution of the company’s board of directors. Dividends may be paid only in cash. Where a dividend has been declared by a company but has not been paid within 30 days from the date of declaration to any shareholder entitled to the payment of such dividend, a penalty can be imposed on a director who is knowingly a party to such default.
	A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected and sanctioned by a High Court. However, pursuant to certain amendments to the Indian Companies Act, a company has been empowered to

155

Delaware Law	Indian Law
	purchase its own shares or other specified securities out of its free reserves, or the securities premium account or the proceeds of any shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back), subject to certain conditions including: (a) the buy-back must be authorized by the articles of association of the company; (b) a resolution must be passed by shareholders holding not less than 75% of the outstanding shares in the general meeting of the company authorizing the buy-back; (c) the buy-back is limited to 25% of the total paid up capital and free reserves; (d) the ratio of debt owed by the company must not be more than twice the capital and free reserves after such buy-back; and (e) the buy-back must be in accordance with the SEBI (Buy-Back of Securities) Regulations, 1998.
	Conditions (a) and (b) mentioned above would not be applicable if the buy-back is for less than 10% of the total paid-up equity capital and free reserves of the company and such buy-back has been authorized by the board of directors of the company. Further, a company buying back its securities is not permitted to buy-back any additional securities for a period of one year after the buy-back or to issue any securities of the same kind for a period of six months.
	A company is also prohibited from purchasing its own shares or specified securities directly or indirectly.

Comparison of Corporate Governance Standards

     The listing of our ADSs on the NYSE and our equity shares on the NSE and BSE cause us to be subject to NYSE listing standards and Indian corporate governance requirements set out in the listing agreements that we have entered into with the NSE and BSE.

     The NYSE listing standards applicable to us, as a foreign private issuer, are considerably different from those applicable to companies incorporated in the United States. Under the NYSE rules, we need only (i) establish an independent audit committee that has specified responsibilities as described in the following table; (ii) provide prompt certification by our chief executive officer of any material non-compliance with any corporate governance rules of the NYSE; (iii) provide periodic (annual and interim) written affirmations to the NYSE with respect to our corporate governance practices; and (iv) provide a brief description of significant differences between our corporate governance practices and those followed by US companies.

     The corporate governance requirements which apply to us as a listed company on the NSE and BSE are contained in Clause 49 of the listing agreements that we have entered into with the NSE and BSE. Clause 49 has been amended from time to time.

     The following table summarizes certain material differences in the corporate governance standards applicable to us under our listing agreements with the NSE and BSE and the corporate governance standards for a NYSE-listed company, both to a typical US domestic issuer and the requirements that would be different for us as a foreign private issuer.

	Requirements under our Listing Agreements
Standard for NYSE-Listed Companies	with the NSE and BSE
Director Independence
A majority of the board must consist of independent directors. Independence is defined by various criteria including the absence of a material relationship between the director and the listed company. For example, directors who are employees, are immediate family of an executive officer of the company or receive over $120,000 per year in direct compensation from the listed company are not independent. Directors who are employees of or otherwise affiliated through immediate family	If the Chairman of the board of directors is an executive director, at least 50% of the board of directors should comprise of independent directors. If the Chairman of the board of directors is a non-executive director, then at least one third of the board should comprise of independent directors, provided that where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying a management position at the board of directors level or at one level below that,

156

	Requirements under our Listing Agreements
Standard for NYSE-Listed Companies	with the NSE and BSE
with the listed company’s independent auditor are also not independent. Determinations of independence were made by the board. The non-management directors must meet at regularly scheduled executive sessions without management. (The NYSE requirements for a board consisting of independent directors and non-management directors meeting at regularly scheduled executive sessions do not apply to us as a foreign private issuer.)	at least 50% of the board of directors should comprise of independent directors. Clause 49 of the listing agreements define an “independent director” to mean a non-executive director who (i) is receiving director’s remuneration and does not have any other material pecuniary relationship or transaction with the company, its promoters, its directors, its senior management or its holding company or its subsidiaries or its associates, which may affect the independence of the director; (ii) is not related to promoters or management at the board level or at one level below the board; (iii) has not been an executive of the company in the immediately preceding three financial years; (iv) is not a partner or an executive and has not been a partner or executive during the preceding three financial years, of the statutory audit firm or the internal audit firm or the legal firm and consulting firm of the company; (v) is not a material supplier, service provider, customer, lessee, or lessor of the company; (vi) is not a shareholder, owning 2% or more of the voting shares of the company; and (vii) is not less than 21 years of age.
	There is no comparable requirement under Indian law.
Audit Committee
The audit committee must (i) be comprised entirely of independent directors; (ii) be directly responsible for the appointment, compensation, retention and oversight of any registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the listed issuer, and each such registered public accounting firm must report directly to the audit committee; (iii) establish procedures for the receipt, retention and treatment of complaints with respect to accounting and auditing issues; (iv) establish procedures for the confidential, anonymous submission by employees of the listed issuer of concerns regarding questionable accounting or auditing matters; (v) be authorized to engage independent counsel and other advisers it deems necessary to perform its duties; and (vi) be given sufficient funding by the board of directors to compensate the independent auditors and other advisors as well as for the payment of ordinary administrative expenses incurred by the committee that are necessary or appropriate in carrying out its duties.	The listing agreements require that the role of the audit committee should include the following: •   To oversee the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible. •   To recommend to the board of directors the appointment and removal of the external auditor, fix the audit fee and also approve of payment to such auditor for any other services rendered by him. •   To review with management the annual financial statements before submission to the board of directors, focusing primarily on matters required to be included in the Director’s Responsibility Statement, any changes in accounting policies and practices, any major accounting entries based on exercise of judgment by management, any qualifications in the draft audit report, any significant adjustments arising out of the audit, the going concern assumption, compliance with accounting standards, compliance with stock exchange and legal requirements concerning financial statements and any related party transactions. •   To review with management the statement of uses or application of funds raised through an issue of securities, the statement of funds utilized for purposes other than as stated in the offer document and the report submitted by the monitoring committee agency, and to make appropriate recommendations. •   To review with management the performance of external and internal auditors, and the adequacy of internal control systems.
	•   To review the adequacy of the internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
	•   To discuss with internal auditors any significant findings and follow-up thereon.

157

	Requirements under our Listing Agreements
Standard for NYSE-Listed Companies	with the NSE and BSE
	•   To review the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and report the matter to the board.
	•   To discuss with external auditors before the audit commences, the nature and scope of the audit as well as to conduct post-audit discussions to ascertain any area of concern.
	•   To review the company’s quarterly financial statements and management policies.
	•   To examine the reasons for substantial defaults in payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.
	•   To review the functioning of whistle blower mechanism.
	•   To review the management’s discussion and analysis of financial condition and results of operation.
	•   To review the statement of significant related party transactions submitted by the management.
	•   To review the management letters/letters of internal control weaknesses issued by the statutory auditors.
	•   To review the internal audit reports relating to internal control weaknesses.
	•   To review the appointment, removal and terms of remuneration of the chief internal auditor.
The audit committee must consist of at least three members, and each member must be independent within the meaning established by the NYSE and Rule 10A-3 under the Exchange Act. The audit committee members must be financially literate or become financially literate within a reasonable period of their appointment to the audit committee. Each listed company must have disclosed whether its board of directors has identified an audit committee financial expert (as defined under applicable rules of the SEC) and if not, the reasons why the board has not done so. The audit committee must have a written charter that addresses the committee’s purpose and responsibilities.	Clause 49 of the listing agreements require that a qualified and independent audit committee should be set up, which has a minimum of three members. Two-thirds of its members should be independent directors and the chairman of the audit committee should be an independent director. The listing agreements also require that all members of the audit committee should be financially literate and at least one member should have financial management and accounting expertise. In addition to the role of the audit committee described above, the audit committee is required to have powers that include the ability to investigate any activity within their terms of reference, seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise if this is considered necessary.
At a minimum, the committee’s purpose must be to assist the board in the oversight of the integrity of the company’s financial statements, the company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence and the performance of the company’s internal audit function and independent auditors.

158

	Requirements under our Listing Agreements
Standard for NYSE-Listed Companies	with the NSE and BSE
The duties and responsibilities of the audit committee include conducting a review of the independent auditing firm’s annual report describing the firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review or peer review of the firm and any steps taken to address such issues.
The audit committee is also to assess the auditor’s independence by reviewing all relationships between the company and its auditor. It must establish the company’s hiring guidelines for employees and former employees of the independent auditor.
The committee must also discuss the company’s annual audited financial statements and quarterly financial statements with management and the independent auditors, the company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies, and policies with respect to risk assessment and risk management.
Each listed company must have an internal audit function. The committee must also meet separately, periodically, with management, with internal auditors (or other personnel responsible for the internal audit function) and with independent auditors and review with the independent auditor any audit problems or difficulties and management’s response.	The listing agreements require an Indian listed company to have an internal audit function. Clause 49 of the listing agreements also require that the audit committee should meet at least four times in a year and not more than four months should lapse between two meetings.
The committee must report regularly to the board.
(The NYSE audit committee requirements apply to us as foreign private issuers are not exempt from this requirement.)
Compensation Committee
Listed companies must have a compensation committee composed entirely of independent board members as defined by the NYSE listing standards. The committee must have a written charter that addresses its purpose and responsibilities.	The listing agreements state that a company may set up a remuneration committee, which should be comprised of at least three directors, all of whom shall be non-executive directors and the chairman of the remuneration committee shall be an independent director.
These responsibilities include (i) reviewing and approving corporate goals and objectives relevant to CEO compensation; (ii) evaluating CEO performance and compensation in light of such goals and objectives for the CEO; (iii) based on such evaluation, reviewing and approving CEO compensation levels; (iv) recommending to the board non-CEO compensation, incentive compensation plans and equity-based plans; and (v) producing a report on executive compensation as required by the SEC to be included in the company’s annual proxy statement or annual report. The committee must also conduct an annual performance self-evaluation.
(The NYSE compensation committee requirements do not apply to us as a foreign private issuer.)

159

	Requirements under our Listing Agreements
Standard for NYSE-Listed Companies	with the NSE and BSE
Nominating/Corporate Governance Committee
Listed companies must have a nominating/corporate governance committee composed entirely of independent board members. The committee must have a written charter that addresses its purpose and responsibilities, which include (i) identifying individuals qualified to become board members; (ii) selecting, or recommending that the board select, the director nominees for the next annual meeting of shareholders; (iii) developing and recommending to the board a set of corporate governance principles applicable to the company; (iv) overseeing the evaluation of the board and management; and (v) conducting an annual performance evaluation of the committee. (The NYSE nominating/corporate governance committee requirements do not apply to us as a foreign private issuer.)	There is no comparable provision under Indian law.
Equity-Compensation Plans
Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exceptions. (The NYSE requirement for shareholder approval of equity-compensation plans does not apply to us as a foreign private issuer.)	Under Section 79A of the Indian Companies Act, a company may issue equity shares of an existing class of shares to employees or directors at a discount or for consideration other than cash if such issue is authorized by a special resolution passed by the company in a general meeting. The SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, also require that a special resolution be passed by the shareholders of a company in a general meeting to approve an employee stock option or stock purchase scheme.
Corporate Governance Guidelines
Listed companies must adopt and disclose corporate governance guidelines. (The NYSE requirement that corporate governance guidelines be adopted does not apply to us as a foreign private issuer. However, we must disclose differences between the corporate governance standards to which we are subject and those of the NYSE.)	Corporate governance requirements for listed companies in India are included in Clause 49 of the listing agreements required to be entered into with the NSE and BSE.
Code of Business Conduct and Ethics
All listed companies, United States and foreign, must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. (The NYSE requirement for a code of business conduct and ethics does not apply to us as a foreign private issuer.)	Clause 49 of the listing agreements require that the board of directors shall lay down a code of conduct for all board members and senior management of a listed company. This code of conduct is required to be posted on the website of the company. Further, all board members and senior management personnel are required to affirm compliance with the code on an annual basis and the company’s annual report must contain a declaration to this effect signed by its CEO.

160

C. Material Contracts

     The following is a summary of each of our material contracts, other than contracts entered into in the ordinary course of business, to which we are a party, for the two years immediately preceding the date of this annual report.

Shared Services Agreement dated December 5, 2003 among STL, Sterlite Gold, Vedanta and Sterlite

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Consultancy Agreement dated March 29, 2005 between Vedanta and Sterlite

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Representative Office Agreement dated March 29, 2005 between Vedanta and Sterlite

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Agreement dated August 30, 2006 between STL and Sterlite for the sale of Sterlite’s aluminum conductor business

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Agreement dated October 3, 2006 between Sterlite and Twin Star Infrastructure Limited, Mr. Anil Agarwal and Mr. Dwarka Prasad Agarwal for the acquisition of Sterlite Energy

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Outstanding loans

     See “Item 5. Operating and Financial Review and Prospects — Outstanding Loans.”

Option Agreement dated February 18, 2005 between Sterlite, IFL and ICICI Bank, Novation Agreement dated November 15, 2008 between IFL, ICICI Bank Limited and Sterlite in respect of the Rs. 772.5 million term loan facility and Novation Agreement dated November 15, 2008 between IFL, ICICI Bank Limited and Sterlite in respect of the Rs. 250 million term loan facility

     On February 18, 2005, we entered into an option agreement with IFL and ICICI Bank pursuant to which, in consideration of the payment of an option fee of Rs. 2 million by ICICI Bank, we granted to ICICI Bank a put option to require us to purchase from ICICI Bank all amounts outstanding, due and payable by IFL to ICICI Bank under two term loan agreements, both dated February 8, 2005, as amended, or the Rupee Term Loan Agreements, between IFL and ICICI Bank. The option price is an amount equivalent to the amount outstanding under the Rupee Term Loan Agreements on the date of exercise of the put option. ICICI Bank is entitled to exercise the put option upon the occurrence of certain put option events, including any delay or default in the repayment of any amounts or the occurrence of an event of default under the Rupee Term Loan Agreements. In fiscal 2009, we, ICICI Bank and IFL entered into two novation agreements to take over the two term loans aggregating Rs. 1,022.5 million which was made by ICICI Bank to IFL. The option agreement has subsequently been terminated. See “Item 5. Operating and Financial Review and Prospects — Outstanding Loans.”

Corporate Guarantee dated February 8, 2005 by Sterlite to ICICI Bank on behalf of IFL

     On February 8, 2005, we granted a guarantee in favor of ICICI Bank and agreed to pay on demand all amounts payable by IFL under the Rupee Term Loan Agreement in the event of any default on the part of IFL to comply with or perform any of the terms, conditions and covenants in the Rupee Term Loan Agreement. Subsequent to our entering into the novation agreements to take over the Rs. 1,022.5 million term loan which was originally made by ICICI Bank to IFL, our guarantee to ICICI Bank was terminated.

Loan Agreement dated February 4, 2008 between Sterlite and Vedanta Aluminium

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Memoranda of Understanding dated August 29, 2007 and December 23, 2007, as amended, between Sterlite and Vedanta Aluminium

     See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Term Sheet dated May 22, 2009 between Sterlite Industries (India) Limited and Vedanta Aluminium Limited relating to the subscription of 9.75% Non-Convertible Debentures.

     See “Item 7, Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

161

Settlement and Purchase and Sale Agreement dated March 6, 2009 among Asarco, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite USA and Sterlite, and amendments thereto dated April 15, 2009, April 22, 2009, and June 12, 2009

     On March 6, 2009, we and Asarco, a US-based copper mining, smelting and refining company, signed an agreement for us to acquire substantially all of the operating assets of Asarco for $1.7 billion. On June 12, 2009, we agreed to increase the purchase consideration to $1.87 billion, mostly related to an expected increase in working capital on the closing date. The purchase consideration consists of a cash payment of $1.1 billion on closing and a senior secured non-interest bearing promissory note for $770 million, payable over a period of nine years. Previously, on May 30, 2008, we had signed an agreement to acquire substantially all of the operating assets of Asarco for $2.6 billion in cash following an auction process. Then, in October 2008, due to the financial turmoil, the steep fall in copper prices and adverse global economic conditions, we and Asarco entered into discussions to renegotiate the prior agreement. The current agreement to acquire Asarco follows a renegotiation of the prior agreement and its consummation remains contingent upon the confirmation of a Chapter 11 plan of reorganization proposed by Asarco and sponsored by our wholly owned subsidiary Sterlite USA by the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, before which Asarco has been in reorganization proceedings under Chapter 11 of the US Bankruptcy Code. If this acquisition is completed, we would acquire ownership of Asarco’s three open-pit copper mines, which had estimated reserves of 5.2 million tons of contained copper as of January 2008, associated mills, SX-EW plant and a copper smelter in the State of Arizona, United States and a copper refinery, rod plant, cake plant and precious metals plant in the State of Texas, United States. See “Item 5. Operating and Financial Review and Prospects —— Recent Developments.”

Sterlite Plan Agreement in Principle Term Sheet dated June 12, 2009 by and among Asarco, the subsidiary debtors, Sterlite USA, Robert C. Pate, in his capacity as the Future Claims Representative, and the Official Committee of Asbestos Claimants

     On June 12, 2009, Sterlite USA agreed with the representatives appointed pursuant to Asarco’s reorganization proceedings under Chapter 11 of the US Bankruptcy Code to represent the Asbestos Claimants, and Asarco to grant a put option to the Asbestos Trust pursuant to which the Asbestos Trust shall be entitled to sell to Sterlite USA its Asbestos Litigation Interest in the Brownsville Judgment, which was awarded by the US District Court for the Southern District of Texas, Brownsville Division, against Americas Mining Corporation requiring it to return to Asarco 260.09 million shares of common stock of Southern Copper Corporation, together with past dividends received with interest, with an aggregate value of over $6.0 billion. The Asbestos Litigation Interest in the Brownsville Judgment is to be distributed for the benefit of all Asbestos Claimants. The grant of put option would be subject to the approval and consummation of the reorganization plan proposed by Asarco and sponsored by Sterlite USA. The put option is exercisable by the Asbestos Trust at any time after the Effective Date through the end of the fourth year from the Effective Date at the price of $160 million less the amount of any amounts received or recovered from the Asbestos Litigation Interest prior to the exercise of the put option. See “Item 5. Operating and Financial Review and Prospects — Recent Developments.”

Sponsor Support Agreement dated June 29, 2009 among Sterlite, Sterlite Energy and the State Bank of India

     See “Item 7, Major Shareholders and Related Party Transactions —— B. Related Party Transactions —— Related Transactions.”

D. Exchange Controls

General

     The Government of India regulates ownership of Indian companies by foreigners. Foreign investment in securities issued by Indian companies is generally regulated by the FEMA, read with the rules, regulations and notifications issued under FEMA. A person resident outside India can transfer any security of an Indian company or any other security to an Indian resident only in accordance with the terms and conditions specified in FEMA and the rules, regulations and notifications made thereunder or as permitted by the RBI.

Foreign Direct Investment

     The Government of India, pursuant to its liberalization policy, set up the Foreign Investment Promotion Board, or FIPB, to regulate all foreign direct investment. Foreign direct investment, or FDI, means investment by way of subscription and/or purchase of shares or securities convertible or exchangeable into shares of an Indian company by a non resident investor. FDI in India can be either through the automatic route where no prior approval of any regulatory authority is required or through the government approval route. Over a period of time, the Government of India has relaxed the restrictions on foreign investment. Subject to certain conditions, under current regulations, FDI in most industry sectors does not require prior approval of the FIPB or the RBI if the percentage of equity holding by all foreign investors does not exceed specified industry-specific thresholds. These conditions include certain minimum pricing requirements, compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended, or the Takeover Code, and ownership restrictions based on the nature of the foreign investor. FDI is prohibited in certain sectors such as retail trading (except single brand product retailing), atomic energy, lottery business and gambling and betting. Also, certain investments require the prior approval of the FIPB, including:

• investments in excess of specified sectoral caps or investments in sectors in which FDI is not permitted or in sectors which specifically require approval of the FIPB;

• investments by any foreign investor who had on January 12, 2005, an existing joint venture or a technology transfer/trade mark agreement in the same field as the Indian company in which the FDI is proposed. However, no prior approval is required if: (a) the investor is a venture capital funds registered with SEBI or a multinational financial institution, or (b) the existing joint venture, investment by either of the parties is less than 3%, or (c) the existing joint venture or collaboration is now defunct or sick, or (d) for transfer of shares of an Indian company engaged in the information technology sector or in the mining sector for the same area or mineral;

• foreign investment of more than 24% in the equity capital of units manufacturing items reserved for small scale industries; and

• all proposals relating to the acquisition of shares of an Indian company by a foreign investor (including an individual of Indian nationality or origin residing outside India and corporations established and incorporated outside India) which are not under the automatic route.

     The Government of India recently amended the method of calculating foreign investment in an Indian company pursuant to Press Note No. 2 (2009 Series) dated February 13, 2009 and Press Note No. 4 (2009 Series) dated February 25, 2009.

162

     A person residing outside India (other than a citizen of Pakistan or Bangladesh) or any entity incorporated outside India (other than an entity incorporated in Pakistan or Bangladesh) has general permission to purchase shares, convertible debentures or preference shares of an Indian company, subject to certain terms and conditions.

     Currently, subject to certain exceptions, FDI and investment by Non-Resident Indians, or NRIs (as such term is defined in FEMA), in Indian companies do not require the prior approval of the FIPB or the RBI. The Government of India has indicated that in all cases where FDI is allowed on an automatic basis without FIPB approval, the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. The foregoing description applies only to an issuance of shares and not to a transfer of shares by Indian companies.

     Under the current regulations, in the case of mining and processing of aluminum, copper and zinc, FDI up to 100% is permitted under the automatic route.

Issue of ADSs

     The Ministry of Finance, pursuant to the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993, as amended, or the ADR Scheme, has permitted Indian companies to issue ADSs. Certain relaxations in the ADR Scheme have also been notified by the RBI. The ADR Scheme provides that an Indian company may issue ADSs to a person resident outside India through a depositary without obtaining any prior approval of the Ministry of Finance of India or the RBI, except in certain cases. An Indian company issuing ADSs must comply with certain reporting requirements specified by the RBI. An Indian company may issue ADSs if it is eligible to issue shares to persons resident outside India under the FDI scheme. However, an Indian listed company which is not eligible to raise funds from the Indian capital markets, including a company which has been restricted from accessing the securities market by the SEBI, will not be eligible to issue ADSs.

     Investors do not need to seek specific approval from the Government of India to purchase, hold or dispose of ADSs. However, overseas corporate bodies, or OCBs, as defined under applicable RBI regulations, which are not eligible to invest in India and entities prohibited to buy, sell or deal in securities by the SEBI are not eligible to subscribe to ADSs issued by Indian companies. We have obtained approval from the relevant Indian stock exchanges for listing of the equity shares underlying the ADSs.

     The proceeds of an ADS issue may not be used for investment in stock markets and real estate. There are no other end-use restrictions on the use of the proceeds of an ADS issue. Further, issue-related expenses for a public issue of ADSs shall be subject to a ceiling of 7% of the total issue size. Issue-related expenses beyond this ceiling would require the RBI approval.

Restrictions on Redemption of ADSs, Sale of the Equity Shares Underlying the ADSs and the Repatriation of Sale Proceeds

     Other than mutual funds that may purchase ADSs subject to terms and conditions specified by the RBI and employees in connection with stock options, a person resident in India is not permitted to hold ADSs of an Indian company. Under Indian law, ADSs issued by Indian companies to non-residents have free transferability outside of India. Under the ADR Scheme, a non-resident holder of the ADSs may transfer such ADSs, or request that the overseas depositary bank redeem such ADSs. In the case of a redemption, the overseas depositary bank will request the domestic custodian bank to release the corresponding underlying shares in favor of the non-resident investor or transfer in the books of account of the issuing company in the name of the non-resident. Although ADS holders are entitled to withdraw the equity shares underlying the ADSs from the depositary at any time, under current Indian law, subject to certain limited exceptions, equity shares so acquired may not be redeposited with the depositary.

     Foreign investors who withdraw their equity shares from the ADS program with the result that their direct or indirect holding in the company is equal to or exceeds 15% of the company’s total equity, may be required to make a public offer to the remaining shareholders of the company under the Takeover Code.

     Investors who seek to sell any equity shares in India withdrawn from the depositary facility and to convert the Rupee proceeds from the sale into foreign currency and repatriate the foreign currency from India will also be subject to certain exchange control restrictions on the conversion of Rupees into dollars. The Government of India has relaxed restrictions on capital account transactions by resident Indians who are now permitted to remit up to $200,000 per financial year (April-March) for any permissible capital account transaction or a combination of capital account and current account transaction other than remittances made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan or to countries identified by the Financial Action Task Force as “non co-operative countries and territories.”

163

Fungibility of ADSs

     As per the directions issued by the RBI on the two-way fungibility of ADSs, a person resident outside India is permitted to purchase, through a registered stock broker in India, shares of an Indian company for the purposes of converting the same into ADSs, subject, inter alia, to the following conditions:

• the shares of the Indian company are purchased on a recognized stock exchange in India;

• the shares of the Indian company are purchased on a recognized stock exchange with the permission of the domestic custodian for the ADSs issued by the Indian company and such shares are deposited with the custodian after purchase;

• the Indian company has authorized the custodian to accept shares from non-resident investors for re-issuance of ADSs;

• the number of shares of the Indian company so purchased does not exceed the ADSs converted into underlying shares (and is further subject to specified sectoral caps); and

• compliance with the provisions of the ADR Scheme and the guidelines issued thereunder.

Sponsored ADS Facilities

     The RBI has permitted existing shareholders of Indian companies to sell their shares through the issuance of ADSs against the block of existing shares of an Indian company, subject to the following conditions:

• the facility to sell the shares would be available pari passu to all categories of shareholders;

• the sponsoring company whose shareholders propose to divest existing shares in the overseas market through the issue of ADSs will give an option to all its shareholders indicating the number of shares to be divested and the mechanism of determining the price under the applicable ADS norms. If the shares offered for divestment are more than the pre-specified number to be divested, shares would be accepted from the existing shareholders in proportion to their existing shareholdings;

• the proposal for divestment of the shares would have to be approved by a special resolution of the Indian company;

• the proceeds of the ADS issue raised abroad shall be repatriated to India within a period of one month from the closing of the issue. However, the proceeds of the ADS offering can also be retained abroad to meet the future foreign exchange requirements of the company; and

• the issue-related expenses in relation to the public issue of ADSs under the ADR Scheme would be subject to a ceiling of 7% of the issue size, in the case of public issues, and 2% of the issue size, in the case of private placements. Issue-related expenses would include underwriting commissions and charges, legal expenses and reimbursable expenses. Issue-related expenses shall be passed on to shareholders participating in the sponsored issue on a pro-rata basis. Issue-related expenses beyond the ceiling would require the approval of the RBI.

Investment by Foreign Institutional Investors

     Pension funds, mutual funds, investment trusts, insurance or reinsurance companies, international or multinational organizations or agencies thereof, foreign governmental agencies, sovereign wealth funds or foreign central banks, endowment funds, university funds, foundation or charitable trusts or charitable societies investing on their own behalf and asset management companies, investment managers or advisors, banks or institutional portfolio managers, trustees, investing their proprietary funds or on behalf of “broad based” funds must register with SEBI as a foreign institutional investor, or FII, and obtain the approval of the RBI unless they are investing in securities of Indian companies through FDI.

164

     FIIs who are registered with SEBI are required to comply with the provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended, or the Foreign Institutional Investors Regulations. A registered FII may, subject to the pricing and ownership restrictions discussed below, buy and freely sell securities issued by any Indian company, realize capital gains on investments made through the initial amount invested in India, subscribe to or renounce rights offerings for shares, appoint a domestic custodian for custody of investments made and repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights offerings of shares.

     Subject to the terms and conditions set out in the Foreign Institutional Investor Regulations, a registered FII or its sub-account may buy or sell equity shares, debentures and warrants of unlisted, listed or to be listed Indian companies through stock exchanges in India at ruling market price and also buy or sell shares or debentures of listed or unlisted companies other than on a stock exchange in compliance with the applicable SEBI/RBI pricing norms. Under the portfolio investment scheme under Schedule 2 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 and the Foreign Institutional Investors Regulations, an FII is not permitted to hold more than 10% of the total issued capital of an Indian company in its own name; a foreign corporate or individual sub-account of the FII is not permitted to hold more than 5% of the total issued capital of an Indian company, and a broad based sub-account is not permitted to hold more than 10% of the total issued capital of an Indian company. The total holding of all FIIs together with their sub-accounts in an Indian company is subject to a cap of 24% of the total issued capital of the company, which may be increased up to the percentage of sectoral cap on FDI in respect of the said company pursuant to a resolution of the board of directors of the company and the approval of the shareholders of the company by a special resolution in a general meeting. Our board of directors and shareholders have approved an increase in the existing FII limit in our company to 49% of our total issued capital.

     Regulation 15A of the Foreign Institutional Investors Regulations provides that an FII may issue or otherwise deal in offshore derivative instruments such as participatory notes, equity linked notes or any other similar instruments against underlying securities, listed or proposed to be listed on any stock exchange in India, only in favor of those entities which are regulated by any regulatory authority in the countries of their incorporation or establishment, subject to compliance with “know your client” requirements. SEBI has clarified that certain categories of entities would be deemed to be regulated entities for purposes of Regulation 15A of the Foreign Institutional Investors Regulations. An FII is also required to ensure that no further issue or transfer of any offshore derivative instrument is made to any person other than a person regulated by an appropriate foreign regulatory authority.

     There is uncertainty under Indian law about the tax regime applicable to FIIs that hold and trade ADSs. FIIs are urged to consult with their Indian legal and tax advisors about the relationship between the FII guidelines and ADSs and any equity shares withdrawn upon surrender of ADSs.

Portfolio Investment by Non-Resident Indians

     A variety of methods for investing in shares of Indian companies are available to NRIs. Under the portfolio investment scheme, each NRI can purchase up to 5% of the paid-up share capital of an Indian company, subject to the condition that the aggregate paid-up share capital of an Indian company purchased by all NRIs through portfolio investments cannot exceed 10%. The 10% limit may be raised to 24% if a special resolution is adopted by the shareholders of the company. In addition to portfolio investments in Indian companies, NRIs may also make foreign direct investments in Indian companies under the FDI route discussed above. These methods allow NRIs to make portfolio investments in shares and other securities of Indian companies on a basis not generally available to other foreign investors.

     Overseas corporate bodies controlled by NRIs, or OCBs, were previously permitted to invest on more favorable terms under the portfolio investment scheme. The RBI no longer recognizes OCBs as an eligible class of investment vehicle under various routes and schemes under the foreign exchange regulations.

165

Transfer of Shares

     Previously the sale of shares of an Indian company from a non-resident to a resident required RBI approval, unless the sale was made on a stock exchange through a registered stockbroker at the market price. The RBI has now granted general permission to persons resident outside India to transfer shares and convertible debentures held by them to an Indian resident, subject to compliance with certain terms and conditions and reporting requirements. A resident who wishes to purchase shares from a non-resident must, pursuant to the relevant notice requirements, file a declaration with an authorized dealer in the prescribed Form FC-TRS, together with the relevant documents and file an acknowledgment thereof with the Indian company to effect transfer of the shares. However, a non-resident to whom the shares are being transferred is required to obtain the prior permission of the Government of India to acquire the shares if he had on January 12, 2005, an existing joint venture or technology transfer agreement or trademark agreement in the same field other than in the information technology field to that in which the Indian company whose shares are being transferred is engaged, except:

• investments to be made by venture capital funds registered with SEBI or a multinational financial institution;

• where the existing joint venture investment by either of the parties is less than 3%;

• where the existing venture/collaboration is defunct or sick; or

• for transfer of shares of an Indian company engaged in the information technology sector or in the mining sector for the same area or mineral.

     A non-resident may also transfer any security to a person resident in India by way of gift. The transfer of shares from an Indian resident to a non-resident does not require the prior approval of the Government of India or the RBI if the activities of the investee company are under the automatic route pursuant to the FDI Policy and are not under the financial services sector, the investor does not have an existing joint venture or technology transfer agreement or trademark agreement in the same field as described above, the non-resident shareholding is within sector limits under the FDI policy, the transaction is not under the Takeover Code and the pricing is in accordance with the guidelines prescribed by SEBI and the RBI.

     A non-resident of India is generally permitted to sell equity shares underlying the ADSs held by him to any other non-resident of India without the prior approval of the RBI. However, approval by the FIPB is required if the person acquiring the shares has a previous venture or tie up in India in the same field in which the company whose shares are being transferred is engaged. Further, the RBI has granted general permission for the transfer of shares by a person resident outside India to a person resident in India, subject to compliance with certain pricing norms and reporting requirements.

     Other than mutual funds that may purchase ADSs subject to terms and conditions specified by the RBI and employees in connection with stock options, a person resident in India is not permitted to hold ADSs of an Indian company. An ADS holder is permitted to surrender the ADSs held by him in an Indian company and to receive the underlying equity shares under the terms of the deposit agreement.

Exchange Rates

     Substantially all of our revenue is denominated or paid with reference to US dollars and most of our expenses are incurred and paid in Indian Rupees or Australian dollars. We report our financial results in Indian Rupees. The exchange rates among the Indian Rupee, the Australian dollar and the US dollar have changed substantially in recent years and may fluctuate substantially in the future. The results of our operations are affected as the Indian Rupee and the Australian dollar appreciate or depreciate against the dollar and, as a result, any such appreciation or depreciation will likely affect the market price of our ADSs in the United States.

     The following table sets forth, for the periods indicated, information concerning the exchange rates between Indian Rupees and US dollars based on the noon buying rate in New York City for cable transfers in Indian Rupees as certified by the Federal Reserve Bank of New York:

	Period End(1)		Average(1) (2)		High		Low
Fiscal Year:
2005		43.62		44.86		46.45		43.27
2006		44.48		44.17		46.26		43.05
2007		43.10		44.93		46.83		42.78
2008		40.02		40.13		43.05		38.48
2009		50.87		46.32		51.96		39.73
2010 (through June 30, 2009)		47.74		48.18		50.48		46.78
Month:
December 2008		48.58		48.51		50.05		46.74
January 2009		48.83		48.70		49.07		48.25
February 2009		50.88		49.25		50.88		48.37
March 2009		50.87		51.13		51.96		50.21
April 2009		49.70		49.97		50.48		49.55
May 2009		47.11		48.51		49.75		46.95
June 2009		47.74		47.67		48.50		46.78

Notes:
(1)	The noon buying rate at each period end and the average rate for each period may have differed from the exchange rates used in the preparation of financial statements included elsewhere in this annual report.
(2)	Represents the average of the exchange rates on the last day of each month during the period for all fiscal years presented and the average of the noon buying rate for all days during the period for all months presented.

166

     The following table sets forth, for the periods indicated, information concerning the exchange rates between the Australian dollar and US dollars based on the noon buying rate in New York City for cable transfers in Indian Rupees as certified by the Federal Reserve Bank of New York:

	Period End(1)		Average(1) (2)		High		Low
Fiscal Year:
2005		1.29		1.35		1.46		1.25
2006		1.40		1.33		1.42		1.28
2007		1.23		1.30		1.39		1.23
2008		1.10		1.15		1.27		1.06
2009		1.44		1.31		1.65		1.02
2010 (through June 30, 2009)		1.24		1.29		1.44		1.22
Month:
December 2008		1.43		1.49		1.58		1.43
January 2009		1.57		1.48		1.57		1.39
February 2009		1.56		1.54		1.58		1.46
March 2009		1.44		1.50		1.59		1.42
April 2009		1.37		1.40		1.44		1.37
May 2009		1.25		1.31		1.37		1.25
June 2009		1.24		1.25		1.27		1.22

Notes:
(1)	The noon buying rate at each period end and the average rate for each period may have differed from the exchange rates used in the preparation of financial statements included elsewhere in this annual report.
(2)	Represents the average of the exchange rates on the last day of each month during the period for all fiscal years presented and the average of the noon buying rate for all days during the period for all months presented.

     Although we have translated selected Indian Rupee and Australian dollar amounts in this annual report into US dollars for convenience, this does not mean, and no representation is made, that the Indian Rupee or Australian dollar amounts referred to represent US dollar amounts or have been, could have been or could be converted to US dollars at any particular rate, the rates stated above, or at all. Unless otherwise stated herein, all translations in this annual report from Indian Rupees to US dollars are based on the noon buying rate in New York City for cable transfers in Indian Rupees as certified by the Federal Reserve Bank of New York on March 31, 2009, which was Rs. 50.87 per $1.00, and all translations from Australian dollars to US dollars are based on the noon buying rate in New York City for cable transfers in Australian dollars as certified by the Federal Reserve Bank of New York on March 31, 2009, which was AUD 1.44 = $1.00.

E. Taxation

India Taxation

     The following is a summary of the material Indian income tax, stamp duty and estate duty consequences of the purchase, ownership and disposal of the ADSs and the equity shares underlying the ADSs for non-resident investors of the ADSs. The summary only addresses the tax consequences for non-resident investors who hold the ADSs or the equity shares underlying the ADSs as capital assets and does not address the tax consequences which may be relevant to other classes of non-resident investors, including dealers. The summary proceeds on the basis that the investor continues to remain a non-resident when the income by way of dividends and capital gains are earned. The summary is based on Indian tax laws and relevant interpretations thereof as are in force as of the date of this annual report, including the Income Tax Act and the special tax regimes under Sections 115AC and 115ACA of the Income Tax Act read with the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993, as amended, which provides for the taxation of persons resident in India on their global income and persons not resident in India on income received, accruing or arising in India or deemed to

167

have been received, accrued or arisen in India, and is subject to change. This summary is not intended to constitute a complete analysis of all the tax consequences for a non-resident investor under Indian law in relation to the acquisition, ownership and disposal of the ADSs or the equity shares underlying the ADSs and does not deal with all possible tax consequences relating to an investment in the equity shares and ADSs, such as the tax consequences under state, local and other (for example, non-Indian) tax laws. Potential investors should therefore consult their own tax advisers on the tax consequences of such acquisition, ownership and disposal of the ADSs or the equity shares underlying the ADSs under Indian law including specifically, the tax treaty between India and their country of residence and the law of the jurisdiction of their residence.

Residence

     For the purpose of the Income Tax Act, an individual is considered to be a resident of India during the fiscal year if he is in India for at least 182 days or at least 60 days in a particular year and for a period or periods aggregating at least 365 days in the preceding four years. However, the 60 day period shall be read as 182 days in the case of (i) a citizen of India who leaves India in the previous year for employment overseas, or (ii) a citizen of India or a person of Indian origin living abroad who visits India and within the four preceding years has been in India for a period or periods aggregating to 365 days or more. A company is considered to be resident in India if it is incorporated in India or the control and management of its affairs is situated wholly in India. Individuals and companies who are not residents of India are treated as non-residents.

Taxation of Sale of the ADSs

     It is unclear whether capital gains derived from the sale by a non-resident investor of rights in respect of ADSs will be subject to tax liability in India. This will depend on the view taken by Indian tax authorities on the position with respect to the situs of the rights being offered in respect of the ADSs. Under the ADR Scheme, the transfer of ADSs outside India by a non-resident holder to another non-resident does not give rise to any capital gains tax in India. However, Section 115AC of the Income Tax Act provides that income by way of long-term capital gains arising from the transfer of ADSs outside India by the non-resident holder to another non-resident is subject to tax at the rate of 10% plus applicable surcharge and education cess. In the circumstances, if at all, that capital gains arising from a transfer of ADSs are taxable under the Income Tax Act, the same would be subject to tax as long-term capital gains at the effective tax rate of 10.56% (including surcharge and education cess) if such ADSs have been held by the non-resident holder for more than three years. Otherwise, the capital gains shall be subject to tax as short-term capital gains at the normal income tax rates applicable to non-residents under the provisions of the Income Tax Act.

Withdrawal of Equity Shares in Exchange for the ADSs

     The withdrawal of equity shares in exchange for the ADSs would not give rise to any capital gains liable to income tax in India.

Taxation of Dividends

     Dividends paid to non-resident holders of ADSs are not presently subject to tax in the hands of the recipient. However, the company that is distributing the dividend is liable to pay a “dividend distribution tax” currently at an effective tax rate of 17.0% on the total amount distributed as dividend. Under Section 115 O (1A) of the Finance Act, 2008, effective April 1, 2008, an Indian company, subject to certain conditions, can set off the dividend income received from its subsidiaries against the amount of dividend income declared by it to its shareholders, therefore reducing the dividend distribution tax to the extent of such set-off.

     Any distribution of additional ADS or equity shares to resident or non-resident shareholders would not be subject to any Indian tax.

Taxation of Sale of the Equity Shares

     Sale of equity shares by any holder may occasion certain incidence of tax in India, as is discussed below. Under applicable law, an equity sale of shares may be subject to a transaction tax and/or tax on income by way of capital gains. Capital gains accruing to a non-resident investor on the sale of the equity shares, whether to an Indian resident or to a person resident outside India and whether in India or outside India, may be subject to Indian capital gains tax in certain instances as described below.

168

Sale of the Equity Shares on a Recognized Stock Exchange

     In accordance with applicable Indian tax laws, any income arising from a sale of the equity shares of an Indian company through a recognized stock exchange in India is subject to a securities transaction tax. Such tax is payable by a person irrespective of residential status and is collected by the recognized stock exchange in India on which the sale of the equity shares is effected. Capital gains realized in respect of equity shares held by the non-resident investor for more than 12 months will be treated as long-term capital gains and will not be subject to tax in the event such transaction is chargeable to the securities transaction tax.

     Capital gains realized in respect of shares held by the non-resident investor for 12 months or less will be treated as short-term capital gains and will be subject to tax at the effective tax rate of 17% (15% plus applicable surcharge and education cess) in the event such transaction is subject to the securities transaction tax. Withholding tax on capital gains on sale of shares is required to be deducted under Section 195 of the Income Tax Act at the prescribed rates.

     For the purpose of computing the capital gain tax on the sale of equity shares, the cost of acquisition of the equity shares would be deemed to be the historical cost of acquiring the ADSs. For the purpose of computing capital gains on the sale of equity shares, the sale consideration received or accruing on such sale shall be reduced by the cost of acquisition of such equity shares and any expenditure incurred wholly and exclusively in connection with such sale. Under the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Mechanism) Scheme, 1993, the purchase price of equity shares in an India listed company received in exchange for ADSs will be the market price of the underlying shares on the date that the depository gives notice to the custodian of the delivery of equity shares in exchange for such corresponding ADSs. The market price is the price of the equity shares prevailing in the BSE or the NSE as applicable. There is no corresponding provision under the Income Tax Act providing for the use of market price as the basis for determination of the purchase price of the equity shares. In the event that the tax department denies the use of market price as the basis for determination of the purchase price of the equity shares, the original purchase price of the ADSs shall be considered as the purchase price of the equity shares for computing the capital gains tax. Subsequently, there could be no tax on the gain between the original purchase price of the ADSs and the price of the equity shares on the date the ADSs are converted to equity shares.

Securities Transaction Tax

     With respect to sales and purchases of equity shares on a recognized stock exchange, both the buyer and seller are required to pay a securities transaction tax at the rate of 0.125% of the transaction value of the securities sold and purchased if the transaction involves the actual delivery of equity shares on the recognized stock exchange.

Sale of the Equity Shares otherwise than on a Recognized Stock Exchange

     Capital gains realized in respect of equity shares listed in India and held by a non-resident investor for more than 12 months will be treated as long-term capital gains and will be subject to tax at the effective rate of 11.33% (including surcharge and education cess). Capital gains realized in respect of equity shares held by the non-resident investor for 12 months or less will be treated as short-term capital gains and will be subject to tax at the normal income tax rates applicable to non-residents under the provisions of the Income Tax Act. Withholding tax on capital gains on sale of equity shares is required to be deducted under Section 195 of the Income Tax Act at the prescribed rates.

Capital Losses

     The losses arising from a transfer of a capital asset in India can only be set off against capital gains and not against any other income in accordance with the Income Tax Act. A long-term capital loss may be set off only against a long-term capital gain. To the extent the losses are not absorbed in the year of transfer, they may be carried forward for a period of eight years immediately succeeding the year for which the loss was first computed and may be set off against the capital gains assessable for such subsequent years. In order to get the benefit of set-off of the capital losses in this manner, the non-resident investor must file appropriate and timely tax returns in India.

Tax Treaties

     The above mentioned tax rates and the consequent taxation are subject to any benefits available to a non-resident investor under the provisions of any agreement for the avoidance of double taxation entered into by the Government of India with the country of tax residence of such non-resident investor.

169

Withholding Tax on Capital Gains

     Any taxable gain realized by a non-resident from the sale of ADSs and equity shares shall be subject to withholding tax at source and withheld by the buyer. However, no withholding tax is required to be withheld under Section 196D (2) of the Income Tax Act from any income accruing to a FII as defined in Section 115AD of the Income Tax Act on the transfer of securities. The FII is required to pay the tax on its own behalf.

Buy-Back of Securities

     Indian companies are not subject to tax on the buy-back of their equity shares. However, shareholders will be taxed on the resulting gains from the share buy-back. We would be required to deduct tax at source in proportion to the capital gains tax liability of our shareholders.

Stamp Duty

     Upon the issuance of the equity shares underlying the ADSs, we are required to pay a stamp duty for each equity share equal to 0.1% of the issue price. Under Indian stamp law, no stamp duty is payable on the acquisition or transfer of equity shares in book-entry form. However, a sale of equity shares by a non-resident holder will be subject to Indian stamp duty at the rate of 0.25% on the market value of equity shares on the trade date, although such duty is customarily borne by the transferee. A transfer of ADSs is not subject to Indian stamp duty.

Wealth Tax, Gift Tax and Inheritance Tax

     The holding of ADSs by non-resident investors, the holding of the equity underlying shares by the depositary in a fiduciary capacity and the transfer of the ADSs between non-resident investors and the depositary is exempt from payment of wealth tax. Further, there is no tax on gifts and inheritances which applies to the ADSs, or the equity shares underlying the ADSs.

Service Tax

     Brokerage or commission fees paid to stockbrokers in connection with the sale or purchase of equity shares are subject to an Indian service tax at the effective tax rate of 10.3% collected by the stockbroker. Further, pursuant to Section 65(101) of the Finance Act (2 of 2004) a sub-broker is also subject to this service tax.

Minimum Alternate Tax

     The Income Tax, Act imposes a MAT on companies whose taxable income is less than 30% of its book profits at a rate of 11.33% (inclusive of surcharge and cess) on its book profits. Amounts paid as MAT may be applied towards regular income taxes payable in any of the succeeding seven years subject to certain conditions. The manner of computing the MAT which can be claimed as a credit is specified in the Income Tax Act. The Finance Act, 2007, included income eligible for deductions under section 10A and 10B of the Act in the computation of book profits for the levy of MAT, and determined that MAT is payable on income which falls within the ambit of section 10A and 10B of the Act.

Fringe Benefit Tax

     The Finance Act, 2007 imposed a fringe benefit tax in respect of specified security allotted or transferred, directly or indirectly, by a company free of cost or at concessional rate to its current or former employees.

Tax Credit

     A non-resident investor may be entitled to a tax credit with respect to any withholding tax paid by us or any other person for such non-resident investor’s account in accordance with the laws of the applicable jurisdiction.

170

United States Federal Income Taxation

     The following discussion describes certain material United States federal income tax consequences to US Holders (defined below) under present law of an investment in the ADSs or equity shares. This summary applies only to investors that hold the ADSs or equity shares as capital assets and that have the US dollar as their functional currency. This discussion is based on the United States Internal Revenue Code of 1986, as amended, as in effect on the date of this annual report and on United States Treasury regulations in effect or, in some cases, proposed, as of the date of this annual report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below.

     The following discussion does not address the tax consequences to any particular investor or to persons in special tax situations such as:

• banks;

• certain financial institutions;

• insurance companies;

• broker dealers;

• United States expatriates;

• traders that elect to mark-to-market;

• tax-exempt entities;

• persons liable for the alternative minimum tax;

• persons holding an ADS or equity share as part of a straddle, hedging, conversion or integrated transaction;

• persons that actually or constructively own 10.0% or more of our voting stock;

• persons who acquired ADSs or equity shares pursuant to the exercise of any employee share option or otherwise as compensation; or

• persons holding ADSs or equity shares through partnerships or other pass-through entities.

     INVESTORS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE UNITED STATES FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF ADSs OR EQUITY SHARES.

     The discussion below of the United States federal income tax consequences to “US Holders” will apply to you if you are a beneficial owner of ADSs or equity shares and you are, for United States federal income tax purposes,

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation) organized under the laws of the United States, any State thereof or the District of Columbia;

• an estate whose income is subject to United States federal income taxation regardless of its source; or

• a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more United States persons for all substantial decisions of the trust or (2) was in existence on August 20, 1996, was treated as a domestic trust on the previous day and has a valid election in effect under the applicable United States Treasury regulations to be treated as a domestic trust.

     If you are a partner in a partnership or other entity taxable as a partnership that holds ADSs or equity shares, your tax treatment generally will depend on your status and the activities of the partnership. Partners in a partnership or other entity taxable as a partnership that holds ADSs or equity shares should consult their own tax advisors regarding the tax treatment of the ownership and disposition of ADSs or equity shares.

171

     The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit agreement and any related agreement will be complied with in accordance with their terms. If you hold ADSs, you should be treated as the holder of the underlying equity shares represented by those ADSs for United States federal income tax purposes.

     The United States Treasury has expressed concerns that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming, by US Holders of ADSs, of foreign tax credits for United States federal income tax purposes. Such actions would also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received by certain non-corporate US Holders, as described below. Accordingly, the availability of foreign tax credits or the reduced tax rate for dividends received by certain non-corporate US Holders could be affected by future actions that may be taken by the United States Treasury or parties to whom ADSs are pre-released.

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

     Subject to the PFIC rules discussed below, the gross amount of all our distributions to you with respect to the ADSs or equity shares generally will be included in your gross income as foreign source dividend income on the date of receipt by the depositary, in the case of ADSs, or by you, in the case of equity shares, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under United States federal income tax principles). To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits, it will be treated first as a tax-free return of your tax basis in your ADSs or equity shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. However, we do not intend to calculate our earnings and profits under United States federal income tax principles. Therefore, a US Holder should expect that a distribution will generally be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. The dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other United States corporations.

     With respect to non-corporate US Holders (including individual US Holders) for taxable years beginning before January 1, 2011, dividends may constitute “qualified dividend income” that is taxed at the lower applicable capital gains rate provided that (1) the ADSs or equity shares, as applicable, are readily tradable on an established securities market in the United States or we are eligible for the benefits of the United States-India income tax treaty, (2) we are not a PFIC (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Under US Internal Revenue Service authority, equity shares or ADSs representing such shares, are considered for the purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on the NYSE, as our ADSs currently are. You should consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our ADSs or equity shares.

     The amount of any distribution paid in Indian Rupees will be equal to the US dollar value of such Indian Rupees on the date such distribution is received by the depositary, in the case of ADSs, or by the US Holder, in the case of equity shares, regardless of whether the payment is in fact converted into US dollars at that time. Gain or loss, if any, realized on the sale or other disposition of such Indian Rupees will generally be United States source ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution.

     For foreign tax credit purposes, dividends distributed with respect to ADSs or equity shares will generally constitute “passive category income” but could, in the case of certain US Holders, constitute “general category income.” If the dividends are qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. A US Holder will not be able to claim a foreign tax credit for any Indian taxes imposed with respect to distributions on ADSs or equity shares (as discussed under “— India Taxation — Taxation of Dividends”). The rules relating to the determination of the foreign tax credit are complex and US Holders should consult their tax advisors to determine whether and to what extent a credit would be available in their particular circumstances.

Taxation of a Disposition of ADSs or Equity Shares

     Subject to the PFIC rules discussed below, you will recognize taxable gain or loss on any sale or other taxable disposition of an ADS or equity share equal to the difference between the amount realized for the ADS or equity share and your tax basis in the ADS or equity share. Your tax basis in the ADS or equity share will generally equal the cost of such ADS or equity share, as applicable. The gain or loss generally will be capital gain or loss. If you are a non-corporate US Holder (including an individual US Holder) who has

172

held the ADS or equity share for more than one year, the gain on a disposition of the ADS or equity share will be long-term capital gain eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize generally will be treated as United States source income or loss for foreign tax credit limitation purposes.

     Because capital gains generally will be treated as United States source gain, as a result of the United States foreign tax credit limitation, any Indian income tax imposed upon capital gains in respect of ADSs or equity shares (as discussed under “— India Taxation — Taxation of Income from ADSs,” “— India Taxation — Taxation of Sale of the Equity Shares,” “— India Taxation — Sale of the Equity Shares on a Recognized Stock Exchange,” “— India Taxation — Sale of the Equity Shares otherwise than on a Recognized Stock Exchange” and “— India Taxation — Buy-Back of Securities”) may not be currently creditable unless a US Holder has other foreign source income for the year in the appropriate United States foreign tax credit limitation basket. US Holders should consult their tax advisors regarding the application of Indian taxes to a disposition of an ADS or equity share and their ability to credit an Indian tax against their United States federal income tax liability.

Passive Foreign Investment Company

     A non-United States corporation is considered to be a PFIC for any taxable year if either:

• at least 75% of its gross income is passive income, or

• at least 50% of the total value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets, including cash, that produce or are held for the production of passive income (the “asset test”).

     For this purpose, we will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock. The total value of our assets generally will be determined by reference to the market price of our equity shares and ADSs.

     Based on the market prices of our equity shares and ADSs and the composition of our income and assets, including goodwill, we do not believe we were a PFIC for United States federal income tax purposes for our taxable year ended March 31, 2009. However, the application of the asset test is subject to ambiguity in several respects and, therefore, the US Internal Revenue Service may assert that, contrary to our belief, due to the decrease in our share value and the amount of cash and other passive assets we held during the taxable year ended March 31, 2009, we met the asset test and, as a result, were a PFIC for such taxable year. In addition, we must make a separate determination each taxable year as to whether we are a PFIC (after the close of each taxable year). A decrease in the market value of our equity shares and ADSs and/or an increase in cash or other passive assets (see “Item 5. Operating and Financial Review and Prospects — Recent Developments — Raising of Additional Capital”) would increase the relative percentage of our passive assets. Accordingly, we cannot assure you that we will not be a PFIC for the taxable year that will end on March 31, 2010 or any future taxable year.

     If we are a PFIC for any taxable year during which you hold ADSs or equity shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the ADSs or equity shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the ADSs or equity shares will be treated as an excess distribution. Under these special tax rules:

• the excess distribution or gain will be allocated ratably over your holding period for the ADSs or equity shares;

• the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income; and

• the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

     The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ADSs or equity shares cannot be treated as capital, even if you hold the ADSs or equity shares as capital assets.

     If we are a PFIC for any year during which you hold ADSs or equity shares, we generally will continue to be treated as a PFIC for all succeeding years during which you hold ADSs or equity shares. However, if we cease to be a PFIC, you may avoid some of the adverse effects of the PFIC regime by making a deemed sale election with respect to the ADSs or equity shares, as applicable. We do not intend to prepare or provide the information that would enable you to make a qualified electing fund election.

173

     If we are a PFIC, to the extent any of our subsidiaries are also PFICs, you will be deemed to own a pro rata portion of the shares of such subsidiary PFICs and be subject to the PFIC rules discussed above with respect to our PFIC subsidiaries.

     A US Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election with respect to such stock to elect out of the tax treatment discussed above. If you make a valid mark-to-market election for the ADSs or equity shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the ADSs or equity shares as of the close of your taxable year over your adjusted basis in such ADSs or equity shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the ADSs or equity shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the ADSs or equity shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ADSs or equity shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the ADSs or equity shares, as well as to any loss realized on the actual sale or disposition of the ADSs or equity shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such ADSs or equity shares. Your basis in the ADSs or equity shares will be adjusted to reflect any such income or loss amounts. If you make such an election, the tax rules that apply to distributions by corporations that are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate with respect to qualified dividend income (discussed above) would not apply.

     The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market, as defined in the applicable United States Treasury regulations. The NYSE is a qualified exchange. Our ADSs are listed on the NYSE and, consequently, if you are a holder of ADSs and the ADSs are regularly traded, the mark-to-market election would be available to you if we become a PFIC. However, such mark-to-market election would not be available with respect to any shares of our PFIC subsidiaries that you may be deemed to own.

     If you hold ADSs or equity shares in any year in which we are a PFIC, you will be required to file Internal Revenue Service Form 8621 regarding distributions received on the ADSs or equity shares and any gain realized on the disposition of the ADSs or equity shares. You are urged to consult your tax advisor regarding the application of the PFIC rules to your investment in ADSs or equity shares.

Information Reporting and Backup Withholding

     Dividend payments with respect to ADSs or equity shares and proceeds from the sale, exchange, redemption or other disposition of ADSs or equity shares made within the United States or through certain United States-related financial intermediaries may be subject to information reporting to the US Internal Revenue Service and possible United States backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a US Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. US Holders who are required to establish their exempt status generally must provide such certification on Internal Revenue Service Form W-9. US Holders should consult their tax advisors regarding the application of the United States information reporting and backup withholding rules.

     Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your United States federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the US Internal Revenue Service and furnishing any required information.

F. Dividends and Paying Agents

     Not applicable

G. Statements by Experts

     Not applicable

174

H. Documents on Display

     Publicly filed documents concerning our company which are referred to in this annual report may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of these materials can also be obtained from the Public Reference Room at the SEC’s principal office, 100 F Street, N.E., Washington D.C. 20549, after payment of fees at prescribed rates.

     The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that make electronic filings through its Electronic Data Gathering, Analysis, and Retrieval, or EDGAR, system. We have made all our filings with the SEC using the EDGAR system.

I. Subsidiary Information

     Not applicable

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Qualitative Analysis

Currency Risk

     The results of our operations may be affected by fluctuations in the exchange rates between the Indian Rupee and Australian dollar against the US dollar. This table illustrates the effect of a 10% movement in exchange rates between these currencies on our operating income for fiscal 2009.

10% movement in currency	For Rs./ $				For AUD/ $
			(in millions)
Copper	Rs.	598.8	$	13.0	Rs.	610.8	$	13.3
Zinc		3,475.9		75.7		—		—
Aluminum		3,333.8		72.6		—		—
Total	Rs.	7,408.6	$	161.3	Rs.	610.8	$	13.3

     We use hedging instruments to manage the currency risk associated with the fluctuations in the Indian Rupee and Australian dollar against the US dollar in line with our risk management policy. Typically, all exposures for maturity of less than two years are managed using simple instruments such as forward contracts. As long-term exposures draw nearer, we hedge them progressively to insulate these from the fluctuations in the currency markets. In our Australian operations, apart from funds to meet local expenses which are denominated in Australian dollars, we strive to retain our surplus funds in US dollar terms. These exposures are reviewed by appropriate levels of management on a monthly basis.

     Hedging activities in India are governed by the RBI with whose policies we must comply. The policies under which the RBI regulates these hedging activities can change from time to time and these policies affect the effectiveness with which we manage currency risk.

     We have in the past held or issued instruments such as options, swaps and other derivative instruments for purposes of mitigating our exposure to currency risk. We do not enter into hedging instruments for speculative purposes.

Interest Rate Risk

     Our short-term debt is principally denominated in Indian Rupees with fixed rates of interest. Typically, our foreign currency debt has floating rates of interest linked to US dollar LIBOR. The costs of floating rate borrowings may be affected by the fluctuations in the interest rates. We have selectively used interest rate swaps, options and other derivative instruments to manage our exposure to interest rate movements. These exposures are reviewed by appropriate levels of management on a monthly basis.

     Borrowing and interest rate hedging activities in India are governed by the RBI and we have to comply with its regulations. The policies under which the RBI regulates these borrowing and interest rate hedging activities can change from time to time and can impact the effectiveness with which we manage our interest rate risk.

     We have in the past held or issued instruments such as swaps, options and other derivative instruments for purposes of mitigating our exposure to interest rate risk. We do not enter into hedging instruments for speculative purposes. This table illustrates the impact of a 0.5% to 2.0% movement in interest rates on interest payable on loans for fiscal 2009.

	US Dollar
Movement in interest rates	Interest Rates
	(in millions)
0.5%	Rs.	259.1	$	5.1
1.0%		518.2		10.2
2.0%		1,036.3		20.4

175

Commodity Price Risk

     We use commodity hedging instruments such as forwards, swaps, options and other derivative instruments to manage our commodity price risk in our copper and zinc businesses. Currently, we use commodity forward contracts to partially hedge against changes in the LME prices of copper and zinc. We enter into these hedging instruments for the purpose of reducing the variability of our cash flows on account of volatility in commodity prices. These hedging instruments are typically of a maturity of less than one year and almost always less than two years.

     Hedging activities in India are governed by the RBI and we have to comply with its regulations. The policies under which the RBI regulates these hedging activities can change from time to time and can impact on the effectiveness with which we manage commodity price risk.

     We have in the past held or issued derivative instruments such forwards, options and other derivative instruments for purposes of mitigating our exposure to commodity price risk. We do not enter into hedging instruments for speculative purposes.

     This table illustrates the impact of a $100 movement in LME prices based on fiscal 2009 volumes, costs and exchange rates and provides the estimated impact on operating income assuming all other variables remain constant.

$100 movement in LME price	Change in Operating Income
	(in millions)
Copper	Rs.	140.3	$	3.1
Zinc		2,661.1		58.0
Aluminum		1,703.5		37.1
Total	Rs.	4,504.9	$	98.2

Quantitative Analysis

     The fair value of our open derivative positions (excluding normal purchase and sale contracts), recorded within other current assets and current financial liabilities is as follows:

	March 31,
	2008				2009				2009
	Asset		Liability		Asset		Liability		Asset		Liability
					(in millions)
Cash flow hedges:
Commodity contracts	Rs.	—	Rs.	19	Rs.	—	Rs.	—	$	—	$	—
Forward foreign currency contracts		18		307		1,189		501		23.4		9.8
Fair value hedges:
Commodity contracts		—		30		—		10		—		0.2
Forward foreign currency contracts		183		283		323		—		6.3		—
Non-qualifying hedges:
Commodity contracts		1,426		—		26		2,128		0.5		41.9
Fair value	Rs.	1,627	Rs.	639	Rs.	1,538	Rs.	2,639	$	30.2	$	51.9

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     Not applicable

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     None

176

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

     On June 20, 2007, we completed the ADS offering on the NYSE. We sold an aggregate of 150,000,000 ADSs (including 11,500,000 ADSs in the Japanese Public Offering) representing 150,000,000 equity shares. The price per ADS was $13.44. The managing underwriters of the ADS offering were Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. International plc and Citigroup Global Markets Inc., Nomura Singapore Limited, or Nomura, was the underwriter for the Japanese Public Offering.

     The registration statement on Form F-1 (File No. 333-138739) filed by us in connection with the ADS offering was declared effective on June 18, 2007. An aggregate of 150,000,000 equity shares, each represented by ADSs, were registered and sold pursuant to the registration statement. The aggregate price of the offering amount registered and sold was $2,016.0 million.

     The net proceeds from the offering to us, after deducting underwriting discounts and commissions and offering expenses, amounted to $1,979.0 million. As of March 31, 2009, we have used approximately $899.5 million towards capital expenditures. We may use the remaining net proceeds towards general corporate purposes, capital expenditures, working capital, reduction of debt, and the acquisition of the Government of India’s remaining 29.5% ownership interest in HZL.

ITEM 15. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

     As required by Rules 13a-15 and 15d-15 under the Exchange Act, management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding our required disclosure.

     Based on the foregoing, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of March 31, 2009, our disclosure controls and procedures were effective.

(b) Management’s Annual Report on Internal Control over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

     Internal controls over financial reporting refers to a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles in the United States.

     Our internal control over financial reporting includes those policies and procedures that, (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on financial statements.

     Our management assessed the effectiveness of internal control over financial reporting as of March 31, 2009 based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of March 31, 2009, our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The scope of our management’s assessment of the effectiveness of internal control over financial reporting includes all of the Company’s consolidated operations.

     Our management recognizes that there are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and the circumvention or override of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation, and may not prevent or detect all misstatements and can only provide reasonable assurance with respect to the preparation and presentation of our financial statements.

     The effectiveness of our internal control over financial reporting as of March 31, 2009 has been audited by Deloitte Haskins & Sells, or Deloitte, our independent registered public accounting firm, as stated in their report which is reproduced in its entirety in Item 15(c) below:

177

(c) Attestation Report of the Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Sterlite Industries (India) Limited
Mumbai, Maharashtra, India

     We have audited the internal control over financial reporting of Sterlite Industries (India) Limited and subsidiaries (the “Company”) as of March 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Item 15 under Controls and Procedures of the accompanying Form 20-F titled Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

     A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended March 31, 2009 of the Company and our report dated July 10, 2009 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE HASKINS & SELLS

DELOITTE HASKINS & SELLS

Mumbai, Maharashtra, India
July 10, 2009

(d) Changes in Internal Control over Financial Reporting

     Management has evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, whether any changes in our internal control over financial reporting that occurred during our last fiscal year have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, management has concluded that no such changes have occurred.

178

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     Our audit committee members are Mr. Gautam Bhailal Doshi (Chairman), Mr. Berjis Minoo Desai and Mr. Sandeep H. Junnarkar. Each of Messrs. Desai, Doshi and Junnarkar satisfies the “independence” requirements pursuant to the rules of the SEC and Rule 10A-3 of the Exchange Act. See “Item 6. Directors, Senior Management and Employees — C. Board Practices” for the experience and qualifications of the members of the audit committee. Our board of directors has determined that Mr. Gautam Doshi qualifies as an “audit committee financial expert” within the requirements of the rules promulgated by the SEC relating to listed-company audit committees.

ITEM 16B. CODE OF ETHICS

     We have adopted a written Code of Business Conduct and Ethics that is applicable to all of our directors, executive officers and employees. We have posted the code on our website at www.sterlite-industries.com. Information contained in our website does not constitute a part of this annual report. We will also make available a copy of the Code of Business Conduct and Ethics to any person, without charge, if a written request is made to us at our registered office at SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin, State of Tamil Nadu 628 002, India.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Our financial statements prepared in accordance with US GAAP are audited by Deloitte Haskins & Sells, a firm registered with the Public Company Accounting Oversight Board in the United States and an Indian firm of Chartered Accountants registered with the Institute of Chartered Accountants of India.

     Deloitte Haskins & Sells has served as our independent registered public accountant for each of the years ended March 31, 2008 and March 31, 2009 for which audited statements appear in this annual report.

     The following table shows the aggregate fees for professional services and other services rendered by Deloitte Haskins & Sells and the various member firms of Deloitte to us, including some of our subsidiaries, in fiscal 2008 and 2009.

	Fiscal
	2008		2009
	(in thousands)
Audit fees (audit and review of financial statements)	$	1,171.4	$	1,040.7
Audit-related fees (including fees related to the ADS offering and other miscellaneous audit related certifications)		638.5		1.8
Tax fees (tax audit, other certifications and tax advisory services)		91.4		29.1
All other fees (certification on corporate governance and advisory services)		21.8		78.2
Total	$	1,923.1	$	1,149.8

Audit Committee Pre-approval Process

     Our audit committee reviews and pre-approves the scope and the cost of audit services related to us and permissible non-audit services performed by the independent auditors, other than those for de minimus services which are approved by the audit committee prior to the completion of the audit. All of the services provided by Deloitte Haskins & Sells during the last fiscal year have been approved by the audit committee.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     Not applicable

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

     The following table shows all repurchases of the equity shares of SIIL made by SIIL and any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) of the Exchange Act), and the average price paid per share, in fiscal 2009:

										Maximum Number (or
								Total Number of		Approximate Dollar
								Shares Purchased as		Value) of Shares
				Average Price Paid per				Part of Publicly		that May Yet Be
	Total Number of Shares			Share				Announced Plans or		Purchased Under the
	Purchased			Rs.		$		Programs High		Plans or Programs
Period:
December 1, 2008 to December 31, 2008		2,525,443	(1)	Rs.	246.04	$	4.84		—	Not applicable
January 1, 2009 to January 31, 2009		1,425,000	(1)		307.03		6.04		—	Not applicable
Total		3,950,443	(1)	Rs.	268.04	$	5.27		—	Not applicable

Note:
(1)	Open market purchases of SIIL’s equity shares by MALCO. Of the 3,950,443 equity shares purchased by MALCO, 3,246,124 were subsequently sold by MALCO to Twin Star in February 2009.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

     Not applicable

179

ITEM 16G. CORPORATE GOVERNANCE

     As our ADSs are listed on the NYSE, we are subject to the NYSE listing standards. The NYSE listing standards applicable to us, as a foreign private issuer, are considerably different from those applicable to US companies. Under the NYSE rules, we need only (i) establish an independent audit committee; (ii) provide prompt certification by our chief executive officer of any material non-compliance with any corporate governance rules of the NYSE; (iii) provide periodic (annual and interim) written affirmations to the NYSE with respect to our corporate governance practices; and (iv) provide a brief description of significant differences between our corporate governance practices and those followed by US companies. Our audit committee consists of three directors: Mr. Gautam Bhailal Doshi (Chairman), Mr. Berjis Minoo Desai and Mr. Sandeep H. Junnarkar. Each of Messrs. Desai, Doshi and Junnarkar satisfies the “independence” requirements of Rule 10A-3 of the Exchange Act. A brief description of significant differences between our corporate governance practices and those followed by US companies can be found in “Item 10. Additional Information — B. Memorandum and Articles of Association — Comparison of Corporate Governance Standards.”

     As a foreign private issuer, we are exempt from the NYSE rules applicable to a US company requiring (i) a board of directors consisting of a majority of independent directors, (ii) a compensation committee and a nominating/corporate governance committee, (iii) shareholder approval of equity-compensation plans, (iv) the adoption and disclosure of corporate governance guidelines, and (v) the adoption and disclosure of a code of business conduct and ethics for directors, officer and employees, and the prompt disclosure of any waivers thereof for directors or executive officers.

     In addition, we are deemed to be a “controlled company” under the NYSE rules. As a result, we are exempt from the NYSE rules applicable to a US company that is not a “controlled company” requiring (i) a board of directors consisting of a majority of independent directors and (ii) a compensation committee and a nominating/corporate governance committee.

PART III

ITEM 17. FINANCIAL STATEMENTS

     See Item 18 for a list of the financial statements filed as part of this annual report.

ITEM 18. FINANCIAL STATEMENTS

     The following financial statements are filed as part of this annual report, together with the report of the independent registered public accounting firms:

• Report of Independent Registered Public Accounting Firm.

• Consolidated Statements of Operations for the years ended March 31, 2007, 2008 and 2009.

• Consolidated Balance Sheets as of March 31, 2008 and 2009.

• Consolidated Statements of Cash Flows for the years ended March 31, 2007, 2008 and 2009.

• Consolidated Statements of Changes in Shareholders’ Equity for the years ended March 31, 2007, 2008 and 2009.

• Notes to the Consolidated Financial Statements.

• Schedule II — Valuation and Qualifying Accounts.

ITEM 19. EXHIBITS

     The following exhibits are filed as part of this annual report:

1.1	Certificate of Incorporation of Sterlite Industries (India) Limited, as amended — incorporated by reference to Exhibit 3.1 of Amendment No. 5 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on June 4, 2007.
1.2	Memorandum of Association of Sterlite Industries (India) Limited, as amended — incorporated by reference to Exhibit 1.2 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
1.3	Articles of Association of Sterlite Industries (India) Limited, as amended — incorporated by reference to Exhibit 3.3 of Amendment No. 2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on February 8, 2007.
2.1	Form of Deposit Agreement among Sterlite Industries (India) Limited, Citibank, N.A., as Depositary, and owners and holders from time to time of American Depositary Shares evidenced by American Depositary Receipts issued thereunder amended (including the Form of ADR) — incorporated by reference to Exhibit (a) of Amendment No. 2 to the Registration Statement on Form F-6 (File No. 333-139102), as filed with the SEC on June 15, 2007.
2.2	Specimen share certificate (effective as of November 30, 2006) — incorporated by reference to Exhibit 4.3 to the Registration Statement on Form 8-A (File No. 001-33175) as filed with the SEC on November 30, 2006.
4.1	Vedanta Resources plc Long-Term Incentive Plan — incorporated by reference to Exhibit 10.1 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.2	Relationship Agreement dated December 5, 2003 among Vedanta Resources plc, Volcan Investments Limited, Dwarka Prasad Agarwal, Agnivesh Agarwal and Anil Agarwal — incorporated by reference to Exhibit 10.2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.

180

4.3	Deed of Adherence dated December 11, 2007 among Vedanta Resources plc, Volcan Investments Limited, Onclave PTC Limited and Anil Agarwal — incorporated by reference to Exhibit 4.3 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.4	Shared Services Agreement dated December 5, 2003 among Vedanta Resources plc, Sterlite Optical Technologies Limited, Sterlite Gold Limited and Sterlite Industries (India) Limited, including the letter agreement dated April 13, 2006 amending the Shared Services Agreement — incorporated by reference to Exhibit 10.3 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.5	Consultancy Agreement dated March 29, 2005 between Vedanta Resources plc and Sterlite Industries (India) Limited — incorporated by reference to Exhibit 10.4 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.6	Representative Office Agreement dated March 29, 2005 between Vedanta Resources plc and Sterlite Industries (India) Limited — incorporated by reference to Exhibit 10.5 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.7	Shareholders’ Agreement between the President of India and Sterlite Opportunities and Ventures Limited dated April 4, 2002 — incorporated by reference to Exhibit 10.6 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.8	Shareholders’ Agreement between Sterlite Industries (India) Limited, Government of India and Bharat Aluminium Company Limited dated March 2, 2001 — incorporated by reference to Exhibit 10.7 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.9	Guarantee Agreement between the President of India, Sterlite Industries (India) Limited, Sterlite Optical Technologies Limited and Sterlite Opportunities and Ventures Limited dated April 4, 2002 — incorporated by reference to Exhibit 10.8 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.10	Agreement between Vedanta Aluminium Limited and Orissa Mining Corporation Limited dated October 5, 2004 — incorporated by reference to Exhibit 10.9 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.11	Mining lease between the Government of Rajasthan and Hindustan Zinc Limited dated March 13, 1980 renewed on September 15, 2000 pursuant to an order of the Government of Rajasthan dated May 1, 2000 and an indenture dated September 15, 2000 — incorporated by reference to Exhibit 10.10 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.12	$92.6 million Term Facility Agreement between Sterlite Industries (India) Limited as borrower and CALYON, Standard Chartered Bank and ICICI Bank Limited as lenders dated March 22, 2006 — incorporated by reference to Exhibit 10.11 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.13	Japanese Yen 3,570 million and $19.65 million Term Loan Facilities Agreement between Sterlite Industries (India) Limited as borrower and ICICI Bank Limited, Sumitomo Mitsui Banking Corporation and DBS Bank Ltd as lenders dated September 19, 2005 — incorporated by reference to Exhibit 10.12 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.14	$125 million Term Facility Agreement between Hindustan Zinc Limited as borrower and ABN AMRO Bank N.V., CALYON, Standard Chartered Bank, DBS Bank Ltd, Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Sumitomo Trust and Banking Co., Ltd., Cathay United Bank, Hua Nan Commercial Bank, National Bank of Kuwait S.A.K., Bank of Taiwan, The Export-Import Bank of the Republic of China, Chang Hwa Commercial Bank Ltd., Chiao Tung Bank Co., Ltd., The International Commercial Bank of China, Co. Ltd., Mascareignes International Bank Ltd., Syndicate Bank, Canara Bank and The Shanghai Commercial and Savings Bank, Ltd. as lenders dated July 29, 2005 — incorporated by reference to Exhibit 10.13 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.

181

4.15	Rs. 7,000 million Rupee Term Facility Agreement between Bharat Aluminium Company Limited as the borrower and Union Bank of India, Export Import Bank of India, Uco Bank, State Bank of Travancore, State Bank of Saurashtra, State Bank of Hyderabad, State Bank of Patiala and State Bank of Indore as lenders dated August 18, 2004 — incorporated by reference to Exhibit 10.14 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.16	$50 million Facility Agreement between Bharat Aluminium Company Limited as borrower and ICICI Bank Limited, Singapore Branch, ICICI Bank Limited, Bahrain Branch and ICICI Bank Limited, Offshore Banking Unit as lenders dated November 8, 2004 — incorporated by reference to Exhibit 10.15 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.17	$50 million Facility Agreement between Bharat Aluminium Company Limited as borrower and ICICI Bank Limited, ICICI Bank Limited, Bahrain Branch and ICICI Bank Limited, Offshore Banking Unit as lenders dated November 10, 2004 — incorporated by reference to Exhibit 10.16 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.18	Rs. 10,000 million Facility Agreement between Bharat Aluminium Company Limited as borrower and Oriental Bank of Commerce, Syndicate Bank, The Jammu & Kashmir Bank Limited, Corporation Bank, Housing Development Finance Corporation Limited, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, The Federal Bank Limited, The Karnataka Bank Limited, The Karur Vysya Bank Limited, UCO Bank, Vijaya Bank, ABN AMRO Bank N.V., The Laxmi Vilas Bank Limited as lenders dated September 16, 2003 — incorporated by reference to Exhibit 10.17 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.19	Subscription Agreement between Sterlite Industries (India) Limited and the Life Insurance Corporation of India dated April 9, 2003 — incorporated by reference to Exhibit 10.18 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.20.	Option Agreement between Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited dated February 18, 2005 — incorporated by reference to Exhibit 10.19 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.21	Corporate Guarantee by Sterlite Industries (India) Limited to ICICI Bank Limited on behalf of India Foils Limited dated February 8, 2005 — incorporated by reference to Exhibit 10.20 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.22	Corporate Guarantee by Sterlite Industries (India) Limited to ICICI Bank Limited on behalf of Vedanta Aluminium Limited dated December 4, 2004 — incorporated by reference to Exhibit 10.21 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.23	Frame Contract between Sterlite Industries (India) Limited and the Copper Mines of Tasmania Pty Ltd dated July 1, 2004, as amended on July 1, 2004 — incorporated by reference to Exhibit 10.22 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.24	Copper Concentrate Purchase Contract between Sterlite Industries (India) Limited and the Copper Mines of Tasmania Pty Ltd dated July 1, 2005 — incorporated by reference to Exhibit 10.23 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.25	Agreement for Sale and Purchase of the Power Transmission Line Division between Sterlite Industries (India) Limited and Sterlite Optical Technologies Limited dated August 30, 2006 — incorporated by reference to Exhibit 10.24 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.26	Agreement between Sterlite Industries (India) Limited and Navin Agarwal dated October 8, 2003 — incorporated by reference to Exhibit 10.25 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.

182

4.27	Agreement between Sterlite Industries (India) Limited and Kuldip Kumar Kaura dated September 12, 2006 — incorporated by reference to Exhibit 10.26 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 15, 2006.
4.28	Letter issued by Sterlite Industries (India) Limited to Kuldip Kumar Kaura dated March 27, 2008 — incorporated by reference to Exhibit 4.28 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.29	Share Purchase Agreement between Sterlite Industries (India) Limited and Anil Agarwal dated October 3, 2006 relating to the sale of Sterlite Energy Limited — incorporated by reference to Exhibit 10.29 of Amendment No. 1 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 22, 2006.
4.30	Share Purchase Agreement between Sterlite Industries (India) Limited and Dwarka Prasad Agarwal dated October 3, 2006 relating to the sale of Sterlite Energy Limited — incorporated by reference to Exhibit 10.30 of Amendment No. 1 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 22, 2006.
4.31	Share Purchase Agreement between Sterlite Industries (India) Limited and Twin Star Infrastructure Limited dated October 3, 2006 relating to the sale of Sterlite Energy Limited — incorporated by reference to Exhibit 10.31 of Amendment No. 1 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on November 22, 2006.
4.32	Specialty Deed between Copper Mines of Tasmania Pty Ltd, Mt Lyell Mining Company Limited, Citibank Limited and Citibank, N.A. dated April 1, 1999 — incorporated by reference to Exhibit 10.36 of Amendment No. 2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on February 8, 2007.
4.33	Subordination Deed Poll between Monte Cello Corporation N.V., Citibank Limited and Citibank, N.A. dated April 1, 1999 — incorporated by reference to Exhibit 10.37 of Amendment No. 2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on February 8, 2007.
4.34	Deed of Assignment of Debt between Monte Cello Corporation N.V. and Mt Lyell Mining Company Limited dated April 1, 1999 — incorporated by reference to Exhibit 10.38 of Amendment No. 2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on February 8, 2007.
4.35	Deed of Assignment of Debt between Monte Cello Corporation N.V., Citibank Limited and Citibank, N.A. dated April 1, 1999 — incorporated by reference to Exhibit 10.39 of Amendment No. 2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the SEC on February 8, 2007.
4.36	Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated August 29, 2007 relating to the subscription of the Zero Percent Optionally Fully Convertible Debentures — incorporated by reference to Exhibit 4.38 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.37	Addendum dated March 17, 2008 to the Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated August 29, 2007 relating to the subscription of the Zero Percent Optionally Fully Convertible Debentures — incorporated by reference to Exhibit 4.39 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.38	Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated December 23, 2007 relating to the subscription of the Zero Percent Optionally Fully Convertible Debentures — incorporated by reference to Exhibit 4.40 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.39	Addendum dated March 17, 2008 to the Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated December 23, 2007 relating to the subscription of the Zero Percent Optionally Fully Convertible Debentures — incorporated by reference to Exhibit 4.41 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.40	Purchase and Sale Agreement dated May 30, 2008 among Asarco LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA), Inc. and Sterlite Industries (India) Limited — incorporated by reference to Exhibit 4.42 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.

183

4.41	Rs. 10,000 million Loan Agreement between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated February 4, 2008 — incorporated by reference to Exhibit 4.43 of the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.
4.42**	Settlement and Purchase and Sale Agreement dated March 6, 2009 among Asarco LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA), Inc. and Sterlite Industries (India) Limited.
4.43**	Amendment No. 1 dated April 15, 2009 to the Settlement and Sale and Purchase Agreement dated March 6, 2009 among Asarco LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA), Inc., and Sterlite Industries (India) Limited.
4.44**	Amendment No. 2 effective as of April 22, 2009 to the Settlement and Sale and Purchase Agreement dated March 6, 2009, as amended on April 15, 2009, among Asarco LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA), Inc., and Sterlite Industries (India) Limited.
4.45**	Amendment No. 3 effective as of June 12, 2009 to the Settlement and Sale and Purchase Agreement dated March 6, 2009, as amended on April 15, 2009 and April 22, 2009, among Asarco LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA), Inc., and Sterlite Industries (India) Limited.
4.46**	Sterlite Plan Agreement in Principle Term Sheet dated June 12, 2009 among Asarco LLC, the subsidiary debtors, Sterlite (USA), Inc., Robert C. Pate, in his capacity as the Future Claims Representative, and the Official Committee of Asbestos Claimants.
4.47**	Credit Agreement Letter dated February 7, 2005 between India Foils Limited and ICICI Bank Limited.
4.48**	Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited in respect of Rs. 772.5 million term loan facility.
4.49**	Credit Agreement Letter dated August 4, 2005 between India Foils Limited and ICICI Bank Limited.
4.50**	Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited in respect of the Rs. 250 million term loan facility.
4.51**	Rs. 55,690 million Common Rupee Loan Agreement dated June 29, 2009 among Sterlite Energy Limited, the State Bank of India as facility agent and issuing bank, IDBI Trusteeship Services Limited as security trustee and the lenders named therein.
4.52**	$140 million Term Loan Facility Agreement dated June 29, 2009 among Sterlite Energy Limited, India Infrastructure Finance (UK) Company Limited as lender, and the State Bank of India as facility agent.
4.53**	Sponsor Support Agreement dated June 29, 2009 among Sterlite Industries (India) Limited, Sterlite Energy Limited, and the State Bank of India as facility agent.
4.54**	Term Sheet dated May 22, 2009 between Sterlite Industries (India) Limited and Vedanta Aluminium Limited relating to the subscription of 9.75% Non-Convertible Debentures.
4.55**	Agreement dated February 18, 2009 between the Orissa Mining Corporation Limited and Sterlite Industries (India) Limited.
8.1**	List of subsidiaries of Sterlite Industries (India) Limited.
12.1**	Certification by the Chief Executive Officer pursuant to 17 CFR 240. 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2**	Certification by the Chief Financial Officer pursuant to 17 CFR 240. 15D-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1**	Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2**	Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Filed herewith

184

SIGNATURES

     The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Date: July 10, 2009

STERLITE INDUSTRIES (INDIA) LIMITED
By:	/s/ Vinod Bhandawat
	Name:	Vinod Bhandawat
	Title:	Chief Financial Officer

185

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations for the years ended March 31, 2007, 2008 and 2009	F-3
Consolidated Balance Sheets as of March 31, 2008 and 2009	F-4
Consolidated Statements of Cash Flows for the years ended March 31, 2007, 2008 and 2009	F-5
Consolidated Statements of Changes in Shareholders’ Equity for the years ended March 31, 2007, 2008 and 2009	F-6
Notes to the Consolidated Financial Statements	F-8
Schedule II — Valuation and Qualifying Accounts	F-47

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Sterlite Industries (India) Limited
Mumbai, Maharashtra, India

     We have audited the accompanying consolidated balance sheets of Sterlite Industries (India) Limited and subsidiaries (the “Company”) as of March 31, 2009 and 2008, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the three years in the period ended March 31, 2009, all expressed in Indian Rupees. Our audits also included the financial statement schedule included as Schedule II. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Sterlite Industries (India) Limited and subsidiaries as of March 31, 2009 and 2008, and the result of their operations and their cash flows for each of the three years in the period ended March 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 10, 2009, expressed an unqualified opinion on the Company’s internal control over financial reporting.

     Our audit for the year ended and as of March 31, 2009, also comprehended the translation of the Indian Rupees amounts into United Stated dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2. The translation of the consolidated financial statement amounts into United States dollars have been made solely for the convenience of the readers.

/s/ Deloitte Haskins & Sells

Deloitte Haskins & Sells

Mumbai, Maharashtra, India
July 10, 2009

F-2

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Indian Rupees in millions except share or per share amounts unless otherwise stated)

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

The accompanying notes are an integral part of these consolidated financial statements.

F-3

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Indian Rupees in millions except share or per share amounts unless otherwise stated)

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

The accompanying notes are an integral part of these consolidated financial statements.

F-4

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Indian Rupees in millions except share or per share amounts unless otherwise stated)

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

F-5

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Indian Rupees in millions except share or per share amounts unless otherwise stated)

											Accumulated
	Equity shares										other						Total
	No. of		Par		Additional			Retained			comprehensive			Comprehensive			shareholders’
	shares		value		paid-in-capital			earnings			income/(loss)			income/(loss)			equity
Balance at April 1, 2006		558,494,411		559		26,883			26,575			(519	)					53,498
Stock split from Rs. 5 par value to Rs. 2 par value resulting in additional issuance of 2.5 shares per share held (111,738,469 shares to 279,346,173 shares)
Stock Split effected in the form of dividend				558		(558	)
Net income									47,432						47,432			47,432
Dividend (including dividend tax) (Note 18)									(3,544	)								(3,544	)
Unrealized gain on available-for-sale securities, net of tax of Rs. 24 million												48			48			48
Loss on sale of conductor division						(105	)											(105	)
Foreign currency translation adjustment												13			13			13
Unrealized loss on cash flow hedges, net of tax benefit of Rs. 98 million												(382	)		(382	)		(382	)
Comprehensive income															47,111
Balance at March 31, 2007		558,494,411		1,117		26,220			70,463			(840	)					96,960
Balance at April 1, 2007		558,494,411		1,117		26,220			70,463			(840	)					96,960
Adoption of FIN 48									535									535
Share issued		150,000,000		300		80,206												80,506
Net income									42,600						42,600			42,600
Unrealized loss on available-for-sale securities, net of tax benefit of Rs. 6 million												(11	)		(11	)		(11	)
Foreign currency translation adjustment												315			315			315
Unrealized gain on cash flow hedges, net of tax of Rs. 139 million												218			218			218
Comprehensive income															43,122
Balance at March 31, 2008		708,494,411		1,417		106,426			113,598			(318	)					221,123

The accompanying notes are an integral part of these consolidated financial statements.

F-6

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Indian Rupees in millions except share or per share amounts unless otherwise stated)

										Accumulated
	Equity shares									other						Total
	No. of		Par		Additional		Retained			comprehensive			Comprehensive			shareholders’
	shares		value		paid-in-capital		earnings			income/(loss)			income/(loss)			equity			Total
																			US dollars
																			in millions
																			(Note 2)
Balance at April 1, 2008		708,494,411		1,417		106,426		113,598			(318	)					221,123			4,346.8
Net income								29,562						29,562			29,562			581.1
Dividend (including dividend tax)-(Note-18)								(3,315	)								(3,315	)		(65.1	)
Unrealized loss on available-for-sale securities, net of tax benefit of Rs. 30 million ($ 0.6 million)											(49	)		(49	)		(49	)		(1.0	)
Foreign currency translation adjustment											(328	)		(328	)		(328	)		(6.4	)
Unrealized loss on cash flow hedges, net of tax benefit of Rs 132 million ($2.6 million)											(128	)		(128	)		(128	)		(2.5	)
Comprehensive income														29,057
Balance at March 31, 2009		708,494,411		1,417		106,426		139,845			(823	)					246,865			4,852.9
Balance at March 31, 2009 in US dollar in millions (Note 2)				27.9		2,092.1		2,749.1			(16.2	)		571.2			4,852.9

     The accompanying notes are an integral part of these consolidated financial statements.

F-7

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Background and Operations

     Sterlite Industries (India) Limited and its consolidated subsidiaries (the “Company” or “Sterlite”) are engaged in non-ferrous metals and mining in India and Australia. Sterlite Industries (India) Limited (“SIIL”) was incorporated on September 8, 1975 under the laws of the Republic of India. The Company’s shares are listed on National Stock Exchange and Bombay Stock Exchange in India. In June 2007, Sterlite completed its initial public offering of American Depositary Shares (“ADS”), each representing one equity share, and listed its ADSs on the New York Stock Exchange and raised Rs. 80,506 million.

     SIIL is a majority-owned subsidiary of Twin Star Holdings Limited (“Twin Star”) which is in turn a wholly-owned subsidiary of Vedanta Resources plc (“Vedanta”), a public limited company incorporated in the United Kingdom and listed on the London Stock Exchange plc. Twin Star held 57.4% of SIIL’s equity as of March 31, 2009.

     The Company’s copper business is principally one of custom smelting and includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant and copper rod plant at Tuticorin in Southern India, and a refinery and two copper rod plants at Silvassa in Western India. In addition, the Company owns and operates the Mt. Lyell copper mine in Tasmania, Australia through its subsidiary, Copper Mines of Tasmania Pty Ltd (“CMT”), which provides a small percentage of the copper concentrate requirements for its smelter.

     The Company’s zinc business is owned and operated by Hindustan Zinc Limited (“HZL”). The Company has 64.9% ownership interest in HZL, with the remaining interests owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). HZL’s operations include three lead-zinc mines in Northwest India, three zinc smelters, one lead-zinc smelter and one lead smelter in Northwest India, one zinc smelter in Southeast India and one zinc melting plant in North India.

     The Company’s aluminum business is owned and operated by Bharat Aluminium Company Limited (“BALCO”), in which the Company has a 51.0% ownership interest and the remaining interest is owned by the Government of India. BALCO’s operations include bauxite mines, captive power plants and refining, smelting and fabrication facilities in Central India.

     The Company owns 29.5% minority interest in Vedanta Aluminium Limited (“Vedanta Aluminium”), 70.5% owned subsidiary of Vedanta. Vedanta Aluminium commenced construction of an alumina refinery in the State of Orissa in Eastern India during fiscal 2004. On August 8, 2008, the Supreme Court of India cleared Vedanta Aluminium’s bauxite mining project in the Niyamgiri Hills. Vedanta Aluminium began the progressive commissioning of the greenfield alumina refinery in March 2007 and the first stream became fully operational during the quarter ended September 30, 2008.

     The Company acquired 100% shareholding of Sterlite Energy Limited (“SEL”) during fiscal 2007. SEL is engaged in power generation business in India. SEL has commenced construction of the first phase of a pit-head thermal coal-based power facility in the state of Orissa in Eastern India.

     In July 2008, following a competitive bidding process in which SEL was selected as the successful bidder, SEL acquired 100% ownership interest in Talwandi Sabo Power Limited (“TSPL”), a company created by the Punjab State Electricity Board of India for the purpose of undertaking a 1,980 MW thermal power project in the State of Punjab, India. TSPL is a development stage enterprise in the process of constructing the power plant.

     SIIL divested its aluminum conductor division, a component of SIIL, during fiscal 2007 through a sale to Sterlite Technologies Limited (formerly Sterlite Optical Technologies Limited) (“STL”), a company under common control. Accordingly, the consolidated income statement for the year ended March 31, 2007 have been recasted to present the result of the discontinued operations separately from the continuing operations.

F-8

2. Significant Accounting Policies

Basis of preparation

     The consolidated financial statements of the Company are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The consolidated financial statements are presented in Indian Rupee (“Rs.”).

     Basis of consolidation

     The consolidated financial statements include the results of SIIL and all its wholly-owned subsidiaries and other subsidiaries in which a controlling interest is maintained. There are no Variable Interest Entities to be consolidated in accordance with Financial Accounting Standards Board (FASB) Interpretation 46(R), Consolidation of Variable Interest Entities (revised December 2003), an interpretation of ARB No. 51 (“FIN 46(R)”).

     All significant inter-company balances and transactions, including unrealized profits arising from transactions between the subsidiaries, have been eliminated upon consolidation.

     Non-Indian subsidiaries have a functional currency (i.e., the currency in which activities are primarily conducted) of the country in which a subsidiary is domiciled. Foreign subsidiaries’ assets and liabilities are translated to Indian Rupee at year-end exchange rates, while revenues and expenses are translated at average exchange rates during the year. Adjustments that result from translating amounts in a subsidiary’s functional currency are reported in shareholders’ equity as a component of accumulated other comprehensive income. Minority interests in subsidiaries represent the minority shareholders’ proportionate share.

  Cash and cash equivalents

     Cash and cash equivalents are comprised of cash in hand and at banks and short-term deposits with banks that are readily convertible into cash and which have been purchased with an original maturity of three months or less.

  Investments

  Short-term investments and deposits

     Short-term investments include fixed deposits in banks with an original maturity between three and twelve months, liquid investments and investments in mutual funds which are intended to be held for trading purposes.

     Trading securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included in the statement of operations.

  Long-term investments

     Long-term investments include quoted investment securities which are classified as available-for-sale securities and are initially recorded at cost with subsequent changes in fair values included in accumulated other comprehensive income, a component of shareholders’ equity. Gains and losses resulting from the sale of such securities are reclassified from accumulated other comprehensive income to earnings in the year they are sold by using the specific identification method.

     A decline in the fair value of any available-for-sale securities below their carrying value that is deemed to be other than temporary results in a reduction in carrying amount to fair value and a corresponding charge to the statement of operations. Fair value is based on quoted market prices.

     Securities for which there is no readily determinable fair value are recorded at cost, subject to an impairment charge for any other than temporary decline in value. The impairment is charged to statement of operations.

F-9

     Debt securities for which management has an intent and ability to hold to maturity are classified as held-to-maturity securities and are reported at amortized cost.

  Allowances for doubtful accounts

     Accounts receivable are generally secured. The Company establishes an allowance for doubtful accounts on all accounts receivable based on the present financial condition of the customer and ageing of the accounts receivable after considering historical experience and the current economic environment.

  Inventories

     Inventories include raw materials, ore, concentrate, work-in-progress, stores and spares and finished goods and are stated at the lower of cost and net realizable value. Extraction of ore includes all indirect costs associated with the mining operations including costs such as manpower cost associated with the mining operations and repairs and maintenance of assets used in the mining operations, and also include depreciation, depletion and amortization associated with mining operations. Cost is determined as follows:

• Purchased ore or concentrate is recorded at cost on a first-in, first-out basis;

• All other materials including stores and spares are recorded on a weighted average basis;

• Finished products are valued at raw material cost plus costs of conversion, comprising labor costs and an attributable proportion of manufacturing overheads; and

• By-products and scrap are valued at the lower of cost and net realizable value. Net realizable value is determined based on an estimated selling price, less further costs expected to be incurred for completion and disposal.

     Capitalization of costs related to the mines and other property, plant and equipment begins with the extraction of ore, which is the output from the first stage of the mining activity.

  Equity investment in associate

     An associate is an entity with respect to which the Company is in a position to exercise significant influence. Significant influence generally exists when the Company owns between 20.0% and 50.0% of the voting equity. Goodwill arising on the acquisition of associate is included in the carrying value of investment in associate.

     The consolidated statement of operations includes the Company’s share of associate’s results. The investment is initially recorded at the cost to the Company in the consolidated balance sheet and then, in subsequent periods, the carrying value of the investment is adjusted to reflect the Company’s share of the associate’s profits or losses, any impairment of goodwill and any other changes to the associate’s net assets.

  Property, plant and equipment

     Property, plant and equipment include land, buildings, mine properties, plant and machinery, assets under construction and others.

  Mine properties

     Exploration and evaluation expenditures are written off in the year in which they are incurred. The costs of mine properties, which include the costs of acquiring and developing mine properties and mineral rights, are capitalized and included in property, plant and equipment under the heading “Mine properties” in the year in which they are incurred.

     When it is determined that a mining property has begun production of saleable minerals extracted from an ore body, all further pre-production primary development expenditures are capitalized as part of the cost of the mining property until the mining property begins production of saleable minerals. From the time mining property is capable of producing saleable minerals the capitalized mining property costs are amortized on a unit-of-production basis over the total estimated remaining commercial reserves of each property or group of properties.

F-10

     Stripping costs or secondary development expenditures incurred during the production stage of operations of an ore body are included in the costs of the ore extracted during the period that the stripping costs are incurred. Secondary development costs refer to expenses incurred after the mining property has begun production of saleable minerals extracted from an ore body. Such costs include the costs of removal of overburden and other mine waste materials to access mineral deposits incurred during the production phase of a mine.

     When mine property is abandoned, the cumulative capitalized costs relating to the property are written off in the period of abandonment.

     Commercial reserves are proven and probable reserves. Changes in the commercial reserves affecting unit of production calculations are accounted for prospectively over the revised remaining reserves. Proven and probable reserve quantities attributable to stockpiled inventory are classified as inventory and are not included in the total proven and probable reserve quantities used in the units of production depreciation, depletion and amortization calculations.

  Other property, plant and equipment

     The initial cost of property, plant and equipment consists of its purchase price, including import duties and non-refundable purchase taxes, and any directly attributable costs of bringing an asset to working condition and location for its intended use. Expenditures incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to the statements of operations in the periods in which the costs are incurred. Major shut-down and overhaul expenditure is expensed when incurred.

  Depreciation, depletion and amortization

     Mine properties and other assets in the course of development or construction, and freehold land, are not depreciated. Capitalized mining property costs are amortized once commercial production commences, as described in “Mine properties”. Assets under capital leases and leasehold improvements are amortized on a straight-line method over their estimated useful life or the lease term, as appropriate.

     Other buildings, plant and equipment, office equipment and fixtures and others are stated at cost less accumulated depreciation. Depreciation commences when the assets are ready for their intended use. Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset on a straight-line basis over its expected useful life, as follows:

Buildings:
Operations	30 years
Administration	50 years
Plant and machinery	10-20 years
Office equipment and fixtures	3-20 years

  Impairment

     The carrying amounts of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If there are indicators of impairment, an assessment is made to determine whether the asset’s carrying value exceeds the future undiscounted cash flows expected from the asset. When the carrying value of an asset exceeds its fair value, an impairment loss is computed using a discounted cash flow analysis to determine the fair value and is recorded in the statements of operations.

     For mine properties, the recoverable amount of an asset is determined on the basis of its value in use. The value in use is estimated by calculating the undiscounted cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

     For other property, plant and equipment, the recoverable amount of an asset is also considered on the basis of its net realizable value, where it is possible to assess the amount that could be obtained from the sale of an asset in an arm’s length transaction, less the cost of disposal.

     The Company reviews the residual value and useful life of an asset at least annually or wherever events or changes in circumstances indicate that its carrying amount may not be recoverable. If expectations differ from previous estimates, they are accounted for as a change in accounting estimate.

F-11

     Recoverable amounts are estimated for individual assets or, if this is not possible, for a group of assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

  Assets under construction

     Assets under construction are capitalized in the capital work-in-progress account, which includes advances paid to vendors for supply of equipment. Upon completion of construction, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalized until the period of commissioning has been completed and the asset is ready for its intended use.

  Business combinations

     All business combinations are accounted for as acquisitions using the purchase method. Purchase accounting involves recording assets and liabilities of the acquired businesses at their fair value on the acquisition date. Excess purchase consideration, if any, relating to the acquisition of businesses is recorded as goodwill and allocated to the applicable reporting units.

     Where the fair values of the identifiable assets and liabilities exceed the cost of acquisition, the surplus is first allocated to identifiable assets and the residual value, if any, is reflected in the statements of operations in the period of acquisition as an extraordinary gain.

     The results of businesses acquired or sold during the year are consolidated for the periods from, or to, the date on which control is acquired or given up.

  Debt

     The Company reports long-term debt at the outstanding principal balance. Issuance costs of long-term debt are amortized over the tenure of the debt using the effective interest method.

     Interest costs, including premiums payable on settlement or redemption and direct issuance costs, are accounted for on accruals basis and charged to the statements of operations using the effective interest method. Interest costs are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

  Capitalization of interest

     Interest expense directly relating to the financing of a qualifying capital project under construction are capitalized and added to the project cost during construction until such time as the related asset is substantially ready for its intended use. For debt specific to finance a project, the amount capitalized represents the actual borrowing costs incurred. Funds borrowed to finance a specific project, if temporarily in excess of capital needed are invested in short-term investments and the resulting income is recognized in the statements of operations. When the funds are used to finance a project from general debt of the Company, the interest amount to be capitalized is calculated using a weighted average rate applicable to the relevant general debt during such period.

     All other borrowing costs are recognized in the statements of operations in the period in which they are incurred.

  Employee benefit schemes

     The Company participates in defined benefit and contribution schemes, the assets of which are (where funded) held in separately administered funds. The cost of providing benefits under the plans is determined each year separately for each plan using the projected unit credit actuarial method. All actuarial gains and losses arising in the year are recognized in the statement of operations for the year in which they arise.

F-12

     For defined contribution schemes of provident fund scheme, superannuation scheme and Australian pension scheme, the amount charged to the statements of operations is the contribution payable for the year.

  Share-based payment

     The Company accounts for the compensation cost from share-based payment transactions with employees based on the grant-date fair value of the equity instruments issued or the liability settled.

  Earnings per share (“EPS”)

     Basic EPS is computed by dividing earnings by the weighted average number of equity shares outstanding during the period.

     Diluted EPS is computed by dividing net income by the diluted weighted average number of equity shares outstanding during the period. The dilutive effect of convertible securities is reflected in diluted EPS by application of the if-converted method, except where the results will be anti-dilutive.

  Asset retirement obligations

     Legal obligations associated with the retirement of a tangible long-lived asset that result from its acquisition, construction, development or normal operation are recorded as asset retirement obligations.

     The Company recognizes liabilities, at fair value, for existing legal asset retirement obligations in the periods in which they are incurred if a reasonable estimate of the fair value of the liabilities can be made. Such liabilities are adjusted for accretion expenses and revisions in estimated cash flows. The related asset retirement costs are capitalized as increases to the carrying amount of the associated long-lived assets and accumulated depreciation on these capitalized costs is recognized in the statements of operations.

  Environmental costs and liabilities

     Environmental costs that are not legal asset retirement obligations are expensed or capitalized, as appropriate, on an undiscounted basis. Expenditures relating to existing conditions caused by past operations, which do not contribute to future revenues, are expensed when probable and estimable and are normally included in cost of sales and operating expenses. Recoveries relating to environmental liabilities are recorded when received.

  Derivative financial instruments

     To hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forwards, options, swap contracts and other derivative financial instruments. The Company does not hold nor enter into derivative financial instrument contracts for speculative purposes.

     Derivative financial instruments are initially recorded at their fair value on the date of the derivative transaction and are re-measured at their fair value at subsequent balance sheet dates.

  Fair value hedges

     Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statements of operations for both, the effective and ineffective position. The hedged item is recorded at fair value and any gain or loss is recorded in the statements of operations and is offset by the gain or loss from the change in the fair value of the derivative.

F-13

  Cash flow hedges

     Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in equity. Amounts deferred to equity are recognized in the statements of operations in the periods when the hedged item is recognized in the statements of operations. Ineffective portions of changes in the fair value of cash flow hedges are recognized in statements of operations.

     Derivative financial instruments that do not qualify for hedge accounting are marked to market at the balance sheet date and gains or losses are recognized in the statements of operations immediately. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on cash flow hedge instrument is recognized in other comprehensive income (“OCI”) and in the consolidated statements of operations when the hedged item affects earnings.

     Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives and marked-to-market when their risks and characteristics are not clearly and closely related to those of the host contracts and the host contracts are not fair-valued.

  Foreign currency transactions

     Foreign currency transactions are translated into the functional currency of each entity at the rates of exchange prevailing on the date of the respective transactions. Monetary assets and liabilities in foreign currencies are translated into the functional currency of each entity at the exchange rate prevailing on the balance sheet date. Gains and losses on foreign currency transactions are included as (expense) income in the consolidated statements of operations.

  Revenue recognition

     Revenues are recognized when title and risk of loss pass to the customer and when collectibility is reasonably assured. The passing of title and risk of loss to the customer is based on terms of sale contract upon shipment or delivery of product.

     Certain of our sales contracts provide for provisional pricing based on the price on The London Metal Exchange Limited (“LME”), as specified in the contract, when shipped. Final settlement of the prices is based on the applicable price for a specified future period. The Company’s provisionally priced sales are marked to market using the relevant forward price for the future period specified in the contract and same is adjusted in revenue. Proceeds from the sale of material by-products are included in revenue.

     Dividend income is recognized when the right to receive payment is announced and approved. Interest income is recognized on an accrual basis.

  Income taxes

     Tax expense includes the current tax expense and deferred tax expense.

     Current taxes are determined based on amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted by the balance sheet date.

     Deferred taxes are determined using the balance sheet method on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

     The Company does not record deferred taxes on unremitted earnings of foreign subsidiaries, where it is probable that the temporary differences will not reverse in the foreseeable future or management intends to reinvest such unremitted earnings indefinitely. The Company also does not record deferred taxes on unremitted earnings of domestic subsidiaries since the Company expects to realize such earnings in a tax free manner.

     Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted as of the balance sheet date. Deferred taxes relating to temporary differences on items recorded in other comprehensive income are recognized directly in shareholders’ equity and not in the statements of operations.

     Deferred tax assets are reviewed for recoverability, and a valuation allowance is recorded against deferred tax assets to the extent that it is more likely than not that the deferred tax asset will not be realized.

F-14

     Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

     The Company adopted FASB Interpretation 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“FIN 48”), on April 1, 2007. FIN 48 provides specific guidance on the financial statement recognition, measurement, reporting and disclosure of uncertain tax positions taken or expected to be taken in a tax return. FIN 48 addresses the manner in which tax positions, either permanent or temporary, should be reflected in the financial statements.

     The Company evaluates each tax positions to determine if it is more likely than not that a tax position is sustainable, based on its technical merits. If a tax position does not meet the more likely than not standard, a liability is recorded. Additionally, for a position that is determined to, more likely than not, be sustainable, the Company measure the benefit at the highest cumulative probability of being realized and establish a liability for the remaining portion. A material change in the tax liabilities could have an impact on the results of the Company.

     The Company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense.

  Accumulated other comprehensive income

     The Company reports accumulated other comprehensive income as a separate component of shareholders’ equity. The Company’s accumulated other comprehensive income is comprised of cumulative foreign currency translation adjustments arising on the consolidation of foreign subsidiaries, unrealized gains and losses on available-for-sale securities and unrealized gains and losses on cash flow hedges.

  Shares issued by subsidiary/affiliate

     The issuance of shares by a subsidiary/affiliate to third parties reduces the proportionate ownership interest in the investee. A change in the carrying value of the investment in a subsidiary/affiliate due to direct issue of shares by the investee is accounted for as a capital transaction and the resultant gain or loss is recognized in the shareholders’ equity when the transaction occurs.

  Convenience translation

     The accompanying consolidated financial statements have been prepared in Indian Rupees, the functional currency of the Company. Solely for the convenience of the readers, the consolidated financial statements as of March 31, 2009 have been translated into US dollars (“$”) at the noon buying rates of $1.00 = Rs. 50.87 in the City of New York for cable transfers of Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York on March 31, 2009. No representation is made that the Indian Rupee amounts represent US dollar amounts or have been, could have been or could be converted into US dollars at such a rate or any other rate.

  Use of estimates

     The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting period.

     Significant items subject to such estimates and assumptions include the carrying value of mine properties, useful economic lives of assets, impairment, environmental cost and asset retirement obligations, commitments contingencies and guarantees and deferred and current income taxes.

     Management believes that the estimates used in the preparation of the consolidated financial statements are prudent and reasonable. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from estimates.

Recently issued accounting pronouncements

     SFAS No. 157, Fair Value Measurements

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands

F-15

disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The adoption of the standard did not have a material effect on the consolidated financial position or results of operation of the Company.

     In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-2 delays the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for certain items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company is currently evaluating the impact of SFAS 157 on its consolidated financial position and results of operation for items within the scope of FSP 157-2, which will become effective beginning with the Company’s first quarter of 2010.

     In April 2009, the FASB issued FASB Staff Position No. FAS 157-4, Determining Fair Value When Market Activity Declines. FSP provides guidance on (i) estimating fair value of an asset or liability when volume and level of activity significantly decreases, and (ii) identifying transactions that are not orderly. The Company is currently evaluating the impact of SFAS 157 on its consolidated financial position and results of operation for items within the scope of FSP 157-4, which will become effective beginning with the Company’s first quarter of 2010.

     SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities —Including an amendment of FASB Statement No. 115”.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115” (“SFAS 159”) SFAS 159 permits entities to choose to measure many financial instruments at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. This standard is effective for fiscal years beginning after November 15, 2007. The Company has elected not to value any of its financials assets and liabilities other than those required by standards prior to SFAS 159.

     SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51”

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 improves the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard is effective for fiscal years beginning on or after December 15, 2008. Upon the adoption of SFAS 160, minority interests shall be reported within shareholders’ equity.

     SFAS No. 141 (R), “Business Combination”

     In December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combination” (“ SFAS 141(R)”). SFAS 141(R) improves the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This standard is effective for fiscal years beginning on or after December 15, 2008. The Company’s management is currently evaluating the impact, if any, the adoption of SFAS 141(R) will have on the Company’s financial reporting and disclosures.

     SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”

     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS 161”), which modifies and expands the disclosure requirements for derivative instruments and hedging activities. SFAS 161 requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation and requires quantitative disclosures about fair value amounts and gains and losses on derivative instruments. It also requires disclosures about credit-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company’s management is currently evaluating the impact, if any, the adoption of SFAS 161 will have on the Company’s financial reporting and disclosures.

     SFAS No. 165, “Subsequent Events”

     In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which provides guidance on accounting for and disclosures of events that occur after balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for fiscal years and interim periods ending after June 15, 2009. The Company’s management is currently evaluating the impact, if any, the adoption of SFAS 165 will have on the Company’s financial reporting and disclosure.

     SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162”

     In June 2009, FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162” (“SFAS 168”). The FASB Accounting Standards Codification (Codification) will become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the US Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. This Statement is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009. Once the Codification is in effect, all of its content will carry the same level of authority, effectively superseding SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. The issuance of SFAS 168 (and the Codification) will not change US GAAP except for certain non-public non-governmental entities and accordingly adoption of SFAS 168 will not have any impact on the Company’s financial reporting and disclosures.

F-16

     FASB Staff Position No. FAS 115-2 and FAS 124-2,” Recognition and Presentation of Other-Than-Temporary Impairments”

     In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The objective of an other-than-temporary impairment analysis under existing U.S. generally accepted accounting principles (GAAP) is to determine whether the holder of an investment in a debt or equity security for which changes in fair value are not regularly recognized in earnings (such as securities classified as held-to-maturity or available-for-sale) should recognize a loss in earnings when the investment is impaired. An investment is impaired if the fair value of the investment is less than its amortized cost basis The Company is currently evaluating the impact of FAS 115 and FAS 124 on its consolidated financial position and results of operation for items within the scope of FAS 115-2 and FAS 124-2 which will become effective beginning with the Company’s first quarter of 2010.

     FASB Staff Position No. FAS 107-1 and APB 28-1,” Interim Disclosures about Fair Value of Financial Instruments.”

     In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FASB Staff Position (FSP) amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. The Company is currently evaluating the impact of FAS 107 and APB-28 on its consolidated financial position and results of operation which will become effective beginning with the Company’s first quarter of 2010.

     FSP FAS 142-3 In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets” (FSP 142-3). This guidance is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (FAS 142), and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R when the underlying arrangement includes renewal or extension of terms that would require substantial costs or result in a material modification to the asset upon renewal or extension. Companies estimating the useful life of a recognized intangible asset must now consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension as adjusted for FAS 142’s entity-specific factors. FSP 142-3 is effective for the Company beginning April 1, 2009. The Company would be required to adopt this FSP prospectively for all assets acquired after April 1, 2009 and early adoption is prohibited. Its effects on future periods will depend on the nature and specific facts of assets acquired subject to FAS No. 142.

     FSP FAS 132 (R)-1 In December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (FSP 132(R)-1). This guidance amends FAS No. 132(R), “Employers’ Disclosures about Pensions and Other Postretirement Benefits”, to require more detailed disclosures about the fair value measurements of employers’ plan assets including (a) investment policies and strategies; (b) major categories of plan assets; (c) information about valuation techniques and inputs to those techniques, including the fair value hierarchy classifications (as defined by FAS No. 157) of the major categories of plan assets; (d) the effects of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets; and (e) significant concentrations of risk within plan assets. The disclosures required by the FSP is effective for the Company beginning April 1, 2009. This statement does not impact the consolidated financial results as it is disclosure-only in nature.

     FASB Staff Position No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”

     In April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (FSP 141(R)-1), to amend and clarify the initial recognition and measurement, subsequent measurement and accounting, and related disclosures arising from contingencies in a business combination under SFAS 141(R). The Company’s management is currently evaluating the impact, if any, the adoption of FSP 141(R)-1 will have on the Company’s financial reporting and disclosures, which will become effective beginning with the Company’s first quarter of 2010.

     Emerging Issues Task Force (“EITF”) 08-6, “Equity Method Investment Accounting Considerations”

     In November 2008, the FASB issued EITF 08-6, “Equity Method Investment Accounting Considerations” (EITF 08-6), which clarifies the accounting for transactions such as Change in Level of Ownership or Degree of Influence and contingent consideration, and impairment considerations involving equity method investments. The Company’s management is currently evaluating the impact, if any, the adoption of EITF 08-6 will have on the Company’s financial reporting and disclosures, which will become effective beginning with the Company’s first quarter of 2010.

     EITF 08-7, “Accounting for Defensive Intangible Assets”

     In November 2008, the FASB issued EITF 08-7, “Accounting for Defensive Intangible Assets” (EITF 08-7), to clarify the accounting of acquired intangible assets in situations in which an entity does not intend to actively use the asset but intends to hold (lock up) the asset to prevent others from obtaining access to the asset (a defensive intangible asset), except for intangible assets that are used in research and development activities. The Company’s management is currently evaluating the impact, if any, the adoption of EITF 08-7 will have on the Company’s financial reporting and disclosures, which will become effective beginning with the Company’s first quarter of 2010.

F-17

3. Cash and Cash Equivalents

     Cash and cash equivalents consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Cash in hand		5		4		0.1
Cash at banks		2,344		1,218		23.9
Short-term deposit		10,014		1,479		29.1
Cash and cash equivalents		12,363		2,701		53.1

4. Restricted — Cash, Deposits and Investments

     Restricted cash, deposits and investments consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Dividend, debenture, debenture interest account		59		61		1.2
Short-term investment securities		1,600		1,765		34.7
Short-term deposits with banks		—		1,950		38.3
Restricted — cash, deposits and investments		1,659		3,776		74.2

     Short-term deposits with banks and investment securities have been pledged with banks for credit facilities.

     In accordance with the Indian Companies Act, 1956 (the “Companies Act”), dividends must be paid within thirty days from the date of the declaration and dividends unpaid or unclaimed after that period must be transferred within seven days after the expiry of such 30-day period to a special unpaid dividend account held at a designated banking institution. Further any amount of dividend, matured debentures or debentures interest which remains unpaid or unclaimed for seven years from the date it becomes due shall be transferred to the Investor Education and Protection Fund (“Fund”) established by the Government of India. Until transferred to such Fund, any such amount is treated as restricted cash under the Companies Act.

5. Short-Term and Long-Term Investments

     Short-term and long-term investments consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Short-term investments and deposits
Trading securities and deposits		150,567		184,814		3,633.0
Net unrealized holding gains		3,797		1,488		29.3
Fair value		154,364		186,302		3,662.3
Long-term investments
Investments at cost		984		984		19.3
Available for sale (“AFS”) securities
Carrying value		52		52		1.0
Net unrealized holding gains		87		8		0.2
Fair value		139		60		1.2
Long-term investments		1,123		1,044		20.5

     Investments at cost include the unquoted investment in equity shares of Andhra Pradesh Gas Power Corporation Limited (“APGPC”) in the amount of Rs. 984 million ($ 19.3 million). There are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of investment.

     AFS securities include quoted investments in equity securities that present the Company with the opportunity for return through dividend income and gains in value.

F-18

6. Accounts Receivable, net

     Accounts receivable, net consist of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Accounts receivable		13,352			7,659			150.6
Allowances for doubtful accounts		(12	)		(20	)		(0.4	)
Accounts receivable, net		13,340			7,639			150.2

7. Accounts Payable

     Accounts payable consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Accounts payable		16,761		18,805		369.7
Acceptances		27,104		35,831		704.4
Accounts payable		43,865		54,636		1,074.1

     Acceptances represents bills of exchange drawn by suppliers of raw material that the bank accepts to make payment on the bill on its due date.

8. Inventories

     Inventories consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Finished goods		1,233		1,157		22.7
Work-in-progress		11,580		8,359		164.3
Raw materials		16,554		10,594		208.3
Stores and spares		3,991		4,512		88.7
Inventories		33,358		24,622		484.0

9. Property, Plant and Equipment, net

     Property, plant and equipment, net consist of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Land — freehold		255			269			5.3
Land development		237			238			4.7
Buildings		11,093			11,692			229.8
Mine properties		17,215			17,028			334.7
Plant and machinery		114,541			121,553			2,389.5
Office equipment and fixtures		1,365			1,597			31.4
Total cost		144,706			152,377			2,995.4
Accumulated depreciation, depletion and amortization		(47,481	)		(54,796	)		(1,077.1	)
Property, plant and equipment, net of depreciation, depletion and amortization before assets under construction		97,225			97,581			1,918.3
Assets under construction		24,357			66,662			1,310.4
Property, plant and equipment, net		121,582			164,243			3,228.7

     Depreciation, depletion and amortization expense was Rs. 5,959 million (excluding Rs. 11 million for discontinued operations), Rs. 7,060 million and Rs. 7,845 million, ($ 154.2 million) for the years ended March 31, 2007, 2008 and 2009, respectively.

     Interest capitalized in property, plant and equipment was Rs. 31 million and Rs. 582 million ($ 11.4 million) for the years ended March 31, 2008 and 2009, respectively.

F-19

10. Investment in Associate

     Investment in associate consists of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Equity investment in associate		3,524		—		—
Investment in Optionally fully convertible debentures of associate(1)		16,000		12,692		249.5
Investment in associate		19,524		12,692		249.5

(1) secured by way of first charge on immovable properties of the associate, convertible at the option of the Company based on fair value of shares.

     In September 2008, out of Rs. 16,000 million of investment in optionally fully convertible debentures (OFCDs), Rs. 2,658 million ($ 52.3 million) had been converted into 1,772,268 equity shares of Rs. 10 each at a premium of Rs. 1,490 per share.

     The Company’s equity in net (loss)/income of associate was Rs. 24 million, Rs. 491 million and Rs. (6,001) million and the Company’s share in other comprehensive (loss)/ income was Rs. Nil, Rs. Nil and Rs. (831) million for the years ended March 31, 2007, 2008 and 2009 respectively. These have been adjusted as under:

	2007		2008		2009
	Rs. in millions		Rs. in millions		Rs. in millions
In equity investment		24		491		(6,182	)
In investment in OFCD		—		—		(650	)

11. Other Current and Non-Current Assets, net

     Other current and non current assets consist of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Advances to suppliers		4,491			5,172			101.7
Advances to employees		378			342			6.7
Deposits		1,285			2,021			39.7
Prepaid lease rentals		468			925			18.2
Fair value of derivatives — current		1,627			1,538			30.2
Others		3,780			5,096			100.2
Total other current and non-current assets		12,029			15,094			296.7
Allowances for doubtful advances		(160	)		(158	)		(3.1	)
Other current and non-current assets, net		11,869			14,936			293.6
Balance sheet classification of the above assets is as follows:
Current		10,248			12,834			252.3
Non-current		1,621			2,102			41.3

12. Other Current Liabilities

     Other current liabilities consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Unclaimed dividend		38		37		0.7
Advances received		617		818		16.1
Interest accrued		147		809		15.9
Security deposits received		2,145		2,470		48.5
Fair value of derivatives		639		2,639		51.9
Provision for guarantee		1,412		—		—
Others		2,257		1,557		30.6
Other current liabilities		7,255		8,330		163.7

     Security deposits refer to deposits received from material and service suppliers as security against performance. These deposits are refundable on satisfactory completion of the contract.

F-20

13. Other Non-Current Liabilities

     Other non-current liabilities consist of the following as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Retirement benefits		647		710		14.0
Provision for asset retirement obligations		307		323		6.3
Capital project retentions		—		3,862		75.9
Others		20		13		0.3
Other non-current liabilities		974		4,908		96.5

14. Asset Retirement Obligations

     Management estimated its gross aggregate obligations as of March 31, 2009 to be approximately Rs. 347 million ($ 6.8 million) for CMT, HZL and TCM. The estimated present value of these obligations was Rs. 336 million ($6.6 million) as of March 31, 2009.

     Asset retirement obligations (“AROs”) 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 and Australian laws and the terms of the Company’s mining and other licenses and contractual arrangements.

     The Company owns mining rights in Australia for copper and in India for zinc and bauxite. In relation to these mining rights, the Company has AROs because of existing Indian and Australian laws and the terms of the Company’s mining and other licenses and contractual arrangements.

     The agreement entered into between the Government of Tasmania and the Company, enabled by the Copper Mines of Tasmania (Agreement) Act, 1999, sets out certain concessions to the Company, specifically indemnity for pollution and contamination from activities on the site prior to April 1999 and legal liabilities of the Company and the rehabilitation requirements upon the eventual relinquishment of the leases. The obligations primarily relate to sealing of the mine and making it safe, removal of buildings, decommissioning of tailing dam and associated equipments. The Company has provided a draft Closure Plan to the regulator and is awaiting approval of the plan. The estimated cost of such obligation on a discounted basis is Rs. 316 million ($ 6.2 million) as of March 31, 2009. The Company utilizes the services of vendors to provide it with estimates of such costs and considers such data points in arriving at its best estimate of such obligations.

     The relevant Indian law which governs AROs for mines in India is the Mines and Minerals (Development and Regulation) Act, 1957 and the Mineral Conservation and Development Rules, 1988. Under the relevant legislation, a company which has been granted a mining lease is expected to submit a mine closure plan together with a financial assurance which is a surety furnished by the leaseholder to the Government so as to indemnify the Government against the reclamation and rehabilitation cost. The amount of financial assurance is specified in the act and is calculated on the basis of Rupees per hectare of leased land, which varies with the categorization of mines under the Act. The financial assurance for “A” category mine is Rs. 25,000 per hectare of area put to use for mining and allied activities. In case of “B” category mine, the financial assurance is Rs. 15,000 per hectare of area put to use for mining and allied activities. Most of the Company’s mines are “A” category mines. This constitutes a legal obligation on the part of the Company which has been recognized as ARO.

     Asset retirement obligations consist of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Asset retirement obligations, beginning of year		296			314			6.2
Accretion expense		15			47			0.9
Revision for changes in estimate		(3	)		(5	)		(0.1	)
Settlement and others		(8	)		(6	)		(0.1	)
Foreign exchange (gain) loss		14			(14	)		(0.3	)
Asset retirement obligations, end of year		314			336			6.6
Balance sheet classification of the above obligations is as follows:
Current		7			13			0.3
Non-current		307			323			6.3

F-21

15. Short-Term and Long-Term Debt

     Short-term debt represents borrowings with an original maturity of less than one year. Long-term debt represents borrowings with an original maturity of greater than one year. Maturity distribution is based on contractual maturities or earlier dates at which debt is callable at the option of the holder or the Company. Interest rates on floating-rate debt are generally linked to benchmark rates.

  Working capital loans

     The Company has credit facilities from various banks for meeting working capital requirements, generally in the form of credit lines for establishing letters of credit, packing credit in foreign currency (“PCFC”), cash credit and issuing bank guarantees. Amounts due under working capital loans as of March 31, 2008 and March 31, 2009 were Rs. 6,119 million and Rs. 2,531 million ($ 49.8 million), respectively. The facility consisted of Rs. 2,038 million ($ 40.1 million) working capital loan outstanding as of March 31, 2009, which is a US dollar denominated PCFC loan, and a Rs. 493 million ($ 9.7 million) cash credit facility. Interest on the PCFC facility is based on the London Inter-Bank Offer Rate (“LIBOR”) plus 375 basis points. These working capital loans are secured against the inventories and trade accounts receivables.

  Foreign currency loans

     The Company had a US dollar denominated unsecured term loan facility of $ 92.6 million, the purpose of which was to refinance foreign currency loans with various banks. This facility consisted of a Tranche A of $ 67.6 million which was repaid in June 2007 and a Tranche B of $ 25.0 million which was repaid in September 2008. As per the loan agreement, in April 2006, these loans were converted into Japanese yen loans amounting to Tranche A of Japanese yen 8,012.6 million and Tranche B of Japanese yen 2,862.5 million. Amounts due under this facility as of March 31, 2008 and March 31, 2009 were Rs. 1,147 million and nil respectively.

     In September 2005, the Company entered into an unsecured term loan facility consisting of Japanese yen 3,570 million and $19.7 million, the purpose of which was to refinance foreign currency borrowings made in August 2002. The entire loan has been repaid on or prior to March 31, 2009. The balances under this facility as of March 31, 2008 and March 31, 2009 were Rs. 443 million and nil respectively.

     In November 2008, the Company entered into an US dollar denominated unsecured loan facility of $25.0 million, from DBS Bank Ltd (“DBS”), arranged by DBS, Mumbai Branch, which was drawn down at the coupon interest rate of LIBOR plus 345 basis point per annum. The loan is repayable in the three equal yearly installments beginning in November 2013. As of March 31, 2009, the balance under this facility was $ 25.0 million (Rs. 1,238 million). This is an unsecured facility.

  Term loans

     As of March 31, 2009, the Company had seven term loans which consist of two term loans from the ABN AMRO Bank N.V. (“ABN AMRO”), two from the Industrial Development Bank of India (“IDBI”) , two from the ICICI Bank Limited (“ICICI Bank”) and one from State Bank of India (“SBI”).

     The two term loans from ABN AMRO are pursuant to an Indian Rupee fixed rate term loan facility totaling Rs. 17,000 million, of which Rs. 15,904 million had been drawn down at an average interest rate of 7.3% per annum. The weighted interest rate on the loan outstanding now is 8.4%.These loans are secured by a first charge on the movable and immovable properties, present and future tangible or intangible assets and other than current assets of BALCO. The first loan of Rs. 10,000 million, repayable in twelve quarterly installments beginning January 2007, of which Rs. 8,490 million was paid by March 31, 2009. The second loan of Rs. 5,904 million repayable in eight quarterly installments due to commence in May 2009 of which Rs. 2,127 million has been prepaid. As of March 31, 2008 and March 31, 2009, the balances due under these loans were Rs. 7,599 million and Rs. 5,287 million ($103.9 million), respectively.

     Pursuant to the approval of the Board for Industrial and Financial Reconstruction (“BIFR”) for the rehabilitation scheme of India Foils Limited (“IFL”), the Company took over two loans aggregating Rs. 1,023 million granted by ICICI Bank on the same terms and conditions by way of two novation agreement entered into among the Company, IFL and ICICI Bank in November 2008. The first loan, of Rs. 773 million, at an interest rate of 10.0% per annum, is repayable in 12 quarterly installments beginning November 2008, of which Rs. 124 million was paid by March 31, 2009. The second loan of Rs. 250 million, at an interest rate of 10% per annum is repayable in 16 quarterly installments beginning November 2008, of which Rs. 31 million was paid by March 31, 2009. As of March 31, 2009, the total balance due under these loans was Rs. 868 million ($17.1 million). These are unsecured debts.

F-22

     The two loans from IDBI are pursuant to an Indian Rupee fixed rate term loan facility totaling Rs. 2,500 million. The first loan of Rs. 1,500 million taken in September 2008, has an interest rate of 12% per annum and is repayable in June 2009. The second loan of Rs. 1,000 million taken in December 2008, at an interest rate of Rs. 12.75% per annum, which has been reset to 12.0% per annum effective March 11, 2009 and is repayable in September 2009. As of March 31, 2009, the total balance due under these loans was Rs. 2,500 million ($49.1 million). These are unsecured debts.

     In February 2009, SEL has obtained Indian Rupee fixed rate term loan facilities of Rs. 5,000 million from SBI, of which Rs. 2,000 million had been drawn till March 2009. The interest rate of the loan is 12.0% per annum. This loan is expected to be converted into long term project finance facility of Rs. 19,000 million. The purpose of the loan is to meet project expenditures. As of March 31, 2009, the balance due under the loans is Rs. 2,000 million ($39.3 million) and the same is unsecured.

  Buyers’ credit

     As of March 31, 2009, the SEL has utilised extended credit terms (for a period ranging upto two years) relating to purchases of property, plant and equipment for its projects. As of March 31, 2008 and March 31, 2009, the balances were Rs. 3,047 million and Rs 11,451 million ($ 225.1 million), respectively. These loans bear interest at LIBOR plus 154 basis points. A fixed deposit of Rs. 1,950 million ($38.3 million) is under lien with SBI as security of loan of Rs. 1,998 million. The remaining balance of Rs. 9,453 million is unsecured.

     In fiscal 2009, BALCO had utilized the facility for project expenditures. As of March 31, 2009, the balances were Rs 1,260 million ($ 24.8 million). These loans bear interest at LIBOR plus 325 basis points. These are unsecured debts.

Non-convertible debentures

  As of March 31, 2009, the Company had three debentures issued to the Life Insurance Corporation of India (“LIC”)

     In April 2003, the Company issued Rs. 1,000 million ($ 19.7 million) Indian Rupee denominated non-convertible debentures to LIC. The debentures were established in two tranches. Tranche A, which is in the amount of Rs. 400 million ($ 7.9 million), is due in April 2010, and Tranche B, which is in the amount of Rs. 600 million ($ 11.8 million), is due in April 2013. Interest rates are linked to annualized Indian Government security rates. The applicable interest rate is 9.25% per annum. These debentures are secured by certain of SIIL’s immovable properties.

     In November 2008, BALCO issued Rs. 5,000 million ($ 98.3 million) non-convertible debentures to LIC. The applicable interest rate is 12.25% per annum. The debentures are secured and have a pari passu charges on movable and immovable properties, present and future, tangible or intangible other than current assets of BALCO to the extent of 1.33 times of the issued amount. The debentures are repayable in three equal yearly installments beginning November 2013.

     Short-term and current portion of long-term debt consist of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Short-term debt with banks and financial institutions		6,119			7,031			138.2
Current portion of long-term debt(1)		4,071			13,171			258.9
Short-term and current portion of long-term debt		10,190			20,202			397.1
Weighted average interest rate on short-term debt		4.6	%		6.8	%		6.8	%
Unused line of credit on short-term facilities		46,393			60,937			1,197.9

Note:
(1)	Include debts outstanding to related parties of Rs. 281 million and Rs. 851 million ($ 16.7 million) as of March 31, 2008 and March 31, 2009, respectively.

F-23

     Long-term debt, net of current portion consists of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Bank and financial institutions		12,293			20,128			395.7
Non-convertible debentures		1,000			5,996			117.9
Others (1)		727			1,431			28.1
Long-term debt		14,020			27,555			541.7
Less: Current portion of long-term debt		(4,071	)		(13,171	)		(258.9	)
Long-term debt, net of current portion		9,949			14,384			282.8

(1) Include debts outstanding to related parties of Rs. 281 million and Rs. 851 million ($ 16.7 million) as of March 31, 2008 and March 31, 2009, respectively.

     The scheduled maturity of long-term debt is set out as below:

			US dollars
As of March 31,	Rs. in millions		in millions
2010		13,171		258.9
2011		2,557		50.3
2012		5,040		99.1
2013		—		—
2014		2,091		41.1
Thereafter		4,696		92.3
Total		27,555		541.7

16. Business Combinations and Divestures

a. Call option — HZL

     The Company’s wholly-owned subsidiary, Sterlite Opportunities and Ventures Limited (“SOVL”), has the right to purchase all of the Government of India’s remaining shares in HZL at fair market value. As of March 31, 2008 and March 31, 2009 the Government of India’s holding in HZL was 29.5%. This call option is subject to the right of the Government of India to sell 3.5% of HZL to HZL employees. This call option is also subject to the Government of India’s right, prior to the exercise of this call option, to sell its shares in HZL through a public offer. With effect from April 11, 2007, SOVL has the right to purchase all of the Government of India’s remaining shares in HZL. The option has no expiry date. The Company has not yet exercised the option. The Company continues to engage in talks with the Government of India to agree on a process to complete the transaction.

F-24

b. Call option — BALCO

   The Company purchased a 51% holding in BALCO from the Government of India on March 2, 2001. Under the terms of this 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 purchase price and validity of the option. The Company sought an interim order from the High Court of Delhi to restrain the Government of India from transferring or disposing of its shareholding pending resolution of the dispute. The High Court directed on August 7, 2006 that the parties attempt to settle the dispute by way of a mediation process as provided for in the SHA. Since the dispute could not be settled through mediation, it has been referred to arbitration as provided for in the SHA. Arbitration proceedings commenced on February 16, 2009. The Company has filed its claim statement before the Arbitration Tribunal. The Government of India has been directed by the arbitrators to file its reply on the Company’s claim statement by July 10, 2009 and also directed the parties to complete the procedural aspects and has fixed the matter on August 26, 2009 for further directions.

17. Accumulated Other Comprehensive Income/(Loss)

     The components of accumulated other comprehensive income/(loss) consist of the following as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Unrealized gain on available-for-sale securities		58			8			0.2
Foreign currency translation adjustment		(72	)		(399	)		(7.9	)
Unrealized loss on cash flow hedges		(304	)		(432	)		(8.5	)
Accumulated other comprehensive loss		(318	)		(823	)		(16.2	)

F-25

18. Shareholders’ Equity

  Issued shares

     SIIL’s issued equity share capital as of March 31, 2008 and 2009 was Rs. 1,417 million ($ 27.9 million), consisting of 708,494,411 shares of Rs. 2 each.

     SIIL issued an additional 150,000,000 equity share in June 2007, resulting in an increase in issued equity share capital from 558,494,411 shares to 708,494,411 shares.

     Retained earning includes among others balances of general reserve, debenture redemption reserve and preference share redemption reserve.

  General reserves

     Under the Companies Act, a general reserve is created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers is to ensure that if a dividend distribution in a given year is more than 10.0% 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. The balances in the standalone financial statements of SIIL’s general reserves as determined in accordance with applicable regulations were Rs. 3,602 million as of March 31, 2008 and Rs. 5,642 ($ 110.9 million) as of March 31, 2009.

  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 a minimum proportion of outstanding redeemable debentures as a reserve. The amounts credited to the debenture redemption reserve may not be utilized by the Company except to redeem debentures. Retained earnings of the standalone financial statements of SIIL as of March 31, 2008 and 2009 include Rs. 146 million and Rs. 176 million ($ 3.5 million) of debenture redemption reserve, respectively.

  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 (shares 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 capital redemption reserve account. This amount should then be utilized 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. Retained earnings of the standalone financial statements of SIIL include Rs. 769 million ($ 15.1 million) of preference share redemption reserve as of March 31, 2008 and March 31, 2009 respectively.

F-26

  Dividends

     Each equity share holder is entitled to dividends as and when the Company declares and pays dividends after obtaining shareholder approval. Dividends are paid in Indian Rupees. Remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable taxes. Equity dividends paid were nil for the year ended March 31, 2008 and Rs. 2,834 million ($ 55.7 million) the year ended March 31, 2009. Dividend distribution taxes on the equity dividends were nil for the year ended March 31, 2008 and Rs. 481 million ($ 9.4 million) for the year ended March 31, 2009.

     Dividends are payable from the profits determined under generally accepted accounting principles in India (“Indian GAAP”) from statutory standalone financial statements.

     Under Indian law, a company is allowed to pay dividends in excess of 10.0% of its paid-up capital in any year from profits for that year only if it transfers a specified percentage of the profits of that year to reserves. The Company makes such transfers to general reserves.

     If profits for that year are insufficient to declare dividends, the dividends for that year may be declared and paid out from accumulated profits on the following conditions:

• the rate of dividend to be declared shall not exceed the average of the rates at which dividends were declared in the five years immediately preceding that year or 10.0% of the company’s paid-up share capital, whichever is less;

• the total amount to be drawn from the accumulated profits earned in previous years and transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of the company’s paid-up share capital and net reserves, and the amount so drawn shall first be utilized to set off the losses incurred in the financial year before any dividend in respect of preference or equity share is declared; and

• the balance of reserves after such withdrawal shall not fall below 15.0% of the company’s paid-up share capital.

19. Financial Instruments

  (a) Derivatives and hedges

     In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forward, option and swap contracts and other derivative financial instruments. The Company does not hold or issue derivative financial instruments for speculative purposes.

     All derivative financial instruments are recognized as assets or liabilities on the consolidated balance sheets and measured at fair value, generally based on quoted market prices or quotations obtained from financial institutions. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting designation.

     The fair values of all derivatives are separately recorded on the consolidated balance sheets within other 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 Company uses derivative instruments as part of its management of exposures to fluctuations in foreign currency exchange rates, interest rates and commodity prices. The use of derivatives can give rise to credit and market risk. The Company controls credit risk 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.

F-27

  Foreign exchange risk

     The Company uses forward exchange contracts, currency swaps, options and other derivatives to hedge the effects of movements in exchange rates on foreign currency denominated assets and liabilities. The sources of foreign exchange risk are outstanding amounts payable for imported raw materials, capital goods and other supplies as well as financing transactions and loans denominated in foreign currencies. The Company is also exposed to foreign exchange risk on its exports. Most of these transactions are denominated in US dollars. The policy of the Company is to determine on a regular basis what portion of the foreign exchange risk on financing transactions and loans are to be hedged through forward exchange contracts and other instruments. There are systems in place for the review of open (i.e. unhedged) exposure limits and stop-loss levels by management.

  Interest rate risk

     The short-term debt of the Company is principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest. The long-term debt is principally denominated in Indian Rupees and US dollars. The US dollar debt is split between fixed and floating rates (linked to six-month US dollar LIBOR) and the Indian Rupee debt is principally at fixed interest rates. 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.

  Counterparty and concentration of credit risk

     The Company is exposed to credit risk for receivables, liquid investments and derivative financial instruments. There is no concentration of credit risk for the receivables of the Company given the large number of customers and the business diversity. Credit risk on receivables is very limited as almost all credit sales are against letters of credit of banks of national standing. For current asset investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. For derivative and financial instruments, the credit risk is limited as the Company only deals with reputable banks and financial institutions. These exposures are further reduced by having standard International Swaps and Derivatives Association (ISDA) master agreements including set-off provisions with each counterparty.

  Commodity price risk

     The Company has historically limited the use of derivatives for commodity hedging. As much as possible, the Company tries to mitigate price risk through favorable contractual terms. Moreover, hedging is used purely as a risk management tool and, in some cases, strategically to secure future cash flows in cases of high volatility by entering into forward contracts or similar instruments.

  Aluminum

     The raw material is mined in India with sales prices linked to the LME prices. Currently, the Company does not undertake any hedging activities in its aluminum business.

  Copper

     Copper smelting operations at Tuticorin benefit from a natural hedge matching of quotational periods for concentrate purchases with the timing of finished metal sales. The Company hedges metal prices when entering into customer and supplier contracts under an arrival/dispatch plan with corresponding future contracts. These hedges provide an economic hedge of a particular transaction risk but do not qualify as hedges for accounting purposes. The difference between the actual metal in concentrate recovered and the metal content in concentrate paid for, or “free metal”, is sometimes hedged for through forward contracts or options. For the mining assets in Australia, we have hedged a part of the production to secure cash flows on a selective basis.

  Zinc

     Raw material for zinc and lead is mined in India with sales prices linked to the LME prices. Currently a part of exports out of India is hedged through forward contracts or other instruments.

F-28

  Embedded derivatives

     Derivatives embedded in other financial instruments or other contracts are treated as separate derivative contracts and marked-to-market when their risks and characteristics are not clearly and closely related to those of their host contracts and the host contracts are not fair valued. The Company recognises provisional pricing as an embedded derivative in the host contract. The embedded derivative, which is the final settlement price based on a future price, is marked-to-market through the statement of operations for each period with reference to appropriate forward commodity prices.

     The fair value of the Company’s open derivative positions (excluding normal purchase and sale contracts), recorded within other current assets and other current liabilities is as follows:

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

     The Company purchases copper concentrate at the LME price for copper metal for the relevant quotational period less a treatment charge and refining charge (“TcRc”) which is negotiated with suppliers based on the prevailing market rate. TcRc has a variable component linked to LME. The Company is exposed to differences in the LME prices between the quotational periods of the purchase of copper concentrate and sale of the finished copper products. The Company hedges this variability of LME prices and tries to make the LME price a pass-through cost between its purchases of copper concentrate and sales of finished products, both of which are linked to the LME price.

     The Company also benefits from the differences between amounts paid for quantities of copper contents received and recovered in the manufacturing process, also known as “free copper”.

  Cash flow hedges

     The Company, in its copper business, on selected basis hedged its revenue from variable margins and free copper by entering into future contracts. The main purpose of hedging is to fix the prices at a desired level. These are highly probable forecast transactions and accordingly have been accounted for as cash flow hedges and stated at fair value. The Company has also hedged part of its future sales in its zinc business. The change in fair value on these derivative contracts is recorded in OCI. These hedges have been effective for the year ended March 31, 2009.

     The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. The Company hedged a part of its foreign currency exposure on capital commitments during fiscal 2009. Fair value changes on the open forward contracts are recognized in OCI.

  Fair value hedge

     The Company has hedged the commodity price risk in outstanding payable in its copper business.

     In its zinc business, some of 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 based on average LME prices and thereby fixes its future revenue amount on the date of sale. Gains and losses on these hedge transactions were substantially offset by the amount of gains or losses on the underlying sales.

F-29

  Non-qualifying/economic hedge

     The Company entered into derivative contracts which were 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 and zinc future contracts on the LME and certain other derivative instruments. The Company has accounted for fair value adjustments on its open derivative contracts as assets/liabilities in its consolidated balance sheets.

     Reconciliation for changes in net loss from derivative instruments reported in other comprehensive income is as follows:

	Accumulated other			Share of
	comprehensive			minority
	losses			interests			Total			Total
	Rs. in millions			Rs. in millions			Rs. in millions			US dollars
										in millions
Unrealized derivative loss as of April 1, 2007		522			54			576
Amount recognized in other comprehensive income, net of tax of Rs. 37 million ($0.9 million)		(123	)		52			(71	)
Amount reclassified to income statement, net of tax Rs. 127 million ($3.2 million)		(95	)		(105	)		(200	)
Unrealized derivative loss as of March 31, 2008, net of tax Rs. 2 million ($0.1 million)		304			1			305
Unrealized derivative loss as of April 1, 2008		304			1			305			6.0
Amount recognized in other comprehensive income, net of tax of Rs. 170 million ($ 3.3 million)		273	(1)		(71	)		202			4.0
Amount reclassified to income statement, net of tax Rs. 1 million ($ nil million)		(145	)		142			(3	)		(0.1	)
Unrealized derivative loss as of March 31, 2009, net of tax Rs. 170 million ($ 3.3 million)		432			72			504			9.9

(1) Includes share in associate Rs. 831 million.

     Unrealized derivative losses that are reported in accumulated other comprehensive income will be reclassified into earnings when the underlying transactions such as imports or exports of materials, repayment of debt and purchase of capital items occur. The entire amount in the table above is expected to be reclassified into earnings within the next 12 months.

  (b) Other financial instruments

     The carrying amounts of cash and cash equivalents, liquid and short-term investments in mutual funds, accounts receivable, related party receivable and other current assets, accounts payable, acceptances, accrued expenses, other current liabilities and short-term debt approximate their fair values due to the short terms of these instruments.

     The fair values of debt and other non-current liabilities have been estimated by discounting expected future cash flows using a discount rate equivalent to the risk free rate of return adjusted for the market spread required by the Company’s lenders for instruments of the given maturity.

     The following table presents a comparison of the fair values and carrying values of principal financial instruments of the Company:

	2008				2009				2009
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
As of March 31,	value		fair value		value		fair value		value		fair value
	Rs. in millions		Rs. in millions		Rs. in millions		Rs. in millions		US dollars		US dollars
									in millions		in millions
Assets:
Long-term investments		1,123		1,123		1,044		1,044		20.5		20.5
Other non-current assets		1,621		1,621		2,102		2,102		41.3		41.3
Liabilities:
Long-term debt, net of current portion		9,949		9,873		14,384		14,510		282.8		285.2
Other non-current liabilities		974		974		4,908		4,777		96.5		93.9

F-30

20. Commitments, Contingencies and Guarantees

  (a) Commitments and contingencies

  (i) Commitments

     The Company has a number of continuing operational and financial commitments in the normal course of business including completion of the construction and expansion of certain assets.

• Capital commitments

     Significant capital commitments of the Company as of March 31, 2009 amounted to Rs. 67,607 million ($1,329.0 million), and these are related to capacity expansion projects, including commitments amounting to Rs. 27,496 million ($540.5 million) for the Company’s new energy business.

• Export obligations

     The Company has export obligations of Rs. 60,487 million ($ 1,189.1 million) over eight years on account of concessional rates received on import duties paid on capital goods under the Export Promotion Capital Goods Scheme enacted by the Government of India. If the Company is unable to meet these obligations, the Company’s liability would be Rs. 8,417 million ($ 165.5 million), reduced in proportion to actual exports. Due to the remote likelihood of the Company being unable to meet its export obligations, no loss is anticipated with respect to these obligations and hence no provision has been made in its consolidated financial statements.

  (ii) Contingencies

     The Company is from time to time subject to litigation and other legal proceedings. Certain operating subsidiaries of the Company have been named as parties to legal actions by third party claimants and by the Indian sales tax, excise and related tax authorities for additional sales tax, excise and indirect duties. These claims primarily relate either to the assessable values of sales and purchases or to incomplete documentation supporting the Company’s tax returns. The total claims related to these tax liabilities is Rs. 4,410 million ($ 86.7 million). Management has evaluated these contingencies and hence has recorded Rs. 101 million ($ 2.0 million) as current liabilities as of March 31, 2009.

     Claims by third parties amounted to Rs. 4,807 million ($ 94.5 million) as of March 31, 2009. No liability has been recorded against these claims, based on management’s estimate that none of these claims would become obligations of the Company. The Company intends to vigorously defend these claims. Although the results of legal actions cannot be predicted with certainty, it is the opinion of management, after taking appropriate legal advice, that the likelihood of these claims becoming obligations of the Company is remote and hence the resolution of these actions will not have a material adverse effect, if any, on the Company’s business, financial condition or results of operations.

     Therefore, the Company has not recorded any additional liability beyond what is stated above in relation to litigation matters in the accompanying consolidated financial statements.

  (b) Guarantees

     The Company has given guarantees on the issuance of customs duty bonds amounting to Rs. 879 million ($ 17.3 million) for import of capital equipment at concessional rates of duty. The Company does not anticipate any liability on these guarantees.

     The Company has issued a corporate guarantee of Rs. 21,000 million ($ 412.8 million) on behalf of Vedanta Aluminium for obtaining credit facilities. The Company has also issued a corporate guarantee of Rs. 14,704 million ($ 289.1 million) for importing capital equipment at concessional rates of duty under the Export Promotion Capital Goods scheme enacted by the Government of India and Rs. 134 million ($ 2.6 million) for raw material imports. Vedanta Aluminium is obligated to export goods worth eight times the value of concessions enjoyed in a period of eight years following the date of import, failing which the Company is liable to pay the dues to the government. As of March 31, 2009, management determined that the Company had no liability on either of these guarantees.

     The Company has given a bank guarantee amounting to Australian Dollar 5.0 million (Rs 175 million or $ 3.4 million) in favor of the Ministry for Economic Development, Energy and Resources as a security against rehabilitation liability on behalf of CMT. The same guarantee is backed by the issuance of a corporate guarantee of Rs. 320 million ($ 6.3 million). These liabilities are fully recognised in the consolidated financial statements of the Company.

F-31

     The management of the Company does not anticipate any additional liability on these guarantees.

     The Company has given bank indemnity guarantees amounting to Australian Dollar 2.9 million (Rs. 100 million or $ 2.0 million) in favor of the State Government of Queensland, Australia as a security against rehabilitation liabilities that are expected to occur at the closure of the mine. The environmental liability is fully recognized in the financial statements of the Company. The management of the Company does not anticipate any additional liability on these guarantees.

     The Company has given performance bank guarantees amounting to Rs. 2,809 million ($ 55.2 million) as of March 31, 2009. These guarantees are issued in the normal course of business while bidding for supply contracts or in lieu of advances received from customers. The guarantees have varying maturity dates normally ranging from six months to three years. These are contractual guarantees and are enforceable if the terms and conditions of the contracts are not met and the maximum liability on these contracts is the amount mentioned above. The management of the Company does not anticipate any liability on these guarantees.

     The Company has given bank guarantees for securing supplies of materials and services in the normal course of business. The value of these guarantees as of March 31, 2009 is Rs. 2,047 million ($ 40.2 million). The Company has also issued bank guarantees in the normal course of business for an aggregate value of Rs. 493 million ($ 9.7 million) for litigations, against provisional valuation and for other liabilities. The management of the Company does not expect any liability on these guarantees.

     The Company gave an irrevocable letter of credit amounting to US$100 million in favor of the Asarco LLC, USA (“Asarco”) as a security deposit at the time of the Company entered into a Purchase and Sale Agreement (“PSA”) with Asarco. (Refer note no. 30)

     The Company’s outstanding guarantees cover obligations aggregated to Rs. 47,160 million ($ 927.1 million) as of March 31, 2009. The Company estimates that the likelihood of these claims becoming obligations of the Company is remote and as such no provision has been made in the financial statements for these guarantees.

21. Income Taxes

  Overview of the Indian direct tax regime

     Indian companies are subject to Indian income tax on a stand alone basis and not on a consolidated basis. Each entity is assessed for tax on taxable profits determined for each fiscal year beginning on April 1 and ending on March 31. For each fiscal year, a company’s profit or loss is subject to the higher of the regular income tax payable or the minimum alternative tax (“MAT”).

     Regular income taxes are assessed based on book profits prepared under Indian GAAP adjusted in accordance with the provisions of the Indian Income Tax Act, 1961. Such adjustments generally relate to depreciation of fixed assets, disallowances of certain provisions and accruals, the use of tax losses carried forward and gratuity costs.

     MAT is assessed on book profits adjusted for certain limited items as compared to the adjustments allowed for assessing regular income tax. MAT is assessed at 10.0% plus a surcharge. MAT paid during a year can be set off against regular income taxes within a period of seven years succeeding the assessment year in which MAT credit arises.

     Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenges by the tax authorities. There are appeals procedures available to both the tax authorities and taxpayers and it is not uncommon for significant or complex matters in dispute to remain outstanding for several years before they are finally resolved in the High Court or the Supreme Court.

     The assessment of Indian companies, falling under different jurisdiction within India, is completed for fiscal year 2004 to fiscal year 2007.

     There are various tax exemptions or tax holidays available to companies in India. The most important to the Company are:

• The industrial undertakings’ exemption — Profits of newly constructed industrial undertakings located in designated areas of India can benefit from a tax holiday. A typical tax holiday would exempt 100.0% of the profits from the undertaking for five years, and 30.0% for five years thereafter.

F-32

• The power plants’ exemption — Profits on newly constructed power plants can benefit from a tax holiday. A typical holiday would exempt 100.0% of profits for ten consecutive years within the first 15 years of the power plants’ operation. The start of the exemption period is at the discretion of a company.

• Wind power plant’s exemption — Profits are exempt from income tax for any continuous block of 10 years in the first 15 years of operations. Accelerated depreciation of 80% is available in the first year of operations.

• Export Oriented Unit’s exemption — Profits from units designated as an Export Oriented Unit, from where goods are exported out of India, are exempt from tax upto March 2010.

     The effect of such tax holidays were Rs. 5,192 million (impact on basic EPS — Rs. 9.30), Rs. 5,855 million (impact on basic EPS — Rs. 8.68) and Rs. 6,274 million ($.123.3 million) (impact on basic EPS — Rs. 8.85 ($0.2)) for the years ended March 31, 2007, 2008 and 2009, respectively.

     Business losses can be carried forward for a maximum period of eight assessment years immediately succeeding the assessment year for which the loss was first computed. Unabsorbed depreciation can be carried forward for an indefinite period.

     Income before income taxes consisted of the following for the year ended March 31:

	2007		2008		2009		2009
	Rs. in millions		Rs. in millions		Rs. in millions		US dollars
							in millions
Indian Income		88,951		79,133		49,884		980.6
Foreign Income		4,583		3,693		4,471		87.9
		93,534		82,826		54,355		1,068.5

     Details of tax expense charged to statements of operations for the years ended March 31:

	2007			2008			2009			2009
	Rs. in millions			Rs. in millions			Rs. in millions			US dollars
										in millions
Current tax:
Indian income tax		21,849			17,620			7,098			139.6
Foreign income tax		1,343			790			943			18.5
Total current tax		23,192			18,410			8,041			158.1
Deferred tax:
Indian income tax		1,904			3,046			(1,986	)		(39.1	)
Foreign income tax		63			168			391			7.7
Total deferred tax		1,967			3,214			(1,595	)		(31.4	)
Income taxes for the year		25,159			21,624			6,446			126.7
Effective income tax rate		26.9	%		26.1	%		11.9	%		11.9	%

     Tax effects of significant temporary differences on the income tax expense (benefit) are as follows:

	2007		2008		2009			2009
	Rs. in millions		Rs. in millions		Rs. in millions			US dollars
								in millions
Deferred tax on equity in net loss of associate		—		—		(2,040	)		(40.1	)
Others		1,967		3,214		445			8.7
		1,967		3,214		(1,595	)		(31.4	)

     A reconciliation of income tax expense applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Company’s effective income tax rate for the year ended March 31:

	2007			2008			2009			2009
	Rs. in millions			Rs. in millions			Rs. in millions			US dollars
										in millions
Income before income taxes, minority interests and equity in net gain/(loss) of associate		93,534			82,826			54,355			1,068.5
Indian statutory income tax rate		33.7	%		34.0	%		34.0	%		34	%
Expected income tax (benefit) expense at statutory tax rate		31,483			28,153			18,475			363.2
Disallowable expenses		325			550			23			0.5
Non-taxable income		(1,016	)		(3,145	)		(3,535	)		(69.5	)
Impact of tax rate differences		(159	)		(78	)		(177	)		(3.5	)
Tax holiday and similar exemptions		(5,192	)		(5,855	)		(6,274	)		(123.3	)
Deferred tax on equity in net loss of associate		—			—			(2,040	)		(40.1	)
Minimum alternative tax/wealth tax		—			1,227			648			12.7
Other permanent differences		40			25			1			0.0
Valuation allowance (reversal)/provision		(14	)		—						—
Adjustments to income tax provisions based on tax assessments		(308	)		747			(675	)		(13.3	)
Income taxes recognized in the statement of operations		25,159			21,624			6,446			126.7

     Valuation allowances created in the past have been reversed/utilized on account of the generation of taxable profits in a subsidiary.

     The Company’s income tax provision from continuing operations for the year ended March 31, 2009 was Rs. 6,446 million ($ 126.7 million). The effective tax rate for the year ended March 31, 2009 was 11.9 % and the difference between the statutory tax rate of 34.0% and the effective tax rate was primarily due to tax holidays, exemptions available to Indian companies and deferred tax in respect of investment in associate.

F-33

     Effective April 1, 2007 the Company adopted the provisions of FIN 48. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109, Accounting for Income Taxes, and prescribes a recognition threshold of more-likely-than-not to be sustained upon examination. As a result of the implementation of FIN 48, the Company had recognized a Rs. 535 million decrease in the liability for unrecognized tax benefits related to tax positions taken in prior periods, which were accounted for as an increase to the April 1, 2007 balance of retained earnings.

     Reconciliation for unrecognized tax benefit is as follows:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Unrecognized tax benefit, beginning of the year		1,219			1,184			23.3
Addition/(reduction) of tax positions of prior years		58			(498	)		(9.8	)
Settlements		(93	)		(262	)		(5.2	)
Unrecognized tax benefit, end of the year		1,184			424			8.3

     The Companies’ total unrecognized tax benefits, if recognized, would reduce the tax provisions by Rs. 424 million ($ 8.3 million) as of March 31, 2009 and thereby would affect the Company’s effective tax rate.

     In addition, the Company has accrued interest and necessary penalties, where applicable, of Rs. 30 million ($ 0.6 million) related to unrecognized tax positions.

     Significant changes in the amount of unrecognized tax benefits within the next 12 months cannot be reasonably estimated as the changes would depend upon the progress of tax examinations with various tax authorities.

     Components of activities gave rise to deferred tax assets and liabilities as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Deferred tax asset:
Fair valuation of assets and liabilities		—			382			7.5
Voluntary retirement scheme		32			13			0.2
Accounts receivable, net		175			44			0.9
Employee benefits		187			258			5.1
Minimum alternate tax credit		1,157			1,701			33.4
Deferred tax on equity in net loss of associate		—			2,040			40.1
Others		401			391			7.7
Gross deferred tax asset		1,952			4,829			94.9
Less: Valuation allowance		(1,157	)		(1,701	)		(33.4	)
Net deferred tax asset		795			3,128			61.5
Deferred tax liabilities:
Fair valuation of assets and liabilities		(1,059	)		(831	)		(16.3	)
Property, plant and equipment		(15,849	)		(16,186	)		(318.2	)
Others		(226	)		(482	)		(9.5	)
Total deferred tax liabilities		(17,134	)		(17,499	)		(344.0	)
Net deferred tax liabilities		(16,339	)		(14,371	)		(282.5	)

     The following are the details of the deferred tax assets and liabilities as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Deferred tax assets
Current		421		625		12.3
Non-current		374		2,503		49.2
Total		795		3,128		61.5
Deferred tax liabilities
Current		765		208		4.1
Non-current		16,369		17,291		339.9
Total		17,134		17,499		344.0

F-34

     One of the Company’s subsidiaries had set up a deferred tax asset, for MAT paid which is available as a set off against regular income tax payable in the immediately succeeding seven years. Due to the increased income tax benefits expected to be available from its power generation activity and the expected reduction in the regular income taxes, the Company does not expect to set off the MAT credit and has therefore established a valuation allowance against the MAT credit in the years ended March 31, 2008 and March 31, 2009.

22. Employee Benefits

     The Company participates in defined benefits and contribution pension schemes, the assets of which are held (where funded) in separately administered funds. The cost of providing benefits under the plans is determined each year separately for each plan using the actuarial projected unit credit method.

     Actuarial gains and losses arising in the year are recognized in full in the statement of operations of that year.

     For defined contribution schemes, the central provident fund scheme, the superannuation scheme and the Australian pension scheme, the amount charged to the statements of operations is the contributions payable in the year.

  Defined contribution plans

     The Company contributed an aggregate of Rs. 257 million, Rs. 314 million and Rs 334 million ($ 6.6 million) for the years ended March 31, 2007, 2008 and 2009, respectively, to the following defined contribution plans:

     Central provident fund

     In accordance with Indian Provident Fund Act, 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 (12.0% for 2009) of an employee’s basic salary. These contributions are made to the fund administered and managed by the Government of India or to independently managed and approved funds. The Company has no further obligations under the plan beyond its monthly contributions which are charged to income in the period they are incurred. 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. Each relevant company holds a policy with LIC, to which each company contributes a fixed amount relating to superannuation and the pension annuity is met by the LIC as required, taking into consideration the contributions made. Accordingly, this scheme has been accounted for as a defined contribution plan and contributions are charged directly to the statements of operations.

     Australian pension scheme

     The Company also participates in defined contribution pension schemes in Australia. The contribution of a proportion of an employee’s salary in a superannuation fund is a legal requirement in Australia. The employer contributes, into the employee’s fund of choice, 9.0% of the employee’s gross remuneration where the employee is covered by the industrial agreement and 12.0% of the basic remuneration for all other employees. All employees have the option to make additional voluntary contributions.

     The Company’s contribution to the above defined contribution plans aggregated Rs. 27 million, Rs. 28 million and Rs. 34 million ($ 0.7 million) for years ended March 31, 2007, 2008 and 2009 respectively.

F-35

  Defined benefit plans

     Gratuity plan

     In accordance with Payment of Gratuity Act of 1972, SIIL and its Indian subsidiaries provide 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, an amount based on the respective employee’s last drawn salary and the years of employment with the Company.

     Actuarial valuations of the assets of the schemes are performed on an annual basis where such assets are held in separate funds managed by LIC of India.

F-36

     The following table sets out the funded status and the amount recognized in the financial statements for the gratuity plans as of March 31:

	2007			2008			2009			2009
	Rs. in millions			Rs. in millions			Rs. in millions			US dollars
										in millions
Change in projected benefit obligation:
Projected benefit obligation, beginning of year		1,200			1,359			1,484			29.2
Service cost		65			75			81			1.6
Interest cost		89			104			112			2.2
Actuarial (gain) loss		56			1			56			1.1
Benefits paid		(51	)		(55	)		(84	)		(1.7	)
Projected benefit obligation, end of the year		1,359			1,484			1,649			32.4
Change in plan assets:
Fair value of plan assets, beginning of year		720			783			870			17.1
Actual return on plan assets		54			71			79			1.6
Company contributions		60			71			113			2.2
Translation loss		—			—			3			0.1
Benefits paid		(51	)		(55	)		(84	)		(1.7	)
Fair value of plan assets, end of the year		783			870			981			19.3
Shortfall of plan assets, over benefit obligation		(576	)		(614	)		(668	)		(13.1	)
Accrued pension cost		(576	)		(614	)		(668	)		(13.1	)
Accumulated benefit obligation		1,256			1,132			1,202			2.4

     Liability for the post retirement medical benefits was Rs. 27 million, Rs. 35 million and Rs. 42 million ($0.8 million) as of March 31, 2007, 2008 and 2009 respectively.

     The Company expects to contribute Rs. 100 million ($2.0 million) to the defined benefit plans in fiscal 2010.

     Net gratuity cost for the years ended March 31 consists of the following components:

	2007			2008			2009			2009
	Rs. in millions			Rs. in millions			Rs. in millions			US dollars
										in millions
Service cost		65			75			81			1.6
Interest cost		89			104			112			2.2
Expected return on plan assets		(56	)		(69	)		(81	)		(1.6	)
Recognized net actuarial (gain) loss		57			—			56			1.1
Net periodic benefit cost		155			110			168			3.3

     The assumptions used in accounting for the gratuity plan for the years ended March 31 are set out below:

	2007			2008			2009
Discount rate		7.5%-8	%		7.5%-7.8	%		7.5	%
Rate of increase in compensation level of covered employees		5.0	%		5.0	%		5.0	%
Expected return on assets		8.0	%		7.5%-9.1	%		7.5%-9.45	%

     The following table presents estimated future benefit payments relating to the Gratuity Plans:

Year Ended March 31,	Rs. in millions		US dollars in millions
2010		84		1.7
2011		134		2.6
2012		159		3.1
2013		196		3.9
2014		216		4.2
Thereafter for five years		1,221		24.0

F-37

23. Share-Based Compensation Plans

     The Company offers equity-based award plans to its employees, officers and directors through its parent, Vedanta.

  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 with further awards being made in June 2004, November 2004, February 2006 and November 2007. The exercise price of the awards is 10 US cents per share and the performance period of each award is three years.

     The fair value of these awards has been determined at the date of the 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 a straight-line basis over the vesting period. The fair values were calculated using the Monte Carlo simulation with suitable modifications to allow for specific performance conditions of the LTIP.

     The parent, Vedanta, on the basis of fair value of options granted to the Company employees charged a proportionate cost to the Company in the amount of Rs. 161 million, Rs. 152 million and Rs. 516 million ($ 10.1 million) which is recorded in the statements of operations for the years ended March 31, 2007, 2008 and 2009, respectively.

24(i). Other Income/Expenses

     Pursuant to the approval of BIFR, for the rehabilitation scheme of IFL,in fiscal 2009, the Company was allotted preference shares of IFL amounting to Rs. 1,520 million in payment of the net loans and guarantees aggregating Rs. 1,549 million that devolved on the Company in fiscal 2009. The Company subsequently sold the preference shares for a nominal value and incurred a loss of Rs. 1,520 million ($29.9 million). Other expenses for guarantees, impairment of investments and loan in fiscal 2009 represent the difference of Rs. 137 million between the loss of Rs. 1,520 million on the sale of the preference shares, an additional charge of Rs. 29 million and the write-back of the provision of Rs. 1,412 million, made previously.

     During fiscal 2008, by virtue of an agreement for sale of IFL’s shares held by The Madras Aluminium Company Limited (“MALCO”), a related party, a further liability had evolved upon the Company and hence the Company had revised its liability to Rs. 1,412 million by recognizing an additional provision of Rs. 628 million during fiscal 2008. The management of the Company does not anticipate any further liability in relation to this matter.

     In the year ended March 31, 2007 the Company sold a property, consisting primarily of land and buildings in Mumbai, for Rs. 1,000 million, resulting in a profit of Rs. 986 million.

     The Company offered a voluntary separation package in its zinc operations for which Rs. 97 million was recognized in the statement of operations in the year ended March 31, 2007.

24(ii). Interest and Dividend Income

For the year ended March 31	2007		2008		2009		2009
	Rs. in millions		Rs. in millions		Rs. in millions		US dollars
							in millions
Dividend Income		631		5,444		9,030		177.5
Interest Income		1,441		1,104		7,698		151.3
Total		2,072		6,548		16,728		328.8

24(iii). Foreign Currency Gain(loss)

     Net foreign currency gains/(losses) included in determining the net income for the year ended March 31, 2007, 2008 and 2009 were Rs. (457.52) million, Rs. 324.5 million and Rs. (6,536.2) million ($128.5 million) respectively.

25. Earnings per Share

     The following basic and diluted EPS is adjusted retroactively for all the periods presented to reflect the impact of stock dividend, rights issue and stock split effective as of May 12, 2006 in the tables below for the years ended March 31:

	2007		2008		2009		2009
	Rs. in millions		Rs. in millions		Rs. in millions		US dollars
							in millions
Net income from continuing operations		47,346		42,600		29,562		581.1
Net income from discontinued operations		86		—		—		—
Net income		47,432		42,600		29,562		581.1

F-38

	2007		2008		2009		2009
	Rs.		Rs.		Rs.		US dollars
Weighted average number of ordinary shares for earnings per share		558,494,411		674,478,018		708,494,411		708,494,411
Earnings per share:
Income from continuing operations		84.78		63.16		41.7		0.8
Income from discontinued operations		0.15		—		—		—
Earnings per share		84.93		63.16		41.7		0.8

     As of March 31, 2007, 2008 and 2009, the Company did not have any potentially dilutive outstanding equity shares.

26. Related Party Transactions

     The Company enters into transactions in the normal course of business with its related parties, including its parent, Vedanta and its subsidiaries and companies over which it has significant influence. The significant transactions relate to normal sale and purchase of goods, reimbursement of expenses incurred, issuance of guarantees and investments. Related party transactions also include legal fees paid to a firm in which a director of a wholly-owned subsidiary is a partner, on normal commercial terms and conditions. All inter-company transactions and balances are eliminated in consolidation. A summary of significant related party transactions for the years ended 2007, 2008 and 2009 is noted below:

  Enterprises where principal shareholders have control or significant influence

• Vedanta Resources plc (“Vedanta”)

• Twin Star Holdings Limited (“Twin Star”)

• The Madras Aluminium Company Limited (“MALCO”)

• Sterlite Technologies Limited (“STL”)

• Sterlite Gold Limited/Ararat Gold Recovery LLC (“SGL”)/ (“AGRC”) *

• Konkola Copper Mines plc (“KCM”)

• Monte Cello Corporation NV (“MCNV”)

• Sterlite Foundation

• Anil Agarwal Foundation

• Political and Public Awareness Trust

• Volcan Investments Limited (“Volcan”)

• Vedanta Resources Holding Limited

• Vedanta Resource Cyprus Limited

• Sesa Goa Limited (“Sesa Goa”)

• Sesa Industries Limited (“Sesa Industries”)

  Associate

     Vedanta Aluminium Limited (“Vedanta Aluminium”)

  Associate of Vedanta Resources Plc

     India Foils Limited (“IFL”) **

*	With the disposal of holding in SGL in September 2007, these are no more the related party of the Company
**	With the hive off of IFL in November 2008, this is no more the related party of the Company.

F-39

     Summary of significant related party transactions are as follows:

For the Year Ended March 31,	2007			2008			2009			2009
	Rs. in millions			Rs. in millions			Rs. in millions			US dollars
										in millions
Sales
STL		2,320			3,268			4,467			87.8
IFL		1,988			1,417			549			10.8
MALCO		13			7			3			0.1
Vedanta Aluminium		202			—			1,613			31.7
Purchases
STL		50			11			4			0.1
MALCO		349			—			31			0.6
Sesa Industries		—			2			30			0.6
Sesa Goa		—			—			2			0.0
Vedanta Aluminium		—			—			4,354			85.6
KCM		—			—			111			2.2
Interest and dividend income/(expense)
Vedanta		(212	)		—			(10	)		(0.2	)
MALCO		(13	)		—			(102	)		(2.0	)
Vedanta Aluminium		—			40			528			10.4
IFL		11			—			—			—
Twin Star Holdings Ltd		—			—			(1,615	)		(31.7	)
MCNV		—			—			(653	)		12.8
Other (payments)/receipts
Vedanta		(272	)		(201	)		(229	)		(4.5	)
Sterlite Foundation and Anil Agarwal Foundation		(30	)		(24	)		(45	)		(0.9	)
MALCO		117			—			(41	)		(0.8	)
KCM		64			—			3			0.1
AGRC		4			—			—			—
STL		2			1			4			0.1
Vedanta Aluminium		(313	)		(1,797	)		205			4.0
Sesa Goa		—			—			33			0.6
Investment during the year
Vedanta Aluminium		1,315			16,000			—			—
IFL(Refer note 24(i))		—			—			—			—
Loans during the year
Vedanta Aluminium		—			3,890			11,450			225.1
KCM		—			—			3,931			77.3
Sale of business
STL		1,485			—			—			—
Sale of assets
Vedanta Aluminium		—			—			(81	)		(1.6	)
Guarantees outstanding*
Vedanta Aluminium		6,144			18,733			35,838			704.5
IFL		1,820			1,820			—			—

* Maximum guarantee amount and does not represent actual liability.

F-40

     The significant receivable from and payable to related parties as of March 31:

	2008			2009			2009
	Rs. in millions			Rs. in millions			US dollars
							in millions
Receivable from/(payable to)
IFL		369			—			—
STL		827			274			5.4
MCNV		(3,607	)		(570	)		(11.2	)
Vedanta		(996	)		(1,735	)		(34.1	)
KCM		131			5,625	(1)		110.6
Twinstar Infrastructure Limited		(281	)		(281	)		(5.5	)
Sesa Goa		3			16			0.3
Vedanta Aluminium		4,872			16,087	(1)		316.2
Twin Star Holding Limited		—			1			0.0

(1) Includes loan receivable of Rs. 5,364 million and Rs. 15,340 million from KCM and Vedanta Aluminium, respectively. Of these interest bearing loans Rs. 5,364 million and Rs. 6,850 million from KCM and Vedanta Aluminium respectively are payable by March 31, 2010. The balance of Rs. 8,490 million is repayable in quarterly instalments of Rs. 250 million commencing June 30, 2010.

27. Segment Information

     The Company is primarily in the business of non-ferrous mining and metals in India and Australia. The Company has five reportable segments: copper, zinc, aluminum, power and corporate and others. The management of the Company is organized by its main products: copper, zinc, aluminum and power. Each of the reported segments derives its revenues from these main products and hence these have been identified as reportable segments by the Company’s Chief Operating Decision Maker (CODM). Segment profit amounts are evaluated regularly by the Company’s Chief Executive Officer (“CEO”) who has been identified as its CODM in deciding how to allocate resources and in assessing performance.

  Copper

     The copper business is principally one of custom smelting and includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant and copper rod plant at Tuticorin in Southern India and a refinery and two copper rod plants at Silvassa in Western India. The Company obtains a small quantity of copper concentrate from the Mt. Lyell copper mine in Tasmania, Australia, owned by CMT. The segment also includes a precious metal refinery at Fujairah in the United Arab Emirates.

  Zinc

     The Company’s zinc business is owned and operated by HZL. The Company has a 64.9% ownership interest in HZL, with the remaining interests owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). HZL’s operations include three lead-zinc mines in Northwest India, three zinc smelters, one lead-zinc smelter and one lead smelter in Northwest India ,one zinc smelter in Southeast India and one zinc melting plant in North India

  Aluminum

     The aluminum business is owned and operated by BALCO, in which the Company has a 51.0% ownership interest. The remainder of BALCO is owned by the Government of India. BALCO’s operations include bauxite mines, captive power plants, and refining, smelting and fabrication facilities in Central India.

  Power

     The power business consist of operations by SEL, the wholly owned subsidiary of the company, TSPL, the wholly owned subsidiary of SEL and wind power operations of HZL. This segment has been separately disclosed for the year ended March 31, 2009.

F-41

  Corporate and others

The operating segment “Corporate and others” includes other corporate activities.

  (a) Business segments

     The operating segments reported are the segments of the Company for which separate financial information is available. Segment profit amounts are evaluated regularly by the CEO who has been identified as its chief operating decision maker in deciding how to allocate resources and in assessing performance.

     The following table presents revenue and profit information and certain asset and liability information regarding the Company’s business segments for the years ended March 31, 2007, 2008 and 2009.

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

(1) Includes power segment assets of Rs. 6,156 million.

F-42

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

(1) Includes power segment sales of Rs. 320 million, operating loss of Rs. 28 million and segment asset of Rs. 21,200 million.

F-43

													Corporate
For the Year Ended March 31, 2009	Copper			Zinc			Aluminum			Power			and others			Elimination			Total			Total
							Rs. in millions															US dollars
																						in millions
Net sales to external customers		116,525			55,724			39,170			773			—			—			212,192			4,171.3
Inter-segment sales		145			—			166			—			—			(311	)		—			—
Segment sales		116,670			55,724			39,336			773			—			(311	)		212,192			4,171.3
Segment profit		12,574			27,777			8,954			792			132			—			50,229			987.4
Depreciation, depletion and amortization		(2,017	)		(2,629	)		(2,590	)		(608	)		(1	)		—			(7,845	)		(154.2	)
Guarantees, impairment of investment and loan		—			—			—			—			(137	)					(137	)		(2.7	)
Operating income (loss)		10,557			25,148			6,364			184			(6	)		—			42,247			830.5
Interest and dividend income																				16,728			328.8
Interest expense																				(6,874	)		(135.1	)
Net realized and unrealized investment gains																				2,254			44.3
Income before income taxes, minority interests and equity in net income of associate																				54,355			1,068.5
Income taxes																				(6,446	)		(126.7	)
Income after income taxes, before minority interests and equity in net income of associate																				47,909			941.8
Minority interests																				(12,346	)		(242.7	)
Equity in net loss of associate,														(6,001	)					(6,001	)		(118.0	)
Net income from continuing operations																				29,562			581.1
Income from divested business, net of tax																				—			—
Net income																				29,562			581.1
Assets
Segment assets		148,017			159,903			68,511			51,585			2,378			—			430,394			8,460.7
Investment in associate		—			—			—			—			12,692			—			12,692			249.5
Total assets		148,017			159,903			68,511			51,585			15,070			—			443,086			8,710.2
Additions to property, plant and equipment		1,449			12,816			10,330			25,968			—			—			50,563			994.0

     No single customer accounted for 10% or more of the Company’s net sales on a consolidated basis or for any of the Company’s primary businesses in any of the periods indicated.

  (b) Geographical segmental analysis

     The Company’s operations are located in India and Australia. The following table provides an analysis of the Company’s sales by geographical market, irrespective of the origin of the goods as of March 31:

	2007		2008		2009		2009
	Rs. in millions		Rs. in millions		Rs. in millions		US dollars
							in millions
India		114,222		140,503		140,330		2,758.6
Far East(1)		69,624		62,303		27,803		546.6
Other(2)		57,400		43,608		44,059		866.1
Net sales		241,246		246,414		212,192		4,171.3

(1)	Far East includes a number of countries, primarily China, South Korea, Singapore and Thailand.
(2)	Other includes Kenya, Nigeria, Ethiopia, Algeria, Sudan, Morocco, Namibia, Egypt, Oman, the United Arab Emirates, Turkey, Qatar, Saudi Arabia, Syria, Israel, Bangladesh, Sri Lanka, Pakistan, Belgium, France, Germany, Italy, Jordan, the UK, The Netherlands, Luxembourg, Rotterdam, Spain, Sweden, Switzerland, Australia, Cameroon, Malawi and Iran.

F-44

     The following is an analysis of the carrying amount of long-lived assets analyzed by the geographical area in which the assets are located as of March 31:

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
India		120,754		163,301		3,210.2
Australia		789		580		11.4
UAE		39		362		7.1
Long-lived assets		121,582		164,243		3,228.7

28. Fair Value Measurements

     SFAS 157 defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements. In accordance with SFAS 157, the Company has categorized its financial assets and liabilities as of March 31, 2009, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

	Quoted price								Quoted price
	in active		Significant						in active		Significant
	market for		other		Significant				market for		other		Significant
	identical		observable		unobservable				identical		observable		unobservable
	assets		inputs		inputs				assets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)		Total
			(Rs. in millions)								(US dollars in millions)
Financials Asset
Trading Securities(1)		137,741		—		—		137,741		2,707.7		—		—		2,707.7
Available for sale securities(2)		60		—		—		60		1.2		—		—		1.2
Derivative(3)		26		1,512		—		1,538		0.5		29.7		—		30.2
Total		137,827		1,512		—		139,339		2,709.4		29.7		—		2,739.1
Financials Liability
Derivative(4)		2,138		501		—		2,639		42.0		9.9		—		51.9
Total		2,138		501		—		2,639		42.0		9.9		—		51.9

Notes:
(1)	Included in the short-term investments and deposits and restricted — cash, deposits and investments in the consolidated balance sheet.
(2)	Included in the long term investments in the consolidated balance sheet.
(3)	Included in the other current assets in the consolidated balance sheet.
(4)	Included in the other current liabilities in the consolidated balance sheet.

29. Summarized Financial Information of the associate (Vedanta Aluminium Ltd)

     Summarized Financial Information required by Rule 4-08(g) of Regulation S-X

     The following table provides summarized financial information of the Company’s equity investees as required by Rule 4-08(g) of Regulation S-X.

	2008		2009		2009
	Rs. in millions		Rs. in millions		US dollars
					in millions
Current assets		7,157		15,843		311.4
Non-current assets		83,741		139,470		2,741.7
Current liabilities		15,572		80,107		1,574.7
Non-current liabilities		63,381		77,409		1,521.7

	2007		2008			2009			2009
	Rs. in millions		Rs. in millions			Rs. in millions			US dollars
									in millions
Net sales		—		—			2,069			40.7
Operating income / (Loss)		—		(94	)		(1,003	)		(19.7	)
Income from continuing operations before taxes and minority interest		671		3,018			(21,515	)		(422.9	)
Net income / (loss)		83		1,665			(20,341	)		(399.9	)

     The net loss in the year ended March 31, 2009 is primarily on account of foreign exchange losses.

F-45

30. Asarco Acquisition

     On May 30, 2008, Sterlite entered into a PSA with Asarco, a Tucson-based mining, smelting and refining company, under which it agreed to purchase Asarco’s operating assets for a consideration of $2.6 billion. The integrated assets to be acquired included three open-pit copper mines and associated mills and SX-EW plant in Arizona, USA, a copper smelter in Arizona, USA and a copper refinery, rod and cake plants and a precious metals plant in Texas, USA.

     Due to financial turmoil, the steep fall in copper prices and adverse global market conditions, in October 2008, the Company and Asarco entered into discussions to renegotiate the prior agreement. Since the Company continued negotiation, Asarco agreed to not draw on the US$50 million letter of credit given by the Company as deposit at the time of signing the PSA.

     The Company entered into a new agreement (“New PSA”) following such renegotiations of the prior agreement on March 6, 2009 under which it agreed to purchase the same operating assets of Asarco for $1.7 billion which it agreed on June 12, 2009 to increase to $1.87 billion, mostly related to an expected increase in working capital on the closing date. The purchase consideration consists of (a) a cash payment of US$1.1 billion on closing; and (b) a senior secured non-interest bearing promissory note (the “Note”) of US$770 million, payable over a period of nine years as follows: (i) US$20 million per year from the end of second year for a period of seven years; and (ii) a terminal payment of US$630 million at the end of the ninth year, totaling to US$770 million. In the event that the annual average of daily copper prices in a particular year increases beyond US$6,000 per tonne, the annual payment in that year will be proportionately increased subject to a maximum of US$85.56 million and the terminal payment in the ninth year will be correspondingly reduced, keeping the total payment at US$770 million. The principal amount of the Note will be adjusted upwards for any further increase in working capital on closing. The obligations under the Note are secured against the assets being acquired by Sterlite (USA), Inc. and are without any recourse to the Company.

     The Company has deposited US$50 million in form of letter of credit while entering the New PSA, taking the total deposit/letter of credit to US$100 million which will be adjusted against the Purchase consideration. The Company will assume operating liabilities but not legacy liabilities for asbestos and environmental claims for ceased operations.

     This consummation of the agreement remains contingent upon the confirmation of a Chapter 11 plan of reorganization proposed by Asarco and sponsored by Sterlite’s wholly owned subsidiary Sterlite (USA), Inc. by the US Bankruptcy Court for the Southern District of Texas. The US Bankruptcy Court has approved adequacy of Disclosure Statement submitted by the Company and subsequently, on May 15, 2009, the Company has deposited further US$25 million in the form of letter of credit.

     Separately, Sterlite (USA), Inc. has agreed with the representatives appointed pursuant to Asarco’s reorganization proceedings under Chapter 11 of the US Bankruptcy Code to represent all persons with asbestos claims and demands against Asarco and/or its subsidiary debtors (the “Asbestos Claimants”) and Asarco to grant a put option to the asbestos settlement trust to be established (the “Asbestos Trust”) pursuant to which the Asbestos Trust shall be entitled to sell to Sterlite (USA), Inc. its entire interest (expected to be approximately 27%) (the “Asbestos Litigation Interest”) in the Brownsville judgment against Americas Mining Corporation, a subsidiary of Grupo México, S.A.B de C.V. (the “Brownsville Judgment”), which was awarded by the US District Court for Southern District of Texas, Brownsville Division, against Americas Mining Corporation requiring it to return to Asarco 260.09 million common stock of Southern Copper Corporation, together with past dividends received with interest, worth over $6.0 billion in aggregate. The Asbestos Litigation Interest in the Brownsville Judgment is to be distributed for the benefit of all Asbestos Claimants. The grant of the put option would be subject to the approval and consummation of the reorganization plan proposed by Asarco and sponsored by Sterlite USA. The put option is exercisable by the Asbestos Trust at any time after the end of the second year from the effective date of the approved reorganization plan (the “Effective Date”) through the end of the fourth year from the Effective Date at the price of $160 million less the amount of any receipt or other recovery on account of the Asbestos Litigation Interest prior to the exercise of the put option. The Company does not expect any obligation on account of this agreement.

F-46

     SCHEDULE II-Valuation and Qualifying Accounts

			Charged to
	Balance at		Revenue,							Balance at
	beginning of		Costs or		Other					end of
	period		Expenses		Additions		Deductions			Period
As of March 31, 2008 (in Rs. in millions):
Valuation Allowance		—		1,157		—		—			1,157
Allowances for doubtful accounts receivables and advances		15		160		—		(3	)		172
As of March 31, 2009 (in Rs. in millions):
Valuation Allowance		1,157		544		—		—			1,701
Allowances for doubtful accounts receivables and advances		172		8		—		(2	)		178
As of March 31, 2009 (in US dollars in millions):
Valuation Allowance		22.7		10.7		—		—			33.4
Allowances for doubtful accounts receivables and advances		3.4		0.2		—		0			3.6

Note:

One of the Company’s subsidiaries had set up a deferred tax asset, for MAT paid which is available as a set-off against regular income tax payable in the immediately succeeding seven years. Due to the increased income tax benefits expected to be available from its power generation activity and the expected reduction in the regular income taxes, the Company does not expect to set off the MAT credit and has therefore established a valuation allowance against the MAT credit in the years ended March 31, 2008 and March 31, 2009.

F-47

EX-4.42

Exhibit 4.42

EXECUTION VERSION

SETTLEMENT

AND

PURCHASE AND SALE

AGREEMENT

AMONG

ASARCO LLC,

AR SILVER BELL, INC.,

COPPER BASIN RAILWAY, INC.,

ASARCO SANTA CRUZ, INC.,

STERLITE (USA), INC.

AND

STERLITE INDUSTRIES (INDIA) LTD

Dated as of March 6, 2009

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS			2
1.1	Certain Definitions		2
1.2	Other Terms		18
1.3	Certain Rules of Construction		18
ARTICLE II SETTLEMENT AND RELEASE			18
2.1	Settlement and Release		18
2.2	Bankruptcy Court Approval of Settlement and Release		19
2.3	Reservation of Rights		20
ARTICLE III SALE AND PURCHASE OF THE PURCHASED ASSETS			20
3.1	Purchased Assets		20
3.2	Excluded Assets		23
3.3	Assumed Liabilities		25
3.4	Retained Liabilities		26
3.5	Contract Designation Rights		27
3.6	Silver Bell		28
ARTICLE IV PURCHASE PRICE AND PAYMENT			28
4.1	Purchase Price		28
4.2	Deposit		28
4.3	Purchase Price Adjustment		31
4.4	Dispute Resolution		31
4.5	Allocation of Purchase Price		32
ARTICLE V CLOSING			32
5.1	Time and Place of Closing		32
5.2	Items to Be Delivered by Sellers		33
5.3	Items to Be Delivered by Purchaser		34
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLERS			35
6.1	Organization and Good Standing		35
6.2	Authorization of Agreement		36
6.3	No Violation; Consents		36
6.4	Financial Information		37
6.5	Compliance with Laws; Permits		37
6.6	Sufficiency of Purchased Assets		37
6.7	Purchased Real Property		37
6.8	Material Contracts		38
6.9	Suppliers		39
6.10	Employee Benefit Matters		39
6.11	Environmental Matters		39
6.12	Labor Matters		40
6.13	Taxes		41
6.14	Insurance		41
6.15	Financial Advisors		41

i

		Page
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF PURCHASER AND GUARANTOR			42
7.1	Organization and Good Standing		42
7.2	Authorization of Agreement		42
7.3	No Violation; Consents		42
7.4	Litigation		43
7.5	Investment Intention		43
7.6	Financial Capability		43
7.7	Bankruptcy		43
7.8	Financial Advisors		43
7.9	Subsequent Sales		43
ARTICLE VIII COVENANTS			44
8.1	Access to Information		44
8.2	Conduct of the Business Pending the Closing		44
8.3	Cooperation; Consents and Filings		46
8.4	Preservation of Records		47
8.5	Confidentiality		48
8.6	Public Announcements		48
8.7	Bankruptcy Matters		48
8.8	Title Insurance		49
8.9	Bonds and Assurances		50
8.10	Solicitation Provisions; Matching Right; Back-Up Bid Option		50
8.11	Risk of Loss; Casualty Loss		53
8.12	Further Assurances		53
8.13	Payments and Proceeds		53
8.14	Transition Services Agreement		54
ARTICLE IX EMPLOYEES AND EMPLOYEE BENEFITS			54
9.1	Employment		54
9.2	Terms of Continued Employment		55
9.3	Assumption of Plans		55
9.4	Service Credit		56
9.5	Vacation and Leave		56
9.6	Welfare Benefit Plans; Workers’ Compensation; Other Benefits		56
9.7	OSHA Medical Records; Other Records; Payroll Deductions		57
9.8	Announcement		57
9.9	Warn Act		57
ARTICLE X TAX MATTERS			58
10.1	Transaction Taxes		58
10.2	Tax Prorations		58
10.3	Tax Refunds		59
ARTICLE XI CONDITIONS TO CLOSING			59
11.1	Conditions Precedent to Obligations of Each Party		59
11.2	Conditions Precedent to Obligations of Purchaser and Guarantor		60
11.3	Conditions Precedent to Obligations of Sellers		60
ARTICLE XII LIMITATIONS			61
12.1	Purchaser’s Review		61

ii

		Page
12.2	“As-Is”; Sale		61
12.3	Waivers and Releases		62
12.4	Acceptance and Discharge		64
12.5	No Consequential or Punitive Damages		64
ARTICLE XIII TERMINATION			64
13.1	Termination of Agreement		64
13.2	Effect of Termination		66
ARTICLE XIV GUARANTEE			68
14.1	Guarantee		68
14.2	Limitation		70
ARTICLE XV MISCELLANEOUS			71
15.1	Nonsurvival of Representations, Warranties and Covenants		71
15.2	Remedies		71
15.3	Bankruptcy Court Approval		71
15.4	Expenses		71
15.5	Disclosure Schedules		72
15.6	Governing Law		72
15.7	Submission to Jurisdiction; Consent to Service of Process		72
15.8	Waiver of Jury Trial		73
15.9	No Right of Set-Off		73
15.10	Time of Essence		73
15.11	Entire Agreement; Amendments and Waivers		73
15.12	Table of Contents and Headings		74
15.13	Notices		74
15.14	Severability		75
15.15	Binding Effect; Assignment		75
15.16	No Third-Party Beneficiaries		76
15.17	Counterparts		76

Exhibits

Exhibit A	Form of Assignment and Assumption Agreement
Exhibit B	Form of Bill of Sale
Exhibit C-1	Purchaser Opinion
Exhibit C-2	Guarantor Opinion
Exhibit D	Form of Purchaser Promissory Note
Exhibit E	Closing Accounts Statement Principles and Illustration
Exhibit F-1 through
Exhibit F-4	Forms of Deeds
Exhibit G	Form of Leasehold Deed
Exhibit H	Form of Assignment and Assumption of Ground Lease Agreement
Exhibit I	Form of Patent Assignment
Exhibit J	Form of Trademark Assignment
Exhibit K	Services to be Included in Transition Services Agreement
Exhibit L	Form of Security Agreement
Exhibit M-1	Form of Sterlite Settlement Motion

iii

Exhibit M-2	Form of Sterlite Agreed Order
Exhibit N-1	Form of Mortgage (Texas)
Exhibit N-2	Form of Mortgage (Arizona)
Exhibit O-1	First L/C
Exhibit O-2	Second L/C
Exhibit O-3	Form of Third L/C
Exhibit P	Environmental Claimants

Seller Disclosure Schedule

Section 1.1A	Permitted Liens
Section 1.1B	Sellers’ Knowledge
Section 3.1(b)	Machinery and Equipment
Section 3.1(c)	Purchased Real Property
Section 3.1(e)(i)	Leases of Real Property (ASARCO as Lessee)
Section 3.1(e)(ii)	Leases of Personal Property
Section 3.1(e)(viii)	Insurance Policies
Section 3.1(e)(xiii)	Real Property Leases (ASARCO as Lessor)
Section 3.1(e)(xiv)	Royalty Agreements
Section 3.1(e)(xv)	Other Contracts
Section 3.1(g)	Motor Vehicles
Section 3.1(j)	Patents
Section 3.1(k)	Trademarks
Section 3.1(m)	Permits
Section 3.1(o)	Patented and Unpatented Mining Claims
Section 3.1(p)	Adversary Proceedings
Section 3.2(c)	Equity Securities
Section 3.2(e)	Retained Proceedings
Section 3.2(g)	Retained Real Property
Section 3.2(j)	Retained Contracts
Section 3.2(n)	Retained Adversary Proceedings
Section 3.5(a)	Assumed Contracts
Section 6.3(a)	Sellers Consents
Section 6.3(b)	Governmental Approvals
Section 6.4	Financial Information
Section 6.5	Compliance with Laws
Section 6.7	Purchased Real Property
Section 6.8(a)	Material Contracts
Section 6.9	Suppliers
Section 6.10(a)	Employee Benefit Plans
Section 6.10(b)	Pension Plans
Section 6.10(d)	Litigation Regarding Employee Benefit Plans
Section 6.11	Environmental Matters
Section 6.12(a)	Labor Matters
Section 6.12(b)	Labor Matters

iv

Section 6.12(c)	Labor Matters
Section 6.13	Taxes
Section 6.14	Insurance
Section 8.2	Conduct of Business
Section 8.9	Bonds and Assurances
Section 9.2(b)	Severance Benefits
Section 9.3	Assumed Benefit Plans
Section 9.9	WARN Act
Section 11.3	Unions

v

SETTLEMENT AND PURCHASE AND SALE AGREEMENT

          This SETTLEMENT AND PURCHASE AND SALE AGREEMENT (the “Agreement”), dated as of March 6, 2009 (the “Effective Date”), is entered into by and among ASARCO LLC, a Delaware limited liability company (“ASARCO”); AR Silver Bell, Inc., a Delaware corporation (“ARSB”); Copper Basin Railway, Inc., a Delaware corporation (“CBRI”); and ASARCO Santa Cruz, Inc., a Delaware corporation (“Santa Cruz”, together with ARSB and CBRI, “Non-Debtor Sellers”; ASARCO and Non-Debtor Sellers collectively referred to herein as “Sellers”, and each individually, a “Seller”); and Sterlite (USA), Inc., a Delaware corporation (“Purchaser”); and Sterlite Industries (India) Ltd, an Indian limited liability company (“Guarantor”).

W I T N E S S E T H:

          WHEREAS, ASARCO filed its voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) on August 9, 2005;

          WHEREAS, ASARCO owns 100% of the Equity Securities (as defined below) of each of the Non-Debtor Sellers;

          WHEREAS, the assets and liabilities of ASARCO are subject to the supervision and control of ASARCO as debtor-in-possession subject and pursuant to the jurisdiction of the Bankruptcy Court (as defined below);

          WHEREAS, Sellers have determined that a prompt sale of the Purchased Assets (as defined below) is necessary in order to preserve the value inherent in the Purchased Assets ultimately available to the creditors of ASARCO;

          WHEREAS, Sellers, Purchaser and Guarantor entered into that certain Purchase and Sale Agreement, dated as of May 30, 2008 (the “Original PSA”), for the prompt sale of the Purchased Assets by Sellers to Purchaser and such Original PSA was terminated by Sellers on October 22, 2008;

          WHEREAS, notwithstanding the termination of the Original PSA, pursuant to Sections 363, 105(a) and 1123(a)(5)(D) of the Bankruptcy Code and the applicable Federal Rules of Bankruptcy Procedure, Sellers desire to sell to Purchaser, and Purchaser desires to purchase from Sellers, the Purchased Assets on the terms and subject to the conditions contained in this Agreement; and

          WHEREAS, in connection with the transactions contemplated hereby, Purchaser has delivered to Sellers the Purchaser Opinion (as defined below) and Guarantor has delivered the Guarantor Opinion (as defined below).

          NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

1

ARTICLE I
DEFINITIONS

     1.1 Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

          “Acquisition Proposal” means any proposal or offer for a merger, recapitalization, share exchange, debt-for-equity exchange, distribution of securities for the benefit of the stakeholders of ASARCO, consolidation or similar transaction involving a sale or purchase (directly or through a proposed investment in equity securities, debt securities or claims of creditors) of all or substantially all of the Purchased Assets or all or substantially all of the Equity Securities of ASARCO or of the Non-Debtor Sellers, other than the transactions contemplated by the terms of this Agreement. For the avoidance of doubt, an Acquisition Proposal does not include a proposal or offer for a Stand-Alone Plan.

          “Adjustment Amount” means, as of the date that a binding determination of the Closing Accounts Amount has been made in accordance with Section 4.4, the product of (a) 1.6 multiplied by (b) Agreed Working Capital minus the Closing Accounts Amount. In all cases, the Adjustment Amount shall be expressed as a positive number.

          “Affiliate” (and, with a correlative meaning “affiliated”) means, with respect to any Person, (a) any other Person that directly, or through one or more intermediaries, controls or is controlled by or is under common control with such Person or (b) any Subsidiary of such Person. As used in this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by Contract or otherwise).

          “Agreed Working Capital” means an amount equal to $253,000,000.00.

          “Agreement” shall have the meaning set forth in the preamble hereto.

          “Allocation” shall have the meaning set forth in Section 4.5.

          “Ancillary Agreements” means the Assignment and Assumption Agreement, the Bill of Sale, the Transition Services Agreement, the Patent Assignment, the Trademark Assignment, the Deeds, the Leasehold Deeds, the Mortgages, the Security Agreement and the other documents to be delivered in connection therewith, Purchaser Promissory Note and the Assignment and Assumption of Ground Lease Agreement.

          “Applicable Law” means, with respect to any Person, any Law applicable to such Person or its business, properties or assets.

          “ARSB” shall have the meaning set forth in the preamble hereto.

          “ASARCO” shall have the meaning set forth in the preamble hereto.

2

          “Asbestos Committee” means the official committee of unsecured creditors appointed for the Lac d’Amiante du Québec Ltée (f/k/a Lake Asbestos of Quebec, Ltd.), Lake Asbestos of Quebec, Ltd., LAQ Canada, Ltd., CAPCO Pipe Company, Inc. (f/k/a Cement Asbestos Products Company) and Cement Asbestos Products Company cases.

          “Asbestos FCR” means Judge Robert C. Pate, appointed by the Bankruptcy Court pursuant to section 524(g) of the Bankruptcy Code to represent future asbestos-related claimants and any and all Persons that may assert demands against ASARCO or any of its affiliated debtors but have not presently done so.

          “Asset Retirement Obligations” means those obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.

          “Assignment and Assumption Agreement” means an Assignment and Assumption Agreement among Sellers and Purchaser, dated as of the Closing Date, substantially in the form of Exhibit A hereto.

          “Assignment and Assumption of Ground Lease Agreement” shall have the meaning set forth in Section 5.2(d).

          “Assumed Contracts” shall have the meaning set forth in Section 3.1(e).

          “Assumed Environmental Liabilities” shall have the meaning set forth in Section 3.3(e).

          “Assumed Liabilities” shall have the meaning set forth in Section 3.3.

          “Assumed Pre-Petition Contracts” shall have the meaning set forth in Section 3.1(e).

          “Assumption-Pending Pre-Petition Contracts” shall have the meaning set forth in Section 3.5(a).

          “Back-Up Bid Agreement” shall have the meaning set forth in Section 8.10(f).

          “Back-Up Bid Option” shall have the meaning set forth in Section 8.10(f).

          “Bankruptcy Cases” means the chapter 11 cases commenced by ASARCO and its affiliated debtors on or after August 9, 2005 (including any case commenced after the date of this Agreement), jointly administered under Case No. 05-21207, but excluding the chapter 11 case commenced by Encycle/Texas, Inc which was converted to a chapter 7 case.

          “Bankruptcy Code” shall have the meaning set forth in the recitals hereto.

          “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division or any other court having jurisdiction over the Bankruptcy Cases from time to time.

3

          “Bill of Sale” means a Bill of Sale executed by Sellers, dated as of the Closing Date, substantially in the form of Exhibit B hereto.

          “Bonds” means (i) the $100,000,000 ASARCO Incorporated 7.875% Debentures due 2013; (ii) the $150,000,000 ASARCO Incorporated 8.50% Debentures due 2025; (iii) the $71,900,000 Industrial Development Authority of the County of Gila, Arizona Debentures due 2027; (iv) the $33,160,000 Lewis and Clark County, Montana Debentures due 2027; (v) the $27,740,000 Nueces River Authority Debentures due 2027; (vi) the $34,800,000 Lewis & Clark County, Montana Debentures due 2033; and (vii) the $22,200,000 Nueces River Authority Debentures due 2018.

          “Bonds and Assurances” shall have the meaning set forth in Section 8.9.

          “Books and Records” means all books, records, data and files (in any form or medium, including computerized or electronic) of the Business relating to the Purchased Assets including (i) all books and records of account and other financial records (including Tax records or copies thereof); (ii) all catalogues, brochures, advertising materials, forms of purchase orders, sales orders and invoices and similar sales or marketing materials; (iii) all price lists, customer lists, supplier lists, mailing lists and credit records; (iv) all manuals pertaining to software, products, operations, research, development or maintenance; (v) all records or lists pertaining to supply, production or distribution; (vi) all engineering reports and studies, environmental reports and studies, surveys, engineering design plans, blueprints, or mine plans relating to Purchased Real Property; (vii) operating records and operating, safety and maintenance manuals; and (viii) all personnel records (including, personnel files, time and medical records) of all Transferred Employees, personnel policies and procedures, labor relations records (including, all records pertaining to collective bargaining, grievance files and settlements, arbitration decisions and awards), and records relating to affirmative action plans, in each case, to the extent relating specifically to the Purchased Assets, but excluding (A) any such items to the extent relating to any Excluded Assets or Retained Liabilities, (B) any such items to the extent related or pertaining to asbestos or asbestos-containing materials or products or to asbestos personal injury claims or demands against Sellers, including claims which have been litigated, settled or otherwise dealt with by Sellers or any one of the Sellers, and (C) bids, letters of intent, expressions of interest, or other proposals received in connection with the transactions contemplated by the Original PSA, this Agreement or any of the Ancillary Agreements or otherwise and information and analyses relating to such communications (such items described in (A) through (C), the “Retained Books and Records”).

          “Business” means the business of mining, smelting and refining of copper and other metals as conducted by Sellers on the date of this Agreement.

          “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Law to close. Any event the scheduled occurrence of which would fall on a day that is not a Business Day shall be deferred until the next succeeding Business Day.

          “Cash” shall have the meaning set forth in Section 3.2(a).

4

          “Casualty” shall have the meaning set forth in Section 8.11.

          “CBRI” shall have the meaning set forth in the preamble hereto.

          “CFIUS” shall have the meaning set forth in Section 8.3(d).

          “CFIUS Notice” shall have the meaning set forth in Section 8.3(d).

          “Closing” shall have the meaning set forth in Section 5.1.

          “Closing Accounts Amount” shall have the meaning set forth in Exhibit E hereto.

          “Closing Accounts Statement” shall have the meaning set forth in Section 4.3(a).

          “Closing Date” means the date on which the Closing occurs.

          “Closing Payment” shall have the meaning set forth in Section 4.1.

          “Coal Act” means the Coal Industry Retiree Health Benefit Act of 1992, as amended.

          “COBRA” shall have the meaning set forth in Section 9.6(b).

          “Code” shall mean the Internal Revenue Code of 1986, as amended.

          “Collective Bargaining Agreements” means all collective bargaining agreements between ASARCO and its Subsidiaries and any labor union or other representative of current ASARCO employees (including material local agreements, amendments, supplements, letters and memoranda of understanding of any kind) in effect on the Closing Date.

          “Committee” shall mean the official committee of unsecured creditors of ASARCO appointed in connection with the Bankruptcy Cases.

          “Confidentiality Agreement” shall have the meaning set forth in Section 8.5.

          “Confirmation Deadline” shall have the meaning set forth in Section 13.1(b).

          “Contract” means any written contract, indenture, note, bond, loan, instrument, lease, commitment or other agreement.

          “Creditor Constituents” means the Committee, the Asbestos Committee, the Asbestos FCR, the United States Department of Justice, the United Steel Workers Union, and the States of Washington, Montana, Missouri, Arizona and Texas.

          “Cure Claims” means all defaults as of the Closing Date, as determined by the Bankruptcy Court, and all actual or pecuniary losses that have resulted therefrom and are necessary to cure such defaults under any Assumption-Pending Pre-Petition Contract.

5

          “Deeds” shall have the meaning set forth in Section 5.2(c).

          “Deemed Value” means, in respect of the Purchase Price or a Superior Proposal, the aggregate dollar value to Sellers of all cash and non-cash (as applicable) consideration comprising the Purchase Price or Superior Proposal, as applicable, as determined by the Board of Directors of ASARCO after consultation with its financial and legal advisors, the Creditor Constituents and such other advisors as the Board of Directors of ASARCO chooses, in its sole discretion, to consult.

          “Definitive Agreement” means a binding definitive written agreement, enforceable against the parties thereto, that effects the consummation of a Superior Proposal. A Definitive Agreement does not include an executed letter of intent or any other preliminary written agreement, nor does it include any oral or written agreement in principle or acceptance of an offer or bid by any Person.

          “Deposit” shall have the meaning set forth in Section 4.2.

          “Disclosure Statement” means the disclosure statement relating to the Plan to be filed after the date hereof by ASARCO with the Bankruptcy Court pursuant to Section 1125 of the Bankruptcy Code (including all schedules and exhibits thereto), as such disclosure statement may be amended or modified from time to time, that, to the extent it describes this Agreement, Purchaser (and Guarantor) and the transactions contemplated hereby, is in form and substance reasonably satisfactory to Purchaser.

          “Disclosure Statement Approval Date” means the date on which the Disclosure Statement shall have been approved by the Bankruptcy Court.

          “Effective Date” shall have the meaning set forth in the preamble hereto.

          “Effective Order” means a Plan Confirmation Order entered by the Bankruptcy Court or the United States District Court that has jurisdiction over the Bankruptcy Cases: (a) which the time to appeal or seek certiorari, review, reargument, stay or rehearing has expired or has been waived; or (b) as to which an appeal, petition for certiorari, review, reargument, stay or rehearing has been filed, but no stay of the Plan Confirmation Order has been granted or is in effect (and no request for such stay is pending); provided, that no order or judgment shall fail to be an “Effective Order” solely because of the possibility that a motion pursuant to section 502(j) or 1144 of the Bankruptcy Code, Rule 59 or 60 of the Federal Rules of Civil Procedure or Rule 9024 of the Federal Rules of Bankruptcy Procedure may be filed with respect to such order or judgment.

          “Employees” shall have the meaning set forth in Section 9.1(a).

          “Enforceability Exceptions” means, with reference to the enforcement of the terms and provisions of this Agreement or any other Contract, that the enforcement thereof is or may be subject to the effect of (i) applicable bankruptcy, receivership, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws relating to or affecting the enforcement of the rights and remedies of creditors or parties to

6

executory contracts generally; (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity) and the exercise of equitable powers by a court of competent jurisdiction; and (iii) Applicable Law or public policy limiting the enforcement of provisions providing for the indemnification of any Person.

          “Environmental Claims” means any and all actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, notices of liability or potential liability, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Law, any Environmental Permit or any Hazardous Materials.

          “Environmental Law” means any Law pertaining to health, industrial hygiene, public safety, occupational safety, mining, mine reclamation, natural or cultural resources, fish, wildlife or other protected species or the environment, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601, et. seq.); the Resource, Conservation and Recovery Act of 1976 (42 U.S.C. § 6901, et. seq.); the Toxic Substances Control Act (15 U.S.C. § 2601, et. seq.); the Clean Water Act (33 U.S.C. § 1251, et. seq.); the Oil Pollution Act of 1990 (33 U.S.C. § 2701, et. seq.); the Clean Air Act (42 U.S.C. § 7401, et. seq.); the Atomic Energy Act (42 U.S.C. § 2011, et. seq.); the Hazardous Materials Transportation Act (49 U.S.C. § 5101, et. seq.); the Emergency Planning and Community Right-To-Know Act (42 U.S.C. 11001, et. seq.); the Endangered Species Act of 1973 (16 U.S.C. §1531, et. seq.); the Federal Land Policy and Management Act of 1976 (43 U.S.C. § 1701, et. seq.); the Lead-Based Paint Exposure Reduction Act (15 U.S.C. § 2681, et. seq.); the Safe Water Drinking Act Amendments of 1996 (42 U.S.C. § 300); the National Historic Preservation Act of 1966; the Mine Safety and Health Act (30 U.S.C. 801 et seq.); the Surface Mining Control and Reclamation Act (30 U.S.C. 1201 et seq.) and state and local counterparts of each of the foregoing.

          “Environmental Permit” means any Permit required under any applicable Environmental Law.

          “Equity Securities” means (i) with respect to any corporation, all shares, interests, participations or other equivalents of capital stock of such corporation (however designated), and any warrants, options or other rights to purchase or acquire any such capital stock and any securities convertible into or exchangeable or exercisable for any such capital stock, (ii) with respect to any partnership, all partnership interests, participations or other equivalents of partnership interests of such partnership (however designated), and any warrants, options or other rights to purchase or acquire any such partnership interests and any securities convertible into or exchangeable or exercisable for any such partnership interests and (iii) with respect to any limited liability company, all membership interests, participations or other equivalents of membership interests of such limited liability company (however designated), and any warrants, options or other rights to purchase or acquire any such membership interests and any securities convertible into or exchangeable or exercisable for any such membership interests.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “Exchange Arrangements” shall have the meaning set forth in Exhibit E.

7

          “Excluded Assets” shall have the meaning set forth in Section 3.2.

          “Excluded Payables” means all accounts payable (trade and other) of any Seller on the Closing Date arising out of the Retained Liabilities or owing to any Affiliate of any Seller (other than trade payables owing to Silver Bell).

          “Excluded Receivables” shall have the meaning set forth in Section 3.2(l).

          “Exon-Florio Provision” shall have the meaning set forth in Section 8.3(d).

          “Final Arbiter” shall have the meaning set forth in Section 4.4(d).

          “Financial Statements” shall have the meaning set forth in Section 6.4.

          “First L/C” shall have the meaning set forth in Section 4.2(a).

          “GAAP” means generally accepted accounting principles as in effect from time to time in the United States.

          “Governmental Authority” means any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, foreign or domestic, including any governmental authority, agency, department, board, commission or instrumentality of the United States or other country, any state, province, tribal authority or any political subdivision of any of the foregoing, and any tribunal, court, arbitrator(s) or other private adjudicator whose decisions are binding of competent jurisdiction, and shall include the Bankruptcy Court.

          “Grupo” means Grupo Mexico S.A.B. de C.V. and its subsidiaries or Affiliates other than ASARCO and any subsidiary or affiliate owned or controlled by ASARCO.

          “Guarantor” shall have the meaning set forth in the preamble hereto.

          “Guarantor Opinion” means the opinion of counsel to Guarantor attached as Exhibit C-2 hereto, delivered to Sellers in connection with the execution and delivery of this Agreement.

          “Hayden Settlement Agreement” means the Administrative Settlement Agreement and Order on Consent for Removal Action, U.S. EPA Region IX, CERCLA Docket No. 2008-09, and the Administrative Settlement Agreement and Order on Consent for Removal Action, U.S. EPA Region IX, CERCLA Docket No. 2008-13, by and among the U.S. Environmental Protection Agency, the Arizona Department of Environmental Quality and ASARCO.

          “Hazardous Materials” means any substance, material, pollutant, contaminant, waste, or special waste, whether solid, liquid or gaseous, that is infectious, toxic, hazardous, explosive, corrosive, flammable or radioactive or which is defined, designated, listed, regulated or included in any Environmental Law, including asbestos or asbestos-containing material, petroleum or petroleum additive substances, polychlorinated biphenyls or sewage.

8

          “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

          “Included Payables” shall have the meaning set forth in Exhibit E hereto.

          “Included Receivables” shall have the meaning set forth in Exhibit E hereto.

          “Inventory” means the inventories of raw materials, in-process and finished products of the Business, including, supplies, materials and spare parts but excluding, to the extent owned by a Seller, materials provided to a Seller pursuant to Tolling Arrangements or Exchange Arrangements.

          “Inventory Amount” shall have the meaning set forth in Exhibit E hereto.

          “Judgment Currency” shall have the meaning set forth in Section 14.1(g).

          “Law” means any federal, tribal, state or local or provincial law (including common law), statute, code, ordinance, rule, regulation, executive order, Order, administrative or judicial decision, judgment or decree or other requirement enacted, promulgated, issued or entered by a Governmental Authority.

          “Leasehold Deeds” shall have the meaning set forth in Section 5.2(d).

          “Leasehold Property” shall have the meaning set forth in Section 3.1(e)(i).

          “Legal Proceeding” means any action, claim, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority of any nature, civil, criminal, regulatory or otherwise, in law or in equity.

          “Letters of Credit” shall have the meaning set forth in Section 4.2(c).

          “Liabilities” means any and all debts, losses, liabilities, claims (including claims as defined in the Bankruptcy Code), damages, demands under Section 524(g) of the Bankruptcy Code, expenses, fines, costs, royalties, proceedings, deficiencies or obligations (including those arising out of any Legal Proceeding, such as any settlement or compromise thereof or judgment or award therein), of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, and whether or not resulting from third party claims, and any reasonable out-of-pocket costs and expenses (including reasonable legal counsels’, accountants’, or other fees and expenses incurred in defending any Legal Proceeding or in investigating any of the same or in asserting any rights hereunder).

          “Lien” means any lien, pledge, mortgage, deed of trust, security interest, attachment, levy or other encumbrance affecting title.

          “Manipulative Breach” means an intentional and willful material breach by ASARCO of its obligations under Sections 8.2(d) (but only as it relates to Purchased Assets other than Inventory or Included Receivables), 8.7(a), (b) and (d) or 8.10(b) and (d) that gives rise to a termination right pursuant to Section 13.1(j) and such act or omission giving rise to such

9

breach was performed with the intent to materially breach this Agreement and to prevent the Closing hereunder, as determined by the Bankruptcy Court, after notice and opportunity to be heard, which may be on an expedited basis.

          “Matching/Topping Right” shall have the meaning set forth in Section 8.10(e).

          “Material Contracts” shall have the meaning set forth in Section 6.8(a).

          “Mission Mine Settlement Agreement” means that certain Settlement Agreement between the United States of America, ASARCO, the Tohono O’odham Nation, the San Xavier Allottee’s Association, and the San Xavier District.

          “Mortgages” shall have the meaning set forth in Section 5.3(k).

          “Negotiation Period” shall have the meaning set forth in Section 4.4(b).

          “Non-Debtor Contracts” shall have the meaning set forth in Section 3.1(e).

          “Non-Debtor Sellers” shall have the meaning set forth in the preamble hereto.

          “Non-Target Properties” means all real property that is not (i) a Real Property or (ii) a Silver Bell Property.

          “Non-Union Employees” shall have the meaning set forth in Section 9.1(a).

          “Non-US Taxing Jurisdiction” shall have the meaning set forth in Section 14.1(h).

          “Objection Date” shall have the meaning set forth in Section 4.4(a).

          “Objection Notice” shall have the meaning set forth in Section 4.4(a).

          “Obligations” shall have the meaning set forth in Section 14.1(a).

          “Obligations Currency” shall have the meaning set forth in Section 14.1(g).

          “Order” means any final and non-appealable order, injunction, judgment, stipulation, decree, ruling, writ, assessment or arbitration award issued by a Governmental Authority or any legally binding and enforceable conciliation or settlement agreement with any Governmental Authority.

          “Ordinary Course of Business” means the ordinary conduct of business of Sellers, taken as a whole, relating to the Business, either (i) consistent with past practice during the pendency of and, as applicable, taking into account the Bankruptcy Cases, or (ii) consistent with reasonably prudent management of the Business (as determined by the Board in its business judgment) in response to economic and industry conditions.

10

          “Organizational Documents” means (i) in the case of any Person organized as a corporation, the certificate or articles of incorporation of such corporation (or, if applicable, the memorandum and articles of association of such corporation) and the bylaws of such corporation, (ii) in the case of any Person organized as a limited liability company, the certificate of formation or organization and the limited liability company agreement, operating agreement or regulations of such limited liability company, (iii) in the case of any Person organized as a limited partnership, the certificate of limited partnership and partnership agreement of such limited partnership and (iv) in the case of any other Person, all constitutive or organizational documents of such Person which address all matters relating to the business and affairs of such Person similar to the matters addressed by the documents referred to in clauses (i) through (iii) above in the case of Persons organized as corporations, limited liability companies or limited partnerships.

          “Original PSA” shall have the meaning set forth in the recitals hereto.

          “OSHA” means the Occupational Safety and Health Act of 1970, as amended.

          “Patent Assignment” shall have the meaning set forth in Section 5.2(j).

          “Patents” means issued United States and foreign patents and pending patent applications.

          “Pension Plan” shall have the meaning set forth in Section 6.10(b).

          “Periodic Taxes” shall have the meaning set forth in Section 10.2.

          “Permits” means any approvals, authorizations, consents, licenses, permits or certificates.

          “Permitted Liens” means (i) all Liens set forth in Section 1.1A of the Seller Disclosure Schedule, (ii) statutory Liens for current taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith by appropriate proceedings, to the extent that a reserve has been established therefor or such amount has been deposited with the appropriate Governmental Authority or other adjudicating Person, (iii) mechanic’s, materialman’s, warehouseman’s, carrier’s and similar liens for labor, materials or supplies, as would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect, (iv) purchase money security interests arising in the Ordinary Course of Business, (v) any Lien arising out of a Tolling Arrangement or Exchange Arrangement, to the extent not arising out of a breach of such Tolling Arrangement or Exchange Arrangement, (vi) rights of landlords in respect of any Leasehold Property where the applicable lease is not in default, (vii) any Lien that, pursuant to Section 363(f) of the Bankruptcy Code, will be released upon entry of the Plan Confirmation Order; and (viii) such other Liens as would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

          “Person” means any natural person, corporation, limited partnership, limited liability company, general partnership, joint stock company, joint venture, association, company,

11

trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

          “Plan” means the plan of reorganization prepared by ASARCO and filed after the date hereof with the Bankruptcy Court as (or intended to be) confirmed by the Plan Confirmation Order that contains terms and conditions, that to the extent they relate to this Agreement, Purchaser, Guarantor and the transactions contemplated hereunder, are reasonably satisfactory to Purchaser.

          “Plan Confirmation Order” means an order of the Bankruptcy Court or the United States District Court that has jurisdiction over the Bankruptcy Cases, that, to the extent the order relates to this Agreement, Purchaser (and Guarantor) or the transactions contemplated hereunder is reasonably satisfactory to Purchaser, and in a form acceptable to Sellers in all respects, approving this Agreement and all of the terms and conditions hereof, and approving and authorizing Sellers to consummate the transactions contemplated hereby, including the transfer of the Purchased Assets to Purchaser. The Plan Confirmation Order shall find and provide, among other things, that (i) the transfer of the Purchased Assets by Sellers to Purchaser pursuant to this Agreement (A) will be legal, valid and effective transfers of the Purchased Assets; (B) will vest Purchaser with all right, title and interest of Sellers in and to the Purchased Assets, free and clear of any Liens, claims, interests and encumbrances, other than Permitted Liens and the Assumed Liabilities, pursuant to Section 363(f) of the Bankruptcy Code (including any right of setoff, recoupment, netting or deduction); (C) constitute transfers for reasonably equivalent value and fair consideration under the Bankruptcy Code and under Applicable Law; and (D) qualifies for exemption under section 1146(c) of the Bankruptcy Code such that Transaction Taxes will be exempted pursuant to, and to the fullest extent allowed by, Section 1146(c) of the Bankruptcy Code; (ii) the transactions contemplated by this Agreement are undertaken by Purchaser and ASARCO at arm’s length, without collusion and in good faith within the meaning of Section 363(m) of the Bankruptcy Code; (iii) ASARCO has complied with the notice requirements of Rules 2002, 6004, 6006 and 9014 of the Federal Rules of Bankruptcy Procedure and any applicable rules of the Bankruptcy Court with respect to the transactions contemplated by this Agreement, the Ancillary Agreements and by all other agreements, documents and instruments contemplated in connection with this Agreement; (iv) ASARCO has satisfied all of the requirements of, and are authorized pursuant to, Section 363(b) and (f) of the Bankruptcy Code to enter into this Agreement and to consummate the transactions contemplated hereby; and (v) present and future asbestos claims and demands are enjoined from being asserted against ASARCO; ASARCO’s officers, directors and Subsidiaries; Purchaser, Guarantor and the Purchased Assets (and against any officer, director, Affiliate or assets of Purchaser or Guarantor) pursuant to a channeling injunction issued in compliance with Section 524(g) of the Bankruptcy Code.

          “Pre-Petition Contracts” shall have the meaning set forth in Section 3.1(e).

          “Post-Petition Contracts” shall have the meaning set forth in Section 3.1(e).

          “Proprietary Software” shall have the meaning set forth in Section 3.1(i).

          “Proration Periods” shall have the meaning set forth in Section 10.2.

12

          “Purchase Price” shall have the meaning set forth in Section 4.1.

          “Purchased Assets” shall have the meaning set forth in Section 3.1.

          “Purchased Real Property” shall have the meaning set forth in Section 3.1(c).

          “Purchaser” shall have the meaning set forth in the preamble hereto.

          “Purchaser Bad Faith Event” shall have the meaning set forth in Section 13.2(c).

          “Purchaser Breach” shall have the meaning set forth in Section 4.2(e).

          “Purchaser Claims” shall have the meaning set forth in Section 2.1(b).

          “Purchaser Opinion” means an opinion of counsel to Purchaser delivered to Sellers in connection with the execution and delivery of this Agreement attached as Exhibit C-1 hereto.

          “Purchaser Promissory Note” means a promissory note in the principal amount of $600,000,000.00 (as adjusted pursuant to
Section 4.3(c) herein and Section 2.7 therein) issued at Closing by Purchaser to ASARCO Administration Company LLC (or such other Person as ASARCO may designate in accordance with the Plan) in the form of Exhibit D hereto.

          “Purchaser Released Parties” shall have the meaning set forth in Section 2.1(a).

          “Purchaser Releasing Party” shall have the meaning set forth in Section 2.1(b).

          “Qualified Bank” means ABN AMRO Bank N.V., Chicago or any commercial bank with a rating of at least A+ (S&P) and Aa2 (Moody’s) (except that if a bank is only rated by either S&P or Moody’s and not both, such bank must have the minimum rating by either S&P or Moody’s, as applicable) that is organized or domiciled in the United States of America and that is reasonably satisfactory to Sellers.

          “Real Property” shall have the meaning set forth in Section 3.1(e)(i).

          “Release” means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water or air or otherwise entering into the environment.

          “Release Conditions” shall have the meaning set forth in Section 2.1(c).

          “Remedial Action” means all action to (a) investigate, clean up, remove, treat or handle in any other way Hazardous Materials in the environment; (b) restore or reclaim the environment or natural resources; (c) prevent the Release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or the environment; or (d) perform remedial investigations, feasibility studies, corrective actions, closures and post-remedial or post-closure studies, investigations, operations, maintenance and monitoring on, about or in any Real Property.

13

          “Representatives” shall have the meaning set forth in Section 8.10(a)(ii).

          “Retained Books and Records” shall have the meaning set forth in the definition of Books and Records.

          “Retained Liabilities” shall have the meaning set forth in Section 3.4.

          “Santa Cruz” shall have the meaning set forth in the preamble hereto.

          “Santa Cruz JV Agreement” means the Santa Cruz Joint Venture Agreement, dated as of July 1, 1977, between Freeport Copper Company and Santa Cruz, as amended, and as modified by that certain Modification Agreement, dated as of April 11, 1990, among FCC, Freeport-McMoRan Inc., ASARCO Santa Cruz and ASARCO Incorporated, as further modified and amended.

          “Second L/C” shall have the meaning set forth in Section 4.2(b).

          “Securities Act” shall have the meaning set forth in Section 7.5.

          “Security Agreement” means the Security Agreement, dated as of the Closing Date, between Purchaser and ASARCO substantially in the form of Exhibit L hereto.

          “Seller Claims” shall have the meaning set forth in Section 2.1(a).

          “Seller Data Room” means the online IntraLinks data room set up by Sellers.

          “Seller Disclosure Schedule” means the Disclosure Schedule delivered to Purchaser pursuant to this Agreement.

          “Seller Employee Benefit Plan” means each “employee pension benefit plan” (as defined in Section 3(2) of ERISA), “employee welfare benefit plan” (as defined in Section 3(1) of ERISA), stock option, stock purchase, stock appreciation right, incentive, deferred compensation plan or arrangement, and other employee fringe benefit plan or arrangement maintained, contributed to or required to be maintained or contributed to by Sellers or with respect to which any of Sellers or their Affiliates have any obligation or liability.

          “Seller Material Adverse Effect” means (a) a material adverse effect on the financial condition of the Business (to the extent related to the Purchased Assets and Assumed Liabilities) or the condition of the Purchased Assets, taken as a whole, or (b) any change, circumstance or event that, individually or in the aggregate, would materially hinder or materially and adversely affect Sellers’ ability to consummate the transactions contemplated by this Agreement, excluding, in each case, any such effect, change, circumstance or event attributable to or resulting from (i) the announcement, pendency or consummation of this Agreement, the sale of the Purchased Assets or any other action by Sellers or its Affiliates required or expressly contemplated by this Agreement, (ii) the conversion or dismissal of any Bankruptcy Case or the filing of additional petitions under Chapter 11 of the Bankruptcy Code by or involving any of Sellers’ Affiliates, (iii) any outbreak of hostility, terrorist activities or war, (iv) any changes in general economic (including changes in the securities markets, commodity

14

prices or foreign exchange rates), political or regulatory conditions generally, (v) any changes in economic, political or regulatory conditions in the mining or smelting industries or other industries in which Sellers operate, (vi) any change in Applicable Law or accounting regulations or interpretations thereof by any court, accounting regulatory authority or other Governmental Authority, (vii) any action or omission of any Seller taken in accordance with the terms of this Agreement or with the prior written consent of Purchaser, (viii) any failure by any Seller to meet any projections, budgets, plans or forecasts (but not excluding the underlying cause of such failure to meet projections, budgets, plans or forecasts) or (ix) any expenses incurred by any Seller in the Ordinary Course of Business or in connection with this Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby; provided, however, that in the case of clauses (iv), (v) and (vi), such changes do not affect Sellers in a materially disproportionate manner compared to other businesses conducting a business substantially similar to the Business of Sellers. Any determination as to whether any condition or other matter has a Seller Material Adverse Effect shall be made only after taking into account all proceeds or amounts that are expected to be received by Purchaser with respect to such condition or matter from insurance policies.

          “Seller Released Parties” shall have the meaning set forth in Section 2.1(b).

          “Seller Releasing Party” shall have the meaning set forth in Section 2.1(a).

          “Sellers” shall have the meaning set forth in the preamble hereto.

          “Sellers’ Accountants” means Keegan, Linscott & Kenon, P.C., Grant Thornton LLP, or such other firm of independent accountants that ASARCO’s Board of Directors may approve and appoint to audit Sellers’ financial statements.

          “Sellers’ Knowledge” means the actual knowledge, without any requirement of inquiry or investigation, of any of the individuals listed in Section 1.1B of the Seller Disclosure Schedule.

          “Silver Bell” means Silver Bell Mining, L.L.C., a Delaware limited liability company.

          “Silver Bell Interests” shall have the meaning set forth in Section 3.1(h).

          “Silver Bell LLC Agreement” means that certain Membership Interest Agreement, dated February 5, 1996, among Ginrei, Inc., MSB Copper Corp. and ARSB, as amended, as located in section 2.05.04 of the Seller Data Room.

          “Silver Bell Property” means all real property owned or leased by Silver Bell.

          “Stand-Alone Plan” means a plan of reorganization sponsored by a Person other than Purchaser or Guarantor which the Board of Directors of ASARCO determines (after consultation with its legal and financial advisors and the Creditor Constituents) in good faith would, if consummated and taking into account all factors deemed relevant by the Board of Directors of ASARCO, be more favorable to ASARCO and its stakeholders than the transactions

15

contemplated by this Agreement; provided, however, that, for purposes of the stand-alone plan proposal only, any costs or benefits of any claims which may be made against Purchaser or Guarantor under the Original PSA shall be excluded from the analysis of such stand-alone plan.

          “Sterlite Agreed Order” shall have the meaning set forth in Section 2.2.

          “Sterlite Settlement Motion” shall have the meaning set forth in Section 2.2.

          “Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote or to direct the voting of sufficient securities to elect a majority of the board of directors or similar governing body.

          “Superior Proposal” means a bona fide written Acquisition Proposal that the Board of Directors of ASARCO determines (after consultation with its legal and financial advisors) in good faith (i) is reasonably likely to be consummated in a timely manner, taking into account all factors deemed relevant by the Board of Directors of ASARCO (including all legal, financial and regulatory aspects of the proposal and the Person making the proposal), (ii) if consummated would, taking into account all factors deemed relevant by the Board of Directors of ASARCO (including the amounts that would be owed to Purchaser under Section 13.2(b)(v) (if any) and if, and only to the extent, this Agreement has not been terminated prior to the execution of a Definitive Agreement in respect of such Acquisition Proposal, the costs reasonably likely to be incurred in connection with the negotiation of an Acquisition Proposal), result in a transaction more favorable to ASARCO and its stakeholders than the transactions contemplated by this Agreement and (iii) provides a Deemed Value to ASARCO and its bankruptcy estate that exceeds, by the Superior Proposal Threshold, the Deemed Value of this Agreement and the transactions contemplated hereby; provided, however, that, in the case of each of the foregoing clauses, for purposes of the Acquisition Proposal only, any costs or benefits of any claims which may be made against Purchaser or Guarantor under the Original PSA shall be excluded from the analysis of such Acquisition Proposal.

          “Superior Proposal Threshold” means $25,000,000 plus the amount that would be owed to Purchaser under Section 13.2(b)(v) (if anything) following termination of this Agreement.

          “Suppliers” shall have the meaning set forth in Section 6.9.

          “Survey” shall have the meaning set forth in Section 8.8.

          “Tax” means any (a) federal, state, provincial, territorial, municipal, local or foreign income, profits, franchise, gross receipts, customs, duties, net worth, sales, use, goods and services, gross receipts, withholding, value added, ad valorem, employment, social security, disability, occupation, pension, real property, personal property (tangible and intangible), stamp, duty, stamp duty, transfer, conveyance, severance, production, excise and other taxes,

16

withholdings, duties, levies, imposts and other similar charges and assessments (including any and all fines, penalties and additions attributable to or otherwise imposed on or with respect to any such taxes, charges, fees, levies or other assessments, and interest thereon) imposed by or on behalf of any Taxing Authority, and (b) liability for the payment of any Tax (i) as a result of being a member of a consolidated, combined, unitary or affiliated group that includes any other Person, (ii) by reason of any obligation to indemnify or otherwise assume or succeed to the liability of any other Person for Taxes, including, a Tax sharing, Tax indemnity or similar agreement, or (iii) by reason of transferee or successor liability.

          “Tax Return” means any return, report, declaration, election, statement, information return or other document required to be filed with any Taxing Authority with respect to Taxes, including any amendments thereof.

          “Taxing Authority” means any Governmental Authority exercising any authority to impose, regulate, levy, assess or administer the imposition of any Tax.

          “Termination Date” shall have the meaning set forth in Section 13.1(c).

          “Third L/C” shall have the meaning set forth in Section 4.2(c).

          “Title Company” shall have the meaning set forth in Section 8.8.

          “Title Policy” shall have the meaning set forth in Section 8.8.

          “Title Report” shall have the meaning set forth in Section 8.8.

          “Tolling Arrangements” means those commercial arrangements between ASARCO and certain third parties pursuant to which ASARCO agrees to receive raw materials from such third parties for toll conversion and return certain finished products to such third parties.

          “Trademark Assignment” shall have the meaning set forth in Section 5.2(k).

          “Trademarks” means United States, state and foreign trademarks, service marks, trade names and logos and all applications to register the foregoing.

          “Transaction Taxes” shall have the meaning set forth in Section 10.1.

          “Transferred Employees” shall have the meaning set forth in Section 9.1(a).

          “Transition Services Agreement” means the Transition Services Agreement, dated as of the Closing Date, between Purchaser and ASARCO, to be negotiated in accordance with Section 8.14, which will include, among other things, the services and terms described in Exhibit K hereto.

          “Union Employees” shall have the meaning set forth in Section 9.1(a).

17

          “Unions” means those unions listed in Section 11.3 of the Seller Disclosure Schedule.

          “Unpaid Cure Claims Amount” means, with respect to any Assumption-Pending Pre-Petition Contract, the aggregate amount of any Cure Claims that remains unpaid as of the Closing Date for any reason, provided that if such amount remains disputed as of such date, the “Unpaid Cure Claims Amount” shall be such amount as is asserted by the non-debtor counterparty to such Contract.

          “WARN Act” shall have the meaning set forth in Section 9.9.

     1.2 Other Terms. Other terms may be defined elsewhere in this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

     1.3 Certain Rules of Construction. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. In addition, as used in this Agreement, unless otherwise provided to the contrary, (a) all references to days, months or years shall be deemed references to calendar days, months or years or (b) any reference to a “Section,” “Article” or “Exhibit” shall be deemed to refer to a section or article of this Agreement, a Disclosure Schedule or an exhibit attached to this Agreement. Unless the context otherwise requires, the words “hereof,” “herein,” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “include,” “includes,” or “including” shall be deemed to be followed by the words “without limitation.” Unless otherwise specifically provided for herein, the term “or” shall not be deemed to be exclusive. All references to dollar amounts are to the lawful currency of the United States of America. A reference to any Law shall include all modifications, amendments and re-enactments thereof.

ARTICLE II
SETTLEMENT AND RELEASE

     2.1 Settlement and Release.

          (a) Effective only if and when a Release Condition occurs, each Seller, on behalf of itself and its successors, assigns, Representatives and Subsidiaries (each, a “Seller Releasing Party”), will fully and forever irrevocably and unconditionally release and discharge each of Purchaser and Guarantor and its successors, permitted assigns, Representatives and Affiliates (each a “Purchaser Released Party” and collectively, “Purchaser Released Parties”) from any and all Liabilities both at law and in equity which a Seller Releasing Party has, has ever had, or may hereafter have against any Purchaser Released Party arising out of the Original PSA (collectively, the “Seller Claims”). No release is made by any Seller Releasing Party unless and until a Release Condition occurs and unless and until a Release Condition occurs all of the Seller Claims against each of Purchaser and Guarantor shall remain fully enforceable. If no Release Condition occurs, the release contained in this Section 2.1(a) shall not become operational or effective.

18

          (b) Effective only if and when a Release Condition occurs, each of Purchaser and Guarantor, on behalf of itself and its successors, assigns, Representatives and Subsidiaries (each, a “Purchaser Releasing Party”), will fully and forever irrevocably and unconditionally release and discharge each Seller and its successors, assigns, Representatives and Affiliates (each a “Seller Released Party” and collectively, “Seller Released Parties”) from any and all Liabilities both at law and in equity which a Purchaser Releasing Party has, has ever had, or may hereafter have against any Seller Released Party arising out of the Original PSA (collectively, “Purchaser Claims”). No release is made by any Purchaser Releasing Party unless and until a Release Condition occurs and unless and until a Release Condition occurs all of the Purchaser Claims against Sellers shall remain fully enforceable. If no Release Condition occurs, the release contained in this Section 2.1(b) shall not become operational or effective.

          (c) For purposes of this Agreement, a “Release Condition” means the occurrence after the entry of the Sterlite Agreed Order by the Bankruptcy Court of any of the following: (i) the Closing hereunder prior to or on the Termination Date; (ii) both (A) the termination of this Agreement pursuant to Section 13.1(d) due to the Bankruptcy Court’s approval of a Superior Proposal that is evidenced by a Definitive Agreement duly executed by all parties thereto and (B) subsequent to such termination, the consummation by ASARCO and a Person other than Purchaser or Guarantor (or any of their respective Affiliates) of such Superior Proposal; (iii) both (A) the termination of this Agreement pursuant to Section 13.1(e) due to the Bankruptcy Court’s approval of a Stand-Alone Plan approved and supported by the Board of Directors of ASARCO and (B) subsequent to such termination, the consummation of such Stand-Alone Plan; (iv) both (A) the termination of this Agreement pursuant to Section 13.1(b), (c), (f), (g), (h)(ii), (j) or (m), and (B) subsequent to such termination, the consummation by ASARCO and a Person other than Purchaser or Guarantor (or any of their respective Affiliates) of a Superior Proposal; provided, that a Definitive Agreement for such Superior Proposal is duly executed by all parties thereto no later than the 180th day following such termination; or (v) the termination of this Agreement by Purchaser pursuant to Section 13.1(j) upon the occurrence of a Manipulative Breach; provided, however, that, with respect to the foregoing clauses (ii), (iii), (iv) and (v), in no event shall a Release Condition be deemed to have occurred if any Purchaser Bad Faith Event has occurred. For purposes of this Article II and Section 13.2(b)(v), the Board of Directors of ASARCO shall make its determination of whether or not an Acquisition Proposal is a Superior Proposal at the time the Definitive Agreement for such Acquisition Proposal is executed by all parties thereto. For avoidance of doubt, no Release Condition will occur if the Sterlite Agreed Order is not entered by the Bankruptcy Court.

          (d) Notwithstanding anything to the contrary contained herein, (i) Sellers agree that if this Agreement has not been terminated, they shall not, and they shall cause the other Seller Releasing Parties not to, commence any Legal Proceeding based on any Seller Claims and (ii) Purchaser and Guarantor each agree that if this Agreement has not been terminated, neither shall, and each shall cause the other Purchaser Releasing Parties not to, commence any Legal Proceeding based on any Purchaser Claims.

     2.2 Bankruptcy Court Approval of Settlement and Release. ASARCO shall file with the Bankruptcy Court, as soon as practicable following the execution of this Agreement but in no event later than five Business Days following the Effective Date, a motion pursuant to Rule 9019

19

of the Federal Rules of Bankruptcy Procedure in substantially the form of Exhibit M-1 hereto (the “Sterlite Settlement Motion”), and supporting papers seeking the entry of an agreed order of the Bankruptcy Court in substantially the form of Exhibit M-2 hereto (the “Sterlite Agreed Order”) approving the terms of this Article II, the Superior Proposal Threshold, Sections 8.10(b), (c), (e) and (f), and
Section 13.2(b)(v). Sellers shall use their commercially reasonable efforts to have the Sterlite Agreed Order entered as soon as practicable following the filing of the Sterlite Settlement Motion.

     2.3 Reservation of Rights. Except as set forth in this Article II, Purchaser, Guarantor and Sellers reserve any and all rights and remedies existing at law or in equity or arising out of or relating to the Original PSA, including those contained in Section 12.2 thereof, or otherwise, and except as set forth in this Article II nothing herein shall be construed as or constitute a waiver or release of any such rights or remedies.

ARTICLE III
SALE AND PURCHASE OF THE PURCHASED ASSETS

     3.1 Purchased Assets. Upon the terms and subject to the conditions contained herein, at the Closing, Sellers shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase and acquire from Sellers, free and clear of all Liens (other than Permitted Liens), all of Sellers’ right, title and interest in and to all properties and assets, whether tangible or intangible, used or held for use by Sellers in the conduct of the Business (other than the Excluded Assets) (the “Purchased Assets”). Without limiting the generality of the foregoing, the Purchased Assets shall include all of Sellers’ right, title and interest in and to the following to the extent used or held for use in the conduct of the Business:

          (a) all Inventory;

          (b) all machinery, equipment, fixtures, furniture, computers, tools, parts, supplies and other tangible personal property used, or held for use, in connection with the operation of the Business, including the equipment and machinery listed in Section 3.1(b) of the Seller Disclosure Schedule;

          (c) the real property identified in Section 3.1(c) of the Seller Disclosure Schedule (“Purchased Real Property”), including, all mines, dumps, impoundments, leach pads, tailings, buildings, plants, warehouses, railroad tracks, rights of way, easements, facilities and other improvements and fixtures thereon and appurtenances thereto and all mining rights, mineral rights, mineral claims, riparian rights, water rights, water claims, water allocations and water delivery contracts associated therewith;

          (d) all accounts receivable of Sellers identified on the Books and Records as of the close of business on the Closing Date other than any Excluded Receivables;

          (e) subject to Section 3.2(j), all Contracts (A) that were entered into prior to the filing of the Bankruptcy Cases to which ASARCO is a party that (i) have been assumed by ASARCO prior to the date hereof (the “Assumed Pre-Petition Contracts”) or (ii) are assumed by ASARCO in accordance with Section 3.5 (Contracts referred to in (i) and (ii) collectively

20

referred to herein as, the “Pre-Petition Contracts”), (B) that have been entered into by ASARCO subsequent to the filing by ASARCO of its voluntary petition for relief under Chapter 11 of the Bankruptcy Code, but if entered into after the date hereof, solely to the extent entered into in the Ordinary Course of Business (the “Post-Petition Contracts”), and (C) to which any Non-Debtor Seller is a party on the date hereof or entered into after the date hereof in the Ordinary Course of Business (the “Non-Debtor Contracts”, together with the Pre-Petition Contracts and the Post-Petition Contracts, the “Assumed Contracts”), which may include (to the extent assignable):

          (i) all leases, subleases, licenses or other agreements relating to the occupancy of real property identified in Section 3.1(e)(i) of the Seller Disclosure Schedule, together with all of Sellers’ right, title and interest in and to all fixtures and improvements located thereon and all appurtenances, rights, easements, rights-of-way and other interests incidental thereto, leased, subleased, licensed or occupied by Sellers and used or held for use in the Business (the “Leasehold Property,” the Leasehold Property and the Purchased Real Property collectively the “Real Property”);

          (ii) all leases of equipment, fixtures, furniture, computers, tools, parts, supplies and other tangible personal property leased by Sellers and used or held for use in the Business and identified in Section 3.1(e)(ii) of the Seller Disclosure Schedule;

          (iii) all Contracts with any Transferred Employees, which for clarification shall not include the Collective Bargaining Agreements which are expressly excluded from Assumed Contracts;

          (iv) all Contracts through which any computer software system or program is licensed to any Seller;

          (v) all Contracts governing Tolling Arrangements with other Persons;

          (vi) all Contracts with any customer of any Seller;

          (vii) all Contracts with any supplier of any Seller;

          (viii) the insurance policies identified in Section 3.1(e)(viii) of the Seller Disclosure Schedule;

          (ix) certain Seller Employee Benefit Plans as and to the extent provided in Article IX, and the assets related thereto;

          (x) all confidentiality agreements entered into between ASARCO and any prospective bidder in connection with the transactions contemplated hereunder;

          (xi) the leases and other assets assumed pursuant to the Mission Mine Settlement Agreement and the Order of the Bankruptcy Court entered on April 9, 2008 approving the Mission Mine Settlement Agreement, including the Access

21

Agreement executed by certain of the parties to the Mission Mine Settlement Agreement on April 13, 2007 and corresponding Tribal Council Resolution numbers 07-192 and 07-562, and two settlement agreements related to water rights issues in Arizona and the Southern Arizona Water Rights Settlement Agreement that were approved by the Bankruptcy Court in the Order entered under Docket No. 2320;

          (xii) all rights of ASARCO under the Hayden Settlement Agreement and the Mission Mine Settlement Agreement, including in respect of those certain trusts created pursuant thereto;

          (xiii) all leases of real property identified in Section 3.1(e)(xiii) of the Seller Disclosure Schedule pursuant to which any Seller is a lessor of any Purchased Real Property;

          (xiv) the royalty agreements identified in Section 3.1(e)(xiv) of the Seller Disclosure Schedule;

          (xv) the other Contracts identified in Section 3.1(e)(xv) of the Seller Disclosure Schedule;

          (xvi) Santa Cruz JV Agreement and, subject to Section 3.6, Silver Bell LLC Agreement; and

          (xvii) ASARCO’s right, title and interest in and to the Agreement among Noranda Exploration, Inc., Four Metals Mining Company and ASARCO, dated July 6, 1978, entered into in connection with the exploration venture referred to as “Ventura.”

          (f) all prepaid rentals, deposits, security deposits, advances and other prepaid expenses of any Seller other than those paid in connection with or relating to any Excluded Asset;

          (g) all motor vehicles identified in Section 3.1(g) of the Seller Disclosure Schedule;

          (h) subject to Section 3.6, the limited liability company interests of Silver Bell owned by any Seller (“Silver Bell Interests”);

          (i) all copyrights, including copyrights in software, and all software and associated documentation developed or owned by Sellers for use in the Business (the “Proprietary Software”), including all goodwill associated with such Proprietary Software and all rights of Sellers to sue for and receive damages or other relief in respect of any past infringement or other violation of any rights thereto;

          (j) all Patents identified in Section 3.1(j) of the Seller Disclosure Schedule, including all goodwill associated with such Patents and all rights of Sellers to sue for and receive

22

damages or other relief in respect of any past infringement or other violation of any rights thereto;

          (k) all Trademarks identified in Section 3.1(k) of the Seller Disclosure Schedule (including the name “ASARCO”), including all goodwill associated with such Trademarks and all rights of Sellers to sue for and receive damages or other relief in respect of any past infringement or other violation of any rights thereto;

          (l) all Books and Records;

          (m) all Permits used or held for use in the operation of the Business and listed in Section 3.1(m) of the Seller Disclosure Schedule, in each case to the extent the same are assignable;

          (n) rights to any Tax refunds or credits for Taxes related to the ownership or operation of the Business or the Purchased Assets and that are attributable to any taxable periods (or portions thereof) beginning after the Closing Date or that relate to the portion of Transaction Taxes paid by Purchaser pursuant to Section 10.1 if (and only if) Sellers have not borne any Transaction Taxes or Sellers have received refunds or credits of all Transaction Taxes borne by them pursuant to Section 10.1;

          (o) all patented and unpatented mining claims identified in Section 3.1(o) of the Seller Disclosure Schedule; and

          (p) all rights and claims (whether contingent or absolute, matured or unmatured and whether in tort, contract or otherwise) against any Person relating to the adversary proceedings listed in Section 3.1(p) of the Seller Disclosure Schedule.

     3.2 Excluded Assets. Notwithstanding the provisions of Section 3.1 to the contrary, the properties, assets and rights of any Seller described below are expressly excluded from the transactions contemplated by this Agreement and are not included in the Purchased Assets (the “Excluded Assets”):

          (a) all of Sellers’ cash and cash equivalents, on hand or in banks, certificates of deposit, bank or savings and loan accounts and U.S. government securities of any kind or nature on the Closing (collectively, “Cash”);

          (b) rights to any Tax refunds or credits for Taxes (including credits against post-Closing Taxes) related to the ownership or operation of the Business or the Purchased Assets and that are attributable to any taxable periods (or portions thereof) ending on or prior to the Closing Date but excluding any Tax refunds or credits for Taxes relating to the portion of Transaction Taxes paid by Purchaser pursuant to Section 10.1 if (and only if) Sellers have not borne any Transaction Taxes or Sellers have received refunds or credits of all Transaction Taxes borne by them pursuant to Section 10.1;

          (c) all Equity Securities (i) representing ownership in Sellers and (ii) listed in Section 3.2(c) of the Seller Disclosure Schedule and, in the case of each of the entities listed in

23

Section 3.2(c) of the Seller Disclosure Schedule, all right, title and interest of any such entities in their respective assets, claims and causes of action, property or business;

          (d) all insurance policies except those set forth in Section 3.1(e)(viii) of the Seller Disclosure Schedule;

          (e) all rights, claims, causes of action, rights of recovery and rights of set-off, recoupment or counterclaim of any kind arising under the Bankruptcy Code or applicable bankruptcy law, including but not limited to claims against any Person relating to the adversary proceedings listed in Section 3.2(e) of the Seller Disclosure Schedule;

          (f) all rights, claims, causes of action, rights of recovery and rights of set-off of any kind against current or former directors, officers or other employees of, or agents, accountants or other advisors of or to, any Seller or any Affiliate of any Seller;

          (g) the real property listed in Section 3.2(g) of the Seller Disclosure Schedule including, all mines, dumps, impoundments, leach pads, tailings, equipment, vehicles, personal property, buildings, plants, warehouses, railroad tracks, rights of way, easements, facilities and other improvements and fixtures thereon and appurtenances thereto, all mining and mineral rights associated therewith (whether pursuant to patented or unpatented mining claims, mineral leases or otherwise), and any leases or subleases thereto or by any Seller and all Permits to the extent relating thereto;

          (h) all rights of ASARCO under, including in respect of that certain trust created pursuant to, the Consent Decree entered in United States v. ASARCO Inc., et al., Civil Action No. 02-2079, filed in the United States District Court for the District of Arizona;

          (i) all rights of any Seller under this Agreement, the Ancillary Agreements and all other agreements, documents and instruments contemplated in connection with this Agreement;

          (j) the following Contracts:

     (i) all Contracts related to the Bonds;

     (ii) the Collective Bargaining Agreements;

     (iii) all Seller Employee Benefit Plans, and the assets related thereto, except as and to the extent provided in Article IX;

     (iv) all Contracts between any Seller on the one hand and any Affiliate of any Seller on the other, other than contracts solely between or among Sellers;

     (v) the Contracts listed in Section 3.2(j) of the Seller Disclosure Schedule;

          (k) the deposits and prepaid expenses related to the Contracts described in Section 3.2(j) or any other asset described in this Section 3.2;

24

          (l) all rights, if any, of ASARCO in and to (i) the two promissory notes from Americas Mining Corporation, due October 31, 2009 and May 31, 2010, respectively, in the aggregate original principal amount of $223,250,000, (ii) all accounts receivable (trade and other) of any Seller arising out of or in connection with any item described in this Section 3.2 and (iii) all accounts receivable and any other rights to payment owing from any Affiliate of any Seller (other than trade accounts receivable owing from Silver Bell) (collectively, the “Excluded Receivables”);

          (m) all Retained Books and Records; and

          (n) except as described in Section 3.1(p), all rights, claims, causes of action, rights of recovery and rights of set-off, recoupment or counterclaim of any kind against any person (whether contingent or absolute, matured or unmatured and whether in tort, contract or otherwise) (i) relating to the assets, properties, business or operations of any Seller arising out of events occurring prior to the Closing Date except to the extent arising out of (A) the operation of the Business in the Ordinary Course of Business and (B) the Purchased Assets or Assumed Liabilities, but not including any such rights described in Section 3.2(e) or clauses (ii) and (iii) of this Section 3.2(n), (ii) which may arise in connection with discharge by Sellers of the Retained Liabilities, including all rights and claims, (iii) relating to the adversary proceedings listed in Section 3.2(n) of the Seller Disclosure Schedule, or (iv) against Grupo.

     3.3 Assumed Liabilities. From and after the Closing, Purchaser shall assume, pay, perform and discharge when due, and Purchaser acknowledges that it shall have no recourse from Sellers in respect of, and further that Purchaser shall defend, indemnify and hold harmless each Seller, and each Seller’s respective officers, directors, employees, agents, representatives and Affiliates, from and against any costs, damages, demands, causes of action, Liabilities, lawsuits, judgments, losses and expenses of any kind associated with, the following Liabilities (the “Assumed Liabilities”):

          (a) all Liabilities of any and all Sellers under or with respect to the Assumed Contracts (other than Cure Claims);

          (b) all amounts due and payable pursuant to all of the accounts payable (trade and other) of Sellers on the Books and Records as of the close of business on the Closing Date (other than the Excluded Payables);

          (c) all Liabilities (i) arising on or after the Closing Date with respect to any Transferred Employee or any Seller Employee Benefit Plan (as and to the extent such Seller Employee Benefit Plan is being assumed pursuant to Article IX) or (ii) that are allocated to Purchaser pursuant to Article IX or (iii) that are agreed to between Purchaser and the respective Union;

          (d) all Liabilities with respect to Taxes that are assumed by, or allocated to, Purchaser pursuant to Article X, including, without limitation, the portion of Transaction Taxes and Periodic Taxes for which Purchaser is liable under Sections 10.1 and 10.2;

25

          (e) except as provided in Sections 3.4(f), (g) and (h), all Liabilities relating to any Environmental Laws regarding any of the Real Property (including all Liabilities relating to Releases of Hazardous Materials at such properties or that have migrated or in the future migrate off-site from such properties) irrespective of whether such Liabilities relate to actions, omissions or events that occur or exist prior to or after the Closing Date (the “Assumed Environmental Liabilities”);

          (f) all Liabilities of any and all Sellers under or with respect to the Permits (to the extent related to the Purchased Assets); and

          (g) except as described in Sections 3.4(a) and (c), all Liabilities arising on or after the Closing Date out of the operation of the Business or the ownership of the Purchased Assets, including Liabilities in respect of Asset Retirement Obligations.

     3.4 Retained Liabilities. Purchaser shall not assume or be obligated to pay, perform or otherwise discharge any Liabilities of Sellers, other than those that are expressly assumed by Purchaser hereunder as Assumed Liabilities (collectively, the “Retained Liabilities”). Without limiting the generality of the foregoing, the Retained Liabilities include the following Liabilities of Sellers:

          (a) Liabilities (other than the Assumed Liabilities) incurred in the Ordinary Course of Business existing prior to the filing of the Bankruptcy Cases that are subject to compromise under the Bankruptcy Cases;

          (b) all Taxes of Sellers, and all Taxes related to Sellers’ ownership or operation of the Purchased Assets or the Business, except (i) those Taxes related to the ownership or operation of the Purchased Assets or the Business which are attributable to taxable periods or portions thereof beginning on or after the Closing and (ii) those Taxes specified in Section 3.3(d);

          (c) all Liabilities arising out of (but only to the extent relating to) any of the Excluded Assets;

          (d) all Liabilities arising out of the Bonds;

          (e) all Liabilities relating to current or former employees of Sellers or any of their current or former Affiliates, other than Transferred Employees, and all Liabilities with respect to Transferred Employees arising prior to the Closing Date, except as may otherwise be provided in Article IX or that are agreed to between Purchaser and the respective Union;

          (f) all Liabilities relating to any Environmental Laws regarding any Non-Target Properties (other than Liabilities relating to the off-site migration of Hazardous Materials from a Real Property or Silver Bell Property to a Non-Target Property), irrespective of whether such Liabilities relate to actions, omissions or events that occur or exist prior to or after the Closing Date, including any Liabilities relating to Hazardous Materials that, prior to the Closing Date, were sent from a Real Property (other than by natural migration or to another Real Property or a Silver Bell Property) off-site for treatment, storage or disposal;

26

          (g) all Liabilities relating to any toxic tort claim or other claim by a Person other than a Governmental Authority to the extent it relates to exposure prior to the Closing Date to Hazardous Materials (for the avoidance of doubt, with respect to any such claim that alleges exposure to Hazardous Materials that occurred prior to the Closing Date and continued or continues after the Closing Date, the portion of the Liability attributable to the pre-Closing exposure shall be a Retained Liability and the portion attributable to the continuation of the exposure post-Closing shall be an Assumed Liability); and

          (h) all Liabilities for any natural resource damages at any Non-Target Property that result from migrations or Releases of Hazardous Materials from Real Property that occurred prior to the Closing Date and did not continue thereafter.

     3.5 Contract Designation Rights.

          (a) Contracts that were entered into prior to the filing of the Bankruptcy Cases to which ASARCO is a party that, as of the date of this Agreement, have not been assumed by Sellers and are to be assigned to Purchaser (the “Assumption-Pending Pre-Petition Contracts”) are identified in Section 3.5(a) of the Seller Disclosure Schedule and all such contracts shall be assumed and assigned hereunder. Purchaser shall timely deliver to Sellers such information or documentation relating to “adequate assurance of future performance” as shall be reasonably required in connection with the assumption and assignment of such Contracts pursuant to the Plan.

          (b) At or prior to the Closing, to the extent not previously paid, Sellers shall pay any and all Cure Claims with respect to all Assumption-Pending Pre-Petition Contracts; provided, that any Unpaid Cure Claims Amounts shall be subject to Section 3.5(d).

          (c) Nothing in this Agreement shall be construed as an attempt by any Seller to assign any Contract to the extent that such Contract is not assignable without the necessary notice to or consent of the other party or parties thereto, and such notice to or consent of such other party has not been given or received, as applicable. Purchaser acknowledges that no adjustment to the Purchase Price shall be made for any such Contracts that are not assigned and that Purchaser shall have no claim against Sellers or any other Person in respect of such unassigned Contracts. Notwithstanding the absence at Closing of one or more required consents to the assignment of a Contract that is intended to be an Assumed Contract, following the Closing at such time as consent has been obtained, or any requisite notice has been made or delivered, as applicable, the related Contract shall be assigned to Purchaser automatically without any other conveyance or other action by Purchaser. From and after the Closing, pending receipt or in the absence of any such consent, Sellers will hold the benefit of such Contract that is intended to be an Assumed Contract for Purchaser and subcontract to Purchaser all rights and obligations of Sellers thereunder to the extent allowed by such Contract. As between Sellers and Purchaser, Purchaser will be deemed to have fully assumed Sellers’ performance obligations for any such Contract that is intended to be an Assumed Contract at Closing in accordance with this Agreement.

          (d) At the Closing, ASARCO shall deliver to Purchaser a statement of any Unpaid Cure Claims Amount (and the Contract(s) corresponding thereto), including a calculation

27

thereof. Purchaser shall be permitted (but not required), within 30 days after receipt of such statement, to pay any Unpaid Cure Claims Amount, and within 10 days after any such payment, Purchaser shall provide a written notice to ASARCO of such payment (and the Contract(s) corresponding thereto). To the extent Purchaser pays any Unpaid Cure Claims Amount pursuant to this Section 3.5(d), Sellers shall, within 10 days of receipt of notice from Purchaser delivered in accordance with this Section 3.5(d), reimburse Purchaser in the amount of such payment; provided that, the Plan Confirmation Order shall provide that, as between the Sellers and the counterparty of the underlying Contract, (i) neither the payment nor the reimbursement of a disputed Unpaid Cure Claims Amount shall constitute a waiver, admission or estoppel in respect of any claims or defenses that ASARCO may have related to such Unpaid Cure Claims Amount or the underlying Contract and (ii) ASARCO’s right to object, assert any counterclaim or exercise any setoff or other rights in connection with such Unpaid Cure Claims Amount or the underlying Contract shall be preserved regardless of any such payment or reimbursement; provided, however, that failure of the Plan Confirmation Order to so provide shall not relieve the Sellers of their payment obligations as set forth in this Section 3.5(d).

     3.6 Silver Bell. The parties acknowledge that pursuant to the Silver Bell LLC Agreement, the sale, assignment and transfer by ARSB of its Silver Bell Interests is subject to the consent of the other members of Silver Bell. If such consent is not obtained prior to Closing, then (i) the Silver Bell Interests and Sellers’ right in and to the Silver Bell LLC Agreement will each be an Excluded Asset and the shares of capital stock of ARSB will be a Purchased Asset and (ii) references in Section 7.5 to Silver Bell Interests will be deemed to refer to the capital stock of ARSB.

ARTICLE IV
PURCHASE PRICE AND PAYMENT

     4.1 Purchase Price. The total consideration paid by Purchaser to Sellers in consideration of the sale, conveyance, transfer, assignment and delivery of the Purchased Assets is (i) an amount equal to: (A) $1,100,000,000.00 (the “Closing Payment”), plus (B) the Purchaser Promissory Note (collectively, the “Purchase Price”) and (ii) the assumption by Purchaser of the Assumed Liabilities.

     4.2 Deposit. Purchaser shall make available to ASARCO funds in the aggregate amount of $125,000,000.00 (the “Deposit”) as follows:

          (a) Prior to the execution of this Agreement, Purchaser posted a letter of credit (the “First L/C”) attached as Exhibit O-1 hereto issued in favor of ASARCO by ABN AMRO Bank N.V., Chicago in the amount of $50,000,000.00. After the entry of the Sterlite Agreed Order by the Bankruptcy Court, Purchaser may amend the First L/C solely to add the following to Annex A of the First L/C: “Funds under the Letter of Credit are payable in accordance with the terms set forth in Section 4.2 of that certain Settlement and Purchase and Sale Agreement, dated as of February ___, 2009, among, inter alia, the Beneficiary and the Account Party.” Purchaser, with the prior written consent of Sellers (which consent shall not be unreasonably withheld), shall have the right to exchange the First L/C for a replacement letter of credit issued by a Qualified Bank in substantially the same form as the First L/C and on terms and conditions reasonably satisfactory to Sellers.

28

          (b) Simultaneously with the execution of this Agreement, Purchaser has posted a second letter of credit (the “Second L/C”) attached as Exhibit O-2 hereto issued in favor of ASARCO by ABN AMRO Bank N.V., Chicago in the amount of $50,000,000.00. Purchaser, with the prior written consent of Sellers (which consent shall not be unreasonably withheld), shall have the right to exchange the Second L/C for a replacement letter of credit issued by a Qualified Bank in substantially the same form as the Second L/C and on terms and conditions reasonably satisfactory to Sellers.

          (c) As promptly as practicable following (but not later than 5:00 p.m., Dallas, Texas time, on the third Business Day following) the Disclosure Statement Approval Date, Purchaser will post a third letter of credit (the “Third L/C”) in the form of Exhibit O-3 hereto issued in favor of ASARCO by a Qualified Bank in the amount of $25,000,000.00 and ASARCO shall have received such originally executed Third L/C enforceable against the issuer thereof. The First L/C, the Second L/C and the Third L/C are collectively referred to herein as the “Letters of Credit.”

          (d) Subject to Section 4.2(h), in anticipation of Closing and upon the agreement of the parties, ASARCO shall draw on the Letters of Credit. All cash received by ASARCO (in immediately available funds in an account designated by ASARCO) prior to or on the Closing Date pursuant to such draw shall be credited against the Closing Payment at Closing and retained by Sellers as a component of the Purchase Price. Alternatively, at least three Business Days prior to the Closing Date, Purchaser may deliver a written notice to ASARCO instructing ASARCO that it shall deliver the full amount of the Closing Payment to ASARCO pursuant to Section 5.3(a) at Closing. In such case, at Closing, upon receipt of the Closing Payment pursuant to Section 5.3(a), ASARCO shall deliver to Purchaser each of the Letters of Credit for return to the issuer thereof for cancellation (or any cash drawn and received pursuant to Section 4.2(h)).

          (e) Immediately following the termination of this Agreement due to a material breach by Purchaser or Guarantor of any of their respective representations, warranties or covenants or other agreements hereunder (a “Purchaser Breach”), Sellers shall (i) be entitled to receive from Purchaser and retain the Deposit and (ii) be entitled to draw upon all Letters of Credit at anytime thereafter to obtain the Deposit and the receipt by Sellers of immediately available funds in an account designated by ASARCO in an amount equal to the Deposit pursuant to such draw (or any draw pursuant to Section 4.2(h)) shall satisfy Purchaser’s payment obligation in clause (i); provided, that only $100,000,000.00 shall be paid to and may be drawn by Sellers if such termination occurs prior to the Disclosure Statement Approval Date.

          (f) Immediately following the termination of this Agreement for any reason other than (i) a Purchaser Breach or (ii) by Purchaser pursuant to Section 13.1(j) upon the occurrence of a Manipulative Breach, Sellers shall (x) be entitled to receive from Purchaser and retain $50,000,000.00, (y) be entitled to draw upon any outstanding Letter of Credit at anytime thereafter to obtain such funds and the receipt by Sellers of immediately available funds in an account designated by ASARCO in an amount equal to $50,000,000.00 pursuant to such draw (or any draws pursuant to Section 4.2(h)) shall satisfy Purchaser’s payment obligation in clause (x)) and (z) as promptly as practicable, and in any event within 10 Business Days, return the Second L/C and (if posted) the Third L/C to the issuer thereof for cancellation (or any cash

29

drawn (and received) pursuant to Section 4.2(h) in excess of $50,000,000.00; provided, that if (and only if) a Release Condition occurs following the termination of this Agreement, as promptly as practicable, and in any event within 10 Business Days, following the occurrence of such Release Condition, ASARCO shall either (1) return the First L/C to the issuer thereof for cancellation or (2) if Sellers have already drawn on the First L/C, including pursuant to Section 4.2(h), (and received $50,000,000.00 in respect of such draw), Sellers shall deliver the amount of $50,000,000.00 to Purchaser and such payment shall be made by wire transfer of immediately available funds to an account designated by Purchaser.

          (g) As promptly as practicable, and in any event within 10 Business Days, following the termination of this Agreement by Purchaser pursuant to Section 13.1(j) due to a Manipulative Breach, ASARCO shall return the Letters of Credit to the issuer thereof for cancellation (or any cash drawn and received pursuant to Section 4.2(h)).

          (h) At all times the remaining period until the stated expiry of each Letter of Credit shall be at least 30 days. From time to time, Purchaser shall cause the Letters of Credit to be amended to extend the expiry dates thereunder (without any other modifications thereto) in order to comply with the immediately preceding sentence. If at any time the remaining period until the stated expiry of any Letter of Credit is less than 30 days, ASARCO shall be entitled to draw upon such Letter of Credit at anytime thereafter; provided, however, that if the parties mutually agree that the Closing is reasonably likely to occur during such 30 day period, then ASARCO shall not draw upon such Letter of Credit until the remaining period until the stated expiry of such Letter of Credit is 20 days or less and all cash received by ASARCO (in immediately available funds in an account designated by ASARCO) prior to or on the Closing Date pursuant to such draw shall be credited against the Closing Payment at Closing and retained by Sellers as a component of the Purchase Price; provided, further, that, notwithstanding anything to the contrary contained herein, any cash drawn and received pursuant to this Section 4.2(h) that is to be returned to Purchaser pursuant to any other provision of this Section 4.2 shall be returned to Purchaser immediately.

          (i) Notwithstanding anything to the contrary contained herein, except pursuant to Section 4.2(d), any draw upon any of the Letters of Credit shall be approved by the Bankruptcy Court as an act outside the ordinary course of business under 11 U.S.C. § 363(b)(1). For clarification, Sellers’ right to draw upon a Letter of Credit is not conditioned upon any other finding by the Bankruptcy Court; provided, however, that such Bankruptcy Court approval shall not be required for any draw upon the First L/C prior to the entry of the Sterlite Agreed Order by the Bankruptcy Court.

30

     4.3 Purchase Price Adjustment.

          (a) No later than 45 days after the Closing Date, Sellers shall deliver to Purchaser a statement (the “Closing Accounts Statement”) prepared in accordance with the illustration set forth in Exhibit E setting forth (i) the Included Receivables, the Included Payables and the Inventory Amount, each calculated as of the Closing Date, and (ii) a calculation of the Closing Accounts Amount.

          (b) From and after the Closing Date until the delivery of the Closing Accounts Statement, Purchaser shall give Sellers reasonable access during normal business hours and upon reasonable notice to the Books and Records, the accounting and other appropriate personnel and the independent accountants of the Business in order to enable Sellers to prepare the Closing Accounts Statement and to calculate the Closing Accounts Amount.

          (c) On the date that a binding determination of the Closing Accounts Amount has been made in accordance with Section 4.4, the aggregate principal amount of the Purchaser Promissory Note shall automatically be (i) increased by the Adjustment Amount if the Closing Accounts Amount is greater than the Agreed Working Capital or (ii) decreased by the Adjustment Amount if the Closing Accounts Amount is less than the Agreed Working Capital, in each case without any action on the part of Purchaser or Sellers.

     4.4 Dispute Resolution.

          (a) Purchaser shall be entitled to dispute the calculation of the Closing Accounts Amount set forth in the Closing Accounts Statement if, but only if, Purchaser delivers a written notice (an “Objection Notice”) to Sellers within 30 days after receipt of the Closing Accounts Statement in which Purchaser objects to the calculation by Sellers of the Closing Accounts Amount and provides a reasonably detailed description of each item to which Purchaser objects, the amount Purchaser believes is correct with respect to each such item and the basis therefor (the date upon which Purchaser delivers an Objection Notice to Sellers being hereinafter referred to as the “Objection Date”). If no Objection Notice is delivered within the time required in this Section 4.4(a), the Closing Accounts Statement delivered by Sellers and the calculation of the Closing Accounts Amount set forth therein shall be final and binding on each of the parties.

          (b) If Purchaser delivers an Objection Notice to Sellers within the time period specified in paragraph (a) above, Purchaser and Sellers shall attempt in good faith to agree upon the Closing Accounts Amount during the period commencing on the Objection Date and ending 10 days thereafter (the “Negotiation Period”).

          (c) If Purchaser and Sellers agree in writing prior to the expiration of the Negotiation Period on the Closing Accounts Amount, whether such amount is the same as or different from the amount calculated based upon the Closing Accounts Statement, the amount agreed to in writing shall be the Closing Accounts Amount for all purposes hereunder.

          (d) If Purchaser and Sellers do not agree in writing prior to the expiration of the Negotiation Period on the Closing Accounts Amount, the items in dispute (but no other

31

matters) shall be submitted to KPMG LLP or such other firm of independent public accountants as may be mutually agreed between Purchaser and Sellers (in either case, the “Final Arbiter”). The Final Arbiter shall make a final and binding determination as to all matters in dispute relating to the calculation of the Closing Accounts Amount as promptly as practicable after its appointment (but no later than 45 days after the date of its appointment). The determination by the Final Arbiter of the amounts in dispute shall be based solely on presentations by Purchaser and Sellers, and shall not involve the Final Arbiter’s independent review. Any determination by the Final Arbiter shall not be outside the range defined by the respective amounts proposed by Purchaser and Sellers. The Final Arbiter shall send its written determination of the Included Payables, Included Receivables and Inventory Amount, each calculated as of the Closing Date, to Purchaser and Sellers, together with a calculation of the Closing Accounts Amount that results from such determination, and such determination of the Final Arbiter, and the resulting calculation of the Closing Accounts Amount, shall be binding on the parties, absent fraud or manifest error. The fees and expenses of the Final Arbiter shall be borne equally by Purchaser and Sellers.

     4.5 Allocation of Purchase Price. Purchaser and Sellers shall use good faith efforts to attempt to reach agreement on the allocation of the Purchase Price and other relevant items (including, for example, the amount of Assumed Liabilities, adjustments to the Purchase Price and other consideration for Tax purposes) among the Purchased Assets, including goodwill and other assets, by the earlier of (x) six (6) months following the Closing Date, and (y) 60 days prior to the extended due date of the federal income tax return which includes the transactions contemplated herein, in accordance with Section 1060 of the Code and the Treasury regulations promulgated thereunder and any comparable provision of state, local or foreign Law, as appropriate (the “Allocation”). If Purchaser and Sellers reach a timely agreement regarding the Allocation, (a) such Allocation shall be binding on the parties, (b) the parties shall prepare and timely file all applicable federal and state income Tax forms (including Internal Revenue Service Form 8594) in a manner consistent with the Allocation, cooperate with each other in the preparation of such forms, and furnish each other with a copy of the final version of Form 8594 within a reasonable period before the filing date thereof, and (c) except as otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code (or any comparable provision of any state, local or foreign law), none of the parties shall take a position inconsistent with the Allocation on any Tax Return (including any forms required to be filed pursuant to Section 1060 of the Code), or otherwise. The parties recognize that the Allocation will not include Purchaser’s acquisition expenses or Sellers’ selling expenses, and Purchaser and Sellers will unilaterally allocate such expenses appropriately. If the parties are unable to reach a timely agreement regarding the Allocation, each party shall be entitled to adopt its own position regarding the Allocation.

ARTICLE V
CLOSING

     5.1 Time and Place of Closing. The closing of the sale and purchase of the Purchased Assets and the assumption of the Assumed Liabilities provided for in Article III (the “Closing”) shall take place at the offices of Baker Botts L.L.P., located at 2001 Ross Avenue, Suite 1100, Dallas, Texas, at 10:00 a.m. local time, on the second Business Day after the conditions to

32

Closing set forth in Article XI (excluding conditions that, by their terms, cannot be satisfied until the Closing) have been satisfied (or waived by the party entitled to waive such condition), or at such other place, date and time as the parties may agree.

     5.2 Items to Be Delivered by Sellers. At the Closing, Sellers shall deliver, or cause to be delivered, to Purchaser the following:

          (a) the Bill of Sale duly executed by Sellers;

          (b) the Assignment and Assumption Agreement duly executed by Sellers;

          (c) for each parcel of Purchased Real Property, a recordable quit-claim deed (collectively, the “Deeds”) substantially in the forms of Exhibit F-1 through Exhibit F-4 as applicable, executed by the appropriate Seller, with all appropriate notarizations and certifications as required by the applicable Governmental Authority;

          (d) for each parcel of Leasehold Property, a (i) recordable quit-claim deed conveying title to all improvements located on the Leasehold Property (collectively, the “Leasehold Deeds”) substantially in the form of Exhibit G and (ii) an assignment and assumption agreement for any applicable ground lease agreement relating to such parcel of Leasehold Property substantially in the form of Exhibit H (the “Assignment and Assumption of Ground Lease Agreement”), executed by the appropriate Seller, with all appropriate notarizations and certifications as required by the applicable Governmental Authority;

          (e) certificates of title for all motor vehicles identified in Section 3.1(g) of the Seller Disclosure Schedule, each executed by the appropriate Seller and in a form reasonably satisfactory to the appropriate state agencies where such motor vehicles are titled;

          (f) the Transition Services Agreement duly executed by ASARCO;

          (g) a non-foreign affidavit of each Non-Debtor Seller dated as of the Closing Date in form and substance as required under the Treasury regulations issued pursuant to Section 1445 of the Code;

          (h) a certificate signed by a duly authorized representative of each Seller certifying that the closing conditions set forth in Sections 11.2(a) and 11.2(b) have been satisfied;

          (i) certificates of an authorized officer of each Seller to which is attached: (i) true and correct copies of the Organizational Documents of such Seller; (ii) true and correct copies of the resolutions of the Board of Directors for such Seller respecting the transactions contemplated by this Agreement and the Ancillary Agreements; (iii) a certificate respecting the incumbency and true signatures of the officers of such Seller who execute this Agreement and other transaction documents on behalf of such Seller; and (iv) a certificate from the Secretary of State or other applicable Governmental Authority of the State of formation or incorporation, as applicable, dated within 10 days of the Closing Date, with respect to the existence and good standing of such Seller. The certificates required pursuant to this Section 5.2(i) shall certify that the documents referred to in (i) and (ii) above and attached thereto are true and correct copies,

33

have been duly and validly adopted and have not been amended or altered except as reflected therein;

          (j) the Patent Assignment, dated as of the Closing Date, in the form attached hereto as Exhibit I (the “Patent Assignment”), duly executed by ASARCO;

          (k) the Trademark Assignment, dated as of the Closing Date, in the form attached hereto as Exhibit J (the “Trademark Assignment”), duly executed by ASARCO;

          (l) a certified copy of the Plan Confirmation Order authorizing and ratifying the execution and delivery of this Agreement by Sellers, and the consummation by Sellers of the transactions contemplated hereby;

          (m) for each Arizona water right, claim, Permit, Certificate of Water Right, Statement of Claim, Statement of Claimant, and grandfathered groundwater withdrawal right associated with the Real Property a recordable quit-claim deed conveying title to such rights, permits, certificates, and claims substantially in the form of Exhibit F-3, executed by the appropriate Seller, with all appropriate notarizations and certifications as required by the applicable Governmental Authority;

          (n) a recordable quitclaim deed substantially in the form of Exhibit F-4 with respect to the unpatented mining claims listed in Section 3.1(o) of the Seller Disclosure Schedule, executed by the appropriate Seller with all appropriate notarizations and certifications as required by the applicable Governmental Authorities;

          (o) the Security Agreement duly executed by ASARCO Administration LLC; and

          (p) a receipt for the Closing Payment.

     5.3 Items to Be Delivered by Purchaser. At the Closing, Purchaser shall deliver (or shall cause the delivery) to Sellers of the following:

          (a) the Closing Payment by wire transfer of immediately available funds (to such account or accounts as Sellers shall have specified to Purchaser at least 24 hours prior to the Closing);

          (b) the Purchaser Promissory Note duly executed by Purchaser;

          (c) the Assignment and Assumption Agreement duly executed by Purchaser;

          (d) the Transition Services Agreement duly executed by Purchaser;

          (e) the Patent Assignment duly executed by Purchaser;

          (f) the Trademark Assignment duly executed by Purchaser;

34

          (g) the Assignment and Assumption of Ground Lease Agreement executed by Purchaser, with all appropriate notarizations and certifications as required by the applicable Governmental Authority;

          (h) a certificate signed by a duly authorized representative of Purchaser and Guarantor certifying that the closing conditions set forth in Sections 11.3(a) and 11.3(b) have been satisfied;

          (i) certificates of an authorized officer of each of Purchaser and Guarantor to which is attached: (i) true and correct copies of the Organizational Documents of Purchaser or Guarantor, as applicable; (ii) true and correct copies of the resolutions of the board of directors of Purchaser or Guarantor, as applicable, respecting the transactions contemplated by this Agreement and the Ancillary Agreements; (iii) a certificate respecting the incumbency and true signatures of the officers of Purchaser or Guarantor, as applicable, who execute this Agreement and other transaction documents on behalf of Purchaser or Guarantor; and (iv) a certificate from the Secretary of State of the State (or jurisdiction) of formation or incorporation, as applicable, dated within 10 days of the Closing Date, with respect to the existence and good standing of Purchaser or Guarantor, as applicable. The certificates required pursuant to this Section 5.3(i) shall certify that the documents referred to in (i) and (ii) above and attached thereto are true and correct copies, have been duly and validly adopted and have not been amended or altered except as reflected therein;

          (j) the Security Agreement duly executed by Purchaser;

          (k) a mortgage substantially in the form of either Exhibit N-1 or Exhibit N-2, as applicable, hereto with respect to each parcel of Purchased Real Property (collectively, the “Mortgages”);

          (l) all documents required to perfect the security interest in the Collateral (as defined in the Security Agreement) pursuant to the Security Agreement, each in form and substance reasonably acceptable to ASARCO, including documents required to perfect the pledge of the Silver Bell Interests and the security interest in the Patents and Trademarks; and

          (m) evidence reasonably satisfactory to Sellers that Purchaser has complied with its obligations set forth in Section 8.9.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS

          Sellers, jointly and severally, hereby represent and warrant to Purchaser that, on and as of the date of this Agreement, except as set forth in the Seller Disclosure Schedule:

     6.1 Organization and Good Standing. Each Seller is a limited liability company or corporation duly formed or incorporated, validly existing and in good standing under the laws of the jurisdiction of its formation or incorporation and Sellers have the requisite power and authority to own the Purchased Assets, subject to, in the case of ASARCO, the limitations imposed on ASARCO as a result of having filed a petition for relief under the Bankruptcy Code.

35

Sellers are duly licensed or qualified to transact business and are in good standing in each jurisdiction in which their ownership or leasing of the Purchased Assets or the operation of its respective business makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

     6.2 Authorization of Agreement. Subject to the entry of the Plan Confirmation Order, each Seller has the requisite limited liability company or corporate power and authority to execute this Agreement and each of the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each of the Ancillary Agreements by Sellers and the consummation by Sellers of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of each Seller and no other limited liability company or corporate proceedings on the part of Sellers are necessary to authorize this Agreement or the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and at the Closing each of the Ancillary Agreements will be, duly executed and delivered by each Seller and, assuming due execution and delivery by Purchaser and Guarantor of this Agreement, the Ancillary Agreements and entry of the Plan Confirmation Order, this Agreement constitutes, and at Closing, each of the Ancillary Agreements will constitute, a valid and binding obligation of each Seller, enforceable against each Seller in accordance with its terms subject to the Enforceability Exceptions.

     6.3 No Violation; Consents.

          (a) Assuming the receipt of the consents or waivers referred to in Section 6.3(a) and Section 6.3(b) of the Seller Disclosure Schedule and in Section 6.3(b), the execution and delivery by Sellers of this Agreement and each of the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate any provision of the Organizational Documents of any Seller, (ii) violate any Order of any Governmental Authority existing after the filing of the Bankruptcy Cases to which any Seller is bound or subject, (iii) violate any Applicable Law or (iv) except as provided for herein, result in the imposition or creation of any Lien (other than Permitted Liens) upon the Purchased Assets other than, in the case of clauses (ii), (iii) and (iv), any conflict, violation, breach, default, requirement for consents, rights of acceleration, cancellation or termination that would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

          (b) Assuming entry of the Plan Confirmation Order, no Order or Permit issued by, or declaration or filing with, or notification to, or waiver from any Governmental Authority is required on the part of any Seller in connection with the execution and delivery of this Agreement or any Ancillary Agreement, or the compliance with or performance by any Seller with any provision contained in this Agreement or any Ancillary Agreement, except for (i) in the event the Closing fails to occur prior to the first anniversary of the expiration of the “waiting period” under the previously filed notification under the HSR Act, the filing by or on behalf of ASARCO or its “ultimate parent entity” of notification with the Federal Trade Commission and Antitrust Division of the United States Department of Justice under the HSR Act and the expiration or termination of the applicable “waiting period” thereunder and (ii) any such

36

requirements, the failure of which to be obtained or made would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

     6.4 Financial Information. The Seller Data Room contains the unaudited consolidated balance sheet of ASARCO at December 31, 2008 and the unaudited consolidated statements of income and cash flows of ASARCO for the twelve months ended thereon (collectively, the “Financial Statements”). The Financial Statements, in each case, only to the extent relating to the Purchased Assets and Assumed Liabilities, (a) present fairly in all material respects the consolidated financial position of ASARCO as of the respective dates thereof, and the consolidated results of operations of ASARCO for the periods covered thereby and (b) have been prepared in all material respects in accordance with GAAP applied on a basis consistent with the past practices of Sellers during the pendency of the Bankruptcy Cases, in each case, subject to (i) the absence of footnotes thereto and (ii) audit adjustments resulting from the Sellers’ Accountants’ audit, review and finalization of ASARCO’s financial statements for the years ended December 31, 2005, 2006, 2007 and 2008, which would not individually or in the aggregate reasonably be expected to result in a Seller Material Adverse Effect.

     6.5 Compliance with Laws; Permits.

          (a) Since August 9, 2005, Sellers have conducted their operations of the Business that are situated on the Purchased Real Property in compliance with all Applicable Laws except where the failure to comply with such laws would not reasonably be expected to have a Seller Material Adverse Effect.

          (b) Sellers hold (or are in the process of renewing) all Permits that are required to conduct the operations of the Business that are situated on the Purchased Real Property as they are currently conducted except for any such Permits the absence of which would not reasonably be expected to have a Seller Material Adverse Effect. No Legal Proceeding by any Governmental Authority is pending nor, to Sellers’ Knowledge, has been threatened in writing since August 9, 2005, to cancel, modify or fail to renew any such Permit except for any such cancellation, modification or failure that would not reasonably be expected to result in a Seller Material Adverse Effect.

          (c) The representations and warranties in this Section 6.5 do not address Environmental Laws or labor, employment and benefit plan matters.

     6.6 Sufficiency of Purchased Assets. The Purchased Assets constitute all of the assets material to Sellers’ conduct of the Business as it is currently conducted as of the date of this Agreement.

     6.7 Purchased Real Property. With respect to each parcel of Purchased Real Property, there are no pending, or to Sellers’ Knowledge, threatened condemnation proceedings or other Legal Proceedings that materially and adversely affect the current use or occupancy thereof.

37

     6.8 Material Contracts.

          (a) Section 6.8(a) of the Seller Disclosure Schedule identifies the following Contracts in effect as of the date of this Agreement and to which any Seller is a party and relating to the Business and identifies whether such Contracts are Assumed Pre-Petition Contracts, Assumption-Pending Pre-Petition Contracts, Post-Petition Contracts or Non-Debtor Contracts, as applicable (collectively, the “Material Contracts”):

          (i) all leases, subleases, licenses or other Contracts relating to the occupancy of the Leasehold Property that are necessary to the operation of the Business;

          (ii) all leases, subleases, licenses or other Contracts relating to the Purchased Real Property under which any Seller is a lessor and (A) during the twelve months ended December 31, 2008, received rental payments in excess of $200,000, or (B) that have a non-cancelable term in excess of 12 months;

          (iii) all leases of equipment or other tangible personal property that are necessary to the operation of the Business;

          (iv) all Contracts with Suppliers;

          (v) all Contracts included in the Purchased Assets pursuant to which any Seller retains the right to receive a royalty for production from a parcel of real property;

          (vi) all settlement agreements for the settlement of any Environmental Claims to the extent related to the Real Property;

          (vii) all agreements with trade vendors providing services material to the operation of the Business to which any Seller paid more than $3,000,000 during the twelve month period ended December 31, 2008; and

          (viii) all Contracts granting a third party an option or right of first refusal to purchase any Purchased Real Property.

          (b) Each Material Contract (other than any Assumption-Pending Pre-Petition Contract) is in full force and effect, enforceable against Seller that is a party thereto in accordance with its terms, subject to the Enforceability Exceptions, other than Material Contracts that (i) have expired or terminated pursuant to their terms, (ii) have been terminated by the Seller party thereto in the Ordinary Course of Business or (iii) have been terminated by a counterparty in connection with or attributable to economic and industry conditions, but not as a result of a material breach of such Material Contract by the Seller party thereto.

          (c) No Seller has received written notice that it is in violation, breach of or default in any material respect under any Material Contract (other than any Assumption-Pending Pre-Petition Contract) (or with notice or lapse of time or both, would be in violation or breach of or default under any such Contract).

38

     6.9 Suppliers. Section 6.9 of the Seller Disclosure Schedule lists the ten most significant suppliers (by payable) of raw materials, supplies, merchandise and other goods for the Business for the twelve-month period ended December 31, 2008 and the amount for which each such supplier invoiced Sellers during such period (“Suppliers”). Since January 1, 2009, no Supplier has delivered a written notice to any Seller that it intends to terminate its relationship with Sellers or materially reduce its business with Sellers from the levels achieved during the twelve months ended December 31, 2008 other than terminations or reductions made in connection with or attributable to economic and industry conditions.

     6.10 Employee Benefit Matters.

          (a) All Seller Employee Benefit Plans are listed in Section 6.10(a) of the Seller Disclosure Schedule. True and complete copies of all Seller Employee Benefit Plans, including, but not limited to, any trust instruments and insurance contracts forming a part of any such Seller Employee Benefit Plans, and all amendments thereto, have been made available to Purchaser.

          (b) Each Seller Employee Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a “Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service, and to Sellers’ Knowledge there are no circumstances likely to result in revocation of any such favorable determination letter or the loss of the qualification of such Pension Plan under Section 401(a) of the Code.

          (c) To Sellers’ Knowledge, there has not been any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Seller Employee Benefit Plan. None of the Sellers has incurred any material liability under, arising out of or by operation of Title IV of ERISA, and, to Seller’s Knowledge, no fact or event exists which would reasonably be expected to give rise to any such material liability.

          (d) Each of the Seller Employee Benefit Plans has been operated and administered in all material respects in accordance with its terms and with Applicable Law, including ERISA and the Code, to the extent required by such Applicable Law. There is no material Legal Proceeding pending or, to the Seller’s Knowledge, threatened in writing against any Seller relating to any Seller Employee Benefit Plans.

     6.11 Environmental Matters.

          (a) Except (i) for matters that do not constitute Assumed Liabilities and (ii) for matters that individually or in the aggregate would not reasonably be expected to have a Seller Material Adverse Effect: (w) since August 9, 2005, Sellers operate and have operated the Business on and in connection with the Real Property in compliance with all applicable Environmental Laws, (x) Sellers hold all Environmental Permits necessary to operate the Business on the Real Property as it is currently conducted and, except for matters that have been resolved, since August 9, 2005, have been in compliance with such Environmental Permits, (y) to Sellers’ Knowledge, there has been no migration or Release of Hazardous Materials at or from the Real Property that, as of the Closing Date, requires any Remedial Action pursuant to

39

Environmental Law, except with respect to any such migration or Release specifically identified in any document included in Section 14 of the Seller Data Room, as of the date of this Agreement and (z) there are no Environmental Claims pending or, to the Sellers’ Knowledge, threatened as of the date of this Agreement against Sellers arising out of or relating to the Real Property or the operation of the Business on the Real Property.

          (b) Purchaser acknowledges that, except with respect to Sections 6.3(a)(ii), (iii) and (iv), 6.3(b), 6.8(a)(vi), 6.8(b), 6.8(c) and 6.14, this Section 6.11 shall be deemed to be the only representation and warranty in the Agreement with respect to environmental matters.

     6.12 Labor Matters.

          (a) Sellers are in compliance, in respect of the operation of the Business as currently conducted at any Real Property, with the requirements of Applicable Laws relating to the employment of labor (including the proper classification of employees), the payment of wages, the payment and withholding of taxes, overtime and other compensation and benefits, employment standards or retaliation, except for such non-compliance as would not reasonably be expected to have a Seller Material Adverse Effect. There is no claim with respect to the foregoing pending, or, to Sellers’ Knowledge, threatened against any Seller before any Governmental Authority which, if adversely decided would reasonably be expected to have a Seller Material Adverse Effect. Sellers have not received written notice of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation with respect to or relating to the Business and, to Sellers’ Knowledge, no such investigation is in progress.

          (b) Sellers are not a party to, or otherwise bound by, any unsatisfied or pending conciliation agreement, settlement agreement, arbitration award or consent decree with, or a citation by, any Governmental Authority in each case relating to claims of unfair labor practices, employment discrimination or other claims with respect to employment practices and policies in respect of the operation of the Business (other than claims attributable to or arising out of decisions, practices and policies made in the Ordinary Course of Business, including layoffs and reductions in force), the failure to comply with which would reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

          (c) There are no unfair labor or employment practice charges or complaints, charges or complaints alleging breach by Sellers of any express or implied contract of employment, charges or complaints alleging discriminatory, wrongful or tortious conduct in connection with the employment relationship, or other employee-related charges or complaints, pending against Sellers before any Governmental Authority or, to Sellers’ Knowledge, threatened against Sellers before any Governmental Authority, in each case relating to the Business (other than charges or complaints attributable to or arising out of decisions, practices and policies made in the Ordinary Course of Business, including layoffs and reductions in force), which, if adversely decided, would reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

          (d) There are no grievances, or requests or demands for arbitration pending, or, to Sellers’ Knowledge, threatened in writing against Sellers, or arbitration awards or Orders

40

outstanding against Sellers under the Collective Bargaining Agreements (other than grievances, requests or demands attributable to or arising out of decisions, practices and policies made in the Ordinary Course of Business, including layoffs and reductions in force) that would reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

          (e) No employment contracts or severance agreements exist with any current employee of Sellers.

          (f) As of the Effective Date, since January 1, 2006, (i) Sellers have not effectuated a “plant closing” (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Business and (ii) there has not occurred a “mass layoff’ (as defined in the WARN Act) affecting any site of employment or facility of Sellers; nor have Sellers been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar Law.

          (g) Except for the current Local Supplemental Agreements between Sellers and the Unions that were negotiated pursuant to the Letter of Understanding on Local Supplemental Agreements after January 6, 2007 (set forth on page 124 of the master collective bargaining agreement between Sellers and the Unions that expires by its terms on June 30, 2011), there are no other local agreements that may affect, impact or govern in any material respect wages, benefits, and/or terms and conditions of employment of any Transferred Employees, or operations at any of the facilities covered by the Collective Bargaining Agreements.

     6.13 Taxes. All material Tax Returns relating to the Business or the Purchased Assets (including Tax Returns of Silver Bell) required to be filed have been timely filed (taking into account validly obtained extensions) and all material Taxes relating to the Business or the Purchased Assets (including Taxes of Silver Bell) required to be paid have been timely paid. There are no current or pending audits or other administrative or court proceedings for the assessment, adjustment or collection of material Taxes relating to the Business or the Purchased Assets and no Seller has received, within the past three years, any written notice of any claims, actions, suits, proceedings or investigations for the assessment, adjustment or collection of material Taxes relating to the Business or the Purchased Assets including, any written notice or inquiry from any jurisdiction in which Tax Returns have not been filed with respect to the Business or the Purchased Assets to the effect that the filing of Tax Returns may be required. There are no liens for Taxes against any of the Purchased Assets.

     6.14 Insurance. Section 6.14 of the Seller Disclosure Schedule lists the insurance policies maintained by Sellers that provide casualty, property damage and general liability coverage for the Purchased Assets. As of the Effective Date, all of such policies are in full force and effect. At Closing, all of such policies shall either be in full force and effect or Seller shall have complied with Section 8.2(c).

     6.15 Financial Advisors. Neither Purchaser nor Guarantor is or will become obligated to pay any fee or commission or like payment to any broker, finder or financial advisor as a

41

result of the consummation of the transactions contemplated by this Agreement based upon any arrangement made by or on behalf of any Seller.

ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND GUARANTOR

          Each of Purchaser and Guarantor, jointly and severally, hereby represents and warrants to Sellers:

     7.1 Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Guarantor is a corporation duly organized, validly existing and in good standing under the laws of India.

     7.2 Authorization of Agreement. Each of Purchaser and Guarantor has the requisite limited liability company or corporate power and authority to execute this Agreement and each of the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. The execution and delivery of each of this Agreement and each of the Ancillary Agreements by Purchaser and Guarantor and the consummation by Purchaser and Guarantor of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of each of Purchaser and Guarantor and no other corporate proceedings on the part of Purchaser or any Guarantor are necessary to authorize this Agreement or the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and at the Closing each of the Ancillary Agreements will be, duly executed and delivered by Purchaser and Guarantor and, assuming due execution and delivery by each Seller of this Agreement and the Ancillary Agreements, this Agreement constitutes, and at the Closing each of the Ancillary Agreements will constitute, a valid and binding obligation of each of Purchaser and Guarantor, enforceable against each of Purchaser and Guarantor in accordance with its terms subject to the Enforceability Exceptions.

     7.3 No Violation; Consents.

          (a) The execution and delivery by Purchaser and Guarantor of this Agreement and each of the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate any provision of the Organizational Documents of Purchaser or Guarantor, (ii) violate any Order of any Governmental Authority to which Purchaser or Guarantor is bound or subject, or (iii) violate any Applicable Law, other than, in the case of clauses (ii) and (iii), any conflict, violation, breach, default, requirement for consents, rights of acceleration, cancellation, termination or Lien that would not reasonably be expected to prevent, impede or materially delay or otherwise affect in any material respect the transactions contemplated by this Agreement.

          (b) No Order or Permit issued by, or declaration or filing with, or notification to, or waiver from any Governmental Authority is required on the part of Purchaser or Guarantor in connection with the execution and delivery of this Agreement or any Ancillary Agreement, or the compliance or performance by Purchaser or Guarantor with any provision contained in this Agreement or any Ancillary Agreement, except for (i) in the event the Closing fails to occur

42

prior to the first anniversary of the expiration of the “waiting period” under the previously filed notification under the HSR Act, the filing by or on behalf of Purchaser or its “ultimate parent entity” of notification with the Federal Trade Commission and Antitrust Division of the United States Department of Justice under the HSR Act and the expiration or termination of the applicable “waiting period” thereunder and (ii) any such requirements, the failure of which to be obtained or made would not reasonably be expected to prevent, impede or materially delay or otherwise affect in any material respect the transactions contemplated by this Agreement.

     7.4 Litigation. Other than (i) matters before the Bankruptcy Court involving Sellers or their Affiliates or (ii) matters that will otherwise be resolved by the Plan Confirmation Order, there are no Legal Proceedings pending, or to knowledge of Purchaser or Guarantor, threatened in writing against or affecting Purchaser or Guarantor, at law or in equity, before or by any Governmental Authority, and neither Purchaser nor Guarantor is subject to any Order rendered specifically against any of them which would or seeks to enjoin, rescind or materially delay the transactions contemplated in this Agreement or any Ancillary Agreement or otherwise hinder any of them from timely complying with the terms and provisions of this Agreement or any Ancillary Agreement.

     7.5 Investment Intention. Purchaser is acquiring the Silver Bell Interests for its own account, for investment purposes only and not with a view to the distribution (as such term is used in Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities Act”)) thereof. Purchaser understands that such securities have not been registered under the Securities Act and may not be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.

     7.6 Financial Capability. Guarantor has on the date hereof, and Purchaser will have on the Closing Date, sufficient cash available (and has provided Sellers with evidence thereof) to purchase the Purchased Assets and to consummate the transactions contemplated by this Agreement and each Ancillary Agreement, including, without limitation, payments of fees and expenses contemplated hereunder.

     7.7 Bankruptcy. There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by, or to the knowledge of Purchaser or Guarantor, threatened against Purchaser or Guarantor.

     7.8 Financial Advisors. Sellers are not and will not become obligated to pay any fee or commission or like payment to any broker, finder or financial advisor as a result of the consummation of the transactions contemplated by this Agreement based upon any arrangement made by or on behalf of Purchaser or Guarantor.

     7.9 Subsequent Sales. Other than this Agreement and the Ancillary Agreements, no agreements or understandings exist between any of Purchaser or Guarantor and any other Person with respect to a possible transaction involving any of the Purchased Assets (other than transactions of the Business made in the Ordinary Course of Business).

43

ARTICLE VIII
COVENANTS

     8.1 Access to Information. Prior to Closing, Sellers shall permit Purchaser and its representatives (including its legal advisors and accountants) to have reasonable access, during normal business hours and upon reasonable advance notice, to the Books and Records and senior management personnel of Sellers pertaining to the Purchased Assets, including access to conduct any Phase I environmental site assessments that accord with the American Society for Testing and Materials 05-1527 standard and any mining, real property or water resources assessments (including property condition evaluations, visual inspections, soil tests, dam safety evaluations and water resource evaluations) so long as no such assessments include any sampling and analysis of any environmental media for the presence or absence of Hazardous Materials; provided, that in no event shall Sellers be obligated to provide (i) access or information in violation of Applicable Law or (ii) any information, the disclosure of which would jeopardize any privilege available to Sellers or any of its Affiliates relating to such information or would cause Sellers or any of its Affiliates to breach a confidentiality obligation to which they are bound. In connection with such access, Purchaser’s representatives shall cooperate with Sellers’ representatives (one or more of whom may be present during any such inspection by Purchaser and Purchaser’s representatives) and shall use their reasonable best efforts to minimize any disruption of the Business. Purchaser agrees to abide by the terms of the Confidentiality Agreement and any safety rules or rules of conduct reasonably imposed by Sellers with respect to such access and any information furnished to it or its representatives pursuant to this Section 8.1. Purchaser shall indemnify, defend and hold harmless Sellers, their officers, directors, employees and agents from and against any and all Liabilities asserted against or suffered by them relating to, resulting from, or arising out of, examinations or inspections made by Purchaser or its representatives pursuant to this Section 8.1. The indemnity provided for in this Section 8.1 shall expressly survive any termination of this Agreement or the Closing of the transactions contemplated hereby.

     8.2 Conduct of the Business Pending the Closing. Except as otherwise expressly contemplated by this Agreement, the Ancillary Agreements and Section 8.2 of the Seller Disclosure Schedule attached hereto or with the prior written consent of Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned), and except for any violations that would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect, during the period from and after the date hereof until the Closing Date, Sellers:

          (a) shall use commercially reasonable efforts to conduct the Business in the Ordinary Course of Business;

          (b) will maintain levels of material inventories of consumables and parts and supplies as ASARCO determines are reasonably adequate for operations in the Ordinary Course of Business and it is acknowledged by Purchaser and Guarantor that ASARCO anticipates reducing levels of material inventories of consumables and parts and supplies in the Ordinary Course of Business in response to economic and industry conditions;

44

          (c) will maintain in full force and effect policies of insurance that provide casualty, property damage and general liability coverage for the Purchased Assets comparable in all material respects in amount and scope of coverage to that now maintained by or on behalf of Seller;

          (d) will not sell, lease or otherwise transfer or dispose of any Purchased Assets used or held in the Ordinary Course of Business, or any interest therein, other than transfers and dispositions in the Ordinary Course of Business or de minimus sales approved by the Bankruptcy Court;

          (e) will not grant or announce any material increase in the salaries, bonuses or other benefits payable by Sellers to any of the employees to be offered employment by Purchaser pursuant to Article IX, other than (i) as may be required by any Governmental Authority, Applicable Law, Collective Bargaining Agreement, Seller Employee Benefit Plan or employment Contract with any such employee, (ii) in the Ordinary Course of Business, or (iii) in accordance with Sellers’ annual performance, promotion and salary reviews;

          (f) will not change any method of accounting or accounting practice or policy used by Sellers (as it relates to the Business), other than such changes required by Sellers’ Accountants or GAAP;

          (g) will use commercially reasonable efforts to maintain in all material respects the relationships and goodwill of the Business with its Employees, suppliers and customers;

          (h) will not fail to exercise any rights of renewal with respect to any lease listed in Section 6.8(a)(i) of the Seller Disclosure Schedule that by its terms would otherwise expire;

          (i) will not hire any new employees or transfer employees from any other operations of Sellers, if any such employees are to be offered employment by Purchaser pursuant to Article IX, except (i) as may be required to replace any employees who terminate voluntarily or who were terminated involuntarily in the Ordinary Course of Business, (ii) in the Ordinary Course of Business or (iii) as set forth under Section 8.2 of the Seller Disclosure Schedule;

          (j) will make capital expenditures or commitments for capital expenditures as necessary to maintain the material Purchased Assets, in each case, in the Ordinary Course of Business and it is acknowledged by Purchaser and Guarantor that ASARCO anticipates a reduction in capital expenditures and commitments for capital expenditures in the Ordinary Course of Business; and

          (k) will not agree to take any of the actions specified in this Section 8.2, except as contemplated by this Agreement and the Ancillary Agreements.

For the avoidance of doubt, the foregoing shall not require Sellers to make any payments, incur any costs, or enter into or amend any Contracts or understandings, unless such payment,

45

incurrence or other action is required by Applicable Law, by Contract with a third party or to operate in the Ordinary Course of Business.

     8.3 Cooperation; Consents and Filings.

          (a) From and after the date hereof until the Closing Date, Sellers, Purchaser and Guarantor will each cooperate with each other and use (and will cause their respective representatives to use) commercially reasonable efforts (subject, solely to the extent required by Applicable Law, to entry of the Plan Confirmation Order) (i) to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary, proper or advisable on its part under this Agreement, the Ancillary Agreements, Applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable; (ii) to obtain promptly from any Person or Governmental Authority any consent, Order or Permit required to be obtained by Sellers, Purchaser or Guarantor or any of their respective Affiliates in connection with the authorization, execution, delivery and performance of this Agreement, the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby; (iii) to promptly make all necessary filings and thereafter make any other required submissions with respect to this Agreement and the Ancillary Agreements and prompt consummation of the transactions contemplated hereby and thereby required under any Applicable Law; and (iv) to provide prompt notification to the other parties hereto of any actions pursuant to clauses (i) — (iii) of this Section 8.3(a). In addition, no party shall take any action after the date hereof (other than any action required to be taken under this Agreement or to which the other parties shall have granted their consent) that could reasonably be expected to materially delay the obtaining of, or result in not obtaining, any consent, Order, Permit, qualification, exemption or waiver from any Governmental Authority or other Person required to be obtained prior to Closing; provided, however, that nothing in this Section 8.3 shall be construed as altering the rights and obligations of the parties under Section 3.5 or Section 8.10. To the extent any consideration is required to be paid to a third party in order to obtain any consents from third parties that may be necessary, proper or advisable to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, such cost will be borne equally by Sellers and Purchaser.

          (b) To the extent permitted by Applicable Law and subject to any limitations on access to information provided for in Section 8.1, each party shall consult with the other parties with respect to, and provide any information reasonably requested by the other party in connection with, all material filings made with any Governmental Authority in connection with this Agreement and the transactions contemplated hereby. If any party or any of its Affiliates receives a request for information or documentary material from any Governmental Authority with respect to this Agreement or any of the transactions contemplated hereby, then such party shall endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and, to the extent permitted by Applicable Law, after consultation with the other parties, an appropriate response in compliance with such request.

          (c) In connection with the Original PSA, the parties made the required filing under the HSR Act with the Federal Trade Commission and Antitrust Division of the United States Department of Justice and the applicable “waiting period” thereunder expired on October 22, 2008 and the filing remains effective for a period of twelve months from the date of such

46

expiration. In addition to and without limiting any of the other covenants of the parties contained in this Section 8.3, the parties shall, in connection with the transactions contemplated hereby, (i) comply, at the earliest practicable date, with any request for additional information or documentary material received by them, or any of their respective Affiliates from the Federal Trade Commission or Antitrust Division of the United States Department of Justice pursuant to the HSR Act or from any state attorney general or other Governmental Authority in connection with antitrust matters, (ii) cooperate with each other in connection with any filing under the HSR Act and in connection with resolving any investigation or other inquiry concerning the transactions contemplated hereby commenced by the Federal Trade Commission, Antitrust Division of the United States Department of Justice, any state attorney general or any other Governmental Authority, (iii) use commercially reasonable efforts to resolve such objections, if any, as may be asserted with respect to the transactions contemplated hereby under any antitrust Law, (iv) advise the other parties promptly of any material communication received by such party from the Federal Trade Commission, Antitrust Division of the United States Department of Justice, any state attorney general or any other Governmental Authority regarding any of the transactions contemplated hereby, and of any understandings, undertakings or agreements (oral or written) such party proposes to make or enter into with the Federal Trade Commission, Antitrust Division of the United States Department of Justice, any state attorney general or any other Governmental Authority in connection with the transactions contemplated hereby, and (v) in the event this Agreement fails to close prior to October 22, 2009, take promptly all actions necessary to make the filings required of them or their “ultimate parent entities” under the HSR Act and concurrently with the filing of notifications under the HSR Act or as soon thereafter as practicable, Purchaser and Sellers shall each request early termination of the applicable “waiting period” under the HSR Act.

          (d) In connection with the Original PSA, Purchaser and Sellers prepared and filed a joint notice under Section 721 of Title VII of the Defense Production Act of 1950, as amended (50 U.S.C. App. § 2170 et seq.) (the “Exon-Florio Provision”) with the Committee on Foreign Investment in the United States (“CFIUS”) with respect to the transactions contemplated by the Original PSA (the “CFIUS Notice”). The Purchaser and Sellers shall use commercially reasonable efforts to provide any additional information required by CFIUS in connection with this Agreement to obtain confirmation from CFIUS that the transactions contemplated by this Agreement do not fall within the scope of transactions requiring investigation under the Exon-Florio Provision. If requested by CFIUS in connection with its consideration of the transactions contemplated by this Agreement, the Purchaser and Sellers shall use commercially reasonable efforts to mitigate any concerns raised by CFIUS.

          (e) Before and after the Closing Date, Sellers will use commercially reasonable efforts to cooperate with Purchaser in the conduct of the Arizona water rights adjudication cases to preserve Seller’s existing rights in the adjudication for Purchaser’s benefit after the Closing Date; provided, however, that Sellers shall have no obligation to continue such efforts upon the dissolution and winding up of ASARCO.

     8.4 Preservation of Records. Subject to the other provisions of this Agreement, Purchaser and Guarantor shall, and shall cause their respective Affiliates to, preserve and keep in their possession all records held by them on and after the date hereof relating to the Purchased

47

Assets, for a period of seven years or such longer period as may be required by Applicable Law and shall make such records and personnel available to Sellers, or their Affiliates, as may reasonably be required by such party in connection with, among other things, any insurance claims, Legal Proceedings, collective bargaining or governmental investigations of Sellers or any of their Affiliates or in order to enable Sellers or any of their Affiliates to comply with their obligations under this Agreement, the Ancillary Agreements and each other agreement, document or instrument contemplated hereby or thereby. After the expiration of any applicable retention period, before Purchaser or any Guarantor shall dispose of any of such records, at least 90 days’ prior notice to such effect shall be given by Purchaser or Guarantor to Sellers (or a Person designated by Sellers) and Sellers shall have the opportunity (but not the obligation), at their sole cost and expense, to remove and retain all or any part of such records as they may in their sole discretion select.

     8.5 Confidentiality. The parties acknowledge that Guarantor and ASARCO previously executed a confidentiality agreement, dated July 6, 2007, (the “Confidentiality Agreement”), which Confidentiality Agreement shall continue in full force and effect in accordance with its terms and shall survive the execution and delivery of (and any termination of) this Agreement. Purchaser and Guarantor agree that this Agreement, the Ancillary Agreements and the terms and conditions of the transactions contemplated hereby and thereby shall be considered Evaluation Material as defined in, and subject to the terms of, the Confidentiality Agreement.

     8.6 Public Announcements. Prior to the Closing Date, neither Sellers, nor Purchaser or Guarantor, or any of their respective Affiliates, agents or representatives, shall issue any press release or public statement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other parties hereto, unless such disclosure is required by Applicable Law, an Order of the Bankruptcy Court or by obligations pursuant to any agreement with any national securities exchange; provided, that the party intending to make such release shall give the other parties prior notice and shall use its commercially reasonable efforts consistent with such Applicable Law, Order or obligation to consult with the other party with respect to the text thereof.

     8.7 Bankruptcy Matters.

          (a) ASARCO shall use its reasonable best efforts to obtain prompt entry of the Plan Confirmation Order.

          (b) ASARCO shall provide Purchaser with final drafts (promptly after such final drafts are prepared) of all documents, motions, orders, filings or pleadings that Sellers propose to file with the Bankruptcy Court which relate to (i) this Agreement or the transactions contemplated hereunder, (ii) the Sterlite Settlement Motion and the Sterlite Agreed Order, (iii) the Disclosure Statement, (iv) the Plan Confirmation Order and (v) the acquisition by Purchaser of the Purchased Assets, and will provide Purchaser with a reasonable opportunity to review such documents in advance of their service and filing to the extent reasonably practicable. Sellers shall consult and cooperate with Purchaser, and consider in good faith the views of Purchaser, with respect to all such filings. Except as permitted by Section 8.10, without the prior written consent of Purchaser (which consent shall not be unreasonably delayed or denied), once

48

filed with the Bankruptcy Court, Seller shall not seek to amend or modify any provision in the Sterlite Agreed Order, Disclosure Statement, the Plan or the Plan Confirmation Order to effect a change in the terms and conditions of the transactions contemplated by the Agreement which would reasonably be expected to have a material adverse effect on Purchaser (or Guarantor) or on the ability of Sellers and Purchaser (and Guarantor) to consummate the transactions contemplated hereby on or before the Termination Date; except that, Sellers may seek to amend or modify any provision in the Disclosure Statement, the Plan or the Plan Confirmation Order in connection with an Acquisition Proposal or Stand-Alone Plan in accordance with Section 8.10.

          (c) Sellers, Purchaser and Guarantor shall each use commercially reasonable efforts to cooperate, assist and consult with each other to secure the entry of the Plan Confirmation Order following the date hereof, and to consummate the transactions contemplated by this Agreement (including (i) the assignment to and assumption by Purchaser of any Contract that is intended to be an Assumed Contracts in accordance with this Agreement, (ii) obtaining any consents required in connection therewith, and (iii) identifying any Contracts to allow Purchaser to furnish affidavits or other documents or information for filing with the Bankruptcy Court for the purposes, among others, of providing necessary assurances of performance by Purchaser and Guarantor under Section 3.5(a) of this Agreement). In the event that any Orders of the Bankruptcy Court relating to this Agreement shall be appealed by any Person (or a petition for certiorari or motion for reconsideration, amendment, clarification, modification, vacation, stay, rehearing or reargument shall be filed with respect to any such Order), subject to Section 13.1, Sellers, Purchaser and Guarantor will each cooperate in taking such steps to diligently defend against such appeal, petition or motion and Sellers and Purchaser shall use their commercially reasonable efforts to obtain an expedited resolution of any such appeal, petition or motion. Neither Purchaser nor Guarantor shall, without the prior written consent of Sellers, file, join in, or otherwise support in any manner whatsoever any motion or other pleading relating to the sale of the Purchased Assets. Nothing in this Section 8.7 shall be construed as altering the rights and obligations of Sellers under Section 8.10.

          (d) By Order entered on January 14, 2009, ASARCO’s exclusive periods to file a chapter 11 plan and to obtain acceptances of such chapter 11 plan were extended to March 17, 2009 and May 18, 2009, respectively. From time to time, ASARCO will timely file a motion(s) as required to extend (i) ASARCO’s exclusive period to file a chapter 11 plan and (ii) ASARCO’s exclusive period to obtain acceptances of such chapter 11 plan. Purchaser acknowledges that the Bankruptcy Court terminated exclusivity under Section 1121(d) of the Bankruptcy Code to allow ASARCO Incorporated and Americas Mining Corporation, ASARCO’s direct and indirect parent companies, to file a chapter 11 plan and thus ASARCO’s motion to extend its exclusive periods as provided in this paragraph does not apply to ASARCO Incorporated and Americas Mining Corporation.

     8.8 Title Insurance. Purchaser, at its own expense and at its option, may obtain commitments (each, a “Title Report”) for owner’s policies of title insurance with extended coverage, each in the aggregate amount of the Purchase Price allocable to the applicable Purchased Real Property, and leasehold policies of title insurance in the aggregate amount of the Purchase Price allocable to the applicable Leasehold Property (each such policy, a “Title Policy”) from a title company acceptable to Purchaser in its sole discretion (the “Title

49

Company”), and, at Purchaser’s election and sole cost and expense, a survey of each parcel of Real Property (each, a “Survey”). Sellers have delivered to Purchaser or shall promptly deliver to Purchaser after the date hereof, any existing Surveys of any parcel of Real Property any Seller may have in its possession. Seller shall have no obligation to obtain any new Surveys or updates to any existing Surveys. Purchaser shall provide to Sellers, to the extent obtained by Purchaser, a copy of each Title Report, each Title Policy and each Survey and all supplemental reports amending such Title Reports, Title Policies or revisions amending such Surveys.

     8.9 Bonds and Assurances. Prior to Closing, Purchaser shall (i) cause Sellers to be fully, unconditionally and irrevocably released and discharged from the bonds, financial assurance obligations and guaranty obligations identified in Section 8.9 of the Seller Disclosure Schedule outstanding on the Closing Date and all such other bonds, financial assurance obligations and similar obligations incurred in the Ordinary Course of Business on or after the date of this Agreement and prior to the Closing (the “Bonds and Assurances”) and (ii) replace the Bonds and Assurances or act as a substituted obligor, guarantor or other counterparty to the Bonds and Assurances as required for the continued operation of the Business.

     8.10 Solicitation Provisions; Matching Right; Back-Up Bid Option.

          (a) Prior to entry of the Sterlite Agreed Order by the Bankruptcy Court:

(i)

Purchaser, Guarantor and Sellers acknowledge that Sellers may take any action deemed necessary by Sellers to demonstrate that (i) they have sought to obtain the highest and best value for the Purchased Assets and that (ii) consummation of the transactions contemplated by this Agreement will in fact yield the highest and best value for the Purchased Assets, including giving notice thereof to Sellers’ creditors, other bidders for the Purchased Assets and other interested parties, providing information about the Business to prospective bidders, entertaining and negotiating offers from such prospective bidders, and, if necessary, conducting an auction.

(ii)

Without limiting the generality of Section 8.10(a)(i), each Seller and any director, officer, employee, investment banker, financial advisor, attorney, accountant or other advisor, agent or representative (collectively “Representatives”) of any Seller shall have the right (but not the obligation), acting under the direction of the Board of Directors of ASARCO or any committee thereof, to, directly or indirectly: (i) solicit, initiate, facilitate or encourage any Acquisition Proposal or proposal for a Stand-Alone Plan, including by way of providing access to third parties to non-public information pursuant to one or more confidentiality agreements; and (ii) enter into and maintain discussions or negotiations with respect to one or more Acquisition Proposals or any Stand-Alone Plan proposal or otherwise cooperate with or assist or participate in, or facilitate, any such discussions or negotiations.

50

(iii)	Purchaser and Guarantor agree that none of them nor any of their respective Affiliates or Subsidiaries shall, and that each of them shall use their reasonable best efforts to cause each of their respective Representatives not to, directly or indirectly, discourage or interfere with any Acquisition Proposal or Stand-Alone Plan, or contact or participate in discussions with any Person regarding an Acquisition Proposal or proposal for a Stand-Alone Plan that, to Purchaser or Guarantor’s knowledge, has made, or is considering or participating in discussions or negotiations with any Seller or any Representative of any Seller regarding an Acquisition Proposal or proposal for a Stand-Alone Plan.
(iv)	No Seller, nor any of its Representatives, shall have any liability to Purchaser or Guarantor, either under or relating to this Agreement, the Ancillary Agreements or any Applicable Law, by virtue of entering into or seeking Bankruptcy Court approval of an Acquisition Proposal or Stand-Alone Plan or the definitive agreement for any such Acquisition Proposal or Stand-Alone Plan. Any Seller may in its sole discretion enter into a definitive agreement with respect to such Acquisition Proposal or Stand-Alone Plan and Sellers may terminate this Agreement prior to or after entry into such a definitive agreement.
(v)	Any action taken by any Seller or any Representative of any Seller in accordance with the provisions of this Section 8.10(a) are expressly acknowledged and agreed to be not in breach or violation of any covenant contained in this Agreement or that could be implied in this Agreement (including a covenant of good faith and/or fair dealing).

          (b) Following the entry of the Sterlite Agreed Order by the Bankruptcy Court, ASARCO agrees that neither it nor any of its wholly-owned Subsidiaries shall, and that it shall direct its Representatives and its wholly-owned Subsidiaries’ Representatives not to, directly or indirectly, solicit any Acquisition Proposal; provided, however, that, nothing shall prevent ASARCO, its Board of Directors or any of its Representatives from taking any of the following actions:

        (i) complying with its obligations under Applicable Law with regard to an Acquisition Proposal; or

        (ii) (A) engaging in any negotiations or discussions with any Person who has made an unsolicited bona fide written Acquisition Proposal or (B) recommending an unsolicited Acquisition Proposal to the Creditor Constituents, if in the case of each of clause (A) and (B) above, the Board of Directors of ASARCO determines in good faith (after consultation with its legal and financial advisors and the Creditor Constituents) that (1) such action would be reasonably likely to be required in order to comply with its fiduciary duties under Applicable

51

Law and (2) such Acquisition Proposal is a Superior Proposal or is likely to lead to a Superior Proposal; or

        (iii) communicating or engaging in discussions with any of the Creditor Constituents or their respective advisors or Representatives regarding any matter, whether Acquisition Proposal, proposal relating to a Stand-Alone Plan or otherwise.

          (c) Notwithstanding anything herein to the contrary, Sellers and their Subsidiaries and their respective officers, directors, employees, attorneys, investment bankers, accountants and other agents and Representatives shall be permitted to (i) maintain and continue to provide access to the Seller Data Room to Persons that have executed a confidentiality agreement with ASARCO prior to the entry of the Sterlite Agreed Order and (ii) respond to any inquiries from and provide access to the Seller Data Room to Persons that have submitted a written bona fide (and unsolicited) Acquisition Proposal that ASARCO determines in good faith is a Superior Proposal (or is reasonably likely to lead to a Superior Proposal) and that have executed a confidentiality agreement with ASARCO. No Seller, nor any of its Affiliates shall have any liability to Purchaser or Purchaser Parent, either under or relating to this Agreement, the Ancillary Agreements or any Applicable Law, by virtue of entering into or seeking Bankruptcy Court approval of a Superior Proposal or the definitive agreement for such Superior Proposal, in each case, in accordance with the terms of this Section 8.10, following the receipt of any Superior Proposal, except as provided in Section 13.2(b)(v) upon termination of this Agreement.

          (d) Sellers shall, as soon as practicable, provide Purchaser with the material terms and conditions of any Acquisition Proposal, and identity of the Person making such Acquisition Proposal, received by Sellers after the entry of the Sterlite Agreed Order by the Bankruptcy Court that the Board of Directors of ASARCO determines in accordance with Section 8.10(b)(ii) above to take any affirmative action to approve, or authorize negotiations of, a definitive agreement in respect of.

          (e) Purchaser shall have the right (a “Matching/Topping Right”), within four Business Days after Purchaser receives a copy of the material terms and conditions of any Acquisition Proposal, and identity of the Person making such Acquisition Proposal, pursuant to Section 8.10(d), to deliver to Sellers an unconditional written offer to improve the terms and conditions contained in this Agreement so long as the Deemed Value of such improved offer (which Deemed Value will include the value of the amounts that would be owed to Purchaser under Section 13.2(b)(v) if such Acquisition Proposal were accepted and consummated) is at least equal to the Deemed Value of such pending Acquisition Proposal. Purchaser shall be under no obligation to exercise its Matching/Topping Right or to participate in any proceedings designed to elicit from Purchaser an equal or higher and better offer.

          (f) If ASARCO terminates this Agreement pursuant to Section 13.1(d) or (e), and such Superior Proposal or Stand-Alone Plan, as applicable, that prompted such termination is definitively terminated prior to consummation thereof, then ASARCO shall offer Purchaser the right (the “Back-Up Bid Option”) to consummate the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities in a transaction on substantially the same

52

terms and conditions as this Agreement; provided, however, the Back-Up Bid Option will expire with no further obligation to Purchaser at 5:00 p.m., Dallas, Texas time, on the tenth Business Day following the date on which the Back-Up Bid Option was offered to Purchaser unless prior to such time (A) ASARCO receives a definitive purchase and sale agreement executed by Purchaser and Guarantor in the form of this Agreement (including Article II) with only such modifications as are described in this Section 8.10(f) (the “Back-Up Bid Agreement”) and (B) ASARCO shall have received an originally executed letter of credit, enforceable against the issuer thereof, in the amount of $125,000,000.00 issued in favor of ASARCO by a Qualified Bank; provided, however, that if ASARCO has retained or drawn on the First L/C pursuant to Section 4.2(f), then the letter of credit shall be issued in the amount of $75,000,000.00. The Back-Up Bid Agreement shall contain the following modifications to this Agreement:

(i)	all dates and deadlines shall be extended to such dates following execution of the Back-Up Bid Agreement as are consistent with the respective time periods between the Effective Date and the dates or deadlines contained in this Agreement;
(ii)	the covenants contained in the subsections of Section 8.2 shall be reasonably revised as appropriate to reflect ASARCO’s operations at such time; provided, however, that Purchaser, Guarantor and Sellers, each acting reasonably, are able to agree in writing on such revisions prior to expiration of the Back-Up Bid Option; and
(iii)	such other non-substantive changes as may be reasonably required under the circumstances and as may be agreed in writing among Purchaser, Guarantor and Sellers, each acting reasonably, prior to expiration of the Back-Up Bid Option.

Purchaser shall be entitled to seek specific performance to enforce its right to receive the offer of the Back-Up Bid Option from Sellers in accordance with this Section 8.10(f) without the necessity of proving actual damages or of posting any bond.

     8.11 Risk of Loss; Casualty Loss. All risk of loss or damage to or destruction of the Purchased Assets, in whole or in part, shall be and remain with Sellers until Closing and upon Closing, the risk of loss or damages to or destruction of the Purchased Assets in whole or in part shall be and remain with Purchaser. If, between the date of this Agreement and the Closing, any of the Purchased Assets shall be destroyed or damaged in whole or in part by fire, earthquake, flood, other casualty or any other cause (the “Casualty”), then Purchaser shall acquire such Purchased Assets on an “as is” basis and take an assignment from Sellers of any insurance proceeds payable to Sellers in respect of the Casualty.

     8.12 Further Assurances. Sellers, Purchaser and Guarantor agree that from and after the Closing Date, each of them will, and will cause their respective Affiliates to, execute and deliver such further instruments of conveyance and transfer and take such other action as may reasonably be requested by any party hereto to carry out the purposes and intents hereof.

     8.13 Payments and Proceeds.

53

          (a) If, at any time on or after Closing, any Seller receives any asset or any proceeds in respect of any Purchased Asset, whether or not in payment of any sum due to Purchaser, or otherwise comes into possession of any Purchased Asset or product or proceed thereof, such Seller shall turn over such asset or proceed to Purchaser and pending such turn over, such Seller shall hold such asset or proceed in trust for Purchaser’s benefit. This Section 8.13(a) shall not apply to transactions contemplated by, or Purchased Assets, proceeds or products received pursuant to, the Purchaser Promissory Note or Security Agreement.

          (b) If, at any time on or after Closing, Purchaser receives any asset or any proceeds in respect of any Excluded Asset, whether or not in payment of any sum due to any Seller, or otherwise comes into possession of any Excluded Asset or product or proceed thereof, Purchaser shall turn over such asset or proceed to Sellers and pending such turn over, Purchaser shall hold such asset or proceed in trust for Sellers’ benefit.

     8.14 Transition Services Agreement. The parties shall negotiate in good faith as promptly as practicable following the date of this Agreement a form of Transition Services Agreement whereby from and after the Closing until the completion by ASARCO and its subsidiaries (and any successor entities to ASARCO in the Bankruptcy Cases) of the wind down of its operations and the implementation of the Plan, Purchaser will provide to ASARCO the litigation support services, closing accounts statement services, and access to Real Property and Books and Records as set forth in Exhibit K and will make available the Transferred Employees or other personnel to provide to ASARCO the other wind down services described in Exhibit K in order to wind down operations, implement the Plan and otherwise administer the Bankruptcy Cases.

ARTICLE IX
EMPLOYEES AND EMPLOYEE BENEFITS

     9.1 Employment.

          (a) All of the employees of Sellers who are not union-represented and who are employed on the Closing Date, including those actively at work or on vacation, leave of absence or other approved absence from work and individuals who have received offers of employment but have not reported to work (“Non-Union Employees”), shall be offered employment with Purchaser on or before the Closing Date, subject to completion of all applications and forms for employment and benefits required by Applicable Law or required of similarly-situated employees of Guarantor, on the terms which, in the aggregate, are substantially equivalent to those provided to such Non-Union Employees prior to Closing. All union-represented employees of Sellers who are employed on the Closing Date, including those actively at work or on vacation, leave of absence or other approved absence from work and individuals who have received offers of employment but have not reported to work (“Union Employees”, and together with the Non-Union Employees, the “Employees”) shall be offered employment with Purchaser on or before the Closing Date, subject to completion of all applications and forms for employment and benefits required by Applicable Law or required of similarly-situated employees of Guarantor, in accordance with the terms of the labor agreement negotiated between Purchaser and the respective Union. Such persons who accept such offer on or before the

54

Closing Date shall be referred to as “Transferred Employees.” Notwithstanding the foregoing, this Section 9.1(a) shall not apply to those employees of Sellers whose principal services relate to litigation and bankruptcy administration (which employees Sellers agree to identify to Purchaser at least 30 days prior to Closing), and Purchaser will be under no obligation to offer employment to such employees of Sellers.

          (b) Any liability or obligation that Sellers shall incur with respect to severance, benefits or termination of Employees as a result of Purchaser’s failure to provide Employees with pay, benefits and other terms and conditions of employment comparable in the aggregate to those provided to Employees as of the Closing or, where Purchaser’s provision of a comparable, in the aggregate, benefit is impracticable or impossible, Purchaser’s failure to provide a compensation and benefits package of comparable value at least sufficient to provide Purchaser and Sellers with a good faith defense to any allegation or claim that such Transferred Employees might make for severance or termination, will be an Assumed Liability.

          (c) Purchaser and Sellers shall comply with the requirements of Applicable Law in respect of the Transferred Employees.

     9.2 Terms of Continued Employment.

          (a) Purchaser agrees to provide to those Transferred Employees who were Non-Union Employees, for a period of at least 24 months following the Closing Date (i) levels of total compensation (including salary) and participation in Seller Employee Benefit Plans which, in the aggregate, are substantially equivalent to the levels of total compensation (including salary) and Seller Employee Benefit Plan participation, in the aggregate, of such Employees as in effect as of the Closing Date and (ii) at a work location no more than 50 miles from the individual’s work location as of the Closing Date; provided, however, that this shall not be construed to grant to any Transferred Employee a right to employment by Purchaser for any particular length of time. Nothing in this Section 9.2(a) shall in any way restrict the right of Purchaser to terminate any Transferred Employee who was a Non-Union Employee at any time for any reason not in violation of Contract or Applicable Law.

          (b) Notwithstanding Section 9.2(a), if at any time during the 24-month period following the Closing Date the employment of any Transferred Employee is terminated other than for cause or is constructively terminated under the severance plan set forth in Section 9.2(b) of the Seller Disclosure Schedule, Purchaser shall provide the terminated Transferred Employee with severance benefits which are comparable, in the aggregate, to the severance benefits described in Section 9.2(b) of the Seller Disclosure Schedule.

     9.3 Assumption of Plans. As of the Closing Date, Purchaser shall adopt and become the sponsor and employer for purposes of each and every Seller Employee Benefit Plan set forth in Section 9.3 of the Seller Disclosure Schedule and shall be substituted for Seller or its Subsidiaries who had theretofore been the sponsor of any such Seller Employee Benefit Plan. Effective as of the Closing, Purchaser shall be responsible for all benefits and liabilities with respect to such Seller Employee Benefit Plans, as such Seller Employee Benefit Plans may be amended or modified from time to time by written agreement between Purchaser and the Unions after the Closing Date.

55

     9.4 Service Credit. Except as may otherwise be agreed in writing after the Closing Date between Purchaser and the Unions with respect to the applicable unionized employees, Purchaser shall cause to be provided to each Transferred Employee credit for prior service with Sellers or their Subsidiaries since their last day of hire for all purposes (including vesting, eligibility, benefit accrual and/or level of benefits) in all Purchaser employee benefit plans, programs, practices or arrangements, including fringe benefit plans, vacation and sick leave policies, severance plans or policies, retiree medical plans, defined benefit plans, matching contributions under defined contribution plans (including defined contribution retiree medical plans) maintained or provided by Purchaser or its Subsidiaries or Affiliates in which such Transferred Employees are eligible to participate after the Closing Date, to the extent such prior service credit would be extended under each applicable Seller Employee Benefit Plan; provided, however, that no such past service credit shall be granted to the extent that it would result in the duplication of benefits for the same period of service.

     9.5 Vacation and Leave. Except for amounts of vacation and other accrued time off paid to Transferred Employees by Sellers at or promptly after the Closing Date, Purchaser shall provide each Transferred Employee credit for all of the Transferred Employee’s earned but unused vacation and sick leave and other time-off as of the Closing Date as determined under Seller’s time-off policies and Purchaser shall thereafter be responsible for providing commensurate vacation pay or pay in lieu of vacation as well as sick leave with respect to such employees for the credited vacation and sick leave. At least three days prior to Closing, Sellers shall provide Purchaser with a calculation of all of the Transferred Employee’s earned but unused vacation and sick leave and other accrued time-off.

     9.6 Welfare Benefit Plans; Workers’ Compensation; Other Benefits.

          (a) With respect to each Transferred Employee (including any beneficiary or the dependent thereof), Purchaser shall assume all liabilities and obligations for workers’ compensation benefits even if such liability or obligation relates to claims incurred (whether or not reported or paid) prior to the Closing Date. For purposes of this Section 9.6, a claim shall be deemed to be incurred when (i) with respect to medical, dental, health related benefits, accident and disability (including worker’s compensation benefits but not including wage continuation/replacement type benefits), the medical, dental, health related, accident or disability services with respect to such claim are performed and (ii) with respect to life insurance, when the death occurs.

          (b) Effective as of the Closing Date, Purchaser shall be responsible for providing coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) to any Employee, his or her spouse or dependent person as to whom a “qualifying event” as defined in Section 4890B of the Code has occurred (i) prior to the Closing Date in the case of a “qualifying event” other than a termination of employment and (ii) in the case of a termination of employment “qualifying event” on or prior to the Closing Date. Purchaser shall also be responsible for providing COBRA coverage to any Employee, his or her spouse or dependent person as to whom a “qualifying event” occurs on or after the Closing Date including for a “qualifying event” that is a termination of employment on the Closing Date.

56

          (c) Purchaser acknowledges that ASARCO has obligations under the Coal Act, including the obligations (i) to provide retiree health benefits to eligible beneficiaries and their dependents pursuant to Section 9711 of the Coal Act, 26 U.S.C. § 9711, (ii) to pay the annual prefunding premium and the monthly per beneficiary premium required pursuant to Section 9712(d)(1)(A) and (B) of the Coal Act, 26 U.S.C. § 9712(d)(1)(A) and (B), and (iii) to provide security to the UMWA 1992 Benefit Plan pursuant to Section 9712(d)(1)(C) of the Coal Act, 26 U.S.C. § 9712(d)(1)(C). Accordingly, Purchaser assumes and is responsible for all of the Coal Act obligations of ASARCO, including the obligations set forth in this paragraph.

          (d) In addition to the obligations assumed pursuant to the other sections of Article IX and not in limitation thereof, Purchaser shall assume and be responsible for all of ASARCO’s obligations under the Collective Bargaining Agreement, as amended by that certain letter agreement entered into between the United Steelworkers of America and the Purchaser, dated June 23, 2008, which shall become effective on the Closing Date, and the retiree class action settlement agreement approved by the Bankruptcy Court by order dated March 15, 2007 (Docket No. 4178), which settled the cause of action captioned Asarco Incorporated et al. v. United Steelworkers of America, AFL-CIO/CLC, et al., No. CV-03-1297.

     9.7 OSHA Medical Records; Other Records; Payroll Deductions. Purchaser shall accept delivery from Sellers of all OSHA exposure and other records with respect to the Business, and shall maintain such records and provide copies thereof to current and former employees engaged primarily in the conduct of the Business in compliance with OSHA. Purchaser shall obtain from Transferred Employees, as part of its hiring process or otherwise, their consents to the transfer of their medical and other records and all payroll deduction authorizations from Sellers to Purchaser. Notwithstanding anything to the contrary contained in Section 9.1, receipt of the consent contemplated by the immediately preceding sentence shall be considered a condition to the offer of employment required in Section 9.1, and any Employee who fails to provide such consent promptly shall cease to be a Transferred Employee, effective (retroactively, if applicable) as of the Closing Date.

     9.8 Announcement. On or prior to the date hereof, Sellers and Purchaser have agreed (after consultation with the Unions) upon a form of joint announcement to employees concerning this Agreement and the transactions contemplated hereby and a communication plan concerning the method and timing of the delivery of such announcement. Contemporaneously with the execution and delivery of this Agreement (or promptly thereafter), the parties will deliver such announcement to employees in accordance with such communication plan.

     9.9 Warn Act. Before the Closing Date, Sellers shall be responsible with respect to all current and former employees of Sellers for compliance with the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) and any similar state or local law for an “employment loss” (as defined in the WARN Act) and occurring before the Closing Date as a result of actions take by Sellers. After the Closing Date, Purchaser shall be responsible with respect to all Transferred Employees for compliance with the WARN Act and any similar state or local Laws for an “employment loss” (as defined in the WARN Act) or temporary layoff (with no reasonable expectation of recall) occurring on or after the Closing Date as a result of actions taken by Purchaser. Section 9.9 of the Seller Disclosure Schedule lists the names and the sites of employment or facilities of those individuals who suffered an “employment loss” (as defined in

57

the WARN Act) or who have been placed on temporary layoff (with no reasonable expectation of recall) at any site of employment or facility of Sellers or any of its Subsidiaries during the 90-day period prior to the date hereof, together with the date of each such employment loss or temporary layoff (with no reasonable expectation of recall), which schedule shall be updated with respect to the period between the date hereof and the Closing Date. Seller represents that with respect to each such “employment loss,” it complied in all material respects with the notice requirements contained in the WARN Act.

ARTICLE X
TAX MATTERS

     10.1 Transaction Taxes. Purchaser shall bear and be responsible for paying any sales, use, value added, goods and services, gross receipts, stamp, duty, stamp duty, transfer, documentary, registration, business and occupation, severance (to the extent imposed on the transfer of the Inventory) and other similar Taxes (including related penalties (civil or criminal), additions to Tax and interest) imposed by any Governmental Authority with respect to the transfer of the Purchased Assets under this Agreement (“Transaction Taxes”), regardless of whether any Tax authority seeks to collect such taxes from Sellers or Purchaser; provided, however, that Purchaser shall in no event bear or be responsible for Transaction Taxes in excess of $1,000,000. Purchaser shall also be responsible for (i) administering the payment of such Transaction Taxes required to be paid by Purchaser hereunder; (ii) defending or pursuing any proceedings related thereto; and (iii) paying any expenses, interest and penalties related thereto. Sellers shall cooperate with Purchaser and take actions reasonably requested by Purchaser to permit Transaction Taxes, if any, to be paid on a timely basis. Sellers shall give prompt written notice to Purchaser of any proposed adjustment or assessment of any Transaction Taxes with respect to the transactions contemplated hereby. In any proceedings, whether formal or informal, Sellers shall permit Purchaser to participate and control the defense of such proceeding with respect to such Transaction Taxes, and shall take all actions and execute all documents required to allow such participation.

     10.2 Tax Prorations. As to any Purchased Assets acquired by Purchaser, Sellers and Purchaser shall apportion the liability for real and personal property taxes, ad valorem taxes and other similar Taxes imposed on a periodic basis and measured by the level of any item (“Periodic Taxes”) for all Tax periods including but not beginning or ending on the Closing Date (the “Proration Periods”). The Periodic Taxes described in this Section 10.2 shall be apportioned between Sellers and Purchaser as of the Closing Date, with Purchaser liable for that portion of the Periodic Taxes equal to the Periodic Tax for the Proration Period multiplied by a fraction, the numerator of which is the number of days remaining in the Proration Period after the Closing Date, and the denominator of which is the total number of days covered by such Proration Period. Sellers shall be liable for that portion of the Periodic Taxes for the Proration Period for which Purchaser is not liable under the preceding sentence. Purchaser and Sellers shall pay or be reimbursed for Periodic Taxes (including instances in which such Taxes have been paid before the Closing Date) on this prorated basis. If a payment on a tax bill is due after the Closing, the party that is legally required to make such payment shall make such payment and promptly forward an invoice to the other party for its pro rata share, if any. If the other party does not pay the invoice within 30 calendar days of receipt, the amount of such payment shall

58

bear interest at the rate of 6% per annum. The party responsible for paying a tax described in this Section 10.2 shall be responsible for administering the payment of (and any reimbursement for) such Tax. For purposes of this Section 10.2, the Proration Period for Periodic Taxes shall be the fiscal period for which such Taxes were assessed by the relevant Tax jurisdiction. Notwithstanding anything to the contrary contained herein, Purchaser shall be solely responsible for, promptly pay, and indemnify Sellers from and against, any and all assessments of taxes for the year in which Closing occurs, for all subsequent years and for prior years, in each case, due to change in land usage.

     10.3 Tax Refunds. Any Tax refunds (including any interest related thereto) for which claims were filed prior to the Closing Date and which are received by Purchaser, its Affiliates or successors relating to Taxes attributable to the ownership or operation of the Purchased Assets during Tax periods or portions thereof ending on or before the Closing Date shall be for the account of Sellers, and Purchaser shall pay over to Sellers any such amount within five business days of receipt thereof. Any Tax refunds (including any interest related thereto) received by any Seller or its Affiliates or successors relating to Taxes attributable to the ownership or operation of the Purchased Assets during Tax periods or portions thereof beginning after the Closing Date shall be for the account of Purchaser, and Sellers shall pay over to Purchaser any such amount within five Business Days of receipt thereof. Each party shall, if the other party so requests and at such other party’s direction and expense, file or cause its Affiliates to file for and obtain any Tax refunds relating to Taxes attributable to the ownership or operations of the Purchased Assets that such other party is entitled to under this Section 10.3, and each party shall pay over to such other party any such amount within five Business Days of receipt thereof.

ARTICLE XI
CONDITIONS TO CLOSING

     11.1 Conditions Precedent to Obligations of Each Party. The respective obligations of Sellers, Purchaser and Guarantor to consummate the transactions contemplated by this Agreement are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions:

          (a) The Bankruptcy Court or the United States District Court that has jurisdiction over the Bankruptcy Cases shall have approved and entered the Plan Confirmation Order, and the Plan Confirmation Order shall have become an Effective Order;

          (b) The United States District Court that has jurisdiction over the Bankruptcy Cases shall have issued or affirmed the Plan Confirmation Order in accordance with Section 524(g)(3)(A) of the Bankruptcy Code;

          (c) If this Agreement is not consummated prior to October 22, 2009, any waiting period (including any extension thereof) applicable to the sale to and purchase by Purchaser of the Purchased Assets under the HSR Act or under the regulations of any other applicable governmental antitrust or competition authority, where failure to comply with such regulations would prohibit the consummation of the transactions contemplated by this Agreement, shall have been terminated or expired;

59

          (d) No Order issued by any court of competent jurisdiction preventing the consummation of the transactions contemplated hereby shall be in effect; and

          (e) All conditions precedent to the effectiveness of the Plan (other than the Closing) shall have been satisfied or waived by the relevant parties.

     11.2 Conditions Precedent to Obligations of Purchaser and Guarantor. The obligations of Purchaser and Guarantor to consummate the transactions contemplated by this Agreement are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser or Guarantor, in whole or in part, subject to Applicable Law):

          (a) All of the representations and warranties of Sellers contained herein shall be true and correct on and as of the Closing Date, except those representations and warranties of Sellers that speak of a certain date, which representations and warranties shall have been true and correct as of such date; provided, however, that this condition shall be deemed to have been satisfied so long as any failure of such representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to result in a Seller Material Adverse Effect, ignoring solely for purposes of the satisfaction of this Section 11.2(a) any reference to Seller Material Adverse Effect or other materiality qualifiers contained in such representations and warranties;

          (b) Sellers shall have performed, in all material respects, all obligations required by this Agreement to be performed by Sellers on or prior to the Closing Date; and

          (c) Purchaser shall have been furnished with the deliveries referred to in Section 5.2.

     11.3 Conditions Precedent to Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by Sellers, in whole or in part, subject to Applicable Law):

          (a) All of the representations and warranties of Purchaser and Guarantor contained herein shall be true and correct on and as of the Closing Date, except those representations and warranties of Purchaser and Guarantor that speak of a certain date, which representations and warranties shall have been true and correct as of such date; provided, however, that this condition shall be deemed to have been satisfied so long as any failure of such representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to prevent, impede or materially delay or otherwise affect in any material respect the transactions contemplated by this Agreement ignoring solely for purposes of the satisfaction of this Section 11.3(a) any materiality qualifiers contained in such representations and warranties;

          (b) Purchaser and Guarantor shall have performed, in all material respects, all obligations required by this Agreement to be performed by them on or prior to the Closing Date;

60

          (c) Sellers shall have been furnished with the deliveries referred to in Section 5.3; and

          (d) The consents and waivers set forth in Sections 6.3(a) and 6.3(b) of the Seller Disclosure Schedule shall have been obtained.

ARTICLE XII
LIMITATIONS

     12.1 Purchaser’s Review.

          (a) Disclaimer Regarding Projections. In connection with Purchaser’s and Guarantor’s investigation of Sellers, Purchaser and/or Guarantor has received from Sellers and their Affiliates and agents certain projections and other forecasts, including projected financial statements, cash flow items, certain business plan information and other data of Sellers. Purchaser and Guarantor acknowledge that (i) there are uncertainties inherent in attempting to make such projections, forecasts and plans and, accordingly, is not relying on them, (ii) Purchaser and Guarantor is familiar with such uncertainties and is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections, forecasts and plans so furnished to it and (iii) neither Purchaser nor Guarantor shall have any claim against anyone with respect to any of the foregoing nor any termination right hereunder as a result of any inaccuracy thereof. Accordingly, each of Purchaser and Guarantor acknowledges that notwithstanding anything to the contrary in this Agreement, Sellers have made no representation or warranty with respect to such projections and other forecasts and plans.

          (b) Limited Duties. Any and all duties and obligations which any party hereto may have to any other party hereto with respect to or in connection with the Purchased Assets, this Agreement or the transactions contemplated hereby are limited to those specifically set forth in this Agreement. Neither the duties nor obligations of any party hereto, nor the rights of any party hereto, shall be expanded beyond the terms of this Agreement on the basis of any legal or equitable principle or on any other basis whatsoever. Neither any equitable nor legal principle nor any implied obligation of good faith or fair dealing nor any other matter requires any party hereto to incur, suffer or perform any act, condition or obligation contrary to the terms of this Agreement, whether or not existing and whether foreseeable or unforeseeable. Each of the parties hereto acknowledges that it would be unfair, and that it does not intend, to increase any of the obligations of any other party under this Agreement on the basis of any implied obligation or otherwise.

     12.2 “As-Is”; Sale. AS A MATERIAL PART OF THE CONSIDERATION FOR THIS AGREEMENT, SELLERS, PURCHASER AND GUARANTOR EACH AGREE THAT PURCHASER IS TAKING THE PURCHASED ASSETS “AS IS”, “WHERE IS” AND “WITH ALL FAULTS” AND WITH ANY AND ALL LATENT AND PATENT DEFECTS AND THAT THERE IS NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE (INCLUDING, WITHOUT LIMITATION, WARRANTIES WITH RESPECT TO HABITABILITY, MARKETABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, VALUATION,

61

GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PURCHASED ASSETS WITH LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLERS TO OR FOR THE BENEFIT OF PURCHASER OR GUARANTOR OR ANY OTHER MATTER OR THING REGARDING THE REAL PROPERTY) MADE BY SELLERS WITH RESPECT TO THE REAL PROPERTY (EXCEPT FOR THE REPRESENTATIONS OF SELLERS EXPRESSLY SET FORTH IN SECTIONS 6.1 THROUGH 6.15 AND LIMITED BY SECTIONS 15.1 AND 15.2 OF THIS AGREEMENT), ALL OTHER REPRESENTATIONS AND WARRANTIES, BOTH EXPRESS AND IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED AND DENIED. EACH OF PURCHASER AND GUARANTOR ACKNOWLEDGE THAT IT HAS BEEN OR WILL BE GIVEN ADEQUATE TIME TO CONDUCT WHATEVER EXAMINATION, EVALUATIONS, INSPECTIONS, REVIEWS, STUDIES OR TESTS OF THE PURCHASED ASSETS AND ITS CONDITION AS PURCHASER AND GUARANTOR MAY DESIRE OR DETERMINE WARRANTED, AND THAT NEITHER PURCHASER NOR GUARANTOR ARE RELYING ON, AND SELLERS SHALL NOT BE LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED REPRESENTATION, GUARANTY, WARRANTY, STATEMENT OR OTHER ASSERTION WITH RESPECT TO THE REAL PROPERTY OR ITS CONDITION MADE BY OR FURNISHED BY OR ON BEHALF OF ANY SELLER, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT ANY SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING (EXCEPT FOR THE REPRESENTATIONS OF SELLERS EXPRESSLY SET FORTH IN SECTIONS 6.1 THROUGH 6.15 AND LIMITED BY SECTIONS 15.1 AND 15.2 OF THIS AGREEMENT).

     PURCHASER IS AWARE OF THE REAL PROPERTY’S HISTORIC MINING AND SMELTING OPERATIONS AND THE USE, STORAGE AND HANDLING OF HAZARDOUS MATERIALS ON THE REAL PROPERTY IN CONNECTION WITH SUCH OPERATIONS. PURCHASER AND GUARANTOR REPRESENT THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER OF MINING, COMMERCIAL AND INDUSTRIAL ASSETS, SECURITIES, REAL ESTATE AND THE OTHER TYPES OF ASSETS AND INTERESTS CONTEMPLATED TO BE SOLD AS PART OF THE PURCHASED ASSETS HEREUNDER AND IN DECIDING TO ENTER INTO THIS AGREEMENT, AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY, PURCHASER AND GUARANTOR HAVE RELIED SOLELY UPON THEIR OWN KNOWLEDGE, INVESTIGATION, AND ANALYSIS (AND THAT OF THEIR ATTORNEYS, ACCOUNTANTS, CONSULTANTS AND REPRESENTATIVES) AND NOT ON ANY DISCLOSURE OR REPRESENTATION MADE BY, OR ANY DUTY TO DISCLOSE ON THE PART OF, SELLERS OR THEIR AFFILIATES OR ANY OF THEIR REPRESENTATIVES, OTHER THAN THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN ARTICLE VI.

     12.3 Waivers and Releases. PURCHASER AND GUARANTOR ACKNOWLEDGE THAT PURCHASER HAS, OR BY THE CLOSING DATE SHALL HAVE, CONDUCTED SUCH INVESTIGATIONS OF THE PURCHASED ASSETS, INCLUDING THE PAST AND PRESENT PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, THE STATUS AND REQUIREMENTS OF PERMITS APPLICABLE THERETO AND THE SCOPE AND

62

EXTENT OF MINING OPERATION ACTIVITIES AND RECLAMATION ACTIVITIES AND REQUIREMENTS ON THE REAL PROPERTY, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PURCHASED ASSETS AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS MATERIALS ON, IN, UNDER OR DISCHARGED FROM OR POTENTIALLY MIGRATING UPON THE REAL PROPERTY AND SHALL RELY SOLELY UPON THE SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLERS OR THEIR AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN SECTIONS 6.1 THROUGH 6.15 AND LIMITED BY SECTIONS 15.1 AND 15.2 OF THIS AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 6.1 THROUGH 6.15 AND LIMITED BY SECTIONS 15.1 AND 15.2 OF THIS AGREEMENT, UPON CLOSING, PURCHASER AND GUARANTOR SHALL ASSUME THE RISK THAT ADVERSE MATTERS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS (INCLUDING ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND CLAIMS THAT HAVE ARISEN OR MAY ARISE UNDER LAWS (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LAWS) MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS, AND PURCHASER AND GUARANTOR AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED, AND RELEASED SELLERS (AND SELLERS’ OFFICERS, PARTNERS, MEMBERS, MANAGERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, INCLUDING COST RECOVERY, CONTRIBUTION OR OTHER CLAIMS PURCHASER AND/OR GUARANTOR MIGHT HAVE UNDER LAWS (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LAWS) AND CLAIMS BASED ON THE NEGLIGENCE OR STRICT LIABILITY OF SELLERS (OR ANY OF SELLERS’ OFFICERS, PARTNERS, MEMBERS, MANAGERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AND AGENTS), WHICH PURCHASER AND/OR GUARANTOR MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLERS (AND ANY OF SELLERS’ OFFICERS, PARTNERS, MEMBERS, MANAGERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS OR PERMITS (INCLUDING ANY ENVIRONMENTAL LAWS), SUITS OF ANY KIND, INCLUDING SUITS UNDER ENVIRONMENTAL LAWS BROUGHT BY ANY THIRD PARTY, INCLUDING GOVERNMENTAL AUTHORITIES, RELATING TO THE PURCHASED ASSETS, AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES, OR MATTERS REGARDING THE PURCHASED ASSETS. NOTWITHSTANDING THE FOREGOING, THE WAIVERS AND RELEASES CONTAINED IN THIS SECTION 12.3 SHALL NOT APPLY TO THE EXTENT ANY CLAIM ARISES OUT OF OR RESULTS FROM SELLERS’ FRAUD.

63

     12.4 Acceptance and Discharge. The acceptance of the Deeds, the Leasehold Deeds, the Bill of Sale, the Assignment and Assumption Agreement and the Assignment and Assumption of Ground Lease Agreement by Purchaser, and the entry of the Plan Confirmation Order by the Bankruptcy Court, shall be deemed an acknowledgement by Purchaser and Guarantor that Sellers have fully performed, discharged and complied with all of Sellers’ obligations, representations and warranties, covenants and agreements hereunder, that Sellers are discharged therefrom and that Sellers shall have no further liability with respect thereto, except for those, if any, which are specifically stated herein to survive the Closing.

     12.5 No Consequential or Punitive Damages. NO PARTY HERETO (OR ITS AFFILIATES) SHALL, UNDER ANY CIRCUMSTANCE, BE LIABLE TO ANY OTHER PARTY (OR ITS AFFILIATES), BY STATUTE, IN TORT OR CONTRACT OR OTHERWISE, FOR ANY CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES CLAIMED BY SUCH OTHER PARTY UNDER THE TERMS OF OR DUE TO ANY BREACH OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, LOSS OF REVENUE OR INCOME, COST OF CAPITAL, OR LOSS OF BUSINESS REPUTATION, OTHER THAN IN RESPECT OF A BREACH OF SECTIONS 8.5, 8.6 OR ARTICLE XIV.

ARTICLE XIII
TERMINATION

     13.1 Termination of Agreement. This Agreement may be terminated prior to the Closing Date as follows:

          (a) By the mutual written consent of Sellers and Purchaser;

          (b) By Sellers if the Plan Confirmation Order has not been entered on or before August 31, 2009 (or such later date, which in no event will be later than September 30, 2009, if requested by Sellers and consented to by Purchaser, which consent may not be unreasonably delayed or denied ) (the “Confirmation Deadline”); provided, however, that Sellers shall not be permitted to terminate this Agreement under this Section 13.1(b) if (i) the failure by Sellers to fulfill any obligation under this Agreement has been the primary cause of the Plan Confirmation Order not having been entered on or before the Confirmation Deadline or (ii) the Plan Confirmation Order not having been entered is caused primarily by a breach by Sellers of any covenant or obligation in this Agreement required to be performed by Sellers or the inaccuracy of any representation or warranty of Sellers made herein;

          (c) By Sellers if the Closing has not occurred on or before November 30, 2009 (or such later date, which in no event will be later than December 31, 2009, if requested by Sellers and consented to by Purchaser, which consent may not be unreasonably delayed or denied; provided, that if the Plan Confirmation Order has been entered by the Bankruptcy Court (rather than the United States District Court having jurisdiction over the Bankruptcy Cases), such date shall automatically be extended to December 31, 2009) (the “Termination Date”); provided, however, that Sellers shall not be permitted to terminate this Agreement under this Section 13.1(c) if (i) the failure by Sellers to fulfill any obligation under this Agreement has been the primary cause of the failure of such consummation to occur on or before the Termination Date or

64

(ii) the failure of the Closing to occur is caused primarily by a breach by Sellers of any covenant or obligation in this Agreement required to be performed by Sellers or the inaccuracy of any representation or warranty of Sellers made herein;

          (d) By either Sellers or Purchaser, at any time after the Bankruptcy Court approves a Superior Proposal to be consummated between ASARCO and a Person other than Purchaser, Guarantor or any of their respective Affiliates;

          (e) By either Sellers or Purchaser at any time after the Bankruptcy Court approves a Stand-Alone Plan and such plan has been approved by the Board of Directors of ASARCO and is supported by ASARCO;

          (f) By Purchaser if the Plan Confirmation Order has not been entered on or before the Confirmation Deadline; provided, however, that Purchaser shall not be permitted to terminate this Agreement under this Section 13.1(f) if (i) the failure by Purchaser or Guarantor to fulfill any obligation under this Agreement has been the primary cause of the Plan Confirmation Order not having been entered on or before the Confirmation Deadline or (ii) the Plan Confirmation Order not having been entered is caused primarily by a breach by Purchaser or Guarantor of any covenant or obligation in this Agreement required to be performed by Purchaser or the inaccuracy of any representation or warranty of Purchaser or Guarantor made herein;

          (g) By Purchaser if the Closing has not occurred on or before the Termination Date; provided, however, that Purchaser shall not be permitted to terminate this Agreement under this Section 13.1(g) if (i) the failure by Purchaser or Guarantor to fulfill any obligation under this Agreement has been the primary cause of the failure of such consummation to occur on or before the Termination Date or (ii) the failure of the Closing to occur is caused primarily by a breach by Purchaser or Guarantor of any covenant or obligation in this Agreement required to be performed by Purchaser or Guarantor, or the inaccuracy of any representation or warranty of Purchaser or Guarantor made herein;

          (h) By Purchaser (provided that neither Purchaser nor Guarantor is in material breach of any representation, warranty or covenant or other agreement contained herein) if: (i) the Bankruptcy Court shall not have entered the Sterlite Agreed Order on or prior to April 15, 2009 or (ii) the Bankruptcy Court shall not have entered an order approving the Disclosure Statement on or prior to May 31, 2009 (or such later date, which in no event will be later than July 1, 2009, if requested by Sellers and consented to by Purchaser, which consent may not be unreasonably delayed or denied);

          (i) By Purchaser upon the conversion of ASARCO’s Bankruptcy Case to a case under chapter 7 of the Bankruptcy Code;

          (j) By Purchaser if there shall be a breach by Sellers of any representation, warranty or covenant contained in this Agreement which would result in a failure of a condition to Purchaser’s or Guarantor’s obligation to close set forth in Sections 11.2(a) or (b) to be satisfied, which breach has not been cured by the earlier of (i) 60 days after the giving of written notice by Purchaser to Sellers of such breach and (ii) the Termination Date;

65

          (k) By Sellers if there shall be a breach by Purchaser or Guarantor of any representation, warranty or covenant contained in this Agreement which would result in a failure of a condition to Sellers’ obligation to close set forth in Sections 11.3(a) or (b) to be satisfied, which breach has not been cured by the earlier of (i) 60 days after the giving of written notice by Sellers to Purchaser of such breach and (ii) the Termination Date;

          (l) By either Sellers or Purchaser, if there shall be any final non-appealable Order entered by a Governmental Authority of competent jurisdiction permanently restraining, prohibiting or enjoining Sellers or Purchaser from consummating the transactions contemplated hereby;

          (m) By Sellers if the Plan (i) fails to satisfy the voting requirements under 11 U.S.C. § 524(g)(2)(B)(ii)(IV)(bb) and § 1126 for any class of claimants seeking recovery for damages allegedly caused by the presence of, or exposure to, asbestos or asbestos-containing products or (ii) is rejected by Persons listed in Exhibit P that hold at least one-half in number and/or one-third in amount of the environmental claims set forth in Exhibit P;

          (n) By either Sellers or Purchaser if the Bankruptcy Court denies confirmation of the Plan; or

          (o) By Sellers pursuant to Section 8.10(a)(iv); provided, that the termination right contained in this Section 13.1(o) may be exercised only prior to the entry of the Sterlite Agreed Order.

     13.2 Effect of Termination.

          (a) No termination of this Agreement pursuant to Section 13.1 shall be effective until written notice thereof is given to the non-terminating party specifying the provision hereof pursuant to which such termination is made.

          (b) In the event of termination of this Agreement by either or both of the parties pursuant to Section 13.1, this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated:

          (i) Except as otherwise provided in Section 13.2(b)(v) and in Section 4.2, such termination shall be the sole and exclusive remedy of Purchaser and Guarantor with respect to breaches by any Seller of any covenant, representation or warranty contained in this Agreement and none of the Sellers nor any of their respective past, present or future trustees, directors, officers, employees, members, shareholders, incorporators, partners and/or Affiliates, as the case may be, shall have any liability or further obligation to Purchaser or Guarantor or any of their respective past, present or future trustees, directors, officers, employees, members, shareholders, incorporators, partners and/or Affiliates, as the case may be, and each Seller (and their respective past, present or future trustees, directors, officers, employees, members, shareholders, incorporators, partners and/or Affiliates, as the case may be) shall be fully released and discharged from any

66

liability or obligation under or resulting from this Agreement and neither Purchaser nor Guarantor shall have any other remedy, right, claim or cause of action under or relating to this Agreement or any Applicable Law, including for reimbursement of expenses;

          (ii) Sellers shall have all rights and remedies existing at law or in equity and shall have the right to pursue all legal and equitable remedies that may be available to Sellers, at law or in equity; and in any successful action for damages, Sellers shall be entitled to recover its demonstrated legal damages, which shall not be limited to out of pocket costs in pursuing the transaction contemplated by this Agreement;

          (iii) All filings, applications and other submissions made pursuant to this Agreement, to the extent practicable, shall be withdrawn from the agency or other Person to which they were made;

          (iv) All Evaluation Material (as defined in the Confidentiality Agreement) shall be returned to ASARCO;

          (v) If, following the entry of the Sterlite Agreed Order by the Bankruptcy Court, this Agreement is terminated pursuant to (A) Section 13.1(d) due to the Bankruptcy Court’s approval of a Superior Proposal and such Superior Proposal is consummated between ASARCO and a Person other than Purchaser, Guarantor or any of their respective Affiliates or (B) Section 13.1(e) due to the Bankruptcy Court’s approval of a Stand-Alone Plan approved by the Board of Directors of ASARCO and supported by ASARCO and such Stand-Alone Plan is consummated, Sellers shall pay to Purchaser as soon as practicable (but no later than three Business Days) following the consummation of such Superior Proposal or Stand-Alone Plan, as applicable, a fee in the amount of $26,000,000.00. If, following the entry of the Sterlite Agreed Order by the Bankruptcy Court, this Agreement is terminated pursuant to Section 13.1(j), Sellers shall reimburse Purchaser within two Business Days following such termination for actual and documented expenses of Purchaser not to exceed the sum of $10,000,000.00. Such payment shall be made by wire transfer of immediately available funds to an account designated by Purchaser. Purchaser’s claim in connection with the amounts due hereunder shall constitute a first priority administrative expense claim under section 507(a)(1) of the Bankruptcy Code; and

          (vi) Payment of funds shall be made to Sellers and/or one or more of the Letters of Credit may be drawn or returned for cancellation, in each case, in accordance with Section 4.2.

          (c) Notwithstanding the foregoing, no fee pursuant to Section 13.2(b)(v) shall be due and payable if (i) Purchaser or Guarantor has materially breached this Agreement, (ii) Purchaser or Guarantor has engaged in bad faith conduct with respect to the transactions contemplated by this Agreement or (iii) Purchaser or Guarantor has violated in any material respect the provisions of the Bankruptcy Code, other Applicable Law or an Order of the

67

Bankruptcy Court, in each case relating to the transactions contemplated by this Agreement (any one of the foregoing is referred to herein as a “Purchaser Bad Faith Event”).

          (d) Notwithstanding Section 13.2(b), the obligations of Purchaser and Guarantor under the Confidentiality Agreement and the obligations of the parties under this Section 13.2 and Sections 4.2, 8.5, 8.6, 8.10(f), 15.4, 15.6, 15.7, 15.8, 15.11, 15.13, and 15.14, the last two sentences of Section 8.1, and Articles II, XII, and XIV of this Agreement shall survive any termination of this Agreement and shall remain in full force and effect.

ARTICLE XIV
GUARANTEE

     14.1 Guarantee.

          (a) Guarantor hereby irrevocably, unconditionally and absolutely guarantees as a primary obligor and not as a surety, to Sellers the full and timely payment and due and punctual performance and discharge of all of Purchaser’s obligations under this Agreement and the Ancillary Agreements existing on the date hereof or hereafter of any kind or nature whatsoever, including the due and punctual payment of the Purchase Price and any other amount that Purchaser is or may become obligated to pay pursuant to this Agreement or the Ancillary Agreements (collectively, the “Obligations”). The guarantee under this Section 14.1 is an unconditional, irrevocable and absolute guaranty of timely payment and performance of the Obligations and not merely of collection. If for any reason whatsoever the Obligations shall not be fully and timely paid or performed, Guarantor shall promptly honor and perform its obligations to Sellers hereunder upon demand.

          (b) To the fullest extent permitted by Applicable Law, the obligations of Guarantor hereunder shall remain in full force and effect without regard to, and shall not be affected or impaired by, (i) any change in the structure or ownership of Purchaser or Guarantor or the bankruptcy, insolvency, reorganization, dissolution, liquidation, or other similar proceeding relating to Purchaser, Guarantor or any Affiliate of either Purchaser or Guarantor; (ii) any neglect, delay, omission, failure or refusal of Purchaser or Sellers to take or prosecute any action in connection with this Agreement, the Ancillary Agreements or any other agreement, delivered in connection herewith or therewith; (iii) any extension, compromise, settlement, renewal or waiver of the time for any performance of or compliance with any of the Obligations; (iv) the existence of any claim, set-off or other right which Guarantor may have against Purchaser, Sellers or any other Person, whether in connection herewith or any unrelated transaction; (v) any invalidity or unenforceability of the Obligations; or (vi) any other act (other than prior full and indefeasible payment in cash and timely performance of the Obligations) or omission or delay by Purchaser or Sellers or any other Person that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of Guarantor hereunder.

          (c) In connection with this Section 14.1, Guarantor unconditionally waives: (i) any right to receive demands, protests, or other notices of any kind or character whatsoever, as the same may pertain to Purchaser; (ii) any right to require Sellers to proceed first against Purchaser or to exhaust any security held by Sellers or to pursue any other remedy; (iii) any defense based upon an election of remedies by Sellers; (iv) any duty of Sellers to advise

68

Guarantor of any information known to Sellers regarding Purchaser or its ability to perform under this Agreement or any Ancillary Agreement; (v) all suretyship and other defenses of every kind and nature; (vi) all rights to and benefits under any defense based on or arising out of the voluntary or involuntary bankruptcy, insolvency, liquidation, dissolution, receivership, or other similar proceeding affecting Purchaser, or lack of capacity of Purchaser, which Purchaser or Guarantor may have to performance of any of the Obligations; (vii) notice of the creation of any Obligation or any notice of or proof of reliance by Sellers upon this Section 14.1 (the Obligations shall conclusively be deemed to have been created, contracted, incurred or renewed, extended, amended or waived in reliance upon this Section 14.1 and all dealings between Purchaser or Guarantor and Sellers shall be conclusively presumed to have been had or consummated in reliance upon this Section 14.1) or any notice of any other facts that may come to the attention of Sellers or Guarantor regarding the financial position of Purchaser; (viii) requirements of promptness or diligence on the part of Sellers; (ix) requirements on the part of Sellers to mitigate the damages resulting from any default hereunder or under the Obligations; (x) notice of acceptance hereof, of any action taken or omitted in reliance hereon, of any defaults by Purchaser in the payment or performance of the Obligations; (xi) all notices which may be required by Law or otherwise to preserve any of the rights of Sellers against Guarantor; and (xii) any other act or omission or thing or delay to do any other act or thing, which might in any manner or to any extent vary or limit Guarantor’s obligations hereunder or which might otherwise operate as a discharge of Guarantor.

          (d) The obligations of Guarantor hereunder are primary, absolute, unconditional and irrevocable and will not be discharged by, and this Section 14.1 shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Purchaser of any or all of its Obligations; (b) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution or similar proceedings with respect to Purchaser; (c) any other occurrence whatsoever, except timely full and indefeasible payment and timely performance in full of all Obligations; or (d) any other circumstances whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety, or which might otherwise limit recourse against Guarantor.

          (e) The obligations of Guarantor under this Section 14.1 shall be automatically reinstated if and to the extent that for any reason any payment or other performance by or on behalf of Purchaser in respect of the Obligations is rescinded or must be otherwise restored, and Guarantor agrees that it will indemnify Sellers on demand for all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Sellers in connection with such rescission or restoration. If in connection with the foregoing, Sellers are required to refund part or all of any payment of Purchaser, such payment by Sellers shall not constitute a release of Guarantor from any liability hereunder, and Guarantor’s liability hereunder shall be reinstated to the fullest extent allowed under Applicable Law and shall not be construed to be diminished in any manner.

          (f) Guarantor shall not be entitled to be subrogated to any of the rights of Sellers against Purchaser or any collateral, security or guarantee or right of set-off held by Sellers for the payment or performance of the Obligations, nor shall Guarantor seek or be entitled to

69

seek any reimbursement from Purchaser in respect of performance made by Guarantor hereunder, until the Obligations are indefeasibly paid and performed in full.

          (g) If any claim arising under or related to this Agreement or the Ancillary Agreements is reduced to judgment denominated in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (collectively the “Obligations Currency”), the judgment shall be for the equivalent in the Judgment Currency of the amount of the claim denominated in the Obligations Currency included in the judgment, determined as of the date of judgment. The equivalent of any Obligations Currency amount in any Judgment Currency shall be calculated at the spot rate for the purchase of the Obligations Currency with the Judgment Currency based on the daily noon day rate quoted by JPMorgan Chase Bank, N.A. (any costs of exchange payable in connection with such purchase shall be paid by Guarantor). Guarantor shall indemnify Sellers and hold Sellers harmless from and against all loss or damage resulting from any change in exchange rates between the date any claim is reduced to judgment and the date of payment thereof by Guarantor.

          (h) All payments whatsoever made by the Guarantor under this Agreement and the Ancillary Agreement will be in lawful currency of the United States of America free and clear of, and without liability for withholding or deduction for or on account of, any present or future Taxes of whatever nature imposed or levied by or on behalf of any jurisdiction other than the United States (or any political subdivision or Taxing Authority of or in such jurisdiction) (hereinafter a “Non-US Taxing Jurisdiction”), unless the withholding or deduction of such Tax is compelled by law. If any deduction or withholding for any Tax of a Non-US Taxing Jurisdiction shall at any time be required in respect of any amounts to be paid by Guarantor under this Agreement or the Ancillary Agreements, Guarantor will pay to the relevant Non-US Taxing Jurisdiction the full amount required to be withheld, deducted or otherwise paid before penalties attach thereto or interest accrues thereon and pay to the Sellers such additional amounts as may be necessary in order that the net amounts paid to the Sellers pursuant to the terms of this Agreement or the Ancillary Agreements after such deduction, withholding or payment (including any required deduction or withholding of Tax on or with respect to such additional amount), shall be not less than the amounts then due and payable to such holder under the terms of this Agreement or the Ancillary Agreements before the assessment of such Tax.

          (i) This Section 14.1 shall survive the Closing and shall remain in full force and effect. Guarantor agrees to indemnify and hold Sellers harmless from and against and to pay on demand all out-of-pocket costs and expenses (including reasonable legal fees and expenses) incurred by or on behalf of Sellers in any way relating to the collection and/or enforcement of Guarantor’s obligations under this Section 14.1.

     14.2 Limitation. Each of the Sellers hereby acknowledges and agrees that, notwithstanding anything to the contrary contained herein, Guarantor is not a guarantor or surety of, and does not guarantee, any of the obligations of Purchaser under the Purchaser Promissory Note.

70

ARTICLE XV
MISCELLANEOUS

     15.1 Nonsurvival of Representations, Warranties and Covenants. None of the representations, warranties, covenants or other agreements of the parties made herein, in the Seller Disclosure Schedule with respect to Sellers, in any Ancillary Agreement or any other agreement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants or other agreements, shall survive the Closing except for those covenants and agreements contained herein and therein, which, by their terms, contemplate performance in whole or in part after the Closing, which shall survive in accordance with their terms (including, for the avoidance of doubt, Sections 8.1, 8.5, 8.6, and 8.10(f) and Articles IX, X, XII and XIV).

     15.2 Remedies. Purchaser and Guarantor acknowledge and agree that the only remedy for breach of any representation or warranty made by Sellers, or any covenant required to be performed by Sellers prior to the Closing, shall be Purchaser’s option to terminate this Agreement pursuant to and to the extent permitted by Section 13.1, to receive the Deposit to the extent permitted by Section 4.2, to receive the expense reimbursement to the extent permitted by Section 13.2(b)(v) and to receive a release to the extent permitted by Section 2.1. Notwithstanding the foregoing, each party acknowledges and agrees that the other parties would be irreparably damaged if any provision of this Agreement is not performed in accordance with its specific terms and that any breach of this Agreement could not be adequately compensated in all cases by monetary damages alone. Accordingly, prior to the termination of this Agreement pursuant to Section 13.1 or otherwise, in addition to any other right or remedy to which each party may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any provision of this Agreement, without posting any bond or other undertaking. In any successful action for damages, Sellers shall be entitled to recover their demonstrated legal damages, which shall not be limited to out of pocket costs in pursuing the transaction contemplated by this Agreement.

     15.3 Bankruptcy Court Approval. The obligations of Sellers under this Agreement are subject to approval of the Bankruptcy Court to the extent (and only to the extent) required by Law.

     15.4 Expenses. Except as otherwise set forth in this Agreement, Sellers, Purchaser and Guarantor shall each bear their own expenses (including attorneys’ fees) incurred in connection with the negotiation and execution of this Agreement and the Ancillary Agreements and each other agreement, document and instrument contemplated hereby and thereby and the consummation of the transactions contemplated hereby and thereby. In addition, Purchaser shall pay at Closing (i) all premiums and other costs associated with each Title Report and each Title Policy and any endorsements thereto, including any search and exam fees, (ii) all premiums and other costs for any mortgagee policy of title insurance, including any endorsements or deletions, (iii) the cost to obtain each Survey and the costs associated with any modifications, updates or recertifications of an existing Survey, to the extent one is available, (iv) all of the Title Company’s escrow and closing fees, if any, (v) all recording fees, (vi) the documentary fee payable at the time of recording the Deeds, the Leasehold Deeds and the Assignment and

71

Assumption of Ground Lease Agreement and (vii) any transfer tax imposed by the City, County or State in which the Real Property is located to the extent the Bankruptcy Court requires such transfer taxes to be paid. Any other costs and expenses of Closing not provided for in this Section 15.4 or in other provisions of this Agreement shall be allocated between Purchaser and Seller in accordance with the custom in the county in which the Real Property is located.

     15.5 Disclosure Schedules. For purposes of the representations and warranties of Sellers contained herein, disclosure in any section of the Seller Disclosure Schedule of any facts or circumstances shall be deemed to be adequate disclosure of such facts or circumstances with respect to the representations or warranties made by Sellers in the corresponding section of Article VI of this Agreement, unless it is readily apparent on the face of the disclosure contained in such section of the Seller Disclosure Schedule that such disclosure is applicable to another section of Article VI of this Agreement. Any information provided in the Seller Disclosure Schedule is solely for informational purposes, and the inclusion of such information shall not be deemed to enlarge or enhance any of the representations or warranties of Sellers. The inclusion of any information in any section of the Seller Disclosure Schedule or other document delivered by the parties pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.

     15.6 Governing Law. THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT, AND ANY CLAIM OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE GOVERNED BY AND INTERPRETED, CONSTRUED, AND DETERMINED IN ACCORDANCE WITH, THE APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE AND THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISION THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION).

     15.7 Submission to Jurisdiction; Consent to Service of Process.

          (a) Without limiting any party’s right to appeal any Order of the Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of this Agreement and to decide any claims or disputes which may arise or result from, or be connected with, this Agreement, any breach or default hereunder, or the transactions contemplated hereby, and (ii) any and all Legal Proceedings related to the foregoing shall be filed and maintained only in the Bankruptcy Court, and the parties hereby consent to and submit to the jurisdiction and venue of the Bankruptcy Court and shall receive notices at such locations as indicated in Section 15.13; provided, however, that if the Bankruptcy Cases have been closed, the parties agree to file any such claim or dispute in the United States District Court for the Northern District of Texas and any appellate court thereof.

          (b) The parties hereby unconditionally and irrevocably waive, to the fullest extent permitted by Applicable Law, any objection which they may now or hereafter have to the

72

laying of venue of any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby brought in any court specified in paragraph (a) above, or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

          (c) Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the mailing of a copy thereof in accordance with the provisions of Section 15.13. Each of the Purchaser and Guarantor has appointed Corporation Service Company to receive for it, and on its behalf, service of process in the United States.

     15.8 Waiver of Jury Trial. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT THEY MAY HAVE TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION, OR IN ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTIES WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     15.9 No Right of Set-Off. Each of Purchaser and Guarantor for itself and for its Subsidiaries, Affiliates, successors and assigns hereby unconditionally and irrevocably waives any rights of set-off, netting, offset, recoupment, or similar rights that Purchaser, Guarantor or any of their respective Subsidiaries, Affiliates, successors and assigns has or may have with respect to the payment of the Purchase Price or any other payments to be made by Purchaser or Guarantor pursuant to this Agreement, any Ancillary Agreement or any other document or instrument delivered by Purchaser or Guarantor in connection herewith.

     15.10 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

     15.11 Entire Agreement; Amendments and Waivers. This Agreement (including the Seller Disclosure Schedule and exhibits hereto), the Confidentiality Agreement and the Ancillary Agreements represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement

73

shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The parties acknowledge that all parties, through their legal counsel, played an equal role in drafting and/or had an equal opportunity to review and/or modify the provisions set forth in this Agreement. Thus, in the event of any misunderstanding, ambiguity, or dispute concerning this Agreement’s provisions, or interpretations, no rule of construction shall be applied that would result in having this Agreement interpreted against any party.

     15.12 Table of Contents and Headings. The table of contents and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

     15.13 Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed duly given (i) when delivered personally or by prepaid overnight courier, with a record of receipt or (ii) the day of transmission, if sent by facsimile during regular business hours, or the day after transmission, if sent after regular business hours (with a copy promptly sent by prepaid overnight courier with record of receipt or by certified mail, return receipt requested), to the parties at the following addresses or facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

If to Sellers, to:

ASARCO LLC
5285 East Williams Circle, Suite 2000
Tucson, Arizona 85711
Attention: Joseph F. Lapinsky
Telephone: (520) 798-7728
Facsimile: (520) 798-7781

With a copy (which shall not constitute notice) to:

Baker Botts L.L.P.
2001 Ross Avenue Suite 800
Dallas, Texas 75201
Attention: Jack Kinzie
Telephone: (214) 953-6727
Facsimile: (214) 661-4727

74

If to Purchaser or Guarantor, to:

Sterlite (USA), Inc.
c/o Sterlite Industries (India) Ltd
Vedanta, 75 Nehru Road
Vile Parle (East)
Mumbai — 400 099
India
Attention: Sanjay Khattry
Telephone: +91 22 6646 1310
Facsimile: +91 22 6646 1450

With a copy (which shall not constitute notice) to:

Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: Douglas P. Bartner
Telephone: (212) 848-8190
Facsimile: (646) 848-8190

If to Purchaser or Guarantor for service of process (which may be made by registered mail):

Corporation Service Company
2711 Centerville Road Suite 400
Wilmington, Delaware 19808
Attention: Sterlite (USA), Inc. or Sterlite Industries (India) Ltd. (as applicable)
Telephone: (302) 636-5401

     15.14 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid or enforceable, such provision and (ii) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

     15.15 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. No assignment of this Agreement or of any rights or obligations hereunder may be made by any of Sellers, Purchaser or Guarantor (by operation of Law or otherwise) without the prior written consent of each of the other parties hereto (which consent shall not be unreasonably withheld, delayed or conditioned) and any attempted assignment without the required consents shall be void;

75

provided, however, that any Seller may assign, in whole or in part, all or any rights that it may have under this Agreement to any Person without the prior consent of Purchaser or Guarantor.

     15.16 No Third-Party Beneficiaries. Nothing in this Agreement shall create or be deemed to create any third-party beneficiary rights in any Person not a party to this Agreement, except for the indemnitees identified in Section 3.3.

     15.17 Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Any counterpart may be executed by facsimile signature and such facsimile signature shall be deemed an original.

* * * * *

76

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.

SELLERS:
ASARCO LLC, a Delaware limited liability company
By:	/s/ Joseph F. Lapinsky
Name:	Joseph F. Lapinsky
Title:	Chief Executive Officer and President
AR SILVER BELL, INC., a Delaware corporation
By:	/s/ D.E. McAllister
Name:	D.E. McAllister
Title:	President
COPPER BASIN RAILWAY, INC., a Delaware corporation
By:	/s/ D.E. McAllister
Name:	D.E. McAllister
Title:	Vice President
ASARCO SANTA CRUZ, INC., a Delaware corporation
By:	/s/ D.E. McAllister
Name:	D.E. McAllister
Title:	President

PURCHASER: STERLITE (USA), INC.
By:	/s/ C.V. Krishnan
Name:	C.V. Krishnan
Title:	President

GUARANTOR: STERLITE INDUSTRIES (INDIA) LTD.
By:	/s/ C.V. Krishnan
Name:	C.V. Krishnan
Title:	Managing Director (Power)

EX-4.43

Exhibit 4.43

AMENDMENT NO. 1 TO

SETTLEMENT AND PURCHASE AND SALE AGREEMENT

     This Amendment No. 1 to Settlement and Purchase and Sale Agreement (this “Amendment”) is entered into on April 15, 2009 and amends that certain Settlement and Purchase and Sale Agreement, dated March 6, 2009 (the “PSA”), by and among ASARCO LLC, a Delaware limited liability company; AR Silver Bell, Inc., a Delaware corporation; Copper Basin Railway, Inc., a Delaware corporation; ASARCO Santa Cruz, Inc., a Delaware corporation; Sterlite (USA), Inc., a Delaware corporation; and Sterlite Industries (India) LTD, an Indian limited liability company. Capitalized terms used herein, but not otherwise defined, shall have the respective meanings ascribed to such terms in the PSA.

     WHEREAS, the parties desire to amend the PSA to extend the date by which the Bankruptcy Court shall have entered the Sterlite Agreed Order to avoid a termination right in favor of Purchaser pursuant to Section 13.1(h) thereof;

     NOW, THEREFORE, in consideration of the premises and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

     1. Section 13.1(h)(i) of the PSA is hereby amended to replace the date “April 15, 2009” with the date “April 22, 2009.”

     2. Except as set forth herein, all other terms of the PSA shall remain unchanged and in full force and effect.

     3. This Amendment shall be subject to all of the terms and provisions set forth in the PSA that apply to the PSA (and such terms and provisions shall apply to this Amendment) or to any amendments or modifications thereto, including, without limitation, Article XV thereof.

*     *     *     *     *

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above.

SELLERS: ASARCO LLC, a Delaware limited liability company
By:	/s/ Joseph F. Lapinsky
Name:	JOSEPH F. LAPINSKY
Title:	CHIEF EXECUTIVE OFFICER & PRESIDENT
AR SILVER BELL, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	DOUGLAS E. McALLISTER
Title:	PRESIDENT
COPPER BASIN RAILWAY, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	DOUGLAS E. McALLISTER
Title:	VICE PRESIDENT
ASARCO SANTA CRUZ, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	DOUGLAS E. McALLISTER
Title:	PRESIDENT
PURCHASER: STERLITE (USA), INC.
By:	C.V. Krishnan
Name:	C.V. KRISHNAN
Title:	President
GUARANTOR: STERLITE INDUSTRIES (INDIA) LTD.
By:	C.V. Krishnan
Name:	C.V. KRISHNAN
Title:	Managing Director (Power)

EX-4.44

Exhibit 4.44

AMENDMENT NO. 2 TO

SETTLEMENT AND PURCHASE AND SALE AGREEMENT

     This Amendment No. 2 to Settlement and Purchase and Sale Agreement (this “Amendment”) is made effective as of April 22, 2009, and amends that certain Settlement and Purchase and Sale Agreement, dated March 6, 2009, as amended on April 15, 2009, (the “PSA”), by and among ASARCO LLC, a Delaware limited liability company; AR Silver Bell, Inc., a Delaware corporation; Copper Basin Railway, Inc., a Delaware corporation; ASARCO Santa Cruz, Inc., a Delaware corporation; Sterlite (USA), Inc., a Delaware corporation; and Sterlite Industries (India) LTD, an Indian limited liability company. Capitalized terms used herein, but not otherwise defined, shall have the respective meanings ascribed to such terms in the PSA.

     WHEREAS, the parties desire to amend the term “Sterlite Agreed Order,” as defined by the PSA, by replacing Exhibit M-2 to the PSA with the order attached hereto as Exhibit A;

     NOW, THEREFORE, in consideration of the premises and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

     1. For all purposes under the PSA, Exhibit M-2 to the PSA is hereby replaced with the order attached hereto as Exhibit A, and the Parties agree that the term “Sterlite Agreed Order,” as defined by the PSA, is meant to refer to such attached order.

     2. Except as set forth herein, all other terms of the PSA shall remain unchanged and in full force and effect.

     3. This Amendment shall be subject to all of the terms and provisions set forth in the PSA that apply to the PSA (and such terms and provisions shall apply to this Amendment) or to any amendments or modifications thereto, including, without limitation, Article XV thereof.

*     *     *     *     *

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above.

SELLERS: ASARCO LLC, a Delaware limited liability company
By:	/s/ Joseph F. Lapinsky
Name:	JOSEPH F. LAPINSKY
Title:	PRESIDENT & CEO
AR SILVER BELL, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	DOUGLAS E. McALLISTER
Title:	PRESIDENT & SECRETARY
COPPER BASIN RAILWAY, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	DOUGLAS E. McALLISTER
Title:	VICE PRESIDENT
ASARCO SANTA CRUZ, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	DOUGLAS E. McALLISTER
Title:	PRESIDENT & SECRETARY
PURCHASER: STERLITE (USA), INC.
By:	/s/ C.V. KRISHNAN
Name:	C.V. KRISHNAN
Title:	President
GUARANTOR: STERLITE INDUSTRIES (INDIA) LTD.
By:	/s/ C.V. Krishnan
Name:	C.V. KRISHNAN
Title:	Managing Director (Power)

EX-4.45

Exhibit 4.45

AMENDMENT NO. 3 TO

SETTLEMENT AND PURCHASE AND SALE AGREEMENT

     This Amendment No. 3 to Settlement and Purchase and Sale Agreement (this “Amendment”) is made effective as of June 12, 2009, and amends that certain Settlement and Purchase and Sale Agreement, dated March 6, 2009, as amended on April 15, 2009 and April 22, 2009 (the “PSA”), by and among ASARCO LLC, a Delaware limited liability company; AR Silver Bell, Inc., a Delaware corporation; Copper Basin Railway, Inc., a Delaware corporation; ASARCO Santa Cruz, Inc., a Delaware corporation; Sterlite (USA), Inc., a Delaware corporation; and Sterlite Industries (India) LTD, an Indian limited liability company. Capitalized terms used herein, but not otherwise defined, shall have the respective meanings ascribed to such terms in the PSA.

     WHEREAS, the parties desire to amend (i) the terms “Agreed Working Capital” and “Purchaser Promissory Note” as defined by the PSA and (ii) Section 4.3(c) of the PSA to eliminate any potential reduction in the aggregate principal amount of the Purchaser Promissory Note;

     NOW, THEREFORE, in consideration of the premises and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

     1. The definition of “Agreed Working Capital” is hereby amended to mean “an amount equal to $328,000,000.00.”

     2. The definition of “Purchaser Promissory Note” is hereby amended to replace the principal amount of “$600,000,000.00” with the principal amount of “$770,000,000.00.”

     3. Exhibit D to the PSA is hereby amended and restated in its entirety with the Form of Purchaser Promissory Note attached hereto as Exhibit A.

     4. Section 4.3(c) of the PSA is hereby amended and restated in its entirety to read as follows:

     “(c) On the date that a binding determination of the Closing Accounts Amount has been made in accordance with Section 4.4, the aggregate principal amount of the Purchaser Promissory Note shall automatically be increased by the Adjustment Amount if the Closing Accounts Amount is greater than the Agreed Working Capital without any action on the part of Purchaser or Sellers.”

     5. Exhibit E to the PSA is hereby amended and restated in its entirety with the Closing Accounts Statement Principles and Illustration attached hereto as Exhibit B.

     6. Except as set forth herein, all other terms of the PSA shall remain unchanged and in full force and effect.

     7. This Amendment shall be subject to all of the terms and provisions set forth in the PSA that apply to the PSA (and such terms and provisions shall apply to this Amendment) or to any amendments or modifications thereto, including, without limitation, Article XV thereof.

*     *     *     *     *

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above.

SELLERS:   ASARCO LLC, a Delaware limited liability company
By:	/s/ Joseph F. Lapinsky
Name:	Joseph F. Lapinsky
Title:	Chief Executive Officer & President
AR SILVER BELL, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	Douglas E. McAllister
Title:	President
COPPER BASIN RAILWAY, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	Douglas E. McAllister
Title:	Vice President
ASARCO SANTA CRUZ, INC., a Delaware corporation
By:	/s/ Douglas E. McAllister
Name:	Douglas E. McAllister
Title:	President
PURCHASER:   STERLITE (USA), INC.
By:	/s/ C.V. Krishnan
Name:	C.V. Krishnan
Title:	President
GUARANTOR:   STERLITE INDUSTRIES (INDIA) LTD.
By:	/s/ C.V. Krishnan
Name:	C.V. Krishnan
Title:	Managing Director (Power)

EX-4.46

Exhibit 4.46

Sterlite Plan Agreement in Principle Term Sheet

     This Term Sheet (as the same may be amended, modified or supplemented from time to time, the “Term Sheet”) is made and entered into as of June 12, 2009 by and among ASARCO LLC, a Delaware limited liability company (“ASARCO”), the subsidiary debtors (together with ASARCO, the “Debtors”), Sterlite (USA), Inc., a Delaware corporation (the “Plan Sponsor”), Robert C. Pate, in his capacity as the Future Claims Representative (the “FCR”), and the Official Committee of Asbestos Claimants in order to set forth their agreement to the matters set forth below (the “Asbestos Committee” and collectively with the FCR, the “Asbestos Representatives”). The Debtors, the Plan Sponsor, the FCR and the Asbestos Committee hereinafter are referred to individually as a “Party” and collectively as the “Parties”. Capitalized terms not defined herein shall have the meaning ascribed to such terms in that certain Settlement and Purchase and Sale Agreement (the “New Plan Sponsor PSA”), dated as of March 6, 2009.

Base Plan and Additional Improvements

Plan:

• In consideration of the terms and conditions contained herein, Asbestos Representatives agree to withdraw their support for the plan proposed by Grupo (the “Parent Plan”) and to support the plan proposed by Plan Sponsor and the Debtors (including, without limitation, the provisions therein relating to the section 524(g) injunction).

Ø Except as provided herein, the New Sterlite Plan shall be in substantially the form of the Debtors’ Third Amended Joint Plan of Reorganization Under Chapter 11 of the United States Bankruptcy Code, as such plan shall be amended to give effect to: (i) all necessary material changes and developments in the chapter 11 cases since such plan was filed, (ii) the terms outlined herein, and (iii) such other terms and conditions as the parties hereto may agree (the “New Sterlite Plan”).

Sterlite Note:

• Principal amount of the Purchaser Promissory Note shall be no less than $770 million and Agreed Working Capital shall be $328 million.

Ø	There shall be no downward adjustment of the principal amount of the Purchaser Promissory Note (or to any other consideration to be paid by the Plan Sponsor under the New Plan Sponsor PSA) if on the Closing Date the Closing Accounts Amount is lower than the Agreed Working Capital.
Ø	If on the Closing Date the Closing Accounts Amount is higher than Agreed Working Capital the principal amount of the Purchaser Promissory Note shall be adjusted as per the provisions of the New Plan Sponsor PSA.

1

Ø All other terms of the Purchaser Promissory Note and the security for the Purchaser Promissory Note shall remain unaltered except as required to give effect to the modifications described herein.

Litigation Backstop:

• Upon the occurrence of the Effective Date (as defined in the New Sterlite Plan), Plan Sponsor shall enter into a definitive agreement (the “Put Option”) pursuant to which the Asbestos Trust shall be entitled to sell, and Plan Sponsor shall be obligated to purchase the pro rata share of the interest in the Brownsville litigation which is distributed for the benefit of holders of Asbestos Claims¹ and is expected to be approximately 27% (the “Asbestos Litigation Interest”).

Ø	Put Option is exercisable one time only.
Ø	The Asbestos Trust may exercise the Put Option at any time after the end of the second year from the Effective Date through the end of the fourth year from the Effective Date, even if the Brownsville litigation has been reversed on appeal or has been determined adversely to the Debtors or to the interests of the Litigation Trust (the “Exercise Period”).
Ø	Base purchase price for the pro rata share shall be $160 million less the amount of any receipt or other recovery on account of the Asbestos Litigation Interest that shall have been achieved prior to exercise of such right.
Ø	Asbestos Representatives may sell a portion of their Asbestos Litigation Interest on or prior to the Effective Date, in which case the adjusted purchase price shall be ratably reduced in proportion to the percentage of the Litigation Interest distributed to the Asbestos Trust (as defined in the New Sterlite Plan) which shall have been sold.
Ø	Put Option may be partially exercised and the pro rata share of the adjusted purchase price shall be ratably adjusted.
Ø	Any receipt or other recovery on account of the Asbestos Litigation Interest that shall have been achieved prior to the date of the exercise of the Put Option shall be retained by the Asbestos Trust or the holders of Asbestos Claims, as applicable, and deducted from the $160 million purchase price payable upon exercise of the Put Option.

¹ As used herein, “Asbestos Claims” shall mean all claims and demands of any person or entity, present or future, holding asbestos claims and/or demands against ASARCO and/or the Subsidiary Debtors of a direct or indirect nature.

2

Ø	Any receipt or other recovery on account of the Asbestos Litigation Interest that shall be achieved after the exercise of the Put Option shall be retained by or distributed to Plan Sponsor.
Ø	Put Option will be secured by inventory and accounts receivable of Plan Sponsor.
Ø	Plan Sponsor may assign the benefits of the Put Option but not the obligations.

Plan Support

• Asbestos Representatives agree to support the New Sterlite Plan and not to support any other plan. If more than one plan shall be presented to creditors for voting, and creditors are entitled to vote on more than one such plan, Asbestos Representatives agree to advise and recommend that all holders of Absestos Claims vote in favor of the New Sterlite Plan and that they indicate a preference for the New Sterlite Plan on the ballot (the “Plan Support Obligation”).

• The Asbestos Representatives will take such other action as is reasonably necessary to accomplish the goal that the holders of Asbestos Claims vote to accept the New Sterlite Plan in sufficient number to satisfy in all respects the requirements of 11 USC Sections 524(g), 1126, and 1129.

• Asbestos Representatives’ Plan Support Obligation shall be subject to a fiduciary out in the event they determine that an alternative plan proposal that is feasible, confirmable, and has a likelihood of becoming effective within a reasonable period of time, will yield materially greater recovery to the holders of Asbestos Claims, and provide aggregate consideration to all creditors that is greater to that provided under the New Sterlite Plan (the “Fiduciary Out”).

• Upon the exercise of the Fiduciary Out, Asbestos Representatives shall: (i) continue to recommend that holders of Asbestos Claims vote in favor of confirmation of the New Sterlite Plan (and in favor of any provision contained therein which relates to the provision of a channeling injunction pursuant to section 524(g) thereof), (ii) not recommend that holders of Asbestos Claims indicate a preference for any plan, and (iii) not argue against the confirmation of the New Sterlite Plan or argue in favor of the confirmation of any plan other than the New Sterlite Plan, but the Asbestos Representatives may recommend that holders of Asbestos Claims also vote in favor of the alternative plan giving rise to the exercise of the Fiduciary Out provided no preference toward such a plan is indicated. The Asbestos Representatives may inform the Court that they are neutral or have no preference which plan may be confirmed by the Court, whether it is the New Sterlite Plan or some other plan that gave rise to the exercise of the Fiduciary Out.

• Except as otherwise provided herein, it is the intent of the Parties that the provisions of this Term Sheet or the agreement embodied herein in no way, manner or form shall

3

restrict or impair the free and independent exercise of the Asbestos Representatives’ fiduciary duties.

Other Interim Steps

• Asbestos Representatives shall promptly provide Grupo notice of the exercise of their fiduciary out under the terms of the Agreement in Principle between Grupo and the Asbestos Representatives.

• All parties hereto shall take all other actions and positions as are reasonably necessary to comply with the terms and intentions of this Term Sheet, including, without limitation, supporting the Debtors’ defense of the appeal against the Sterlite Agreed Order.

• Debtors and the Asbestos Representatives shall request the adjournment of the hearing on estimation of asbestos claims (and all related dates and deadlines) pending confirmation. If the holders of Asbestos Claims fail to vote in favor of the New Sterlite Plan in the requisite numbers to satisfy the requirements of 11 USC Sections 524(g), 1126 or 1129, the Debtors may request that the court hear ASARCO’s motion to estimate the asbestos claims and the Debtors shall not be bound by the proposed allowance of such claims as provided in the New Sterlite Plan.

Treatment of Asbestos Claim

• The Asbestos Representatives have asserted claims of approximately $2.1 billion (the “Asserted Claims”). In order to settle and compromise disputes between the Debtors and the Asbestos Representatives as to the allowed amount of Asbestos Claims and to facilitate the agreements contained herein, the Asbestos Representatives have agreed to reduce the Asserted Claims to a $1 billion allowed claim and to receive pro rata distributions of (i) cash, (ii) the Purchaser Promissory Note (or interest in a trust holding such Purchaser Promissory Note), and (iii) litigation trust interests under the New Sterlite Plan based upon a claim amount of $750 million.

• The Asbestos Claims shall be channeled to the Asbestos Trust, and the holders of such Asbestos Claims shall look solely to the Asbestos Trust for payment on such Asbestos Claims.

• The Asbestos Trust shall be established and funded on the Effective Date with:

Ø	a pro rata share of all cash distributed to unsecured creditors based upon a $750 million claim amount
Ø	a pro rata share of the Purchaser Promissory Note based upon a claim amount of $750 million
Ø	a pro rata share of litigation trust interests based upon a claim amount of $750 million

4

Ø	rights to all insurance proceeds from all policies with respect to Asbestos Claims
Ø	$27.5 million to fund the costs of administering the Asbestos Trust, which shall be an allowed administrative claim

• Asbestos Representatives shall be permitted to select one of three litigation trustees for the litigation trust; provided, however, the Parties recognize that the number of litigation trustees may be expanded if necessary to accommodate the auction of all or a portion of the interest in the Brownsville litigation.

• Cooperation agreement with respect to access to information to be provided.

• Asbestos trust related documents (asbestos TDP, asbestos trust agreement, etc.) shall be reasonably acceptable to the Asbestos Committee, the FCR and the Debtors.

• Debtors to be permitted to substantively consolidate estates at their election.

• Intercompany DIP loan extended through the Effective Date.

• The outstanding balance, if any, under the intercompany DIP loan shall be credited against the Debtors’ initial cash funding of the Asbestos Trust as provided in the Debtors’ Third Amended Plan of Reorganization.

• Debtors shall be liable for the post-confirmation date fees and expenses of the Asbestos Representatives to the same extent they are liable for the fees and expenses of other retained professionals.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

5

DEBTORS:

ASARCO LLC, a Delaware limited liability company

By: /s/ Joseph F. Ladinsky                    
       Name: JOSEPH F. LADINSKY
       Title: PRESIDENT

Cement Asbestos Products Company
Capco Pipe Company
Lac D’Amiante du Quebec, Ltee.
LAQ Canada, Ltd.
Lake Asbestos of Quebec, Ltd.

By: /s/ Robert C. Pate          

Robert C. Pate, Future Claims Representative in his official capacity as representative of the Asbestos Subsidiary Debtors’ future creditor-claimants pursuant to the Stipulation and Agreement Regarding the Prosecution of Alter Ego Claims on Behalf of the Asbestos Subsidiary Debtors’ Estates approved by the Court on April 25, 2006

By: /s/ Alan R. Brayton     

The Official Committee of Unsecured Creditors of the Subsidiary Debtors, in its capacity as representative of the estates of the Asbestos Subsidiary Debtors and of their creditors and claimants pursuant to the Stipulation and Agreement Regarding the Prosecution of Alter Ego Claims on Behalf of the Asbestos Subsidiary Debtors’ Estates approved by the Court on April 25, 2006

     Name: Alan R. Brayton
     Title: Co-Chair

PLAN SPONSOR:

STERLITE (USA), INC., a Delaware corporation

By: /s/ C.V. Krishnan              
       Name: C.V. Krishnan
       Title: President

ASBESTOS COMMITTEES:

The Official Committee of Unsecured Creditors of the Subsidiary Debtors

          By: /s/ Alan R. Brayton          
     Name: ALAN R. BRAYTON
     Title:   CO-CHAIR

The Official Committee of Asbestos Claimants

          By: /s/ Alan R. Brayton          
     Name: ALAN R. BRAYTON
     Title:   CO-CHAIR

FCR:

The Future Claims Representative for the Subsidiary Debtors

/s/ Robert C. Pate    
Robert C. Pate

The Future Claims Representative for the Debtor

/s/ Robert C. Pate    
Robert C. Pate

The Future Claims Representative for the Additional Debtors

/s/ Robert C. Pate    
Robert C. Pate

EX-4.47

Exhibit 4.47

CREDIT ARRANGEMENT LETTER

CSG(W)10535

February 07, 2005

India Foils Limited
1, Sagore Dutta Ghat Road,
Kamarhati,
Kolkata 700 058

Dear Sirs,

We have pleasure in advising you that the Bank has sanctioned the following term loan facility to the company.

	(Rs. in million)
Facilities		Limit
Term Loan		1020.0
TOTAL		1020.0

The aforesaid credit facilities are subject to the main terms and conditions (subject to change as per RBI directives/Bank’s policies from time to time) set out in Annexure I hereto which is deemed to be a part of this Credit Arrangement Letter. The credit assistance is also subject to the conditions that are contained in the documents, which the Company has to execute between and in favour of ICICI Bank Limited.

Meanwhile please return to us the duplicate copy of this letter duly signed by the Authorized signatory of the Company in token of acceptance of the terms and conditions stipulated herein.

Yours faithfully,

/s/ Suvalaxmi Chakraborty
Suvalaxmi Chakraborty
General Manager
Enclosures

Accepted

For India Foils Limited

Authorized Signatory

ICICI Bank Limited
ICICI Bank Towers	Tel. (+91-22) 2653 1414	Regd. Off. : Landmark, Race Course Circle, Vadodara 390007, India.
Bandra-Kurla Complex	Fax (+91-22) 2653 1122	Corp. Off. : ICICI Bank Towers, Bandra-Kurla Complex
Mumbai 400 051, India	Website www.icicibank.com	Mumbai 400051, India, Tel. (+91-22) 2653 1414 Fax (+91-22) 2653 1122

2

TERMS AND CONDITIONS

The following summary of Terms and Conditions (the “Term Sheet”) provides indicative terms and conditions for the credit facilities to the Borrower. This Term Sheet is not meant to be, nor should it be construed as a commitment by ICICI Bank to extend credit facilities. The Term Sheet is intended to outline basic points of business understanding around which the credit facilities would be constructed. It does not attempt to describe all the terms and conditions that would relate to the credit facilities nor do the terms suggest specific documentation phrasing. The closing of any financial transaction relating to the credit facilities would be subject to various conditions precedent, including without limitation, the conditions set forth in this Term Sheet. The final terms and conditions applicable to the credit facilities would be subject to inter alia, due diligence of various agreements and contracts, validation of revenue assumptions, legal counsel review, satisfactory transaction economics and internal credit.

Facility	Term Loans
Limit	Rs. 1020.0 million
Currency	Rupee facility
Security	Secured by a first charge over the fixed assets of India Foils Limited.
Tenor / Repayment schedule	Amortisation schedule of the loan is attached.
Interest	The Company shall pay to ICICI Bank interest on the principal amount of the Facility outstanding from time to time monthly in each year on 15th day of each calender month. The rates of interest for each Tranche of the Facility (“the Applicable Rate”) shall be as follows:
	From February 2005 till January 2006: Nil interest
	From February 2006 till November 2007: 7.00% per annum below the sum of the ICICI Bank Benchmark Advance Rate and the Term Premium prevailing on the date of disbursement of such Tranche of the Facility, plus applicable interest tax or other statutory levy, if any.
	The ICICI Bank Benchmark Advance Rate as on date is 10.50% per annum, the Term Premium as on date is 1.00% per annum and the Applicable Rate as on date is 4.50% per annum.
	From December 2007 till November 2009: 1.50% per annum below the sum of the ICICI Bank Benchmark Advance Rate and the Term Premium prevailing on the date of disbursement of such Tranche of the Facility, plus applicable interest tax or other statutory levy, if any.
	The ICICI Bank Benchmark Advance Rate as on date is 10.50% per annum, the Term Premium as on date is 1.00% per annum and the Applicable Rate as on date is 10.00% per annum.
	From December 2009 till September 2011: 1.00% per annum below the sum of the ICICI Bank Benchmark Advance Rate and the Term Premium prevailing on the date of disbursement of such Tranche of the Facility, plus applicable interest tax or other statutory levy, if any.

3

	The ICICI Bank Benchmark Advance Rate as on date is 10.50% per annum, the Term Premium as on date is 1.00% per annum and the Applicable Rate as on date is 10.50% per annum.
	Rate of interest is subject to revision from time to time.
Redemption Premium	Rs. 30.0 million payable on September 15, 2011.
Interest payment frequency	Interest would be payable monthly, on the 15th day of each month commencing from December 2007.
Interest calculation	Interest will be calculated on 365 day basis in respect of rupee loans.
Prepayment	The Company may pay any of the outstanding tranches (in part or full), on November 15th of each year during the currency of the loan, without any prepayment premium or any other fee or charges except interest accrued to date.

In addition to the above terms and conditions, the General Conditions (GC-C-1999) will also apply to the Facility

4

AMORTIZATION SCHEDULE

COMPANY NAME	INDIA FOILS LTD
ASSISTANCE TYPE	CORPORATE LOAN
DUE DATES FOR INTEREST	15TH OF EACH MONTH COMMENCING FROM FEBRUARY 15, 2005.

	Installment of principal		Principal amount of the
	amount of the facility		facility outstanding after each
Due Dates for Payment	(in Rs)		payment (in Rs)
February 15, 2005		—		1,020,000,000
December 15, 2007		61,875,000		958,125,000
January 15, 2008		—		958,125,000
February 15, 2008		—		958,125,000
March 15, 2008		61,875,000		896,250,000
April 15, 2008		—		896,250,000
May 15, 2008		—		896,250,000
June 15, 2008		61,875,000		834,375,000
July 15, 2008		—		834,375,000
August 15, 2008		—		834,375,000
September 15, 2008		61,875,000		772,500,000
October 15, 2008		—		772,500,000
November 15, 2008		—		772,500,000
December 15, 2008		61,875,000		710,625,000
January 15, 2009		—		710,625,000
February 15, 2009		—		710,625,000
March 15, 2009		61,875,000		648,750,000
April 15, 2009		—		648,750,000
May 15, 2009		—		648,750,000
June 15, 2009		61,875,000		586,875,000
July 15, 2009		—		586,875,000
August 15, 2009		—		586,875,000
September 15, 2009		61,875,000		525,000,000
October 15, 2009		—		525,000,000
November 15, 2009		—		525,000,000
December 15, 2009		61,875,000		463,125,000
January 15, 2010		—		463,125,000
February 15, 2010		—		463,125,000
March 15, 2010		61,875,000		401,250,000
April 15, 2010		—		401,250,000
May 15, 2010		—		401,250,000
June 15, 2010		61,875,000		339,375,000

5

	Installment of principal		Principal amount of the
	amount of the facility		facility outstanding after each
Due Dates for Payment	(in Rs)		payment (in Rs)
July 15, 2010		—		339,375,000
August 15, 2010		—		339,375,000
September 15, 2010		61,875,000		277,500,000
October 15, 2010		—		277,500,000
November 15, 2010		—		277,500,000
December 15, 2010		61,875,000		215,625,000
January 15, 2011		—		215,625,000
February 15, 2011		—		215,625,000
March 15, 2011		61,875,000		153,750,000
April 15, 2011		—		153,750,000
May 15, 2011		—		153,750,000
June 15, 2011		61,875,000		91,875,000
July 15, 2011		—		91,875,000
August 15, 2011		—		91,875,000
September 15, 2011		61,875,000		30,000,000
September 15, 2011		30,000,000	—

EX-4.48

Exhibit 4.48

NOVATION AGREEMENT

Dated as of 15/11/2008 (the “Novation Date”) among

Indian Foils Limited, a public limited company incorporated under the Companies Act, 1956 and having its registered office at India Foils Limited, 1, Sagore Dutta Ghat Road, Kamarhati, Kolkata-700058 (the “Transferor”, which expression shall, unless it be repugnant to the subject or context thereof, include its successors and permitted assigns)

ICICI Bank Limited, a public company incorporated under the Companies Act, 1956 and a banking company within the meaning of the Banking Regulation Act, 1949 and having its registered office at Landmark, Race Course Circle, Vadodra 390007 and its corporate office at ICICI Bank Towers, Bandra Kurla Comple, Mumbai 400051 / and a Regional Office at 2B, Gorky Terrace, Calcutta 700017 (the “Lender” or “ICICI Bank” which expression shall, unless it be repugnant to the subject or context thereof, include its successors and permitted assigns); and

Sterlite Industries Limited, a public limited company incorporated under the Companies Act, 1956 and having its registered office at SIPCOT Industrial Complex, Madurai, By pass road, TV Pura, Tuticurin, Tamilnadu — 628002 (the “Transferee”, which expression shall, unless it be repugnant to the subject or context thereof, include its successors and permitted assigns)

The Transferor, the Lender and the Transferee are hereinafter collectively referred to as the “Parties”.

Whereas:

1.	By a Corporate Rupee Loan Facility Agreement, (the “Facility Agreement” which term includes all amendments and modifications made thereto and the General Conditions as defined in the Facility Agreement) executed between the Transferor and the Lender on the 8th day of February 2005, the Lender has at the request of the Transferor, lent and advanced a Rupee Term Loan of Rs. 1020.00 million (the “Facility”).
2.	The said Facility is inter alia secured by a Corporate Guarantee (the “Corporate Guarantee”) dated the 8th day of February 2005, issued by the Transferee in favour of the Lender.
3.	The said Facility is further secured by an Option Agreement dated the 8th day of February 2005 (the “Option Agreement”), on payment of a one time option fee of Rs. 2.00 million by ICICI Bank to the Transferee, whereby the Transferee has granted an option to the Lender, to require the Transferee to purchase from the Lender the receivables under the Facility Agreement on the terms and conditions more particularly described in the Option Agreement.
	The Facility Agreement, the Corporate Guarantee and the Option Agreement are hereinafter collectively referred to as the Transaction Documents.
4.	Whereas a Put Option Event has occurred under clause 1.1 of the Option Agreement, also tantamounting to an Event of Default under the General Conditions to the Facility Agreement, by which it has become improbable for the Transferor to fulfill its obligations under the Facility Agreement.
5.	As on date a sum of Rs.772.5 million is due and payable by the transferor under the Facility Agreement.

At the request of the Transferor and the Transferee, the Lender has agreed to not exercise its rights under the Option Agreement for the time being, in lieu of the Transferee agreeing to refund the said outstanding of Rs. 772.5 million, as per the Schedule given in the Facility Agreement and on the terms and conditions mentioned herein after:

     NOW THEREFORE, the Parties hereto hereby agree as follows:

1.	The Transferee hereby undertakes to refund the said sum of Rs. 772.5 million as per the Schedule given in the Facility Agreement.
2.	On and from the date hereof the said outstanding sum of Rs. 772.5 million payable by the Transferee to the Lender will be treated as an unsecured loan by the Lender to the Transferee.
3.	All the Existing securities given by Transferor to the Lender in terms of the Facility Agreement hereby stands discharged and the Parties shall take necessary steps in this regards.
4.	The Lender shall issue a ‘No Due Certificate” at the time of execution of this Agrrement and release all the Title Deeds deposited by the Transferor, to the Transferor within 7 (seven) days from the date of This Agreement.
5.	The transferee agrees and undertakes that all the obligations and liabilities of the Transferor towards ICICI Bank with respect to the Facility as under the Facility Agreement hereby stand conveyed and reassigned in full to the Transferee.

6. Any capitalized term not otherwise defined herein shall have the meaning assigned to such terms in Transaction Documents as the context may permit.

IN WITNESS WHEREOF the Parties have executed this Novation Agreement on the respective dates specified below with effect from and including the Novation Date.

ICICI Bank Ltd.			India Foils Ltd.
(Name of Lender)			(Name of Transferor)
By:	/s/ A. Senthil Raj		By:	/s/ Sandeep Agarwal
	Name:	A. Senthil Raj	Name:	Sandeep Agarwal
	Title:	Chief Manager	Title:	Director
	Date:	15/11/2008	Date:	15/11/08
Sterlite Industries (I) Ltd.			By:	/s/ Manjol Agarwal
(Name of Transferee)			Name:	Manjol Agarwal
			Title:	Company Secretary and Head Finance
			Date:	15/11/08
By:	/s/ Sushil Gupta
	Name:	Sushil Gupta
	Title:	CFO
	Date:	15/11/2008
By:	/s/ Tarun Jain
	Name:	Mr. Tarun Jain
	Title:	Whole Time Director

EX-4.49

Exhibit 4.49

CREDIT ARRANGEMENT LETTER

CBG (West) / 3224 / CAL601386

August 04, 2005

India Foils Limited,
1, Sagore Dutta Ghat Road,
Kamarhati,
Kolkata — 700 058

Dear Sirs,

We have pleasure in advising you that the Bank has sanctioned the following term loan facility to the company,

(Rs. in million)
Facilities	Limit
Term Loan		250.0
TOTAL		250.0

The aforesaid credit facilities are subject to the main terms and conditions (subject to change as per RBI directives / Bank’s policies from time to time) set out in Annexure I hereto which is deemed to be a part of this Credit Arrangement Letter. The credit assistance is also subject to the conditions that are contained in the documents, which the company has to execute between and in favour of ICICI Bank Limited.

Meanwhile please return to us the duplicate copy of this letter duly signed by the authorised signatory of the company in token of acceptance of the terms and conditions stipulated herein.

Yours faithfully,

/s/ Loknath Mishra
Asst. General Manager

For INDIA FOILS LIMITED
(signed)	(signed)
Authorised Signatory	Authorised Signatory

ICICI Bank Limited
ICICI Bank Towers	Tel. (91-22) 2653 1414	Regd. Off. : "Landmark"
Bandra-Kurla Complex	Fax: (91-22) 2653 1122	Race Course Circle
Mumbai 400 051, India.	Website www.icicibank.com	Vadodara 390 007, India

ANNEXURE 1

TERMS AND CONDITIONS

Facility	Corporate Loan
Limit	Rs.250.0 million
Currency	Rupee facility
Security	Secured by a first charge over the fixed assets of India Foils Limited.
Tenor / Repayment schedule	Amortisation schedule of the loan is attached as Annexure B.
Interest	The Company shall pay to ICICI Bank interest on the principal amount of the Facility outstanding from time to time monthly in each year on 20th day of each calender month. The rates of interest for each Tranche of the Facility (“the Applicable Rate”) shall be as follows:
	From August 2005 till July 2006: Nil interest
	From August 2006 till May 2008: 6.50% per annum below the sum of the ICICI Bank Benchmark Advance Rate and the Term Premium prevailing on the date of disbursement of such Tranche of the Facility, plus applicable interest tax or other statutory levy, if any.
	The ICICI Bank Benchmark Advance Rate as on date is 11.00% per annum, the Term Premium as on date is 0.00% per annum and the Applicable Rate as on date is 4.50% per annum.
	From June 2008 till May 2009: 1.00% per annum below the sum of the ICICI Bank Benchmark Advance Rate and the Term Premium prevailing on the date of disbursement of such Tranche of the Facility, plus applicable interest tax or other statutory levy, if any.
	The ICICI Bank Benchmark Advance Rate as on date is 11.00% per annum, the Term Premium as on date is 0.00% per annum and the Applicable Rate as on date is 10.00% per annum.
	From June 2009 till August 2012: ICICI Bank Benchmark Advance Rate and the Term Premium prevailing on the date of disbursement of such Tranche of the Facility, plus applicable interest tax or other statutory levy, if any.
	The ICICI Bank Benchmark Advance Rate as on date is 11.00% per annum, the Term Premium as on date is 0.00% per annum and the Applicable Rate as on date is 11.00% per annum.
	Above Interest rates shall be reset at the end of every 12 months from the date of disbursement of the first Tranche of the Facility at the applicable margin over over/below the sum of IBAR and the Term Premium prevailing on the reset date, plus applicable interest tax or other statutory levy, if any. The effective rate will be adjusted in the redemption premium payable by the company.

For INDIA FOILS LIMITED
(signed)	(signed)
Authorised Signatory	Authorised Signatory

2

Loan Processing Fee	Rs.21.5 million payable at the time of loan disbursement.
Interest calculation	Interest will be calculated on 365 day basis in respect of rupee loans.
Prepayment	The Company may pay any of the oustanding tranches (in part or full), on March 20th of each year from the 2nd year of the currency of the loan along with the stipulated redemption premium.
Redemption Premium	Redemption premium payable at the end of each year in the event of prepayment / repayment will be calculated to provide the stipulated yeild as given in Annexure A.
	ICICI Bank Benchmark Advance Rate (I-Bar) for the calculation of yeild will be reset at the end of every 12 months and will be applicable only from the reset date.

In addition to the above terms and conditions, the General Conditions (GC-C-1999) will also apply to the Facility

Annexure A

REDEMPTION PREMIUM PAYABLE ON PREPAYMENT

YEAR OF REPAYMENT	YIELD FOR CALCULATION
/ PREPAYMENT	OF REDEMPTION PREMIUM
Mar 20, 2007	I-BAR-3.25%
Mar 20, 2008	I-BAR-3.25%
Mar 20, 2009	I-BAR-3.00%
Mar 20, 2010	I-BAR-3.00%
Mar 20, 2011	I-BAR-2.50%
August 20, 2012	I-BAR-2.00%

For INDIA FOILS LIMITED
(signed)	(signed)
Authorised Signatory	Authorised Signatory

3

Annexure B
AMORTIZATION SCHEDULE

COMPANY NAME	INDIA FOILS LTD
ASSISTANCE TYPE	CORPORATE LOAN

	Installment of principal			Principal amount of the facility
Due Dates for	amount of the facility			outstanding after each payment
Payment	(in Rs)			(in Rs)
20-Nov-08		15,625,000			234,375,000
20-Feb-09		15,625,000			218,750,000
20-May-09		15,625,000			203,125,000
20-Aug-09		15,625,000			187,500,000
20-Nov-09		15,625,000			171,875,000
20-Feb-10		15,625,000			156,250,000
20-May-10		15,625,000			140,625,000
20-Au9-10		15,625,000			125,000,000
20-Nov-10		15,625,000			109,375,000
20-Feb-11		15,625,000			93,750,000
20-May-11		15,625,000			78,125,000
20-Aug-11		15,625,000			62,500,000
20-Nov-11		15,625,000			46,875,000
20-Feb-12		15,625,000			31,250,000
20-May-12		15,625,000			15,625,000
20-Aug-12		26,625,000	*		—

* Including redemption premium of Rs.11.0 million.

For INDIA FOILS LIMITED
(signed)	(signed)
Authorised Signatory	Authorised Signatory

4

EX-4.50

Exhibit 4.50

NOVATION AGREEMENT

Dated as of 15/11/2008 (the “Novation Date”) among

Indian Foils Limited, a public limited company incorporated under the Companies Act, 1956 and having its registered office at India Foils Limited, 1, Sagore Dutta Ghat Road, Kamarhati, Kolkata-700058 (the “Transferor”, which expression shall, unless it be repugnant to the subject or context thereof, include its successors and permitted assigns)

ICICI Bank Limited, a public company incorporated under the Companies Act, 1956 and a banking company within the meaning of the Banking Regulation Act, 1949 and having its registered office at Landmark, Race Course Circle, Vadodra 390007 and its corporate office at ICICI Bank Towers. Bandra Kurla Comple, Mumbai 400051 / and a Regional Office at 2B, Gorky Terrace, Calcutta 700017 (the “Lender” or “ICICI Bank” which expression shall, unless it be repugnant to the subject or context thereof, include its successors and permitted assigns); and

Sterlite Industries Limited, a public limited company incorporated under the Companies Act, 1956 and having its registered office at SIPCOT Industrial Complex, Madurai, By pass road, TV Pura, Tuticurin, Tamilnadu — 628002 (the “Transferee”, which expression shall, unless it be repugnant to the subject or context thereof, include its successors and permitted assigns

The Transferor, the Lender and the Transferee are hereinafter collectively referred to as the “Parties”.

Whereas:

1.	By a Corporate Rupee Loan Facility Agreement, (the “Facility Agreement” which term includes all amendments and modifications made thereto and the General Conditions as defined in the Facility Agreement) executed between the Transferor and the Lender on the 5th day of August 2005, the Lender has at the request of the Transferor, lent and advanced a Rupee Term Loan of Rs. 250.00 million (the “Facility”).
2.	The said Facility is inter alia secured by a Corporate Guarantee (the “Corporate Guarantee”) dated the 8th day of August 2005, issued by the Transferee in favour of the Lender.
3.	The said Facility is further secured by an Option Agreement dated the 8th day of August 2005 (the “Option Agreement”), on payment of a one time option fee of Rs. 2.30 million by ICICI Bank to the Transferee, whereby the Transferee has granted an option to the Lender, to require the Transferee to purchase from the Lender the receivables under the Facility Agreement on the terms and conditions more particularly described in the Option Agreement.
	The Facility Agreement, the Corporate Guarantee and the Option Agreement are hereinafter collectively referred to as the Transaction Documents.
4.	Whereas a Put Option Event has occurred under clause 1.1 of the Option Agreement, also tantamounting to an Event of Default under the General Conditions to the Facility Agreement, by which it has become improbable for the Transferor to fulfill its obligations under the Facility Agreement.
5.	As on date a sum of Rs.250.0 million is due and payable by the transferor under the Facility Agreement.

At the request of the Transferor and the Transferee, the Lender has agreed to not exercise its rights under the Option Agreement for the time being, in lieu of the Transferee agreeing to refund the said outstanding of Rs. 250.0 million as per the Schedule given in the Facility Agreement and on the terms and conditions mentioned herein after:

NOW THEREFORE, the Parties hereto hereby agree as follows:

1.	The Transferee hereby undertakes to refund the said sum of Rs. 250.0 million as per the Schedule given in the Facility Agreement.
2.	On and from the date hereof the said outstanding sum of Rs. 250.0 million payable by the Transferee to the Lender will be treated as an unsecured loan by the Lender to the Transferee.
3.	All the Existing securities given by Transferor to the Lender in terms of the Facility Agreement hereby stands discharged and the Parties shall take necessary steps in this regards.
4.	The Lender shall issue a ‘No Due Certificate” at the time of execution of this Agrrement and release all the Title Deeds deposited by the Transferor, to the Transferor within 7 (seven) days from the date of This Agreement.
5.	The transferee agrees and undertakes that all the obligations and liabilities of the Transferor towards ICICI Bank with respect to the Facility as under the Facility Agreement hereby stand conveyed and reassigned in full to the Transferee.

6. Any capitalized term not otherwise defined herein shall have the meaning assigned to such terms in Transaction Documents as the context may permit.

IN WITNESS WHEREOF the Parties have executed this Novation Agreement on the respective dates specified below with effect from and including the Novation Date.

(ICICI Bank Ltd.)			India Foils Ltd
(Name of Lender)			(Name of Transferor)
By:	/s/ A. Senthil Raj		By:	/s/ Sandeep Agarwal
	Name:	A. Senthil Raj	Name:	Sandeep Agarwal
	Title:	Chief Manager	Title:	Director
	Date:	15/11/2008	Date:	15/11/2008
Sterlite Industries(I) Ltd.			By:	/s/ Manjol Agarwal
(Name of Transferee)			Name:	Manjol Agarwal
			Title:	Company Secretary and Head Finance
			Date:	15/11/08
By:	/s/ Sushil Gupta
	Name:	Sushil Gupta
	Title:	CFO
	Date:	15/11/2008

EX-4.51

Exhibit 4.51

STERLITE 2400 MW COAL BASED POWER PROJECT

COMMON RUPEE LOAN AGREEMENT

AMONG

STERLITE ENERGY LIMITED
As the Borrower

AND

STATE BANK OF INDIA
As Facility Agent for the Lenders

AND

IDBI TRUSTEESHIP SERVICES LIMITED
As Security Trustee

AND

THE PERSONS
SET FORTH IN PART A of SCHEDULE II
As Rupee Lenders

AND

STATE BANK OF INDIA
As the Issuing Bank

Amarchand & Mangaldas & Suresh A. Shroff & Co.
Solicitors & Advocates

TABLE OF CONTENTS

1.	DEFINITIONS	3
2.	ORDER OF PRIORITY	3
3.	THE FACILITY	4
4.	APPLICATION OF PROCEEDS	5
5.	DISBURSEMENT MECHANISM	6
6.	REPRESENTATIONS AND WARRANTIES	16
7.	CONDITIONS PRECEDENT	31
8.	AFFIRMATIVE COVENANTS	57
9.	NEGATIVE COVENANTS	86
10.	CANCELLATION OF THE FACILITY	92
12.	DISBURSEMENTS BY WAY OF LETTER OF COMMITMENT	93
13.	LIABILITY OF AND PAYMENTS BY LENDERS	104
14.	INTEREST	111
15.	REPAYMENTS	114
16.	PREPAYMENTS AND COMMITMENT REDUCTIONS	115
17.	PAYMENTS	118
18.	FACILITY AGENT AND SECURITY TRUSTEE	120
19.	EXPENSES AND INDEMNIFICATIONS	120
20.	EVENTS OF DEFAULT	125
21.	MISCELLANEOUS	134
SCHEDULE I		154
SCHEDULE II		189
SCHEDULE III		205
SCHEDULE IV		208
SCHEDULE V		211
SCHEDULE VI		214
SCHEDULE VII		215
SCHEDULE VIII		216
SCHEDULE IX		218
SCHEDULE X		222
SCHEDULE XIII		226
SCHEDULE XIV		228
SCHEDULE XV		243
SCHEDULE XVI		245
EXHIBIT 1		248

(i)

EXHIBIT 2	252
EXHIBIT 3	256

(ii)

COMMON RUPEE LOAN AGREEMENT

THIS COMMON RUPEE LOAN AGREEMENT (this “Agreement”) is made at                     this 29th day of June, 2009 by and among:

1. STERLITE ENERGY LIMITED, a company incorporated in India under the Companies Act, 1956, with its registered office at SIPCOT Industrial Complex, Madurai By Pass Road, T V Puram, P O Tuticorin, Tamil Nadu — 628 002 (hereinafter referred to as the “Borrower”, which expression shall, unless repugnant to the context, be deemed to include its successors and permitted assigns);

1

2.	STATE BANK OF INDIA, a body corporate constituted under the State Bank of India Act, 1955 with its Corporate Centre at Project Finance SBU, State Bank Bhavan, Madame Cama Road, Mumbai- 400 021 acting as the facility agent for the Lenders (hereinafter referred to as the “Facility Agent”, which expression shall, unless repugnant to the context hereof, be deemed to include its successors, transferees, and permitted assigns);
3.	IDBI TRUSTEESHIP SERVICES LIMITED, a company incorporated in India, having its registered office at Asian Building, Ground Floor, 17, R.K. Kamani Marg, Ballard Estate, Mumbai- 400 001 in its capacity as security trustee for the Lenders (hereinafter referred to as the “Security Trustee”, which expression shall, unless repugnant to the context, be deemed to include its successors, transferees and permitted assigns);
4.	THE PERSONS as set out in Part A of Schedule II, as Rupee Lenders (hereinafter referred to as the “Rupee Lenders”, which expression shall, unless repugnant to the context, be deemed to include their successors, transferees, novatees and assigns); and
5.	STATE BANK OF INDIA, a body corporate constituted under the State Bank of India Act, 1955 with its Corporate Centre at State Bank Bhavan, Madame Cama Road, Mumbai- 400 021, as the Issuing Bank (hereinafter referred to as the “Issuing Bank”, which expression shall, unless repugnant to the context, be deemed to include its successors, transferees and assigns).

Each of the parties mentioned above, are hereinafter collectively referred to as the “Parties” and individually as a “Party”.

WHEREAS

(A) Upon the request of the Borrower and to enable the Borrower to partly finance implementation of the Project undertaken by it for the development, designing and commissioning of a power plant at Jharsuguda Orissa, (i) the Rupee Lenders

2

have agreed to grant to the Borrower the rupee term loan facility in the aggregate principal amount of Rupees Five Thousand Five Hundred Sixty Nine Crores (Rs. 55,69,00,00,000) not exceeding the amounts mentioned against their names respectively in Part A of Schedule II hereto; and (ii) the Issuing Bank and some of the Rupee Lenders have agreed to issue letters of commitment for making payments towards Project Costs upon the terms and conditions as more particularly set out in this Agreement.

(B) This Agreement provides for, inter-alia, (i) certain common representations, warranties and covenants of the Borrower, (ii) certain uniform conditions of drawdown of the Facility and (iii) certain events of default and conditions precedent to the provision of the Facility to the Borrower.

NOW, THEREFORE, in consideration of the foregoing, and other good and valid consideration, the receipt and adequacy expressly acknowledged, the Parties hereby agree as follows:

1.	DEFINITIONS
	For the purposes of this Agreement, (i) capitalized terms, not otherwise defined in the body of this Agreement shall have the meanings set forth in Schedule I, and (ii) the principles for construction and interpretation of this Agreement shall be as set forth in Schedule I.
2.	ORDER OF PRIORITY
	In the case of any discrepancy between the provisions of this Agreement and those of the Intercreditor Agreement and the Trust and Retention Account Agreement, except as provided in Section 5.4.1.1 (ii) below, the provisions in the Intercreditor Agreement and the Trust and Retention Account Agreement shall prevail in order of priority of firstly the Intercreditor Agreement and secondly the Trust and Retention Account Agreement.

3

3.	THE FACILITY
3.1	The Facility

3.1.1	The Borrower agrees to borrow from the Rupee Lenders and the Rupee Lenders agree to lend and advance to the Borrower during the Availability Period a rupee amount up to a maximum of all their respective Commitments (the “Rupee Facility Amount”) as a rupee facility (the “Rupee Facility”). The Rupee Lenders and the Issuing Bank further agree that they shall participate in or issue Letters of Commitment under the terms of this Agreement to the maximum extent of their respective Earmarked Amounts/Commitment and on the terms and conditions contained in this Agreement (the “LOC Facility”).
	For the avoidance of doubt, Life Insurance Corporation of India shall have no obligation to participate in or issue any Letters of Commitment under this Agreement.
3.1.2	The Rupee Lenders agree and acknowledge that to part finance the Project Costs, the Borrower may, after achievement of Financial Close but before Project COD, borrow amounts by way of External Commercial Borrowings/ borrowings from export credit agency/foreign currency loans/domestic bonds, upto the extent of the Additional Loan Amount (the “Additional Loans”) in one or more tranches. Upon availing the Additional Loans, the Available Commitment shall be reduced to the extent of the amount of the Additional Loans. The Commitment and the Earmarked Amount of each Rupee Lender shall be reduced pro rata to effect any such reduction of the Available Commitment.
3.1.3	Any amount disbursed or a letter of commitment issued by: (i) IDBI Bank Limited to the Borrower under the facility agreement dated September 6, 2008 entered into by it with the Borrower (the “IDBI Interim Rupee Facility Agreement”), (ii) State Bank of India to the Borrower under the

4

interim rupee facility agreement dated January 3, 2009 entered into by it with the Borrower (the “SBI Interim Rupee Facility Agreement”), (iii) Punjab National Bank to the Borrower under the interim rupee facility agreement dated June 24, 2009 entered into by it with the Borrower (the “PNB Interim Rupee Facility Agreement”), and (iv) Jammu & Kashmir Bank Limited to the Borrower under the interim rupee facility agreement dated June 24, 2009 entered into by it with the Borrower (the “J&K Interim Rupee Facility Agreement”) (the IDBI Interim Rupee Facility Agreement, the SBI Interim Rupee Facility Agreement, the PNB Interim Rupee Facility Agreement and the J&K Interim Rupee Facility Agreement collectively referred to as the “Interim Rupee Facility Agreements”) shall, from the Initial Drawdown Date, be deemed to be a Drawdown made under this Agreement. All terms and conditions contained in the Financing Documents shall apply to such disbursement made or letters of commitment issued under the Interim Rupee Facility Agreements from the Initial Drawdown Date as if such Drawdown had been made under the Financing Documents. Provided that any disbursement or action or event occurring under the Interim Rupee Facility Agreements prior to the Initial Drawdown Date shall be governed by the provisions of the Interim Rupee Facility Agreements, including for the avoidance of doubt, satisfaction of conditions precedent with respect to any such disbursements made prior to the Initial Drawdown Date. For the avoidance of doubt, the amount of Commitment mentioned against the names of IDBI Bank Limited, State Bank of India, Punjab National Bank and Jammu & Kashmir Bank Limited in Schedule II include the amounts committed and/or disbursed and/or earmarked pursuant to issue of letters of commitment under the IDBI Interim Facility Agreement, the SBI Interim Rupee Facility Agreement, the PNB Interim Rupee Facility Agreement and the J&K Interim Rupee Facility Agreement, respectively.

4.	APPLICATION OF PROCEEDS
	The Borrower agrees that it shall apply the proceeds of each Drawdown in and

5

towards financing of the Project Costs in accordance with the terms of the Financing Documents.

5.	DISBURSEMENT MECHANISM
5.1	Certain Agreements
	The Lenders have agreed to provide the Facility to the Borrower subject to the terms and conditions set forth in this Agreement. The Commitments of the Lenders shall be as per Schedule II.
5.2	Availability
	Drawdowns under this Agreement shall be made only during the Availability Period. The Drawdowns shall be subject to the satisfaction (or waiver) of each condition precedent set forth in Section 7, provided, however, that the conditions set forth in Sections 7.1 and 7.2 of this Agreement shall be required to be satisfied (or waived) only in connection with the Initial Drawdown.
5.3	Mechanics for Requesting Drawdowns

5.3.1	The Borrower shall request Drawdowns under the Facility by delivering a Notice of Drawdown with respect to each such Drawdown substantially in the form attached hereto as Exhibit 2, to the Facility Agent with a copy to each Lender, no later than ten (10) Business Days prior to the Initial Drawdown Date or Drawdown Date referred to below.
5.3.2	Each Notice of Drawdown shall contain a certification by an Authorized Officer of the Borrower as to the following:

(i)	the amount of the Drawdown under the Facility (if any);
(ii)	the Initial Drawdown Date or the Drawdown Date for such Drawdowns, which shall be a Business Day and shall be the same

6

date for each Drawdown requested by such Notice of Drawdown;

(iii)	Outstanding Due Amounts under the Facility including the amount of each Drawdown requested on such Drawdown Date;
(iv)	that with respect to the Initial Drawdown, 30% of the Required Equity or with respect to any subsequent Drawdown, all proceeds of the equity then required to have been funded pursuant to the provisions of the Sponsor Support Agreement, shall have been (or, as of the date of the making of the applicable Drawdown, will be) contributed and applied to pay (or reimburse the Borrower) for Project Costs;
(v)	both before and after giving effect to such requested Drawdowns and taking into account the equity then required to have been funded concurrently therewith, the ratio of: (i) the sum of the principal amount outstanding of the Facility; over (ii) the sum of all paid up Equity is no greater than 75:25;
	For the purpose of calculating the ratio under this Section 5.3.2(v):

(a)	any Equity invested by or in the Borrower other than for the purposes of the Project or any equity/ shareholding of the Borrower in any Person shall be excluded, and
(b)	the calculation of Equity for the purposes of this Section 5.3.2(v) shall be done on an unconsolidated basis. By way of illustration, if Rs. 100 is invested into the Borrower by way of equity, of which Rs. 40 is used by the Borrower to subscribe to shares of its subsidiary, if permitted, only the remainder Rs. 60 shall be used for the purposes of

7

calculating Equity under this Section 5.3.2(v).

(vi)	that the proceeds of each Drawdown shall be applied to only such Project Costs as are permitted under this Agreement;
(vii)	each representation and warranty of the Borrower made in Section 6 hereof and in any of the Financing Documents shall be true, complete and correct in all respects, in each case, with the same force and effect as though each such representation and warranty were made in and as of the date of such Notice of Drawdown, except for any representation and warranty which expressly related to an earlier date and is not surviving; and
(viii)	no Potential Event of Default or Event of Default has occurred or is continuing.

5.3.3

The Notice of Drawdown shall include as attachments all certificates and documentation required thereby, provided, however, that those certificates and documentation required under Section 7.2 in connection with the Initial Drawdown shall not be required to be attached to any subsequent Notice of Drawdown delivered in connection with any subsequent Drawdown, unless this Agreement specifically contemplates otherwise pursuant to Section 7.3.

5.3.4

The Notice of Drawdown with respect to any Coal Investment JV Drawdown shall in addition to the requirements of this Section 5.3, also be accompanied by a certificate from the Authorized Officer of the Borrower certifying that some or all of the proceeds of such Drawdown, as the case may be, shall be utilized for the purpose of investment in Rampia Coal Mine and Energy Private Limited.

5.4 Mechanics for Funding Drawdowns

8

5.4.1 Procedure for Drawdowns

5.4.1.1	(i)	Promptly after each receipt of a Notice of Drawdown (and in any event no later than ten (10) Business Days prior to the Drawdown Date), the Facility Agent shall: (A) review such Notice of Drawdown and attachments thereto to determine whether all required documentation has been provided and whether all applicable conditions precedent pursuant to this Agreement under which such Drawdowns as requested have been satisfied; and (B) notify each of the Lenders of its determination. In making such determination, the Facility Agent shall, without any further enquiry or investigation, be entitled to assume that each condition precedent under this Agreement shall have been satisfied if no Unsatisfied CP Notice (as defined in subparagraph (iii) below) shall have been received by it with respect to such conditions prior to the time required therefor pursuant to such subparagraph (iii).
	(ii)	Subject to Section 5.2 and the other subparagraphs of this Section 5.4 and upon satisfaction or waiver of all applicable conditions precedent and any other applicable provisions hereunder under which such Drawdowns are requested, at such time as the Facility Agent has determined that all applicable conditions precedent set forth in Section 7 have been satisfied or waived by the Lenders, funding under the Facility may occur; provided, however, that there is nothing to the contrary contained in any Financing Document (it being understood that in the event of any conflict between this Agreement and any other Financing Document in respect of the matters set forth in this Section 5.4, this Agreement shall prevail).

9

(iii)	If in connection with any Drawdown, any Lender determines that any condition precedent under Section 7.2 or Section 7.3 has not been satisfied, such Lender shall notify the Borrower and the Facility Agent no later than five (5) Business Days prior to the Drawdown Date that the Drawdown may not be made and shall give the reasons therefor (any such notice, is hereinafter referred to as an “Unsatisfied CP Notice”). Any such notice received less than five (5) Business Days prior to the Drawdown Date shall not be effective as an Unsatisfied CP Notice.
(iv)	If the Facility Agent: (A) on or prior to the Drawdown Date determines that the conditions precedent to a Drawdown have not been satisfied; or (B) at least five (5) Business Days prior to the Drawdown Date receives an Unsatisfied CP Notice, then the Facility Agent shall notify the Borrower thereof in writing within one (1) Business Day of such determination or receipt, as the case may be. The notice from the Facility Agent shall specify the conditions precedent which have not been satisfied and/or attach a copy of the Unsatisfied CP Notice received by the Facility Agent with respect to such Drawdown. Upon such written notice from the Facility Agent, none of the Lenders shall have any obligation to make the Drawdown requested under the related Notice of Drawdown.
(v)	At such time, if ever, as: (A) the Facility Agent determines that the condition precedent to the Drawdown which had not been satisfied has been satisfied or waived in accordance with the Financing Documents; or (B) those Person(s) which gave an Unsatisfied CP Notice to the Facility Agent with respect to such Drawdown inform the Facility Agent in writing that the event giving rise to such

10

	Unsatisfied CP Notice no longer exists or has been waived, the Facility Agent shall notify the Borrower thereof. Provided that where the Borrower provides the Facility Agent and the Lenders satisfactory information as to the satisfaction of the condition precedent, which is the subject of such Unsatisfied CP Notice, the Unsatisfied CP Notice shall be deemed to be revoked if, within one (1) Business Day of receipt of such information from the Borrower, none of the Lenders issues a fresh Unsatisfied CP Notice.
	Upon the occurrence of any of the foregoing, such Unsatisfied CP Notice shall be deemed to be revoked and the Facility Agent shall promptly notify the Borrower and the Lenders thereof.
(vi)	The Facility Agent shall have no liability to any Person arising from any notice issued pursuant to this Section 5.4 as a result of an Unsatisfied CP Notice submitted by any Person, whether or not such Person was entitled to issue any such notice. No Lender or the Facility Agent shall have any liability to the Borrower or any Affiliate thereof or any other Lender arising from the issuance of an Unsatisfied CP Notice, if such Person shall have issued the Unsatisfied CP Notice in good faith.

5.4.1.2 If the Facility Agent has not received an Unsatisfied CP Notice pursuant to Section 5.4.1.1(iii) and is satisfied that the conditions precedent to a Drawdown have been satisfied, or at such time as the Facility Agent has issued a notice to the Borrower under Section 5.4.1.1(iv) and is otherwise satisfied that the conditions precedent to a Drawdown are satisfied or an Unsatisfied CP Notice is deemed revoked pursuant to Section 5.4.1.1(v) and the Facility Agent is satisfied that the conditions precedent have been fulfilled,

11

the Facility Agent shall issue a notice confirming the Drawdown, (hereinafter the “Lending Confirmation Notice”) substantially in the form attached hereto as Exhibit 3 to the Borrower no later than two (2) Business Days prior to the Drawdown Date to which the Notice of Drawdown relates or, in the event of the issuance by the Facility Agent of any notice pursuant to Section 5.4.1.1(iv) above, promptly upon the issuance of the related notice under Section 5.4.1.1(v), approving such requested Drawdown.

5.4.1.3	(i)	On the proposed Drawdown Date following the issue of a Lending Confirmation Notice, each of the Lenders, shall, on the Drawdown Date make the proceeds of the Drawdown available to the Borrower in immediately available funds, in Rupees by depositing such proceeds into the Construction Account under the Trust and Retention Account Agreement.
	(ii)	Subject to the proviso below and Section 5.9, in respect of any Drawdown requested by the Borrower, the Lenders shall make available disbursements in the same proportion as their respective amounts of Commitment (or respective Earmarked Amounts in case of issue of a Letter of Commitment) bears to the aggregate of all the Commitments (or aggregate Earmarked Amounts in case of issue of a Letter of Commitment) as more particularly set out in Section 5.9.
		Provided that the issue of Letter of Commitment by the Issuing Bank or by any Rupee Lender shall be deemed to be a Drawdown for a Rupee Lender of an amount equivalent to: (a) where the Letter of Commitment is issued by the Issuing Bank, the Participating Interest of each Rupee Lender participating in such Letter of Commitment

12

on the Drawdown Date; or (b) where the Letter of Commitment is issued by any individual Rupee Lender, the face value of such Letter of Commitment.

5.4.1.4 Subject to the foregoing provisions of this Section 5.4.1, so long as no Drawstop Notice is in effect, the failure of any Lender to make available a Drawdown shall not relieve any other Lender of its obligation hereunder (provided no Event of Default or Potential Event of Default has occurred) to make any requested Drawdown under its Commitment but no Lender shall be responsible for the failure of any other such Person to make available any Drawdown or any portion thereof.

5.4.2 Drawstop Notices

5.4.2.1

In addition to the ability to issue an Unsatisfied CP Notice pursuant to Section 5.4.1.1(iii) and notwithstanding the issuance of any Lending Confirmation Notice by the Facility Agent pursuant to Section 5.4.1.2 in connection with any Drawdown any Lender may, on the occurrence of an Event of Default or a Potential Event of Default issue a notice (a “Drawstop Notice”) to the Borrower with a copy to each of the other Lenders, the Security Trustee, and the Account Bank, notifying the Borrower that no Drawdowns shall be made under any Notice of Drawdown.

5.4.2.2

A Drawstop Notice issued pursuant to Section 5.4.2 shall remain in full force and effect until, as the case may be till:

(i) the Potential Event of Default or Event of Default which led to the issuance of such Drawstop Notice has been remedied by the Borrower or waived by the Lenders;

13

(ii) the Lender which issued such Drawstop Notice revokes such Drawstop Notice by sending notice of such revocation to the Facility Agent, other Lenders, the Security Trustee and the Account Bank (which notice shall specify in reasonable detail the basis for such revocation and shall have attached thereto copies of relevant documentation supporting such revocation).

Upon the occurrence of any of the foregoing, such Drawstop Notice shall be deemed to be revoked and the Facility Agent shall promptly notify the Borrower and the Lenders, thereof, whereupon the applicable Lender(s) shall make the requested Drawdowns as soon as practicable thereafter (and in any event no later than five (5) Business Days thereafter).

5.5	No Approval of Work
	The making of any Drawdown or the issuance of a Lending Confirmation Notice shall not be deemed an approval or acceptance by any Lenders or the Facility Agent of any work, labour, supplies, materials or equipment furnished or supplied with respect to the Project.
5.6	Availability Period
	Advances: (a) under the Facility; and (b) subject to Section 12.1.4, under the Unutilized Earmarked Amounts, will be made to the Borrower in compliance with the terms of this Section 5 hereunder and upon request by the Borrower upon issuance of a valid Notice of Drawdown at any time during the Availability Period subject to the terms of this Agreement and the other Financing Documents.
5.7	Notice of Drawdown Irrevocable
	Each Notice of Drawdown is irrevocable and shall commit the Borrower to

14

	borrow in accordance with such notice.
5.8	Reliance on Notices of Borrowing
	The Facility Agent and the Lenders shall be entitled (but not obliged) to rely and act upon any Notice of Drawdown and any documentation or information in connection with a Notice of Drawdown, which appears on its face to have been duly completed notwithstanding that the Notice of Drawdown, documentation or information proves to be not genuine, not properly signed or otherwise incorrect in any respect.
5.9	Proportion of Advances
	The contribution of the Rupee Lenders towards each Drawdown under the Facility shall be pro rata to the extent of their respective Commitments. The Facility Agent shall, with respect to each Drawdown requested by the Borrower determine and communicate to each Lender, the share of each Lender in such Drawdown request, after taking into account Drawdown previously made by each Lender under the terms of the Financing Documents so as to ensure that the contribution of each Lender towards each Drawdown is pro rata to the extent of their respective Commitments. For the avoidance of doubt:

(i) the amounts disbursed or Letters of Commitment issued by IDBI Bank Limited, Punjab National Bank, State Bank of India and Jammu & Kashmir Bank Limited under the Interim Rupee Facility Agreements shall be taken into account while making such calculations and IDBI Bank Limited, Punjab National Bank, State Bank of India and Jammu & Kashmir Bank Limited shall not have any obligation to make any Drawdown until the other Rupee Lenders have made Drawdowns such that proportion of Drawdowns made by each of State Bank of India, IDBI Bank Limited, Punjab National Bank and Jammu & Kashmir Bank Limited to their respective Commitments is the same as the proportion of Drawdowns made by the Rupee Lenders (other than State Bank of India,

15

IDBI Bank Limited, Punjab National Bank and Jammu & Kashmir Bank Limited) to their respective Commitments. Proceeds of Drawdown shall be deposited in the Construction Account as provided for in the Trust and Retention Account Agreement. For the avoidance of doubt, proceeds of any Drawdowns shall not be utilised to repay any portion of the amounts owed by the Borrower to IDBI Bank Limited, Punjab National Bank, State Bank of India and Jammu & Kashmir Bank Limited under their respective Interim Rupee Facility Agreement.

(ii) where Drawdowns have been made or participated in by any of the Rupee Lenders by way of participating in or issuing Letters of Commitment (such Rupee Lenders hereinafter referred to as the “Participating Rupee Lenders”), no Disbursement shall be made by any of the Participating Rupee Lenders until such time, as the ratio of all Disbursements made by all the other Rupee Lenders to their respective Commitments is the same as the ratio of all Drawdowns made by the Participating Rupee Lenders to their respective Commitments.

5.10	Individual Letters of Commitment
	Notwithstanding anything contained in Section 5.3.1, if the Borrower requests for a Drawdown by way of issue of an individual Letter of Commitment in accordance with Section 12.1A hereof, the Notice of Drawdown shall only be delivered to the Facility Agent and the relevant Rupee Lender, and the procedure set forth in Section 5.4 shall only be applicable with respect to the Facility Agent and the relevant Rupee Lender.
6.	REPRESENTATIONS AND WARRANTIES
	In order to induce each Secured Party and the Facility Agent to enter into the Financing Documents and to disburse the Facility in terms thereof, the Borrower makes the following representations and warranties as of the date hereof and as of the Initial Drawdown Date and the date of each subsequent Drawdown and the

16

date of each drawing under a Letter of Commitment, and on each Interest Payment Date and each LOC Commission Payment Date and each Repayment Date other than those made as of a particular date, which representations and warranties shall survive the execution and delivery of this Agreement and the making of the Drawdowns under the Financing Documents and drawing under the Letter(s) of Commitment till the Final Settlement Date.

6.1 Corporate Organisation and Authorisations

(i)	The Borrower: (i) is a duly organised and validly existing company under the laws of India; and (ii) has the power and authority to execute and deliver the Transaction Documents and obtain ownership rights and/or leasehold rights in its property and assets and perform its obligations under the Transaction Documents, to transact the business in which it is engaged or proposes to be engaged and to do all things necessary or appropriate in respect of the Project and to consummate the transactions contemplated by the Transaction Documents to which it is a Party.
(ii)	Such of the acts, conditions and things required to be done, fulfilled or performed, and all authorisations as required or essential, as on the date when this representation and warranty is made, for the purpose of the Project or for the entry and delivery of the Transaction Documents entered into or for the performance of the Borrower’s obligations in terms of and under the Transaction Documents have been done, fulfilled, obtained, effected and performed and are in full force and effect and no such authorisation has been, or is threatened (as evidenced by a notice or receipt of communication in writing) to be, revoked or cancelled.
(iii)	The Borrower has, wherever necessary, obtained import licences with list of equipment and/or necessary authorisations about eligibility, scope and validity of imports under open general licence for equipment to be imported for the Project.

17

6.2

No Contravention

Neither the execution and delivery by the Borrower of the Transaction Documents to which it is a party, nor the Borrower’s compliance with or performance of the terms and provisions hereof or thereof, nor the use of the proceeds under each of the Drawdowns as contemplated by the Financing Documents: (i) will contravene any provision of any Applicable Law or any order, writ, injunction or decree of any court or Governmental Authority binding on the Borrower; (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a Potential Event of Default or Event of Default under, or result in the creation or imposition of (or the obligation to create or impose) any Security Interest (except any Permitted Security Interest) upon any of the property or assets of the Borrower pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, any facility agreement, or any other agreement, contract or instrument to which the Borrower is a party or by which it or any of its property or assets is bound or to which it may be subject; or (iii) will violate any provision of the Memorandum and Articles of Association of the Borrower.

6.3 Filings and Payments

(i)

The Borrower certifies that all registrations, recordings, filings and notarisations of any Transaction Document and all payments of any tax or duty, including without limitation stamp duty, registration charges or similar amounts which are required to be effected or made by the Borrower which is necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Transaction Documents have been made.

(ii)

The Borrower has filed all tax returns and paid, except those Contested in Good Faith, all Taxes and fees, including in relation to stamp duties and registration fees due and payable.

18

6.4 Events of Default, Legal Proceedings, Material Adverse Effect

(i)	The Borrower confirms that there has not occurred any material amendment to or modification of, any Transaction Document that is executed as on the date this representation and warranty is made, without the prior written consent of the Secured Parties.
(ii)	The Borrower confirms that there has not been initiated nor is there pending nor are there any threatened (as evidenced by a notice or receipt of communication in writing) Legal Proceedings, relating to the Project, the Borrower, the Sponsor or their assets, or any Major Project Party having or likely to have a Material Adverse Effect.
(iii)	The Borrower confirms that no Event of Default or Potential Event of Default has occurred or is subsisting under any Transaction Document.
(iv)	The Borrower confirms that none of its Directors or promoters is on the caution list/specific approval list of the Export Credit Guarantee Corporation of India Limited (ECGC) or the Reserve Bank of India’s defaulter list/caution list or the defaulters list under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) or is the defaulter of any of the Lenders and that no Director is disqualified under Section 274 of the Companies Act.

6.5

Consents

The Borrower confirms that, other than Clearances which have already been obtained with respect to the Borrower and all other Material Project Participants, no Clearance or validation of, or filing, recording or registration with, or exemption or waiver by, any Governmental Authority, is required to authorise, or is required in connection with: (i) the execution, delivery and performance of the Transaction Documents to which they are party; (ii) the legality, validity, binding effect or enforceability hereof or thereof; or (iii) the ownership, construction or

19

operation of the Project as contemplated by the Project Documents. The Borrower further confirms that no notice has been received and the Borrower is not aware of any reason to believe that any authorisation/ Clearance which is necessary or required to be obtained in relation to the Project will not be granted or obtained.

6.6 Compliance with Laws

(i)	The Borrower, Sponsor and all other Major Project Parties are in compliance in all respects with all Applicable Law, governmental authorisations for the development, construction, ownership and operation of the Project.
(ii)	The Borrower certifies that the Project is being carried out in compliance with all Applicable Law.
(iii)	Neither the Project Site nor the Plant (nor any other property with respect to which the Borrower has retained or assumed liability either contractually or by operation of law) has been affected by any hazardous material in a manner which does or is reasonably likely to give rise to any liability of the Borrower under any Applicable Law nor is there disposal of any hazardous material by the Borrower outside the Project Site.

6.7 Good Title

(i)

The Borrower has ownership rights/leasehold rights and title to the immovable property, and owns the movable property, assets and revenues of the Borrower on which it grants or purports to grant Security Interest(s) pursuant to the Security Documents, in each case free and clear of any encumbrance other than any Permitted Security Interest, and further confirms that the Security Interest(s) created or expressed to be created by the Security Documents is valid and enforceable.

(ii)

The Borrower is lawfully possessed of the ownership, use and other

20

interests or rights (including leasehold rights), with respect to the Project Site and on which it purports to grant Security Interest including any special purpose facilities on the Project Site, free of all Security Interests (other than Permitted Security Interest) and confirms that the Project Site is suitable for the location, construction and operation of the Project.

(iii) There are no encumbrances subsisting or in existence on any of the Borrower’s assets other than any Permitted Security Interest.

6.8

No Subsidiaries or Equity Interest

Other than as may have been permitted by the Facility Agent, and other than Talwandi Sabo Power Limited, the Borrower has no other subsidiaries and owns no equity interest in any Person other than Talwandi Sabo Power Limited to the extent of Fifty Thousand (50,000) shares having a par value of Rs. 10 (Rupees Ten) per share and Rampia Coal Mine and Energy Private Limited to the extent of 5,217,432 shares having a par value of Re. 1 (Rupee One) per share.

6.9

Sufficient Funds

Undisbursed monies in the Accounts, together with the aggregate of: (i) amounts that are committed but undrawn under the Financing Documents; (ii) Loss Proceeds received by and available to the Borrower; (iii) liquidated damages and other amounts that have crystallised pursuant to the Project Documents; and (iv) without duplication, amounts available under the Sponsor Support Agreement, equal or exceed the amount necessary to pay all Project Costs which have been or may be incurred in connection with the completion of the Project and achievement of Final Completion, including all working capital needs of the Borrower in connection with start-up activities and all interest, LOC Commission, fees and other amounts to be paid under the Financing Documents.

21

6.10

Utility Services

All utility services necessary for the construction, operation and maintenance of the Project, including but not limited to storm and sanitary sewer, electricity and telephone services and facilities, as are necessary for the Project, are, or will be when needed to be, available to the Project and, to the extent necessary, arrangements in respect thereof have been made on commercially reasonable terms.

6.11 Security

(i)	The Borrower certifies that all Security Documents when executed, delivered and registered (where necessary or desirable) and when appropriate forms are filed as required under Applicable Law, shall create and perfect legal, valid and enforceable Security (including performance of all registrations and filings as may be required and obtaining of all consents required therefor) over the assets referred therein including without limitation a legal, valid and enforceable security assignment of all Project Documents, and all other necessary and appropriate action has been taken so that each such Security Document creates an effective Security Interest on all right, title, estate and interest of the Borrower in the property, assets and revenues of the Borrower covered thereby.
(ii)	Each of the Secured Parties shall have a first ranking charge over all the assets referred to in the Security Documents.
(iii)	The Borrower has not created any Security Interest upon any of its present or future revenues or other assets in favour of any Person other than the Secured Parties nor does it have any obligation to create any Security Interest other than Permitted Security Interest.
(iv)	The Borrower confirms that the Security Interests to be created pursuant to this Agreement or under any Financing Document or at any time created

22

in favour of or for the benefit of the Lenders shall be and remain a continuing security to secure the Lenders and accordingly shall:

a.	secure the Borrower’s dues under the Financing Documents;
b.	not be discharged by any intermediate payment by the Borrower or any settlement of accounts between the Borrower and the Lenders or the Security Trustee;
c.	be in addition to and not in substitution for or derogation of any other security which the Lenders or the Security Trustee may at any time hold in respect of the Borrower’s dues/obligations under the Financing Documents; and
d.	be a security for all amounts due and payable by the Borrower for all the sums due by the Borrower to the Lenders and its trustees or agents, whether under the Financing Documents or otherwise.

(v) The Security created and indemnities and undertakings given herein and/or by the Security Documents executed in favour of, or for the benefit of the Lenders to secure the Facility shall operate as continuing security and/or indemnities and/or undertakings for all monies, indebtedness and liabilities of the Borrower with respect to the Facility and will operate as security and/or indemnities and/or undertaking for the ultimate balance or aggregate balance with interest thereon and costs, charges and expenses, if any, to become payable upon the account(s) to be opened and the said account(s) is/are not closed and is/are not to be considered to be closed for the purpose of such security and/or indemnity and/or undertaking and the security and/or indemnity and/or undertaking is not to be considered exhausted merely by reason of the said account(s) being closed and fresh accounts being opened in respect of any fresh financial assistance being granted within the overall limit sanctioned to the Borrower or either or any

23

of them being brought to credit at any time or from time to time or any partial payments made thereto or any fluctuations of such account(s) and if the whole of the Lender’s dues shall be repaid and the whole of the security be withdrawn the account(s) or either or any of them may nevertheless at any time before such account(s) has or have been closed, be continued under this Agreement upon the security as aforesaid being again furnished.

6.12 Insurance

(i)

The Borrower certifies that all its assets over which a Security Interest has been created in favour of the Lenders have been insured and the Insurance Contracts have been duly endorsed to the Lenders/Security Trustee as loss payees or beneficiaries.

(ii)

The Borrower confirms that all insurance as per the Insurance Contracts have been put in place at the times and in the manner required herein and are as contemplated herein and are in full force and effect and it has complied with all its obligations under the Insurance Contracts and no event or circumstances has occurred nor has there been any omission to disclose a fact which in any such case would entitle any insurer to avoid or otherwise reduce its liability thereunder to less than the amount provided in the relevant policy and insurance coverage provided by such insurance.

6.13

Intellectual Property

The Borrower has lawful and valid right to use free and clear of any pending or threatened Security Interest, all patents, patent applications, trademarks, permits, service marks, trade names, trade secrets, proprietary information and knowledge, technology, computer programs, databases, copyrights, licenses, franchises and formulas, or rights (collectively the “Intellectual Property Rights”) with respect thereto necessary for implementation of the Project. The Borrower confirms that all actions (including registration, payment of all registration and renewal fees)

24

required to maintain the same in full force and effect have been taken as and when required. Further, none of the Intellectual Property Rights owned or enjoyed by the Borrower, or which the Borrower is licensed to use, which are material in the context of the Borrower’s business and operations are being infringed nor, so far as the Borrower is aware, is there any infringement or threatened (as evidenced by a notice or receipt of communication in writing) infringement of those Intellectual Property Rights licensed or provided to the Borrower by any Person.

6.14	Project Schedule
	The Project Schedule accurately specifies the work that the counterparties to the Project Documents (for the Scope of Work), propose to complete in each quarter from the Initial Drawdown Date till Final Completion, all of which can be expected to be achieved for the timely construction of the Project in the manner contemplated by the Transaction Documents.

6.15 No Immunity

(a)	The execution or entering into by the Borrower and the Sponsor of the Financing Documents constitute, and its exercise of its rights and performance of its obligations under the Financing Documents will constitute, private and commercial acts done and performed for private and commercial purposes.
(b)	Each of the Borrower and the Sponsor is not, will not be entitled to, and will not claim any immunity whatsoever for itself or any of its properties, assets, revenues or rights to receive income from any contract, suit, or from the jurisdiction of any court, from execution of a judgment suit, execution, attachment or other legal process in any proceedings in relation to the Transaction Documents.

6.16 All Representations and Warranties

25

The Borrower confirms that all representations and warranties of the Borrower set forth in the Project Documents are true, complete and correct in all respects at the time as of which such representations and warranties were made or deemed made.

6.17 Capitalisation

(i)

On the date of this Agreement, (i) the authorized capital of the Borrower consists of 3,500,000,000 equity shares of par value Rs. 10 per share and 1,000,000,000 redeemable cumulative convertible preference shares of Rs.10 each; (ii) 1,186,493,500 equity shares and 803,230 redeemable cumulative convertible preferable shares of Rs. 10 each carrying a coupon rate of two per cent (2%) have been issued by the Borrower; and (iii) 1,186,493,440 of such issued equity shares (representing 99.9% of the equity shares issued by the Borrower) is owned by the Sponsor. All of the equity share capital of the Borrower, including the Equity Interest of the Sponsor is duly and validly issued and fully paid.

(ii)

The Borrower does not have outstanding: (i) as of the date hereof and as of the Initial Drawdown Date, any subordinated indebtedness, (ii) any securities convertible into or exchangeable for its Equity Interests except for the Twinstar Preference Shares or (iii) other than as set forth in the Sponsor Support Agreement, any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements, arrangements or understandings providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its Equity Interests.

6.18 Transaction Documents

6.18.1 (i) The Borrower has, or by the Initial Drawdown Date will have, duly executed and delivered each of the Transaction Documents to which it is a party other than those Transaction Documents for the execution of which different time periods have been provided for

26

in this Agreement, and each of such Transaction Documents constitutes or, when executed and delivered, will constitute, its legal, valid and binding obligation enforceable without any further action being required with respect to such documents on the part of the Secured Parties or the Facility Agent.

(ii) The Facility Agent has received a true, complete and correct copy of each of the Transaction Documents in effect or required to be in effect as of the date this representation is made or deemed made (including all exhibits, schedules, side letters and disclosure letters referred to therein or delivered pursuant thereto, if any).

6.18.2 The services to be performed, the materials to be supplied and the easements, licenses and other rights granted or to be granted to the Borrower pursuant to the terms of the executed Transaction Documents provide or will provide the Borrower with all rights and property interests required to enable the Borrower to obtain all services, materials or rights (including access) required for the design, construction, start-up, operation and maintenance of the Project, including the Borrower’s full and prompt performance of its obligations, and full and timely satisfaction of all conditions precedent to the performance by others of their obligations, under the Project Documents, other than those services, materials or rights that reasonably can be expected to be obtained in the ordinary course of business without material additional expenses or material delay.

6.18.3 All conditions precedent to the obligations of the respective parties under all executed Project Documents have been satisfied as of the date of this Agreement or will be satisfied when required or, with the written consent of the Facility Agent, waived, except where the effectiveness of this Agreement is the only condition remaining unperformed for the effectiveness of such Project Document.

27

6.19 True and Complete Disclosure

6.19.1

The Borrower certifies that the Financial Statements of the Borrower delivered to the Facility Agent are accurate in all respects as of the date of such statements.

6.19.2

The Borrower certifies that all information whether in writing, electronic form or otherwise or documents furnished to the Secured Parties or the Facility Agent or any representatives of the Secured Parties or the Facility Agent in connection with the transaction contemplated hereby, by or on behalf of the Borrower is true, correct and complete in all respects on the date hereof, and is not false or misleading in any respect nor incomplete by omitting to state any fact necessary to make such information not misleading in any respect. No fact is known to the Borrower which could be expected to have a Material Adverse Effect which has not been disclosed in writing to the Facility Agent and the Secured Parties prior to the execution of this Agreement.

6.20	Purpose of the Company
	The Borrower is not engaged in any business or trade nor has incurred any liabilities other than in connection with its participation in the transactions contemplated by the Transaction Documents and other than holding the shares of Talwandi Sabo Power Limited and Rampia Coal Mine and Energy Private Limited.

6.21	Expenses prior to Financial Close
	The Borrower agrees that all preliminary, preoperative and development expenses incurred by the Borrower prior to Financial Close shall be accounted as part of Project Cost only to the extent certified by the Lenders Engineer/ Auditor or any other person required by the Lenders and as accepted by the Lenders.

28

6.22 Fees and Enforcement

6.22.1	Except for fees and Taxes that have been paid in full or will have been paid in full on or by the date when such fees and Taxes are due, or any fees and Taxes Contested in Good Faith, no fees or Taxes are required to be paid for the legality, validity or enforceability of the Transaction Documents.
6.22.2	This Agreement and each of such Transaction Documents executed and delivered as of the date this representation is made or deemed made are each in proper legal form: (i) under Applicable Law; and (ii) for the enforcement thereof in the applicable jurisdiction without any further action on the part of the Facility Agent or any Secured Party.

6.23 Budgets and other Items

6.23.1

The Construction Budget accurately specifies all costs and expenses previously incurred and the Borrower’s best estimate of all costs and expenses anticipated to be incurred in order to achieve Final Completion in accordance with the timetable set out in the Project Schedule, all as confirmed by the Lenders Engineer.

6.23.2

All projections and budgets, including the projections of revenues and expenses contained in the initial Operating Budget, the Base Case and the Project Schedule furnished or to be furnished to the Lenders or the Facility Agent by the Borrower and the summaries of significant assumptions related thereto: (i) have been and will be prepared with due care; (ii) will present, in all respects, the Borrower’s expectations as to the matters covered thereby as of such date; (iii) are based on, and will be based on all factual matters in respect of the estimates therein (including dispatch levels, interest rates and costs); (iv) are and will be in all respects consistent with the provisions of the Transaction Documents and Applicable Law; and (v) are prepared on a basis consistent with the

29

Financial Statements referred to in this Agreement. There are no statements, assumptions or conclusions in any of the projections or budgets which are based upon or include information known to the Borrower to be misleading or which fail to take into account information regarding the matters reported therein.

6.24	Transactions with Affiliates
	The Borrower is not a party to any contracts or agreements with, nor has any other commitments to any of its Affiliates other than:

(i)	contracts or agreements which have been entered into on an arm’s length basis; or
(ii)	contracts or agreements that are permitted to be entered into with Affiliates under this Agreement; or
(iii)	as may have been permitted by the Facility Agent, and a copy of which contract or agreement has been provided to the Facility Agent.

6.25	No Other Powers of Attorney
	The Borrower has not executed and delivered any powers of attorney or similar documents, instruments or agreements, or made arrangements except for those issued under the Security Documents and the powers authorizing modification, amendments or signatures of the Transaction Documents, other than in the ordinary course of business.

6.26	Investments
	Other than: (i) Permitted Investments; (ii) any investments permitted by the Facility Agent; and (iii) the equity interests held by the Borrower in Talwandi Sabo Power Limited to the extent of Rs. 5,00,000 (Rupees Five Lakhs) and Rampia Coal Mine and Energy Private Limited to the extent of Rs. 52,17,432

30

(Rupees Fifty Two Lakhs Seventeen Thousand Four Hundred and Thirty Two), the Borrower has not acquired an equity interest in, loaned money, extended credit or made deposits with or advances (other than deposits or advances in relation to the payment for goods and equipment the making of which is expressly contemplated pursuant to the Project Documents) to any Person or purchased or acquired any stock, obligations or securities of, or any other interest in, or made any capital contribution to, or acquired all or substantially all of the assets of, any other Person, or purchased or otherwise acquired (in one or a series or related transactions) any part of the property or assets of any Person (other than purchases or other acquisitions of inventory of materials or capital expenditures, each in accordance with the Construction Budget or the applicable Operating Budget, as the case may be).

6.27	Accounts
	The most recent Audited Annual Financial Statements of the Borrower delivered to the Facility Agent/Lenders:

(i)	have been prepared in accordance with accounting principles and practices generally accepted in India, consistently applied; and
(ii)	represent a true and fair view of its financial condition as at the date to which they were drawn up,

and there has been no Material Adverse Effect since the date on which those accounts were drawn up.

7. CONDITIONS PRECEDENT

7.1	Conditions Precedent to Commitment
	The obligation of the Lenders to make available the Facility pursuant to this Agreement shall become effective only upon the Borrower fulfilling to the

31

satisfaction of the Lenders (unless any waiver is granted by the Lenders) all of the following conditions:

(a) Corporate Authorisations and Clearances

(i)	The Borrower shall have agreed to amend its Memorandum and Articles of Association, for inter alia enhancing the authorized capital and borrowing power of the Borrower as required under the Financing Plan, and appointment of nominee directors as required under this Agreement, and making such other changes as may be required by the Lenders.
(ii)	The Lenders shall have received all corporate documents, incumbency certificates and resolutions in each case certified by the appropriate officers of such Person which shall include, but not be limited to:

(A)	up-to-date certified true copies of the constitutional documents and certificate of incorporation and commencement of business of the Borrower and the Sponsor including any amendments required as per the provisions of the Financing Documents;
(B)	certified true copy of resolutions of the Board of Directors of each of the Borrower or Sponsor, as the case may be:

(i)	approving the terms and execution of, and the transactions contemplated by the Financing Documents to which it is a party;
(ii)	authorizing, the affixation of the common seal on the Financing Documents, and/or a director or directors or other authorized executives to execute

32

the Financing Documents to which it is a party;

(iii)	authorizing a Person or Persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under or in connection with the Financing Documents to which it is a party; and
(iv)	specimen signatures of each such Person authorized by the resolutions referred to in sub-sections (B)(ii) and (B)(iii) above.

(C)	recent certified Audited Annual Financial Statements;
(D)	certified copy of the resolution of the shareholders of the Borrower under Section 293(1)(a) and Section 293 (1)(d) of the Companies Act authorising borrowing of the Facility and the Foreign Currency Facility and creation of Security and approving such Borrower’s participation and undertaking of obligations in the Project;
(E)	a certificate of the Auditors of the Borrower confirming that the borrowing or the availing of the Facility under the Agreement would not cause any borrowing limit binding on the Borrower to be exceeded;
(F)	a certificate from the company secretary/Director of the Borrower certifying that the Borrower and its Directors have the necessary powers under the constitutional documents of the Borrower to borrow or avail the Facility and enter into the Financing Documents and that the borrowing or availing of the Facility would not cause any borrowing limit binding on the Borrower to be exceeded;

33

(G)	certified copy of the resolution of the shareholders of the Sponsor under Section 372A of the Companies Act authorising the Sponsors’ participation and undertaking of obligations in the Project or a certificate from a director of the Sponsor certifying the non-applicability of the same;
(H)	all other corporate authorizations/resolutions as may be required under the Applicable Law and for the purposes of the Project Documents; and
(I)	all Clearances and all necessary third party consents, waivers and other approvals, required for the Project and for the execution, delivery, and enforcement of the Transaction Documents except for the following:

(i)	Clearances required for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person, which shall be required to be obtained on or before June 30, 2009;
(ii)	Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India, which shall be required to be obtained on or before June 30, 2009; and
(iii)	environmental Clearances from the Government of Orissa/other statutory bodies with respect to any Unit, which shall be required to be obtained on or before a date which is six (6) months prior to the Date of Commercial Operation of such Unit,

34

provided that with respect to the first Unit, such environmental Clearances (other than those specified in sub-sections (i) and (ii) above) shall be obtained on or before a date which is three (3) months prior to the Date of Commercial Operations of the first Unit.

(b) Appointments

(i)

Lenders Engineer and Lenders Insurance Consultant

The Borrower shall have appointed or agreed to appoint the Lenders Engineer and Lenders Insurance Consultant (hereinafter referred to as “Lenders Consultants”) in consultation with the Facility Agent to undertake the roles described in the Lenders Engineer Appointment Letter (including but not limited to review of Project Costs, including reasonability of contract prices, and Project Documents, review of technical configuration of the Plant, conducting pre-construction due diligence monitoring the construction and performance tests and monitor the operations of the Project and submitting reports to the Facility Agent every financial quarter, or such other intervals as the Lenders may require) and the Insurance Consultancy Appointment Letter (including to review and finalise the Insurance Contracts), respectively and shall have undertaken to pay or arrange or shall have paid or arranged the payment of all fees, expenses and other charges payable to the Lenders Consultants. The Borrower shall have agreed and undertaken to provide all information and other assistance required by the Lenders Consultant for the discharge of their services and to carry out all such changes/alterations as may be recommended by them.

(ii) Lenders Counsel

35

The Borrower shall have appointed the Lenders Counsel to inter alia assist the Lenders in reviewing and finalizing the Transaction Documents and shall have undertaken to pay or arrange the payment of all fees, expenses and other charges payable to the Lenders Counsel. The Borrower shall have agreed and undertaken to provide all information and other assistance required by the Lenders Counsel for the discharge of its services and to carry out all such changes/alterations as may be recommended by it.

(iii)	Auditors
	The Borrower shall have appointed the Auditors to the satisfaction of the Lenders. The Auditors shall have certified all expenses incurred by the Borrower prior to the Initial Drawdown Date.

(iv)	Other Consultants
	Any other consultant/advisor as may be required by the Lenders/Facility Agent shall have been appointed, and the Borrower shall have agreed to bear all expenses, fees and costs in relation to such appointment.

(c) The Borrower shall have caused the Sponsor to execute the Sponsor Support Agreement in form and substance satisfactory to the Facility Agent, wherein the Sponsor shall have undertaken to, inter alia, do the following:

(i) contribute such additional funds as may be required to meet the shortfall, if any, in the Required Equity of the Borrower;

(ii) in the event of any Cost Overrun, contribute the amounts by which the Project Costs exceed the Estimated Project Costs without recourse to the Project assets;

36

(iii)	meet the export obligations (from its operations) as required under the available export promotion capital good scheme (“EPCG Scheme”) based upon the duty benefit made available to the Borrower by way of concessional duty payable for import of plant and machinery and equipments or any benefit of deemed exports on domestic acquisition, if any under EPCG Scheme for the Project and agree that any increase in Project Costs due to non-availability of such import duty/deemed export benefits under the EPCG Scheme, shall be met by the Sponsor from its own resources to the satisfaction of the Lenders;
(iv)	ensure that the Borrower shall raise the necessary funds for refinancing of the Rupee Bullet Repayment Amount;
(v)	provide the Borrower with all funds required by the Borrower for the development of the Coal Blocks under the Mining JV Agreement;
(vi)	in the event of failure by the Borrower to:

(a)	enter into transmission arrangements satisfactory to the Lenders for evacuation of power generated from the Project at least six (6) months prior to the Date of Commercial Operation of each Unit;
(b)	make suitable arrangements for adequate supply and transportation of coal by entering into the Fuel Supply Agreements and Coal Transportation Agreements at least six (6) months prior to the Date of Commercial Operation of each Unit other than the first Unit, for which the Fuel Supply Agreements and the Coal Transportation Agreement need to be in place prior to the Initial Drawdown Date;

37

(c)	enter into such PPAs so as to achieve a minimum DSCR of 1.1, in the manner contemplated in the Financing Documents, at least six (6) months prior to Project COD;
(d)	make necessary arrangements and obtain necessary Clearances for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, on or before June 30, 2009; and
(e)	obtain Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India, on or before June 30, 2009,

the Sponsor shall make available funds to the Borrower, in a manner satisfactory to the Lenders, to enable the Borrower to so discharge its Obligations; and

(d)

The Borrower shall have finalized to the satisfaction of the Facility Agent the Insurance Contracts as provided in Section 8.19 and shall have provided to the Facility Agent a certificate or other acceptable evidence and such certificate or other evidence shall accurately describe the insurance already obtained by the Borrower and shall also certify that all such insurance is in full force and effect and conforms in all respects to the insurance required to be obtained on or before the date of this Agreement.

(e)

Accounts

(i) The Borrower shall have provided sufficient evidence of having established, in the manner satisfactory to the Facility Agent, each of the Accounts, including the Debt Service Reserve Account, in the manner contemplated in the Trust and Retention Account Agreement and this Agreement.

38

(ii)	The Borrower shall deposit all the cash inflows of the Project in the Account as specified in the Trust and Retention Account Agreement and ensure that the reserves required to be maintained in accordance with the Trust and Retention Account Agreement are maintained.
(iii)	The Borrower shall utilise the Project Proceeds in a manner and priority as agreed to in the Trust and Retention Account Agreement.

7.2

Conditions Precedent to Initial Drawdown

Drawdowns under this Agreement shall be subject to the fulfilment (or waiver in accordance with Section 7.4) prior to or on the Drawdown Date for such Drawdown, in a manner satisfactory to the Facility Agent, of all the conditions set forth below and such satisfaction is to be recorded in writing, and the acceptance of the benefits of each Drawdown shall constitute a representation and warranty by the Borrower to each of the Lenders that all the conditions specified in this Section 7.2 have been satisfied or waived by such of the Lenders as of that time:

(a) Transaction Documents

(i) Other than the Transaction Documents expressly permitted to be executed at a different time under Section 8.6.2, each of the Transaction Documents shall have been executed by the respective parties thereto and shall have become (or, as the case may be, shall remain) effective and enforceable in accordance with their respective terms and copies thereof shall have been delivered to the Facility Agent together with a certificate of the Borrower to the effect that each of such Transaction Document as are required to be executed on the Initial Drawdown Date are true, correct and complete in all respects, and in full force and effect including without limitation the Fuel Supply Agreements and

39

Coal Transportation Agreements for meeting the coal requirements of the first Unit.

(ii)	The Borrower shall have provided a certificate signed by an Authorized Officer of the Borrower and expressed to be effective as of the Initial Drawdown Date, stating that the Borrower is in compliance with all provisions of the Transaction Documents.
(iii)	The Lenders Engineer shall have reviewed each of the Project Documents and shall have submitted its report and certified that the Project Documents are adequate for implementation of the Project.

(b) Opinion of Counsels

(i)

The Borrower shall have provided confirmation from its legal counsels: (i) that the Borrower has entered into valid, binding and enforceable Project Documents required by it to be executed prior to Initial Drawdown; (ii) that the Borrower has entered into binding agreements for financing as required under the Financing Plan to meet the Estimated Project Costs and that the conditions for Drawdown of amounts under such Financing Documents have been satisfied or waived; (iii) that the Borrower accepts to provide, effectuate and perfect the Security Interest in the form and manner as may be required by the Lenders from time to time; (iv) all Clearances required prior to Initial Drawdown have been obtained and are in full force and effect; and (v) all Taxes (including the stamp duty and registration fees) other than those Contested in Good Faith have been duly and validly paid.

The Facility Agent shall have received legal opinions pertaining inter alia to the validity and enforceability of the Transaction Documents, each dated the date of the Notice of Drawdown in

40

relation to the Initial Drawdown from the following persons:

(A)	Lenders Counsel;
(B)	Legal advisors to the Foreign Currency Lender;
(C)	Legal advisors to the Borrower and Sponsor; and
(D)	Where any of the counterparties to the Project Documents are not Persons organised under the laws of, or residents of, India, the international counsel of such counterparties to the Project Documents.

(c) Clearances

(i)	Other than the Clearances which are expressly permitted under Section 8.16 to be obtained at a different time, the Borrower shall have obtained all Clearances as may be required for the Project, and such Clearances shall be in full force and effect and the Borrower shall have fulfilled the conditions stipulated in such Clearances and the Facility Agent shall have received certified copies of each Clearance, together with a certificate from the Borrower certifying that all such Clearances have been obtained and are in full force and effect.
(ii)	The Borrower shall have obtained all necessary third party consents, waivers and other approvals required for the Project and for the execution, delivery, and enforcement of the Transaction Documents. The permission of the assessing officer under Section 281(1)(ii) of the Income Tax Act, 1961 shall have been obtained by the Borrower prior to creation of any Security
(iii)	The Lenders Engineer shall have certified the adequacy and

41

validity of the Clearances.

(d) Project

(i)	The Facility Agent shall have received a report from the Lenders Engineer inter alia certifying the Estimated Project Costs in the form and manner as provided in Schedule XI, a preliminary legal due diligence report from the Lenders Counsel and the Borrower shall have resolved all issues raised in all of the abovementioned reports and incorporated necessary changes to the satisfaction of the Facility Agent in the Project Documents, the Estimated Project Cost and the Financing Plan.
(ii)	The Facility Agent shall have received satisfactory evidence from the Lenders Engineer that the Project Site is suitable for the Project and suitable security and other arrangements have been made with respect thereto as also a report in relation to Project Cost, the Project Documents (other than Insurance Contracts), provision of liquidated damages by the Major Project Parties, performance guarantees and such other matters as may be specified by the Facility Agent.
(iii)	The Facility Agent shall have received a schedule for award of contracts matching with the implementation schedule for the Project, which shall have been reviewed by the Lenders Engineer.

(e)	Project Documents
	The Borrower shall have identified all key contractors (including any Major Project Parties) required for the implementation of the Project and finalized all key Project Documents, which shall have been reviewed by the Lenders Engineer.

42

(f)	Applicable Law
	The Borrower shall have received a certificate from an Authorized Officer of the Borrower certifying that the Project and the Borrower are in compliance in all respects with all Applicable Law as in effect on the Drawdown Date.
(g)	Representations and Warranties
	The Borrower shall have provided a certificate issued by an Authorized Officer of the Borrower stating that all representations and warranties of the Borrower, Sponsor, and to the best of knowledge of the Borrower after due enquiry of the Major Project Parties under the Transaction Documents are true and correct in all respects with the same force and effect as though such representations and warranties have been made on and as of the date of such certificate.
(h)	Events of Default and Legal Proceedings

(i)	There shall be no Event of Default or Potential Event of Default under the Transaction Documents which has not been cured or waived in accordance with the terms of the Transaction Documents and all Transaction Documents shall be in full force and effect.
(ii)	There shall not have occurred any event that would restrict directly or indirectly the Borrower’s borrowing power or authority or its ability to borrow under the Financing Documents due to any provision in its Memorandum and Articles of Association or any provision contained in any document by which the Borrower is bound, or any Applicable Law.

(i) Sponsor Support

43

The Facility Agent shall have received the following:

(i)	satisfactory evidence that 30% (thirty per cent) of the Required Equity (“Upfront Equity”) has been subscribed and paid up in full and has been either (a) deposited in the Account; or (b) certified by the Auditor as having been utilised for payment of Project Costs. Provided that the Upfront Equity shall not include any equity contributed by the Sponsor for the purpose of investment in any subsidiary of the Borrower in accordance with Section 9.3;
(ii)	an undertaking from the Sponsor, in the form and manner acceptable to the Lenders, and any other evidence required by the Facility Agent in relation to the same, to subscribe to the balance 70% (seventy per cent) of the Required Equity in the manner specified in the Sponsor Support Agreement; and
(iii)	An undertaking from the Sponsor that the management and control of the Borrower shall not change during the currency of the Loan without the consent of the Lenders.

(j)	Personnel
	The Borrower shall have appointed such technical, financial and executive personnel (including auditors and/or management personnel) of proper qualification and experience, satisfactory to the Facility Agent, and shall have ensured that the organizational set-up is adequate, so as to ensure smooth implementation of the Project by the Borrower.
(k)	Security
	The Borrower shall have created and perfected the Initial Security in favour of the Security Trustee prior to the Initial Drawdown Date, in accordance with the terms of this Agreement, to the satisfaction of the

44

Security Trustee and the same shall be in full force and effect.

(l) Construction Budget

(i) The Lenders shall have received a copy of the Construction Budget in a form satisfactory to the Lenders Engineer. The Construction Budget should:

(A)	reflect the amount of all Estimated Project Costs; and
(B)	conform to the Base Case.

(ii) The Facility Agent shall have received a true, correct and completed copy of the Project Schedule certified by an Authorised Officer of the Borrower.

(m) Insurance

(i)

The Borrower shall have obtained the Insurance Contracts (including reinsurance) in accordance with the recommendations of the Lenders Insurance Consultant, suitably endorsed in favour of the Lenders and naming the Lenders/Security Trustee as loss payees as recommended by the Lenders Insurance Consultant and shall have provided to the Facility Agent a certificate or other acceptable evidence and such certificate or other evidence shall accurately describe the insurance obtained by the Borrower and shall also certify that all such insurance is in full force and effect and conforms in all respects to the insurance required to be obtained on or before the Initial Drawdown Date.

(ii)

The Facility Agent shall have received a letter from the Borrower’s insurer confirming that all premia due and payable with respect to the insurance as of the Initial Drawdown Date have been paid and

45

no insurance premia are overdue.

(iii)	The Facility Agent shall have received a list of the existing Insurance Contracts detailing therein the names and addresses of the insurer, brief particulars of goods covered, type of cover, amount of cover and date of expiry of each policy.
(iv)	The Borrower shall duly pay all premia and other sums payable for the aforesaid Insurance Contracts, at least thirty (30) days prior to the shipment in respect of the Project.

(n)	English Translations
	If any Transaction Document, Clearance, notice, certificate, instrument, communication or other document required to be delivered to any Person pursuant to this Section 7.2 is not originally executed, delivered or given in English (regardless of whether such requirement arises before or after the date of Financial Close), the Borrower, shall concurrently with the delivery of such Transaction Document, Clearance, notice, certificate, instrument or other document, additionally and at its own expense, provide to such Person: (i) in the case of any Transaction Document, any communication from any Governmental Authority and any Clearance, certified, official English translation prepared by: (A) a translator identified as an approved translator for the high court of any State in India; or (B) another translator reasonably acceptable to the Lenders; and (ii) in the case of any other document, an English translation thereof certified by an Authorized Officer of the Borrower to be complete and accurate in all material respects.
(o)	Project Costs and Financing Plan

46

The Borrower shall have finalized the Project Cost and the Financing Plan after incorporating the views of the Lenders Engineer to the satisfaction of the Facility Agent.

(p)	Other Conditions
	The Lenders shall have the right to stipulate other conditions, after consultation with the Borrower, prior to the Initial Drawdown Date and the Borrower agrees to abide by the same.

7.3

Conditions Precedent to Each Drawdown

Any Drawdown shall be subject to the fulfilment or waiver, prior to or concurrently with each such Drawdown, in a manner satisfactory to the Facility Agent of the conditions set forth below, such satisfaction to be recorded in writing, and the acceptance of the benefits of each Drawdown shall constitute a representation and warranty by the Borrower to each of the Lenders that all the conditions specified in this Section 7.3 have been satisfied or waived (which waiver shall be in accordance with the provisions of Section 7.4) by such of the Lenders as of that time.

7.3.1 Obligations

(i)	The Borrower shall have performed in all respects, all of its obligations required to be performed under the Transaction Documents prior to the date of such Drawdown and the other Material Project Participants shall have performed in all respects all of their respective material obligations required to be performed under the Transaction Documents prior to the date of such Drawdown.
(ii)	The Borrower shall have paid all fees, expenses and other charges then payable by it under the Financing Documents.

47

7.3.2 Drawdown

(i)	The Borrower shall have delivered to the Facility Agent in the form set out in Exhibit 2 duly completed and in substance satisfactory to the Facility Agent, a Notice of Drawdown.
(ii)	The Facility Agent shall have received the certification of the Lenders Engineer referred to in Section 14.5.3 with respect to the Drawdown Schedule Period in which the relevant Drawdown occurs.
(iii)	The Borrower shall have procured and furnished to the Facility Agent, prior to each subsequent Drawdown, a certificate each from: (a) a chartered accountant; and (b) a Director of the Borrower, confirming that the proceeds of the preceding Drawdown have been utilized only for the purposes of Project Costs as permitted under this Agreement.
(iv)	The Borrower shall have complied with the provisions of Section 8.9 (i) of this Agreement.

7.3.3 Debt: Equity Ratio

(i)

The Borrower shall have provided evidence to the satisfaction of the Lenders that the ratio of Debt to Equity for meeting the Project Cost does not exceed 75:25. The Facility Agent shall have received a certificate from an Authorized Officer of the Borrower confirming that the Debt to Equity ratio of the Borrower would not exceed 75:25 after the relevant Drawdown. For the purpose of calculating Debt to Equity ratio, any Cost Overrun which has been funded by way of subscription to Equity shall be excluded.

(ii)

The Facility Agent shall have received a certificate each from: (a)

48

a chartered accountant; and (b) a Director of the Borrower stating that the Required Equity required to have been brought in as on the relevant Drawdown Date has been brought in.

(iii)	The Borrower shall have complied with the provisions of Section 8.9 (ii) of this Agreement.
(iv)	For the purpose of calculating the ratio under this Section 7.3.3:

(a)	any Equity invested by or in the Borrower other than for the purposes of the Project or any equity/ shareholding of the Borrower in any Person shall be excluded, and
(b)	the calculation of Equity for the purposes of this Section 7.3.3 shall be done on an unconsolidated basis. By way of illustration, if Rs. 100 is invested into the Borrower by way of equity, of which Rs. 40 is used by the Borrower to subscribe to shares of its subsidiary, only the remainder Rs. 60 shall be used for the purposes of calculating Equity under this Section 7.3.3.

7.3.4 Events of Default, Legal Proceedings, Representations and Warranties

(i) There shall be no Event of Default or Potential Event of Default under the Transaction Documents which has not been cured or waived in accordance with the terms of the Transaction Documents, and all Transaction Documents shall be in full force and effect and all representations and warranties made by the Borrower and any other Material Project Participant in any Transaction Documents shall be true and correct in all respects with the same force and effect as though such representations and warranties had been made on and as of such date of Drawdown.

49

(ii)	The Borrower shall have delivered to the Facility Agent, a certificate of an Authorized Officer of the Borrower stating that there are no Legal Proceedings having a value over Rs. 10,00,00,000/- (Rupees Ten crores) pending or threatened (as evidenced by a notice or receipt of communication in writing) in India or any other jurisdiction against the Borrower or Sponsor or their assets or the Major Project Parties and there are no Legal Proceedings pending or threatened in India or any other jurisdiction regarding the effectiveness or validity of any of the Clearances or the Transaction Documents.
(iii)	The Borrower shall certify that no Adverse Change has occurred with respect to the Project.
(iv)	There shall not have occurred any event that would restrict directly or indirectly the Borrower’s borrowing power or authority or its ability to borrow under the Financing Documents due to any provision in its Memorandum and Articles of Association or any provision contained in any document by which the Borrower is bound, or any Applicable Law.

7.3.5 Security

(i)

Each of the Security Documents and the Security Interest over the assets created thereunder in favour of the Security Trustee required, under the terms of this Agreement, to be created as of the relevant Drawdown Date for the benefit of the Secured Parties shall be in full force and effect including without limitation, the Security Interest required to be created over any property in accordance with Section 8.7.3.

(ii)

Without prejudice to the generality of Section 7.3.5(i) above, the Borrower shall have entered into the Share Pledge Agreement and

50

the same shall be in full force and effect, (including obtaining of all consents, authorisations, registrations and filings required to create, perfect and maintain the same in full force and effect) prior to the Coal Investment JV Drawdown.

(iii)	The Borrower shall have obtained the written consent of the relevant parties for execution and performance of the Security Documents.
(iv)	The requirements of this Section 7.3.5 shall not apply to the extent that they are already satisfied as per the requirements of Section 7.2(k).

7.3.6 Permits and Consents

(i)	The Borrower shall have obtained and cause to be maintained in full force and effect all Clearances (other than those Clearances which are expressly permitted under this Section 7.3.6 to be obtained at a different time) required to be obtained prior to the date of the particular Drawdown;
(ii)	The Borrower shall confirm that all Clearances and corporate approvals previously obtained shall remain in full force and effect and no event shall have occurred which would render void any of the above;
(iii)	With respect to any Drawdown occurring on or after June 30, 2009, the Borrower shall have obtained and shall cause to be maintained in full force and effect the: (a) chimney height clearance as may be required for the Project, from the Airports Authority of India; and (b) all Clearances required for obtaining the requisite water drawal required for the Project from the Hirakud Dam/any other source; and

51

(iv) With respect to any Drawdown occurring on or after a date which is six (6) months prior to the Date of Commercial Operation of each Unit (and, in the case of the first Unit, three (3) months prior to the Date of Commercial Operations of the first Unit), all required environmental Clearances (other than those specifically mentioned in sub-section (iii) above) from the Government of Orissa/other statutory bodies, shall have been obtained by the Borrower to the satisfaction of the Lenders.

7.3.7 Certificates

(i)	On the date of each Drawdown, after giving effect thereto, the Borrower shall have provided a certificate to the Facility Agent confirming: (a) satisfaction of all ratios and financial covenants as set out in the Financing Documents; and (b) compliance with all Financing Documents.
(ii)	The Borrower shall have provided a certificate issued by an Authorized Officer of the Borrower stating that all representations and warranties of the Borrower, Sponsor and to the best of the knowledge of the Borrower after due enquiry of the Major Project Parties to the Transaction Documents are true and correct in all respects with the same force and effect as though such representations and warranties have been made on and as of the date of Drawdown.
(iii)	The Facility Agent shall have received a certificate from an Authorized Officer of the Borrower certifying that the Project and the Borrower are in compliance in all respects with all Applicable Law as in effect on date of the relevant Drawdown.
(iv)	The Borrower shall have provided a certificate, in form satisfactory to the Facility Agent signed by an Authorized Officer of the

52

Borrower and expressed to be effective as of the date of the relevant Drawdown, stating that the Borrower is in compliance with all provisions of the Transaction Documents.

(v) The Borrower shall have provided a certificate to the Facility Agent from the Lenders Engineer (or confirmed by the Lenders Engineer) that the amounts requested under the Drawdown are in accordance with the Base Case.

7.3.8	Drawdown towards Margin Money
	Any Drawdown of an amount equal to the provision against margin money for working capital in Estimated Project Costs shall be made only after the Lenders have confirmed their satisfaction that the Project is near completion and such Drawdown is required at the time of build up of working capital.
7.3.9	Absence of Unsatisfied CP Notice and Drawstop Notice
	The Facility Agent shall not have issued or received an Unsatisfied CP Notice or Drawstop Notice with respect to such Drawdown, which has not been withdrawn or revoked.
7.3.10	Development Expenses
	If any part of any Drawdown is to be utilised to pay or reimburse any Project Costs constituting development expenses, preoperative expenses and preliminary expenses, the Facility Agent shall have received a certificate from an Authorized Officer of the Borrower setting forth the amounts and nature of such expenses, to the extent the Facility Agent shall not have received an audit with respect to such expenses.

53

7.3.11	Lien Waivers
	The Facility Agent shall have received the lien waivers, if any, contemplated to be delivered pursuant to the provisions of the Project Documents.
7.3.12	Project
	The Borrower shall be lawfully possessed of the ownership, use and other interests or rights with respect to the Project Site and on which it purports to grant Security Interest including any special purpose facilities on the Project Site, free of all Security Interests (other than Permitted Security Interest), the adequacy of which shall be satisfactory to the Lenders Engineer. Provided that, the Borrower shall only be required to be so possessed:

(i)	of the land to be transferred from the Sponsor and Vedanta Aluminium Limited prior to any Drawdown occurring six (6) months after Initial Drawdown; and
(ii)	of the land required for ash disposal for any Unit prior to any Drawdown occurring on or after a date which is six (6) months before the Date of Commercial Operation of such Unit.

7.3.13	Cost Overrun
	The Sponsor shall have financed/funded the Cost Overrun if any, in the form and manner as provided in the Sponsor Support Agreement.
7.3.14	Sale of Balance Power
	With respect to any Drawdown occurring on or after a date which is two (2) months prior to the Project COD, the Borrower shall have finalized and entered into the PPA (other than GRIDCO PPA) or other sale

54

arrangement(s), to the satisfaction of the Lenders, for the offtake of the balance power of the total 2400 MW power generation capacity of the Project.

7.3.15	Arrangements for water
	With respect to any Drawdown occurring on or after June 30, 2009, the Borrower shall have made the necessary arrangements and obtained the necessary approvals, to the satisfaction of the Facility Agent, for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person as may be required for the Project, which will have been reviewed by the Lenders Engineer.
7.3.16	Transaction Documents

(i)	The Borrower shall have entered into the Transaction Documents required to be entered into as of the relevant Drawdown Date.
(ii)	All Transaction Documents entered into by the Borrower shall be in full force and effect.
(iii)	The Borrower shall, in a manner satisfactory to the Lenders, carry out necessary changes and modifications as are required by the Lenders or are recommended by the Lenders Counsel, Lenders Engineer and Lenders Insurance Consultant and deemed necessary by the Lenders to be made to the Transaction Documents arising out of any due diligence conducted by them or otherwise.
(iv)	The Borrower shall ensure that the Major Project Documents contain adequate liquidated damages for delay in commissioning of the Plant and performance of the shortfall guarantees.

55

7.3.17	Amendment to Articles of Association
	With respect to any Drawdown occurring on or after a date which is three (3) months from the date of this Agreement, the Borrower shall have amended its Articles of Association, for inter alia enhancing the authorized capital and borrowing power of the Borrower as required under the Financing Plan, and appointment of nominee directors as required under this Agreement, and making such other changes as may be required by the Lenders.
7.3.18	Credit Rating
	With respect to any Drawdown occurring after a date which is three (3) months from the date of this Agreement, or such other time period as may be agreed by Facility Agent, the Borrower shall have complied with its obligations under Section 8.27.

7.4 No Waiver

7.4.1

No course of dealing or waiver by any Lender, or the Facility Agent in connection with any condition of effectiveness of this Agreement or any condition of Drawdown under this Agreement or any other Financing Document shall impair any right, power or remedy of any such Lender or the Facility Agent with respect to any other condition of Drawdown, or be construed to be a waiver thereof, nor shall the action of any Lender, or the Facility Agent in respect of any Drawdown affect or impair any right, power or remedy of any Lender or the Facility Agent in respect of any other Drawdown.

7.4.2

Unless otherwise notified to the Borrower by a Lender and without prejudice to the generality of Section 7.4.1 above, the right of any Lender to require compliance with any condition under this Agreement or the relevant Financing Documents which may be waived by such Lender in

56

respect of any Drawdown is expressly preserved for the purpose of any subsequent Drawdown.

7.4.3 Any request by the Borrower for a waiver of a condition in Section 7.2 or Section 7.3 shall be in writing and delivered to the Facility Agent and the Lenders at least twenty (20) Business Days prior to the proposed Initial Drawdown Date or Drawdown Date as applicable.

7.5	Final Drawdown Review
	The Lenders shall have the right to review Project Costs incurred prior to the final Drawdown under the Facility. Pursuant to the review mentioned hereinabove, if the Lenders determine that the Project Costs are less than the Estimated Project Costs, then the amount of the Facility shall be reduced, as specified by the Lenders.
7.6	Delivery of Certificates
	All the certificates, legal opinions, communications, notices and other documents and papers referred to in Sections 7.1, 7.2 and 7.3 to be delivered thereunder, unless otherwise specified, shall be delivered to the Facility Agent and in sufficient counterparts and unless otherwise specified, shall be in form and substance satisfactory to the Facility Agent.
8.	AFFIRMATIVE COVENANTS
	The Borrower covenants and agrees that until the Final Settlement Date:
8.1	Project Implementation and Use of Proceeds
	The Borrower shall:

(i) use the proceeds of the Facility only to pay the Project Costs, in

57

accordance with the Financing Documents, and in particular, the proceeds of the Financing Documents shall not be used for the following:

(a)	subscription to or purchase of shares/debentures and investment in real estate;
(b)	repayment of dues of Affiliates, promoters/associate concerns/inter-corporate deposits, etc.;
(c)	for extending loans/facilities to subsidiary or associate companies or for making any inter-corporate deposits; and
(d)	for any speculative purposes.

(ii)

carry out the Project and conduct its business as per prudent industry standards and accepted industry practices and with due diligence and efficiency and in accordance with generally acceptable construction, engineering, financial and business practices and, prior to Final Completion in accordance with the Construction Budget and shall achieve Project COD by the end of twenty one (21) months from Financial Close or June 30, 2010, whichever is earlier, unless otherwise permitted by the Lenders; and

(iii)

cause the construction of the Project to be executed and completed with due diligence and continuity (except for interruptions due to events of Force Majeure which the Borrower will use all efforts to mitigate), in accordance with generally accepted construction and engineering practices.

8.2	Inspection
	The Borrower, at reasonable intervals, will permit officers and designated representatives of the Lenders to carry out technical, legal, or financial

58

inspections and visit and inspect during normal business hours, any of the properties of the Borrower, including the Project, Plant, installations, Project Site, Project facilities, equipments, records, documents, works, Project Site and buildings on the Project Site and to examine and make copies of the books of record and accounts of the Borrower and discuss the affairs, finances and accounts of the Borrower with, and be advised as to the same, by its officers. The Borrower shall provide full assistance and co-operation to the Lenders/Facility Agent. The cost of any such visit shall be borne by the Borrower. Provided that upon the occurrence of an Event of Default or a Potential Event of Default: (a) the Lenders or any of their officers and representatives may carry out the aforementioned inspections as often as may be required by them; and (b) no notice shall be required to be given to the Borrower under this Section 8.2.

8.3 Books, Records and Inspections, Accounting and Audit Matters

8.3.1

The Borrower will properly keep such records as are required to be maintained under Applicable Law and the Transaction Documents and such accounts as are adequate to reflect truly and fairly the financial condition and results of operations of the Borrower (including the progress of the Project) which shall contain full, true and correct entries in conformity with Indian GAAP consistently applied and all requirements of Applicable Law, and will not radically change its accounting policy/system without prior approval of the Lenders. Provided that the Borrower may, upon informing the Lenders of the same, keep records and maintain accounts in conformity with IFRS.

8.3.2

In the event that auditors acting as the Auditors cease acting as the auditors for the Borrower for any reason, the Borrower shall promptly inform the Facility Agent of the reasons for such cessation and shall appoint in accordance with Applicable Laws and maintain as its Auditors, another firm of independent chartered accountants, approved by the Board and shareholders and under intimation to the Facility Agent.

59

8.4 Additional Documents, Filings and Recordings

8.4.1	The Borrower shall execute and deliver, from time to time but in no event later than fifteen (15) days, or such additional time as may be permitted by the Facility Agent, from the request made by the Facility Agent, at the Borrower’s expense, such other documents as the Lender may request in connection with its rights and remedies granted or provided for by the Transaction Documents and to consummate the transactions contemplated therein.
8.4.2	The Borrower will do all such acts necessary to: (i) create, perfect and maintain the Security in full force and effect at all times (including the priority thereof); and (ii) preserve and protect the Security and protect and enforce its rights and title, and the rights and title of the Lenders, to the Security.
	Provided further that the Borrower shall pay on demand to the Lenders, all reasonable and actual costs incurred by their legal counsel/ company secretaries/ advisors in connection with creation and registration of security, certification of charge thereof with the registrar of companies, compilation of search/ status reports or other similar matters.

8.5	Financing Fees
	The Borrower shall pay all financing fees and charges due and payable in relation to the Agreement to the Lenders on the Due Dates as specified hereunder.

8.6 Transaction Documents

8.6.1	The Borrower shall comply in all respects with the provisions of the Transaction Documents.
8.6.2	The Borrower shall ensure that each of the Transaction Documents is

60

maintained in full force and effect. Provided that:

(A)	the PPA (other than the GRIDCO PPA) or other sale arrangements satisfactory to the Lenders for the offtake of power from the Project for maintaining a minimum DSCR of 1.1 shall be executed on or before a date which is six (6) months prior to Project COD;
(B)	the PPA (other than GRIDCO PPA) or other sale arrangement(s) for the offtake of the balance power generation capacity of the Project on a merchant basis shall be executed on or before a date which is two (2) months prior to Project COD;
(C)	Transaction Documents required for the purpose of making firm and suitable arrangements for transmission and evacuation of power from any Unit shall be executed on or before a date which is six (6) months prior to the Date of Commercial Operation of such Unit;
(D)	Fuel Supply Agreements and Coal Transportation Agreements required for meeting the coal requirements of any Unit (other than the first Unit, for which, Fuel Supply Agreements and Coal Transportation Agreements are required to be executed prior to the Initial Drawdown Date) including obtaining necessary approvals from the Railways and other authorities and arranging for coaches/railway wagons for transportation of the coal till the Project Site from any Unit (other than the first Unit) shall be executed on or before a date which is six (6) months prior to the Date of Commercial Operation of each Unit (other than the first Unit); and
(E)	Transaction Documents required for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person (which will be

61

reviewed by the Lenders Engineer) shall be executed on or before June 30, 2009.

8.6.3	The Borrower shall not enter in to or further execute any new agreement having a value over Rs. 10,00,00,000 (Rupees Ten crores) in relation to the Project with any Person, unless such agreement is approved by the Facility Agent.
8.6.4	The Borrower shall, in a manner satisfactory to the Lenders, carry out necessary changes and modifications as are required by the Lenders or are recommended by the Lenders Counsel, Lenders Engineer and Lenders Insurance Consultant and deemed necessary by the Lenders to be made to the Transaction Documents, executed prior to or after the date of this Agreement, arising out of any due diligence conducted by them or otherwise.
8.6.5	Upon occurrence of an Event of Default or a Potential Event of Default, the Borrower agrees to take such actions under the Project Documents, as may be directed by the Lenders.
8.6.6	With respect to any Transaction Documents executed after the date of this Agreement, the Borrower shall deliver to the Facility Agent copies thereof, together with a certificate of the Borrower to the effect that each of such Transaction Documents are true, correct and complete in all respects, and in full force and effect.

8.7 Security

8.7.1 The Loan together with all fees, costs, charges, expenses and all amounts payable to the Secured Parties under the Financing Documents shall be secured by the following:

(1) a first ranking charge / Security Interest through the execution of

62

the Deed of Hypothecation in favour of the Security Trustee, in respect of:

(i)	all the Borrower’s movable fixed properties and assets for the Project, both present and future;
(ii)	all tangible and intangible assets including but not limited to the goodwill, undertaking and uncalled capital of the Borrower for the Project;
(iii)	all revenues and receivables of the Borrower from the Project;
(iv)	all the Borrower’s accounts, (including but not limited to the Accounts and the Permitted Investments) for the Project and each of the other accounts required to be created by the Borrower for the Project under any Transaction Document, including without limitation, the Trust and Retention Accounts Agreement; including in each case, all monies lying credited/deposited into such accounts;

(2)	an undertaking by the Sponsor for non-disposal of 51% of the total, issued and paid up Shares of the Borrower held by them.
	The Security over assets comprised in items (1) and (2) above shall be collectively referred to as the “Initial Security”.

(3) a first ranking charge/Security Interest through the creation of a mortgage in favour of the Security Trustee, in respect of:

(i) all the Borrower’s immovable properties both present and future for the Project;

63

(ii) assignment of all of the Borrower’s rights, titles and interest in respect of the assets and its rights under each of the Project Documents, duly acknowledged and consented to, where required, by the relevant counter-parties to such Project Documents, all the Borrower’s rights under each letter of credit/guarantee or performance bond that may be posted by any party to a Project Documents for the Borrower’s benefit and all the Borrower’s rights under the Clearances (including all contract, licences, permits, approvals, concessions and consents in respect of or in connection with the Project, to the extent assignable under Applicable Law);

(iii) all the Insurance Contracts (and cut through clauses in respect of, or assignments of reinsurances, as applicable) naming the Security Trustee as an additional insured/sole loss payee (as may be required by the Lenders);

(4)	a first ranking pledge in respect of 51% of the total, issued and paid up shares of Rampia Coal Mine and Energy Private Limited held by the Borrower through the execution by the Borrower of a Share Pledge Agreement in favour of the Security Trustee (the “Pledge”);
	The Security over assets comprised in items (3) and (4) above shall be collectively referred to as “Subsequent Security”.
	The Initial Security and Subsequent Security shall be collectively referred to as the “Security”.
	Provided land/right of way and immoveable/moveable assets for the transmission line of 235 km up to Meramandali shall not be included within the Security created/to be created for the Lenders.

64

8.7.2	Each of the Security Documents and the Security Interest over the assets created thereunder in favour of the Security Trustee for the benefit of the Lenders shall be in full force and effect.
8.7.3	The Borrower shall create and perfect the Initial Security prior to the Initial Drawdown Date under this Agreement and the Subsequent Security on or prior to a date which is the earlier of: (a) a date which is three (3) months prior to the Date of Commercial Operations of the first Unit of the Project; and (b) a date which is six (6) months from the Initial Drawdown Date. Provided that the Pledge, specified in Section 8.7.1(4) above shall only be required to be created and perfected prior to the Coal Investment JV Drawdown and if the Borrower acquires any immovable property or any interest in immovable property for the Project, it shall promptly create the Security over such immovable property within thirty (30) days of the date of acquisition of such property.
8.7.4	The Borrower shall have obtained written consent of the relevant parties for creation, perfection and maintenance of the Security required hereunder.
8.7.5	The Borrower hereby undertakes to create such additional security as may be required by the Lenders and execute such further documents and agreements as may be required for this purpose in case the Security provided by the Borrower has in the opinion of the Facility Agent/Lenders become inadequate due to any reason whatsoever. The creation and perfection of Security by the Borrower shall be to the satisfaction of the Lenders’ Legal Counsel.
8.7.6	The Lenders/Facility Agent reserves the right to modify the Security requirements stated in this Section 8.7 prior to execution of all the Financing Documents. Provided that if the Facility Agent in its opinion decides that certain conditions materially affecting the security structure have not been met even after execution of all the Financing Documents,

65

	then the Facility Agent reserves the right to modify the security structure, after consultation with the Borrower, after execution of all the Financing Documents until Financial Close and the Borrower shall at its own costs, do all acts, deeds and things as may be necessary to create and perfect the Security in terms of the revised security structure, to the satisfaction of the Facility Agent.
8.7.7	So long as any monies remain due and outstanding to the Lenders, the Borrower undertakes to promptly notify the Lenders in writing of all its acquisitions of immovable properties.

8.8 Opening of Account

(a)	The Borrower shall have provided evidence to the Facility Agent of having established the Account in accordance with the provisions of the Trust and Retention Account Agreement.
(b)	The Borrower hereby agrees and undertakes that any/all amounts in the Accounts shall be utilised and/or transferred to any other account in such manner as specified in the Trust and Retention Account Agreement.

8.9	Auditor’s Certificate
	The Borrower agrees and undertakes that, it shall submit to the Facility Agent, within a period of thirty (30) days from every Auditor’s Certificate Provision Date, a certificate from the Auditors certifying that:

(i) the proceeds of all Drawdowns that have occurred:

(a) as on the first Auditor’s Certificate Provision Date, from the Initial Drawdown Date till the first Auditor’s Certificate Provision Date, and

66

(b) thereafter, from the previous Auditor’s Certificate Provision Date till the next Auditor’s Certificate Provision Date,

	have been utilized only for the purpose of paying Project Costs; and
(ii)	the Required Equity, required to have been brought in as on the Drawdown Date(s) that have occurred since the previous Auditor’s Certificate Provision Date (and in the case of the first Auditor’s Certificate Provision Date, since the Initial Drawdown Date) has been brought in.

8.10	Progress Reports
	The Borrower agrees and undertakes that it shall submit progress reports to the Facility Agent in a form and manner satisfactory to the Facility Agent every three (3) months, and upon occurrence of an Event of Default or Potential Event of Default, as and when required by the Lenders.

8.11	Project Management; Operation & Maintenance
	The Borrower agrees and undertakes to make arrangements satisfactory to the Facility Agent, in consultation with the Lenders Engineer, for project management and operation and maintenance of the Project, including but not limited to:

(a)	constitution of a project management committee consisting of directors/senior executives of the Borrower to monitor and supervise the implementation of the Project (including project management and operation and maintenance of the Project) till the Final Settlement Date (the “Project Management Committee”); and
(b)	making arrangements satisfactory to the Lenders so as to be in a ready stage for operation and maintenance of the Project at least six (6) months prior to Date of Commercial Operations of the first Unit of the Project.

67

The Facility Agent, and after the occurrence of an Event of Default or a Potential Event of Default, the Lenders, shall have the right to seek appropriate information from the Project Management Committee whenever required by them.

8.12 Environment and Social Monitoring and Review

8.12.1

The Borrower shall provide the necessary information to the Facility Agent and bear the costs of conducting a periodic Environment and Social Monitoring and Review (the “ESMR”), by a consultant appointed by the Facility Agent (the “Environmental Consultant” or “EC”), if so required by the Facility Agent. The Borrower shall also provide the EC with information necessary for conducting such ESMR at such intervals as the EC may deem fit. The Borrower shall also forward to the Facility Agent, copies of the EC’s report or any relevant internal reports or annual/other periodical reports on the environmental and social status and performance of the Project and its operations and shall carry out such acts as recommended by the EC, to the extent such recommendations are required by the Lenders and are not contrary to Applicable Law, and bear the costs of the same, including any increase in Project Costs.

8.12.2

Without prejudice to the Borrower’s obligations under this Agreement, the Borrower shall at all times during the currency of the assistance, comply with the provisions of Applicable Law and Clearances with respect to environmental, health, safety and social requirements of the Project, and shall maintain documents to be able to demonstrate compliance with the same, and shall take all necessary steps to well in time so as to ensure smooth functioning of the Project to the satisfaction of the Lenders till Final Settlement Date.

8.13 Project Costs

8.13.1 All expenditure undertaken for the Project under this Agreement shall be

68

in accordance the Estimated Project Cost as per Schedule XI and the Construction Budget as per Schedule X.

8.13.2 The Lenders have a right to review the Project Costs and means of finance before the Project COD and Final Completion to ensure that they are in conformity with the Construction Budget and stipulate relevant conditions, as deemed necessary after consultation with the Borrower.

8.14 Financial Statements of the Borrower and Sponsor

8.14.1 As soon as available, but in any event within one hundred and eighty (180) days after the close of each Fiscal Year, copies of the Audited Annual Financial Statements of the Borrower and of the Sponsor in each case prepared in accordance with generally accepted accounting principles applicable in its jurisdiction of incorporation consistently applied and, if unaudited, certified by an Authorized Officer of Borrower or the Sponsor shall be provided to the Facility Agent, with a copy to each of the Secured Parties.

8.14.2 In addition to Section 8.14.1, the Borrower and the Sponsor shall furnish copies of their Quarterly Financial Statements as and when the Facility Agent requires them.

8.15 Management/ Key Personnel

8.15.1 The Borrower shall from time to time upon the Facility Agent’s direction reconstitute the Board to induct professionals satisfactory to the Facility Agent and nominees of the Lenders, in accordance with the provisions of Schedule XII, and shall strengthen its Management to the satisfaction of the Lenders, in conformity with the principles of corporate governance set out in the Companies Act and will constitute such committees and sub- committees of the Board of Directors as required under the Companies

69

Act to adhere to the principles of the corporate governance, including but not limited to such professionals, committees and sub-committees as are specified in this Section 8.15.

8.15.2	Prior to the Initial Drawdown Date and till Final Settlement Date, the Borrower shall constitute and maintain the Project Management Committee referred to in Section 8.11. The responsibilities of such committee shall be satisfactory to the Facility Agent and shall include, without limitation, management of the Project during construction, civil engineering, placement of orders for supply of Plant, and other assets, and oversight of operation and maintenance of the Project. The Borrower shall make, at a reasonable period of time prior to the Project COD, adequate arrangements for the operation and maintenance of the Project, which arrangements shall be reviewed by the Lenders Engineer and shall be to the Lenders Engineer’s satisfaction. The Lenders shall have the right to seek appropriate information from the Project Management Committee.
8.15.3	Prior to the Initial Drawdown Date and till Final Settlement Date, the Borrower shall constitute and maintain at all times an audit sub-committee, each comprised of appropriate directors of the Borrower, satisfactory to the Facility Agent. The responsibilities of such audit sub-committee shall be satisfactory to the Facility Agent and shall include close monitoring of the Borrower’s operations and its compliance with corporate governance.
8.15.4	The Borrower shall to the satisfaction of the Facility Agent, appoint and/or change technical, financial and executive personnel (including auditors and/or management personnel) of proper qualifications and experience for the key posts and the Borrower shall ensure that its organizational set-up is adequate enough to ensure smooth implementation and operation of the Project.
8.15.5	The terms and conditions for appointment of the managing director of the

70

Borrower or any other Person holding substantial powers of management shall be in accordance with good industry practices and Applicable Law and such Person shall only receive such remuneration as is permissible under the Companies Act.

8.15.6 In the event that the name of any of the directors on the Board of Directors of the Borrower appears in the list of willful defaulters issued by the Reserve Bank of India (“RBI”) or the Credit Information Bureau (India) Limited (“CIBIL”), the Borrower shall forthwith remove such director from its Board of Directors or cause his name to be deleted from RBI/CIBIL list of willful defaulters.

8.16	Clearances
	The Borrower will, in a timely manner, obtain and maintain, or cause to be obtained and maintained, in full force and effect (or where appropriate, renew) all Clearances required for the purposes of the transactions as contemplated by the Transaction Documents, provided that:

(A)	Clearances required for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person (which will be reviewed by the Lenders Engineer) shall be required to be obtained on or before June 30, 2009;
(B)	Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India shall be required to be obtained on or before June 30, 2009; and
(C)	environmental Clearances from the Government of Orissa/other statutory bodies with respect to any Unit shall be required to be obtained on or before a date which is six (6) months prior to the Date of Commercial Operation of such Unit, provided that with respect to the first Unit, such environmental Clearances shall be obtained on or before a date which is

71

three (3) months prior to the Date of Commercial Operations of the first Unit.

8.17 Accounts

8.17.1	The Borrower shall deposit all the cash inflows of the Project, including any transmission line charges recovered for wheeling of power for OPTCL/other bulk suppliers/power transmission company, in the Account as specified in the Trust and Retention Account Agreement and ensure that the reserves required to be maintained in accordance with the Trust and Retention Account Agreement are maintained.
8.17.2	The Borrower shall utilise the Project Proceeds in a manner and priority as agreed to in the Trust and Retention Account Agreement.

8.18 Maintenance of Property; Site Security

8.18.1	The Borrower will keep all its property and assets in good working order and condition.
8.18.2	The Borrower shall maintain title to or its interest in all of its property and assets and shall take all actions necessary to create and perfect at all times, freehold rights in the Project Site and shall take all actions necessary to create and perfect at all times its interest in all its other assets, at the times, and in the manner contemplated in this Agreement.

8.19 Maintenance of Property and Insurance

8.19.1 The Borrower will keep the Plant, the Project Site and all other assets of the Borrower over which a Security Interest has been or shall be created in favour of the Security Trustee for the benefit of the Lenders, insured with

72

financially sound and reputable insurers satisfactory to the Facility Agent and on terms and conditions satisfactory to the Facility Agent.

8.19.2	The Borrower will cause the Major Project Parties performing any services in connection with the engineering, procurement or construction of the Project each to keep the insurance described in, and fulfil all obligations set forth in, the Major Project Documents with financially sound and reputable insurers satisfactory to the Facility Agent against loss or damage in such manner and to the same extent as so described.
8.19.3	The Borrower will submit to the Facility Agent a certificate, from the Borrower indicating the properties insured, the type of insurance, amounts and risks covered, names of the beneficiaries, expiration dates, names of the insurers and special features of all insurance policies already obtained by it, and shall within twenty (20) days after the effective date of any new or renewed insurance policy, as provided in Section 8.19.1 above submit a similar certificate to the Facility Agent with respect to such new or renewed insurance policy, such policies to be in form and substance, and issued by companies, satisfactory to the Facility Agent in consultation with the Lenders Insurance Consultant.
8.19.4	The provisions of this Section 8.19 shall be regarded as supplemental to, but not duplicative of, the provisions of any of the Security Documents that require the maintenance of insurance. In the event that any insurance whatsoever is purchased, taken or otherwise obtained by the Borrower with respect to the Project other than as required hereunder or if not properly endorsed to the Lenders/Security Trustee as the loss payees or beneficiaries as required under the provisions of this Agreement, such insurance shall be considered assigned hereunder to the Lenders/Security Trustee with the right of the Lenders/Security Trustee to make, settle, compromise and liquidate any and all claims thereunder, without prejudice to the exercise of any other rights and remedies that the Lenders/Security

73

Trustee may have under any of the Financing Documents, or under any law, statute or regulation now or hereafter in force.

8.19.5

The Borrower shall duly pay all premia and other sums payable for the aforesaid purpose, at least thirty (30) days prior to the shipment in respect of the Project. The insurance in respect of the assets charged/to be charged to Lenders shall be shall be suitably endorsed in favour of the Security Trustee/Lenders. In the event of failure on the part of the Borrower to insure the assets or to pay the insurance premia or other sums referred to above, any Secured Party may get the assets insured or pay the insurance premia and other sums referred to above, as the case may be.

8.19.6

If any Secured Party shall pay any insurance premiums on behalf of the Borrower in respect of any insurance policies required to be obtained by the Borrower hereunder, the amounts paid shall be immediately reimbursed to the Secured Party without requirement of any notice of any kind and without reference to any dispute or controversy which the Borrower may have with the insurance provider or the Lenders Insurance Consultant and all such amounts shall till payment thereof remain due and payable to such Secured Party by the Borrower and till repayment, all unpaid amounts shall carry interest as provided in Section 14.6 hereof.

8.20	Working Capital Arrangements
	Prior to the Project COD, the Borrower shall have made satisfactory arrangements for obtaining working capital facilities in accordance with the Base Case.

8.21	Project Documents
	The Borrower shall prepare and submit to the Facility Agent, to the satisfaction of the Facility Agent, in consultation with the Lenders Engineer, a schedule for finalisation and execution of the Project Documents for the Project in accordance with the Project Schedule as confirmed by the Lenders Engineer. Provided that in

74

the event of occurrence of an Event of Default or a Potential Event of Default, the said schedule shall be provided to all the Lenders.

8.22	Information Covenants
	The Borrower shall furnish to the Facility Agent, and upon occurrence of an Event of Default or a Potential Event of Default to all Secured Parties, copies of all the notices and documents that are required to be given pursuant to this Section 8.22.

8.22.1	Information to be Provided
	Within five (5) Business Days after any officer of the Borrower obtains knowledge thereof, the Borrower shall provide notice to the Facility Agent, by facsimile, of the following:

(i)	any event which constitutes a Potential Event of Default or Event of Default, specifying the nature of such Potential Event of Default or Event of Default and any steps the Borrower is taking and proposes to take to remedy the same;
(ii)	an event that may delay completion of the Project, material work stoppages or design changes under the Project Documents, scarcity or unavailability of any material or equipment or an event that permits, or, with the passage of time, would permit the Borrower or any other party to claim relief on account of Force Majeure;
(iii)	any event, circumstance or condition constituting, or which the Borrower either believes, has claimed or will claim to constitute a “Change in Law” under the PPA, together with copies of all notices, calculations and other correspondence between the Offtaker(s) and the Borrower pursuant to such Section;

75

(iv)	any event of Force Majeure affecting, or which either the Borrower or any other Material Project Participant claims would affect, the performance by such Person of any obligation under any Transaction Document, together with copies of all notices, calculations, data and other correspondence between such Material Project Participant and the Borrower in respect of any such event, circumstance or condition;
(v)	any notice of any application for winding up having been made or receipt of any statutory notice of winding up under the provisions of the Companies Act or any other notice under any other Applicable Law or otherwise of any suit or legal process shall have been filed or initiated against the Borrower and affecting the title to the property of the Borrower or if a receiver is appointed over any of the properties or business or undertakings of the Borrower;
(vi)	any one or more events, conditions or circumstances (including any event of Force Majeure or any on-going or threatened labour strikes, lockouts, shutdowns, slowdown or work stoppage by the Borrower’s, or the Offtaker’s employees or employees of any counterparty to a Project Documents or any scarcity or unavailability of materials or equipment or fire or other similar event) that exist or have occurred that has, had or could reasonably be expected to have a Material Adverse Effect;
(vii)	any Legal Proceeding pending or threatened (as evidenced by a notice or receipt of communication in writing): (a) against the Borrower; or (b) with respect to any Transaction Document;
(viii)	any proposal by any Governmental Authority to acquire compulsorily the Borrower, any of the Security or any part of the Borrower’s business or assets (whether or not constituting an Event of Default hereunder or under the PPA);

76

(ix)	any dispute between the Borrower and any Material Project Participant or between the Borrower or any Material Project Participant and any Governmental Authority in each case relating to the Project;
(x)	any change in the Authorized Officers, giving certified specimen signatures of any new officer so appointed and, if requested by the Facility Agent, satisfactory evidence of the authority of such new officer;
(xi)	any actual or proposed termination, rescission, discharge (otherwise than by performance), amendment or waiver under, any provision of any Transaction Document or the existence of any event or condition which permits, or, with the passage of time, would permit, the Borrower to serve a termination notice under any Project Document;
(xii)	any notice, document, Clearance, authorisation, amendments to any Transaction Documents or correspondence received or initiated by the Borrower relating to the Project necessary for the performance of its obligations or any other Material Project Participant’s, obligations under the Transaction Documents;
(xiii)	any Security Interest (other than a Permitted Security Interest) being granted or established or becoming enforceable over any of the Borrower’s assets;
(xiv)	any proposed material change in the design, nature or scope of the Project or any change in the business or operations of the Borrower;
(xv)	any event, circumstance or condition which requires, or which the Borrower believes or which the Offtaker has claimed requires,

77

	pursuant to the PPA, an amendment to the provisions of the PPA or the tariff provided for in the PPA on the basis that the tariff determined under the PPA is not in compliance with the Electricity Act, 2003 and Applicable Law;
(xvi)	the institution or commencement of any dispute under the PPA, together with copies of all notices, calculations, data and other correspondence between the Offtaker and the Borrower in respect of such institution or commencement;
(xvii)	any notice received by the Borrower purporting to cancel or alter the terms of any Insurance Contract (including any notification of any premium increase therefor);
(xviii)	any: (i) fact, circumstance, condition or occurrence at, on, or arising from the Project Site that results in non compliance with any Applicable Law and constitutes a Material Adverse Effect; and (ii) pending or threatened (as evidenced by a notice or receipt of communication in writing) environmental claim against the Borrower, or any of the Borrower’s contractors or lessees arising in connection with their occupying or conducting operations on or in relation to the Project or the Project Site;
(xix)	copies of any data relative to the performance of any tests under any Project Document;
(xx)	any accident resulting in loss of life of any employee of the Borrower or any counterparty to any Project Documents occurring at the Project Site or otherwise arising in India, in each case in connection with the Project;

78

(xxi)	the occurrence of any event in connection with the reorganisation of the Offtaker or the State of Orissa which has an impact on the rights and obligations of the Borrower under the PPA;
(xxii)	any representation, warranty, covenant or condition under the Financing Documents being or becoming untrue or incorrect in any respect;
(xxiii)	the occurrence of any event with respect to which any insurance has been obtained under the Insurance Contracts, and any loss or damage suffered as a result of such event to the assets of the Borrower; and
(xxiv)	any circumstances affecting the financial position of the Borrower, the Sponsor, the Borrower’s subsidiaries or companies in which the Borrower has been permitted to have large investments, including any action or Legal Proceedings commenced by any creditor of such entities.

8.22.2	Consortium Finance Information
	Provide all information and certification as may be required by the Facility Agent or the Lenders to comply with Applicable Law, including but not limited to circular number RBI/2008-2009/379 dated February 10, 2009 issued by the RBI. The Lenders may require its consultants to provide certification required to determine compliance with the abovementioned at the Borrower’s cost.

8.22.3	Required Information and Data
	In order to inform the Lenders about the physical progress as well as provide evidence to the Lenders that the expenditure incurred on the Project is in accordance with the Project Schedule, the Borrower shall

79

provide to the Facility Agent all relevant information and data as may be required by the Facility Agent including certification from the Lenders Engineer/Auditor regarding completion of the Project. The Borrower shall also ensure that the physical progress of the development of the Coal Blocks is proceeding in accordance with the schedule provided to the Lenders and provide all relevant information and data as may be required by the Facility Agent in relation thereto. While delivering copies of documents, materials and information required to be delivered under the Financing Documents and this sub-section, the Borrower shall deliver such number of copies of all documents, materials and information as is sufficient for onward delivery to each of the Lenders.

8.22.4

Construction Schedule Milestone Dates

Within five (5) Business Days, the Borrower shall certify to the Facility Agent (such certification to be confirmed by the Lenders Engineer) of the occurrence of each of: (i) the Date of Commercial Operation for each Unit and Project COD; (ii) Final Completion; (iii) any change in the scheduled Date of Commercial Operations of any Unit; and (iv) the date on which the Borrower proposes to take over each Unit of the Project pursuant to the Project Documents prior to scheduled synchronisation date of any Unit of the Project.

8.23 Financial Covenants

8.23.1 From Project COD onwards at all times during the term of the Loan, the Borrower shall maintain the following financial covenants:

(i)	Total Debt Gearing shall be maintained at 3.0:1; or lower
(ii)	Debt Service Coverage Ratio shall be maintained at 1.30; or higher and

80

(iii) Security Margin shall be maintained as per the Base Case.

8.23.2 If the Borrower defaults or fails to comply with any of the covenants in Section 8.23.1 (i), (ii) and (iii), the Borrower shall pay additional interest of 1% per annum over and above the Lending Rate (after taking into account any Default Interest or Liquidated Damages) for the period of non-adherence subject to a minimum period of one (1) year. The measurement of the deviation shall be at the end of each Fiscal Year and shall be made on the basis of the Audited Annual Financial Statements for such Fiscal Year. Provided, however, the Borrower may, deviate by up to 20% vis-à-vis the stipulated levels as indicated above, in respect of any one of the conditions specified in 8.23.1(i) and (ii) above without attracting such additional interest.

8.23.3 In case the Borrower continuously defaults in the performance of the above financial covenants, or in case of a decline in performance levels, the Lenders shall be entitled to stipulate any other conditions required by them after consultation with the Borrower.

8.24 Annual Budget; Operating Plan; Long Term Major Maintenance Plan

8.24.1 (i) (A)   The Operating Budget shall have been agreed and delivered for each Operating Year, as soon as available, but in any event at least seventy five (75) days prior to the commencement of each Operating Year. The Borrower shall submit to the Facility Agent an annual Operating Budget for such upcoming Operating Year (including budgeted statements of income and sources and uses of cash and balance sheets, the “Annual Budget”) prepared by the Borrower and accompanied by a statement of the chief financial officer or other Authorized Officer of the Borrower to the effect that, the budget is a reasonable estimate for the period covered thereby and is in

81

compliance with the requirements of this Section 8.24. Each Annual Budget shall contain fair and accurate Rupee denominated estimates of project revenues, fuel costs, Operation and Maintenance Costs and projected working capital requirements for each calendar month covered by such Annual Budget based on the Borrower’s fair and accurate projections at such time which shall be based on all facts and circumstances then existing and known to the Borrower and which reflect the Borrower’s best estimate of the future results of the Borrower and which are consistent with the Annual Operating Plan and the Major Maintenance Budget applicable to such Operating Year. Each Annual Budget shall be prepared in good faith on the basis of written assumptions stated therein which the Borrower believes to be reasonable as to all factual and legal matters material to such estimates. Each Operating Budget and Annual Budget shall be subject to approval by the Facility Agent.

(B)	Unless otherwise consented to by the Facility Agent in consultation with the Lenders Engineer, the Annual Budget from year to year shall be based on the same format and be maintained on the same basis and shall provide sufficient detail to permit a meaningful comparison to previous years.
(C)	An Annual Budget shall become effective on the first day of the relevant Operating Year if approved prior to such date by the Lenders or the Facility Agent. If the Facility Agent does not inform the Borrower of the Lenders’ non-approval of a submitted Annual Budget within seventy five (75) days after submission thereof to the Facility Agent, such submitted Annual Budget shall be deemed to have

82

been approved by the Lenders.

	(ii)	If all or any portion of an Annual Budget is disapproved prior to the first day of the relevant Operating Year, the Borrower shall adhere to all approved aspects of such Annual Budget. With respect to those aspects of any Annual Budget which are not approved (other than with respect to Major Maintenance expenditures), the Annual Budget for the preceding Operating Year (if applicable), shall be applicable thereto (and shall for all purposes hereof be regarded as part of the approved Annual Budget for such Operating Year) until such time as such aspects of the Annual Budget therefor have been approved by the Facility Agent. In the event that any Major Maintenance expenses proposed as part of an Annual Budget for any Operating Year are disapproved, the major maintenance expenses available during such Operating Year shall be an amount that is approved by the Lenders Engineer and the Facility Agent.
8.24.2	(i)	The Mobilisation Plan, in form and substance satisfactory to the Facility Agent, and with the prior approval of the Lenders Engineer, for the Mobilisation Period shall be delivered to the Facility Agent by the Borrower not later than one (1) year prior to the commencement of the Mobilisation Period, or such other time as may be agreed by the Facility Agent.

(ii) For each Operating Year, the Borrower shall submit in writing to the Facility Agent for approval by the Facility Agent, in connection and concurrently with the submission of the Annual Budget for such Operating Year, the Annual Operating Plan therefore and a revised or updated Long Term Major Maintenance Plan covering the five (5) year period commencing with such upcoming Operating Year. The Facility Agent will either approve or disapprove any Annual Operating Plan and Long Term Major

83

	Maintenance Plan so submitted within forty five (45) Business Days (or, with respect to amendments to any applicable Annual Budget, Annual Operating Plan or Long Term Major Maintenance Plan, within fifteen (15) Business Days) after such submission.
(iii)	The Annual Operating Plan shall consist of the Borrower’s fair and accurate projections for the operation and maintenance of the Project including fuel expenses for the given Operating Year, as well as with the Major Maintenance contemplated to be performed during such Operating Year pursuant to the Long Term Major Maintenance Plan (hereinafter the “Annual Operating Plan”).
(iv)	The Long Term Major Maintenance Plan shall set forth the details of all Major Maintenance proposed to be performed by the Borrower with respect to the Project during the upcoming five (5) year period specifying the nature, timing, cost and scope of all such proposed maintenance and its envisioned effect on Project operations (hereinafter referred to as the “Long Term Major Maintenance Plan”).
(v)	The Long Term Major Maintenance Plan shall be consistent with the maintenance program agreed (or otherwise applicable) between the Offtaker and the Borrower pursuant to the PPA.

8.24.3 The Borrower shall ensure that the aggregate Major Maintenance costs for each Unit for each Operating Year shall not exceed the aggregate of the Major Maintenance Amounts for such Operating Year. Any additional payments towards Major Maintenance shall be paid only with the approval of the Lenders Engineer.

8.25 Bullet Repayment

84

The Borrower shall have, to the satisfaction of the Lenders, made arrangements for repayment of the Rupee Bullet Repayment Amount, at least three (3) months prior to the Maturity Date.

8.26	Constitutional Documents
	The Borrower shall, within a period of three (3) months from the date of this Agreement, suitably amend its Articles of Association, inter alia, to provide for the appointment of two (2) nominee directors by the Lenders in the manner contemplated in this Agreement and such other changes as may be required by the Lenders, to the satisfaction of the Facility Agent.

8.27	Credit Rating
	The Borrower shall, at its cost, get itself rated by such reputed external credit rating agency as may be approved by the Facility Agent, within a period of three (3) months from the date of this Agreement, or such other time period as may be agreed by Facility Agent.

8.28 Miscellaneous

8.28.1 The Borrower shall maintain its corporate existence and right to carry on its business and operations and ensure that it has the right and is duly qualified to conduct its business and operations as it is conducted in all applicable jurisdictions and will obtain and maintain all franchises and rights necessary for the conduct of its business and operations in such jurisdictions. On the happening of any event that adversely affects the finances of the Borrower or any of its Affiliates, or any other Person in which it has been permitted to have large investments under the terms of this Agreement, including any action taken by creditors/statutory authorities/other bodies, the Borrower shall promptly inform the Lenders of the same.

85

8.28.2	The Borrower shall inform the Facility Agent of the happening of any event which may have a Material Adverse Effect on the Project within two (2) days of happening of such event and suggest remedial measures in relation to the same.
8.28.3	The Lenders shall have the right to stipulate any additional conditions upon the occurrence of an event having a Material Adverse Effect, an Event of Default or a Potential Event of Default and the Borrower undertakes to abide by the same.
8.28.4	The Borrower shall, if required by the Lenders based on the review by the Lenders Engineer, make necessary arrangements for disposal of fly ash to the satisfaction of the Lenders at least six (6) months prior to Project COD.
8.28.5	The Lenders shall have the right to stipulate any other condition as they may consider necessary after consultation with the Borrower, prior to the First Utilisation Date and the Borrower agrees to abide by the same.

9.	NEGATIVE COVENANTS
	The Borrower covenants and agrees that, until the Final Settlement Date, it shall, unless otherwise previously agreed to in writing by the Facility Agent, comply with the following:

9.1

Permitted Indebtedness

The Borrower shall not, without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, contract, create, incur, assume or suffer to exist any indebtedness, except for Permitted Indebtedness. In the event of the Facility Agent permitting the Borrower to obtain any subordinated loans, the lenders of such subordinated loan shall enter into necessary subordination arrangement with/in favour of the Facility Agent. The Borrower

86

agrees that it shall not prepay such loans without the consent of the Facility Agent.

9.2	Restricted Payments
	The Borrower shall not make any Restricted Payments before Project COD. After Project COD, the Borrower may make Restricted Payment only in accordance with the provisions of the Trust and Retention Account Agreement and upon satisfaction of the Restricted Payment Conditions.

9.3	No Other Business or Activity
	The Borrower shall not: (i) carry on any business or activity other than in connection with the completion or operation of the Project; or (ii) set up or have any subsidiaries other than Talwandi Sabo Power Limited unless consent of the Facility Agent has been obtained; or (iii) without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, issue any guarantee or undertake any obligations having substantially the same effect as a guarantee except as required under the Transaction Documents in the ordinary course of business; or (iv) revalue the assets and properties of the Borrower during the currency of the Facility except as required by the Applicable Law; or (v) suspend or terminate or take any action which would entitle the Major Project Parties to suspend or terminate the Major Project Documents, without the prior written approval of the Facility Agent.
	Provided that the Borrower shall not invest any funds in Talwandi Sabo Power Limited (whether in the form of subscription to shares, lending monies or otherwise) in excess of Rs 5,00,000 (Rupees Five Lakhs), unless: (i) such funds have been invested in the Borrower by the Sponsor through subscription to the Borrower’s Shares; and (ii) prior written consent of the Facility Agent has been obtained.

87

Provided further that the Borrower shall not undertake any obligations with respect to any business or activity being conducted by Talwandi Sabo Power Limited, without the prior written consent of the Facility Agent.

9.4	Expansion
	The Borrower shall not undertake any new project or expansion thereof without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld.

9.5	Winding Up, Amalgamation and Restructuring and Sale of Assets
	The Borrower shall not:

(a)	wind up, liquidate or dissolve its affairs;
(b)	without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, enter into any transaction of merger, consolidation, amalgamation or reorganization;
(c)	without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, effect any change in the capital structure including the shareholding pattern other than as contemplated under this Agreement; and
(d)	convey, sell, lease, let or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets except for any Permitted Disposal.

9.6	Assignment
	The Borrower will not: (i) assign or permit the assignment of any rights or obligations of the Borrower to any Transaction Document; or (ii) consent to or

88

permit the assignment of (except to the extent that such assignment constitutes a Permitted Security Interest) any rights or obligations of any party (other than the Borrower) under any Transaction Document.

9.7 Modifications of Constitutional Documents; Additional Agreements; Assignments and Modifications of Financing Documents

9.7.1

The Borrower will not: (i) amend or modify its Memorandum and Articles of Association which will affect the Borrower’s obligations or the Lenders’ rights under the Financing Documents; or (ii) change its Fiscal Year; or (iii) change the accounting policies presently followed by the Borrower except as required under Applicable Law or Indian GAAP; or (iv) without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, materially change the nature or scope of the Project.

9.7.2

The Borrower shall not initiate or consent to any amendments to the approved Construction Budget and Project Schedule or approved completion plan, as the case may be except:

(i)	Such amendment that reflects events of Force Majeure under the Project Documents (or approved Construction Budget, if applicable) and the Lenders Engineer certifies, that such amendment is not likely to result in an Material Adverse Effect; and
(ii)	Such amendments that are permitted by the Facility Agent.

Provided that in relation to sub-paragraph 9.7.2 (i) above, the Lenders Engineer certifies that funds available to the Borrower (from borrowings, liquidated damages proceeds or otherwise) are expected to be sufficient to fund the costs of achieving Final Completion.

89

9.8	Security Interest
	Without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, the Borrower shall not, and shall not agree to, create, incur, assume or suffer to exist any Security Interest upon or with respect to any property, revenues or assets (real, personal or mixed, tangible or intangible) of the Borrower, whether now owned or hereafter acquired, other than: (a) a Permitted Security Interest; and (b) Security Interests arising under Applicable Law, to the extent that the same is not arising on account of any amounts due but not paid by the Borrower to any Person.
9.9	Advances, Investments and Loans
	The Borrower shall not lend money or credit or make deposits with or advances (other than deposits or advances in relation to the payment for goods and equipment as required and permitted by the Transaction Documents) to any Person, or purchase or acquire any stock, shares, obligations or securities of, or any other interest in, or make any capital contribution to, or acquire all or substantially all of the assets of, any other Person other than Talwandi Sabo Power and Rampia Coal Mine and Energy Private Limited. The Borrower may, however, utilize amounts lying in the Distribution Account for the aforesaid purposes, unless any such use of these funds results in the Borrower incurring any additional obligation.
	Provided that the Borrower shall not invest any funds in Talwandi Sabo Power Limited and/or Rampia Coal Mine and Energy Private Limited (whether in the form of subscription to shares, lending monies or otherwise) in excess of Rs 5,00,000 (Rupees Five Lakhs) and Rs. 52,17,432 (Rupees Fifty Two Lakhs Seventeen Thousand Four Hundred and Thirty Two), respectively, unless: (i) such funds have been invested in the Borrower by the Sponsor through subscription to the Borrower’s shares; and (ii) prior written consent of the Facility Agent has been obtained.

90

9.10 Transaction Documents

9.10.1

The Borrower shall not make or agree to make any material amendment of any Transaction Document without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, or grant any waiver in respect of, modify any provision or grant any waiver of the Transaction Documents, terminate any of the Transaction Documents, or assign or otherwise dispose of any of its interests under the Transaction Documents or exercise any election or permit the assignment, transfer, termination, amendment, modification or grant in respect of any provision of any Transaction Document to which the Borrower is a party or assign or dispose of any of its interests under the Transaction Documents.

9.10.2

The Borrower shall not suspend or terminate; or take any action which would entitle the Major Project Parties to suspend or terminate the Major Project Documents, without the prior written approval of the Facility Agent.

9.11	Leases
	The Borrower shall not enter into any agreement or arrangement to acquire or make available by lease the use of any property or equipment of any kind, other than:

(a)	for office premises taken in the ordinary course of business provided the lease rent does not exceed Rs. 5,00,00,000/- (Rupees Five Crores only) in any Fiscal Year; and
(b)	land constituting the Project Site taken on lease, without the prior written approval of the Facility Agent.

9.12 Abandonment

91

	The Borrower shall not Abandon or agree to Abandon the Project or place it or agree to place it on a Care and Maintenance basis.
9.13	Contingency Funds
	The Borrower shall not, utilise the Contingency without prior approval of the Facility Agent.
9.14	Accounts
	The Borrower shall not open any bank account denominated in any currency other than Rupees and other than in accordance with the terms of the Trust and Retention Account Agreement, except to the extent required for deposit of the Additional Loans. Provided that the Lenders shall have a charge on such accounts.
10.	CANCELLATION OF THE FACILITY
	The undrawn Commitments shall be cancelled at the close of normal working hours on the last Business Day of the Availability Period. The Borrower shall not cancel the Facility or any part thereof unless, in the opinion of the Lenders, the representation in Section 6.9 would not become untrue as a result of such cancellation. The Borrower shall notify the Lenders and the Facility Agent upon receipt of such approval that the Facility that is being cancelled.
11.	CANCELLATION OF THE FACILITY BY THE LENDERS

11.1.1	Any Lender may, by notice in writing to the Borrower, cancel its Commitment or any part thereof, which the Borrower has not withdrawn prior to the giving of such notice.
11.1.2	Any Lender may cancel its Commitment only in accordance with this Section 11. Notwithstanding anything to the contrary, any Lender may cancel whole or part of its Commitment, without assigning any reason

92

whatsoever, including in the event of deterioration in the loan accounts in any manner whatsoever.

12.	DISBURSEMENTS BY WAY OF LETTER OF COMMITMENT
12.1	Letter(s) of Commitment

12.1.1	The Rupee Lenders hereby jointly and irrevocably authorise the Issuing Bank to open one or more Letter(s) of Commitment not exceeding in aggregate, the aggregate of all their respective Earmarked Amounts, upon the Borrower so requesting and on submission of the Documentary Credit Application in accordance with the terms of this Agreement, in favour of the Buyers Credit Lender. Upon issue of a Letter of Commitment, the Issuing Bank shall notify to each of the Rupee Lenders, their respective Participating Interest in that Letter of Commitment by a notice in the form set out in Schedule V hereto (“Participating Interest Notice”).
	For the avoidance of doubt, the Issuing Bank, while determining the Participating Interest of each Rupee Lender shall deduct the aggregate of the face value of all individual Letters of Commitment issued by such Rupee Lender, if any, under Section 12.1A hereof from the Unutilized LOC Amount of that Rupee Lender.. For every Letter of Commitment issued, each Rupee Lender irrevocably and unconditionally agrees to share the credit risk and reimburse to the Issuing Bank an amount equivalent to the extent of its Participating Interest in that Letter of Commitment.
	Provided that: (i) the Issuing Bank shall not be obliged to issue a Letter of Commitment if the aggregate of the Unutilized LOC Amount of all Rupee Lenders for that Letter of Commitment is less than the face value of that Letter of Commitment; (ii) the aggregate face value of all Letters of Commitment issued by the Issuing Bank shall not exceed the Maturity Amount; and (iii) the Issuing Bank shall not be obliged to issue any Letters of Commitment if the issue of such Letter of Commitment results

93

	in the aggregate of the face value of all Letters of Commitment, issued by it hereunder (but excluding the aggregate Participating Interest of State Bank of India in all such Letters of Commitment) to exceed Rs. 1400,00,00,000/- (Rupees Fourteen Hundred Crores Only). For issuance of a Letter of Commitment, the Borrower shall furnish to the Lenders at the time of submitting the Documentary Credit Application such documents in connection with the Project Documents or the Buyers Credit Facility as may be required by the Lenders.
	For the avoidance of doubt, Life Insurance Corporation of India shall have no obligation to participate in or issue any Letters of Commitment under this Agreement.
12.1.2	Each drawing made under a Letter(s) of Commitment shall constitute a Disbursement under this Agreement of:

(a)	where the Letter of Commitment has been issued by the Issuing Bank, the drawn portion of the Participating Interest of each Rupee Lender participating in such Letter of Commitment; or
(b)	where the Letter of Commitment has been issued by an Issuing Lender, of the drawn portion of the face value of such Letter of Commitment,

	to be repayable as a Loan in terms of Section 15 including, for the avoidance of doubt, the payment of any interest thereon. The Borrower irrevocably and unconditionally authorizes the Rupee Lenders and the Facility Agent to take all such actions as it may require for the above purpose.
12.1.3	Without prejudice to the generality of Section 12.1.1 and 12.1.2 above, the Borrower and each Rupee Lender irrevocably and unconditionally:

94

(a) authorise the Issuing Bank/ Issuing Lenders to pay any demand made under a Letter of Commitment which appears on its face to be in accordance with the relevant Letter of Commitment:

(i)	without investigation by the Issuing Bank/ Issuing Lenders or confirmation from the Borrower, any Rupee Lenders or any other Person; and
(ii)	notwithstanding that the Borrower may dispute the validity of any such demand;

(b)	agrees and confirms that the Issuing Bank/ Issuing Lender would be authorised to determine, at its sole discretion, whether a demand complies with the relevant Letter of Commitment or is discrepant and upon a payment being made or a determination being made by the Issuing Bank/ Issuing Lender of a valid demand having been made, the demand will be conclusive evidence that the demand is correct and has been properly made and any amount paid shall be regarded as having been properly paid for the purposes of this Agreement. The Borrower shall not be entitled to and hereby irrevocably waives all rights and entitlements to claim against, object or dispute the aforesaid determination of the Issuing Bank/Issuing Lender or any payments made by it under the Letter of Commitment, whether or not finally the demand was determined to be discrepant;
(c)	agrees that Issuing Bank/Issuing Lender deals in documents only and shall not be concerned with the legality of the claim or any underlying transaction or any set-off, counterclaim or defence as between the Borrower and any other Person or the Buyers Credit Lender and any other Person;
(d)	agrees that this Section 12.1 shall apply in respect of amounts paid

95

under any demand without regard to:

(A)	the sufficiency, accuracy or genuineness of any demand or any certificate or statement in connection with any demand;
(B)	any incapacity of, or limitation upon the powers of, any person signing or issuing any demand or certificate or statement in respect of any demand; or
(C)	any other condition;

(e) agrees that if Issuing Bank or the Issuing Lender pays any demand under a Letter of Commitment such amount shall be regarded as having been properly paid for the purposes of this Agreement.

12.1.4 (a) The Borrower may request and the Rupee Lenders may permit, any Disbursement from their Unutilized Earmarked Amount in accordance with the terms of this Agreement, and such drawing shall constitute a Drawdown under this Agreement. The Borrower and Rupee Lenders shall notify the Issuing Bank if any Drawdown is made from their Unutilized Earmarked Amount.

(b) Upon such Drawdown, the Earmarked Amount with respect to the relevant Rupee Lenders shall be reduced by the amount of such Drawdown.

12.1.5 The Borrower agrees, confirms and declares that:

(a)	the import of Goods is/are not in contravention of Trade Policy/Exim Policy guidelines prescribed by the GOI from time to time.
(b)	it has a valid Import Export code number assigned by the Director General of Foreign Trade and is authorised to undertake imports of

96

	the Goods.
(c)	the transaction covered under the Facility and the issue of Letter of Commitments do not involve and are not designed for the purpose of any contravention or evasion of the provisions of Foreign Exchange Management Act, 1999 or of any rule, regulations, notifications direction or order made thereunder or of any other law, rule, regulation or direction.
(d)	the Letter(s) of Commitment may be amended and/or modified by the Issuing Bank/ Issuing Lender in its absolute discretion, including for an increased limit on the Borrower giving the Issuing Bank/Issuing Lender written instruction for the same and in such an event, such amendment/ modification will be deemed to form part of the Documentary Credit Application and will be governed by the terms hereof and the Borrower agrees, covenants, records and confirms that it shall be bound by the same as if such amendment/modification including the increased limit had originally constituted the term of the relevant Letter of Commitment.

12.1.6	The Borrower further confirms and declares that it is in compliance with provisions of Applicable Law with respect to import of Goods and the transactions covered under the Facility.
12.1.7	The Borrower agrees that the transmission of all instructions and communications under the Letter(s) of Commitment and the shipping of Documents and the Goods thereunder are entirely at its risk. No Lender or its correspondents or agents shall be responsible for any error or delay in such transmission or loss or delay in delivery of the Documents or the Goods.
12.1.8	The Borrower and each Rupee Lender agrees, confirms and declares for

97

itself that:

(a)

the Documentary Credit Application of the Borrower and the Participating Interest of each Rupee Lender shall be deemed to have been accepted by such Rupee Lender when advice of the issuance of the Letter of Commitment has been sent to the Buyer’s Credit Lender, with a copy of such advice to each Rupee Lender through SWIFT/tested telex/airmail and the Participating Interest Notice has been issued; and

(b)

the date of receipt of the Documents by Issuing Bank/Issuing Lender under the Letter(s) of Commitment as registered in the records of Issuing Bank/Issuing Lender shall be conclusive and binding on it and it shall not have a right to demand and seek verification of any of the Documents.

12.1.9 The Borrower undertakes to submit to the Rupee Lenders, if so required by them, the exchange control copy of the relative customs bills of entry within the time limit stipulated by the Reserve Bank of India.

12.1A	Issue of Individual Letter(s) of Commitment
	Any Rupee Lender may, upon request by the Borrower, and with prior written approval of the Facility Agent, issue individual Letter(s) of Commitment having a face value not exceeding an amount equal to the maximum extent of its Unutilized LOC Amount, in favour of the Buyers Credit Lender (such Rupee Lender, in its capacity as an issuer of a Letter of Commitment shall be referred to in this Section 12 as the “Issuing Lender”).
12.2	Terms and Conditions of the Letter(s) of Commitment

12.2.1 Affirmative and Negative Covenants

98

In addition to Sections 8 and 9 of this Agreement, the Borrower covenants and agrees that, until Final Completion:

(a)	The Borrower shall not suspend or terminate; or take any action which would entitle the counterparty(ies) to the Project Documents to suspend or terminate the Project Documents in respect of which Letter(s) of Commitment have been issued, or the Buyer’s Credit Lender to terminate the Buyer’s Credit Facility Agreement without the prior written approval of the Lenders;
(b)	The Borrower agrees to take such actions under the Project Documents or the Buyer’s Credit Facility Agreement, as may be directed by the Lenders; and
(c)	The Borrower shall during the Availability Period, if required by the Lenders, hedge the foreign exchange risk to the satisfaction of the Lenders.

12.2.2 Indemnity from the Borrower

(a)

The Lenders shall not be liable for any losses, liabilities, costs, damages, expenses or inconvenience whatsoever incurred by the Borrower or by any other Person pursuant to any action by the Borrower in accordance with Section 12.2.1 above. The Borrower shall indemnify the Lenders against any costs, charges, expenses, losses, liabilities, claims, actions, suits or proceedings (including arbitral proceedings) arising, incurred, made or filed by the Borrower or by any other Person in connection with any action of the Borrower in accordance with Section 12.2.1 above.

(b)

The Borrower hereby agrees to pay to the Rupee Lenders on demand, all costs (including legal costs on a full indemnity basis), customs duty, penalty, demurrage, storage charges, clearing and

99

forwarding charges and all other charges and expenses including any costs incurred by the Rupee Lenders on account of devaluation of rupee against the US Dollar with respect to the Letter of Commitment and/or in connection with opening, establishing, participating in the issue of any Letter(s) of Commitment or taking any action thereunder or in the exercise or enforcement of any right or power hereby conferred or otherwise howsoever and further agrees and undertakes to hold the Rupee Lenders safe and harmless and keep it indemnified against any claim, action or proceedings made or brought against the Rupee Lenders, its correspondents or agents, as also against any liability or loss incurred or suffered by it, its correspondents or agents by reason of it having established the Letter(s) of Commitment.

(c)

The Borrower hereby agrees to indemnify and keep the Lenders indemnified against any liability, loss, damages, reasonable and actual costs and expenses (including legal expenses) awarded against or incurred or paid by the Lenders as a result of or in connection with the Lenders making payment outside India to the Buyers Credit Lender, under the Letter(s) of Commitment, without deducting tax in India whether or not such payment attracts withholding tax in India or requires due certification by a qualified accountant.

12.2.3 The Facility will be disbursed by the Rupee Lenders during the Availability Period:

(a)	in accordance with Section 5 of this Agreement in respect of sums disbursed by way of Drawdown; and
(b)	as and when a drawing is made on the Letters of Commitment in accordance with the terms thereof.

100

12.2.4 Any Letter of Commitment which has been retired, has expired, or under which all payments have been made, shall not be reinstated.

12.3 Charges

12.3.1

The Borrower shall pay, in advance to the Issuing Bank, fronting commission, for its own account, at the rate to be specified by the Issuing Bank (the “Fronting Commission Rate”) on the aggregate of the undrawn face value of the Letter(s) of Commitment (the “Fronting Commission”), for each LOC Commission Period, on the LOC Commission Payment Dates. The Borrower shall pay to each Rupee Lender, who has issued any Letter of Commitment, commission at the LOC Commission Rate on the proportionate value of the undrawn face value of the Letter(s) of Commitment (the “LOC Commission”) calculated as per its respective Participating Interest, for each LOC Commission Period, on the LOC Commission Payment Dates. For the avoidance of doubt, if any Issuing Lender has issued individual Letters of Commitment under Section 12.1A, the Borrower shall pay to such Issuing Lender, LOC Commission for each LOC Commission Period at the LOC Commission Rate on the undrawn face value of all such individual Letter(s) of Commitment issued.

12.3.2

Additionally, the Borrower shall pay:

(a)	SWIFT charges per Letter(s) of Commitment or such other amounts as may be specified by the Issuing Bank/ Issuing Lender from time to time;
(b)	for all the Documents negotiated, a document handling charge as may be specified by the Issuing Bank/ Issuing Lender from time to time of the value of the Documents negotiated;
(c)	amendment Charges of each Letter of Commitment and associated

101

	SWIFT charges, each as may be specified by the Issuing Bank/Issuing Lender from time to time per amendment;
(d)	any charges that may be levied as per FEDAI rules in force from time to time for any early/late delivery of the relevant foreign exchange/currency under the forward exchange contract if any, booked by the Borrower;
(e)	commission or other bank charges and out of pocket charges (at actuals) including but not limited to remittance of monies to the Buyer’s Credit Lender, SWIFT, telex, telephone, facsimile, air mail and courier charges, and all other reasonable and actual costs, charges and expenses incurred at any time by the Lenders (including any payment made or liability incurred on behalf of the Borrower, together with interest, and costs, charges and expenses thereon) with respect to the issue, amendment, renewal, extension, maintenance or payment under the Letter(s) of Commitment.

12.4	Advances
	The procedure specified in Section 5 of this Agreement shall not be applicable to the Disbursement under the Facility pursuant to a Letter(s) of Commitment except in the event specified in Section 12.1.4.
12.5	Payment under Letter of Commitment

(a) If the Buyers Credit Lender presents a claim, under any Letter(s) of Commitment, and the Issuing Bank determines that the Documents, if any, submitted along with claim are non-discrepant, or is satisfied that the discrepancies have been resolved, then Issuing Bank shall make payments to the Buyers Credit Lender of the amount claimed (“Claimed Amount”) in the manner required under the Letter of Commitment. Issuing Bank may in the first instance honour the claim or demand so made on it by the

102

Buyers Credit Lender out of its own funds provided such claim or demand shall have been otherwise found to be in accordance with the terms of the Letter(s) of Commitment. Issuing Bank shall honour the claim/demand made by the Buyers Credit Lender irrespective of whether the Borrower or the Lenders have made payments to Issuing Bank and any losses or expenses suffered by the Issuing Bank on this account, including interest suffered by it on account of funds required or sought by it for meeting the obligations, shall be on account of the Borrower and the particular Lender who has not paid its respective amounts.

(b)

If the Buyers Credit Lender presents a claim, under any Letter(s) of Commitment issued by any Issuing Lender under Section 12.1A, and such Issuing Lender determines that the Documents, if any, submitted along with claim are non-discrepant, or is satisfied that the discrepancies have been resolved, then such Issuing Lender shall make payments to the Buyers Credit Lender of the amount claimed in the manner required under the Letter of Commitment.

12.6

Payment of Amount Claimed

Unless a payment under any of the Letter(s) of Commitment is restrained by an order of a competent court, the Issuing Bank/ Issuing Lender shall be at liberty to make payment of the amount claimed under the Letter(s) of Commitment on the Payment Date if the claim or demand of the Buyers Credit Lender is otherwise found to be in order. Each Rupee Lender shall unconditionally and irrevocably contribute ratably and pay to the Issuing Bank, without any set-off, such sums as are equivalent to the proportion that its Participating Interest in such Letter of Commitment bears to the Claimed Amount towards any such payment made by Issuing Bank, notwithstanding any dispute between the Borrower and the Lenders and/or any direction to the contrary that may be given, represented, affirmed, etc. by the Borrower on the ground of any dispute between the Borrower and the Buyers Credit Lender or counterparty(ies) to the Project Documents or between the Borrower and any of the Lenders.

103

12.7	Conditions Precedent to the Issuance of the Letter(s) of Commitment
	Issuance of Letter(s) of Commitment by the Issuing Bank/ Rupee Lender under this Agreement shall be subject to the fulfillment or waiver (in accordance with the Financing Documents) of the conditions precedent set out in Section 7 of this Agreement. For the avoidance of doubt, (i) the conditions set out in Section 7 of this Agreement shall not be applicable to Disbursements by way of drawing under the Letter(s) of Commitment; and (ii) the conditions set out in Section 7 of this Agreement shall be applicable to Disbursement made under Section 12.1.4 hereof.
12.8	Validity
	Notwithstanding anything contained in this Agreement, no Letter of Commitment having a validity period extending beyond the Availability Period shall be issued under this Agreement. The Borrower shall not avail of the Buyer’s Credit Facility having maturity date beyond the Availability Period.
12.9	Terms and Conditions
	The Letters of Commitment shall be either usance or sight Letters of Commitment within the usance period permitted by the RBI. The detailed terms and conditions of each Letter of Commitment shall be as specified by the Issuing Bank, or the relevant Rupee Lender, as the case maybe.
12.10	Applicable Law
	The issuance of any Letter of Commitment under this Agreement shall be in compliance with the ECB Guidelines and all other rules and regulations made under the Foreign Exchange Management Act, 1999.
13.	LIABILITY OF AND PAYMENTS BY LENDERS

104

13.1	Notice of Demand
	In the event of Issuing Bank being called upon or otherwise required at any time to make payment under any Letter(s) of Commitment, then Issuing Bank shall immediately issue notice of demand (“Notice of Demand”) on the Rupee Lenders with a copy to the Borrower along with a copy of each of the Documents. The Notice of Demand shall specify:

(i)	the Claimed Amount;
(ii)	the Payment Date;
(iii)	the contribution of the Rupee Lenders with respect to the Claimed Amount in proportion to their Participating Interest in that Letter of Commitment(“Claimed Share”);
(iv)	the Due Date for receipt of the Participating Interest; and
(v)	the Crystallized Rupee Amount with respect to the Participating Interest.

	The Rupee Lenders shall, at the option of Issuing Bank, pay directly to Issuing Bank their respective Claimed Shares in that Letter of Commitment either: (i) in the relevant foreign currency; or (ii) in the Crystallized Rupee Amount as determined by Issuing Bank.
	The Rupee Lenders irrevocably agree that if the Issuing Bank has, prior to receiving their comments, if any, on the Documents and prior to the demand from the Buyers Credit Lender becoming irrevocable against the Issuing Bank in terms of the ICC Uniform Customs & Practises for Documentary Credits, made a determination that the Documents and the demand are in compliance with the terms of the Letter of Commitment, then such determination shall be valid and binding on the Rupee Lenders.
13.2	Payment by the Lenders and the Borrower

105

13.2.1	Notwithstanding anything contrary contained in any of the other Financing Documents, the Rupee Lenders irrevocably agree and confirm to the Issuing Bank that they shall forthwith and unconditionally, upon receipt of a Notice of Demand from the Issuing Bank, pay to the Issuing Bank at its Lending Office or any other place specified in the notice on the Due Date, without demur or protest, the amount of their Participating Interest, and if such payment is after the Due Date for such payment, together with interest thereon at the Default Rate from the date of remittance of the payment to the Buyers Credit Lender until reimbursement thereof by the Rupee Lenders as mentioned in the Notice of Demand. Such interest shall become payable upon the footing of compound interest with monthly rests.
13.2.2	Notwithstanding Section 13.2.1 above, if the Issuing Bank is called upon to pay, or pays, all or any of the monies in pursuance of the Letter(s) of Commitment, the Borrower shall forthwith, without any demur or protest, pay to the Issuing Bank at its Lending Office or such other place specified, all amounts paid by the Issuing Bank and not reimbursed by the Rupee Lenders or the Borrower as the case may be, including the Unreimbursed Drawings, and including without limitation all reasonable and actual costs, charges and expenses whatsoever payable or paid, suffered or incurred by the Issuing Bank in respect of or in relation to or arising out of the obligations undertaken by the Issuing Bank under such Letter(s) of Commitment together with interest on such amount, from the date when they were first paid or incurred by the Issuing Bank until payment by the Borrower in full at the Default Rate. The Borrower shall, at the option of the Issuing Bank, pay the claimed amounts or reimburse the Unreimbursed Drawings, as the case may be, to the Issuing Bank either: (i) in the relevant foreign currency; or (ii) the Crystallized Rupee Amount as determined by the Issuing Bank.
13.2.3	A certificate in writing signed by an authorised officer of Issuing Bank stating the amount payable by the Rupee Lenders hereunder, shall be

106

conclusive evidence against them of the amount due to Issuing Bank, save for manifest error.

13.3 Liability of Lenders

13.3.1

The Rupee Lenders shall be unconditionally and irrevocably liable to reimburse the Issuing Bank in proportion to their respective Participating Interests immediately on the receipt of a Notice of Demand from Issuing Bank, any expenditure which the Issuing Bank may have incurred in connection with the Letter(s) of Commitment, if the same shall not have been forthwith reimbursed by the Borrower, together with interest at the rate as mentioned hereinabove.

13.3.2

No Rupee Lender shall exercise any right of set-off, counter-claim, lien or any other right to which it may be entitled, against any credit balance or assets of the Borrower or of any other person liable for the Borrower, lying with such Rupee Lender and notwithstanding the exercise of any right of set-off, counter-claim, lien or any other right, the Rupee Lenders shall continue to be unconditionally and irrevocably liable to reimburse Issuing Bank in proportion to their respective Participating Interests immediately on receipt of a Notice of Demand from the Issuing Bank.

13.4 Distribution of Dues Received And Costs Amongst the Lenders

13.4.1 Issuing Bank shall be liable on its part to distribute amongst the Rupee Lenders their pro rata shares in all dues, charges and expenses, forthwith upon the same being received, collected or recovered from the Borrower or any other person in connection with the Facility, after deducting from such income or dues, all costs charges and expenses that may have been properly incurred by the Issuing Bank in the course of its collection or recovery, and pending such distribution, the moneys shall be held by Issuing Bank in trust for the Rupee Lenders, it being understood that only such of the Rupee Lenders who shall have contributed its/their respective

107

	share towards payment of a Claimed Amount including interest thereon, if any, will become entitled to be paid their pro rata shares from receipt/ recovery of dues relating to such payment.
13.4.2	If Issuing Bank shall contribute on behalf of any defaulting Rupee Lender towards the Claimed Amount or towards its share in any expenditure incurred by Issuing Bank in connection with the Letter(s) of Commitment, then the Issuing Bank shall be entitled to reimburse itself for such contribution from the monies received/ recovered from the Borrower or any other person, to the extent of its contribution on behalf of the defaulting Rupee Lender.
13.4.3	If the Borrower shall have paid directly to a Rupee Lender its pro rata share of the expenditure incurred by the Issuing Bank in connection with the Letter(s) of Commitment, and the Issuing Bank has not been reimbursed the monies expended by the Issuing Bank by such Rupee Lender, then such Rupee Lender shall forthwith on demand repay/ pay to Issuing Bank the amount of such payment together with interest thereon at the Default Rate of the Issuing Bank till receipt of payment.
13.4.4	All monies received by the Issuing Bank or any of the Rupee Lenders from the Borrower or any other person in respect of any liability of the Borrower under the Facility shall be apportioned amongst the Rupee Lenders in accordance with the provisions of this Agreement in such a manner that at all times, each Rupee Lender’s share in respect of the moneys received as at the date of receipt, shall be in the same proportion that its Participating Interest shall bear to the total of such dues of the Rupee Lenders, and if any Rupee Lender shall receive moneys (such Rupee Lender for the purpose of this Section 13 being referred to as the “Receiving Bank”) towards any sum due to it in respect of the Facility in a greater proportion then the sum due to it, the Receiving Bank shall subject to the provisions of this Agreement, promptly pay over the excess amount to Issuing Bank along with interest at the Default Rate from the date of

108

receipt of such excess amount until payment to Issuing Bank. Issuing Bank shall thereupon forthwith distribute such excess amount together with interest thereon amongst the other Rupee Lender(s) in proportion to their dues provided however that if any part of such excess amount shall subsequently be required to be repaid/refunded by the Receiving Bank to any other person entitled thereto, then each Rupee Lender who may have received any part thereof from Issuing Bank shall repay to Issuing Bank for the account of the Receiving Bank such amount as shall be necessary to ensure that all the Rupee Lenders share rateably in any part of such excess amount so retained.

13.4.5

Any moneys distributed by the Issuing Bank to each of the Rupee Lenders in accordance with the aforesaid provision in payment of dues shall be in pro tanto satisfaction of the dues owing to each Rupee Lender under the Facility but as between each of the Rupee Lenders and the Borrower, the Rupee Lenders shall be entitled to enforce their rights against the Borrower for the balance dues owing to them by the Borrower.

13.5 Maintenance of Accounts and Records by Issuing Bank

13.5.1

Issuing Bank will furnish copies of the Letter(s) of Commitment to the Rupee Lenders soon after issuance thereof, for their perusal and record and will consult the Rupee Lenders prior to making or permitting any variation, amendment or modification in the Letter(s) of Commitment or granting any extension thereof.

13.5.2

the Issuing Bank shall open and maintain a control account or accounts according to its normal practice showing the amount of the Letter(s) of Commitment issued and outstanding and interest accrued, if any, and the amount of any other sum due from the Borrower including payment that may have been made by Issuing Bank under any Letter(s) of Commitment and all reimbursements/payments with respect thereto made to the Issuing Bank from time to time by the Borrower and/or any other person. In any

109

legal action or proceedings that may be taken by the Issuing Bank on behalf of the Rupee Lenders, such control account or accounts shall, save for manifest error, be conclusive as to the total amount of principal, interest, commission and other sums due from the Borrower to the Rupee Lenders in respect of the Facility under this Agreement or the Financing Documents.

13.5.3

Issuing Bank shall also maintain a memorandum (mirror) account in the name of each Rupee Lender showing: (i) the face value of the Letter(s) of Commitment issued and outstanding, the Participating Interest of each Rupee Lender in respect of its liability thereunder; (ii) the amount of any sum including interest, if any, due from the concerned Rupee Lender in respect of its participation in the Facility and all payments with respect thereto made to Issuing Bank by such Rupee Lender; and (iii) the distribution of pro rata payment(s) made by Issuing Bank to the Rupee Lenders from time to time according to their respective entitlement. Each such memorandum account shall be conclusive as to the amount due to or from each of the Rupee Lenders from time to time, save for manifest error.

13.6

Indemnity by the Rupee Lenders

To the extent that the Borrower shall fail to reimburse and indemnify the Issuing Bank for all costs, charges and expenses that may be properly incurred by the Issuing Bank in suing for or recovering any moneys due to the Rupee Lenders in respect of the Facility or in preserving the security and protecting the rights of the Rupee Lenders against the Borrower or any other person, the Rupee Lenders shall reimburse and indemnify the Issuing Bank (in the proportion that their respective dues shall bear to the total of such dues of all the Rupee Lenders at the date on which legal action shall have been first commenced by the Issuing Bank), against all claims, demands, actions, proceedings, costs, charges and expenses which may be brought or taken against or incurred or sustained by Issuing Bank in connection with the Letter(s) of Commitment or otherwise in respect of the Facility.

110

13.7 Recovery by Rupee Lenders

13.7.1

If any of the Rupee Lenders shall at any time recover any moneys in respect of the Facility, whether by way of set-off or lien or upon enforcement and realisation of the security, such Rupee Lenders shall pending distribution, hold such moneys in trust for the Rupee Lenders and subject to provisions herein, forthwith distribute the same amongst the Rupee Lenders in consultation with the Issuing Bank, in proportion to their respective dues, together with interest at such rate as would be chargeable by Issuing Bank to the Borrower, from the date of receipt of moneys by such Rupee Lenders until payment to other Rupee Lenders.

13.7.2

Notwithstanding anything hereinabove contained in this Agreement, none of the Rupee Lenders shall be obliged to share with the other Rupee Lenders any moneys which may have been received/recovered by it/them as a result of or pursuant to any legal action, suit or proceedings initiated by it/them for recovery of its/their dues in respect of the Facility, if such other Rupee Lender(s) elect not to join the Rupee Lender(s) as co-plaintiffs in such action, suit or proceedings.

14.	INTEREST
14.1	Interest

14.1.1	The Borrower shall pay on each Interest Payment Date to the Rupee Lenders, interest on each Advance and on the Loan for the Interest Period at the Lending Rate.
14.1.2	On the First Interest Reset Date the Rupee Lenders may reset the Lending Rate for the Loan. Thereafter the Rupee Lenders may reset the Lending Rate on each Interest Reset Date during the currency of the Facility and the Borrower shall pay interest on the Loan at the reset Lending Rate from the last date of the month in which the Lending Rate is so reset. The

111

	Rupee Lenders shall notify to the Borrower and the Facility Agent of such reset Lending Rate.
14.1.3	The Lending Rate shall be subject to changes from time to time as per the guidelines of Reserve Bank of India/ GOI.

14.2	Due Dates
	The Borrower shall pay the Lenders, all amounts payable under the Financing Documents on their respective Due Dates.
14.3	Upfront Fee
	The Borrower shall pay to each Rupee Lender a non refundable upfront fee of 0.20% of its Commitment plus the applicable Interest Tax on the amount of the Commitment (“Upfront Fee”) and such fee shall have been paid simultaneously with or prior to the date of this Agreement.
14.4	Agent Fees
	In consideration of the Facility Agent agreeing to act as an agent of the Lenders and the Lenders agreeing to advance the Facility, the Borrower agrees to pay to the Facility Agent, the fees as set out in the Fee Letter.
14.5	Drawdown Schedule and Commitment Fee

14.5.1	The Borrower shall at least thirty (30) days prior to the Initial Drawdown Date provide the Facility Agent a Drawdown Schedule which shall consist of consecutive fiscal quarters (each a “Drawdown Schedule Period”) and the amount that the Borrower shall draw during the relevant Drawdown Schedule Period.
14.5.2	The Borrower shall pay to the Rupee Lenders, a commitment fee of 1.00%

112

per annum (the “Commitment Fee”) on the amount undrawn with respect to the Drawdown Schedule. The Commitment Fee shall be calculated on the basis of amount undrawn and the number of days deviated from the scheduled date. Provided that the Borrower shall have the option to modify/ revise such Drawdown schedule upon delivery of notice to the Rupee Lenders of at least thirty (30) days prior to the actual Drawdown Dates without payment of any Commitment Fee. Such revised Drawdown Schedule shall be applicable from the next Drawdown Schedule Period. The initial Drawdown Schedule and all such revised Drawdown Schedules shall be deemed to be part of this Agreement.

14.5.3

The Lenders Engineer shall provide a certification prior to the commencement of each Drawdown Schedule Period certifying:

(a)	the amounts estimated to be expended by the Borrower towards the Project Cost; or
(b)	the amount estimated to be utilized towards reimbursement of the Borrower against amounts spent towards the Project Cost,

in that Drawdown Schedule Period.

14.6

Default Interest or Liquidated Damages

Without prejudice to the obligations of the Borrower under the Financing Documents, repayment of principal amounts, and on all costs, charges, expenses and other monies accruing due to or incurred/paid by the Lenders under any Transaction Document, shall, in case the same be not paid on the respective Due Dates (whether at stated maturity, by acceleration, by mandatory prepayment in accordance with this Agreement or otherwise), carry default interest / liquidated damages (“Default Interest” or “Liquidated Damages”) at the Default Rate. Such Default Interest or Liquidated Damages will be computed from the respective Due Date of payment or incurring of such costs, charges, expenses and

113

	monies and shall become payable upon the footing of compound interest with monthly rests as provided in this Agreement and shall be payable together with the defaulted amounts on demand, and if no demand is made, on the immediately next Interest Payment Dates.
14.7	Additional Interest
	The Rupee Lenders may at their sole discretion make disbursements out of the Facility pending creation and perfection of the Security in favour of the Lenders. Unless the Lenders otherwise agree, in the event the Borrower does not create and perfect the Security in a form and manner satisfactory to the Lenders prior to the Initial Drawdown Date, the Advances made by the Lenders pending creation and perfection of the Security shall carry additional interest at the rate of 1.00% per annum plus Interest Tax or other statutory levy, if any, (“Additional Interest”) computed from the Initial Drawdown Date till creation and perfection of Security in a form and manner satisfactory to the Lenders. The Additional Interest shall be payable forthwith upon demand by the Lenders. The levy of Additional Interest shall be without prejudice to any other rights or remedies available to Lenders under the Financing Documents.
14.8	Interest Tax
	The Borrower shall pay to the Rupee Lenders, Interest Tax as applicable from time to time.
15.	REPAYMENTS
15.1	Repayment Mechanism

15.1.1 The Borrower shall repay the Loan to the Rupee Lenders in the amounts, in the number of instalments and on the dates (“Repayment Dates”) as specified in the Repayment Schedule (each such instalment payable to the Rupee Lenders is hereinafter referred to as the “Repayment Instalment”).

114

	The first Repayment Instalment shall be due on the First Repayment Date and subsequent Repayment Instalments shall be due on each successive Repayment Date.
15.1.2	The Rupee Bullet Repayment Amount together with all other amounts due and outstanding under this Agreement shall be repaid in full on the Maturity Date.
15.1.3	No amounts repaid under the Facility may be re-borrowed.
15.1.4	The Borrower undertakes to repay the Repayment Instalments of the Facility in accordance with the Repayment Schedule. If, for any reason, the amount finally disbursed by the Rupee Lenders under this Agreement is less than the amount of the Commitment, the Repayment Instalments shall stand reduced proportionately but shall be payable on the same dates as specified in the Repayment Schedule set forth in Schedule IV hereto.
15.1.5	The Rupee Lenders may, if so warranted in their sole judgment, revise, vary or postpone the Repayment Schedule, Repayment Instalments and repayment of the principal amounts of the Loan/the Facility or the balance outstanding for the time being or any part thereof by giving prior notice to the Borrower on such terms and conditions as may be decided by them.

16.	PREPAYMENTS AND COMMITMENT REDUCTIONS
16.1	Voluntary Prepayment
	The Borrower may prepay all or any portion of the Loan as provided hereinafter. Where such prepayment is made in a manner other than as contemplated in Section 16.1(a) to (d) hereinbelow, the Borrower shall pay a penalty of 1% (one per cent) of the amount so prepaid. The Borrower may prepay all or any portion

115

of the Loan, without payment of such penalty only in the following circumstances:

(a)	the prepayment is effected at the instance of the Rupee Lenders;
(b)	the prepayment is made on an Interest Reset Date, provided prior notice of thirty (30) days has been provided to the Rupee Lenders prior to such prepayment;
(c)	the prepayment is made as per Section 16.2 (Mandatory Prepayment); and
(d)	the prepayment is made within three (3) months of the Interest Reset Date, if the revision in rate of interest on such Interest Reset Date is not acceptable to the Borrower, and the Borrower provides notice of its intention to prepay the Facility or any part thereof to the Rupee Lenders within one (1) month after such Interest Reset Date.

16.2 Mandatory Prepayment

16.2.1

In the event the Lenders or the Borrower or any other person acting on behalf of the Borrower shall receive funds in respect of the amounts referred to in this subparagraph, the Borrower hereby agrees that such amounts shall be used to prepay the Facility in accordance with the terms hereof and distributed in accordance with the Trust and Retention Account Agreement. These amounts shall include: (i) any liquidated damages under Project Documents; (ii) Loss Proceeds; and (iii) amounts received under the Project Documents pursuant to the Borrower exercising its right of rejection under the Project Documents.

16.2.2

The surplus amounts in the Construction Account at Final Completion shall be utilised in accordance with the provisions of the Trust and Retention Account Agreement.

116

16.2.3 In the event the Debt Service Coverage Ratio in any year exceeds 1.30, 50% (fifty per cent) of the cash flow in excess of the cash flow required to maintain the DSCR at 1.30 shall be utilized for prepayment of the Rupee Bullet Repayment Amount.

16.3 General Provisions in respect of Prepayment

16.3.1	Any notice of prepayment under this Agreement is irrevocable. The Rupee Lenders and the Facility Agent shall notify each other promptly of receipt of any such notice.
16.3.2	All prepayments under this Agreement shall be made together with accrued interest on the amount prepaid and any other amounts payable under this Agreement.
16.3.3	No prepayment is permitted except in accordance with the express terms of this Agreement.
16.3.4	No amount prepaid under this Agreement may subsequently be re-borrowed under the Financing Documents.
16.3.5	All prepayments pursuant to Section 16.1 shall be offered to each Rupee Lender proportionately and shall not be less than the amount of Rs. 50,00,00,000 (Rupees Fifty crores) in aggregate and Rs. 1,00,00,000 (Rs. One crore) for each individual Lender. This Section 16.3.5 shall not be applicable to mandatory prepayments made as per Section 16.2.
16.3.6	In the event that the Project Costs are less than the Estimated Project Costs on account of reduction of any duties/taxes or price negotiations under the Project Documents or for any other reason, any surplus amounts lying in the Construction Account at Final Completion that are attributable towards such reduction in Project Costs shall be utilised for pro-rata reduction in the amount of the Loans and the Required Equity (subject to Applicable Law).

117

16.3.7 Any prepayment made under the cash sweep option of the Rupee Lenders shall be applied towards prepayment of the Rupee Bullet Repayment Amount. All other prepayments made under this Agreement shall be applied proportionately towards all the outstanding Repayment Instalments of the Loan including, for the avoidance of doubt, the Rupee Bullet Repayment Amount.

17.	PAYMENTS
17.1	Place
	All payments to be made by the Borrower to the Lenders in terms of this Agreement shall be made directly to the Lenders at its Lending Office or at such other place as may be specified by the Lenders, by telegraphic, telex, real time gross settlement or mail transfer to the account of the Lenders or by cheque/bank draft drawn in favour of the Lenders on a scheduled bank at Mumbai or such other place or to such other account as the Lenders may notify the Borrower.
17.2	Time
	Except to the extent otherwise provided herein, all Unreimbursed Drawings, payments and prepayments of Loan and interest on the Loan, Fronting Commission, LOC Commission, costs, fees, indemnities and other amounts payable by the Borrower under this Agreement or any other Transaction Document shall be made by the Borrower to the Lenders by credit to respective accounts to be designated by the Lenders not later than 11.00 a.m. Mumbai time on the Due Date (each such payment made after such time on such Due Date to be deemed to have been made on the next succeeding Business Day).
17.3	Currency
	Amounts payable under this Agreement are payable in Rupees.

118

17.4	Set-off and Counterclaim
	All payments made by the Borrower under this Agreement shall be made without deduction, set-off or counterclaim.
17.5	Non-Business Days
	If a payment under this Agreement is due on a day, which is not a Business Day, the Due Date for that payment shall instead be the immediately preceding Business Day.
17.6	Appropriation

17.6.1 Any amounts due and payable by the Borrower under this Agreement shall be appropriated by Lenders towards such dues in the following order viz.,

(a)	Default Interest or Liquidated Damages;
(b)	interest, Fronting Commission, LOC Commission, costs, charges, fees, expenses and other monies;
(c)	interest on costs, charges, fees, expenses and other monies;
(d)	prepayment premium; and
(e)	Repayment Instalments and Unreimbursed Drawings.

17.6.2 Notwithstanding anything contained in Section 17.6.1, the Lenders may, in their absolute discretion, appropriate in any manner, such payment towards the dues, if any, payable by the Borrower in respect of any Financing Document.

17.7 Realisation at Par

119

17.7.1	All rupee sums payable under this Agreement shall be so paid by the Borrower as to enable the Lenders to realise the monies at par on the Due Dates.
17.7.2	Any difference on account of exchange fluctuations in the rates of foreign currencies involved between the payment made by the Borrower to the Lenders and the actual amounts incurred by the Lenders under this Agreement or the Letter(s) of Commitment shall be borne by or be given credit to the Borrower.

17.8	Accrual
	All interest and other costs, charges, expenses shall accrue from day to day and be calculated on the basis of the actual number of days elapsed and a year of 365 days.
18.	FACILITY AGENT AND SECURITY TRUSTEE
	The Borrower and the Lenders agree that the Facility Agent and Security Trustee shall have the benefit of all protections, indemnities and limitations on liability contained in the Financing Documents.
19.	EXPENSES AND INDEMNIFICATIONS
19.1	Payment of Expenses

19.1.1 The Borrower shall, subject to submission of evidence as is available at the time or a certificate from the Facility Agent certifying such expenditure, whether or not the transactions herein contemplated are consummated, pay: (i) all out-of-pocket costs and expenses (including all Taxes (including stamp taxes)), fees and disbursements of the Lenders Counsel, duties, fees or other charges payable to, the Facility Agent and the Secured Parties (including, without limitation, collection/remittance

120

charges in relation to the disbursement of the Facility) in connection with: (A) the preparation, notarisation, execution, issue and delivery and, where appropriate, registration, or for the legality, validity, enforceability, of this Agreement, the other Financing Documents and any other documents and instruments related hereto or thereto (including legal opinions); (B) any amendment or modification to, or the protection or preservation of any Borrower’s assets including any right or claim under, or consent or waiver in connection with, or any inspection, investigation of title to the Borrower’s assets or otherwise or consultation undertaken by the Facility Agent or the Secured Parties, (whether or not known to or approved by the Borrower) of the Borrower’s performance under or compliance with, this Agreement, the other Financing Documents or any such other document or instrument related hereto or thereto; (C) the registration (where appropriate) and the delivery of the evidences of indebtedness relating to the Facility, and the Drawdowns thereof; and (D) the enforcement of this Agreement, the other Financing Documents and any other documents and instruments referred to herein and therein (including, without limitation, the fees of Lenders Counsel); (ii) the fees of the Lenders Engineer for services performed pursuant to the Lenders Engineer Appointment Letter; and (iii) the fees of the Lenders Insurance Consultant for services performed pursuant to the Insurance Consultancy Appointment Letter.

19.1.2

The Borrower shall, whether or not the transactions herein contemplated are consummated: (i) pay and hold each of the Facility Agent or the Secured Parties harmless from and against any and all present and future stamp and other similar taxes with respect to the matters described in Section 19.1.1 and further hold each of the Facility Agent and the Secured Parties harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Facility Agent or Secured Party) to pay such taxes; and (ii) indemnify each of the Facility Agent or the Secured Parties and each of their respective officers, directors, employees, representatives, attorneys and agents from and hold each of them harmless against any and all

121

	liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, arbitration proceedings, costs, expenses and disbursements incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, litigation or other proceeding (whether or not the Facility Agent or such Secured Party is a party thereto) related to the entering into and/or performance of any Transaction Document or the disbursement of, or use of the proceeds of, any Facility or the implementation or consummation of any transactions contemplated herein or in any Transaction Document, including, without limitation, the reasonable and actual fees and disbursements of counsel and any consultants selected by such indemnified party incurred in connection with any such investigation or any Legal Proceeding or in connection with enforcing the provisions of this Section 19.1.2 (but excluding any such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, arbitration proceedings, costs, expenses and disbursements to the extent incurred by reason of the gross negligence or wilful misconduct of the Person to be indemnified, as determined by a court of competent jurisdiction).
19.1.3	Without limitation to the provisions of Section 19.1.2 above, the Borrower agrees to defend, protect, indemnify and hold harmless each of the Facility Agent and the Secured Parties and each of their respective officers, directors, employees, representatives, legal counsels and agents from and hold each of them harmless, in respect of environmental protection obligations, against any and all liabilities arising under Applicable Law and any losses, damages, penalties, claims, actions, judgments, suits, arbitration proceedings, costs, expenses and disbursements including counsel fees incurred thereunder, to the extent not incurred by reason of the gross negligence or wilful misconduct of the Person to be indemnified, as determined by a court of competent jurisdiction.
19.1.4	To the extent that the undertakings in Sections 19.1.1, 19.1.2 and 19.1.3 above may be unenforceable because they violate any Applicable Law or

122

	public policy, the Borrower will contribute the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of such undertakings. The Borrower hereby undertakes that it shall not raise the defence of or claim unenforceability, for any reason whatsoever, of any of Sections 19.1.1, 19.1.2 and 19.1.3.
19.1.5	All sums paid and costs incurred by any of the Facility Agent or the Secured Parties shall bear interest at the Default Rate from the date so paid or incurred until reimbursed by the Borrower, and all such sums and costs shall be added to the Debt and be secured by the Security Documents and shall be immediately due and payable on demand.
19.1.6	Each indemnified party pursuant to Sections 19.1.2 and 19.1.3 above, on a best efforts basis, endeavour, within thirty (30) days after the receipt by it of notice of the commencement of any action for which indemnity may be sought by it, or by any Person controlling it, from the Borrower on account of the documents contained in this Section 19.1, to notify the Borrower in writing of the commencement thereof, but the failure of such indemnified party to so notify the Borrower of any such action shall not release the Borrower from any liability which it may have to such indemnified party. In case any such action shall be brought against any indemnified party the Borrower shall be entitled to participate in the defence thereof at its own expense, provided that in any event an indemnified party shall have the right to retain its own counsel at the expense of the Borrower and such participation by the Borrower in the defence thereof shall not release the Borrower from any liability which it may have to such indemnified party (including with respect to fees and other charges of its own counsel).
19.1.7	The Borrower shall pay the Secured Parties any reimbursements of costs and expenses under any of the Financing Documents immediately on the demand thereof and in any case within twenty (20) Business Days from the date of notice of demand from the Facility Agent/Secured Party. All

123

	such sums shall be debited to the Borrower’s loan account and shall carry interest from the date of payment till such reimbursement at the highest of the Lending Rate.
19.1.8	In case of default in making such reimbursement in accordance with Section 19.1.7 above within twenty (20) Business Days from the date of notice of demand, the Borrower shall also pay on the defaulted amounts, interest at the Default Rate from the expiry of twenty (20) Business Days from the date of notice of demand till reimbursement.
19.1.9	Without prejudice to the generality of the other provisions of this Section 19, all expenses incurred by any Secured Party after an Event of Default has occurred in connection with:

(a)	preservation and protection of the Borrower’s assets (whether then or thereafter existing); and
(b)	collection of amounts due under the Financing Documents;

shall be payable by the Borrower.

19.1.10

The Borrower hereby authorises the Lenders and the Facility Agent to debit any current account permitted to be opened with such Lender/Facility Agent to the extent of the expenditure incurred under the Financing Documents, provided that this shall not apply to the Trust and Retention Accounts, and any account permitted under the Trust and Retention Account Agreement to be opened for the purpose of utilisation of Project Proceeds (as defined in the Trust and Retention Account Agreement).

19.2	Other Indemnities
	The Borrower shall indemnify the Secured Parties against any loss or liability

124

which that Secured Party incurs as a consequence of:

(i)	the occurrence of any Event of Default or Potential Event of Default; and
(ii)	a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment.

	The Borrower shall forthwith on demand by the Facility Agent or the Secured Parties pay any amounts due under this Section 19.2.
20.	EVENTS OF DEFAULT
20.1	Events of Default
	An Event of Default occurs upon the occurrence of any of the following specified events (each an “Event of Default”):

20.1.1 Payment

i)	Failure by the Borrower in the payment, when due, of any principal, interest, LOC Commission or fee or any other amount owed by it under any Financing Document and such default if capable of remedy, continues unremedied for thirty (30) days;
ii)	Failure by the Borrower to pay the Issuing Bank any Claimed Amount in the event of any Rupee Lender not fulfilling its obligation to contribute its Participating Interest; or
iii)	Failure by the Sponsor in the payment when due of any amount owed by it under any Financing Document.

20.1.2 Non Performance

(i) Failure by the Borrower to perform any of its obligations under

125

	any Financing Document (other than those specifically listed as Events of Default under this Section 20.1) and such default if capable of remedy, continues unremedied for thirty (30) days; or
(ii)	Failure by the Sponsor to perform any of its obligations under any Financing Document (other than those specifically listed as Events of Default under this Section 20.1) and such default if capable of remedy, continues unremedied for a period of twenty (20) days.

20.1.3 Cross Default

(i)	The Borrower is unable or has admitted in writing its inability to pay any of its indebtedness as they mature or when due.
(ii)	An event of default occurs under any agreement or document relating to any indebtedness of the Borrower, including but not limited to the Foreign Currency Facility Agreement, or if any lender including financial institutions or banks with whom the Borrower has entered into agreements for financial assistance exceeding in the aggregate, Rs. 50,00,00,000 (Rupees Fifty crores), have on account of default or non-compliance by the Borrower of any of the terms contained therein, refused to disburse, extend, or have cancelled or recalled its/their assistance or any part thereof, and the Borrower has not arranged for alternate financial assistance from such banks and/or financial institutions as may be acceptable to the Facility Agent within a period of thirty (30) days of the notice of such cancellation.
(iii)	If the Borrower or any other party to any Project Document are in breach of, or do not comply with, any term or condition (whether, financial, performance or otherwise) of any Project Document and such breach or non-compliance is, in the opinion of the Lenders, likely to have a Material Adverse Effect.

126

20.1.4 Failure to Perform, Breach and Non Compliance

i)	The Borrower or the Sponsor fails to perform or comply with any covenant, condition or agreement contained in this Agreement or the other Financing Documents which could have a Material Adverse Effect and such non-compliance, if capable of remedy, continues unremedied for ninety (90) days.
ii)	Other than a Permitted Disposal, the Borrower sells, assigns, disposes, charges or otherwise encumbers or places a Security Interest on any of its assets without the prior written approval of the Facility Agent; or
iii)	One or more events, conditions or circumstances (including, without limitation, Force Majeure), excluding events which are specifically provided for in this Section 20.1.4, shall exist or shall have occurred which have had and continue to have, or, in the judgment of the Secured Parties, could reasonably be expected to have a Material Adverse Effect.

20.1.5

Security

Any Security required to be created is not so created within the time period specified in this Agreement or the Security Documents once executed and delivered shall fail to provide the Security Interests, rights, title, remedies, powers or privileges intended to be created thereby (including the priority intended to be created thereby) or such Security Interest shall fail to have the priority contemplated in such Security Document or any such Security Document shall cease to be in full force and effect, or the validity thereof or the applicability thereof to the Drawdowns or the Security Interest purported to be created thereby is jeopardised or endangered in any manner whatsoever or any other obligations purported to be secured or guaranteed thereby or any part

127

	thereof shall be disaffirmed by or on behalf of the Borrower or any other party thereto and such default if capable of remedy, continues unremedied for more than ninety (90) days.
20.1.6	Insurance

(i)	The Borrower fails to maintain any of the insurance described in the Insurance Contract and such default, if capable of remedy, continues unremedied for ten (10) days.
(ii)	If the Borrower’s assets have not been kept insured by the Borrower or depreciate in value to such an extent that such depreciation in value could have a Material Adverse Effect.
(iii)	Any insurance contracted or taken by the Borrower is not, or ceases to be, in full force and effect at any time when it is required to be in effect or any insurance is avoided, or any insurer or re-insurer avoids or suspends or becomes entitled to avoid or suspend, any insurance or any claim under it or otherwise reduce its liability under any insurance or any insurer of any insurance is not bound, or ceases to be bound, to meet its obligations in full or in part under any insurance.

20.1.7 Court Order, Government Actions

(i) Any Governmental Authority shall have condemned, nationalised, seized, or otherwise expropriated all or any part of the property or other assets of the Borrower or of the Equity Interests of the Sponsor in the Borrower, or shall have assumed custody or control of the Equity Interests of the Sponsor in the Borrower and its property or other assets or of the business or operations of the Borrower or shall have taken any action for the dissolution of the Borrower or any action that would prevent the Borrower or its

128

	officers from carrying on its business or operations or a substantial part thereof or with a view to regulate, administer, or limit, or assert any form of administrative control over the rates applied, prices charged or rates of return achievable, by the Borrower in connection with its business; or
(ii)	An attachment or restraint has been levied on the assets of the Borrower or the counterparty(ies) to any Project Document or the Sponsor resulting in, or which in the judgment of the Secured Parties results in, a Material Adverse Effect; or
(iii)	Failure by the Borrower to pay one or more amounts due under any judgments or decrees which shall have been entered against the Borrower; or
(iv)	Any Legal Proceeding under or relating to any Applicable Law shall have been instituted against the Borrower which has or can be reasonably expected to have, or which in the judgment of the Secured Parties has, a Material Adverse Effect on the Project; or
(v)	Execution or distress being levied or enforced against the whole or any part of the Borrower’s property and any order relating thereto is not discharged or stayed within a period of ninety (90) days from the date of enforcement or levy.

20.1.8	Representations and Covenants
	Any representation or warranty confirmed or made or deemed to be made, by the Borrower or the counterparty(ies) to any Project Document or the Sponsor in any Transaction Document is incorrect, misleading when made or deemed made and could reasonably be expected to have a Material Adverse Effect.

129

20.1.9 Winding Up, Bankruptcy and Dissolution

(i)	If the Borrower or the Major Project Parties or the Sponsor commences a voluntary proceeding under any applicable bankruptcy, insolvency, winding up or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary proceeding under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee (or similar official) for any or a substantial part of its property.
(ii)	If a receiver has been appointed in respect of the whole or any material or substantial part of the property of the Borrower or the Project and such appointment is not stayed, quashed or dismissed within a period of ninety (90) days from the date of such appointment.
(iii)	The Borrower or any Major Project Party or the Sponsor has taken or suffered to be taken any action towards its reorganisation (to the extent that this would constitute a Material Adverse Effect), or its liquidation or dissolution.
(iv)	Any of the Borrower or Major Project Party(ies) or the Sponsor has been declared as a sick industry or is, in the reasonable apprehension of the Facility Agent or the Secured Parties, likely to be declared as a sick industry under the Sick Industrial Companies (Special Provisions) Act, 1985.

20.1.10 Environmental Compliance

(i) Any administrative, regulatory or judicial action, suit or proceeding under or relating to any environmental law or asserting any environmental claim is instituted against the Borrower and has

130

	not been discharged within thirty (30) days or such shorter period as the Lenders may determine necessary so as to avoid a Material Adverse Effect.
(ii)	The operation and maintenance of the Project by the Borrower or any operator in any manner that poses a hazard to the environment, health or safety or would result in a breach its obligations under any Transaction Documents.

20.1.11	Change in Control
	If any Person acting singularly or with any other Person (either directly or indirectly) acquires control of the Borrower or of any other Person who controls the Borrower, without the approval of the Facility Agent/Lenders.
20.1.12	Illegality

(i)	It is or becomes unlawful for the Borrower or any Person (including the Lenders) to perform any of their respective obligations under any Financing Document; or
(ii)	Any Financing Document or any provision thereof are required by any law to be: (a) amended or waived (to the extent this adversely affects the rights or remedies of the Lenders under the Financing Documents); or (b) repudiated; or
(iii)	Any obligation under the Financing Documents is not or ceases to be a valid and binding obligation of any Person party to it or becomes void, illegal, unenforceable or is repudiated by such Person (other than the Secured Parties).

20.1.13	Material Adverse Effect
	One or more events, conditions or circumstances (including any Change in

131

	Law) shall occur or exist and which could have a Material Adverse Effect and such event or circumstance continues to have an effect for a period in excess of ninety (90) days.
20.1.14	Borrower ceases to carry on business
	If the Borrower ceases or threatens to cease to carry on its business for a period exceeding ninety (90) days.
20.1.15	Financial Position
	The financial position of the Borrower is unsatisfactory.
20.1.16	Extraordinary Situation
	Any extra-ordinary situation makes it improbable that the Borrower would be able to perform its obligations under the Financing Documents.
20.1.17	Specific Obligations
	Non-fulfilment by the Borrower of its obligations specified in Sections 8.6.2 (A), (C), (D) and (E) and 8.16 (A) and (B) of this Agreement unless the Lenders determine at the relevant time, upon review of the status of the Project, that such non-fulfilment by the Borrower shall not constitute an Event of Default.

20.2 Consequences of Event of Default

20.2.1 If an Event of Default has occurred, the Secured Parties may, without prejudice to any rights that they may have and by notice to the Borrower, take one or more of the following actions including but not limited to:

(i) to enter upon and take possession of the assets of the Borrower;

132

(ii)	to transfer the assets of the Borrower comprised within the Security created in favour of the Secured Parties or any other Person by way of lease, leave and licence, sale or otherwise;
(iii)	place the Facility on demand or declare all amounts payable by the Borrower in respect of the Facility to be due and payable immediately;
(iv)	sue for creditors’ process and/or exercise rights with respect to the Security in accordance with the Financing Documents;
(v)	suspend further drawings;
(vi)	declare the Commitments to be cancelled;
(vii)	call on undrawn and unsubscribed position of the Required Equity under the Sponsor Support Agreement;
(viii)	require the Borrower to immediately put the Lender in funds in an amount equivalent to 100% (One Hundred per cent) of the outstanding face value of all Letters of Commitment issued hereunder;
(ix)	utilise any amounts in the sub -accounts under the Account (as defined in the Trust and Retention Account Agreement) or any Additional Accounts to service and repay the Facility;
(x)	appoint two whole-time nominee Directors on behalf of all the Lenders on the terms and conditions contained in Schedule XII;
(xi)	review, restructure and/or substitute the Management or organisation of the Borrower in a manner acceptable to the Facility Agent and as may be considered necessary by the Facility Agent, including the formation of management committees with such

133

	powers and functions as may be considered suitable by the Facility Agent. The Borrower shall comply with all such requirements of the Facility Agent; and
(xii)	Exercise such other rights as may be available to the Secured Parties under the Transaction Documents and all Applicable Laws, including the special rights and remedies available to secured lenders under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002.

	Notwithstanding any suspension or cancellation pursuant to Sections 20.2.1 (v) or (vi) above, all the provisions of the Financing Documents for the benefit or protection of the Lenders and their interests shall continue to be in full force and effect as specifically provided in the Financing Documents.
21.	MISCELLANEOUS
21.1	Right of Setoff

(i) The Lenders shall have the paramount right of set-off and lien, irrespective of any other lien or charge, present as well as future on the deposits of any kind and nature (including fixed deposits) held/ balances lying in any Accounts pursuant to the Trust and Retention Account Agreement, whether in single name or joint name(s) and on any monies, securities, bonds and all other assets, documents and properties held by/ under the control of the Lenders (whether by way of Security or otherwise pursuant to any contract entered/ to be entered into by the Borrower in any capacity) to the extent of all outstanding dues, whatsoever, arising as a result of any obligations owed to the Lenders by the Borrower. The Lenders are entitled without any notice to the Borrower to settle any indebtedness whatsoever owed by the Borrower to the Lenders, (whether actual or contingent, or whether primary or collateral, or whether joint and/or several) hereunder or under any other document/ agreement, by

134

adjusting, setting-off any deposit(s) and/or transferring monies lying to the balance of any Account(s) notwithstanding that the deposit(s)/ balances lying in such Account(s) may not be expressed in the same currency as such indebtedness. Lenders’ rights hereunder shall not be affected by the Borrower’s bankruptcy or winding-up. It shall be the Borrower’s sole responsibility and liability to settle all disputes/ objections with any such joint account holders.

(ii)

In addition to the above mentioned right or any other right which the Lenders may at any time be entitled whether by operation of law, contract or otherwise, the Borrower authorises the Lenders: (a) to combine or consolidate at any time all or any of the Accounts and liabilities of the Borrower with or to any branch of the Lenders; and/or (b) to sell any of the Borrower’s securities or properties held by the Lenders by way of public or private sale without having to institute any judicial proceeding whatsoever and retain/appropriate from the proceeds derived there from the total amounts outstanding to the Lenders from the Borrower, including costs and expenses in connection with such sale.

21.2	Obligations of the Borrower
	The Borrower’s liability to the Lenders shall not be discharged until and unless the Borrower has paid or discharged all the Obligations owed to the Secured Parties under the Financing Documents. For the avoidance of doubt, notwithstanding that the Borrower may have paid all amounts due to any Lender under the Financing Documents, the Borrower shall remain liable to such Lender if, as a result of any sharing arrangement between the Lenders that has been notified to and confirmed by the Borrower under the Financing Documents, such Lender is obliged to share the payments made by the Borrower and consequently the obligations owing to such Lender under the Financing Documents are still owing.
21.3	Notices

135

21.3.1 Except as otherwise expressly provided herein or in any Financing Document, all notices and other communications provided for hereunder or thereunder shall be: (i) in writing (including facsimile, except as noted below); and (ii) sent by facsimile or sent by a Person, overnight courier (if for inland delivery) or international courier (if for overseas delivery) to a Lender hereto at its address and contact number specified in Schedule II, or at such other address and contact number as is designated by such party in a written notice to the other parties hereto. The address for notices of the Facility Agent, Security Trustee and Borrower shall be as follows:

Facility Agent
Address:	State Bank of India, Project Finance SBU, State Bank Bhavan , Madame Cama Road, Mumbai- 400 021
Fax:	022-22883021
Attention:	Deputy General Manager
Borrower
Address:	232, Solitaire Corporate Park, Andheri Ghatkopar Link Road, Chakala, Andheri(East), Mumbai – 400093.
Fax No.:	022-40058021
Attention:	Mr. Venkat Kanada  / Mr. Manish Singhania

136

Security Trustee
Address:	Asian Building, Ground Floor, 17, R.K. Kamani Marg, Ballard Estate, Mumbai- 400001
Fax No.:	022-66311776
Attention:	Mr. S. K. Mitter / Ms. Brindha Venkataraman

21.3.2	All such notices and communications shall be effective: (i) if sent by facsimile, when sent (on receipt of a confirmation to the correct facsimile number); (ii) if sent by Person, when delivered; (iii) if sent by courier: (a) one (1) Business Day after deposit with an overnight courier if for inland delivery; and (b) five (5) Business Days after deposit with an international courier if for overseas delivery; and (iv) if sent by registered letter when the registered letter would, in the ordinary course of post, be delivered whether actually delivered or not.
21.3.3	An original of each notice and communication sent by facsimile shall be dispatched by person, overnight courier (if for inland delivery) or international courier (if for overseas delivery) and, if such Person or courier service is not available, by registered airmail (or, if for inland delivery, registered first class mail) with postage prepaid, provided that the effective date of any such notice shall be determined in accordance with this Section 21.3.3 as the case may be, without regard to the dispatch of such original.
	Provided, however, if any notice or communication is received after 6.00 p.m. on any date the same shall be deemed to have been served upon or received by the party to whom it is addressed on immediately succeeding

137

Business Day.

21.4	Benefit of Agreement
	This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto and shall inure to the benefit of the Borrower, each of the Secured Parties and the Facility Agent.
21.5	No Waiver; Remedies Cumulative
	No failure or delay on the part of the Facility Agent or any Secured Party in exercising any right, power or privilege hereunder or under any other Financing Document and no course of dealing between the Borrower, on the one hand, and the Facility Agent and the Secured Parties, on the other hand, shall impair any such right, power or privilege or operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Financing Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Financing Document or expressly provided are cumulative and not exclusive of any rights, powers or remedies which any of the Facility Agent or Secured Parties would otherwise have. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of any of the Facility Agent or Secured Parties to any other or further action in any circumstances without notice or demand.
21.6	Amendments and Waivers; Procedure

21.6.1 Subject to Section 21.6.2 below and save where otherwise expressly provided in any Financing Document, this Agreement (including the schedules, annexures and exhibits hereto) may not be amended, supplemented or modified and no other Financing Document may be

138

	amended, supplemented or modified and no term or condition or any of thereof may be waived without the consent of the Borrower, and the Secured Parties and, in the event any such amendment, modification or waivers relates to the rights, duties or obligations of the Facility Agent, the Facility Agent, as relevant. The Facility Agent may effect, on behalf of the Secured Parties, an amendment, supplement, modification or waiver to which the Secured Parties have agreed in writing, whether generally or specifically.
21.6.2	The Facility Agent shall promptly supply to the Secured Parties copies of any amendment, supplement, modification or waiver effected under Section 21.6.1 above, and any such amendment, supplement, modification or waiver shall be binding on all the parties to this Agreement.
	For the purpose of this Section 21.6, Financing Documents shall not include the Intercreditor Agreement.

21.7	Transfer by the Borrower
	The Borrower shall not assign, transfer or novate any interest in, its rights and/or obligations under any Financing Document to which it is a party without the prior written consent of all the Lenders.
21.8	Novation and Participation

21.8.1 Any Lender may at its own cost, without the consent of the Borrower or any other party assign all or any of its rights and benefits hereunder or transfer or novate, in accordance with Section 21.8.3 all or part of its rights, benefits and obligations hereunder or under the Financing Documents to which it is a party to any Person. Nothing herein shall prevent the assignment by any Lender of its rights and benefits under the Financing Documents. However, where such assignment, transfer or novation by a Lender is to be done in favor of an entity which is a

139

	competitor of the Borrower, the same shall be done after consultation with the Borrower.
21.8.2	If any Lender assigns all or any of its rights, obligations and benefits hereunder and under the other Financing Documents to which it is a party in accordance with this Section 21.8, then, unless and until the assignee has agreed with the Facility Agent and other Lenders that it shall be under the same obligations towards each one of them as it would have been under if it has been an original party hereto as a Lender, the Facility Agent and other Lenders shall not be obliged to recognize such assignee as having the rights against each of them which it would have had if it had been such a party thereto.
21.8.3	If a Lender wishes to novate all or any of its rights, benefits and obligations hereunder and under the other Financing Documents to which it is a party then such novation shall be made by delivering to the Facility Agent and the Borrower a duly completed, stamped and executed novation notice in the form set out in Exhibit 1 (the “Novation Notice”), together with the Facility Agent’s administrative fee. On receipt of such a notice and payment of such fee, the Facility Agent shall countersign it for and on behalf of itself and the other parties to this Agreement and subject to the terms of that Novation Notice:

(i)	to the extent that in that Novation Notice the relevant Lender seeks to novate its Outstanding Due Amounts and/or its Commitment, the Borrower or the Lender, as the case may be, shall each be released from further obligations to each other and their respective rights against each other shall be cancelled (such rights and obligations being referred to as “Discharged Rights and Obligations”);
(ii)	the Borrower and the relevant bank/or financial institution to which such interest is being novated (the “New Lender”) shall

140

each assume new obligations towards each other and/or acquire new rights against each other which differ from the Discharged Rights and Obligations only insofar as the Borrower and that New Lender, as the case may be, have assumed and acquired the same in place of the Borrower and such Lender as the case may be; and

(iii)

the New Lender, as the case may be, and the other parties to the Financing Documents (other than the Borrower) shall acquire the same rights and assume the same obligations between themselves as regards the Borrower as they would have acquired and assumed had that New Lender, as the case may be, been an original party to the Financing Documents as a Lender with the rights and/or obligations acquired or assumed by it as a result of that novation (and, to that extent, the original Lender and those other parties shall each be released from further obligations to each other).

21.8.4

If any Lender assigns all or any of its rights and benefits hereunder in accordance with this Section 21.8, unless and until the assignee has agreed with the Facility Agent and other Lenders that it shall be under the same obligations towards each of them as it would have been under if it had been an original party hereto as Lender, as the case may be, the Facility Agent, and the other Lenders shall not be obliged to recognise such assignee as having the rights against each of them which it would have had if it had been such a party hereto.

21.8.5

Notwithstanding anything contained herein, all the costs, charges and expenses including stamp duty and other taxes on the Novation Notice shall be borne by the Lender novating its rights, benefits and obligations.

21.9	Severability
	Any provision of any Financing Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of

141

	prohibition or unenforceability but that shall not invalidate the remaining provisions of such Financing Document or affect such provision in any other jurisdiction.
21.10	Documents
	All documents to be furnished or communications to be given or made under this Agreement shall be in English or if any other language, shall be accompanied by a translation into English certified by a representative of the Facility Agent, at the expense of the Borrower, which translation shall be the governing version between the Borrower, the Lenders and the Facility Agent.
21.11	Calculations and Computations

21.11.1	In any legal action or proceedings arising out of or in connection with the Financing Documents, the entries made in the accounts maintained by the Lenders shall be conclusive evidence of the existence and amount of obligations of the Borrower as therein recorded.
21.11.2	Any certification or determination by the Lenders or the Facility Agent of a rate or amount under the Financing Documents is conclusive evidence of the matters to which it relates.
21.11.3	All calculations and computations determining compliance with this Agreement shall utilise accounting principles, policies and practices in conformity with those used to prepare the Financial Statements, delivered to the Facility Agent pursuant to this Agreement.
21.11.4	To the extent that the determination of compliance with any provision hereof or any other Financing Document requires the conversion of Rupees into any acceptable foreign currency, or any acceptable foreign currency into Rupees, then such conversion shall be made based upon the Applicable Exchange Rate as determined on the date of each creation,

142

sale, transfer, disposition, expenditure or other similar event, as the case may be, which is the subject of such determination of compliance pursuant to the respective provision (with all such events theretofore incurred to be recalculated based upon such conversion rate). Provided, however, that at no time shall there exist a violation of the provisions of this Agreement dealing with Restricted Payments and in the calculation of DSCR, based on prior events, solely as a result of changes in conversion rates.

21.12	Governing Law
	This Agreement is governed by and shall be construed in accordance with the laws of India.
21.13	Jurisdiction

21.13.1

The Borrower agrees that the courts and tribunals (including the Debt Recovery Tribunal) in Mumbai shall have non-exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Financing Documents and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with the Financing Documents may be brought in such courts or the tribunals and the Borrower irrevocably submits to and accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of those courts or tribunals to the extent permissible under Applicable Law.

21.13.2

The Borrower irrevocably waives any objection now or in future, to the laying of the venue of any Proceedings in the courts and tribunals at Mumbai (subject to appeal/revision) and any claim that any such Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgment in any Proceedings brought in the courts and tribunals at Mumbai shall be conclusive and binding upon it

143

	and may be enforced in the courts of any other jurisdiction, (subject to the laws of such jurisdiction) by a suit upon such judgment, a certified copy of which shall be conclusive evidence of such judgment, or in any other manner provided by law.
21.13.3	Nothing contained in this Section 21.13, shall, subject to Applicable Law, limit any right of the Facility Agent or the Secured Parties to take Proceedings in any other court or tribunal of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction whether concurrently or not and the Borrower irrevocably submits to and accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of such court or tribunal, and the Borrower irrevocably waives any objection it may have now or in the future to the laying of the venue of any Proceedings and any claim that any such Proceedings have been brought in an inconvenient forum.
21.13.4	The Borrower hereby consents generally in respect of any Proceedings arising out of or in connection with any Financing Document to the giving of any relief or the issue of any process in connection with such Proceedings including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such Proceedings.
21.13.5	To the extent that the Borrower may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Borrower hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity.

144

21.14 Survival

21.14.1	All indemnities set forth herein shall survive the Final Settlement Date.
21.14.2	The obligations of the Borrower under the Financing Documents will not be affected by:

(a)	any unenforceability, illegality or invalidity of any obligation of any Person under a Transaction Document; or
(b)	the breach, frustration or non-fulfilment of any provisions of, or claim arising out of or in connection with a Transaction Document.

21.15 Disclosure

21.15.1 The Borrower hereby agrees that the Facility Agent, the Lenders and the Security Trustee may disclose any information in respect of:

(a)	the Borrower,
(b)	the Project;
(c)	any of the Transaction Documents;
(d)	the Facility or any other credit facility availed / to be availed by the Borrower from the Lenders;
(e)	obligations assumed / to be assumed by the Borrower in relation to the Facility; and
(f)	default, if any, committed by the Borrower in discharge of the aforesaid obligations,

to any of its Affiliates, agents and representatives, other creditors of the

145

Borrower, or to any Person with whom it intends to enter, or has entered into any kind of transfer, participation or other agreement or transactions in relation to this Agreement, the Transaction Documents, the Project, the Borrower or otherwise.

21.15.2

Except as provided in this Section 21.15, the Facility Agent and the Secured Parties agree to keep all information (“Information”) (including the terms and conditions of the Transaction Documents) made available (whether before or after the date of this Agreement) by the Borrower, or on its behalf, to such Secured Party or Facility Agent concerning the Borrower or the Project, confidential and not to communicate any Information, or allow any Information to be communicated to any third party unless:

(a)	in connection with any proceedings arising out of or in connection with this Agreement to the extent that such Secured Party or Facility Agent may consider it necessary to protect its interest or the interests of the Secured Party, or the Facility Agent or any of them; or
(b)	required to do so by an order of a court of competent jurisdiction whether or not in pursuance of any procedure for discovering documents; or
(c)	the Borrower commits a default in payment or repayment of the principal amount of any Facility, or interest thereon or in respect of other monies, or utilises any Facility other than for the purposes specified in the Financing Documents without the prior written consent of the Lenders, any of the Lenders and/or the RBI and/or CIBIL shall have an unqualified right to disclose or publish the details of the default and the name of the Borrower and its directors as defaulters in such manner and through such medium as any of the Lenders, and/or RBI and/or CIBIL or such other agency

146

	appointed by them in their absolute discretion may think fit; or
(d)	pursuant to the requirements of any Applicable Law in accordance with which such Person is required to act; or
(e)	to its Auditors for the purposes of enabling the Auditors to complete an audit of such Lender, or the Facility Agent or to its legal advisers when seeking bona fide legal advice in connection with the Transaction Documents; or
(f)	to the Lenders Consultants or other adviser appointed by the Lenders to the extent necessary to enable such consultant or adviser to give the advice required by the Lenders; or
(g)	in circumstances where the relevant Information has been published or announced by the Borrower in conditions free from confidentiality or has otherwise entered the public domain without default on the part of the relevant party; or
(h)	it is in the interest of the Lenders to do so; or
(i)	the Information was obtained by such Lender or the Facility Agent from an independent or third party source.

Notwithstanding the foregoing provisions of this Section 21.15,

(a)	the Lenders, or the Facility Agent may make public announcements or place advertisements in relation to the Project or the financing of the Project with the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed; and
(b)	any Lender shall, as such Lender may deem appropriate and necessary, be entitled to disclose all or any such:

147

(i)	information and data relating to the Borrower;
(ii)	information or data relating to its Facility;
(iii)	obligations assumed / to be assumed by the Borrower in relation to its Facility; and
(iv)	default, if any, committed by the Borrower in discharge of the aforesaid obligations,

	to Credit Information Bureau (India) Limited (“CIBIL”) and any other agency authorised in this behalf by Reserve Bank of India (“RBI”);
(c)	CIBIL and any other agency so authorised may use, process the aforesaid information and data disclosed by any Lender in the manner as deemed fit by them; and
(d)	CIBIL and any other agency so authorised may furnish for consideration, the processed information and data or products thereof prepared by them, to banks / financial institutions and other credit grantors or registered users, as may be specified by RBI in this behalf.

21.15.3

The Borrower hereby agrees that the Secured Parties may disclose any information in respect of the Borrower, the Project or any of the Transaction Documents to any of its Affiliates, agents and representatives or to any Person with whom it intends to enter, or has entered into any kind of transfer, participation or other agreement or transactions in relation to this Agreement, the Transaction Documents, the Project, the Borrower or otherwise.

21.15.4

The Borrower hereby agrees that in case the Borrower commits a default in payment or repayment of any amount due and payable hereunder, the

148

Lenders, the and/or the Reserve Bank of India (RBI) shall have an unqualified right to disclose or publish the details of the default and the name of the Borrower and its directors as defaulters in such manner and through such medium as the Lenders or RBI in their absolute discretion may think fit.

21.16	Illegality
	If by reason of the introduction of, or any change in, or any change in the interpretation or application of, any Applicable Law it is or has or will become unlawful for the Lenders to make or fund any Loan then, notwithstanding the terms of this Agreement:

(a) that Lender shall promptly after becoming aware of any of the foregoing notify the Borrower through the Facility Agent accordingly; and

(b) (i) the Borrower shall within the period allowed by Applicable Law (the “Relevant Period”) prepay that Lender’s Loan, to the extent it has become unlawful to make or fund such Loan together with all other amounts payable by it to that Lender under the Financing Documents and the Security Documents in respect of such Loan; and

(ii) such part of the Lender’s Commitment which it has become unlawful to make, fund or maintain shall within the Relevant Period be cancelled,

provided that by making any payment pursuant to this Section 21.16, the Borrower shall not be taken to have breached any other provision of this Agreement in so doing.

21.17 Taxes

21.17.1 Taxes and Net Payments

149

(a)

All payments to be made by the Borrower to the Secured Parties under the Financing Documents shall be made free and clear of and without deduction for or on account of Taxes. The Borrower is only allowed to make such a payment subject to the tax deduction at source on the net income of the Secured Parties if such deduction is required by law and provided that the Borrower delivers to the Secured Parties tax withholding or tax deduction certificates in respect of such withholding or deduction, evidencing that such deducted taxes or withholdings have been duly remitted to the appropriate authority.

(b)

In the event that the Borrower is required to make any other deduction or withholding (other than as mentioned in (a) above with reference to the income of the Secured Parties), the sum payable by the Borrower in respect of which such deduction or withholding is made shall be increased to the extent necessary to ensure that, after the making of the required deduction or withholding, such Secured Party receives and retains (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made.

21.17.2

Tax Indemnity

The Borrower shall, upon demand of any Lender promptly indemnify such Lender against any such payment or liability arising or in any relation to Taxes (other than Taxes in relation to the net income received by any Lender as specified in 21.17.1 above) or otherwise in relation to any sum received or receivable pursuant to the Financing Documents, that are required to be borne by the Borrower, together with any interest, penalties, costs and expenses payable or incurred in connection therewith.

150

21.17.3	Notification by the Lenders
	The Lenders intending to make a claim under Section 21.17.2 hereof shall notify the Facility Agent promptly and in any event within ten (10) Business Days of becoming aware of the circumstances by which it is entitled to do so and shall deliver to the Facility Agent a certificate setting out in reasonable detail the basis of such claim, whereupon the Facility Agent shall promptly, and in any event within ten (10) Business Days from the date on which it receives such certificate, notify the Borrower thereof and shall deliver to the Borrower a copy of such certificate.
21.17.4	Notification by Borrower
	If at any time, the Borrower is required by law to make any deduction or withholding from any sum payable hereunder (or if thereafter there is any change in the rates at which or the manner in which such deductions and withholdings are calculated) the Borrower shall as soon as practicable notify the Facility Agent and the Secured Parties thereof.
21.17.5	Receipt
	The Borrower shall deliver to the Facility Agent and the Secured Parties within ten (10) Business Days of receipt (or such other period as the Secured Parties may agree) a copy of the receipt, if any, issued by the applicable taxation or other authority evidencing the deduction or withholding of all amounts required to be deducted or withheld from such payment or (if the Borrower fails to provide a copy of such receipt) such other evidence as may be requested by the Secured Party to whom such payment is made.

21.18	Accession by Other Lenders
	The Parties to this Agreement acknowledge and agree that from time to time

151

	certain creditors of the Borrower may accede to this Agreement by executing the Deed of Accession and upon accession by such creditors to this Agreement, such creditors shall be included in the term Lenders (as defined in this Agreement) and they shall be entitled to the benefits of this Agreement and be bound by the terms of this Agreement.
21.19	Subordination
	Monies brought in by the promoters/directors or Affiliates as loans/share application money pending allotment as part of promoters contribution brought in towards the funding of the proposed project shall be subordinated to the loans of the Lenders, and shall not be repaid during the currency of the loans by the Lenders, and may carry such interest as approved by the Lenders.
21.20	Conditions of Other Finance Parties
	The Borrower hereby agrees and confirms that in case any other person providing any financial assistance to the Borrower with terms and conditions more favourable to the ones laid down in this Agreement or imposes any conditions not included herein, or in case any of the terms offered by the Borrower to such person is more favourable to such person than the terms stipulated by, or offered to, the Lenders, the Borrower shall promptly inform the Lenders of such terms or conditions and such of those terms and conditions as may be considered necessary by the Lenders, in its discretion, shall apply to the Facility as if the Borrower had specifically agreed to such terms and conditions, which terms and conditions shall be regarded as being expressly incorporated herein.

152

21.21	Registration Details
	The Borrower shall submit to the Lenders the Corporate Identity Number of the Borrower and the Director Identification Number of each director of the Borrower during the term of the Facility and shall incorporate the details in all future references/proposals with respect to the Lenders.

153

SCHEDULE I

DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

1.1	Definitions
	As used in this Agreement, the following terms shall have the following meanings:
	Abandonment shall mean the cessation of performance of obligations by the Borrower in respect of the whole or any material part of the Project for reasons other than Force Majeure or scheduled outage for a continuous period of fifteen (15) days. For this purpose, but without limitation to the generality of the foregoing, the Borrower shall be deemed to have abandoned the Project if it shall make or fail to make a decision, or shall take or fail to take any action clearly indicating the cessation of performance by it of its obligations in respect of the Project for reasons other than Force Majeure. Abandon shall be construed accordingly.
	Account Bank shall have the meaning specified in the Trust and Retention Account Agreement.
	Account(s) shall have the meaning specified in the Trust and Retention Account Agreement.
	Additional Accounts shall have the meaning specified in the Trust and Retention Account Agreement.
	Additional Interest shall have the meaning given to it in Section 14.7 of this Agreement.
	Additional Loans shall have the meaning given to it in Section 3 of this Agreement.

154

Additional Loan Amount shall mean 30% (thirty per cent) of the Rupee Required Debt provided that the Additional Loan Amount shall not at any time, exceed the Available Commitment. For the avoidance of doubt, the Foreign Currency Facility forms part of the Additional Loan Amount.

Advance(s) shall mean the principal amount of each Drawdown made to the Borrower by the Lenders under the Facility to the maximum extent of their Commitment.

Adverse Change shall mean any change which has had or which is likely to have a Material Adverse Effect.

Affiliates shall mean in relation to any party, a Person that controls, is controlled by or is under the common control with such party.

Agreement or Common Rupee Loan Agreement shall mean this agreement, together with all schedules attached hereto, and shall include any written modification or alteration made by the Parties after the date first above written.

Annual Budget shall have the meaning specified in Section 8.24.1 (i) (A).

Annual Operating Plan shall have the meaning specified in Section 8.24.2(iii).

Applicable Exchange Rate shall mean the reference rate quoted by Reserve Bank of India on the “RBIB” page of Reuters as on the end of that date.

Applicable Law shall mean any statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, clearance, approval, directive, guideline, policy, requirement, or other governmental restriction or any similar form of decision, or determination by, or any interpretation or administration of any of the foregoing by, any statutory or regulatory authority whether in effect as of the date of this Agreement or thereafter and in each case as amended.

155

Auditor(s) shall mean such firm of chartered accountants acceptable to the Facility Agent, as the Borrower may, with the consent of the Facility Agent, from time to time appoint as statutory auditors of the Borrower.

Audited Annual Financial Statements shall mean the Financial Statements for a period ending on the last day of the Fiscal Year, which have been duly audited by the Auditors as required under the Companies Act 1956, and in accordance with Indian GAAP.

Authorized Officer shall mean with respect to any Person, any officer of such Person that is authorized to sign on behalf of such Person and at the time being listed as such by the company secretary of such Person in the most recent certificate of such company secretary delivered to the Facility Agent.

Auditor’s Certificate Provision Dates shall mean the 30^th of September and the 31^st of March of each Fiscal Year.

Available Commitment shall mean, at any point of time, an amount equal to the difference between: (i) the aggregate of the Commitments of all the Rupee Lenders; and (ii) the aggregate of all Drawdowns made under this Agreement.

Availability Period shall mean with respect to the Facility, the period from the date of this Agreement until the earliest of: (i) the date that each of the Commitments under such Facility shall have been terminated or reduced to zero pursuant to the terms of this Agreement; or (ii) six (6) months after Project COD.

Base Case shall mean the projection of revenues and expenses and cash flows with respect to the Project, mutually agreed to by the Borrower and the Lenders, over a period not shorter than the period ending on the Final Settlement Date, together with the Drawdown Schedule and supporting assumptions and explanations thereto as amended from time to time which shall be in substance satisfactory to the Lenders Engineer (which satisfaction shall only be required to be obtained before Project COD) and the Facility Agent. The Base Case as on the

156

date of this Agreement is as set out in Schedule IX.

Board or Board of Directors shall mean the board of directors of the Borrower appointed pursuant to the Companies Act.

Borrower shall have the meaning specified in item no. 1 of the array of parties.

Business Day shall mean:

(a)	in relation to the making of any Drawdown, by a Lender, any day on which such Lender is required or authorized by law to be open for business in the place of its Lending Office; or
(b)	in relation to all other matters, a day (other than a Saturday or a Sunday) upon which banks are normally open for business in Mumbai.

Buyer’s Credit Facility shall mean the buyer’s credit facility being extended by the Buyer’s Credit Lender to the Borrower for the purpose of making payments to the offshore counterparty (ies) to the Project Documents.

Buyer’s Credit Facility Agreement shall mean the agreement entered into or to be entered into between the Borrower and the Buyer’s Credit Lender for providing the Buyers Credit Facility to the Borrower.

Buyer’s Credit Lender shall mean one or more banks/financial institution(s) extending the Buyer’s Credit Facility.

Care and Maintenance shall mean any transfer of possession or transfer of control of the Project to any Person by the Borrower except in accordance with the provisions of this Agreement.

Change in Law shall mean:

(a) the enactment, bringing into effect, adoption, promulgation, amendment,

157

	modification or repeal, after the date of this Agreement, of any statute, decree, ordinance or other law, regulation, notice, circular, code, policy, rule or direction by any Governmental Authority; or
(b)	a change in its interpretation by a competent court of law, tribunal, government or statutory authority or any of the above regulations; or
(c)	a change in any consents, approvals, licenses available or obtained for the transmission and evacuation of power from the Project by the Borrower; or
(d)	any change in charges for the transmission and evacuation of power from the Project, that results in any change in the Borrower’s revenue or costs directly attributable to the Project being decreased or increased, including without limitation, with respect to income tax or any tax or surcharge or cess levied on the sale of electricity by the GOI.

Claimed Amount shall have the meaning specified in Section 12.5(a).

Clearances shall mean any consent, license, approval, registration, permit or other authorisation of any nature which is required to be granted by any statutory or regulatory authority or any third party: (i) for fulfilling by each of the Borrower and Sponsor under the Transaction Documents its obligations, the making by it of the payments contemplated by the Transaction Documents; (ii) for the enforceability of any Transaction Documents and the making of any payments contemplated thereunder; (iii) for the construction, operation, and maintenance of the Project; and (iv) for all such other matters as may be necessary in connection with the Project or the performance of any Person’s obligations under any Transaction Document, each of the above having been reviewed by the Lenders Engineer, and shall in any event include but not be limited to those Clearances listed in Schedule III to this Agreement.

Coal Blocks shall mean the coal blocks located at Rampia and Dip Side Rampia

158

which are proposed to be developed by Rampia Coal Mine and Energy Private Limited and other companies.

Coal Transportation Agreements shall mean all binding documents, deeds and other writings entered into by the Borrower for transportation of coal for the Project to the Project Site.

Coal Investment JV Drawdown shall mean a Drawdown under this Agreement of which any part of the proceeds are intended to be utilized for the purpose of investment through subscription to equity by the Borrower in Rampia Coal Mine and Energy Private Limited, which shall be evidenced by a certificate given by the Authorized Officer of the Borrower along with the Notice of Drawdown.

Commitment(s) shall mean to the extent not suspended or cancelled pursuant to the terms of this Agreement, the commitment of each Lender to make the Facility available pursuant to this Agreement to the extent set out against its name in Schedule II.

Companies Act shall mean the Companies Act, 1956 as amended or replaced from time to time.

Consent(s) to Assignment shall mean the agreement(s) entered into between the Borrower, the Security Trustee and any of the Material Project Participants (other than the Borrower and the Sponsor), for the benefit of the Secured Parties, inter alia in respect of assignment of the Borrower’s rights under the Transaction Documents.

Construction Account shall have the meaning specified in the Trust and Retention Account Agreement.

Construction Budget shall mean the budget which shall reflect the final Scope of Work and contract price and set forth the timing and amount of all projected payments towards the Project, submitted by the Borrower in substantially the

159

form set forth at Schedule X.

Contested in Good Faith shall mean, with respect to the payment of Taxes or any other claims or liabilities by any Person, the satisfaction of each of the following conditions: (i) the validity or amount there of is being diligently contested in good faith by such Person by appropriate proceedings timely instituted; (ii) such Person has posted a bond or other security acceptable to the Security Trustee or if not approved by the Secuity Trustee, establish adequate cash reserves with respect to the contested items; (iii) during the period of such contest, the enforcement of any contested item is effectively stayed by a court or tribunal or by operation of law; (iv) neither such Person nor any of its officers nor any Secured Party or their respective officers is or could reasonably be expected to become subject to criminal liability or sanction; and (v) such contest and any resultant failure to pay or discharge the claimed or assessed amount does not constitute a Material Adverse Effect.

Contingency shall mean the line item designated as “contingency” line item in the Contruction Budget.

Cost Overrun(s) shall have the meaning ascribed to it in the Sponsor Support Agreement.

Crystallized Rupee Amount shall mean, with respect to the Claimed Amount or Participating Interest, such amount in equivalent Rupees converted at the exchange rate at which Issuing Bank may have purchased or contracted to purchase the requisite US Dollar amount from the market to make payments towards the Claimed Amount.

Date of Commercial Operation shall mean, with respect to each Unit of the Project, the date on which such Unit commences commercial production to the satisfaction of the Facility Agent and Lenders Engineer.

Debt shall mean at any time the aggregate Obligations owed to the Secured

160

Parties by the Borrower.

Debt Recovery Tribunal shall have the meaning specified in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Debt Service Coverage Ratio or DSCR shall mean, on any date, in respect of any period, the ratio of (i) is to (ii) below:

(i)	the aggregate of: (a) profit after tax (excluding non cash adjustments, if any) for that period; (b) depreciation for such period; (c) interest, LOC Commission and Letter of Comfort Fees payable for such period; and (d) financing costs payable for such period; and (e) deferred tax liability;
(ii)	an amount equal to the sum of interest, LOC Commission, Letter of Comfort Fees and financing costs payable and the repayment instalment to be paid for that period under this Agreement and the Foreign Currency Facility Agreement (but excluding the Rupee Bullet Repayment Amount and the Foreign Currency Bullet Repayment Amount).

For the purpose of calculating the DSCR over any period, actual figures would be taken for the past period and figures as per the updated Base Case would be taken for the future period. For determining the figures for the future period, the exchange rate shall be the Applicable Exchange Rate.

Debt Service Reserve Account shall have the meaning specified in the Trust and Retention Account Agreement.

Deed of Accession shall mean the deed of accession in the format set out in Schedule XIII.

Deed of Hypothecation shall mean the deed of hypothecation executed or to be executed by the Borrower in favour of the Security Trustee for the benefit of the Lenders in respect of the movable assets of the Borrower.

161

Default Interest shall have the meaning given to it in Section 14.6.

Default Rate shall mean a rate which is the aggregate of: (a) the Lending Rate in effect from time to time, and (b) two per cent (2%) per annum.

Devaluation Amount shall mean the provisions equivalent to the amount in Rupees set forth against the name of each Lender in Schedule II to account for devaluation of rupee against any foreign currency during the construction phase of the Project.

Directors shall mean directors on the Borrower’s Board.

Disbursement shall mean a Drawdown other than by way of issuance of a Letter of Commitment (including Drawdown made under Section 12.1.4) and shall include any payment made under any Letter of Commitment in accordance with the terms and conditions hereunder.

Distribution Account shall have the meaning specified in the Trust and Retention Account Agreement.

Documents shall mean the documents as specified under each Letter(s) of Commitment and drawn up in accordance with the terms of the Letter(s) of Commitment opened under this Agreement and/or documents as are required to be submitted by the Buyers Credit Lender for payment to be made under any Letter of Commitment.

Drawdown Date shall mean the date of each Drawdown subsequent to Initial Drawdown.

Drawdown(s) shall mean the Initial Drawdown and each subsequent drawdown under the Facility, of funds or opening of a Letter of Commitment under this Agreement. Drawndown shall be construed accordingly.

Drawstop Notice shall have the meaning specified in Section 5.4.2.1.

162

Drawdown Schedule shall mean the schedule for making Drawdowns under this Agreement prepared by the Borrower in accordance with Section 14.5.1.

Drawdown Schedule Period shall have the meaning specified in Section 14.5.1.

Documentary Credit Application/(s) shall mean the Borrower’s application/(s) to the Lenders for opening the Letter(s) of Commitment and all supporting documents furnished by the Borrower in respect thereof to the Lenders.

Due Date shall mean, in respect of:

(i)	Repayment Instalments, the date on which the Repayment Instalment falls due as stipulated in the Repayment Schedule;
(ii)	Interest, the Interest Payment Dates;
(iii)	LOC Commission, LOC Commission Payment Date; and
(iv)	any other amount payable under the Financing Documents, the date on which such amount falls due in terms of the Financing Documents.

Earmarked Amount with respect to any Lender shall mean the portion of its Commitment which is earmarked for the purpose of participation in issue of Letter(s) of Commitment and as specified against its name in Schedule II as may be reduced by an amount equivalent to the amount of Disbursement in accordance with Section 12.1.4. The Earmarked Amount shall consist of the LOC Amount and the Devaluation Amount.

ECB Guidelines means the master circular on External Commercial Borrowings and Trade Credit dated July 1, 2008 issued by the RBI as amended, supplemented or updated from time to time.

Equity Interest shall mean the extent of issued share capital of the Borrower subscribed to by the Sponsor.

163

Equity shall mean the issued and subscribed equity share capital of the Borrower. For the avoidance of doubt, this shall not include any preference shares of the Borrower.

Estimated Project Cost(s) shall mean the costs of the Project as set forth in Schedule XI and as approved by the Lenders Engineer.

Event of Default shall have the meaning specified in Section 20.

External Commercial Borrowings shall have the meaning given to it in the ECB Guidelines.

Facility Agent shall mean State Bank of India, Project Financing, SBU as appointed under this Agreement.

Facility shall mean, collectively, the Rupee Facility and the LOC Facility.

Facility Agent Agreement shall mean the agreement entered into or to be entered into between the Lenders, the Facility Agent and the Borrower.

FEDAI means Foreign Exchange Dealers Association of India.

Fee Letter shall mean the letter relating to the payment of fees by the Borrower to the Facility Agent.

Final Completion shall mean the date on which the following requirements have been satisfied:

(i)	Final acceptance under the Project Documents has occurred and the Project is operating in accordance with the obligations of the Borrower under the relevant Project Documents;
(ii)	The Lenders Engineer certifies that the Scope of Work (including all punch list items under Project Documents) has been completed and all

164

Clearances required to construct, operate and maintain the Project have been obtained;

(iii)

(A) the Borrower has delivered to the Facility Agent a completion certificate in such form as may be agreed upon by the parties hereto (the “Borrower Completion Certificate”), signed by an Authorized Officer of the Borrower, certifying that the requirements set forth in paragraphs (i) and (ii) above have been satisfied, and (B) the Lenders Engineer has countersigned the Borrower Completion Certificate confirming that the requirements set forth in paragraphs (i) and (ii) above have been satisfied.

Final Settlement Date shall mean the date on which all Obligations have been irrevocably and unconditionally paid and discharged in full to the satisfaction of the Secured Parties.

Financial Close shall mean the date on which each of the Financing Documents are executed and unless any condition precedent in Section 7.2 is waived, upon fulfillment, to the satisfaction of the Lenders, of all conditions precedent provided in Section 7.2 and 7.3.

Financing Documents shall mean the documents set out in Schedule VI.

Financing Plan shall mean the base case financial plan as mutually agreed between the Borrower and the Lenders (after incorporation of the views of the Lenders Engineer) and as set out in Schedule VII.

Financial Statement shall mean the profit and loss account for the period ending, balance sheet and cashflow statements for a quarter of a Fiscal Year as the context may require.

First Interest Reset Date shall mean the date falling one (1) year from the date of this Agreement.

First Repayment Date shall mean in respect of all the Rupee Lenders the date

165

occurring six (6) months after the Project COD.

Fiscal Year shall mean the accounting period commencing from April 1^st of each year till March 31^st of the next year.

Force Majeure shall mean an event of force majeure howsoever defined in the Transaction Documents.

Foreign Currency Bullet Repayment Amount means thirty six per cent (36%) of the amount of the Foreign Currency Facility to be repaid by the Borrower in a single instalment as part of the forty — eighth (48th) repayment instalment in accordance with the Foreign Currency Facility Agreement.

Foreign Currency Facility shall mean the US Dollars One Hundred and Forty Million (USD 140,000,000/-) term loan facility and the letter of comfort facility made available to the Borrower by the Foreign Currency Lender under the Foreign Currency Facility Agreement.

Foreign Currency Facility Agreement shall mean the foreign currency facility agreement dated June 29, 2009 entered into between, the Borrower, the Foreign Currency Lender, and the Facility Agent, for the Foreign Currency Facility being availed of by the Borrower in relation to the Project, and shall include any amendments or modifications thereto.

Foreign Currency Lender shall mean India Infrastructure Finance company (UK) Limited, or any successor, novatee, transferee or assignee thereof.

Fuel Supply Agreements mean all binding documents, agreements, deeds and other writings entered into by the Borrower for procurement and supply of coal for the Project.

GOI shall mean the Government of India.

Goods shall mean goods described in the Documentary Credit Application.

166

Government of Orissa shall mean the Government of the State of Orissa or any successor entity assuming the obligations of the Government of State of Orissa in relation to the Project as the case may be.

Governmental Authority shall mean the GOI, Government of Orissa, or the government of any other state of India or any ministry, department, board, authority, instrumentality, agency, corporation (to the extent acting in a legislative, judicial or administrative capacity and not as a contracting party with the Borrower) or commission under the direct or indirect control of the GOI or the Government of Orissa or any political subdivision of any of them or owned or controlled by the GOI, the Government of Orissa or any of their subdivisions, or any court, tribunal or judicial body within India.

GRIDCO PPA shall mean the power purchase agreement dated September 28, 2006 executed between Grid Corporation of Orissa Limited and the Borrower and shall include the letter from GRIDCO to the Borrower dated October 01, 2008 requisitioning for 600 MW of power from the first Unit of the Project, and any other similar letter or any other document issued under such power purchase agreement.

Hedging Plan means the plan prepared by the Borrower, in form, substance and detail satisfactory to the Facility Agent, specifying the Borrower’s plans for hedging the Borrower’s currency risks, interest rate risks and such other risks as may be permitted by the Facility Agent.

ICC Uniform Customs & Practises for Documentary Credits shall mean the rules governing letters of credit as notified and updated by the International Chamber of Commerce from time to time.

IFRS shall mean International Financial Reporting Standards.

Indenture of Mortgage shall, collectively, mean any mortgages created or to be created by the Borrower over all or any of the assets mentioned in Section 8.7.1 in favour of the Security Trustee for the benefit of the Lenders.

167

Indian GAAP shall mean generally accepted accounting principles in India, as in effect from time to time.

Initial Drawdown shall mean the first Drawdown by the Borrower of a Facility under this Agreement whether by way of issuance of a Letter of Commitment under this Agreement or otherwise. For the avoidance of doubt, any drawdown under the Interim Rupee Facility Agreements shall not be considered as Initial Drawdown.

Initial Drawdown Date shall mean date of the Initial Drawdown.

Initial Security shall have the meaning specified in Section 8.7.1.

Insurance Consultancy Appointment Letter shall mean the letter issued by the Facility Agent appointing the Lenders Insurance Consultant in connection with performance of certain services with respect to the Project.

Insurance Contract(s) shall mean the insurance contracts and policies specified by the Lenders Insurance Consultant and required pursuant to this Agreement, any substitutes therefor and any additional insurance contracts or policies required under any of the Financing Documents.

Intellectual Property means all patents, trademarks, permits, service marks, brands, trade names, trade secrets, proprietary information and knowledge, technology, computer programs, databases, copyrights, licences, franchises, formulae, designs, rights of confidential information and all other intellectual property.

Intellectual Property Rights means all rights, title, benefit and interest in relation to Intellectual Property anywhere in the world (whether registered or not and including all applications for the same) and as defined in Section 6.13.

Intercreditor Agreement shall mean the Agreement entered into or to be entered into between and amongst the Lenders, the Facility Agent and the Security

168

Trustee.

Interest Payment Date shall mean the last day of each calendar month on which interest is due and payable for the Loan except that the last Interest Payment Date shall coincide with the last Repayment Date.

Interest Period shall mean, in respect of an Advance: (i) in the first instance, the period commencing from the date of Drawdown and ending on (and excluding) the immediately following Interest Payment Date; and (ii) subsequently, the period commencing on one Interest Payment Date and ending on (and excluding) the immediately following Interest Payment Date.

Interest Reset Date shall mean the date falling on the expiry of every one (1) year period from the First Interest Reset Date during the currency of the Facility.

Interest Tax shall mean any tax, fees or other statutory levy payable by the Lender which is levied on any payments in the nature of interest (howsoever the same may be described including but not limited to further interest, penalties, damages).

Issuing Lender shall have the meaning given to it in Section 12.1A.

Legal Proceeding(s) shall mean any litigation, judicial, quasi-judicial, administrative or arbitral proceedings or proceedings with respect to any commission of inquiry.

Lender or Lenders shall mean each of the Rupee Lenders and the Issuing Bank as listed in Schedule II and any other bank or financial institution that may accede to this Agreement by executing a Deed of Accession (as specified in Section 21.18) and the other relevant Financing Documents in relation to any financial assistance provided to the Project.

Lenders Consultants shall have the meaning given to it in Section 7.1 (b) (i).

169

Lenders Counsel shall mean Amarchand & Mangaldas & Suresh A Shroff & Co., Mumbai acting for the Lenders and the Facility Agent and any replacement therefor appointed by the Facility Agent after consultation with the Borrower.

Lenders Engineer shall mean Mott MacDonald Private Limited, and any replacement therefor appointed by the Facility Agent after consultation with the Borrower.

Lenders Engineer Appointment Letter shall mean the appointment letter dated April 11, 2009 issued by the Facility Agent appointing the Lenders Engineer in connection with performance of certain services with respect to the Project, including but not limited to the scope of work specified in Schedule XIV.

Lenders Insurance Consultant shall mean Marsh India Insurance Brokers Pvt. Limited, a private limited company incorporated under the Companies Act and having its corporate office at Tower 1, Peninsula Corporate Park, Lower Parel, Mumbai 400 013 including its successors and assigns and any replacement therefor acting for the Lenders and the Facility Agent and appointed by the Facility Agent after consultation with the Borrower and any replacement therefor satisfactory to the Facility Agent.

Lending Office shall mean the address specified against the name of each Lender in Schedule II.

Lending Rate shall mean a rate which is 25 basis points below SBAR, which is 11.50% (eleven point five zero per cent) as of the date hereof until the First Interest Reset Date and thereafter, the applicable Lending Rate shall be the rate as reset in accordance with the terms of this Agreement on every successive Interest Reset Date until the next Interest Reset Date.

Letter of Comfort Fees shall mean the commission payable by the Borrower to the Foreign Currency Lender under the terms of the Foreign Currency Facility Agreement.

170

Letter(s) of Commitment or LOC shall mean letter(s) of commitment issued by the Issuing Bank or any Rupee Lender, substantially in the form and manner attached hereto as Schedule XV, as the case maybe, at the request of the Borrower in accordance with this Agreement, in favour of the Buyers Credit Lender, for an amount not exceeding the Maturity Amount of the Buyer’s Credit Facility provided by the Buyer’s Credit Lender. Provided that the face value of all Letters of Commitment issued by the Lenders shall not exceed the aggregate Earmarked Amount of all Lenders.

Liquidated Damages shall have the meaning given to such term in Section 14.6.

Loan shall mean the aggregate of all Advances by the Lenders to the Borrower under this Agreement to the maximum extent of their Commitment or (as the context requires) so much thereof as may be outstanding from time to time.

LOC Amount shall mean the amount (in Rupees or US Dollars at an exchange rate as on the date of issuing the Letter of Commitment) designated by the Rupee Lender as specified in Schedule II.

LOC Commission shall have the meaning as specified in Section 12.3.1 hereof.

LOC Commission Payment Date shall mean in the first instance, the date of the opening of the Letter of Commitment and thereafter, the first day of each subsequent fiscal quarter, or any other extended date that may be agreed by the Issuing Bank or the Rupee Lender issuing the relevant Letter of Commitment, as the case may be.

LOC Commission Rate shall mean the rate to be mutually agreed between the Borrower and each Lender issuing or participating in a Letter of Commitment.

LOC Commission Period shall mean, in respect of a Letter of Commitment: (i) at the time of issue of the Letter of Commitment, the period commencing from the date of issue of that Letter of Commitment and ending on (and excluding) the next

171

following LOC Commission Payment Date; and (ii) subsequently, the period commencing on one LOC Commission Payment Date and ending on (and excluding) the following LOC Commission Payment Date or the date when the Letter of Commitment is drawn down completely or the date of the expiry of such Letter of Commitment, whichever is earlier.

LOC Facility shall have the meaning given to it in Section 3.1.1.

Long Term Major Maintenance Plan shall mean the plan setting forth the details of all major maintenance proposed to be performed by the Borrower with respect to the Project during the upcoming five (5) year period specifying the nature, timing, cost and scope of all such proposed maintenance and its envisioned effect on Project operations.

Loss Proceeds shall mean any insurance proceeds (after payment of costs of collection incurred by the Security Trustee and the Facility Agent) received by the Security Trustee arising from any claim under the Insurance Contracts.

Major Maintenance shall mean the inspection, servicing and replacement of parts of the Plant after periodic intervals of operation of each Unit as certified by the Lenders Engineer.

Major Maintenance Amounts shall have the meaning given to it in the Trust and Retention Account Agreement.

Major Maintenance Budget shall mean the major maintenance budget for the relevant Operating Year itemized on a monthly basis for all Major Maintenance included in the operating plan for such Operating Year.

Major Project Documents shall mean the documents listed in Schedule XVI.

Major Project Parties shall mean each of the counter-parties to any Major Project Document or collectively all of them as the case may be.

172

Management shall mean the Persons appointed by the Borrower to operate and manage the business and operations of the Borrower.

Material Adverse Effect shall mean the effect or consequence of an event, circumstance, occurrence or condition which has caused, as of any date of determination, or could reasonably be expected to cause a material and adverse effect on: (i) the financial condition, business or operation of the Borrower or any person who is party to the Transaction Document including any material adverse effect on profits, production or sales; (ii) the ability of the Borrower to perform its obligations under the Financing Documents or any Project Documents, or the ability of any Material Project Participant (other than the Borrower) to perform its obligations under the Financing Documents or the Project Documents; (iii) the ability of the Borrower to exercise or enforce any right, benefit, privilege or remedy under any Project Document or approvals for the Project; (iv) the ability of the Borrower or any Material Project Participant to comply in all respects with the terms or conditions of any approvals for the Project; (v) the validity or enforceability of any of the Financing Documents (including the ability of any Secured Party to enforce any of its remedies under any thereof), the Project Documents or the approvals for the Project; (vi) the validity or enforceability of the Security Documents or Permitted Security Interest of the Secured Parties; (vii) prejudicial to the Project; or (viii) the Secured Parties’ ability to benefit from the assignment of the Borrower’s right of possession in respect of the Project which adverse effect, in the case of any such event, circumstance, occurrence or condition which has already occurred as of such date of determination, remains in effect or has not otherwise been fully remedied or alleviated as of such date.

Material Project Participant shall mean the Borrower, the Sponsor, any Person which provides guarantees in respect of the performance of any operator appointed in respect of the Project or any portion thereof, the Offtaker, the bank issuing the letter of credit under the PPA, the Major Project Parties, and any Person appointed as a replacement or substitute of any of the above.

Maturity Amount shall mean the aggregate of the principal amount of the

173

Buyers Credit Facility and the interest thereon payable at the expiry of the term of each Buyer’s Credit Facility.

Maturity Date shall mean the last to occur of the maturity dates of any of the Facility.

Memorandum and Articles of Association shall mean the Memorandum and Articles of Association of the Borrower as amended from time to time.

Mining JV Agreement shall mean the agreement entered into by the Borrower with five other companies for the establishment of a joint venture company to undertake the development of the Coal Blocks.

Mobilisation Period shall mean the period from six (6) months prior to the scheduled Date of Commercial Operation of the first Unit till the Date of Commercial Operation of the first Unit or as approved by the Lenders Engineer.

Mobilisation Plan shall mean a written plan, setting forth, among other things, the budget for and details of anticipated staffing requirements, purchases, training, objectives, and required actions by the Borrower necessary to assist with Project start-up and performance testing, and preparation for ongoing operation.

Notice of Drawdown shall mean the notice to be provided by the Borrower to the Facility Agent in the form set out in Exhibit 2 duly completed and in substance satisfactory to the Facility Agent itemising in detail the use of the Drawdown proceeds as specified in Section 5.3 hereof.

Novation Notice shall have the meaning specified in Section 21.8.3.

Obligations shall mean all amounts payable by the Borrower pursuant to the terms of the Financing Documents, including without limitation:

(i) the principal of and interest and LOC Commission, Letter of Comfort Fees on the Facility, and all other obligations and liabilities of the Borrower,

174

	including indemnities, expenses, fees, interest, Letter of Comfort Fees and LOC Commission, incurred under, arising out of or in connection with any Financing Document.
(ii)	any and all sums advanced by the Facility Agent and the Security Trustee in order to preserve the Security or preserve their Security Interest in the Security; and
(iii)	in the event of any proceeding for the collection or enforcement of the Obligations, after an Event of Default shall have occurred and be continuing, the expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realising the Security, or of any exercise of the Facility Agent and the Security Trustee of its right under the Security Documents, together with legal fees and court costs.

Offtaker(s) shall mean the entity or entities (including any of the Borrower’s Affiliates) that have executed a PPA with the Borrower for offtake of electricity generated by the Project under such PPA.

Operating Budget shall have the meaning specified in the Trust and Retention Account Agreement.

Operating Year shall mean the period beginning on the Date of Commercial Operation of the first Unit and ending at 00:00 Hrs on the first of the next following April and each subsequent period beginning at 00:00 Hrs on the first of April and ending at 00:00 Hrs on the first of April of the following year.

Operation and Maintenance Costs shall have the meaning specified in the Trust and Retention Account Agreement.

OPTCL means the Orissa Power Transmission Corporation Limited.

Outstanding Due Amounts, in respect of a Loan, shall mean the amount of the Loan, which has not fallen due.

175

Participating Interest shall mean with respect to any Letter of Commitment and with respect to a Rupee Lender, the share of credit risk of that Rupee Lender in that Letter of Commitment which share shall be in the same proportions as that between the Unutilized LOC Amount of that Rupee Lender and the aggregate Unutilized LOC Amount of all the Rupee Lenders and as notified as such by the Issuing Bank at the time of issuance of the LOC.

Participating Interest Notice shall have the meaning given in Section 12.1.1 and will be in the form set out in Schedule V.

Payment Date shall mean the date on which payment in respect of the amount claimed under any Letter(s) of Commitment is required to be made in terms of such Letter(s) of Commitment.

Permitted Disposal shall mean any sale, disposal, lease or other transfer of any property or assets which are:

(1)	required or permitted under any Financing Document; or
(2)	to the extent permitted by the Lenders, a sale or other disposal of equipment which in the opinion of the Lenders Engineer is either:

(A)	uneconomic or obsolete;
(B)	no longer used or useful; or
(C)	at the end of its useful life; and

in respect of (A), (B) and (C) above, which is replaced by other equipment of equal or greater value and utility and secured in favour of the Secured Parties.

Permitted Indebtedness shall mean:

176

(i)	the Facility, the Foreign Currency Facility and such other indebtedness that the Borrower may incur as per the Financing Plan approved by the Facility Agent;
(ii)	working capital facilities (including trade credits) to the extent of Rs. 430,00,00,000/- (Rupees Four Hundred and Thirty Crores) or such further amounts as may be permitted by the Lenders;
(iii)	financial obligations arising under the Transaction Documents and not occurring as a result of a default by the Borrower of its obligations thereunder;
(iv)	financial obligations in connection with any hedging arrangement undertaken in accordance with the Hedging Plan;
(v)	any other borrowing approved by the Facility Agent.

Permitted Investments shall have the meaning specified in the Trust and Retention Account Agreement.

Permitted Security Interest shall mean the following:

(a)	the Security Interests, charges and other liens or encumbrances in favour of Security Trustee pursuant to the Financing Documents; and
(b)	any unpaid vendors’ lien arising under the Project Documents and not occurring as a result of a default by the Borrower of its obligations thereunder.

Person shall mean any individual, corporation, partnership, (including, without limitation, association), joint stock company, trust, unincorporated organization or government authority or political subdivision thereof, international organisation, agency or authority (in each case, whether or not having separate legal personality) and shall include their respective successors and assigns and in case

177

of an individual shall include his legal representatives, administrators, executors and heirs and in case of a trust shall include the trustee or the trustees for the time being.

Plant shall mean equipment, machinery, apparatus, materials, articles, drawings, designs, plans and things of all kinds to be erected, installed and commissioned by the relevant counterparties to the Project Documents.

Potential Event of Default shall mean an event, which with the giving of notice, lapse of time, determination of materiality, or fulfillment of any other applicable condition or any combination of the foregoing or otherwise, would constitute an Event of Default.

PPA shall mean the GRIDCO PPA and any other power purchase agreement(s) entered into or to be entered into between an Offtaker(s) and the Borrower for sale of the power generated by the Project, as amended and novated from time to time.

Project COD shall mean the Date of Commercial Operation of the last Unit of the Project, which shall not be later than June 30, 2010, or actual implementation date of the Project.

Project Costs shall mean all the actual costs incurred or to be incurred by the Borrower to develop, finance, construct and operate the Project and all costs required to be incurred till the Final Completion.

Project Documents shall mean:

(a)	Major Project Documents;
(b)	Insurance Contracts;
(c)	Any bonds, letters of credit or guarantees, consent agreements, side letters under (a) and (b) above;

178

(d) Any other agreements, documents or instruments entered into by the Borrower or by any Person in its favour in respect of the development, construction, design, procurement, operation, maintenance and ownership of the Project or management and control of the Borrower and designated as Project Documents by the Facility Agent and each such Project Document as amended from time to time.

Project Proceeds shall have the meaning specified in the Trust and Retention Account Agreement.

Project Schedule shall mean the construction schedule of the Project as specified substantially in the form attached in Schedule VIII as may be amended from time to time with the consent of the Facility Agent.

Project shall mean the development, design, procurement, ownership, construction, commissioning, operation and maintenance of the 2400 MW coal based power project using sub-critical technology, comprised of four (4) Units at the Project Site formulated by the Borrower at Jharsuguda, Orissa, including development of the Coal Blocks.

Project Site shall mean and include land admeasuring approximately [•] in Jharsuguda, State of Orissa, where the Project is to be set up by the Borrower.

Quarterly Financial Statements shall mean unaudited Financial Statements in respect of a fiscal quarter.

Repayment Date shall mean each date on which a Repayment Instalment shall be paid in accordance with the Repayment Schedule.

Repayment Instalment shall have the meaning set out in Section 15.1.1.

Repayment Schedule shall have the meaning set out in Schedule IV.

Required Equity shall mean an amount of Rs. 2050,00,00,000 (Rupees Two

179

Thousand and Fifty Crores) required to be infused by the Sponsor by subscription to the equity share capital of the Borrower provided that the Required Equity shall not include any equity contributed by the Sponsor for the purpose of investment in any subsidiary of the Borrower in accordance with Section 9.9.

Restricted Payments shall mean:

(i)	the authorisation, declaration or payment of any dividends (either in cash or property) or distributions or return of equity;
(ii)	redemption, retirement, purchase or other acquisition, directly or indirectly of any shares of any class of its Equity Interests now or hereafter outstanding (or any options or warrants issued by the Borrower with respect to its Equity Interests) which will result in a Debt to Equity ratio higher than 75:25;
(iii)	prepay or redeem for value, any indebtedness of the Borrower prior to the scheduled maturity of such indebtedness, except to the extent that this is permitted under the Financing Documents; or
(iv)	any investment (other than a Permitted Investment) in any entity other than in a subsidiary.

Restricted Payment Conditions shall have the meaning given to it in the Trust and Retention Account Agreement.

Rupee or Rs shall mean the lawful currency of India.

Rupee Bullet Repayment Amount shall mean forty per cent (40%) of the amount of the Loan to be repaid by the Borrower in a single instalment as part of the last Repayment Instalment in accordance with the Repayment Schedule.

Rupee Facility shall have the meaning given to it in Section 3.1.1.

180

Rupee Lenders shall mean the Persons listed in Part A of Schedule II.

Rupee Required Debt shall mean an amount of Rs. 6150,00,00,000 (Rupees Six Thousand One Hundred and Fifty Crores) or equivalent of the same in any other currency.

SBAR shall mean the State Bank of India Benchmark Advance Rate, as prevailing from time to time.

Scope of Work shall have the meaning specified in the Project Documents.

Secured Party or Secured Parties shall mean the Lenders and the Security Trustee.

Security Documents shall mean all documents entered into or executed by the Borrower for creating and perfecting the Security including:

1.	the Indenture of Mortgage;
2.	the Deed of Hypothecation;
3.	the Share Pledge Agreement;
4.	the Security Trustee Agreement;
5.	the Consents to Assignments; and
6.	any other document designated as such by the Facility Agent and/or a Secured Party.

Security Interest shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever including, without limitation, (i) any conditional sale or other title retention agreement, any financing

181

or similar statement or notice filed under any recording or notice statute, and any lease having substantially the same effect as any of the foregoing, and (ii) any designation of loss payees or beneficiaries or any similar arrangement under any Insurance Contract.

Security shall have the meaning specified in Section 8.7.

Security Margin shall be a figure which is calculated as follows:

1 — (Debt divided by value of net fixed assets of the Borrower)

Security Trustee Agreement shall mean the agreement entered into or to be entered into between the Borrower, the Security Trustee and the Lenders.

Security Trustee shall mean IDBI Trusteeship Services Limited, being a company incorporated in India and having its registered office at Asian Building, Ground Floor, 17, R.K. Kamani Marg, Ballard Estate, Mumbai- 400001, acting as trustee for the Lenders under the Security Trustee Agreement, or any successor thereof.

Shares shall mean fully paid-up equity shares of par value of Rs. 10/- each in the Borrower.

Share Pledge Agreement shall mean the agreement entered into or to be entered into between the Borrower, Rampia Coal Mine and Energy Private Limited and the Security Trustee for pledge of shares held by the Borrower in the Rampia Coal Mine and Energy Private Limited in favour of the Security Trustee.

Sponsor shall mean Sterlite Industries (India) Limited.

Sponsor Support shall have the meaning given to the term in the Sponsor Support Agreement.

Sponsor Support Agreement shall mean the agreement entered into between the

182

Sponsor, the Borrower, the Security Trustee and the Facility Agent.

SWIFT shall mean Society for Worldwide International Financial Telecommunications.

Tangible Networth shall mean Equity plus the amounts standing to the credit of the reserves of the Borrower (including, without limitation, any share premium account and any credit balance on the accumulated profit and loss account) minus the aggregate of: (a) any debit balance in the profit and loss account or impairment of the issued share capital of the Borrower (except to the extent that deduction with respect to that debit balance or impairment has already been made); (b) revaluation reserves; (c) amounts set aside for dividends or taxation (including deferred taxation); and (d) amounts attributable to capitalized items such as goodwill, trademarks, deferred charges, licenses, patents and other intangible assets.

Taxes shall mean any and all present and future taxes, including without limitation, gross receipts, sales, turn-over, value added, use consumption, property, income, franchise, capital, occupational, license, excise, interest and documentary stamps taxes, and customs and other duties, assessments, or fees, however imposed, withheld, levied, or assessed by any country or government subdivision thereof or any other taxing authority.

Total Debt Gearing shall mean the ratio derived by dividing Total Outside Liabilities with Tangible Networth.

Total Outside Liabilities shall mean the aggregate of all present and future obligation (whether actual or contingent) of the Borrower to pay or repay money including, without limitation:

(a) amounts raised under any transaction having the financial effect of a borrowing under the Indian GAAP;

183

(b)	the aggregate amount then outstanding of all liabilities of any person to the extent the Borrower guarantees them or otherwise directly or indirectly obligates itself to pay them; and
(c)	all actual liabilities of the Borrower howsoever arising to redeem any of its Shares.

but shall not include any deferred tax liability of the Borrower.

Transaction Documents shall mean each and all of the Project Documents and Financing Documents executed or entered into, or to be executed or entered into, by the Borrower or as the case may be, any other person, in relation, or pertaining, to the transactions contemplated by, or under this Agreement and designated as Transaction Documents by the Facility Agent and each such Transaction Document as amended from time to time.

Trust and Retention Account Agreement shall mean the agreement entered into or to be entered into between the Borrower, the Security Trustee, the Facility Agent and the Account Bank.

Twinstar Preference Shares shall mean 803,230 Redeemable Cumulative Convertible Preference Shares of the Borrower carrying a coupon rate of 2% of Rs. 10/- each fully paid up in cash amounting to Rs 8,032,300/- held by Twinstar Infrastructures Limited.

Unit shall mean a unit of the Project having an anticipated nominal capacity of six hundred megawatts (600 MW).

Unreimbursed Drawings shall mean all amounts paid by the Issuing Bank towards the Claimed Amount and cost, charges, expenses, etc. in relation to invocation of any Letter(s) of Commitment that may not have been reimbursed by the Rupee Lenders or the Borrower.

Unsatisfied CP Notice shall have the meaning specified in Section 5.4.1.1(iii).

184

Unutilized Earmarked Amount with respect to a Rupee Lender shall mean its Earmarked Amount less the sum of: (i) the sum of its Participating Interests in all the Letters of Commitment; (ii) the aggregate of the face value of all individual Letters of Commitment issued by such Rupee Lender under Section 12.1A; and (iii) any Disbursements in accordance with Section 12.1.4.

Unutilized LOC Amount with respect to a Rupee Lender shall mean its LOC Amount less the sum of: (i) the sum of its Participating Interests in all the Letters of Commitment; (ii) the aggregate of the face value of all individual Letters of Commitment issued by such Rupee Lender under Section 12.1A; and (iii) any reduction in the LOC Amount due to any Disbursements in accordance with Section 12.1.4.

US Dollars or US$ means the lawful currency from time to time of the United States of America.

1.2 Principles of Construction

In this Agreement:

(A)	reference to an Account includes a reference to any sub-account of that Account;
(B)	reference to an “amendment” includes a supplement, modification, novation, replacement or re-enactment and “amended” is to be construed accordingly;
(C)	a reference to “assets” include all properties whatsoever both present and future, (whether tangible, intangible or otherwise) (including Intellectual Property and Intellectual Property Rights), investments, cash-flows, revenues, rights, benefits, interests and title of every description;
(D)	a reference to “authorisation” includes an authorisation, consent, clearance, approval, permission, resolution, licence, exemption, filing and registration;

185

(E)	a reference to “control” includes the power to direct the management and policies of an entity, whether through the ownership of voting capital, by contract or otherwise;
(F)	a reference to “encumbrance” includes a mortgage, charge, lien, pledge, hypothecation, Security Interest or any lien of any description whatsoever;
(G)	unless the context otherwise requires, the singular includes the plural and vice versa;
(H)	headings and the use of bold typeface shall be ignored in its construction;
(I)	a reference to a Section or Schedule is, unless indicated to the contrary, a reference to a section or schedule to this Agreement;
(J)	references to this Agreement shall be construed as references also to any separate or independent stipulation or agreement contained in it;
(K)	the words “other”, “or otherwise” and “whatsoever” shall not be construed ejusdem generis or be construed as any limitation upon the generality of any preceding words or matters specifically referred to;
(L)	references to the word “includes” or “including” are to be construed without limitation;
(M)	references to a person shall include such person’s successors and permitted assignees or transferees;
(N)	all references to agreements, documents or other instruments include (subject to all relevant approvals) a reference to that agreement, document or instrument as amended, supplemented, substituted, novated or assigned from time to time;
(O)	words importing a particular gender include all genders;

186

(P)	any reference to a public organisation shall be deemed to include a reference to any successor to such public organisation or any organisation or entity which has taken over the functions or responsibilities of such public organisation;
(Q)	references to “Party” means a party to this Agreement and references to “Parties” shall be construed accordingly;
(R)	references to any law shall include any constitution, statute, law, rule, regulation, ordinance, judgment, order, decree, authorisation, or any published directive, guideline, requirement or governmental restriction having the force of law, or any determination by, or interpretation of any of the foregoing by, any judicial authority, whether in effect as of the date of the Financing Documents or thereafter and each as amended from time to time;
(S)	capitalised terms and expressions not defined herein shall have the meanings specified in the Financing Documents;
(T)	words and abbreviations, which have, well known technical or trade/commercial meanings are used in the Agreement in accordance with such meanings;
(U)	“repayment” includes “redemption” and vice-versa and repaid, repayable, repay, redeemed, redeemable and redemption shall be construed accordingly; and

187

(V) In the event of any disagreement or dispute between the Lenders and the Borrower regarding the materiality of any matter including any event, occurrence, circumstance, change, fact, information, document, authorisation, proceeding, act, omission, claims, breach, default or otherwise, the opinion of the Lenders as to the materiality of any of the foregoing shall be final and binding on the Borrower.

188

SCHEDULE II

LENDERS, LENDING OFFICE AND COMMITMENT

Part A- Rupee Lenders

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	1.	State Bank of India,		1540.0		923.4		48.6
		Project Finance—SBU
		Address:
		Corporate Centre, Floor-3, State Bank Bhavan, Madame Cama Road, Nariman Point, Mumbai — 400021
		Attn: Deputy General Manager
		Fax: 022—22883021
		Telephone No.:022-2274 0370

189

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	2.	IDBI Bank Limited		569.0		430.92		22.68
		Address: IDBI Bank Ltd., ICG-PAD, IDBI Tower, 12th Floor, WTC Complex, Cuffe Parade. Mumbai — 400 005 Attn: Deputy. General Manager.
		Fax: 022-2218 3880/ 2215 5742
		Telephone No.: 022-6655 2098/ 6655 2359

190

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	3.	Punjab National Bank		405.0		192.375		10.125
		Address:
		Large Corporate Branch, Maker Tower ‘E’, Ground floor Cuffe Parade, Mumbai 400 005
		Attn: Deputy General Manager
		Fax: 022-2218 0403/8451
		Telephone No.: 022-2215 2058/2218 0752

191

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	4.	Andhra Bank		100.0		0		0
		Address: Corporate Finance Branch, 16-B, Earnest House, 16th Floor 194, NCPA Marg, Nariman Point, Mumbai – 400 021. Attn: Asst. General Manager, Fax: 022-2288 5841
		Telephone No.: 022-2288 4877

192

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	5.	United Bank of India		200.0		95.0		5.0
		Address:
		Mumbai Branch,
		United Bank of India Building. 25, Sir P M Road, Fort. Mumbai 400 001
		Attention: Assistant General Manager
		Fax: 022 2288 6909
		Telephone No.: 022 22873656/22871261/22871262

193

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	6.	Life Insurance Corporation of India		350.0		0		0
		Address: 6th Floor, Investment Department “Yogakshama” Jeevan Bima Marg, Mumbai 400 021
		Attn: Chief (Investment)
		Fax: 022 – 22810448
		Telephone No.: 022 66593616/22/81

194

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	7.	Syndicate Bank		200.0		95.0		5.0
		Address: Syndicate Bank, Homji Street, Fort, Mumbai – 400 023. Attn: Dy. General Manager,
		Fax: 022-2267 6354
		Telephone No.: 022-2266 4568/2266 4407
	8.	Tamilnad Mercantile Bank Limited		100.0		0		0
		Address: Garodia House, 1st Floor, 101-104, Kazi Syed Street, Mandvi, Mumbai – 400 023. Attn: Chief Manager, Fax: 022-23401667
		Telephone No.: 022-23415624

195

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	9.	Bank of India		200.0		190.0		10.0
		Address: Bank of India Building, Fourth Floor 70-80 Mahatma Gandhi Road Fort, Mumbai – 400 001.
		Attn: Deputy General Manager Fax: 022 2267 1718 Telephone No.: 022-2262 3656/2267 1152/ 22610918

196

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	10.	Canara Bank		100.0		47.5		2.5
		Address: Industrial Finance Branch, Canara Bank Building, Adi Marzaban Street, Ballard Estate, Mumbai – 400 038. Attn: Asst. General Manager
		Fax: 022-2262 6641 Telephone No.: 022-22666951/22675437/38/ 22625806/22626898

197

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	11.	Union Bank of India		300.0		0		0
		Address: Union Bank of India Building 66/80, Mumbai Samachar Marg, Mumbai–400 023
		Attn: Deputy General Manager
		Fax: 022 22674135
		Telephone No.: 022 2267 4115

198

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	12.	Corporation Bank		200.0		190.0		10.0
		Address: Industrial Finance Branch, Bharat House, Ground Floor, 104, B. S. Marg, Fort, Mumbai – 400 023.
		Attn: Asst. General Manager Fax: 022-2267 5309
		Telephone No.: 022-2267 0030

199

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	13.	Allahabad Bank		350.0		166.25		8.75
		Address: Industrial Finance Branch, 17, R. N. Mukherjee Road. Kolkata – 700 001
		Attn: Asst. General Manager
		Fax: 033-2213 1004
		Telephone No.: 033-2213 1007/2213 1002
	14.	Oriental Bank of Commerce		150.0		142.5		7.5
		Address: Maker Tower ‘E’, 18th Floor, Cuffe Parade, Mumbai 400 005
		Attn: Deputy General Manager
		Fax: 022 22153533
		Telephone No.: 022 22189337/ 22154656

200

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	15.	UCO Bank		405.0		192.375		10.125
		Address: Flagship Corporate Branch Mafatlal Centre, 1st floor Nariman Point, Mumbai 400 021
		Attn: Deputy General Manager
		Fax: 022 2202 5338/ 4054 9122
		Telephone No.: 022 4054 9101

201

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	16.	Jammu and Kashmir Bank Limited		200.0		95.0		5.0
		Address: The Jammu & Kashmir Bank Ltd. 79-A, Mehta House Bombay Samachar Marg, Fort, Mumbai – 400001
		Attn: Branch Head Fax: 022 6656 5975
		Telephone No.: 022 22610056/ 6659 5971-74

202

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	17.	Central Bank of India		100.0		47.5		2.5
		Address: Corporate Finance Branch, 1st Floor, Central Bank Building, M.G. Road, Fort, Mumbai – 400023
		Attn: Deputy General Manager
		Fax: 022-4078 5840 Telephone No.: 022-2265 3010/ 4078 5801
	18.	The Bank of Rajasthan Limited		100.0		47.5		2.5
		Address: 18/20, Jeevan Jyoti Building, Cawasji Patel Street, Fort. Mumbai – 400 001.
		Attn: Asst. Vice President, Fax: 022-22873471 Telephone No.: 022-32520560/32603987/ 32922022

203

	Name of Lender,	Rupee		Earmarked Amount
	registered office and	Commitment
	branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.	Lending Office	Crores)		Amount		Amount
	Total		5569.0		2855.32		150.28

Part B — Issuing Bank

	Issuing Bank	Commitment
1.	State Bank of India Address: 23, J.N. Heredia Marg, Ballard Estate, Mumbai – 400 001 Attn: Deputy General Manager Fax: 022-2267 9030 Telephone No.: 022 66356611/ 22671916	To issue Letter(s) of Commitment upto a maximum of Rs. 2600,00,00,000/- (Rupees Twenty Six Hundred Crores Only). Provided that the Issuing Bank shall not issue any Letter of Commitment if the issue of such Letter of Commitment results in the aggregate of the Participating Interests of all Rupee Lenders (other than State Bank of India) under all Letter(s) of Commitment issued by it under this Agreement to exceed Rs. 1400,00,00,000/- (Rupees Fourteen Hundred Crores Only).

204

SCHEDULE III

CLEARANCES

1.	Final approval of the Orissa Electricity Regulatory Commission for the tariff to be paid under the PPA where required under Applicable Law.
2.	Environmental Clearance(s) from the Ministry of Environment and Forests, Government of India for the setting up and operation of the Project (including intake channel).
3.	Clearance in connection with the height of the chimney(s) from the Airports Authority of India.
4.	All consents and permissions required for supply of requisite water for the Project from Hirakud dam or any other source.
5.	Registration from the Provident Fund Commissioner.
6.	Registration under Section 7 of the Contract Labour (Regulation and Abolition) Act, 1970.
7.	Import licenses from the Director General of Foreign Trade for automatic clearance for the import of capital goods and raw materials.
8.	Sales Tax Registration, Government of Orissa.
9.	Insurance policy under the Public Liability Insurance Act, 1991.
10.	Applicable town planning/ local authority approval for construction, if required.
11.	Rights of Way for project roads, access roads, water intake/outlet and coal transportation from the concerned private parties.

205

12.	Approval of the Labour Commissioner under the Employees State Insurance Act, 1948, if applicable.
13.	Pollution Control Board approvals with respect to air and water pollution for the commencement of construction and for operation.
14.	Consent of Chief Controller of Explosives, Nagpur and Home Department, Government of Orissa/District Magistrate for the storage, possession and use of explosives, and also for fuel and flammable gas if required.
15.	Approval for communications facilities (wireless) from the Department of Telecommunications, Ministry of Communication and Information Technology, Government of India, if required.
16.	Authorization to collect, treat, store and dispose of waste (including fly ash).
17.	Permissions from the appropriate fire authorities, if applicable.
18.	All necessary requisite approval/s under Factories Act, 1948 and from Chief Inspector of Factories including in relation to fire fighting.
19.	Approvals from the Electrical Inspectorate or other relevant authorities in respect of equipment.
20.	Certificate of Importer-Exporter Code from the Ministry of Commerce, Government of India.
21.	Coal Block Allocation from the Ministry of Coal, Government of India, dated for allocation of the Coal Mines.
22.	Central Excise Registration Certificate from Ministry of Finance (Department of Revenue) for manufacturing of excisable goods.
23.	Railway Approval for proposed private siding near the Project Side to service the Project.

206

24.	Permission under S. 281(1)(ii) of the Income Tax Act, 1961.
25.	Any other clearances required as may be specified by the Facility Agent.

207

SCHEDULE IV

REPAYMENT SCHEDULE

		Amount of Loan
		repayable to the
Installment		Lenders (in
Number	Quarter	percentage)
1	First Repayment Date — 1st quarter	1.25%
2	2nd quarter	1.25%
3	3rd quarter	1.25%
4	4th quarter	1.25%
5	5th quarter	1.25%
6	6th quarter	1.25%
7	7th quarter	1.25%
8	8th quarter	1.25%
9	9th quarter	1.25%
10	10th quarter	1.25%
11	11th quarter	1.25%
12	12th quarter	1.25%
13	13th quarter	1.25%
14	14th quarter	1.25%

208

		Amount of Loan
		repayable to the
Installment		Lenders (in
Number	Quarter	percentage)
15	15th quarter	1.25%
16	16th quarter	1.25%
17	17th quarter	1.25%
18	18th quarter	1.25%
19	19th quarter	1.25%
20	20th quarter	1.25%
21	21st quarter	1.25%
22	22nd quarter	1.25%
23	23rd quarter	1.25%
24	24th quarter	1.25%
25	25th quarter	1.25%
26	26th quarter	1.25%
27	27th quarter	1.25%
28	28th quarter	1.25%
29	29th quarter	1.25%
30	30th quarter	1.25%
31	31st quarter	1.25%
32	32nd quarter	1.25%
33	33rd quarter	1.25%
34	34th quarter	1.25%

209

		Amount of Loan
		repayable to the
Installment		Lenders (in
Number	Quarter	percentage)
35	35th quarter	1.25%
36	36th quarter	1.25%
37	37th quarter	1.25%
38	38th quarter	1.25%
39	39th quarter	1.25%
40	40th quarter	1.25%
41	41st quarter	1.25%
42	42nd quarter	1.25%
43	43rd quarter	1.25%
44	44th quarter	1.25%
45	45th quarter	1.25%
46	46th quarter	1.25%
47	47th quarter	1.25%
48	48th quarter	41.25%

210

SCHEDULE V

FORM OF PARTICIPATING INTEREST NOTICE

[Letterhead of the Issuing Bank]

To: [Rupee Lenders]

Re: Participating Interest Notice for LOC

This notice is delivered pursuant to the Common Rupee Loan Agreement, dated as of                     , among the Rupee Lenders, the Issuing Bank, the Facility Agent, the Security Trustee and the Borrower (“Agreement”). Capitalized terms used herein without definition shall have the meaning specified in the Agreement.

Pursuant to Section 12.1.1 of the Agreement, the undersigned (the “Issuing Bank”) hereby notifies you that a Letter of Commitment for a face value of Rs.                     - has been issued by the Issuing Bank in favour of                                          on                    - in accordance with the terms of the Agreement. We hereby notify you that the Participating Interest of the Rupee Lenders in the Letter of Commitment will be as follows:

Name of Rupee Lender	Participating Interest
[•]	[•]
[•]	[•]
[•]	[•]
[•]	[•]
[•]	[•]

211

OR (for notifying revised Participating Interest)

Pursuant to Section 12.1.1 of the Agreement and pursuant to request received by us from [                    ] [insert name of Rupee Lender] on [                    ] [insert date], the undersigned (the “Issuing Bank”) hereby notifies you that a Letter of Commitment for a face value of Rs.                      has been issued by the Issuing Bank in favour of                      on                      in accordance with the terms of the Agreement. We hereby notify you that the revised Participating Interest of the Rupee Lenders in the Letter of Commitment will be as follows:

Name of Rupee Lender	Participating Interest (revised)
[•]	[•]
[•]	[•]
[•]	[•]

The Participating Interest Notice dated                      issued by the Issuing Bank is hereby revoked/cancelled in terms of the Agreement. This revised Participating Interest Notice shall be effective upon receipt of confirmation from the Rupee Lenders named in the original Participatory Interest Notice and this revised Participating Interest Notice.

[Name]
 

By 

Name:  

212

Title:  

Date:  

213

SCHEDULE VI

FINANCING DOCUMENTS

1.	Common Rupee Loan Agreement;
2.	Foreign Currency Facility Agreement;
3.	Trust and Retention Account Agreement;
4.	Intercreditor Agreement;
5.	Borrower’s confirmation letter in respect of the Intercreditor Agreement;
6.	Sponsor Support Agreement;
7.	Facility Agent Agreement;
8.	Security Documents; and
9.	Any other agreement for financing designated as a Financing Document by the Facility Agent.

214

SCHEDULE VII

FINANCING PLAN

	Rupees.		Percentage
Particulars	Crore		(%)
Capital Contribution — Equity Capital		2050		25	%
Senior Debt Finance — Term Loans		6150		75	%
Total		8200		100	%

215

SCHEDULE VIII

PROJECT SCHEDULE

Particulars	Start	Completion
Advance Payment Date	Day 0 (Nov. 30, 2006)
Civil Works	Day 0 + 2 mths	Day 0 + 20 mths
Technical & Engineering	Day 0	Day 0 + 15 mths
Manufacturing & Delivery	Day 0 + 4 mths	Day 0 + 29 mths
Installation of Equipment	Day 0 + 13 mths	Day 0 + 38 mths
Unit I Trial Runs	Day 0 + 30 mths	Day 0 + 33 mths
Unit II Trial Runs	Day 0 + 33 mths	Day 0 + 36 mths
Unit III Trial Runs	Day 0 + 36 mths	Day 0 + 39 mths
Unit IV Trial Runs	Day 0 + 39 mths	Day 0 + 42 mths
Commercial Operation Date (Unit I)	Day 0 + 33 mths (September 1, 2009)
Commercial Operation Date (Unit  II)	Day 0 + 36 mths (December 1, 2009)
Commercial Operation Date (Unit  III)	Day 0 + 39 mths (March 1, 2010)
Commercial Operation Date (Unit  IV)	Day 0 + 42 mths (June 1, 2010)

216

Particulars	Start	Completion
Total Implementation Period	42 Months (June 2010)

217

SCHEDULE IX

BASE CASE

PROFIT & LOSS ACCOUNT

	31-		31-		31-		31-
Profit & Loss	Mar-		Mar-		Mar-		Mar-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Account	07		08		09		10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Revenue
Revenue from Tariff — GRIDCO		0.00		0.00		0.00		461.40		868.00		882.17		898.47		907.37		921.29		936.15		951.97		968.81		986.69		1005.67		1025.78		1047.08		1077.01
Revenue from Sale to others		0.00		0.00		0.00		342.17		2326.73		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59
Interest Income on DSRA & Cash Balance		0.00		0.00		0.00		0.00		3.20		7.53		7.25		6.98		6.70		6.42		6.15		5.87		5.59		5.32		5.04		4.76		4.64
Total Revenue		0.00		0.00		0.00		803.57		3197.92		3353.30		3369.31		3377.94		3391.58		3406.16		3421.71		3438.27		3455.88		3474.58		3494.42		3515.43		3545.24
Expenditure
Fuel Cost		0.00		0.00		0.00		313.41		1249.20		1355.64		1409.87		1466.26		1524.91		1585.91		1649.35		1715.32		1783.93		1855.29		1929.50		2006.68		2086.95
O&M Expense		0.00		0.00		0.00		58.41		232.85		252.69		262.80		273.31		284.24		295.61		307.44		319.73		332.52		345.82		359.66		374.04		389.00
Orissa Cess on sale outside state		0.00		0.00		0.00		9.78		66.48		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39
Total Expenditure		0.00		0.00		0.00		381.60		1548.52		1678.72		1743.05		1809.96		1879.54		1951.91		2027.17		2105.44		2186.84		2271.50		2359.54		2451.11		2546.34

218

	31-		31-		31-		31-
Profit & Loss	Mar-		Mar-		Mar-		Mar-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Account	07		08		09		10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
PBDIT		0.00		0.00		0.00		421.97		1649.40		1674.58		1626.26		1567.98		1512.04		1454.25		1394.54		1332.83		1269.04		1203.08		1134.87		1064.32		998.90
Interest
Interest on Loan		0.00		0.00		0.00		179.43		716.68		701.10		664.20		627		590.40		553.50		516.60		479.70		442.80		405.90		369.00		332.10		294.54
Interest on WC		0.00		0.00		0.00		13.05		44.61		47.24		48.22		49		50.15		51.21		52.32		53.48		54.70		55.98		57.31		58.71		60.27
Total Interest		0.00		0.00		0.00		192.47		761.30		748.34		712.42		676		640.54		604.71		568.92		533.18		497.50		461.88		426.31		390.81		354.81
PBDT		0.00		0.00		0.00		229.49		888.10		926.24		913.84		892		871.50		849.55		825.62		799.65		771.54		741.20		708.56		673.51		644.09
Depreciation		0.00		0.00		0.00		104.28		404.94		422.89		422.89		423		422.89		422.89		422.89		422.89		422.89		422.89		422.89		422.89		422.89
PBT		0.00		0.00		0.00		125.21		483.16		503.35		490.96		469		448.61		426.66		402.74		376.76		348.65		318.32		285.67		250.63		221.21
Tax		0.00		0.00		0.00		14.19		54.74		57.03		55.63		53		50.83		48.34		45.63		42.69		39.50		36.07		32.37		28.40		25.06
Deferred Tax		0.00		0.00		0.00		28.37		109.48		114.06		111.25		0		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
PAT		0.00		0.00		0.00		82.65		318.93		332.26		324.08		416		397.78		378.32		357.11		334.07		309.15		282.25		253.31		222.23		196.14

219

Projected Cash Flow of the Company

	31-
Cash Flow	Mar-		31-		31-		31-		31-		31-		31-`		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Statement	07		Mar-08		Mar-09		Mar-10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Inflows
Cash flow from Operations		0.00		0.00		0.00		186.93		723.88		755.15		746.97		838.45		820.67		801.21		779.99		756.96		732.03		705.14		676.19		645.12		619.03
Deferred Tax		0.00		0.00		0.00		28.37		109.48		114.06		111.25		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Equity		512.06		102.94		728.80		636.28		69.92		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Subordinate Loans		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Senior Loans		0.00		901.12		3130.29		1908.83		209.76		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Working capital Finance		0.00		0.00		0.00		296.37		123.00		10.06		8.92		8.29		9.22		9.66		10.11		10.58		11.08		11.59		12.13		12.69		14.19
Total inflows		512.06		1004.06		3859.09		3056.79		1236.03		879.27		867.14		846.74		829.89		810.86		790.11		767.54		743.11		716.73		688.32		657.80		633.23
Outflows
Capital Expenditure		512.06		1004.06		3859.09		2432.87		251.12		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Loan Repayments-Senior Loans		0.00		0.00		0.00		0.00		153.75		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		329.46
Loan Repayments-Subordinated Loans		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Increase in Current Assets		0.00		0.00		0.00		395.16		164.00		13.42		11.90		11.05		12.30		12.88		13.48		14.11		14.77		15.45		16.17		16.91		18.93

220

	31-
Cash Flow	Mar-		31-		31-		31-		31-		31-		31-`		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Statement	07		Mar-08		Mar-09		Mar-10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Total outflows		512.06		1004.06		3859.09		2828.03		568.87		320.92		319.40		318.55		319.80		320.38		320.98		321.61		322.27		322.95		323.67		324.41		348.39
Opening cash		0.00		0.00		0.00		0.00		228.76		640.31		908.09		1105.30		1282.95		1442.51		1582.47		1701.05		1796.45		1866.76		1910.00		1924.12		1906.97
Additions		0.00		0.00		0.00		228.76		667.16		558.36		547.74		528.18		510.09		490.49		469.12		445.93		420.84		393.77		364.65		333.39		284.83
Cash available before DSRA		0.00		0.00		0.00		228.76		895.92		1198.67		1455.84		1633.49		1793.05		1933.00		2051.59		2146.99		2217.29		2260.53		2274.65		2257.51		2191.81
Transfer to DSRA Account		0.00		0.00		0.00		0.00		255.61		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		0.93
Equity Dividend paid		0.00		0.00		0.00		0.00		0.00		299.80		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76
Closing balance		0.00		0.00		0.00		228.76		640.31		908.09		1105.30		1282.95		1442.51		1582.47		1701.05		1796.45		1866.76		1910.00		1924.12		1906.97		1831.11

221

SCHEDULE X

CONSTRUCTION BUDGET

	30-Jun-09		30-Sep-09		31-Dec-09		31-Mar-10		30-Jun-10		Total
Land, Site Development and Non-EPC cost		30.00		5.00		5.00		5.00		5.00		50.00
Civil & Structural Works other than EPC		0.00		0.00		0.00		0.00		0.00		0.00
EPC Cost		2000.00		1500.00		800.00		700.00		555.24		5555.24
Balance of Plant(including Coal Mine)		750.00		250.00		100.00		100.00		104.00		1304.00
Preliminary & Pre-operative Expenses		100.10		47.00		0.00		0.00		0.00		147.10
Contingencies		30.00		30.00		30.00		30.00		37.50		157.50
Margin Money for WC		0.00				0.00		0.00		140.79		140.79
Total project Cost		2910.10		1832.00		935.00		835.00		842.53		7354.64
IDC						845.36						845.36
Total Project Cost including IDC					Total							8200.00

222

SCHEDULE XI

ESTIMATED PROJECT COST

Particulars	(Rs. in crore)
Land & site development etc.		50.00
EPC Cost		5555.24
Transmission Line		400.00
Railway Line (MGR)		504.00
Water Line		125.00
Ash Pond		50.00
Township		75.00
Captive Coal Block Dev. Contribution		150.00
Total Hard Cost (incl. of Land) (A)		6909.24
Preoperative Expenditure (B)		146.58
Interest During Construction Period (C)		707.37
Contingencies (D)		296.24
Margin Money for working capital (E)		140.57
Total Cost (A + B + C + D + E )		8200.00

223

SCHEDULE XII

NOMINEE DIRECTORS

1.

The Borrower acknowledges and consents to the right of the Lenders to appoint to the Board and replace from time to time while the Facility is outstanding directors of the Borrower in accordance with the provisions of this Agreement (“Nominee Directors”) /or an observer (the “Observer”) on behalf of all the Lenders, and will take all corporate action to effectuate such right (including, without limitation, amending the Borrower’s articles of association). Such appointment shall be in accordance with the Intercreditor Agreement.

2.

The Nominee Directors shall:

(a)	not be required to hold qualification shares nor be liable to retire by rotation.
(b)	any expenditure incurred by the Lenders and/ or the Nominee Directors in connection with their appointment of directorship shall be borne and payable by the Borrower.
(c)	be appointed members of committees of the Board, if so desired by the Lenders.

3.	The Nominee Directors and the Observer(s) shall be entitled to receive all notices, agenda, etc. and to attend all General Meetings and Board Meetings and Meetings of any committees of the Board of which they are members.
4.	If, at any time, the Nominee Director is not able to attend a meeting of the Board of Directors or any of its committees of which he is a member, the Lenders may depute an Observer to attend the meeting. The expenses incurred by the Lenders in this connection shall be borne and payable by the Borrower.

224

5.	The Nominee Directors/the Observers shall furnish to the Lenders reports of the proceedings of all such meetings and the Borrower shall not have any objection to the same.
6.	The appointment/removal of the Nominee Directors shall be by notice in writing by the Lenders addressed to the Borrower and shall (unless otherwise indicated by the Lenders) take effect forthwith upon such a notice being delivered to the Borrower.
7.	The Nominee Directors shall be entitled to all the rights, privileges and indemnities of other Directors including the sitting fees and expenses as are payable by the Borrower to the other Directors, but if any other fees, commission, moneys or remuneration in any form are payable by the Borrower to the Directors in their capacity as Directors, the fees, commission, moneys and remuneration in relation to such Nominee Directors shall accrue to the Lenders in proportion to their respective Facility then outstanding and the same shall accordingly be paid by the Borrower directly for the respective accounts of the Lenders; provided, that if such Nominee Director is an officer of any of the Lenders the sitting fees in relation to such Nominee Director shall accrue to the relevant Lender and the same shall accordingly be paid by the Borrower directly to such Lender for its account. Any expenditure incurred by a Nominee Director or any Lender in connection with such appointment or directorship shall be borne by the Borrower.
8.	The Borrower shall ensure that the Observer shall be entitled to the same indemnities as the Directors and shall be indemnified by the Borrower against any liabilities, losses, damages, claims, penalties, judgments, suits, costs and expenses arising as a result of its actions pursuant to appointment as an Observer.

225

SCHEDULE XIII

DEED OF ACCESSION

(format)

To:	Lenders
	[Insert Address]
To:	Facility Agent
	[Insert Address]
To:	Security Trustee
	[Insert Address]
Cc:	Borrower
	[Insert Address]

THIS DEED OF ACCESSION (the “Deed”) dated                                          is supplemental to the common rupee loan agreement (the “Common Rupee Loan Agreement”) dated                                          between the Borrower, the Facility Agent, the Security Trustee and the Lenders. Words and expressions defined in the Common Rupee Loan Agreement have the same meaning when used in this Deed of Accession.

[Name of the new Lender] of [address] has entered into / acceded to the Common Rupee Loan Agreement with the Borrower for extending financial assistance by way of                      for a sum of                      (Facility).

226

[Name of the new Lender] of [address] hereby agrees with each other Person who is or who becomes a Party to the Common Rupee Loan Agreement that with effect on and from the date hereof, it shall be a party to the Common Rupee Loan Agreement as a Lender and shall assume and perform all obligations applicable to it and specified therein.

[Name of the new Lender] of [address] hereby appoints each agent to act as its agent as provided in the Common Rupee Loan Agreement, the Financing Documents and the Security Documents and agrees to be bound by such Agreement thereto.

Upon execution of this Deed, Part A of Schedule II of the Common Rupee Loan Agreement shall be amended and restated as set out in the attached Annexure.

Address for notices of the [new Lender] for the purposes of Section 21.3 of the Common Agreement is:

Signature of authorised Signatory for
and on behalf of the [new Lender]

ANNEXURE
Part A — Rupee Lenders

		Name of Lender,	Rupee		Earmarked Amount
		registered office and	Commitment
		branch details and	Amount (in Rupees		LC		Devaluation
Sr. No.		Lending Office	Crores)		Amount		Amount
	1.	[•]		[•]		[•]		[•]

227

SCHEDULE XIV

LENDERS ENGINEER SCOPE OF WORK

Sterlite Energy Limited (SEL)
Scope of Services for Lenders Independent Engineer (LIE)

The Scope of LIE Services is broadly mentioned as below. However, the Scope shall not be limited to what is specified here & it is the sole responsibility of the LIE to provide the LIE Services as required for successful completion and operation of 4*600 MW Coal based Thermal Power Plant at Jharsuguda, Orissa.

The Scope of Services is divided into four phases:

Phase I	Project Review and Assessment (Until Financial Closure)
Phase II	Construction Monitoring
Phase III	Performance Testing
Phase IV	Annual Operational Review

Phase I: Project Review and Assessment (Until Financial Closure)

The Lenders Independent Engineer shall provide professional engineering consultancy services to the Lenders or other party so designated by the Sponsors and approved of by the Lenders in writing as well as SEL (the “Clients”).The Lenders Independent Engineer’s review and recommendation (where appropriate) shall include, but will not be limited to, the following:

A. Plant Design Requirements

The Lenders Independent Engineer will assess the compatibility of the design on the basis of following:

*	Requirement of Power Purchase Agreement/s (PPA)
*	Plant operating requirements
*	Site characteristics and its acceptability for the development proposed
*	Fuel Characteristics

228

*	Off-site transport requirements
*	Evacuation requirements
*	Compliance with statutory regulations

B. Design of Project Facilities

The Lenders Independent Engineer will review the conceptual design of major on-site facilities included within the Project boundary as well as Project-related off-site facilities such as those associated with the transmission of electric power to the procurers, transmission line, coal transportation /MGR facility, fuel but not to include, make-up water, wastewater and water etc.

Major equipment components and systems will be reviewed by mechanical, electrical, civil / structural, and environmental engineers for Boiler, turbine and Generator (BTG) including its Control system and any other major critical equipment/system, with regard to:

*	Capability of design to perform as required in all anticipated operating modes meeting all health and safety standards.
*	Capability of design to meet plant availability and reliability requirements.
*	Conformance of design with “good engineering practice”, i.e. industry standards.
*	Any major equipment component or system design feature that does not appear to meet design, performance or operating requirements or fails to adhere to good engineering practice will be identified. The Lenders Independent Engineer will provide an opinion on the quality of the design and equipment with respect to their effect on the anticipated service life of the facility, the degree of maintenance needed to meet performance requirements, long-term availability, and anticipated performance degradation over the term of the Client’s interest in the Project.
*	The extent to which each major equipment component proposed for the Project has been operating commercially under similar conditions and comment on the anticipated impact of limited operating experience, where applicable, on plant performance including expected plant degradation.

229

* For any information not available, the Lenders Independent Engineer will note the significant issues requiring review, which could not be addressed at this time.

The above scope comprise broadly review of the following:

*	Design Criteria and Design Basis Reports
*	Plot Plan & Equipment floor drawings of all the systems
*	Design Calculations

The purpose of this review would be to determine if the equipment can meet the project requirements and to identify any risks associated with the project as planned.

C. EPC and other Packages

The Lenders Independent Engineer will review the following elements relating to the EPC and other various equipment packages:

*	Scope of supply of EPC and other various equipment packages including water supply pipeline contract, transmission line contract, coal transportation / MGR facility construction contract etc.
*	Assessment of EPC contractor and other subcontractors, equipment suppliers based on their past experience, projects executed with similar technology, operational parameters of projects already implemented alongwith period of operations etc.
*	Terms and conditions (including a comparison with terms and conditions of PPA with regards to performance guarantees, force majeures, damages for delays etc. and potential liabilities arising thereon)
*	Integration issues between the EPC and other various equipment packages
*	Technical provisions associated with equipment supplier’s responsibilities
*	Provisions for provisional and final acceptance.
*	Provisions for qualifying and selecting sub-contractors.
*	Provisions for liquidated damages
*	Limits on total liability and individual liability caps.
*	Change order procedures.
*	Quality assurance measures

230

*	The procedures to develop, review, and approve periodic drawdown requests.
*	Scheduling and lay down provisions for interconnecting to off-site (out-of-scope) facilities.
*	Evaluation of project schedule and potential for delays, damages or force majeure provisions for spares.

D. Construction Schedule

The Lenders Independent Engineer will review the proposed construction milestone schedule for the Project and determine that adequate provisions have been made for the following:

*	Design
*	Equipment procurement
*	Equipment fabrication
*	Shipment / Transportation
*	Installation
*	Start-up
*	Testing
*	Unknown or variable elements in the schedule

E. Total Project Cost Estimate

The Lenders Independent Engineer will review the following:

*	The EPC and various other equipment suppliers’ scope of supply and corresponding cost estimate methodology.
*	The EPC / civil works contracts and corresponding cost estimate methodology.
*	Assessment of the EPC and other equipment packages finalized for optimization of performance and costs
*	The taxes, levies, freight and inflation indexation applicable to the EPC and other equipment suppliers’ costs
*	Identify major equipment not covered in the EPC and other equipment packages finalized and cost impact, if any.
*	Assess the methodology used to develop the total Project cost estimate.
*	Compare the total Project cost estimate to that of similar projects.

231

*	Evaluate to what extent cost items are based on estimates versus an actual fixed price and identify those items that are not fixed price along with the possible risk associated with these variables.
*	Opine on the adequacy of the contingency and total project cost estimate.

F. Drawdown Schedule

The Lenders Independent Engineer will review the drawdown schedule prepared by the Company and comment on whether each monthly/quarterly cash drawdown amount is consistent with the likely Project schedule and requirements under EPC and the various equipment supply contracts.

G. Review Performance Guarantees

The Lenders Independent Engineer will review and comment on the following:

*	The guarantees provided by EPC and other package suppliers to assess the potential for compliance with the applicable project contracts and permits.
*	The guarantees provided by EPC and other equipment manufacturer to assess the level of support that these equipment guarantees provide to the major package suppliers’ guarantees.

H. Review Performance Testing Criteria

The Lenders Independent Engineer will review the plant performance test criteria as proposed by the contractor and comment on the following:

*	Adequacy of arrangements made by the company
*	Review of the Performance Test plans and procedures.
*	Reasonableness of performance criteria.
*	Ability of the test to unambiguously demonstrate net power output, total input, emissions, load-following capability, and other characteristics of the Project to determine whether manufacturers’ and contractor’s guarantees are met.
*	Adequacy of the test design.
*	Ability to extrapolate test results over the expected life of the Project.
*	Conformance of test procedures to established codes and standards for testing power plant equipment.

232

I. Operations and Maintenance (“O&M”) Arrangements

Based on the O&M arrangements to be undertaken in-house Or through and O&M operator, the Lenders Independent Engineer will review and comment on the following atleast 6 months prior to commencement of operations of Unit 1 of the project:

*	Proposed staffing levels.
*	Provisions for Major and Minor Maintenance
*	The Technical Services Agreement for adequacy.
*	The adequacy of the start-up and long-term operating procedures.
*	The reasonableness of the annual Technical Services Agreement fee.
*	The guarantees, LDs under the Technical Services Agreement and the cap on the LDs.
*	The reasonableness of the proposed training and preventive maintenance programs.
*	Adequacy of projected non-operating days due to maintenance.
*	Risk sharing between Owner and Technical Services Agent.

J. Non-Fuel Operating and Maintenance Cost Estimate

The Lenders Independent Engineer will review and comment on the O&M cost estimate and comment on its adequacy/ reasonableness.

K. Technical input to the Project Pro forma/ Financial Model

The Lenders Independent Engineer will review and comment on all inputs to the Proforma which have a technical content, including but not limited to the following:

*	The technical data input to the Client’s or the Owner’s Project Pro forma.
*	The model used to estimate annual fuel and operating costs and annual revenues from the sale of power will be evaluated to determine if it accurately accounts for variation in, but not limited to, ambient temperature, power sales, and estimated plant availability.
*	How well the assumptions and projections made in the Pro Forma are supported by contract guarantees, performance testing, quality of the design and equipment, and the experience of the Project participants.
*	That the model accurately reflects the performance requirements of the Project

233

documents (to include, but not limited to the PPA, EPC and other the Equipment Supply Contracts and O&M arrangements

L. Project Pro Forma/ Financial Model Sensitivities

The Lenders Independent Engineer will conduct analysis on the Project Pro Forma as directed by the Client. The analysis shall include, but not be limited to, the following:

*	Fuel price increases.
*	Performance shortfalls compared to liquidated damages payments.
*	Determination of acceptable levels of End Finance requirements

M. Fuel Supply Arrangements, Mining Arrangements & Fuel Transportation

The Lenders Independent Engineer will review the following aspects of the fuel supply and determine:

*	The Primary and Secondary Fuel required for the Project
*	Coal Linkage arrangements
*	Whether the quality of the coal available in the mines meets the standard operating requirements of the equipments supplied for the Project and enables the Project to operate within projections.
*	Coal Block allotment letters
*	Approvals required for commencement of mining operations including availability of mining rights
*	Whether the proportionate mining reserve allocated to the project meets the envisaged requirement for 1000 MW on an annual basis
*	Milestones for satisfactory progress on construction of any fuel supply infrastructure required for delivery of fuel to the Project, identify incompatibilities of any required infrastructure with requirements of Project
*	Any fuel supply infrastructure and/or transportation constraints of any party involved in fuel supply and Project
*	Any terms relating to interruptibility in supply of fuel or availability of fuel.
*	Adequacy of supply arrangements during testing period
*	Adequacy of the Project’s fuel storage capability
*	Adequacy of fuel measurement facilities to satisfy requirement of fuel related agreements
*	Fuel sampling procedures

234

*	Insurance issues
*	List any required fuel related permits which the Project or fuel related third-parties must obtain in order for the Project to receive delivery of fuel and operate; discuss any issues associated with any of these permits that may affect the Project’s construction schedule or operation
*	Proposed fuel delivery system, delivery schedule, flexibility of delivery schedule, and adequacy of unloading facilities
*	The coal transportation, loading and unloading facilities.
*	Alternative routes for fuel supply
*	Provisions for back-up fuel arrangements
*	The annual quantum of requirement and closest available source for the secondary fuel
*	Any other issues that would be faced while sourcing the fuel for the Project.

N. Water Supply

The Lenders Independent Engineer will review and comment on the Water Supply arrangements for the Project including, but not limited to, the following:

*	Provisions for sufficient water supply to the project throughout the year and availability of a reliable source of suitable quality water for the full term of the Lenders’ loan
*	Construction water availability
*	Water works for water intake

O. Power Evacuation Arrangements

The Lenders Independent Engineer will review and comment on the power evacuation arrangements for the Project including, but not limited to, the following:

*	Provisions for sufficient evacuation capacity for all envisaged procurers
*	Feasibility of as also the arrangements for interconnection with regional and national grid

P. Ash Disposal Arrangements

The Lenders Independent Engineer will review and comment on the ash disposal arrangements for the Project including, but not limited to, the following:

235

*	Provisions for sufficient space and infrastructure for ash evacuation and disposal from the project
*	Compliance with regulatory guidelines for ash disposal for the thermal power projects

Q. Consistency of Project Documentation

Considering the interrelationship between the various documents, the Lenders Independent Engineer will review all available Project documentation for the purpose of identifying missing, inconsistent or unresolved issues. The Lenders Independent Engineer will review and comment on:

*	The consistency of the various contract provisions within each of the technical contracts.
*	The capability of the Project as designed to meet the Project operating, contractual and licensing requirements.

For each of the activities in the scope of work the Independent Engineer shall, at all the times, compare with the requirements of the PPA.

R. Review of Permits and Licenses

The Lenders Independent Engineer will review the permitting schedule and all available permits and licenses or permit/license applications for the project. Independent Engineer will:

*	Assess the capability of the Project as designed to meet the technical requirements specified in the Project’s permits licenses
*	Establish contact with the appropriate environmental or energy regulatory agencies for the purpose of independently identifying and determining the current status of the major permits and licenses to construct and operate the Project.
*	Review permits and approvals required for coal mining of the allotted coal block and preparedness of JV partners for the same
*	Identify what major permits have not been obtained and comment on the likelihood that they may or may not be able to be obtained in a timely manner to support the Project schedule.

236

* Assess the adequacy of proposed evacuation facilities for the off take of power.

S. Environmental Impact Assessment

The Lenders Independent Engineer would review the permits and licenses required for the construction and operation of the facility. The Environmental Impact Assessment report would be reviewed to address the general quality and accuracy of the environmental assessment of the project, the plume and dispersion modeling techniques and the meteorological data used. Guaranteed Emission levels would also be reviewed. The typical environmental issued to be addressed are:

*	Erosion Control Measures and other environmental protection measures during construction
*	Storage and handling of oils and hazardous chemicals during construction and operation.
*	Provisions for disposal of wastes and control of flooding during plant operation.
*	Provisions for control of air pollution emissions during plant operation.

T. Work Product

*	Preparation and delivery to the Client of:
*	Preliminary reports as required, and a final report at Financial Closure evaluating the proposed Project
*	Attendance at meetings with the Client, and their counsel as needed.
*	Participation in conference calls with Client, and their counsel as needed.
*	Advise and consult with independent insurance consultant.
*	Issue Independent Engineer’s Certificate verifying progress claimed in each periodic cash drawdown request by contractor throughout the construction period, as will be required under the loan documents.
*	Review and comment on:

1)	The contractor’s Loan Requisition Certificate, and
2)	The contractor’s Completion Certificate, and
3)	The testing procedures.

237

Phase II: Construction Monitoring

The Project will be supervised and monitored on a regular quarterly basis through successful construction and commissioning completion which will include:

*	Attending quarterly Project review meetings to assess quarterly progress in engineering, procurement, and construction activities and to review contractor’s presentation of problem areas.
*	Advising client on possible problems and delays that may arise in future, to ensure timely action to prevent the problems.
*	Advise client immediately of major problems that may arise.
*	Reviewing progress of design effort for compliance with the Project schedule.
*	Reviewing progress of preparation of procurement specification for timely issuance and allowance for lead times.
*	Reviewing progress of issuance of procurement contracts for conformity with the Project Schedule.
*	Reviewing overall procurement contracts progress.
*	Reviewing work plans and quality control procedures.
*	Conducting quarterly on-site visits for observations of the work in progress to determine that the Project is proceeding in general accordance with the Project schedule and the agreed upon design concepts.
*	Advise client on any dispute that arises between contractor and the company.
*	Reviewing quality control reports and field laboratory test reports.
*	Consulting with Client in advance of scheduled major inspections, tests, or start of important phases of work, including witness of major equipment tests at Sub-Contractors sites.
*	Reviewing change orders to the EPC Contract and other Equipment Supply Contracts and informing Client of the amount of change order(s) and its status. Lenders Independent Engineer will apprise the Client if the change has an impact on operations and maintenance of the facility and whether the cost indicated is satisfactory. In addition client shall be advised if design or construction is deviating from the agreed specifications.
*	Issue of Certification of completion of site work in accordance with approved Drawings / specifications
*	Review & approval of EPC contractor’s commissioning schedule, procedure

238

and checklist and ensuring that these are followed

*	Supervision & co-ordination of commissioning and start-up activities
*	Reviewing monthly/quarterly Loan Requisition Certificate and supporting documentation. Reviewing actual budget and schedule against contract budget and schedule. Requesting changes or supplemental information as required to approve drawdown request. Signing monthly/quarterly Consulting Engineer’s Certificate and submitting to the Client.
*	Review and confirm contractor’s punch list items to be identified and completed in accordance with the construction contract. Verify facility is ready to start up and begin performance testing. The Independent Engineers’ representative would be present at site during start-up and commissioning.
*	Conference calls and briefings for the Client
*	Prepare and submit monthly/quarterly written reports to client.
*	After every visit the Independent Engineer would prepare a progress report outlining all activities completed and those scheduled for the coming and an independent assessment of the status. On conclusion of the site visit the Independent Engineer will issue a communication covering their expert recommendation on the request for draw of loan funds.

Phase III: Performance Testing

During performance testing, the Lenders Independent Engineer will:

*	Review test procedures developed by contractor and confirm compliance with applicable test codes and standards and with testing criteria specified in EPC and other Equipment Supply contract.
*	Monitor on site overall plant performance tests including, data collection procedures, testing instrumentation, and plant operating and testing personnel throughout the plant performance test.
*	Review test reports prepared by contractor or contractor’s testing consultant and verify data reduction procedures and correction calculations to EPC and other Equipment Supply Contract guarantee conditions.
*	Submit letter summarizing testing procedures and verifying attainment of each performance guarantee specified in the EPC and other Equipment Supply Contracts. Comment on accuracy of Contractor’s Test Report and identify

239

any discrepancies or errors noted.

* Monitor successful completion of each punch-list item by telephone. Make one final visit to Project site to verify punch-list items have been completed. Sign and submit Project Completion Certificate. Completion Report to include :

*	Facility design versus actual installation
*	Adequacy of facility interconnection for fuel, power, water and other requirements
*	Compliance with health, safety and other regulatory requirements
*	Confirmation that required governmental permits and licenses have been obtained for construction and operation.
*	Certification of Performance Test Results.

After performance testing Lenders Independent engineer shall:

* Review of EPC Contractor’s final O&M Manual

* Review of Plant completion report prepared by EPC Contractor

Phase IV: Annual Operational Review

During commercial operation, the Lenders Independent Engineer will:

*	Review the O&M manuals and comment on their completeness and compatibility to those of similar facilities. In particular, the scheduled maintenance, preventive maintenance, and spare parts programs will be reviewed.
*	Review the O&M training program and the O&M manuals, periodically monitoring actual classroom and hands-on instruction and reporting to lender on the training programs.
*	Review the O&M monthly report issued by the operator. Actual plant performance, heat rate, and on-line availability will be compared to expected performance. Causes for equipment component and plant forced outages will be assessed. Conformance with scheduled maintenance, preventive maintenance, and spare parts programs will be evaluated.
*	Conduct periodic site visits to assess overall operation. During the first visit each year, the operation would be renewed. The station outage records, and

240

any planned modifications for the period since the last visit would be reviewed. One of the site visits will be scheduled to coincide with the annual plant maintenance outage to review the condition of the facility while the plant is shut down.

*	Submit periodic report to the Client, noting recurring problems along with recommendations for improving plant operations.
*	Review the budget and actual expenditure to ensure that operational parameters are generally following the input assumptions in the project pro-forma.

Further, an indicative list of documents to be submitted by SEL to the Lenders and to be reviewed by the Lenders Independent Engineer including inter-alia, the following:

Permits and Licenses:

• Issued Permits and Permit Applications

• Licensing Agency Correspondence (As Required)

• Site Lease or Acquisition Agreement

• Land Lease Agreement

• Coal block allotment letters

• Coal Mining JV agreement

Design and Operating Information:

• Construction Contracts

• Facility Design Criteria

• Site Plan and General Arrangements

• Electrical Single-Line Diagrams

• Performance and Acceptance Testing Plan

• Turbine /Generator Performance Data

• Major Equipment Specifications and Purchase Orders

• Auxiliary Power Listing

• Selected Detailed Design Drawing

• Construction Methodology and Construction Equipment to be utilized

241

Reports and Analysis:

• Environment Impact Analysis

• Mass Wasting Impact Analysis

• Energy Output Analysis

Business Information:

• Financial Model and Supporting Documents

• Power Purchase Agreement

• Electrical Interconnection Agreement

• Operation and Maintenance Plan

• Project Operating and Management Structure

• Credit Facility Document

Cost and Schedule:

• Project Cost Estimates (Detailed)

• Engineering & Procurement Schedule

• Construction Schedule

• Project Schedule

• Operation and Maintenance Cost Estimates (Including Spare Parts and Plant Staffing)

The Lenders Independent Engineer shall ask the Borrower & Lead Institution for any further documents, if required for execution of the assignment.

The scope of services provided above is not exhaustive and it shall be the sole responsibility of the LIE to render all services required to fulfill the obligations broadly envisaged herein. Further, LIE may have to provide written opinions/clarifications on any of the techno-commercial issues related to the project as requested by the lenders.

242

SCHEDULE XV

FORMAT OF LETTER OF COMMITMENT

BY SWIFT MT 799
20 TRANSACTION REF
21 RELATED REF
79 NARRATIVE
PLEASE REFER TO YOUR QUOTE DATED .............................. FOR THE FOLLOWING TRANSACTION:
NAME AND ADDRESS OF THE IMPORTER: Sterlite Energy Limited
NAME AND ADDRESS OF THE EXPORTER: SEPCO III Electric Power Construction Corporation
NAME AND ADDRESS OF EXPORTER’S BANK:
DESCRIPTION OF GOODS IMPORTED: Capital Goods
COUNTRY OF ORIGIN OF GOODS: China
SHIPMENT FROM:
SHIPMENT TO:
NAME OF SHIPPING LINE / AIRLINE:
NAME OF THE VESSEL:
AMOUNT OF LOAN:
TENOR:
INTEREST RATE:
MATURITY AMOUNT:

PLEASE EXTEND THE LOAN FOR USD .............................. TO M/S. .............................. FOR THE ABOVE IMPORT TRANSACTION AND REMIT THE AMOUNT TO .............................. (BANKING INFORMATION WHERE THE FUNDS ARE TO BE CREDITED).

WE (NAME OF THE ISSUING BANK/ISSUING RUPEE LENDER) HEREBY UNCONDITIONALLY AGREE TO PAY THE MATURITY AMOUNT UNDER THIS LOAN IN CASE M/S. .............................. FAILS TO REMIT THE AMOUNT ON THE DUE DATE. WE UNDERTAKE TO CREDIT YOUR DESIGNATED ACCOUNT ON DUE DATE AS PER YOUR INSTRUCTIONS IN CASE M/S. .............................. FAILS TO REPAY.

243

WE HEREBY UNDERTAKE TO PAY YOU ON DEMAND THE MATURITY AMOUNT AND/OR THE AMOUNT OF ANY LOSSES, COSTS OR DAMAGES YOU MAY SUFFER ON OUR FAILURE TO CREDIT YOUR DESIGNATED ACCOUNT ON DUE DATE.

244

SCHEDULE XVI

MAJOR PROJECT DOCUMENTS

(a)	PPA;
(b)	Fuel Supply Agreements;
(c)	Coal Transportation Agreements;
(d)	Mining JV Agreement;
(e)	Any agreements, documents or instruments entered into by the Borrower or by any Person in its favour in respect of the operation and maintenance of the Project;
(f)	Memorandum of Understanding between Governor of Orissa through Commissioner cum Secretary, Energy Department and the Borrower dated September 26, 2006;
(g)	Offshore Supply Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
(h)	Onshore Supply Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
(i)	Offshore Engineering and Technical Services Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
(j)	Onshore Services and Construction Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;

245

(k)	Design, Engineering, Supply, Services and Construction Contract for the long distance raw water pumping and delivery system at the Project Site between the Borrower and Simplex Infrastructures Limited dated March 27, 2007;
(l)	All documents reflecting the Borrower’s ownership/title in respect of the site of the Project, Borrower’s title to the fixed assets, easements, water rights and other documents analogous to the above, including but not limited to:

(i)	Lease Deed for industrial plots between Orissa Industrial Infrastructure Development Corporation (Lessor) and the Borrower (Lessee) dated August 7, 2007; and
(ii)	Lease Deed for industrial plots between Orissa Industrial Infrastructure Development Corporation (Lessor) and the Borrower (Lessee) dated December 13, 2006;

(m)	Letter of Award for design, engineering, obtaining statutory approvals from Railways and other relevant authorities, procurement, supply, transportation, unloading, civil works, storage, erection/construction, testing, commissioning and PMC services for Railway Siding to the Project Site issued by the Borrower to Larsen & Tourbo Limited dated June 11, 2008;
(n)	Letter of Award for obtaining Right of Way for 5 (five) tower locations in the Interconnection transmission line between 9 X 135 MW captive power plant and 4 X 600 MW power plant issued by the Borrower to ABB Limited dated October 10, 2008;
(o)	Purchase Order for Interconnection transmission line between 9 X 135 MW captive power plant and 4 X 600 MW power plant issued by the Borrower to ABB Limited dated August 22, 2008;
(p)	Purchase Order for supply of transformer, fire fighting equipment and spares issued by the Borrower to Crompton Greaves Limited dated October 8, 2008;

246

(q)	Work Order for Interconnection transmission line between 9 X 135 MW Captive Power Plant and 4 X 600 MW Power Plant issued by the Borrower to ABB Limited dated August 22, 2008.
(r)	Any bonds, letters of credit or guarantees, consent agreements, side letters under (a) to (q) above;
(s)	Any other document or agreement with respect to the Project designated as such by the Facility Agent and/or the Lenders Engineer after consultation with the Borrower.

247

EXHIBIT 1

NOVATION NOTICE

To:	[Insert name of Facility Agent]
	[Insert address of Facility Agent]
Attention:	[Insert name of relevant department or title of relevant officer]
	and
	Sterlite Energy Limited
	[Insert address of Borrower]
Attention:	[Insert title of relevant officer of the Borrower]

Sterlite Energy Limited

Common Rupee Loan Agreement dated                      ___, 2009

1.	This Novation Notice relates to the captioned Agreement. Terms defined in the Common Rupee Loan Agreement have the same meaning in this Novation Notice and in particular:
	“Existing Lender” means [Insert name of the Existing Lender];
	“New Lender” means [Insert name New Lender].
2.	The Existing Lender:

(A) confirms that, to the extent details appear below under the heading “Rights and/or Obligations to be Novated”, those details accurately summarise the rights and/or obligations which are to be novated and which are, upon

248

delivery of this Novation Notice to the Facility Agent (but subject to paragraph 3 below), cancelled and discharged in accordance with Section 21.8 of the Agreement;

(B)	confirms that any consent, if any, required in accordance with Section 21.8 of the Agreement has been obtained for this novation; and
(C)	gives notice to the undersigned New Lender that the Existing Lender is under no obligation to repurchase all or any part of those rights and/or obligations at any time nor to support any losses suffered by the New Lender.

3.	The undersigned New Lender agrees that it assumes and acquires new rights and/or obligations in accordance with Section 21.8 of the Agreement on and with effect from [______].
4.	The New Lender:

(A)	confirms that, until further notice, its Lending Office and details for communications are set out below;
(B)	agrees to perform and comply with the obligations expressed to be imposed on it by Section 21.8 of the Agreement as a result of this Novation Notice taking effect;
(C)	acknowledges and accepts paragraph 2(C) above;
(D)	if not already a Lender, appoints each agent to act as its agent as provided in the Agreement, the Financing Documents and the Security Documents and agrees to be bound by such Agreement thereto; and
(E)	confirms, on the basis of the facts then known to it, that the novation will not give rise to any requirement for any withholding or increased cost or other cost or expense to the Borrower which would not be incurred by the

249

Borrower if the novation did not take place.

5. The above confirmations and documents are given to and for the benefit of and made with each of the other Parties to the Agreement.

Rights and/or Obligations to be Novated

The Existing Lender’s Available Commitment to be novated: Rs. [     ].

This Novation Notice shall be governed by and construed in accordance with the laws of India.

For the Existing Lender

Name:
By:
	Authorized Signatory Date:

For the New Lender

Name:
By:
	Authorized Signatory Date:

250

Lending Office

Address:
Facsimile No.:
Telex No.:
Attention:

Agreed for and on behalf of itself as Facility Agent and the other parties to the Agreement

Name:
By:
	Authorized Signatory Date

251

EXHIBIT 2

NOTICE OF DRAWDOWN

To:     [•], as Facility Agent

Cc:     [•]

Notice of Drawdown of the Borrower

Ladies and Gentlemen:

               I, the undersigned Authorized Officer of Sterlite Energy Limited (the “Borrower”), DO HEREBY CERTIFY that:

1.	This certificate is furnished pursuant to Section 5.3.1 of the Common Rupee Loan Agreement, dated as of                      (the “Common Rupee Loan Agreement”), among the Borrower, the Lenders, the Facility Agent and the Security Trustee. Unless otherwise defined herein, all capitalized terms used herein have the meanings assigned to those terms in the Common Rupee Loan Agreement.
2.	The Borrower has irrevocably requested a Drawdown from [insert name of respective Lender or Lenders] on [insert Business Day] in the amount of [insert amount] in accordance with Section 5.3 of the Common Rupee Loan Agreement (the “Proposed Drawdown”). After giving effect to the Proposed Drawdown, the aggregate principal outstanding is [insert aggregate of all Drawdowns made under the Facility and the Proposed Drawdown].
3.	For the purposes of Section 5 of the Common Rupee Loan Agreement, the Borrower hereby certifies that the following statements are true on the date hereof

252

and that the acceptance by the Borrower of the benefits of the Proposed Drawdown shall constitute a representation and warranty by the Borrower to each of the Lenders and the Facility Agent that as of the date of such Proposed Drawdown:

(a)	All representations and warranties of the Borrower and the other Material Project Participants contained in the Common Rupee Loan Agreement and in the other Transaction Documents are true, complete and correct in all material respects with the same force and effect as though such representations and warranties had been made on and as of the date hereof and as of the date of the Proposed Drawdown;
(b)	No Event of Default or Potential Event of Default has occurred and is continuing;
(c)	All of the conditions in Section [Insert 7.1/7.2/7.3 as appropriate] of the Common Rupee Loan Agreement have been satisfied and all the necessary certificates and documentation required thereunder is attached herewith or has already been made available to the Facility Agent and the Lenders; and
(d)	The proceeds of the Proposed Drawdown shall be used towards the Project Costs under the Common Rupee Loan Agreement.

4.	If any of the certifications set forth in Clause 3 above shall cease to be valid on, as of or prior to the date of the Proposed Drawdown, the Borrower shall immediately notify each of the Lenders and the Facility Agent in writing.
5.	The Borrower hereby certifies that all proceeds of the equity required to be funded pursuant to Section [ ] of the Sponsor Support Agreement have been made and have been or, as of the date of the Proposed Drawdown will be applied for the following purposes, all of which form a part of the Project Costs as allowed under the Common Rupee Loan Agreement in respect of equity or has been allowed or

253

approved by the Facility Agent and the Lenders in respect of the equity:

Purpose Amount

6. The Borrower hereby certifies that both before and after giving effect to the Proposed Drawdown, the ratio of:

(i)	the sum of the principal amount outstanding of all the Facility over
(ii)	the sum of all paid—up Required Equity is not greater than [•].

For the purpose of calculating the abovementioned ratio:

(a)	any Equity invested by or in the Borrower other than for the purposes of the Project or any equity/ shareholding of the Borrower in any Person has be excluded, and
(b)	the calculation of Equity for the purposes of the abovementioned ratio has been done on an unconsolidated basis. By way of illustration, if Rs. 100 is invested into the Borrower by way of equity, of which Rs. 40 is used by the Borrower to subscribe to shares of its subsidiary, only the remainder Rs. 60 has been used for the purposes of calculating Equity.

7. The Borrower hereby certifies that the sum of: (A) the aggregate of all amounts available but undrawn under the Facility and all undisbursed moneys in the Construction Accounts; (B) proceeds of insurance received and available to the Borrower, (C) Loss Proceeds; (D) liquidated damages under Project Documents and other amounts which are due and payable pursuant to the Transaction Documents; (E) any unfunded Sponsor Support obligation pursuant to Sections [ ] of the Sponsor Support Agreement, equals or exceeds the sum of the amount necessary to pay all balance Project Costs which have been or are reasonably likely to be incurred in connection with the Project in order to achieve Final Completion.

254

8. Outstanding Due Amounts under the Facility including the amount of the Drawdown requested hereunder is                     .

IN WITNESS WHEREOF, I have hereunto set my hand this day of                     .

STERLITE ENERGY LIMITED
 

By:  

Name:  

Designation: 

255

EXHIBIT 3

LENDING CONFIRMATION NOTICE

To:	Sterlite Energy Limited
Cc:	[•]

Lending Confirmation Notice

Ladies and Gentlemen:

This notice is issued pursuant to Section 5.4.1.2 of the Common Rupee Loan Agreement, dated as of __________________ (the “Common Rupee Loan Agreement”), among the Borrower, the Lenders, the Security Trustee and the Facility Agent in connection with the, Notice of Drawdown of the Borrower dated ____________, 20__.

1.	We hereby state that as of the date hereof, we have not received an Unsatisfied CP Notice from any Lender in accordance with the Common Rupee Loan Agreement.
2.	Based on the information supplied to us by the Borrower, we also certify that the conditions precedent to Drawdown stipulated in Section 5 of the Common Rupee Loan Agreement have been satisfied.
3.	Pursuant to Section 5.4.1 of the Common Rupee Loan Agreement, Drawdown may occur in terms of the Notice of Drawdown of the Borrower dated ____________, 20__.

For and on behalf of [  ], as Facility Agent

Name:

Designation:

256

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and acknowledged by their respective officers or representatives hereunto duly Authorized, as of the date first above written.

THE COMMON SEAL OF STERLITE ENERGY LIMITED has pursuant to the Resolution of its Board of Directors passed in that behalf on ___________________ hereunto been affixed in the presence of Shri. _________ ____________________________________ Director/ Company Secretary/ Authorised Signatory, who has signed these presents in token thereof and Shri ___________________ ____________ Company Secretary/ Authorised Signatory who has signed these presents in token thereof.		) ) ) ) ) ) ) ) ) )	/s/ V. Ramanathan /s/ Manish Bhatter
IDBI TRUSTEESHIP SERVICES LIMITED		)
as Security Trustee, for the Lenders		)
By:	/s/ Ajit S. Guruji
Name:	Ajit S. Guruji
Title:	Vice President
STATE BANK OF INDIA		)
as Facility Agent, for the Lenders		)
By:	/s/ VRK Saxena
Name:	VRK Saxena
Title:	Assistant General Manager

257

STATE BANK OF INDIA		)
as Issuing Bank
By:	/s/ VRK Saxena
Name:	VRK Saxena
Title:	Assistant General Manager
STATE BANK OF INDIA		)
as a Rupee Lender
By:	/s/ VRK Saxena
Name:	VRK Saxena
Title:	Assistant General Manager
IDBI BANK LIMITED as a Rupee Lender		)
By:	/s/ Subrajit Bhowmick
Name:	Subrajit Bhowmick
Title:	Deputy General Manager
PUNJAB NATIONAL BANK		)
as a Rupee Lender
By:	/s/ V.K. Sardeshpande
Name:	V.K. Sardeshpande
Title:	Sr. Manager
ANDHRA BANK		)
as a Rupee Lender
By:	/s/ K.G. Sivasankar Rao
Name:	K.G. Sivasankar Rao
Title:	Chief Manager

258

LIFE INSURANCE CORPORATION OF INDIA		)
as a Rupee Lender
By:	/s/ Smt. Anjali N. Desai
Name:	Smt. Anjali N. Desai
Title:	Deputy Secretary (Investment)
SYNDICATE BANK		)
as a Rupee Lender
By:	/s/ Jugeshchander
Name:	Jugeshchander
Title:	Assistant General Manager
TAMILNAD MERCANTILE BANK		)
as a Rupee Lender
By:	/s/ S. Senthil Anandan
Name:	S. Senthil Anandan
Title:	Chief Manager
BANK OF INDIA		)
as a Rupee Lender
By:	/s/ V.V. Agnihotri
Name:	V.V. Agnihotri
Title:	Assistant General Manager
CANARA BANK		)
as a Rupee Lender
By:	/s/ M.R. Muralidhar
Name:	M.R. Muralidhar
Title:	Chief Manager

259

CORPORATION BANK		)
as a Rupee Lender
By:	/s/ M. Pineiro
Name:	M. Pineiro
Title:	Chief Manager
UNION BANK OF INDIA
as a Rupee Lender
By:	/s/ N.S. Hegde
Name:	N.S. Hegde
Title:	Chief Manager
UNITED BANK OF INDIA
as a Rupee Lender
By:	/s/ Sanjay Kumar
Name:	Sanjay Kumar
Title:	Assistant General Manager
ALLAHABAD BANK		)
as a Rupee Lender
By:	/s/ Ashok Nath Chattopadhyay
Name:	Ashok Nath Chattopadhyay
Title:	Senior Manager
ORIENTAL BANK OF COMMERCE		)
as a Rupee Lender
By:	/s/ K.K. Aacharya
Name:	K.K. Aacharya
Title:	Deputy General Manager

260

UCO BANK		)
as a Rupee Lender
By:	/s/ R.K. Anjaria
Name:	R.K. Anjaria
Title:	Senior Manager—Relationship
JAMMU & KASHMIR BANK LIMITED		)
as a Rupee Lender
By:	/s/ A.K. Pardita
Name:	A.K. Pardita
Title:	Senior Executive Manager
CENTRAL BANK OF INDIA		)
as a Rupee Lender
By:	/s/ B. Akbaraly
Name:	B. Akbaraly
Title:	Assistant General Manager
THE BANK OF RAJASTHAN LIMITED		)
as a Rupee Lender
By:	/s/ A.M. Arun
Name:	A.M. Arun
Title:	Senior Manager

261

EX-4.52

Exhibit 4.52

DATED JUNE 29, 2009

US$140,000,000 TERM LOAN FACILITY AGREEMENT

AMONG

STERLITE ENERGY LIMITED
as Borrower

AND

INDIA INFRASTRUCTURE FINANCE (UK) COMPANY LIMITED
as Lender

AND

STATE BANK OF INDIA
As Facility Agent

Amarchand & Mangaldas & Suresh A. Shroff & Co.
Advocates & Solicitors

TABLE OF CONTENTS

CLAUSE 1 — INTERPRETATION	2
CLAUSE 2 — THE FACILITY	28
CLAUSE 3 — PURPOSE	29
CLAUSE 4 — CONDITIONS PRECEDENT	30
CLAUSE 5 — UTILISATION	32
CLAUSE 6 — REPAYMENT	37
CLAUSE 7 — PREPAYMENT AND CANCELLATION	39
CLAUSE 8 — COSTS OF UTILISATION	42
CLAUSE 9 — INTEREST RESET	45
CLAUSE 10 — BREAK COSTS	46
CLAUSE 11 — ADDITIONAL PAYMENT OBLIGATIONS	47
CLAUSE 12 — INCREASED COST	51
CLAUSE 13 — OTHER INDEMNITIES	53
CLAUSE 14 — MITIGATION BY THE LENDER	54
CLAUSE 15 — COSTS AND EXPENSES	55
CLAUSE 16 — REPRESENTATIONS AND WARRANTIES	57
CLAUSE 17 — INFORMATION UNDERTAKINGS	70
CLAUSE 18 — GENERAL UNDERTAKINGS	75
CLAUSE 19 — NEGATIVE COVENANTS	92
CLAUSE 20 — EVENTS OF DEFAULT	97
CLAUSE 21 — CHANGES TO THE LENDER	104
CLAUSE 22 — CHANGES TO THE BORROWER	107
CLAUSE 23 — CONDUCT OF BUSINESS BY LENDER	108
CLAUSE 24 — ADMINISTRATION	109
CLAUSE 25 — SET OFF	110
CLAUSE 26 — NOTICES	111
CLAUSE 27 — CALCULATIONS AND CERTIFICATES	114
CLAUSE 28 — CONFIDENTIALITY	115
CLAUSE 29 — PARTIAL INVALIDITY	116
CLAUSE 30 — REMEDIES AND WAIVERS	117

(i)

CLAUSE 31 — AMENDMENTS AND WAIVERS	118
CLAUSE 32 — COUNTERPARTS	119
CLAUSE 33 — GOVERNING LAW	120
CLAUSE 34 — ENFORCEMENT	121
CLAUSE 35 — CONDITIONS OF OTHER FINANCE PARTIES	123
SCHEDULE 1	124
CONDITIONS PRECEDENT	124
SCHEDULE 2	141
REQUESTS	141
SCHEDULE 3	143
FORM OF TRANSFER CERTIFICATE	143
SCHEDULE 4	145
BASE CASE	145
SCHEDULE 5	149
CLEARANCES	149
SCHEDULE 6	151
LENDERS ENGINEER SCOPE OF WORK	151
SCHEDULE 7	162
REPAYMENT SCHEDULE	162
SCHEDULE 8	164
ESTIMATED PROJECT COSTS	164
SCHEDULE 9	165
FINANCING PLAN	165
SCHEDULE 10	166
MAJOR PROJECT DOCUMENTS	166
SCHEDULE 11	168
CONSTRUCTION BUDGET	168
SCHEDULE 12	169
NOMINEE DIRECTORS	169

(ii)

THIS AGREEMENT is dated June 29, 2009 and made between:

1.	STERLITE ENERGY LIMITED, a company incorporated in India under the Companies Act, 1956, with its registered office at SIPCOT Industrial Complex, Madurai By Pass Road, T V Puram, P O Tuticorin, Tamil Nadu — 628002 (the “Borrower”);
2.	INDIA INFRASTRUCTURE FINANCE (UK) COMPANY LIMITED, incorporated with the Companies House for England and Wales under the UK Companies Act 1985, with Company No. 6496661, having its registered office at 87 Gresham St. London EC2V7NQ (the “Lender”); and
3.	STATE BANK OF INDIA, a body corporate constituted under the State Bank of India Act, 1955 with its Corporate Centre at Project Finance SBU, State Bank Bhavan, Madame Cama Road, Mumbai- 400 021 acting as the facility agent for the Lender (the “Facility Agent”).

1

IT IS AGREED as follows:

CLAUSE 1 — INTERPRETATION

1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions
	For the purpose of this Agreement, the following terms shall have the following meanings:
	“Abandonment” means the cessation of performance of obligations by the Borrower in respect of the whole or any material part of the Project for reasons other than Force Majeure or scheduled outage for a continuous period of fifteen (15) days. For this purpose, but without limitation to the generality of the foregoing, the Borrower shall be deemed to have abandoned the Project if it shall make or fail to make a decision, or shall take or fail to take any action clearly indicating the cessation of performance by it of its obligations in respect of the Project for reasons other than Force Majeure. Abandon shall be construed accordingly.
	“Account Bank” shall have the meaning specified in the Trust and Retention Account Agreement.
	“Additional Interest” shall have the meaning given to it in Clause 8.6 of this Agreement.
	“Additional Loans” shall mean the amounts to be borrowed by the Borrower by way of External Commercial Borrowings/ borrowings from export credit agency/foreign currency loans/domestic bonds, as permitted under the terms of the Common Rupee Loan Agreement.
	“Adverse Change” means any change which has had or which is likely to have a Material Adverse Effect.
	“Affiliates” means in relation to any party, a Person that controls, is controlled by or is under the common control with such party.
	“Annual Budget” has the meaning specified in Clause 18.23.1 (i) (A).
	“Annual Operating Plan” has the meaning specified in Clause 18.23.2(iii).
	“Applicable Law” means, any statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, clearance, approval, directive, guideline, policy, requirement, or other governmental restriction or any similar form of decision, or determination by, or any interpretation or administration of any of the foregoing by, any statutory or regulatory authority whether in effect as of the date of this

2

Agreement or thereafter and in each case as amended, and includes without limitation the ECB Guidelines.

“Audited Annual Financial Statements” means the Financial Statements for a period ending on the last day of the Fiscal Year, which have been duly audited by the Auditors as required under the Companies Act 1956, and in accordance with GAAP.

“Auditor(s)” means such firm of chartered accountants acceptable to the Facility Agent, as the Borrower may, with the consent of the Facility Agent, from time to time appoint as statutory auditors of the Borrower.

“Auditor’s Certificate Provision Dates” means the 30th of September and the 31st of March of each Fiscal Year.

“Authorized Officer” means with respect to any Person, any officer of such Person that is authorized to sign on behalf of such Person and at the time being listed as such by the company secretary of such Person in the most recent certificate of such company secretary delivered to the Facility Agent.

“Availability Period” means, in relation to the Facility, the period from the date of this Agreement until the earliest of: (i) the date that the Commitment under such Facility shall have been terminated or reduced to zero pursuant to the terms of this Agreement; or (ii) six (6) months after Project COD.

“Available Facility” means, in relation to the Facility at any time, an amount equal to the difference between (i) the aggregate for the time being of the Lender’s Commitment in respect of the Facility and (ii) the aggregate of all Utilisations under this Agreement that have been made at such time (which shall include the aggregate of all amounts for which Utilisation Requests have been sent by the Borrower and have not been rejected as per the terms of this Agreement).

“Base Case” means the projection of revenues and expenses and cash flows with respect to the Project, mutually agreed to by the Borrower and the Lender, over a period not shorter than the period ending on the Final Settlement Date, together with the Drawdown Schedule and supporting assumptions and explanations thereto as amended from time to time which shall be in substance satisfactory to the Lenders Engineer (which satisfaction shall only be required to be obtained before Project COD) and the Facility Agent. The Base Case as on the date of this Agreement is as set out in Schedule 4.

“Board or Board of Directors” means the board of directors of the Borrower appointed pursuant to the Companies Act.

“Borrower” shall have the meaning specified in item no. 1 of the array of parties.

3

“Break Costs” means the amount (if any) by which:

(a) the additional interest which the Lender would have received for the period from the date of repayment or prepayment of all or any part of its Loan or Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount of the Loan or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b) the amount which the Lender would be able to obtain by placing an amount equal to the principal amount of the Loan or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“Business Day” means a day (other than a Saturday or Sunday):

(a)	in relation to the first and last day of an Interest Period and any other day for payment of principal, interest or an Unpaid Sum which is denominated in US Dollars, which is a London Business Day and on which banks are open for general business in London, England and Mumbai, India;
(b)	in relation to any day for payment of any other amount (not being principal, interest or an Unpaid Sum), on which banks are open for general business in London, England and Mumbai, India; and
(c)	in relation to any other day, on which banks are open for general business in London, England and Mumbai, India.

“Care and Maintenance” means any transfer of possession or transfer of control of the Project to any Person by the Borrower except in accordance with the provisions of this Agreement.

“Change in Law” means:

(a)	the enactment, bringing into effect, adoption, promulgation, amendment, modification or repeal, after the date of this Agreement, of any statute, decree, ordinance or other law, regulation, notice, circular, code, policy, rule or direction by any Governmental Agency; or
(b)	a change in its interpretation by a competent court of law, tribunal, government or statutory authority or any of the above regulations; or
(c)	a change in any consent, approval or license available or obtained for the transmission and evacuation of power from the Project by the Borrower; or

4

(d) any change in charges for the transmission and evacuation of power from the Project, that results in any change in the Borrower’s revenue or costs directly attributable to the Project being decreased or increased, including without limitation, with respect to income tax or any tax or surcharge or cess levied on the sale of electricity by the GOI.

“Clearances” means any consent, license, approval, registration, permit or other authorisation of any nature which is required to be granted by any statutory or regulatory authority or any third party: (i) for fulfilling by each of the Borrower and Sponsor under the Transaction Documents its obligations, and the making by it of the payments contemplated by the Transaction Documents; (ii) for the enforceability of any Transaction Document and the making of any payments contemplated thereunder; (iii) for the construction, operation, and maintenance of the Project; and (iv) for all such other matters as may be necessary in connection with the Project or the performance of any Person’s obligations under any Transaction Document, each of the above having been reviewed by the Lenders Engineer, and shall in any event include but not be limited to those Clearances listed in Schedule 5 to this Agreement.

“Coal Blocks” means the coal blocks located at Rampia and Dip Side Rampia which are proposed to be developed by Rampia Coal Mine and Energy Private Limited and other companies.

“Coal Investment JV Drawdown” means a Utilisation under the Common Rupee Loan Agreement of which any part of the proceeds are intended to be utilized for the purpose of investment through subscription to equity by the Borrower in Rampia Coal Mine and Energy Private Limited, which shall be evidenced by a certificate given by the Authorized Officer of the Borrower along with the Utilisation Request.

“Coal Transportation Agreements” means all binding documents, deeds and other writings entered into by the Borrower for transportation of coal for the Project to the Project Site.

“Commitment” means in relation to the Lender, US$140,000,000 (United States Dollars One Hundred and Forty million) at the date of this Agreement to the extent not cancelled, reduced or transferred by it under this Agreement.

“Common Rupee Loan Agreement” means the agreement titled as the Common Rupee Loan Agreement dated as of the date hereof entered into between, inter alia, the Borrower and the Rupee Lenders, providing certain terms which are common to the Facility and certain other facilities being availed of by the Borrower in relation to the Project, and shall include any amendments or modifications thereto.

“Companies Act” means the Companies Act, 1956 as amended or replaced from time to time.

5

“Consent(s) to Assignment” shall mean the agreement(s) entered into between the Borrower, the Security Trustee and any of the Material Project Participants (other than the Borrower and the Sponsor), for the benefit of the Secured Parties, inter alia in respect of assignment of the Borrower’s rights under the Transaction Documents.

“Construction Budget” means the budget which shall reflect the final Scope of Work and contract price and set forth the timing and amount of all projected payments towards the Project, submitted by the Borrower in substantially the form set forth at Schedule 11.

“Contested in Good Faith” shall mean, with respect to the payment of Taxes or any other claims or liabilities by any Person, the satisfaction of each of the following conditions: (i) the validity or amount there of is being diligently contested in good faith by such Person by appropriate proceedings timely instituted; (ii) such Person has posted a bond or other security acceptable to the Security Trustee or if not approved by the Security Trustee, established adequate cash reserves with respect to the contested items; (iii) during the period of such contest, the enforcement of any contested item is effectively stayed by a court or tribunal or by operation of law; (iv) neither such Person nor any of its officers nor any Secured Party or their respective officers is or could reasonably be expected to become subject to criminal liability or sanction; and (v) such contest and any resultant failure to pay or discharge the claimed or assessed amount does not constitute a Material Adverse Effect.

“Contingency” means the line item designated as “contingency” line item in the Contruction Budget.

“Cost Overrun(s)” has the meaning ascribed to it in the Sponsor Support Agreement.

“Date of Commercial Operation” means, with respect to each Unit of the Project, the date on which such Unit commences commercial production to the satisfaction of the Facility Agent and Lenders Engineer.

“Debt” means at any time the aggregate Obligations owed by the Borrower under the Financing Documents.

“Debt Service Coverage Ratio or DSCR” means, on any date, in respect of any period, the ratio of (i) is to (ii) below:

(i) the aggregate of: (a) profit after tax (excluding non cash adjustments, if any) for that period; (b) depreciation for such period; (c) interest, Letter of Comfort fees and letter of commitment commission payable for such period; (d) financing costs payable for such period; and (e) deferred tax liability;

6

(ii) an amount equal to the sum of interest, Letter of Comfort fees, letter of commitment commission and financing costs payable and the Repayment Instalment to be paid for that period under this Agreement and the Common Rupee Loan Agreement (but excluding the Foreign Currency Bullet Repayment Amount and the Rupee Bullet Repayment Amount and not excluding the eight (8) Repayment Instalments payable after the payment of the Foreign Currency Bullet Repayment Amount).

For the purpose of calculating the DSCR over any period, actual figures would be taken for the past period and figures as per the updated Base Case would be taken for the future period. For determining the figures for the future period, the exchange rate shall be the Applicable Exchange Rate.

“Deed of Hypothecation” means the deed of hypothecation executed or to be executed by the Borrower in favour of the Security Trustee for the benefit of the Lenders in respect of the movable assets of the Borrower.

“Default Interest” means the meaning given to it in Clause 8.5 (Default Interest).

“Default Rate” means a rate which is the aggregate of: (a) the Interest Rate in effect from time to time, and (b) two per cent (2%) per annum.

“Directors” means directors on the Borrower’s Board.

“Discharged Rights and Obligations” has the meaning given to it in Clause 21.4 (Procedure for transfer).

“Dispute” has the meaning given to it in Clause 34.1 (Jurisdiction).

“Distribution Account” shall have the meaning ascribed to it in the Trust and Retention Account Agreement.

“Drawdown Schedule” shall mean the schedule for making Utilisations under this Agreement prepared by the Borrower in accordance with Clause 8.4 (Commitment Fee).

“Drawdown Schedule Period” shall have the meaning specified in Clause 8.4.

“Drawstop Notice” has the meaning specified in Clause 5.5 (Drawstop Notices).

“Due Date” shall mean, in respect of:

(i)	Repayment Instalments, the date on which the Repayment Instalment falls due as stipulated in the Repayment Schedule;
(ii)	interest, the Interest Payment Date; and

7

(iii) any other amount payable under the Finance Documents, the date on which such amount falls due in terms of the Finance Documents.

“ECB Guidelines” means the master circular on External Commercial Borrowings and Trade Credit dated July 1, 2008 along with all modifications and amendments thereto.

“Environment” means living organisms including the ecological systems of which they form part and the following media:

(a)	air (including air within natural or man-made structures, whether above or below ground);
(b)	water (including territorial, coastal and inland waters, water under or within land and water in drains and sewers); and
(c)	land (including land under water).

“Environmental Consultant” or “EC” shall have the meaning given to it in Clause 18.12 (Environment and Social Monitoring and Review).

“Environmental Law” means all laws and regulations of any relevant jurisdiction which:

(i)	have as a purpose or effect the protection of, and/or prevention of harm or damage to, the Environment;
(ii)	provide remedies or compensation for harm or damage to the Environment; or
(iii)	relate to Hazardous Substances or health and safety matters.

“EPCG Scheme” shall have the meaning given in Clause (c) of Part A, Schedule 1.

“Equity” shall mean the issued and subscribed equity share capital of the Borrower. For the avoidance of doubt, this shall not include any preference shares of the Borrower.

“Equipment and Machinery” shall mean the capital equipment and machinery required for the Project purchased or to be purchased by the Borrower from the overseas standard Suppliers.

“Equity Interest” shall mean the extent of issued share capital of the Borrower subscribed to by the Sponsor.

“ESMR” shall have the meaning given in Clause 18.12 (Environment and Social Monitoring Review).

8

“Estimated Project Cost(s)” shall mean the costs of the Project as set forth in Schedule 8 and as approved by the Lenders Engineer.

“Event of Default” means any event or circumstance specified as such in Clause 20 (Events of Default).

“External Commercial Borrowings” shall have the meaning given to it in the Master Circular on External Commercial Borrowings and Trade Credits issued by the Reserve Bank of India on July 1, 2008, as amended, supplemented or updated from time to time.

“Existing Lender” has the meaning set out in Clause 21.1 (Assignments and Transfer by the Lender).

“Facility” shall have the meaning given in Clause 2.1 (The Facility).

“Facility Agent” means State Bank of India, Project Finance, SBU as appointed under this Agreement.

“Facility Agent Agreement” shall mean the agreement entered into or to be entered into between the Lenders, the Facility Agent and the Borrower.

“Facility Office” means the office or offices of the Lender through which it will perform its obligations under this Agreement.

“Fee Letter” means the fee letter dated on or around the date of this Agreement between the Borrower and the Lender.

“Final Completion” shall mean the date on which the following requirements have been satisfied:

(i)	Final acceptance under the Project Documents has occurred and the Project is operating in accordance with the obligations of the Borrower under the relevant Project Documents;
(ii)	The Lenders Engineer certifies that the Scope of Work (including all punch list items under Project Documents) has been completed and all Clearances required to construct, operate and maintain the Project have been obtained;
(iii)	(A) the Borrower has delivered to the Facility Agent a completion certificate in such form as may be agreed upon by the parties hereto (the “Borrower Completion Certificate”), signed by an Authorized Officer of the Borrower, certifying that the requirements set forth in paragraphs (i) and (ii) above have been satisfied, and (B) the Lenders Engineer has countersigned the Borrower Completion Certificate confirming that the requirements set forth in paragraphs (i) and (ii) above have been satisfied.

9

“Finance Documents” means collectively, the following:

(a)	This Agreement;
(b)	Common Rupee Loan Agreement;
(c)	Trust and Retention Account Agreement;
(d)	Intercreditor Agreement;
(e)	Borrower’s confirmation letter in respect of the Intercreditor Agreement;
(f)	Sponsor Support Agreement;
(g)	Facility Agent Agreement;
(h)	Security Documents; and
(i)	Any other agreement for financing designated as a Finance Document by the Lender.

“Final Settlement Date” shall mean the date on which all Obligations have been irrevocably and unconditionally paid and discharged in full to the satisfaction of the Secured Parties.

“Financial Close” shall mean the date on which each of the Finance Documents are executed and unless any condition precedent in Clause 4.2 (Conditions Precedent to First Utilization) is waived, upon fulfillment, to the satisfaction of the Lenders, of all conditions precedent provided in Clauses 4.2 (Conditions Precedent to First Utilization) and 4.3 (Conditions Precedent to Each Utilization).

“Financial Indebtedness” means any indebtedness for or in respect of:

(a)	moneys borrowed;
(b)	any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(c)	the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with applicable GAAP, be treated as a finance or capital lease;
(d)	receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(e)	any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value

10

of any derivative transaction, only the marked to market value shall be taken into account);

(f)	shares which are expressed to be redeemable prior to the final Repayment Date of the Facility;
(g)	any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and
(h)	the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (g) above (without double counting).

“Financing Plan” means the base case financial plan as mutually agreed between the Borrower and the Lender (after incorporation of the views of the Lenders Engineer) and as set out in Schedule 9.

“First Currency” has the meaning given to it in Clause 13.1 (Currency indemnity).

“First Utilisation” means the first Utilisation by the Borrower of the Facility under this Agreement.

“Fiscal Year” means the accounting period commencing from April 1^st of each year till March 31^st of the next year.

“Force Majeure” means an event of force majeure howsoever defined in the Transaction Documents.

“Foreign Currency Account” means the the US Dollars nostro account of the bank handling the import documents and/or the nostro account of the LC Issuing Bank, to be notified by the Borrower to the Lender, into which the Lender shall make disbursements for onward payment to the Supplier(s) in accordance with the provisions of this Agreement.

“Foreign Currency Bullet Repayment Amount” means thirty six per cent (36%) of the amount of the Loan to be repaid by the Borrower in a single instalment as part of the forty — eighth (48th) Repayment Instalment in accordance with the Repayment Schedule.

“Fuel Supply Agreements” mean all binding documents, agreements, deeds and other writings entered into by the Borrower for procurement and supply of coal for the Project.

“GAAP” means, generally accepted accounting principles, standards and practices applicable in the jurisdiction of incorporation of the Borrower.

“GOI” shall mean the Government of India.

11

“Governmental Agency” means any government or any governmental agency, semi-governmental or judicial entity or authority (including, any stock exchange or any self-regulatory organisation established under any law or regulation).

“Government of Orissa” shall mean the Government of the State of Orissa or any successor entity assuming the obligations of the Government of State of Orissa in relation to the Project as the case may be.

“GRIDCO PPA” shall mean the power purchase agreement dated September 28, 2006 executed between Grid Corporation of Orissa Limited and the Borrower and shall include the letter from GRIDCO to the Borrower dated October 01, 2008 requisitioning for 600 MW of power from the first Unit of the Project, and any other similar letter or any other document issued under such power purchase agreement.

“Hazardous Substance” means any waste, pollutant, contaminant or other substance (including any liquid, solid, gas, ion, living organism or noise) that may be harmful to human health or other life or the Environment or a nuisance to any person or that may make the use or ownership of any affected land or property more costly.

“Hedging Plan” means the plan prepared by the Borrower, in form, substance and detail satisfactory to the Facility Agent, specifying the Borrower’s plans for hedging the Borrower’s currency risks, interest rate risks and such other risks as may be permitted by the Facility Agent.

“IFRS” means International Financial Reporting Standards.

“Increased Costs” has the meaning given to it in Clause 12.1 (Increased Costs).

“Indenture of Mortgage” shall, collectively, mean any mortgages created or to be created by the Borrower over all or any of the assets mentioned in Clause 18.7.1 in favour of the Security Trustee for the benefit of the Lenders.

“India” means the Republic of India and its constituent states from time to time and includes where the context so requires, the Government of the Republic of India, the Government of any constituent state thereof and any regulatory agency or authority thereof.

“Indirect Tax” means any goods and services tax, consumption tax, value added tax or any Tax of a similar nature.

“Initial Security” shall have the meaning specified in Clause 18.7.1.

“Insurance Consultancy Appointment Letter” shall mean the letter issued by the Facility Agent appointing the Lenders Insurance Consultant in connection with performance of certain services with respect to the Project.

12

“Insurance Contract(s)” shall mean the insurance contracts and policies specified by the Lenders Insurance Consultant and required pursuant to this Agreement, any substitutes therefor and any additional insurance contracts or policies required under any of the Finance Documents.

“Intellectual Property” means all patents, trademarks, permits, service marks, brands, trade names, trade secrets, proprietary information and knowledge, technology, computer programs, databases, copyrights, licences, franchises, formulae, designs, rights of confidential information and all other intellectual property.

“Intellectual Property Rights” means all rights, title, benefit and interest in relation to Intellectual Property anywhere in the world (whether registered or not and including all applications for the same) and as defined in Clause 16.24 (Intellectual Property).

“Intercreditor Agreement” shall mean the Agreement entered into or to be entered into between and amongst the Lenders, the Facility Agent and the Security Trustee.

“Interest Payment Date” means, the 30^th (thirtieth) day of each calendar month (and the last Business Day in the month of February) on which interest is due and payable for the Loan except that the last Interest Payment Date shall coincide with the last Repayment Date.

“Interest Period” means, in relation to a Loan: (i) in the first instance, the period commencing from the Utilisation Date and ending on (and excluding) the immediately following Interest Payment Date; and (ii) subsequently, the period commencing on one Interest Payment Date and ending on (and excluding) the immediately following Interest Payment Date and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.5 (Default interest).

“Interest Rate” means, in relation to any Interest Period, the interest rate determined in accordance with Clause 8.1 (Calculation of Interest).

“Interest Reset Date” means, in the first instance, a date which is six (6) months from the date of this Agreement, and thereafter the date falling on the expiry of every six (6) month period from the last Interest Reset Date during the currency of the Facility.

“Legal Proceeding(s)” shall mean any litigation, judicial, quasi-judicial, administrative or arbitral proceedings or proceedings with respect to any commission of inquiry.

“Lenders Consultants” shall have the meaning given to it in Schedule 1 Part A (b) (i).

13

“Lenders Counsel” shall mean: (a) Amarchand & Mangaldas & Suresh A Shroff & Co., Mumbai, and (b) Singhania & Co., London acting for the Lender and the Facility Agent and any replacement therefor appointed by the Facility Agent after consultation with the Borrower.

“Lenders Engineer” means Mott MacDonald Private Limited, and any replacement therefor appointed by the Facility Agent after consultation with the Borrower.

“Lenders Engineer Appointment Letter” shall mean the appointment letter dated April 11, 2009 issued by the Facility Agent appointing the Lenders Engineer in connection with performance of certain services with respect to the Project, including but not limited to the scope of work specified in Schedule 6.

“Lenders Insurance Consultant” shall mean Marsh India Insurance Brokers Pvt. Limited, a private limited company incorporated under the Companies Act and having its corporate office at Tower 1, Peninsula Corporate Park, Lower Parel, Mumbai 400 013 including its successors and assigns and any replacement therefor acting for the Lenders and the Facility Agent and appointed by the Facility Agent after consultation with the Borrower and any replacement therefor satisfactory to the Facility Agent.

“Letter(s) of Credit or LC” shall mean bank guarantee, indemnity, letter of credit or other form of undertaking issued by the LC Issuing Banks in favour of the Suppliers.

“LC Issuing Bank” shall mean such bank as may be agreed by the Lender which has agreed to open Letter(s) of Credit.

“Letter(s) of Comfort” shall mean a letter issued by the Lender in favour of the LC Issuing Bank on the terms and in the manner deemed fit by the Lender.

“LIBOR” means, London Interbank Offered Rate declared by the British Bankers’ Association (“BBA”), which shall be reset every 6 (six) months. For the purpose of determining the rate of interest, the LIBOR declared by the BBA on the second previous working day prior to the date from which the interest shall accrue or shall be reset, shall be applied. In case, the LIBOR is not declared by BBA on the relevant date for any reason, the latest available LIBOR declared by BBA shall be used for determining the applicable Interest Rate.

“Loan” or “Loans” means the loans made or to be made under the Facility or the principal amount outstanding for the time being of those loans.

“London Business Day” means a day (other than a Saturday or Sunday) on which deposits may be dealt in on the Relevant Interbank Market and banks are open for general business in London and New York.

14

“Long Term Major Maintenance Plan” shall mean the plan setting forth the details of all major maintenance proposed to be performed by the Borrower with respect to the Project during the upcoming five (5) year period specifying the nature, timing, cost and scope of all such proposed maintenance and its envisioned effect on Project operations.

“Loss Proceeds” shall mean any insurance proceeds (after payment of costs of collection incurred by the Security Trustee and the Facility Agent) received by the Security Trustee arising from any claim under the Insurance Contracts.

“Major Maintenance” shall mean the inspection, servicing and replacement of parts of the Plant after periodic intervals of operation of each Unit as certified by the Lenders Engineer.

“Major Maintenance Amounts” shall have the meaning given to it in the Trust and Retention Account Agreement.

“Major Maintenance Budget” shall mean the major maintenance budget for the relevant Operating Year itemized on a monthly basis for all Major Maintenance included in the operating plan for such Operating Year.

“Major Project Documents” shall mean the documents listed in Schedule 10.

“Major Project Parties” shall mean each of the counter-parties to any Major Project Document or collectively all of them as the case may be.

“Management” shall mean the Persons appointed by the Borrower to operate and manage the business and operations of the Borrower.

“Margin” means five point three five per cent (5.35%) per annum.

“Material Adverse Effect” means a material adverse effect on or material adverse change in:

(a)	the financial condition, assets, prospects or business of the Borrower;
(b)	the ability of the Borrower to perform and comply with its payment obligations under any Finance Document and/or its obligations under Clause 18.22 (Financial covenants) of this Agreement (which shall include any material and adverse effect on the consolidated financial condition, assets or prospects of the Subsidiaries of the Borrower which would have the effect mentioned in this clause (b));
(c)	the ability of the Sponsor to perform and comply with its obligations under the Sponsor Support Agreement and any other Finance Document;
(d)	the validity, legality or enforceability of any Finance Document; or

15

(e) any of the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower taken as a whole since December 31, 2008, including any downgrade of the Borrower’s credit rating or arising generally from any pending or threatened litigation, investigation or proceeding.

“Material Project Participant” shall mean the Borrower, the Sponsor, any Person which provides guarantees in respect of the performance of any operator appointed in respect of the Project or any portion thereof, the Offtaker, the bank issuing the letter of credit under the PPA, the Major Project Parties, and any Person appointed as a replacement or substitute of any of the above.

“Memorandum and Articles of Association” shall mean the Memorandum and Articles of Association of the Borrower as amended from time to time.

“Mining JV Agreement” shall mean the agreement entered into by the Borrower with five other companies for the establishment of a joint venture company to undertake the development of the Coal Blocks.

“Mobilisation Period” shall mean the period from six (6) months prior to the scheduled Date of Commercial Operation of the first Unit till the Date of Commercial Operation of the first Unit or as approved by the Lenders Engineer.

“Mobilisation Plan” shall mean a written plan, setting forth, among other things, the budget for and details of anticipated staffing requirements, purchases, training, objectives, and required actions by the Borrower necessary to assist with Project start-up and performance testing, and preparation for ongoing operation.

“Modified Following London Business Day Convention” means the convention for adjusting the last day of any period which would otherwise fall on a day which is not a London Business Day, by specifying that such day will instead fall on the next London Business Day in the same calendar month and if there is no Business Day in the same calendar month then such day shall fall on the previous Business Day in the same calendar month.

“New Lender” has the meaning set out in Clause 21.1 (Assignments and Transfer by the Lender).

“Obligations” shall mean all amounts payable by the Borrower pursuant to the terms of the Finance Documents, including without limitation:

(i) the principal of and interest and Letter of Comfort fees, letter of commitment commission on the Facility, and all other obligations and liabilities of the Borrower, including indemnities, expenses, fees and interest, incurred under, arising out of or in connection with any Finance Document;

16

(ii) any and all sums advanced by the Facility Agent and the Security Trustee in order to preserve the Security or preserve their Security Interest in the Security; and

(iii) in the event of any proceeding for the collection or enforcement of the Obligations, after an Event of Default shall have occurred and be continuing, the expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realising the Security, or of any exercise of the Facility Agent and the Security Trustee of its right under the Security Documents, together with legal fees and court costs.

“Offtaker(s)” shall mean the entity or entities (including any of the Borrower’s Affiliates) that have executed a PPA with the Borrower for offtake of electricity generated by the Project under such PPA.

“Operating Budget” shall have the meaning specified in the Trust and Retention Account Agreement.

“Operating Year” shall mean the period beginning on the Date of Commercial Operation of the first Unit and ending at 00:00 Hrs on the first of the next following April and each subsequent period beginning at 00:00 Hrs on the first of April and ending at 00:00 Hrs on the first of April of the following year.

“Operation and Maintenance Costs” shall have the meaning specified in the Trust and Retention Account Agreement.

“OPTCL” means the Orissa Power Transmission Corporation Limited.

“Party” means a party to this Agreement.

“Permitted Disposal” shall mean any sale, disposal, lease or other transfer of any property or assets which are:

(1)	required or permitted under any Finance Document; or
(2)	to the extent permitted by the Lenders, a sale or other disposal of equipment which in the opinion of the Lenders Engineer is either:

(A)	uneconomic or obsolete;
(B)	no longer used or useful; or
(C)	at the end of its useful life; and

in respect of (A), (B) and (C) above, which is replaced by other equipment of equal or greater value and utility and secured in favour of the Secured Parties.

“Permitted Indebtedness” shall mean:

17

(i)	the Facility and such other indebtedness the Borrower may incur as per the Financing Plan approved by the Facility Agent;
(ii)	the Rupee Loan;
(iii)	working capital facilities (including trade credits) to the extent of Rs. 430,00,00,000/- (Rupees Four Hundred and Thirty Crores) or such further amounts as may be permitted by the Lenders;
(iv)	financial obligations arising under the Transaction Documents and not occurring as a result of a default by the Borrower of its obligations thereunder;
(v)	financial obligations in connection with any hedging arrangement undertaken in accordance with the Hedging Plan; and
(vi)	any other borrowing approved by the Facility Agent.

“Permitted Investments” shall have the meaning specified in the Trust and Retention Account Agreement.

“Permitted Security Interest” shall mean the following:

(a)	the Security Interests, charges and other liens or encumbrances in favour of Security Trustee pursuant to the Finance Documents; and
(b)	any unpaid vendors’ lien arising under the Project Documents and not occurring as a result of a default by the Borrower of its obligations thereunder.

“Person” shall mean any individual, corporation, partnership, (including, without limitation, association), joint stock company, trust, unincorporated organization or government authority or political subdivision thereof, international organisation, agency or authority (in each case, whether or not having separate legal personality) and shall include their respective successors and assigns and in case of an individual shall include his legal representatives, administrators, executors and heirs and in case of a trust shall include the trustee or the trustees for the time being.

“Plant” shall mean equipment, machinery, apparatus, materials, articles, drawings, designs, plans and things of all kinds to be erected, installed and commissioned by the relevant counterparties to the Project Documents.

“Potential Event of Default” shall mean an event, which with the giving of notice, lapse of time, determination of materiality, or fulfillment of any other applicable condition or any combination of the foregoing or otherwise, would constitute an Event of Default.

18

“PPA” shall mean the GRIDCO PPA and any other power purchase agreement(s) entered into or to be entered into between an Offtaker(s) and the Borrower for sale of the power generated by the Project, as amended and novated from time to time.

“Project” means the development, design, procurement, ownership, construction, commissioning, operation and maintenance of the 2400 MW coal based power project using sub-critical technology, comprised of four (4) Units at the Project Site formulated by the Borrower at Jharsuguda, Orissa, including development of the Coal Blocks.

“Project COD” shall mean the Date of Commercial Operation of the last Unit of the Project, which shall not be later than June 30, 2010, or 21 months from Financial Close, whichever is earlier.

“Project Costs” shall mean all the actual costs incurred or to be incurred by the Borrower to develop, finance, construct and operate the Project and all costs required to be incurred till the Final Completion.

“Project Documents” shall mean:

(a)	Major Project Documents;
(b)	Insurance Contracts;
(c)	Any bonds, letters of credit or guarantees, consent agreements, side letters under (a) and (b) above;
(d)	Any other agreements, documents or instruments entered into by the Borrower or by any Person in its favour in respect of the development, construction, design, procurement, operation, maintenance and ownership of the Project or management and control of the Borrower and designated as Project Documents by the Facility Agent and each such Project Document as amended from time to time.

“Project Proceeds” shall have the meaning specified in the Trust and Retention Account Agreement.

“Project Site” shall mean and include the land in Jharsuguda, State of Orissa, where the Project is to be set up by the Borrower.

“Project Schedule” shall mean the construction schedule of the Project as specified substantially in the form attached in Schedule 13 as may be amended from time to time with the consent of the Facility Agent.

“Quarterly Financial Statements” means unaudited Financial Statements in respect of a fiscal quarter.

19

“RBI” means the Reserve Bank of India.

“RBI Approval” means the approval obtained from the RBI with respect to the Borrower availing the Facility from the Lender on the terms and conditions stipulated in this Agreement.

“Relevant Interbank Market” means the London interbank market.

“Relevant Jurisdictions” means, in relation to the Borrower:

(f)	its jurisdiction of incorporation; and
(g)	any jurisdiction where it conducts its business.

“Relevant Party” has the meaning given to it in Clause 15.4 (Transaction undertaking to pay).

“Repayment Date” means each of the dates specified in Schedule 7 (Repayment Schedule).

“Repayment Instalment” shall have the meaning given to it in Clause 6.1 (Repayment of the Facility).

“Repeating Representations” means each of the representations set out in Clause 16 (Representations and Warranties).

“Required Equity” shall mean an amount of Rs. 2050,00,00,000 (Rupees Two Thousand and Fifty Crores) required to be infused by the Sponsor by subscription to the equity share capital of the Borrower provided that the Required Equity shall not include any equity contributed by the Sponsor for the purpose of investment in any subsidiary of the Borrower in accordance with Clause 19.9 (Advances, Investments and Loans).

“Restricted Payments” shall mean:

(i)	the authorisation, declaration or payment of any dividends (either in cash or property) or distributions or return of equity;
(ii)	redemption, retirement, purchase or other acquisition, directly or indirectly of any shares of any class of its Equity Interests now or hereafter outstanding (or any options or warrants issued by the Borrower with respect to its Equity Interests) which will result in a Debt to Equity ratio higher than 75:25;
(iii)	prepay or redeem for value, any indebtedness of the Borrower prior to the scheduled maturity of such indebtedness, except to the extent that this is permitted under the Finance Documents; or

20

(iv) any investment (other than a Permitted Investment) in any entity other than in a subsidiary.

“Restricted Payment Conditions” shall have the meaning given to it in the Trust and Retention Account Agreement.

“Rupees” means the lawful currency of India.

“Rupee Bullet Repayment Amount” shall mean forty per cent (40%) of the amount of the Rupee Loan to be repaid by the Borrower in a single instalment as part of the last repayment instalment in accordance with the Common Rupee Loan Agreement.

“Rupee Lenders” means the lenders providing the Rupee Loan to the Borrower under the Common Rupee Loan Agreement.

“Rupee Loan” means the financial assistances availed by the Borrower from, inter alia, the Rupee Lenders, under the Common Rupee Loan Agreement.

“Scope of Work” shall have the meaning specified in the Project Documents.

“Second Currency” has the meaning given to it in Clause 13.1 (Currency indemnity).

“Secured Party or Secured Parties” shall mean the Lender and the Security Trustee.

“Security” shall have the meaning specified in Clause 18.7.

“Security Documents” shall mean all documents entered into or executed by the Borrower for creating and perfecting the Security including:

1.	the Indenture of Mortgage;
2.	the Deed of Hypothecation;
3.	the Share Pledge Agreement;
4.	the Security Trustee Agreement;
5.	the Consents to Assignments; and
6.	any other document designated as such by the Facility Agent and/or a Secured Party.

“Security Interest” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever including, without

21

limitation, (i) any conditional sale or other title retention agreement, any financing or similar statement or notice filed under any recording or notice statute, and any lease having substantially the same effect as any of the foregoing, and (ii) any designation of loss payees or beneficiaries or any similar arrangement under any Insurance Contract.

“Security Margin” shall be a figure which is calculated as follows:
1 — (Debt divided by value of net fixed assets of the Borrower)

“Security Trustee Agreement” shall mean the agreement entered into or to be entered into between the Borrower, the Security Trustee and the Lenders.

“Security Trustee” shall mean IDBI Trusteeship Services Limited, being a company incorporated in India and having its registered office at Asian Building, Ground Floor, 17, R.K. Kamani Marg, Ballard Estate, Mumbai- 400001, acting as trustee for the Lenders under the Security Trustee Agreement, or any successor thereof.

“Shares” shall mean fully paid-up equity shares of par value of Rs. 10/- each in the Borrower.

“Share Pledge Agreement” shall mean the agreement entered into or to be entered into between the Borrower, Rampia Coal Mine and Energy Private Limited and the Security Trustee for pledge of shares held by the Borrower in the Rampia Coal Mine and Energy Private Limited in favour of the Security Trustee.

“Sponsor” shall mean Sterlite Industries (India) Limited.

“Sponsor Support” shall have the meaning given to the term in the Sponsor Support Agreement.

“Sponsor Support Agreement” shall mean the agreement entered into between the Sponsor, the Borrower, the Security Trustee and the Facility Agent.

“Standing Payment Instruction” means in relation to a lender which becomes a party to this Agreement through a Transfer Certificate, the payment instructions set out in the Transfer Certificate to which such lender is signatory.

“Subsidiary” means in relation to any Person (the “first Person”) at any particular time, any other person which is then, directly or indirectly, either controlled, or more than 50% of whose issued ordinary or common equity share capital (or the like) is then beneficially owned, directly or indirectly, by the first Person.

“Sum” has the meaning given to it in Clause 13.1 (Currency indemnity).

“Supplier” shall mean overseas standard supplier of the capital Equipment and Machinery.

22

“Tangible Networth” shall mean Equity plus the amounts standing to the credit of the reserves of the Borrower (including, without limitation, any share premium account and any credit balance on the accumulated profit and loss account) minus the aggregate of: (a) any debit balance in the profit and loss account or impairment of the issued share capital of the Borrower (except to the extent that deduction with respect to that debit balance or impairment has already been made); (b) revaluation reserves; (c) amounts set aside for dividends or taxation (including deferred taxation); and (d) amounts attributable to capitalized items such as goodwill, trademarks, deferred charges, licenses, patents and other intangible assets.

“Taxes” shall mean any and all present and future taxes, including without limitation, gross receipts, sales, turn-over, value added, use consumption, property, income, franchise, capital, occupational, license, excise, interest and documentary stamps taxes, and customs and other duties, assessments, or fees, however imposed, withheld, levied, or assessed by any country or government subdivision thereof or any other taxing authority.

“Tax Credit”, “Tax Deduction” and “Tax Payment” each has the meaning set out in Clause 11.1 (Definitions).

“Third Parties Act” means the Contracts (Rights of Third Parties) Act 1999, a legislation having jurisdiction over England and Wales.

“Total Debt Gearing” shall mean the ratio derived by dividing Total Outside Liabilities with Tangible Networth.

“Total Outside Liabilities” shall mean the aggregate of all present and future obligation (whether actual or contingent) of the Borrower to pay or repay money including, without limitation:

(a)	amounts raised under any transaction having the financial effect of a borrowing under the Indian GAAP;
(b)	the aggregate amount then outstanding of all liabilities of any person to the extent the Borrower guarantees them or otherwise directly or indirectly obligates itself to pay them; and
(c)	all actual liabilities of the Borrower howsoever arising to redeem any of its Shares,

but shall not include any deferred tax liability of the Borrower.

“Transaction Documents” shall mean each and all of the Project Documents and Finance Documents executed or entered into, or to be executed or entered into, by the Borrower or as the case may be, any other person, in relation, or pertaining, to the transactions contemplated by, or under this Agreement and designated as

23

Transaction Documents by the Facility Agent and each such Transaction Document as amended from time to time.

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 3 (Form of Transfer Certificate), or in any other form agreed between the Lender and the Borrower.

“Transfer Date” means, in relation to a transfer:

(a)	the proposed Transfer Date specified in the Transfer Certificate; and
(b)	the date on which any new lender executes the Transfer Certificate.

“Treasury Transaction” means any currency, commodity or interest rate purchase, cap or collar agreement, forward rate agreement, future or option contract, swap or other similar agreement.

“Trust and Retention Account Agreement” shall mean the agreement entered into or to be entered into between the Borrower, the Security Trustee, the Facility Agent and the Account Bank.

“Twinstar Preference Shares” shall mean 803,230 Redeemable Cumulative Convertible Preference Shares of the Borrower carrying a coupon rate of 2% of Rs. 10/- each fully paid up in cash amounting to Rs 8,032,300/- held by Twinstar Infrastructures Limited.

“UK” shall mean the United Kingdom.

“Unit” shall mean a unit of the Project having an anticipated nominal capacity of six hundred megawatts (600 MW).

“Unpaid Sum” means any sum due and payable but unpaid by the Borrower under the Finance Documents.

“Unsatisfied CP Notice” shall have the meaning specified in Clause 5.4 (iii).

“US Dollars” or “US$” means the lawful currency from time to time of the United States of America.

“Utilisation” means a utilisation of the Facility in accordance with the terms of this Agreement.

“Utilisation Date” means the date of a Utilisation, being the date on which the relevant Loan is or is to be made (as the case may be).

“Utilisation Request” means a notice substantially in the form set out in Part I of Schedule 2.

24

1.2 Construction

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

(i)	the “Lender”, the “Borrower” or any “Party” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;
(ii)	“assets” includes present and future properties, revenues and rights of every description;
(iii)	an “authorised signatory” means a person that has been duly authorised by another person (the “other person”) to execute or sign any Finance Document (or other document or notice to be executed or signed by the other person under or in connection with any Finance Document) on behalf of that other person;
(iv)	a “contract” includes any agreement, deed or other arrangement of any kind whatsoever (whether or not evidenced in writing);
(v)	the “control” of one person (the “first person”) by another person (the “second person”) or the first person being “controlled” by the second person means that the second person (whether directly or indirectly and whether by the ownership of share capital, the possession of voting power, contract or otherwise) has the power to appoint and/or remove all or a majority of the members of the board of directors or other governing body of the first person or otherwise controls or has the power of control over the affairs and policies of the first person;
(vi)	a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended, restated (however fundamentally and whether or not more onerously) or replaced and includes any terms and conditions referred to in any waiver or consent granted in respect of any term of any Finance Document and any change in the purpose of any extension of or any increase in a Facility or the addition of any new facility under that Finance Document or other agreement or instrument and including any waiver or consent granted in respect of any term of any Finance Document from time to time;
(vii)	“including” means including, without limiting the generality of any description preceding such term;
(viii)	“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

25

(ix)	a “person” includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing;
(x)	a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
(xi)	“shares” or “share capital” includes equivalent ownership interests (and “shareholder” and similar expressions shall be construed accordingly);

(b)	Section, Clause and Schedule headings are for ease of reference only.
(c)	Unless a contrary indication appears, a term used in any other Finance Document or in any notice or certificate given under or in connection with any Finance Document has the same meaning in that Finance Document, notice or certificate as in this Agreement.
(d)	Unless the context otherwise requires, the singular includes the plural and vice versa.
(e)	A Potential Event of Default is “continuing” if it has not been remedied or waived and an Event of Default if it has not been waived.
(f)	Unless a contrary indication appears, one person is “acting in concert” with another person in relation to their holding of shares in a company if, whether pursuant to any agreement or understanding, formal or informal or otherwise, they actively cooperate to obtain, maintain, consolidate or exercise control over that company.
(g)	In the event of any disagreement or dispute between the Lenders and the Borrower regarding the materiality of any matter including any event, occurrence, circumstance, change, fact, information, document, authorisation, proceeding, act, omission, claims, breach, default or otherwise, the opinion of the Lenders as to the materiality of any of the foregoing shall be final and binding on the Borrower.
(h)	In the case of any discrepancy between the provisions of this Agreement and those of the Intercreditor Agreement and the Trust and Retention Account Agreement, the provisions in the Intercreditor Agreement and the Trust and Retention Account Agreement shall prevail so far as the discrepancy relates to the interest of any party to any Finance Document other than the Lender and the Borrower, the order of priority being firstly

26

the Intercreditor Agreement and secondly the Trust and Retention Account Agreement. The provisions of this Agreement shall prevail over Intercreditor Agreement and the Trust and Retention Account Agreement so far as the discrepancy relates to the sole interest of the Lender and/or the relationship between the Borrower and the Lender without reference to any other party to any Financing Document, save and except for obligations of the Facility Agent under this Agreement, which shall also be governed by the terms of the other Financing Documents.

1.3 Third Party Rights

(a)	Unless expressly provided to the contrary in a Finance Document, a person who is not a Party has no right under the Third Parties Act to enforce or enjoy the benefit of any term of this Agreement.
(b)	Notwithstanding any provision of any Finance Document, the consent of any person who is not a party to a Finance Document is not required to vary, rescind or terminate that Finance Document.

27

CLAUSE 2 — THE FACILITY

2.	THE FACILITY
2.1	Subject to the terms of this Agreement and all other Finance Documents, the Lender agrees to make available to the Borrower during the Availability Period a US Dollars term loan facility in an aggregate amount equal to the Commitment (the “Facility”).
2.2	The disbursement of the Facility shall be made:

2.2.1	To the Foreign Currency Account for onward credit to the Supplier as per Letter of Credit, based on the confirmation/determination of the Facility Agent in accordance with Section 5.4 (i) and on receipt of satisfactory reports from the Borrower and fulfilment of all pre-disbursement conditions including other prescribed requirements under the Finance Documents. At the request of the Borrower and on such terms and condition as it may deem fit, the Lender shall consider providing Letter of Comfort to the LC opening Bank at a fee that may be prescribed by the Lender. Issuance of Letter of Comfort shall constitute disbursement by the Lender.
2.2.2	To the Foreign Currency Account for onward credit to the Supplier(s) as per the documents evidencing import of Equipment and Machinery based on the certificate issued by the relevant bank nominated to handle shipping documents and release of invoice payment accompanied by the confirmation in relation to the documents from the Facility Agent, if received by the Lender in a form satisfactory to it.
2.2.3	The Borrower shall, immediately but in any case within seven (7) days of the Utilization Date, provide confirmation to the Lender from the LC Issuing Bank or the bank handling the import documents, as the case may be, that the proceeds of the Utilization have been remitted to the account of the Supplier.

2.3 The lending to the Borrower under this Agreement would be treated as External Commercial Borrowings, as permitted by the Reserve Bank of India. The Facility would, accordingly, be subject to the ECB Guidelines and the prescribed reporting and disclosure requirements.

28

CLAUSE 3 — PURPOSE

3.	PURPOSE
3.1	Purpose
(i)	Subject to and in accordance with the Applicable Law and this Agreement, the Borrower shall apply all amounts borrowed by it under the Facility towards all overseas payments required to be made for the purpose of import / purchase of Equipment and Machinery from the Supplier.
(ii)	The Facility made available shall be paid by the Lender on Borrower’s account to the Supplier as specified in the Utilisation Request.
3.2	Monitoring
	To monitor, supervise, review from time to time, with regard to implementation of the Project by the Borrower, the Clearances, Finance Documents, Project Documents, insurance policies obtained pursuant to the Insurance Contracts, etc. and the compliance by the Borrower of the terms, conditions and covenants contained in the same, the Facility Agent shall appoint agents, professionals and consultants as may be required and shall inform the Lender of all reports, recommendations and information provided by them and by the Borrower. The Facility Agent may call upon the Borrower to take such steps as are deemed necessary to remedy any defects/shortcomings noticed by it. The Facility Agent may also review the status of the Borrower and the Project from time to time in such a manner as it may deem fit and report the same to the Lenders in accordance with the Financing Documents. The Facility Agent shall send periodic progress reports at such time as may be prescribed by the Lender.
3.3	Review of Project Cost
	The Lender shall have right to review the cost of the Project before the final disbursement of the Loan(s).

29

CLAUSE 4 — CONDITIONS PRECEDENT

4.	CONDITIONS PRECEDENT
4.1	Conditions Precedent to Effectiveness
	The Lender’s obligation to make available the Facility pursuant to the Agreement shall become effective only upon the Borrower fulfilling all of the conditions listed in Part A of Schedule 1 (Conditions precedent to Effectiveness) in form and manner satisfactory to the Lender.
4.2	Conditions Precedent to First Utilisation
	The Borrower may not deliver a Utilisation Request for the First Utilisation unless all of the conditions listed in Part B of Schedule 1 have been complied with by the Borrower, in form and manner satisfactory to the Lender.
4.3	Conditions Precedent to Each Utilisation
	The Lender shall perform its obligations under Clause 5 (Utilisation) during the Availability Period, upon delivery of a Utilisation Request, if, on the date of the Utilisation Request and on the proposed Utilisation Date, the Borrower is in compliance with all the conditions listed in Part C of Schedule 1, in form and manner satisfactory to the Lender.
4.4	Further Conditions
	The obligation to give the Loan(s) is subject to there being, on or prior to the First Utilization Date, no:

(a)	material adverse changes having occurred in any business conditions (financial or otherwise), operations, performance properties or prospects of the Borrower and Sponsor since April 1, 2008;
(b)	circumstantial change of conditions in the international or domestic commercial banks, financial, or capital markets having ocurred that, in the opinion of the Lender, would materially affect the granting of loans and financial closure of the Facility; and
(c)	material adverse changes having occurred in the markets for loans.

If any such event occurs, the Lender shall be entitled to after consultations with the Borrower, change the pricing, amount and other terms of the Facility if the Lender determines that such changes are advisable in order to ensure successful achievement of the Financial Close of the Project and disbursement of the Loans.

30

4.5	No Waiver
(i)	No course of dealing or waiver by the Lender or the Facility Agent in connection with any condition of effectiveness of this Agreement or any condition of Utilisation under this Agreement or any other Finance Document shall impair any right, power or remedy of the Lender or the Facility Agent with respect to any other condition of Utilisation, or be construed to be a waiver thereof, nor shall the action of the Lender or the Facility Agent in respect of any Utilisation affect or impair any right, power or remedy of the Lender or the Facility Agent in respect of any other Utilisation.
(ii)	Unless otherwise notified to the Borrower by the Lender and without prejudice to the generality of Clause 4.4(i) above, the right of the Lender to require compliance with any condition under this Agreement or the relevant Finance Documents which may be waived by the Lender in respect of any Utilisation is expressly preserved for the purpose of any subsequent Utilisation.
(iii)	Any request by the Borrower for a waiver of a condition in Schedule 1, Parts B and C shall be in writing and delivered to the Facility Agent and the Lender at least twenty (20) Business Days prior to the proposed first Utilisation Date or Utilisation Date as applicable.
4.6	Delivery of Certificates
	All the certificates, legal opinions, communications, notices and other documents and papers referred to in Part A, Part B and Part C of Schedule 1 to be delivered thereunder, unless otherwise specified, shall be delivered to the Facility Agent and in sufficient counterparts and unless otherwise specified, shall be in form and substance satisfactory to the Facility Agent.

31

CLAUSE 5 — UTILISATION

5.	UTILISATION
5.1	Availability Period and Delivery of a Utilisation Request
(i)	Utilisations under this Agreement shall be made only during the Availability Period. The Utilisations shall be subject to the satisfaction (or waiver) of each condition precedent set forth in Schedule 1, provided, however, that the conditions set forth in Part A and Part B off Schedule 1 of this Agreement shall be required to be satisfied (or waived) only in connection with the First Utilisation.
(ii)	The Borrower may utilise the Facility by delivery to the Facility Agent and the Lender of a duly completed Utilisation Request in the form specified in Schedule 2 at least fifteen (15) Business Days prior to the Utilisation Date.
5.2	Completion of a Utilisation Request
	Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

(i)	it constitutes a request for the drawing of a Loan under the Facility;
(ii)	the proposed Utilisation Date is a Business Day within the Availability Period; and
(ii)	the amount of the Utilisation complies with Clause 5.3 (Currency and amount).

5.3 Currency and amount

(a)	The currency specified in a Utilisation Request must be US Dollars.
(b)	The amount of the proposed Loan (if not equal to the relevant Available Facility) must be:

(i)	a minimum of US$5,000,000; and
(ii)	in any event such that it is less than or equal to the relevant Available Facility.

5.4 Procedure for Utilisation

(i) Promptly after each receipt of a Utilisation Request (and in any event no later than fifteen (15) Business Days prior to the Utilisation Date), the Facility Agent shall: (A) review such Utilisation Request and attachments thereto to determine whether all required documentation has been provided and whether all applicable conditions precedent pursuant to this

32

	Agreement under which such Utilisations as requested have been satisfied; and (B) notify the Lender of its determination. In making such determination, the Facility Agent shall be entitled to assume that each condition precedent under this Agreement shall have been satisfied if no Unsatisfied CP Notice (as defined in subparagraph (iii) below) shall have been received by it with respect to such conditions prior to the time required therefor pursuant to such subparagraph (iii).
(ii)	Subject to Clause 5.1 and the other sub-clauses of this Clause 5.4 and upon satisfaction or waiver of all applicable conditions precedent and any other applicable provisions hereunder under which such Utilisations are requested, at such time as the Facility Agent has determined that all applicable conditions precedent set forth in Schedule 1 have been satisfied or waived by the Lender, a Utilisation may occur; provided, however, that there is nothing to the contrary contained in any Finance Document (it being understood that in the event of any conflict between this Agreement and any other Finance Document in respect of the matters set forth in this Clause 5.4, this Agreement shall prevail).
(iii)	In connection with any Utilisation, the Lender reserves the right to determine that any condition precedent under Part B or Part C of Schedule 1 has not been satisfied. On such determination the Lender shall notify the Borrower and the Facility Agent no later than ten (10) Business Days prior to the Utilisation Date that the Utilisation may not be made and shall give the reasons therefor (any such notice, is hereinafter referred to as an “Unsatisfied CP Notice”). Any such notice received less than ten (10) Business Days prior to the Utilisation Date shall not be effective as an Unsatisfied CP Notice.
(iv)	If the Facility Agent: (A) on or prior to the Utilisation Date determines that the conditions precedent to a Utilisation have not been satisfied; or (B) at least ten (10) Business Days prior to the Utilisation Date receives an Unsatisfied CP Notice, then the Facility Agent shall notify the Borrower thereof in writing within one (1) Business Day of such determination or receipt, as the case may be. The notice from the Facility Agent shall specify the conditions precedent which have not been satisfied and/or attach a copy of the Unsatisfied CP Notice received by the Facility Agent with respect to such Utilisation. Upon such written notice from the Facility Agent, the Lender shall not have any obligation to make the Utilisation requested under the related Utilisation Request.
(v)	At such time, if ever, as: (A) the Facility Agent determines that the condition precedent to the Utilisation which had not been satisfied has been satisfied or waived in accordance with the Finance Documents; or (B) the Lender informs the Facility Agent in writing that the event giving rise to any Unsatisfied CP Notice no longer exists or has been waived, the Facility Agent shall notify the Borrower thereof. Provided that where the Borrower provides the Facility Agent and the Lender satisfactory

33

	information as to the satisfaction of the condition precedent, which is the subject of such Unsatisfied CP Notice, the Unsatisfied CP Notice shall be deemed to be revoked if, within one (1) Business Day of receipt of such information from the Borrower, the Lender does not issue a fresh Unsatisfied CP Notice.
	Upon the occurrence of any of the foregoing, such Unsatisfied CP Notice shall be deemed to be revoked and the Facility Agent shall promptly notify the Borrower and the Lender thereof.
(vi)	The Facility Agent shall have no liability to any Person arising from any notice issued pursuant to this Clause 5.4 as a result of an Unsatisfied CP Notice submitted by any Person, whether or not such Person was entitled to issue any such notice. Neither the Lender nor the Facility Agent shall have any liability to the Borrower or any Affiliate thereof arising from the issuance of an Unsatisfied CP Notice, if the Lender shall have issued the Unsatisfied CP Notice in good faith.
(vii)	If the Facility Agent has not received an Unsatisfied CP Notice pursuant to Clause 5.4(iii), is satisfied that the conditions precedent to a Utilisation have been satisfied, or at such time as the Facility Agent has issued a notice to the Borrower under Clause 5.4(iv) and is otherwise satisfied that the conditions precedent to a Utilisation are satisfied or an Unsatisfied CP Notice is deemed revoked pursuant to Clause 5.4(v) and the Facility Agent is satisfied that the conditions precedent have been fulfilled, the Facility Agent shall issue a notice confirming the Utilisation, (hereinafter the “Lending Confirmation Notice”) substantially in the form attached hereto as Exhibit 1 to the Borrower no later than five (5) Business Days prior to the Utilisation Date to which the Utilisation Request relates or, in the event of the issuance by the Facility Agent of any notice pursuant to Clause 5.4(iv) above, promptly upon the issuance of the related notice under Clause 5.4(v), approving such requested Utilisation.
(viii)	On the proposed Utilisation Date following the issue of a Lending Confirmation Notice, the Lender shall, on the Utilisation Date, or one day prior to the Utilisation Date, make the Utilisation in accordance with the terms of this Agreement either by way of:

(A)	Issuance of Letter(s) of Comfort in format and on terms and conditions as mutually agreed by and between the Lender and LC Issuing Bank;
(B)	Payment on behalf of the Borrower to the Foreign Currency Account for onward remittance to the Supplier(s).

34

5.5 Drawstop Notices

(i)

In addition to the ability to issue an Unsatisfied CP Notice pursuant to Clause 5.4 (iii) and notwithstanding the issuance of any Lending Confirmation Notice by the Facility Agent pursuant to Clause 5.4(vii) in connection with any Utilisation the Lender may, on the occurrence of an Event of Default or a Potential Event of Default issue a notice (a “Drawstop Notice”) to the Borrower with a copy to the Facility Agent , notifying the Borrower that no Utilisations shall be made under any Utilisation Request.

(ii)

A Drawstop Notice issued pursuant to Clause 5.5(i) shall remain in full force and effect until, as the case may be:

(a)	the Potential Event of Default or Event of Default which led to the issuance of such Drawstop Notice has been remedied by the Borrower or waived by the Lender;
(b)	the Lender revokes such Drawstop Notice by sending notice of such revocation to the Facility Agent (which notice shall specify in reasonable detail the basis for such revocation and shall have attached thereto copies of relevant documentation supporting such revocation).

Upon the occurrence of any of the foregoing, such Drawstop Notice shall be deemed to be revoked and the Facility Agent shall promptly notify the Borrower thereof, whereupon the Lender shall make the requested Utilisations as soon as practicable thereafter (and in any event no later than five (5) Business Days thereafter).

5.6	Automatic Cancellation of Commitment
	The Commitment shall be immediately cancelled on the earlier of: (i) the end of the Availability Period for the Facility; and (ii) the day on which the Available Facility is zero.

5.7 Cancellation of Commitment by the Lender

(i)	The Lender may, by notice in writing to the Borrower, cancel its Commitment or any part thereof, which the Lender has not withdrawn prior to the giving of such notice.
(ii)	The Lender may cancel its Commitment only in accordance with this Clause 5.7. Notwithstanding anything to the contrary, the Lender may cancel whole or part of its Commitment, without assigning any reason whatsoever, including in the event of deterioration in the loan accounts in any manner whatsoever.

35

(iii) Without prejudice to the generality of the above, the Lender may cancel the Commitment upon the Borrower being unable to comply with the terms of this Agreement or any terms specified by the Lender, or if the Lender discovers that any information supplied by the Borrower was incorrect or misleading.

36

CLAUSE 6 — REPAYMENT

6.	REPAYMENT
6.1	Repayment of the Facility

(i)

The Borrower shall repay the principal amount of the Facility in accordance with the repayment schedule set out in Schedule 7 (Repayment Schedule). If, for any reason the amount finally disbursed by the Lender under this Agreement is less than the Commitment, the instalments (each a “Repayment Instalment”) shall stand reduced proportionately but shall be payable on the same dates as specified in Schedule 7 (Repayment Schedule).

(ii)

The Lender may, if so warranted in its sole judgment, revise, vary or postpone the repayment schedule, Repayment Instalments and repayment of the principal amounts of the Loan/the Facility or the balance outstanding for the time being or any part thereof by giving prior notice to the Borrower on such terms and conditions as may be decided by them.

6.2	Re-borrowing
	The Borrower may not re-borrow any part of a Loan which is repaid or prepaid.
6.3	Realisation at Par
	The Borrower shall ensure that all amounts due and payable to the Lender under this Agreement shall be paid at par.
6.4	Appropriation
6.4.1	Any amounts due and payable by the Borrower under this Agreement shall be appropriated by the Lender towards such dues in the following order:

(a)	interest on fees, costs, charges, expenses and other monies excluding interest;
(b)	fees, costs, charges, expenses and other monies, including costs and expenses related to preservation and/or enforcement of security;
(c)	default interest;
(d)	additional interest;
(e)	prepayment premium;
(f)	interest;

37

(g)	repayment installments; and
(h)	any other sum due but unpaid under the Finance Documents

6.4.2 Notwithstanding anything contained in Clause 6.4.1, the Lender may, in its absolute discretion, appropriate in any manner, such payment towards the dues, if any, payable by the Borrower in respect of the Finance Document.

38

CLAUSE 7 — PREPAYMENT AND CANCELLATION

7.	PREPAYMENT AND CANCELLATION
7.1	Illegality
	If at any time it becomes or will become unlawful or contrary to any regulation in any applicable jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement or to fund any Loan:

(i)	The Lender shall promptly notify the Borrower upon becoming aware of the event;
(ii)	upon the Lender notifying the Borrower, the Commitment will be immediately cancelled; and
(iii)	if the Lender has funded all or part of its Commitment, the Borrower shall prepay the Loan on the last day of the Interest Period for each Loan occurring after the Lender has notified the Borrower or if earlier, the date specified by the Lender or the Facility Agent in the notice delivered to the Borrower (being no earlier than the last day of any applicable grace period permitted by law).

7.2 Prepayment of the Loan

(a) Subject to the prevailing ECB Guidelines, the Borrower may, if it gives the Lender not less than ten (10) Business Days’ (or such shorter time period as the Lender may agree) notice, prepay the whole or any part (being a minimum amount of US$5,000,000 and in integral multiples of US $1,000,000) of the Facility. The Borrower shall pay a penalty of 2% (two per cent) of the amount so prepaid unless such prepayment is made in the following circumstances:

(i)	the prepayment is effected at the instance of the Lender;
(ii)	the prepayment is made as per Clause 7.2(c), (d) or (e) (Mandatory Prepayment);
(iii)	on every fourth six-monthly Interest Reset Date from the first interest set date, if the rate of Interest prevailing at that time is not acceptable to the Borrower. The Borrower shall exercise this option within 60 days of the Interest Rate advised by the Lender and give 30 days’ notice prior to the intended prepayment; and
(iv)	the prepayment is made on an Interest Reset Date out of funds lying in the Distribution Account, upon giving a prior notice of sixty (60) days to the Lender.

If the prepayment is made on the last day of an Interest Period, no Break

39

Costs will apply. Provided that, if the prepayment is made on a day other than the last day of an Interest Period, Break Costs shall be paid in relation to such prepayment.

(b)	Any notice of prepayment given by the Borrower under Clause 7.2 (a) above shall only be valid if accompanied by evidence satisfactory to the Lender that all Clearances necessary or desirable in connection with the proposed prepayment have been obtained and are in full force and effect.
(c)	In the event the Debt Service Coverage Ratio in any year exceeds 1.30, 50% (fifty per cent) of the cash flow in excess of the cash flow required to maintain the DSCR at 1.30 shall be utilized for prepayment of the Foreign Currency Bullet Repayment Amount.
(d)	In the event the Lenders or the Borrower or any other person acting on behalf of the Borrower shall receive funds in respect of the amounts referred to in this subparagraph, the Borrower hereby agrees that such amounts shall be used to prepay the Facility in accordance with the terms hereof and distributed in accordance with the Trust and Retention Account Agreement. These amounts shall include: (i) any liquidated damages under Project Documents; (ii) Loss Proceeds; and (iii) amounts received under the Project Documents pursuant to the Borrower exercising its right of rejection under the Project Documents.
(e)	Any prepayment made under sub-section (d) above shall be applied towards prepayment of the Foreign Currency Bullet Repayment Amount. All other prepayments made under this Agreement shall be applied proportionately towards all the outstanding Repayment Instalments of the Loan including, for the avoidance of doubt, the Foreign Currency Bullet Repayment Amount.

7.3 Restrictions

(a)	Any notice of cancellation or prepayment given by the Borrower under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
(b)	Subject to Clause 7.2 (Voluntary Prepayment of Loan), any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs payable pursuant to Clause 10 (Break Costs), without premium or penalty.
(c)	The Borrower shall not repay or prepay all or any part of a Loan or cancel all or any part of the Commitment except at the times and in the manner expressly provided for in this Agreement.

40

(d)	No amount of the Commitment cancelled under this Agreement may be subsequently reinstated or borrowed.
(e)	Any prepayment under this Agreement shall be made subject to the same being permitted under Applicable Law including, but not limited to, the ECB Guidelines.

41

CLAUSE 8 — COSTS OF UTILISATION

8.	INTEREST
8.1	Calculation of interest
	The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(i)	Margin; and
(ii)	Six month LIBOR.

Provided that if the Borrower avails any indebtedness from any other creditor having the same tenure as the Facility, and the interest rate paid to such creditor is higher than the interest rate being paid to the Lender hereunder, the Borrower shall pay interest to the Lender at such higher interest rate.

8.2	Payment of interest
	The Borrower shall pay accrued interest on each Loan on the last day of each Interest Period (which Interest Period is monthly). The applicable Interest Rate, as determined above, shall be conveyed to the Borrower and the Facility Agent by the Lender within a period of seven (7) working days from the date of applying such rate of interest.
8.3	Upfront Fee
	The Borrower shall pay to the Lender a non refundable upfront fee of 1.5% of its Commitment on the amount of the Commitment (“Upfront Fee”) immediately upon receipt of Loan Registration Number from RBI.
8.4	Commitment Fee

(i)

The Borrower shall within 30 (thirty) days from the date of execution of this Agreement and in any event at least 30 (thirty) days prior to the first Utilisation Date provide the Facility Agent a Drawdown Schedule which shall consist of consecutive fiscal quarters (each a “Drawdown Schedule Period”) and the amount that the Borrower shall draw during the relevant Drawdown Schedule Period.

(ii)

The Borrower shall pay to the Lender, a commitment fee of 1.20% per annum (the “Commitment Fee”) on the amount undrawn with respect to the Drawdown Schedule. The Commitment Fee shall be calculated on the basis of amount undrawn and the number of days deviated from the scheduled date. Provided that the Lender may on the request of the Borrower, by specific approval, modify/ revise such Drawdown Schedule Such revised Drawdown Schedule shall be applicable from the next

42

	Drawdown Schedule Period. The initial Drawdown Schedule and all such revised Drawdown Schedules shall be deemed to be part of this Agreement.
(iii)	The Borrower shall pay fees at 0.5% (zero point five per cent) per annum of the outstanding of the Letter of Comfort amount for the Letter(s) of Credit, for a minimum of one quarter and pro rata thereafter, payable in advance.
(iv)	The Lenders Engineer shall provide a certification prior to the commencement of each Drawdown Schedule Period certifying:

(A)	the amounts estimated to be expended by the Borrower towards the Project Cost; and
(B)	progress of the Project,

in that Drawdown Schedule Period.

8.5	Default Interest
	Without prejudice to the obligations of the Borrower under the Finance Documents, repayment of principal amounts, and on all costs, charges, expenses and other monies accruing due to or incurred/paid by the Lender under any Transaction Document, shall, in case the same be not paid on the respective due dates (whether at stated maturity, by acceleration, by mandatory prepayment in accordance with this Agreement or otherwise), carry default interest (“Default Interest”) at the Default Rate. Such Default Interest will be computed from the respective Due Date of payment or incurring of such costs, charges, expenses and monies and shall become payable upon the footing of compound interest with monthly rests as provided in this Agreement and shall be payable together with the defaulted amounts on demand, and if no demand is made, on the immediately next Interest Payment Date.
8.6	Additional Interest
	The Lender may at its sole discretion make disbursements out of the Facility pending creation and perfection of the Security in favour of the Lender. Unless the Lender otherwise agrees, in the event the Borrower does not create and perfect the Security in a form and manner satisfactory to the Lender at the time specified in Clause 18.7 (Security) hereof, the Loans made by the Lender pending creation and perfection of the Security shall carry additional interest at the rate of 2.00% per annum plus other statutory levy, if any, (“Additional Interest”) computed from the first Utilisation Date till creation and perfection of Security in a form and manner satisfactory to the Lender. The Additional Interest shall be payable forthwith upon demand by the Lender. The levy of Additional Interest shall be without prejudice to any other rights or remedies available to Lender under the Finance Documents.

43

8.7	Non-Business Days
	If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
8.8	Fees
	In addition to the fees specified in this Clause 8, the Borrower shall pay to the Lender management fee of 6 bps per annum of the Facility amount set out in the Fee Letter, at the time mentioned therein. Such fees shall be paid to the Lender in currency and at place that the Lender may specify from time to time.

44

CLAUSE 9 — INTEREST RESET

9.	INTEREST RESET
9.1	Interest Reset
	The rate of interest for the Loan shall be automatically reset on each Interest Reset Date during the currency of the Facility, based on the six (6) months LIBOR prevailing at that time, and the Borrower shall pay interest on the Loan at such reset interest rate from the last date of the month in which the rate of interest is so reset. The Margin over LIBOR, as mentioned in this Agreement, would remain unchanged.
9.2	Notification of rates of interest
	The rate of interest will vary with the variation in LIBOR while the margin remains the same. The Lender shall promptly notify the Borrower and the Facility Agent of the determination of a rate of interest under this Agreement.

45

CLAUSE 10 — BREAK COSTS

10. BREAK COSTS

(a)	The Borrower shall, within five (5) Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of a Loan or Unpaid Sum owed by the Borrower being paid on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
(b)	The Lender shall provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
(c)	For the avoidance of doubt, Break Costs shall be payable under this Clause 10 only and not recoverable or indemnified pursuant to any other provision of this Agreement.

46

CLAUSE 11 — ADDITIONAL PAYMENT OBLIGATIONS

11.	TAX GROSS UP AND INDEMNITIES
11.1	Definitions

(a)	In this Agreement:
	“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.
	“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
	“Tax Payment” means either the increase in a payment made by the Borrower to the Lender under Clause 11.2 (Tax gross-up) or a payment under Clause 11.3 (Tax indemnity).
(b)	Unless a contrary indication appears, in this Clause 11 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination, save for manifest error.

11.2 Tax gross-up

(a)	All payments to be made by the Borrower under or in connection with a Finance Document shall be made free and clear and without any Tax Deduction, unless a Tax Deduction is required by law in which case the sum payable by the Borrower shall be increased to the extent necessary to ensure that the Lender receives a sum, net of any Tax Deduction, equal to the sum which it would have received if no Tax Deduction had been required. The Borrower shall not have any obligation to make any payment under this Clause 11.2 to the Lender if the Borrower is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had the Lender complied with its obligations under Clause 11.2 (e) below.
(b)	The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Lender and/or Facility Agent accordingly. The Lender shall notify the Borrower if it becomes aware of a Tax Deduction in respect of a payment payable to the Lender.
(c)	If the Borrower is required to make a Tax Deduction, it shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by any Applicable Law.

47

(d)

Within 45 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall deliver to the Lender an original receipt (or certified copy thereof) or any other evidence to the reasonable satisfaction of the Lender that the Tax Deduction has been made or (as applicable) any appropriate payment has been made to the relevant taxing authority.

(e)

Not less than fifteen (15) days before making any payment under the Finance Documents with respect to which a Tax Deduction is required and for which the Borrower is not required to make any additional payment pursuant to this Clause 11.2, the Borrower shall notify the Lender of its intention to make such Tax Deduction and the Borrower and the Lender shall cooperate with each other with a view if possible to obtaining authorisation from the applicable taxation authority for the Borrower to make that payment without a (or, to the extent applicable, with a reduced) Tax Deduction.

11.3 Tax indemnity

(a)	Without prejudice to Clause 11.2 (Tax gross-up), if the Lender is required to make any payment of or on account of Tax on or in relation to any sum received or receivable under or in connection with the Finance Documents, including any sum deemed for purposes of Tax to be received or receivable by the Lender, (whether or not actually received or receivable) or if any liability in respect of any such payment is asserted, imposed, levied or assessed against the Lender, the Borrower shall (within five (5) Business Days of demand by the Lender) indemnify the Lender against such payment or liability together with any interest, penalties, costs and expenses payable or incurred in connection therewith. For the avoidance of doubt, this Clause 11.3 (a) shall apply to any Tax imposed on the Lender in respect of interest accrued on all or any part of its participation in a Loan assigned or transferred by it other than on the last day of an Interest Period relating thereto (including any such Tax liability attaching to that part of the consideration received or receivable by the Lender in connection with that assignment or transfer which is attributable to accrued interest) to the extent that the Borrower would have been obligated to make an increased payment in respect of such Tax under Clause 11.2(a), had such Tax been collected by means of deduction or withholding.
(b)	Clause 11.3 (a) shall not apply:
(i)	with respect to any Tax imposed in respect of payments by the Borrower to the Lender, by the jurisdiction of incorporation or location of the Facility Office of the Lender, by any other jurisdiction in which the Lender is treated as a resident for tax purposes, or by reason of any connection between the Lender and any other jurisdiction other than any such connection resulting from the execution, entry into, delivery of, performance under, exercise of any rights under, or enforcement of any

48

	Finance Document if, in each case, that Tax is, (A) imposed on or calculated by reference to the net income actually received or receivable (but, for the avoidance of doubt, not including any sum deemed for the purposes of Tax to be received or receivable by the Lender but not actually received or receivable) by the Lender; or (B) a franchise tax (or similar tax) imposed on the Lender, in addition to, or as a substitute for, any net income tax that would be excluded from indemnification by this Clause 11.3(b); or (C) the Tax arises due to the failure or delay of the Lender to make any filings of tax returns.
(ii)	to the extent a loss, liability or cost is compensated for by an increased payment under Clause 11.2 (Tax gross-up) or would have been so compensated but for the proviso in Clause 11.2 (a); or
(iii)	with respect to any Tax imposed that is attributable to the wilful breach by the Lender of any law or regulation.
(c)	If the Lender makes or intends to make, a claim under Clause 11.3 (a) above, the Lender shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, and the Facility Agent will in turn notify the Borrower.

11.4	Tax Credit
	If the Borrower makes a Tax Payment and the Lender determines that:

(i)	a Tax Credit is attributable either to an increased payment forming all or part of that Tax Payment; and
(ii)	the Lender has obtained, utilised and retained that Tax Credit,

	the Lender shall pay an amount to the Borrower to the extent of the Tax Credit retained by the Lender with respect to that Tax Payment. The Lender shall furnish the Borrower with such material as it may reasonably and practicably obtain to support such determination of the amount referred to above.
11.5	Stamp taxes
	The Borrower shall pay and, within five (5) Business Days of demand, indemnify the Lender against any cost, loss or liability that the Lender incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
11.6	Indirect Tax

(a) All consideration expressed to be payable under a Finance Document by the Borrower to the Lender shall be deemed to be exclusive of any Indirect Tax. If any Indirect Tax is chargeable on any amount to be paid to the

49

	Lender in connection with a Finance Document, the Borrower shall pay to the Lender (in addition to and at the same time as paying the consideration) an amount equal to the amount of the Indirect Tax.
(b)	Where a Finance Document requires any Party to reimburse the Lender for any costs or expenses, that Party shall also at the same time pay and indemnify the Lender against all Indirect Tax incurred by the Lender in respect of the costs or expenses to the extent that the Lender reasonably determines that it is not entitled to credit or repayment of any value added tax.

11.7	Survival
	The provisions of this Clause 11 in respect of an Existing Lender shall survive any assignment or transfer by the Existing Lender pursuant to Clause 21 (Changes to Parties) of this Agreement and shall apply with respect to any New Lender.

50

CLAUSE 12 — INCREASED COST

12.	INCREASED COSTS
12.1	Increased costs

(a)

Subject to Clause 12.3 (Exceptions) the Borrower shall, within 5 (five) Business Days of a demand by the Lender, pay for the account of the Lender the amount of any Increased Costs incurred by the Lender as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement. The terms “law” and “regulation” in this Clause 12.1(a) shall include, without limitation, any law or regulation concerning capital adequacy, prudential limits, liquidity reserve assets or Tax.

(b)

In this Agreement “Increased Costs” means:

(i)	a reduction in the rate of return from the Facility or on the Lender’s overall capital (including, as a result of any reduction in the rate of return on capital brought about by more capital being required to be allocated by the Lender);
(ii)	an additional or increased cost; or
(iii)	a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by the Lender to the extent that it is attributable to the Lender having entered into its Commitment or funding or performing its obligations under any Finance Document.

12.2 Increased cost claims

(a)	If the Lender intends to make a claim pursuant to Clause 12.1 (Increased costs), the Lender shall notify the Borrower of the event giving rise to the claim.
(b)	The Lender shall provide a certificate to the Borrower confirming the amount of its Increased Costs.

12.3 Exceptions

(a) Clause 12.1 (Increased costs) does not apply to the extent any Increased Cost is:

(i) attributable to a Tax Deduction required by law to be made by the Borrower;

51

(ii)	compensated for by Clause 11.3 (Tax indemnity) (or would have been compensated for under Clause 11.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in Clause 11.3 (b) applied); or
(iii)	attributable to the wilful breach by the Lender of any law or regulation.

52

CLAUSE 13 — OTHER INDEMNITIES

13.	OTHER INDEMNITIES
13.1	Currency indemnity
(a)	If any sum due from the Borrower under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

(i)	making or filing a claim or proof against the Borrower; or
(ii)	obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

	the Borrower shall as an independent obligation, within three (3) Business Days of demand, indemnify the Lender against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)	The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
13.2	Other indemnities
	The Borrower shall, within five (5) Business Days of demand, indemnify the Lender against any cost, loss or liability incurred by the Lender as a result of:

(a)	the occurrence of any Event of Default;
(b)	the information produced or approved by the Borrower in connection with the Facility being or being alleged to be misleading and/or deceptive in any respect;
(c)	a failure by the Borrower to pay any amount due under a Finance Document on its due date;
(d)	funding, or making arrangements to fund a Loan requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by the Lender alone); or
(e)	a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

53

CLAUSE 14 — MITIGATION BY THE LENDER

14.	MITIGATION BY THE LENDER
14.1	Mitigation

(a)

The Lender shall, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 7.1 (Illegality), Clause 11 (Tax gross up and indemnities) (other than Clause 11.6 (Indirect Tax)) or Clause 12 (Increased costs) including transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

(b)

Clause 14.1(a) above does not in any way limit the obligations of the Borrower under the Finance Documents.

14.2 Limitation of liability

(a)	The Borrower shall indemnify the Lender for all costs and expenses reasonably incurred by the Lender as a result of steps taken by it under Clause 14.1 (Mitigation).
(b)	The Lender is not obliged to take any steps under Clause 14.1 (Mitigation) if, in the opinion of the Lender (acting reasonably), to do so might be prejudicial to it.

54

CLAUSE 15 — COSTS AND EXPENSES

15.	COSTS AND EXPENSES
15.1	Transaction expenses
	The Borrower shall within five (5) Business Days of demand pay the Lender the amount of all costs and expenses (including legal fees) reasonably incurred by the Lender in connection with the negotiation, preparation, printing and execution of:

(a)	this Agreement and any other documents referred to in this Agreement; and
(b)	any other Finance Documents executed after the date of the Agreement.

15.2	Amendment costs
	If the Borrower requests an amendment, waiver, release or consent, the Borrower shall, within five (5) Business Days of demand, reimburse the Lender for the amount of all costs and expenses (including legal fees) reasonably incurred by the Lender in responding to, evaluating, negotiating or complying with that request or requirement.
15.3	Enforcement costs
	The Borrower shall, within three (3) Business Days of demand, pay the Lender the amount of all costs and expenses (including legal fees) incurred by the Lender in connection with the enforcement of, or the preservation of any rights under, any Finance Document.
15.4	Transaction undertaking to pay

(a)

The Borrower undertakes to pay the Lender within five (5) Business Days of demand an amount equal to any liability, damages, loss, cost or expense (including legal fees, costs and expenses) incurred by or awarded against the Lender or any of its Affiliates or any of its (or its Affiliates’) directors, officers, employees or agents (each a “Relevant Party”) arising out of, in connection with or based on the use of proceeds of any Loan, except to the extent such liability, damages, loss, cost or expense incurred or awarded results from any breach by the Lender of a Finance Document which is finally judicially determined to have resulted directly from the gross negligence or wilful misconduct of that Relevant Party.

(b)

The Borrower undertakes to pay the Lender, within five (5) Business Days of demand, an amount equal to any cost or expense (including legal fees, costs and expenses) incurred by any Relevant Party in connection with investigating, preparing, pursuing or defending any action, claim, suit, enquiry, investigation, subpoena (or similar order) or litigation or other

55

	proceeding arising out of, in connection with or based on any of the above or with respect to any of the matters referred to in Clause 15.4 (a) above, whether or not pending or threatened and whether or not any Relevant Party is a party.
(c)	The Lender shall not have any duty or obligation, whether as fiduciary for any Relevant Party or otherwise, to recover any payment made or required to be made under Clause 15.4 (a).
(d)	The Borrower agrees that no Relevant Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Borrower or any of its Affiliates for or in connection with anything referred to in Clause 15.4(a) above except for any such liability, damages, loss, cost or expense incurred by the Borrower that results directly from any breach by that Relevant Party of any Finance Document which is in each case finally judicially determined to have resulted directly from the gross negligence or wilful misconduct of that Relevant Party.
(e)	Notwithstanding Clause 15.4(d) above, no Relevant Party shall be responsible or have any liability to the Borrower or any of its Affiliates or anyone else for any reason, including without limitation:

(a)	in respect of any advice or opinion which may be given to the Borrower in respect of the Facility; and
(b)	for any expense, loss or damage suffered by the Borrower as a result of, or in connection with the Facility or any action taken by the Lender which is permitted under the Facility.

56

CLAUSE 16 — REPRESENTATIONS AND WARRANTIES

16.	REPRESENTATIONS AND WARRANTIES
	The Borrower makes the representations and warranties set out in this Clause 16 to the Lender on the date of this Agreement.
16.1	Corporate Organisation and Clearances

(a)	The Borrower: (i) is a duly organised and validly existing company under the laws of India; and (ii) has the power and authority to execute and deliver the Transaction Documents and obtain ownership rights and/or leasehold rights in its property and assets and perform its obligations under the Transaction Documents, to transact the business in which it is engaged or proposes to be engaged and to do all things necessary or appropriate in respect of the Project and to consummate the transactions contemplated by the Transaction Documents to which it is a Party.
(b)	Such of the acts, conditions and things required to be done, fulfilled or performed, and all authorisations as required or essential, as on the date when this representation and warranty is made, for the purpose of the Project or for the entry and delivery of the Transaction Documents entered into or for the performance of the Borrower’s obligations in terms of and under the Transaction Documents have been done, fulfilled, obtained, effected and performed and are in full force and effect and no such authorisation has been, or is threatened (as evidenced by a notice or receipt of communication in writing) to be, revoked or cancelled.
(c)	The Borrower has, wherever necessary, obtained import licences with list of equipment and/or necessary authorisations about eligibility, scope and validity of imports under open general licence for equipment to be imported for the Project.

16.2	Binding obligations
	The obligations expressed to be assumed by it in each Finance Document are legal, valid, binding and enforceable.
16.3	Non-conflict with other obligations
	The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with:

(a)	any law or regulation applicable to it;
(b)	its constitutional documents; or

57

(c) any agreement or instrument binding upon it or any of its assets, or institute a default or termination event (however discussed) under any such agreement or instrument.

16.4	Validity and admissibility in evidence
	All Clearances required or desirable:

(a)	to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party;
(b)	to make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation; and
(c)	for it to carry on its business,

	have been obtained or effected and are in full force and effect.
16.5	Governing law and enforcement

(a)	The choice of English law as the governing law of this Agreement, will be recognised and enforced in its Relevant Jurisdictions; and
(b)	Any judgment obtained in England in relation to a Finance Document (or in the jurisdiction of the governing law of that Finance Document) will be recognised and enforced in its Relevant Jurisdictions and, in relation to a Finance Document governed by a law other than English law, in the jurisdiction of the governing law of that Finance Document.

16.6	No filing or stamp taxes
	Subject to as provided in the Finance Documents, under the law of its jurisdiction of incorporation it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents other than the stamp duty paid at the time of execution of the Agreement or the stamp duty payable in accordance with Clause 11.5 (Stamp Duty and Taxes) and other than the regulations notified by the Reserve Bank of India from time to time.
16.7	No misleading information

(a)	Any factual information provided by or on behalf of the Borrower was true and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.
(b)	Any financial projections provided by or on behalf of the Borrower were prepared on the basis of recent historical information and on the basis of

58

	reasonable assumptions at the time such financial projections were prepared.
(c)	Nothing has occurred or been omitted from the information so provided and no information has been given or withheld that results in any information provided by or on behalf of the Borrower being untrue or misleading in any material respect.

16.8 Financial statements

(a)	Any and all financial statements of the Borrower which have been or shall be supplied to the Lender have been or will be prepared in accordance with GAAP consistently applied and give a true and fair view of the Borrower’s financial condition and operations as at the end of and for the relevant financial year.
(b)	There has been no material adverse change in its condition (financial or otherwise), assets, operations, prospects or business since December 30, 2008.
(c)	As at the date of its most recent financial statements (if any), the Borrower had no indebtedness (whether arising under contract or otherwise and regardless of whether or not contingent) which was not disclosed by those financial statements (or by the notes thereto) or reserved against therein, nor any unrealised or anticipated losses which were not so disclosed or reserved against.

16.9	No proceedings pending or threatened
	No litigation, arbitration, investigative or administrative proceedings of or before any court, arbitral body or agency (including any arising from or relating to Environmental Law) which, if adversely determined, might have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened (as evidenced by a notice or receipt of communication in writing) against it.
16.10	Title
	It has good and marketable title to or valid leases and licences of or is otherwise entitled to use, (i) all material assets necessary or desirable for it to carry on its business as it is being or is proposed to be conducted and (ii) all assets forming part of the Security.
16.11	Authorised signatories
	Each person specified as its authorised signatory in any document accepted by the Lender pursuant to paragraph 1(c) of Schedule 1 (Conditions precedent) or delivered to the Lender pursuant to Clause 17.2(xxv) (Other Information to be

59

	provided) is, subject to any notice to the contrary delivered to the Lender pursuant to Clause 17.2(xxv) (Other Information to be provided), authorised to sign all Utilisation Requests and other notices on its behalf under or in connection with the Finance Documents.
16.12	Solvency

(b)	It is able to, and has not admitted its inability to, pay its debts as they mature and has not suspended making payment on any of its debts and it will not be deemed by a court to be unable to pay its debts within the meaning of the laws of each of its Relevant Jurisdictions, nor in any such case, will it become so in consequence of entering into any Finance Document.
(c)	It, by reason of actual or anticipated financial difficulties, has not commenced, and does not intend to commence, negotiations with one or more of its creditors with a view to rescheduling its indebtedness.
(d)	The value of its assets is more than its liabilities (taking into account contingent and prospective liabilities) and it has sufficient capital to carry on its business.
(e)	It has not taken any corporate action nor have any legal proceedings or other procedures or step been taken, started or threatened (as evidenced by a notice or receipt of communication in writing) in relation to anything referred to in Clause 20.19 (Winding up, Bankruptcy and Dissolution).

16.13	Foreign Exchange Control/Reserve Bank Approval
	The Borrower has obtained all necessary governmental and other consents required under all Applicable Law, including the necessary approval from the RBI, for the Lender providing, and the Borrower using the Facility.
16.14	Repetition

(a)	The representations and warranties set out in this Clause 16 are deemed to be made by the Borrower by reference to the facts and circumstances then existing on the date of the Utilisation Request and the Utilisation Date.
(b)	The Repeating Representations are deemed to be made by the Borrower by reference to the facts and circumstances then existing on the first day of each Interest Period.
(c)	The representations and warranties set out in Clause 16.7 (No misleading information) shall, in addition, be deemed to be made by the Borrower on the date of each Transfer Certificate signed by reference to the facts and circumstances then existing.

60

16.15 Events of Default, Legal Proceedings, Material Adverse Effect

(a)	The Borrower confirms that there has not occurred any material amendment to or modification of, any Transaction Document that is executed as on the date this representation and warranty is made, without the prior written consent of the Lender or the Facility Agent.
(b)	The Borrower confirms that there has not been initiated nor is there pending nor are there any threatened (as evidenced by a notice or receipt of communication in writing) Legal Proceedings, relating to the Project, the Borrower, the Sponsor or their assets, or any Major Project Party having or likely to have a Material Adverse Effect.
(c)	The Borrower confirms that no Event of Default or Potential Event of Default has occurred or is subsisting under any Transaction Document.
(d)	The Borrower confirms that none of its Directors or promoters is on the caution list/specific approval list of the Export Credit Guarantee Corporation of India Limited (ECGC) or the Reserve Bank of India’s defaulter list/caution list or the defaulters list under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) or is a defaulter of the Lender and that no Director is disqualified under Section 274 of the Companies Act.

16.16	Consents
	The Borrower confirms that, other than Clearances which have already been obtained with respect to the Borrower and all other Material Project Participants, no Clearance or validation of, or filing, recording or registration with, or exemption or waiver by, any Governmental Agency, is required to authorise, or is required in connection with: (i) the execution, delivery and performance of the Transaction Documents to which they are party; (ii) the legality, validity, binding effect or enforceability hereof or thereof; or (iii) the ownership, construction or operation of the Project as contemplated by the Project Documents. The Borrower further confirms that no notice has been received and the Borrower is not aware of any reason to believe that any authorisation/ Clearance which is necessary or required to be obtained in relation to the Project will not be granted or obtained.
16.17	Compliance with Laws

(i)	The Borrower, Sponsor and all other Major Project Parties are in compliance in all respects with all Applicable Law and governmental authorisations for the development, construction, ownership and operation of the Project.
(ii)	The Borrower certifies that the Project is being carried out in compliance with all Applicable Law.

61

(iii) Neither the Project Site nor the Plant (nor any other property with respect to which the Borrower has retained or assumed liability either contractually or by operation of law) has been affected by any hazardous material in a manner which does or is reasonably likely to give rise to any liability of the Borrower under any Applicable Law nor is there disposal of any hazardous material by the Borrower outside the Project Site.

16.18 Good Title

(i)	The Borrower has ownership rights/leasehold rights and title to the immovable property, and owns the movable property, assets and revenues of the Borrower on which it grants or purports to grant Security Interest(s) pursuant to the Security Documents, in each case free and clear of any encumbrance other than any Permitted Security Interest, and further confirms that the Security Interest(s) created or expressed to be created by the Security Documents is valid and enforceable.
(ii)	The Borrower is lawfully possessed of the ownership, use and other interests or rights (including leasehold rights), with respect to the Project Site and on which it purports to grant Security Interest including any special purpose facilities on the Project Site, free of all Security Interests (other than Permitted Security Interest) and confirms that the Project Site is suitable for the location, construction and operation of the Project.
(iii)	There are no encumbrances subsisting or in existence on any of the Borrower’s assets other than any Permitted Security Interest.

16.19	No Subsidiaries or Equity Interest
	Other than as may have been permitted by the Facility Agent, the Borrower has no other subsidiaries and owns no equity interest in any Person other than;

(i)

a subsidiary setting up a power project in the state of Punjab to the extent of Fifty Thousand (50,000) shares having a par value of Rs. 10 (Rupees Ten) per share. Any further investment in this subsidiary whether in the form of subscription to shares, lending monies or otherwise in excess of Rs 5,00,000 (Rupees Five Lakhs),shall not be made, unless: (i) such funds have been invested in the Borrower by the Sponsor through subscription to the Borrower’s Shares; and (ii) prior written consent of the Facility Agent has been obtained; and

(ii)

a company set up to mine coal from the Coal Blocks to the extent of 5,217,432 shares having a par value of Re. 1 (Rupee One) per share.

16.20	Sufficient Funds
	Undisbursed monies in the Accounts, together with the aggregate of: (i) amounts

62

	that are committed but undrawn under the Finance Documents and the Common Rupee Loan Agreement; (ii) Loss Proceeds received by and available to the Borrower; (iii) liquidated damages and other amounts that have crystallised pursuant to the Project Documents; and (iv) without duplication, amounts available under the Sponsor Support Agreement, equal or exceed the amount necessary to pay all Project Costs which have been or may be incurred in connection with the completion of the Project and achievement of Final Completion, including all working capital needs of the Borrower in connection with start-up activities and all interest, fees and other amounts to be paid under the Finance Documents and the Common Rupee Loan Agreement.
16.21	Utility Services
	All utility services necessary for the construction, operation and maintenance of the Project, including but not limited to storm and sanitary sewer, electricity and telephone services and facilities, as are necessary for the Project, are, or will be when needed to be, available to the Project and, to the extent necessary, arrangements in respect thereof have been made on commercially reasonable terms.
16.22	Security

(i)	The Borrower certifies that all Security Documents when executed, delivered and registered (where necessary or desirable) and when appropriate forms are filed as required under Applicable Law, shall create and perfect legal, valid and enforceable Security (including performance of all registrations and filings as may be required and obtaining of all consents required therefor) over the assets referred therein including without limitation a legal, valid and enforceable security assignment of all Project Documents, and all other necessary and appropriate action has been taken so that each such Security Document creates an effective Security Interest on all right, title, estate and interest of the Borrower in the property, assets and revenues of the Borrower covered thereby.
(ii)	Each of the Secured Parties shall have a first ranking charge over all the assets referred to in the Security Documents.
(iii)	The Borrower has not created any Security Interest upon any of its present or future revenues or other assets in favour of any Person other than the Secured Parties nor does it have any obligation to create any Security Interest other than Permitted Security Interest.
(iv)	The Borrower confirms that the Security Interests to be created pursuant to this Agreement or under any Finance Document or at any time created in favour of or for the benefit of the Lender shall be and

63

remain a continuing security to secure the Lender and accordingly shall:

a.	secure the Borrower’s dues under the Finance Documents;
b.	not be discharged by any intermediate payment by the Borrower or any settlement of accounts between the Borrower and the Lender or the Security Trustee;
c.	be in addition to and not in substitution for or derogation of any other security which the Lender or the Security Trustee may at any time hold in respect of the Borrower’s dues/obligations under the Finance Documents; and
d.	be a security for all amounts due and payable by the Borrower for all the sums due by the Borrower to the Lender and its trustees or agents, whether under the Finance Documents or otherwise.

(v) The Security created and indemnities and undertakings given herein and/or by the Security Documents executed in favour of, or for the benefit of the Lender to secure the Facility shall operate as continuing security and/or indemnities and/or undertakings for all monies, indebtedness and liabilities of the Borrower with respect to the Facility and will operate as security and/or indemnities and/or undertaking for the ultimate balance or aggregate balance with interest thereon and costs, charges and expenses, if any, to become payable upon the account(s) to be opened and the said account(s) is/are not closed and is/are not to be considered to be closed for the purpose of such security and/or indemnity and/or undertaking and the security and/or indemnity and/or undertaking is not to be considered exhausted merely by reason of the said account(s) being closed and fresh accounts being opened in respect of any fresh financial assistance being granted within the overall limit sanctioned to the Borrower or either or any of them being brought to credit at any time or from time to time or any partial payments made thereto or any fluctuations of such account(s) and if the whole of the Lender’s dues shall be repaid and the whole of the security be withdrawn the account(s) or either or any of them may nevertheless at any time before such account(s) has or have been closed, be continued under this Agreement upon the security as aforesaid being again furnished.

16.23 Insurance

(i) The Borrower certifies that all its assets over which a Security Interest has been created in favour of the Lender have been insured and the Insurance Contracts have been duly endorsed to the Lender/Security Trustee as loss payees or beneficiaries.

64

(ii) The Borrower confirms that all insurance as per the Insurance Contracts have been put in place at the times and in the manner required herein and are as contemplated herein and are in full force and effect and it has complied with all its obligations under the Insurance Contracts and no event or circumstances has occurred nor has there been any omission to disclose a fact which in any such case would entitle any insurer to avoid or otherwise reduce its liability thereunder to less than the amount provided in the relevant policy and insurance coverage provided by such insurance.

16.24	Intellectual Property
	The Borrower has lawful and valid right to use free and clear of any pending or threatened Security Interest, all patents, patent applications, trademarks, permits, service marks, trade names, trade secrets, proprietary information and knowledge, technology, computer programs, databases, copyrights, licenses, franchises and formulas, or rights (collectively the “Intellectual Property Rights”) with respect thereto necessary for implementation of the Project. The Borrower confirms that all actions (including registration, payment of all registration and renewal fees) required to maintain the same in full force and effect have been taken as and when required. Further, none of the Intellectual Property Rights owned or enjoyed by the Borrower, or which the Borrower is licensed to use, which are material in the context of the Borrower’s business and operations are being infringed nor, so far as the Borrower is aware, is there any infringement or threatened (as evidenced by a notice or receipt of communication in writing) infringement of those Intellectual Property Rights licensed or provided to the Borrower by any Person.
16.25	Project Schedule
	The Project Schedule accurately specifies the work that the counterparties to the Project Documents (for the Scope of Work), propose to complete in each quarter from the First Utilisation Date till Final Completion, all of which can be expected to be achieved for the timely construction of the Project in the manner contemplated by the Transaction Documents.
16.26	No Immunity

(a)	The execution or entering into by the Borrower and the Sponsor of the Finance Documents constitute, and its exercise of its rights and performance of its obligations under the Finance Documents will constitute, private and commercial acts done and performed for private and commercial purposes.
(b)	Each of the Borrower and the Sponsor is not, will not be entitled to, and will not claim any immunity whatsoever for itself or any of its properties, assets, revenues or rights to receive income from any contract, suit, or from the jurisdiction of any court, from execution of a judgment suit, execution, attachment or other legal process in any proceedings in relation to the Transaction Documents.

65

16.27	All Representations and Warranties
	The Borrower confirms that all representations and warranties of the Borrower set forth in the Project Documents are true, complete and correct in all respects at the time as of which such representations and warranties were made or deemed made.
16.28	Capitalisation

(i)

On the date of this Agreement, (i) the authorized capital of the Borrower consists of 3,500,000,000 equity shares of par value Rs. 10 per share and 1,000,000,000 redeemable cumulative convertible preference shares of Rs.10 each; (ii) 1,186,493,500 equity shares and 803,230 redeemable cumulative convertible preferable shares of Rs. 10 each carrying a coupon rate of two per cent (2%) have been issued by the Borrower; and (iii) 1,186,493,440 of such issued equity shares (representing 99.9% of the equity shares issued by the Borrower) is owned by the Sponsor. All of the equity share capital of the Borrower, including the Equity Interest of the Sponsor is duly and validly issued and fully paid.

(ii)

The Borrower does not have outstanding (i) as of the date hereof and as of the First Utilisation Date, any subordinated indebtedness, (ii) any securities convertible into or exchangeable for its Equity Interests except for compulsorily convertible preference shares to the extent of the Twinstar Preference Shares or (iii) other than as set forth in the Sponsor Support Agreement, any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements, arrangements or understandings providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its Equity Interests.

16.29 Transaction Documents

16.29.1 (i) The Borrower has, or by the First Utilisation Date will have, duly executed and delivered each of the Transaction Documents to which it is a party other than those Transaction Documents for the execution of which different time periods have been provided for in this Agreement, and each of such Transaction Documents constitutes or, when executed and delivered, will constitute, its legal, valid and binding obligation enforceable without any further action being required with respect to such documents on the part of the Secured Parties or the Facility Agent.

(ii) The Facility Agent has received a true, complete and correct copy of each of the Transaction Documents in effect or required to be in effect as of the date this representation is made or deemed made (including all exhibits, schedules, side letters and disclosure letters referred to therein or delivered pursuant thereto, if any).

66

16.29.2	The services to be performed, the materials to be supplied and the easements, licenses and other rights granted or to be granted to the Borrower pursuant to the terms of the executed Transaction Documents provide or will provide the Borrower with all rights and property interests required to enable the Borrower to obtain all services, materials or rights (including access) required for the design, construction, start-up, operation and maintenance of the Project, including the Borrower’s full and prompt performance of its obligations, and full and timely satisfaction of all conditions precedent to the performance by others of their obligations, under the Project Documents, other than those services, materials or rights that reasonably can be expected to be obtained in the ordinary course of business without material additional expenses or material delay.
16.29.3	All conditions precedent to the obligations of the respective parties under all executed Project Documents have been satisfied as of the date of this Agreement or will be satisfied when required or, with the written consent of the Facility Agent, waived, except where the effectiveness of this Agreement is the only condition remaining unperformed for the effectiveness of such Project Document.
16.30	True and Complete Disclosure
16.30.1	The Borrower certifies that the Financial Statements of the Borrower delivered to the Facility Agent are accurate in all respects as of the date of such statements.
16.30.2	The Borrower certifies that all information whether in writing, electronic form or otherwise or documents furnished to the Secured Parties or the Facility Agent or any representatives of the Secured Parties or the Facility Agent in connection with the transaction contemplated hereby, by or on behalf of the Borrower is true, correct and complete in all respects on the date hereof, and is not false or misleading in any respect nor incomplete by omitting to state any fact necessary to make such information not misleading in any respect. No fact is known to the Borrower which could be expected to have a Material Adverse Effect which has not been disclosed in writing to the Facility Agent and the Secured Parties prior to the execution of this Agreement.
16.31	Purpose of the Company
	The Borrower is not engaged in any business or trade nor has incurred any liabilities other than in connection with its participation in the transactions contemplated by the Transaction Documents and other than holding the shares of a company engaged in setting power project in state of Punjab and Rampia Coal Mine and Energy Private Limited.
16.32	Expenses prior to Financial Close
	The Borrower agrees that all preliminary, preoperative and development expenses

67

	incurred by the Borrower prior to Financial Close shall be accounted as part of Project Cost only to the extent certified by the Lenders Engineer/ Auditor or any other person required by the Lender and as accepted by the Lender.
16.33	Fees and Enforcement
16.33.1	Except for fees and Taxes that have been paid in full or will have been paid in full on or by the date when such fees and Taxes are due, or any fees and Taxes Contested in Good Faith, no fees or Taxes are required to be paid for the legality, validity or enforceability of the Transaction Documents.
16.33.2	This Agreement and each of such Transaction Documents executed and delivered as of the date of this representation is made or deemed made are each in proper legal form: (i) under Applicable Law; and (ii) for the enforcement thereof in the applicable jurisdiction without any further action on the part of the Facility Agent or any Secured Party.
16.34	Budgets and other Items
16.34.1	The Construction Budget accurately specifies all costs and expenses previously incurred and the Borrower’s best estimate of all costs and expenses anticipated to be incurred in order to achieve Final Completion in accordance with the timetable set out in the Project Schedule, all as confirmed by the Lenders Engineer.
16.34.2	All projections and budgets, including the projections of revenues and expenses contained in the initial Operating Budget, the Base Case and the Project Schedule furnished or to be furnished to the Lender or the Facility Agent by the Borrower and the summaries of significant assumptions related thereto: (i) have been and will be prepared with due care; (ii) will present, in all respects, the Borrower’s expectations as to the matters covered thereby as of such date; (iii) are based on, and will be based on all factual matters in respect of the estimates therein (including dispatch levels, interest rates and costs); (iv) are and will be in all respects consistent with the provisions of the Transaction Documents and Applicable Law; and (v) are prepared on a basis consistent with the Financial Statements referred to in this Agreement. There are no statements, assumptions or conclusions in any of the projections or budgets which are based upon or include information known to the Borrower to be misleading or which fail to take into account information regarding the matters reported therein.
16.35	Transactions with Affiliates
	The Borrower is not a party to any contracts or agreements with, nor has any other commitments to any of its Affiliates other than:

(i) contracts or agreements which have been entered into on an arm’s length basis; or

68

(ii)	contracts or agreements that are permitted to be entered into with Affiliates under this Agreement; or
(iii)	as may have been permitted by the Facility Agent, and a copy of which contract or agreement has been provided to the Facility Agent.

16.36	No Other Powers of Attorney
	The Borrower has not executed and delivered any powers of attorney or similar documents, instruments or agreements, or made arrangements except for those issued under the Security Documents and the powers authorizing modification, amendments or signatures of the Transaction Documents, other than in the ordinary course of business.
16.37	Investments
	Other than: (i) Permitted Investments; (ii) any investments permitted by the Facility Agent; and (iii) the equity interests held by the Borrower in a company engaged in setting power project in state of Punjab and to the extent of Rs. 5,00,000 (Rupees Five Lakhs) and Rampia Coal Mine and Energy Private Limited to the extent of Rs. 52,17,432 (Rupees Fifty Two Lakhs Seventeen Thousand Four Hundred and Thirty Two), the Borrower has not acquired an equity interest in, loaned money, extended credit or made deposits with or advances (other than deposits or advances in relation to the payment for goods and equipment the making of which is expressly contemplated pursuant to the Project Documents) to any Person or purchased or acquired any stock, obligations or securities of, or any other interest in, or made any capital contribution to, or acquired all or substantially all of the assets of, any other Person, or purchased or otherwise acquired (in one or a series or related transactions) any part of the property or assets of any Person (other than purchases or other acquisitions of inventory of materials or capital expenditures, each in accordance with the Construction Budget or the applicable Operating Budget, as the case may be).
16.38	Accounts
	The most recent Audited Annual Financial Statements of the Borrower delivered to the Facility Agent/ Lender:

(i)	have been prepared in accordance with accounting principles and practices generally accepted in India, consistently applied; and
(ii)	represent a true and fair view of its financial condition as at the date to which they were drawn up,

and there has been no Material Adverse Effect since the date on which those accounts were drawn up.

69

CLAUSE 17 — INFORMATION UNDERTAKINGS

17.	INFORMATION UNDERTAKINGS
	The undertakings in this Clause 17 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or (if later) until the Commitment has been cancelled in accordance with Clause 5.7 (Cancellation of Commitment by the Lender).
17.1	“Know your customer” checks
	If:

(i)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)	any change in the status of the Borrower after the date of this Agreement; or
(iii)	a proposed assignment or transfer by the Lender of any of its rights and obligations under this Agreement,

	obliges the Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Lender, supply or procure the supply of such documents and other evidence as is reasonably requested by the Lender, or any prospective New Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all Applicable Law pursuant to the transactions contemplated in the Finance Documents.
17.2	Other Information to be Provided
	Within five (5) Business Days after any officer of the Borrower obtains knowledge thereof, the Borrower shall provide notice to the Facility Agent (and upon occurrence of an Event of Default or a Potential Event of Default, to the Lender), by facsimile, of the following:

(a)	any event which constitutes a Potential Event of Default or Event of Default, specifying the nature of such Potential Event of Default or Event of Default and any steps the Borrower is taking and proposes to take to remedy the same;
(b)	an event that may delay completion of the Project, material work stoppages or design changes under the Project Documents, scarcity or unavailability of any material or

70

	equipment or an event that permits, or, with the passage of time, would permit the Borrower or any other party to claim relief on account of Force Majeure;
(c)	any event, circumstance or condition constituting, or which the Borrower either believes, has claimed or will claim to constitute a “Change in Law” under the PPA, together with copies of all notices, calculations and other correspondence between the Offtaker(s) and the Borrower pursuant to such Clause;
(d)	any event of Force Majeure affecting, or which either the Borrower or any other Material Project Participant claims would affect, the performance by such Person of any obligation under any Transaction Document, together with copies of all notices, calculations, data and other correspondence between such Material Project Participant and the Borrower in respect of any such event, circumstance or condition;
(e)	any notice of any application for winding up having been made or receipt of any statutory notice of winding up under the provisions of the Companies Act or any other notice under any other Applicable Law or otherwise of any suit or legal process shall have been filed or initiated against the Borrower and affecting the title to the property of the Borrower or if a receiver is appointed over any of the properties or business or undertakings of the Borrower;
(f)	any one or more events, conditions or circumstances (including any event of Force Majeure or any on-going or threatened labour strikes, lockouts, shutdowns, slowdown or work stoppage by the Borrower’s, or the Offtaker’s employees or employees of any counterparty to a Project Document or any scarcity or unavailability of materials or equipment or fire or other similar event) that exist or have occurred that has, had or could reasonably be expected to have a Material Adverse Effect;
(g)	any Legal Proceeding pending or threatened (as evidenced by a notice or receipt of communication in writing): (a) against the Borrower; or (b) with respect to any Transaction Document;
(h)	any proposal by any Governmental Agency to acquire compulsorily the Borrower, any of the Security or any part of the Borrower’s business or assets (whether or not constituting an Event of Default hereunder or under the PPA);

71

(i)	any dispute between the Borrower and any Material Project Participant or between the Borrower or any Material Project Participant and any Governmental Agency in each case relating to the Project;
(j)	any change in the Authorized Officers, giving certified specimen signatures of any new officer so appointed and, if requested by the Facility Agent, satisfactory evidence of the authority of such new officer;
(k)	any actual or proposed termination, rescission, discharge (otherwise than by performance), amendment or waiver under, any provision of any Transaction Document or the existence of any event or condition which permits, or, with the passage of time, would permit, the Borrower to serve a termination notice under any Project Document;
(l)	any notice, document, Clearance, authorisation, amendment to any Transaction Document or correspondence received or initiated by the Borrower relating to the Project necessary for the performance of its obligations or any other Material Project Participant’s, obligations under the Transaction Documents;
(m)	any Security Interest (other than a Permitted Security Interest) being granted or established or becoming enforceable over any of the Borrower’s assets;
(n)	any proposed material change in the design, nature or scope of the Project or any change in the business or operations of the Borrower;
(o)	any event, circumstance or condition which requires, or which the Borrower believes or which the Offtaker(s) has claimed requires, pursuant to the PPA, an amendment to the provisions of the PPA or the tariff provided for in the PPA on the basis that the tariff determined under the PPA is not in compliance with the Electricity Act, 2003 and Applicable Law;
(p)	the institution or commencement of any dispute under the PPA, together with copies of all notices, calculations, data and other correspondence between the Offtaker and the Borrower in respect of such institution or commencement;
(q)	any notice received by the Borrower purporting to cancel or alter the terms of any Insurance Contract (including any

72

	notification of any premium increase therefor);
(r)	any: (i) fact, circumstance, condition or occurrence at, on, or arising from the Project Site that results in non compliance with any Applicable Law and constitutes a Material Adverse Effect; and (ii) pending or threatened (as evidenced by a notice or receipt of communication in writing) environmental claim against the Borrower, or any of the Borrower’s contractors or lessees arising in connection with their occupying or conducting operations on or in relation to the Project or the Project Site;
(s)	copies of any data relative to the performance of any tests under any Project Document;
(t)	any accident resulting in loss of life of any employee of the Borrower or any counterparty to any Project Document occurring at the Project Site or otherwise arising in India, in each case in connection with the Project;
(u)	the occurrence of any event in connection with the reorganisation of the Offtaker or the State of Orissa which has an impact on the rights and obligations of the Borrower under the PPA;
(v)	any representation, warranty, covenant or condition under the Finance Documents being or becoming untrue or incorrect in any respect;
(w)	the occurrence of any event with respect to which any insurance has been obtained under the Insurance Contracts, and any loss or damage suffered as a result of such event to the assets of the Borrower;
(x)	any circumstances affecting the financial position of the Borrower, the Sponsor, the Borrower’s subsidiaries or companies in which the Borrower has been permitted to have large investments, including any action or Legal Proceedings commenced by any creditor of such entities; and
(y)	any change in the authorised signatories of the Borrower, signed by a director or the secretary of the Borrower, whose specimen signature has previously been provided to the Lender, accompanied (where relevant) by a specimen signature of each new signatory.

73

17.3	Required Information and Data
	In order to inform the Lender about the physical progress as well as provide evidence to the Lender that the expenditure incurred on the Project is in accordance with the Project Schedule, the Borrower shall provide to the Facility Agent or to the Lender all relevant information and data as may be required by the Facility Agent including certification from the Lenders Engineer/Auditor regarding completion of the Project. The Borrower shall also ensure that the physical progress of the development of the Coal Blocks is proceeding in accordance with the schedule provided to the Lender and provide all relevant information and data as may be required by the Facility Agent in relation thereto. While delivering copies of documents, materials and information required to be delivered under the Finance Documents and this sub-Clause, the Borrower shall deliver such number of copies of all documents, materials and information as is sufficient for onward delivery to the Lender.
17.4	Construction Schedule Milestone Dates
	Within five (5) Business Days, the Borrower shall certify to the Facility Agent (such certification to be confirmed by the Lenders Engineer) of the occurrence of each of: (i) the Date of Commercial Operation for each Unit and Project COD; (ii) Final Completion; (iii) any change in the scheduled Date of Commercial Operations of any Unit; and (iv) the date on which the Borrower proposes to take over each Unit of the Project pursuant to the Project Documents prior to scheduled synchronisation date of any Unit of the Project.

74

CLAUSE 18 — GENERAL UNDERTAKINGS

18.	GENERAL UNDERTAKINGS
	The undertakings in this Clause 18 remain in force from the date of this Agreement until the Final Settlement Date.
18.1	Project Implementation and Use of Proceeds
	The Borrower shall:

(i) use the Facility granted under this Agreement only towards all overseas payments required to be made for the purpose of import / purchase of Equipment and Machinery from the Suppliers and together with the Facility under this Agreement use the proceeds of the Rupee Loan only to pay the Project Costs, in accordance with the Finance Documents, and in particular, the proceeds of the Finance Documents shall not be used for the following:

(a)	subscription to or purchase of shares/debentures and investment in real estate;
(b)	repayment of dues of Affiliates, promoters/associate concerns/inter-corporate deposits, etc.;
(c)	for extending loans/facilities to subsidiary or associate companies or for making any inter-corporate deposits; and
(d)	for any speculative purposes.

(ii)

carry out the Project and conduct its business as per prudent industry standards and accepted industry practices and with due diligence and efficiency and in accordance with generally acceptable construction, engineering, financial and business practices and, prior to Final Completion in accordance with the Construction Budget and shall achieve Project COD by the end of twenty one (21) months from Financial Close or June 30, 2010, whichever is earlier, unless otherwise permitted by the Lender; and

(iii)

cause the construction of the Project to be executed and completed with due diligence and continuity (except for interruptions due to events of Force Majeure which the Borrower will use all efforts to mitigate), in accordance with generally accepted construction and engineering practices.

75

18.2	Inspection
	The Borrower, at reasonable intervals, will permit officers and designated representatives of the Lender to carry out technical, legal, or financial inspections and visit and inspect during normal business hours, any of the properties of the Borrower, including the Project, Plant, installations, Project Site, Project facilities, equipments, records, documents, works, Project Site and buildings on the Project Site and to examine and make copies of the books of record and accounts of the Borrower and discuss the affairs, finances and accounts of the Borrower with, and be advised as to the same, by its officers. The Borrower shall provide full assistance and co-operation to the Lender or the Facility Agent. The cost of any such visit shall be borne by the Borrower. Provided that upon the occurrence of an Event of Default or a Potential Event of Default: (a) the Lender or any of its officers and representatives may carry out the aforementioned inspections as often as may be required by them; and (b) no notice shall be required to be given to the Borrower under this Clause 18.2.
18.3	Books, Records and Inspections, Accounting and Audit Matters
18.3.1	The Borrower will properly keep such records as are required to be maintained under Applicable Law and the Transaction Documents and such accounts as are adequate to reflect truly and fairly the financial condition and results of operations of the Borrower (including the progress of the Project) which shall contain full, true and correct entries in conformity with GAAP consistently applied and all requirements of Applicable Law, and will not radically change its accounting policy/system without prior approval of the Lender. Provided that the Borrower may, upon informing the Lender of the same, keep records and maintain accounts in conformity with IFRS.
18.3.2	In the event that auditors acting as the Auditors cease acting as the auditors for the Borrower for any reason, the Borrower shall promptly inform the Facility Agent of the reasons for such cessation and shall appoint in accordance with Applicable Laws and maintain as its Auditors, another firm of independent chartered accountants, approved by the Board and shareholders and under intimation to the Facility Agent.
18.4	Additional Documents, Filings and Recordings
18.4.1	The Borrower shall execute and deliver, from time to time but in no event later than fifteen (15) days, or such additional time as may be permitted by the Facility Agent, from the request made by the Facility Agent, at the Borrower’s expense, such other documents as the Lender may request in connection with its rights and remedies granted or provided for by the Transaction Documents and to consummate the transactions contemplated therein.
18.4.2	The Borrower will do all such acts necessary to: (i) create, perfect and maintain the Security in full force and effect at all times (including the priority thereof); and (ii) preserve and protect the Security and protect and enforce its rights and title,

76

	and the rights and title of the Lender, to the Security.
	Provided further that the Borrower shall pay on demand to the Lender, all reasonable and actual costs incurred by their legal counsel/ company secretaries/ advisors in connection with creation and registration of security, certification of charge thereof with the registrar of companies, compilation of search/ status reports or other similar matters.
18.5	Financing Fees
	The Borrower shall pay all financing fees and charges due and payable in relation to the Agreement to the Lender on the Due Dates as specified hereunder.
18.6	Transaction Documents
18.6.1	The Borrower shall comply in all respects with the provisions of the Transaction Documents.
18.6.2	The Borrower shall ensure that each of the Transaction Documents is maintained in full force and effect. Provided that:

(i)	the PPA (other than the GRIDCO PPA) or other sale arrangements satisfactory to the Lender for the offtake of power from the Project for maintaining a minimum DSCR of 1.1 shall be executed on or before a date which is six (6) months prior to Project COD;
(ii)	the PPA (other than GRIDCO PPA) or other sale arrangement(s) for the offtake of the balance power generation capacity of the Project on a merchant basis shall be executed on or before a date which is two (2) months prior to Project COD;
(iii)	Transaction Documents required for the purpose of making firm and suitable arrangements for transmission and evacuation of power from any Unit shall be executed on or before a date which is six (6) months prior to the Date of Commercial Operation of such Unit;
(D)	Fuel Supply Agreements and Coal Transportation Agreements required for meeting the coal requirements of any Unit (other than the first Unit, for which, Fuel Supply Agreements and Coal Transportation Agreements are required to be executed prior to the First Utilisation Date) including obtaining necessary approvals from the Railways and other authorities and arranging for coaches/railway wagons for transportation of the coal till the Project Site from any Unit (other than the first Unit) shall be executed on or before a date which is six (6) months prior to the Date of Commercial Operation of each Unit (other than the first Unit); and
(E)	Transaction Documents required for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of

77

Orissa, or any other Person (which will be reviewed by the Lenders Engineer) shall be executed on or before June 30, 2009.

18.6.3	The Borrower shall not enter into or further execute any new agreement having a value over Rs. 10,00,00,000 (Rupees Ten crores) in relation to the Project with any Person, unless such agreement is approved by the Facility Agent.
18.6.4	The Borrower shall, in a manner satisfactory to the Lender, carry out necessary changes and modifications as are required by the Lender or are recommended by the Lenders Counsel, Lenders Engineer and Lenders Insurance Consultant and deemed necessary by the Lender to be made to the Transaction Documents, executed prior to or after the date of this Agreement, arising out of any due diligence conducted by them or otherwise.
18.6.5	Upon occurrence of an Event of Default or a Potential Event of Default, the Borrower agrees to take such actions under the Project Documents, as may be directed by the Lender.
18.6.6	With respect to any Transaction Documents executed after the date of this Agreement, the Borrower shall deliver to the Facility Agent copies thereof, together with a certificate of the Borrower to the effect that each of such Transaction Documents are true, correct and complete in all respects, and in full force and effect.
18.7	Security
18.7.1	The Loan together with all fees, costs, charges, expenses and all amounts payable to the Secured Parties under the Finance Documents shall be secured by the following:

(1) a first ranking charge / Security Interest through the execution of the Deed of Hypothecation in favour of the Security Trustee, in respect of:

(i)	all the Borrower’s movable fixed properties and assets for the Project, both present and future;
(ii)	all tangible and intangible assets including but not limited to the goodwill, undertaking and uncalled capital of the Borrower for the Project;
(iii)	all of the operating cash flows, commissions, revenues of whatsoever nature and wherever arising, present and future pertaining to the Project and all revenues and receivables of the Borrower from the Project;
(iv)	all the Borrower’s accounts, (including but not limited to the Account and the Permitted Investments) for the Project and each of the other accounts required to be created by the Borrower for the

78

Project under any Transaction Document, including without limitation, the Trust and Retention Accounts Agreement; including in each case, all monies lying credited/deposited into such accounts;

(2)	an undertaking by the Sponsor for non-disposal of 51% of the total, issued and paid up Shares of the Borrower held by them.
	The Security over assets comprised in items (1) and (2) above shall be collectively referred to as the “Initial Security”.
(3)	a first ranking charge/Security Interest through the creation of a mortgage in favour of the Security Trustee, in respect of:

(i)	all the Borrower’s immovable properties both present and future for the Project;
(ii)	assignment of all of the Borrower’s rights, titles and interest in respect of the assets and its rights to the Project under each of the Project Documents, duly acknowledged and consented to, where required, by the relevant counter-parties to such Project Documents, all the Borrower’s rights under each letter of credit/guarantee or performance bond that may be posted by any party to a Project Document for the Borrower’s benefit and all the Borrower’s rights under the Clearances (including all contract, licences, permits, approvals, concessions and consents in respect of or in connection with the Project, to the extent assignable under Applicable Law); and
(iii)	all the Insurance Contracts (and cut through clauses in respect of, or assignments of reinsurances, as applicable) naming the Security Trustee as an additional insured/sole loss payee (as may be required by the Lender);

(4)	a first ranking pledge in respect of 51% of the total, issued and paid up shares of Rampia Coal Mine and Energy Private Limited held by the Borrower through the execution by the Borrower of a Share Pledge Agreement in favour of the Security Trustee (the “Pledge”);
	The Security over assets comprised in items (3) and (4) above shall be collectively referred to as “Subsequent Security”.
	The Initial Security and Subsequent Security shall be collectively referred to as the “Security”.
	Provided land/right of way and immoveable/moveable assets for the transmission line of 235 km up to Meramandali shall not be included within the Security created/to be created for the Lender.

79

18.7.2	Each of the Security Documents and the Security Interest over the assets created thereunder in favour of the Security Trustee for the benefit of the Lender shall be in full force and effect.
18.7.3	The Borrower shall create and perfect the Initial Security prior to the First Utilisation Date under this Agreement and the Subsequent Security on or prior to a date which is the earlier of: (a) a date which is three (3) months prior to the Date of Commercial Operations of the first Unit of the Project; and (b) a date which is six (6) months from the First Utilisation Date. Provided that the Pledge, specified in Clause 18.7.1(4) above shall only be required to be created and perfected prior to the Coal Investment JV Utilisation and if the Borrower acquires any immovable property or any interest in immovable property for the Project, it shall promptly create the Security over such immovable property within thirty (30) days of the date of acquisition of such property.
18.7.4	The Borrower shall have obtained written consent of the relevant parties for creation, perfection and maintenance of the Security required hereunder.
18.7.5	The Borrower hereby undertakes to create such additional security as may be required by the Lender and execute such further documents and agreements as may be required for this purpose in case the Security provided by the Borrower has in the opinion of the Facility Agent/ Lender become inadequate due to any reason whatsoever. The creation and perfection of Security by the Borrower shall be to the satisfaction of the Lenders’ Legal Counsels.
18.7.6	The Lender/Facility Agent reserves the right to modify the Security requirements stated in this Clause 18.7 prior to execution of all the Finance Documents. Provided that if the Facility Agent in its opinion decides that certain conditions materially affecting the security structure have not been met even after execution of all the Finance Documents, then the Facility Agent reserves the right to modify the security structure, after consultation with the Borrower, after execution of all the Finance Documents until Financial Close and the Borrower shall at its own costs, do all acts, deeds and things as may be necessary to create and perfect the Security in terms of the revised security structure, to the satisfaction of the Facility Agent.
18.7.7	So long as any monies remain due and outstanding to the Lender, the Borrower undertakes to promptly notify the Lender in writing of all its acquisitions of immovable properties.
18.7.8	The Borrower shall be required to obtain a no objection certificate from an Authorised Dealer or the RBI for the purpose of creation of Security over its assets in favour of the Lender as required under Applicable Law.

80

18.8 Opening of Account

(a)	The Borrower shall have provided evidence to the Facility Agent of having established the Account in accordance with the provisions of the Trust and Retention Account Agreement.
(b)	The Borrower hereby agrees and undertakes that any/all amounts in the Accounts shall be utilised and/or transferred to any other account in such manner as specified in the Trust and Retention Account Agreement.

18.9	Auditor’s Certificate
	The Borrower agrees and undertakes that, it shall submit to the Facility Agent, within a period of thirty (30) days from every Auditor’s Certificate Provision Date, a certificate from the Auditors certifying that:

(i) the proceeds of all Utilisations that have occurred:

(a)	as on the first Auditor’s Certificate Provision Date, from the First Utilisation Date till the first Auditor’s Certificate Provision Date, and
(b)	thereafter, from the previous Auditor’s Certificate Provision Date till the next Auditor’s Certificate Provision Date,

	have been utilized only for the purpose of paying Project Costs; and
(ii)	the Required Equity, required to have been brought in as on the Utilisation Date(s) that have occurred since the previous Auditor’s Certificate Provision Date (and in the case of the first Auditor’s Certificate Provision Date, since the First Utilisation Date) has been brought in.

18.10	Progress Reports
	The Borrower agrees and undertakes that it shall submit progress reports to the Facility Agent in a form and manner satisfactory to the Facility Agent every three (3) months, and upon occurrence of an Event of Default or Potential Event of Default, as and when required by the Lender.
18.11	Project Management; Operation & Maintenance
	The Borrower agrees and undertakes to make arrangements satisfactory to the Facility Agent, in consultation with the Lenders Engineer, for project management and operation and maintenance of the Project, including but not limited to:

(a) constitution of a project management committee consisting of

81

	directors/senior executives of the Borrower to monitor and supervise the implementation of the Project (including project management and operation and maintenance of the Project) till the Final Settlement Date (the “Project Management Committee”); and
(b)	making arrangements satisfactory to the Lender so as to be in a ready stage for operation and maintenance of the Project at least six (6) months prior to Date of Commercial Operations of the first Unit of the Project.

	The Facility Agent, and after the occurrence of an Event of Default or a Potential Event of Default, the Lender, shall have the right to seek appropriate information from the Project Management Committee whenever required by them.
18.12	Environment and Social Monitoring and Review
18.12.1	The Borrower shall provide the necessary information to the Facility Agent and bear the costs of conducting a periodic Environment and Social Monitoring and Review (the “ESMR”), by a consultant appointed by the Facility Agent (the “Environmental Consultant” or “EC”), if so required by the Facility Agent. The Borrower shall also provide the EC with information necessary for conducting such ESMR at such intervals as the EC may deem fit. The Borrower shall also forward to the Facility Agent, copies of the EC’s report or any relevant internal reports or annual/other periodical reports on the environmental and social status and performance of the Project and its operations and shall carry out such acts as recommended by the EC, to the extent such recommendations are required by the Lender and are not contrary to Applicable Law, and bear the costs of the same, including any increase in Project Costs.
18.12.2	Without prejudice to the Borrower’s obligations under this Agreement, the Borrower shall at all times during the currency of the assistance, comply with the provisions of Applicable Law and Clearances with respect to environmental, health, safety and social requirements of the Project, and shall maintain documents to be able to demonstrate compliance with the same, and shall take all necessary steps to well in time so as to ensure smooth functioning of the Project to the satisfaction of the Lender till Final Settlement Date.
18.13	Project Costs
18.13.1	All expenditure undertaken for the Project under this Agreement shall be in accordance the Estimated Project Cost as per Schedule 8 and the Construction Budget as per Schedule 11, and in case of any savings in the expenditure, the Lender and the Rupee Lenders shall have the right to cancel their unavailed commitments proportionately.
18.13.2	The Lender has a right to review the Project Costs and means of finance before the Project COD and Final Completion to ensure that they are in conformity with the Construction Budget and stipulate relevant conditions, as deemed necessary after consultation with the Borrower.

82

18.3.3.	In the event of a reduction in Project Cost on account of any savings on account of duties/other taxes, price negotiations or otherwise, there would be a pro-rata reduction in all components of means of finance. With respect to the Facility and the Rupee Loans, the reduction shall be from the unavailed portion of their commitment.
18.14	Financial Statements of the Borrower and Sponsor
18.14.1	As soon as available, but in any event within one hundred and eighty (180) days after the close of each Fiscal Year, copies of the Audited Annual Financial Statements of the Borrower and of the Sponsor in each case prepared in accordance with generally accepted accounting principles applicable in its jurisdiction of incorporation consistently applied and, if unaudited, certified by an Authorized Officer of Borrower or the Sponsor shall be provided to the Facility Agent, with a copy to each of the Secured Parties.
18.14.2	In addition to Clause 18.14.1, the Borrower and the Sponsor shall furnish copies of their Quarterly Financial Statements as and when the Facility Agent requires them.
18.15	Management/ Key Personnel
18.15.1	The Borrower shall from time to time upon the Facility Agent’s direction reconstitute the Board to induct professionals satisfactory to the Facility Agent and nominees of the Lender, in accordance with the provisions of Schedule 12 (Nominee Director), and shall strengthen its Management to the satisfaction of the Lender, in conformity with the principles of corporate governance set out in the Companies Act and will constitute such committees and sub- committees of the Board of Directors as required under the Companies Act to adhere to the principles of the corporate governance, including but not limited to such professionals, committees and sub-committees as are specified in this Clause 18.15.
18.15.2	Prior to the First Utilisation Date and till Final Settlement Date, the Borrower shall constitute and maintain the Project Management Committee referred to in Clause 18.11 (Project Management: Operation and Maintenance). The responsibilities of such committee shall be satisfactory to the Facility Agent and shall include, without limitation, management of the Project during construction, civil engineering, placement of orders for supply of Plant, and other assets, and oversight of operation and maintenance of the Project. The Borrower shall make, at a reasonable period of time prior to the Project COD, adequate arrangements for the operation and maintenance of the Project, which arrangements shall be reviewed by the Lenders Engineer and shall be to the Lenders Engineer’s satisfaction. The Lender shall have the right to seek appropriate information from the Project Management Committee.
18.15.3	Prior to the First Utilisation Date and till Final Settlement Date, the Borrower

83

	shall constitute and maintain at all times an audit sub-committee, each comprised of appropriate directors of the Borrower, satisfactory to the Facility Agent. The responsibilities of such audit sub-committee shall be satisfactory to the Facility Agent and shall include close monitoring of the Borrower’s operations and its compliance with corporate governance.
18.15.4	The Borrower shall to the satisfaction of the Facility Agent, appoint and/or change technical, financial and executive personnel (including auditors and/or management personnel) of proper qualifications and experience for the key posts and the Borrower shall ensure that its organizational set-up is adequate enough to ensure smooth implementation and operation of the Project.
18.15.5	The terms and conditions for appointment of the managing director of the Borrower or any other Person holding substantial powers of management shall be in accordance with good industry practices and Applicable Law and such Person shall only receive such remuneration as is permissible under the Companies Act.
18.15.6	In the event that the name of any of the directors on the Board of Directors of the Borrower appears in the list of wilful defaulters issued by the Reserve Bank of India (“RBI”) or the Credit Information Bureau (India) Limited (“CIBIL”), the Borrower shall forthwith remove such director from its Board of Directors or cause his name to be deleted from RBI/CIBIL list of wilful defaulters.
18.16	Clearances
	The Borrower will, in a timely manner, obtain and maintain, or cause to be obtained and maintained, in full force and effect (or where appropriate, renew) all Clearances required for the purposes of the transactions as contemplated by the Transaction Documents, provided that:

(A)	Clearances required for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person (which will be reviewed by the Lenders Engineer) shall be required to be obtained on or before June 30, 2009;
(B)	Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India shall be required to be obtained on or before June 30, 2009; and
(C)	environmental Clearances from the Government of Orissa/other statutory bodies with respect to any Unit shall be required to be obtained on or before a date which is six (6) months prior to the Date of Commercial Operation of such Unit, provided that with respect to the first Unit, such environmental Clearances shall be obtained on or before a date which is three (3) months prior to the Date of Commercial Operation of the first Unit.

84

18.17	Accounts
18.17.1	The Borrower shall deposit all the cash inflows of the Project, including any transmission line charges recovered for wheeling of power for OPTCL/other bulk suppliers/power transmission company, in the Account as specified in the Trust and Retention Account Agreement and ensure that the reserves required to be maintained in accordance with the Trust and Retention Account Agreement are maintained.
18.17.2	The Borrower shall utilise the Project Proceeds in a manner and priority as agreed to in the Trust and Retention Account Agreement.
18.18	Maintenance of Property; Site Security
18.18.1	The Borrower will keep all its property and assets in good working order and condition.
18.18.2	The Borrower shall maintain title to or its interest in all of its property and assets and shall take all actions necessary to create and perfect at all times, freehold rights in the Project Site and shall take all actions necessary to create and perfect at all times its interest in all its other assets, at the times, and in the manner contemplated in this Agreement.
18.19	Maintenance of Property and Insurance
18.19.1	The Borrower will keep the Plant, the Project Site and all other assets of the Borrower over which a Security Interest has been or shall be created in favour of the Security Trustee for the benefit of the Lender, insured with financially sound and reputable insurers satisfactory to the Facility Agent and on terms and conditions satisfactory to the Facility Agent.
18.19.2	The Borrower will cause the Major Project Parties performing any services in connection with the engineering, procurement or construction of the Project each to keep the insurance described in, and fulfil all obligations set forth in, the Major Project Documents with financially sound and reputable insurers satisfactory to the Facility Agent against loss or damage in such manner and to the same extent as so described.
18.19.3	The Borrower will submit to the Facility Agent a certificate, from the Borrower indicating the properties insured, the type of insurance, amounts and risks covered, names of the beneficiaries, expiration dates, names of the insurers and special features of all insurance policies already obtained by it, and shall within twenty (20) days after the effective date of any new or renewed insurance policy, as provided in Clause 18.19.1 above submit a similar certificate to the Facility Agent with respect to such new or renewed insurance policy, such policies to be

85

	in form and substance, and issued by companies satisfactory to the Facility Agent in consultation with the Lenders Insurance Consultant.
18.19.4	The provisions of this Clause 18.19 shall be regarded as supplemental to, but not duplicative of, the provisions of any of the Security Documents that require the maintenance of insurance. In the event that any insurance whatsoever is purchased, taken or otherwise obtained by the Borrower with respect to the Project other than as required hereunder or if not properly endorsed to the Lender/Security Trustee as the loss payees or beneficiaries as required under the provisions of this Agreement, such insurance shall be considered assigned hereunder to the Lender/Security Trustee with the right of the Lender/Security Trustee to make, settle, compromise and liquidate any and all claims thereunder, without prejudice to the exercise of any other rights and remedies that the Lender/Security Trustee may have under any of the Finance Documents, or under any Applicable Law.
18.19.5	The Borrower shall duly pay all premia and other sums payable for the aforesaid purpose, at least thirty (30) days prior to the shipment in respect of the Project. The insurance in respect of the assets charged/to be charged to Lender shall be suitably endorsed in favour of the Security Trustee/ Lender. In the event of failure on the part of the Borrower to insure the assets or to pay the insurance premia or other sums referred to above, any Secured Party may get the assets insured or pay the insurance premia and other sums referred to above, as the case may be.
18.19.6	If any Secured Party shall pay any insurance premiums on behalf of the Borrower in respect of any insurance policies required to be obtained by the Borrower hereunder, the amounts paid shall be immediately reimbursed to the Secured Party without requirement of any notice of any kind and without reference to any dispute or controversy which the Borrower may have with the insurance provider or the Lenders Insurance Consultant and all such amounts shall till payment thereof remain due and payable to such Secured Party by the Borrower and till repayment, all unpaid amounts shall carry interest as provided in Clause 8.5 (Default Interest) hereof.
18.20	Working Capital Arrangements
	Prior to the Project COD, the Borrower shall have made satisfactory arrangements for obtaining working capital facilities in accordance with the Base Case.
18.21	Project Documents
	The Borrower shall prepare and submit to the Facility Agent, to the satisfaction of the Facility Agent, in consultation with the Lenders Engineer, a schedule for finalisation and execution of the Project Documents for the Project in accordance with the Project Schedule as confirmed by the Lenders Engineer. Provided that in the event of occurrence of an Event of Default or a Potential Event of Default, the said schedule shall be provided to the Lender.

86

18.22	Financial Covenants
18.22.1	From Project COD onwards at all times during the term of the Loan, the Borrower shall maintain the following financial covenants:

(i)	Total Debt Gearing shall be maintained at 3.0:1; or lower
(ii)	Debt Service Coverage Ratio shall be maintained at 1.30; or higher and
(iii)	Security Margin shall be maintained as per the Base Case.

18.22.2	If the Borrower defaults or fails to comply with any of the covenants in Clause 18.22.1 (i), (ii) and (iii), the Borrower shall pay additional interest of two per cent (2%) per annum over and above the Interest Rate (after taking into account any Default Interest) for the period of non-adherence subject to a minimum period of one (1) year. The measurement of the deviation shall be at the end of each Fiscal Year and shall be made on the basis of the Audited Annual Financial Statements for such Fiscal Year. Provided, however, the Borrower may, deviate by up to twenty per cent (20%) vis-à-vis the stipulated levels as indicated above, in respect of any one of the conditions specified in Clause 18.22.1 (i) and (ii) above without attracting such additional interest.
18.22.3	In case the Borrower continuously defaults in the performance of the above financial covenants, or in case of a decline in performance levels, the Lender shall be entitled to stipulate any other conditions required by them after consultation with the Borrower.
18.23	Annual Budget; Operating Plan; Long Term Major Maintenance Plan

18.23.1 (i) (A)  The Operating Budget shall have been agreed and delivered for each Operating Year, as soon as available, but in any event at least seventy five (75) days prior to the commencement of each Operating Year. The Borrower shall submit to the Facility Agent an annual Operating Budget for such upcoming Operating Year (including budgeted statements of income and sources and uses of cash and balance sheets, the “Annual Budget”) prepared by the Borrower and accompanied by a statement of the chief financial officer or other Authorized Officer of the Borrower to the effect that, the budget is a reasonable estimate for the period covered thereby and is in compliance with the requirements of this Clause 18.23. Each Annual Budget shall contain fair and accurate Rupee denominated estimates of project revenues, fuel costs, Operation and Maintenance Costs and projected working capital requirements for each calendar month covered by such Annual Budget based on the Borrower’s fair and accurate projections at such time which shall be based on all facts and circumstances then existing and known to the Borrower and which reflect the Borrower’s best

87

	estimate of the future results of the Borrower and which are consistent with the Annual Operating Plan and the Major Maintenance Budget applicable to such Operating Year. Each Annual Budget shall be prepared in good faith on the basis of written assumptions stated therein which the Borrower believes to be reasonable as to all factual and legal matters material to such estimates. Each Operating Budget and Annual Budget shall be subject to approval by the Facility Agent.
(B)	Unless otherwise consented to by the Facility Agent in consultation with the Lenders Engineer, the Annual Budget from year to year shall be based on the same format and be maintained on the same basis and shall provide sufficient detail to permit a meaningful comparison to previous years.
(C)	An Annual Budget shall become effective on the first day of the relevant Operating Year if approved prior to such date by the Lender or the Facility Agent. If the Facility Agent does not inform the Borrower of the Lender’s non-approval of a submitted Annual Budget within seventy five (75) days after submission thereof to the Facility Agent, such submitted Annual Budget shall be deemed to have been approved by the Lender.

(ii) If all or any portion of an Annual Budget is disapproved prior to the first day of the relevant Operating Year, the Borrower shall adhere to all approved aspects of such Annual Budget. With respect to those aspects of any Annual Budget which are not approved (other than with respect to Major Maintenance expenditures), the Annual Budget for the preceding Operating Year (if applicable), shall be applicable thereto (and shall for all purposes hereof be regarded as part of the approved Annual Budget for such Operating Year) until such time as such aspects of the Annual Budget therefor have been approved by the Facility Agent. In the event that any Major Maintenance expenses proposed as part of an Annual Budget for any Operating Year are disapproved, the Major Maintenance expenses available during such Operating Year shall be an amount that is approved by the Lenders Engineer and the Facility Agent.

18.23.2 (i) The Mobilisation Plan, in form and substance satisfactory to the Facility Agent, and with the prior approval of the Lenders Engineer, for the Mobilisation Period shall be delivered to the Facility Agent by the Borrower not later than one (1) year prior to the commencement of the Mobilisation Period, or such other time as may be agreed by the Facility Agent.

(ii) For each Operating Year, the Borrower shall submit in writing to the Facility Agent for approval by the Facility Agent, in connection and concurrently with the submission of the Annual Budget for such Operating Year, the Annual Operating Plan therefor and a revised or updated Long

88

	Term Major Maintenance Plan covering the five (5) year period commencing with such upcoming Operating Year. The Facility Agent will either approve or disapprove any Annual Operating Plan and Long Term Major Maintenance Plan so submitted within forty five (45) Business Days (or, with respect to amendments to any applicable Annual Budget, Annual Operating Plan or Long Term Major Maintenance Plan, within fifteen (15) Business Days) after such submission.
(iii)	The Annual Operating Plan shall consist of the Borrower’s fair and accurate projections for the operation and maintenance of the Project including fuel expenses for the given Operating Year, as well as the Major Maintenance contemplated to be performed during such Operating Year pursuant to the Long Term Major Maintenance Plan (hereinafter the “Annual Operating Plan”).
(iv)	The Long Term Major Maintenance Plan shall set forth the details of all Major Maintenance proposed to be performed by the Borrower with respect to the Project during the upcoming five (5) year period specifying the nature, timing, cost and scope of all such proposed maintenance and its envisioned effect on Project operations (hereinafter referred to as the “Long Term Major Maintenance Plan”).
(v)	The Long Term Major Maintenance Plan shall be consistent with the maintenance program agreed (or otherwise applicable) between the Offtaker and the Borrower pursuant to the PPA.

18.23.3	The Borrower shall ensure that the aggregate Major Maintenance costs for each Unit for each Operating Year shall not exceed the aggregate of the Major Maintenance Amounts for such Operating Year. Any additional payments towards Major Maintenance shall be paid only with the approval of the Lenders Engineer.
18.24	Bullet Repayment
	The Borrower shall have, to the satisfaction of the Lender, made arrangements for repayment of the Foreign Currency Bullet Repayment Amount, at least three (3) months prior to the Repayment Date of the forty-eighth (48th) Repayment Instalment as per the Repayment Schedule.
18.25	Constitutional Documents
	The Borrower shall, within a period of three (3) months from the date of this Agreement, suitably amend its Articles of Association, inter alia, to provide for the appointment of two (2) nominee directors by the Lender in the manner contemplated in this Agreement and such other changes as required by the Lender, to the satisfaction of the Facility Agent.

89

18.26	Credit Rating
	The Borrower shall, at its cost, get itself rated by such reputed external credit rating agency as may be approved by the Facility Agent, within a period of three (3) months from the date of this Agreement, or such other time period as may be agreed by Facility Agent.
18.27	Right of First Refusal
	The Borrower shall grant the Lender the first right of refusal with respect to provision of hedging in relation to the Facility, including interest rate or currency hedging or other derivative transactions, provided that the terms offered by the Lender should be better than or equal to similar terms available in the market for such hedging transactions.
18.28	RBI Approval
	The Borrower shall obtain all approvals and permissions, as may be required, from the RBI under the provisions of Applicable Law relating to availing of external commercial borrowing.
	The Borrower shall apply to the RBI to obtain a loan registration number for the Facility within 15 (fifteen) days of the date of this Agreement, in accordance with the ECB Guidelines.
18.29	Hedging
	The Borrower shall make all necessary arrangements satisfactory to the Lender for hedging of the risks associated with the availing of this Facility.
18.30	Miscellaneous
18.30.1	The Borrower shall maintain its corporate existence and right to carry on its business and operations and ensure that it has the right and is duly qualified to conduct its business and operations as it is conducted in all applicable jurisdictions and will obtain and maintain all franchises and rights necessary for the conduct of its business and operations in such jurisdictions. On the happening of any event that adversely affects the finances of the Borrower or any of its Affiliates, or any other Person in which it has been permitted to have large investments under the terms of this Agreement, including any action taken by creditors/statutory authorities/other bodies, the Borrower shall promptly inform the Lender of the same.
18.30.2	The Borrower shall inform the Facility Agent of the happening of any event which may have a Material Adverse Effect on the Project within two (2) days of the happening of such event and suggest remedial measures in relation to the same.

90

18.30.3	The Lender shall have the right to stipulate any additional conditions upon the occurrence of an event having a Material Adverse Effect, an Event of Default or a Potential Event of Default and the Borrower undertakes to abide by the same.
18.30.4	The Borrower shall, if required by the Lender based on the review by the Lenders Engineer, make necessary arrangements for disposal of fly ash to the satisfaction of the Lender at least six (6) months prior to Project COD.
18.30.5	The Lender shall have the right to stipulate any other condition as they may consider necessary after consultation with the Borrower, prior to the First Utilisation Date and the Borrower agrees to abide by the same.

91

CLAUSE 19 — NEGATIVE COVENANTS

19.	NEGATIVE COVENANTS
	The Borrower covenants and agrees that, until the Final Settlement Date, it shall, unless otherwise previously agreed to in writing by the Facility Agent, comply with the following:
19.1	Permitted Indebtedness
	The Borrower shall not, without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, contract, create, incur, assume or suffer to exist any indebtedness, except for Permitted Indebtedness. In the event of the Facility Agent permitting the Borrower to obtain any subordinated loans, the lenders of such subordinated loan shall enter into necessary subordination arrangement with/in favour of the Facility Agent. The Borrower agrees that it shall not prepay such loans without the consent of the Facility Agent.
19.2	Restricted Payments
	The Borrower shall not make any Restricted Payments before Project COD. After Project COD, the Borrower shall not, without obtaining prior consent of the Facility Agent, make any Restricted Payment unless it satisfied the following conditions:

(i)	The Borrower shall have paid all amounts that are then due to the Lenders in accordance with the Common Rupee Loan Agreement and this Agreement including but not limited to the first Repayment Instalment and all other Repayment Instalments;
(ii)	The reserves or balances required to be maintained in the Debt Service Reserve Account have been fully funded; and
(iii)	There is no default that has occurred and is continuing by the Borrower in meeting its Debt Service obligation nor is the Borrower in breach of any of its obligations under the Finance Documents nor is there any other Event of Default or Potential Event of Default in existence or continuance,

	and without prejudice to the foregoing, the Borrower may make Restricted Payment only in accordance with the provisions of the Trust and Retention Account Agreement and upon satisfaction of the Restricted Payment Conditions.
19.3	No Other Business or Activity
	The Borrower shall not: (i) carry on any business or activity other than in connection with the completion or operation of the Project; or (ii) set up or have any subsidiaries other than a company engaged in setting power project in state of Punjab and unless consent of the Facility Agent has been obtained; or (iii) without

92

	the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, issue any guarantee or undertake any obligations having substantially the same effect as a guarantee except as required under the Transaction Documents in the ordinary course of business; or (iv) revalue the assets and properties of the Borrower during the currency of the Facility except as required under Applicable Law; or (v) suspend or terminate or take any action which would entitle any Major Project Party to suspend or terminate any Major Project Document, without the prior written approval of the Facility Agent.
	Provided that the Borrower shall not invest any funds in the company engaged in setting power project in state of Punjab in which it has invested as of the date of this Agreement and (whether in the form of subscription to shares, lending monies or otherwise) in excess of Rs 5,00,000 (Rupees Five Lakhs), unless: (i) such funds have been invested in the Borrower by the Sponsor through subscription to the Borrower’s Shares; and (ii) prior written consent of the Facility Agent has been obtained.
	Provided further that the Borrower shall not undertake any obligations with respect to any business or activity being conducted by the aforementioned company engaged in setting power project in state of Punjab, without the prior written consent of the Facility Agent.
19.4	Expansion
	The Borrower shall not undertake any new project or expansion thereof without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld.
19.5	Winding Up, Amalgamation and Restructuring and Sale of Assets
	The Borrower shall not:

(a)	wind up, liquidate or dissolve its affairs;
(b)	without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, enter into any transaction of merger, consolidation, amalgamation or reorganization;
(c)	without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, effect any change in the capital structure including the shareholding pattern other than as contemplated under this Agreement; and
(d)	convey, sell, lease, let or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets except for any Permitted Disposal.

93

19.6	Assignment
	The Borrower will not: (i) assign or permit the assignment of any rights or obligations of the Borrower to any Transaction Document; or (ii) consent to or permit the assignment of (except to the extent that such assignment constitutes a Permitted Security Interest) any rights or obligations of any party (other than the Borrower) under any Transaction Document.
19.7	Modifications of Constitutional Documents; Additional Agreements; Assignments and Modifications of Finance Documents
19.7.1	The Borrower will not: (i) amend or modify its Memorandum and Articles of Association which will affect the Borrower’s obligations or the Lender’s rights under the Finance Documents; or (ii) change its Fiscal Year; or (iii) change the accounting policies presently followed by the Borrower except as required under Applicable Law or GAAP; or (iv) without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, materially change the nature or scope of the Project.
19.7.2	The Borrower shall not initiate or consent to any amendments to the approved Construction Budget and Project Schedule or approved completion plan, as the case may be except:

(i)	Such amendment that reflects events of Force Majeure under the Project Documents (or approved Construction Budget, if applicable) and the Lenders Engineer certifies, that such amendment is not likely to result in an Material Adverse Effect; and
(ii)	Such amendments that are permitted by the Facility Agent.

	Provided that in relation to sub-paragraph 9.7.2 (i) above, the Lenders Engineer certifies that funds available to the Borrower (from borrowings, liquidated damages proceeds or otherwise) are expected to be sufficient to fund the costs of achieving Final Completion.
19.8	Security Interest
	Without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, the Borrower shall not, and shall not agree to, create, incur, assume or suffer to exist any Security Interest upon or with respect to any property, revenues or assets (real, personal or mixed, tangible or intangible) of the Borrower, whether now owned or hereafter acquired, other than: (a) a Permitted Security Interest; and (b) Security Interests arising under Applicable Law, to the extent that the same is not arising on account of any amounts due but not paid by the Borrower to any Person.

94

19.9	Advances, Investments and Loans
	The Borrower shall not lend money or credit or make deposits with or advances (other than deposits or advances in relation to the payment for goods and equipment as required and permitted by the Transaction Documents) to any Person, or purchase or acquire any stock, shares, obligations or securities of, or any other interest in, or make any capital contribution to, or acquire all or substantially all of the assets of, any other Person other than a company engaged in setting power project in state of Punjab and Rampia Coal Mine and Energy Private Limited. The Borrower may, however, utilize amounts lying in the Distribution Account for the aforesaid purposes, unless any such use of these funds results in the Borrower incurring any additional obligation.
	Provided that the Borrower shall not invest any funds in the company engaged in setting power project in state of Punjab referred to above and and/or Rampia Coal Mine and Energy Private Limited (whether in the form of subscription to shares, lending monies or otherwise) in excess of Rs 5,00,000 (Rupees Five Lakhs) and Rs. 52,17,432 (Rupees Fifty Two Lakhs Seventeen Thousand Four Hundred and Thirty Two), respectively, unless: (i) such funds have been invested in the Borrower by the Sponsor through subscription to the Borrower’s Shares; and (ii) prior written consent of the Facility Agent has been obtained.
19.10	Transaction Documents
19.10.1	The Borrower shall not make or agree to amend or make any material amendment of any Transaction Document without the prior written consent of the Facility Agent, which consent shall not be unreasonably withheld, or grant any waiver in respect of, modify any provision or grant any waiver of any of the Transaction Documents, terminate any of the Transaction Documents, or assign or otherwise dispose of any of its interests under the Transaction Documents or exercise any election or permit the assignment, transfer, termination, amendment, modification or grant in respect of any provision of any Transaction Document to which the Borrower is a party or assign or dispose of any of its interests under the Transaction Documents.
19.10.2	The Borrower shall not suspend or terminate; or take any action which would entitle the Major Project Parties to suspend or terminate the Major Project Documents, without the prior written approval of the Facility Agent.
19.11	Leases
	The Borrower shall not enter into any agreement or arrangement to acquire or make available by lease the use of any property or equipment of any kind, other than:

(i) for office premises taken in the ordinary course of business provided the lease rent does not exceed Rs. 5,00,00,000/- (Rupees Five Crores only) in any Fiscal Year; and

95

(ii) land constituting the Project Site taken on lease, without the prior written approval of the Facility Agent.

19.12	Abandonment
	The Borrower shall not Abandon or agree to Abandon the Project or place it or agree to place it on a Care and Maintenance basis.
19.13	Contingency Funds
	The Borrower shall not, utilise the Contingency without prior approval of the Facility Agent.
19.14	Accounts
	The Borrower shall not open any bank account denominated in any currency other than Rupees and other than in accordance with the terms of the Trust and Retention Account Agreement, except to the extent required for deposit of the Additional Loans. Provided that the Lender shall have a charge on such accounts.
19.15	Treasury Transactions
	Other than Permitted Indebtedness, the Borrower shall not enter (or agree to enter) into any Treasury Transaction.
19.16	Subordinated Loans
	The Borrower agrees that monies brought in by the promoters/ Directors/ associate companies as loans/ share application money pending allotment as part of promoters contribution brought in towards the funding of the Project shall be subordinated to the loans of the Lender, and shall not be repaid during the currency of the loans by the Lender, and may carry such interest as approved by the Lender.

96

CLAUSE 20 — EVENTS OF DEFAULT

20.	EVENTS OF DEFAULT
	Each of the events or circumstances set out in this Clause 20 is an Event of Default (other than Clause 20.25 (Consequences of Event of Default).
20.1	Payment

(i)	Failure by the Borrower in the payment, when due, of any principal, interest, or fee or any other amount owed by it under any Finance Document and such default if capable of remedy, continues unremedied for thirty (30) days; or
(ii)	Failure by the Sponsor in the payment when due of any amount owed by it under any Finance Document.

20.2 Non Performance

(i)	Failure by the Borrower to perform any of its obligations under any Finance Document (other than those specifically listed as Events of Default under this Clause 20.2) and such default if capable of remedy, continues unremedied for thirty (30) days; or
(ii)	Failure by the Sponsor to perform any of its obligations under any Finance Document (other than those specifically listed as Events of Default under this Clause 20.2) and such default if capable of remedy, continues unremedied for a period of twenty (20) days.

20.3 Cross Default

(i)	The Borrower is unable or has admitted in writing its inability to pay any of its indebtedness as they mature or when due.
(ii)	An event of default occurs under any agreement or document relating to any indebtedness of the Borrower or if any lender including financial institutions or banks with whom the Borrower has entered into agreements for financial assistance exceeding in the aggregate, Rs. 50,00,00,000 (Rupees Fifty crores), have on account of default or non-compliance by the Borrower of any of the terms contained therein, refused to disburse, extend, or have cancelled or recalled its/their assistance or any part thereof, and the Borrower has not arranged for alternate financial assistance from such banks and/or financial institutions as may be acceptable to the Facility Agent within a period of thirty (30) days of the notice of such cancellation or refusal to disburse.
(iii)	If the Borrower or any other party to any Project Document are in breach of, or do not comply with, any term or condition (whether, financial,

97

performance or otherwise) of any Project Document and such breach or non-compliance is, in the opinion of the Lender, likely to have a Material Adverse Effect.

20.4 Failure to Perform, Breach and Non Compliance

(i)	The Borrower or the Sponsor fails to perform or comply with any covenant, condition or agreement contained in this Agreement or the other Finance Documents which could have a Material Adverse Effect and such non-compliance, if capable of remedy, continues unremedied for ninety (90) days.
(ii)	Other than a Permitted Disposal, the Borrower sells, assigns, disposes, charges or otherwise encumbers or places a Security Interest on any of its assets without the prior written approval of the Facility Agent; or
(iii)	One or more events, conditions or circumstances (including, without limitation, Force Majeure), excluding events which are specifically provided for in this Clause 20.4, shall exist or shall have occurred which have had and continue to have, or, in the judgment of the Secured Parties, could reasonably be expected to have a Material Adverse Effect.

20.5	Security
	Any Security required to be created is not so created within the time period specified in this Agreement or the Security Documents once executed and delivered shall fail to provide the Security Interests, rights, title, remedies, powers or privileges intended to be created thereby (including the priority intended to be created thereby) or such Security Interest shall fail to have the priority contemplated in such Security Document or any such Security Document shall cease to be in full force and effect, or the validity thereof or the applicability thereof to the Utilisations or the Security Interest purported to be created thereby is jeopardised or endangered in any manner whatsoever or any other obligations purported to be secured or guaranteed thereby or any part thereof shall be disaffirmed by or on behalf of the Borrower or any other party thereto and such default if capable of remedy, continues unremedied for more than ninety (90) days.
20.6	Insurance

(i)	The Borrower fails to maintain any of the insurance described in the Insurance Contracts and such default, if capable of remedy, continues unremedied for ten (10) days.
(ii)	The Borrower’s assets have not been kept insured by the Borrower or depreciate in value to such an extent that such depreciation in value could have a Material Adverse Effect.

98

(iii) Any insurance contracted or taken by the Borrower is not, or ceases to be, in full force and effect at any time when it is required to be in effect or any insurance is avoided, or any insurer or re-insurer avoids or suspends or becomes entitled to avoid or suspend, any insurance or any claim under it or otherwise reduce its liability under any insurance or any insurer of any insurance is not bound, or ceases to be bound, to meet its obligations in full or in part under any insurance.

20.7 Court Order, Government Actions

(i)	Any Governmental Agency shall have condemned, nationalised, seized, or otherwise expropriated all or any part of the property or other assets of the Borrower or of the Equity Interests of the Sponsor in the Borrower, or shall have assumed custody or control of the Equity Interests of the Sponsor in the Borrower and its property or other assets or of the business or operations of the Borrower or shall have taken any action for the dissolution of the Borrower or any action that would prevent the Borrower or its officers from carrying on its business or operations or a substantial part thereof or with a view to regulate, administer, or limit, or assert any form of administrative control over the rates applied, prices charged or rates of return achievable, by the Borrower in connection with its business; or
(ii)	An attachment or restraint has been levied on the assets of the Borrower or the counterparty(ies) to any Project Document or the Sponsor resulting in, or which in the judgment of the Secured Parties results in, a Material Adverse Effect; or
(iii)	Failure by the Borrower to pay one or more amounts due under any judgments or decrees which shall have been entered against the Borrower; or
(iv)	Any Legal Proceeding under or relating to any Applicable Law shall have been instituted against the Borrower which has or can be reasonably expected to have, or which in the judgment of the Secured Parties has, a Material Adverse Effect on the Project; or
(v)	Execution or distress being levied or enforced against the whole or any part of the Borrower’s property and any order relating thereto is not discharged or stayed within a period of ninety (90) days from the date of enforcement or levy.

20.8	Representations and Covenants
	Any representation or warranty confirmed or made or deemed to be made, by the Borrower or the counterparty (ies) to any Project Document or the Sponsor in any Transaction Document is incorrect and/or misleading when made or deemed made and which could reasonably be expected to have a Material Adverse Effect.

99

20.9 Winding Up, Bankruptcy and Dissolution

(i)	If the Borrower or the Major Project Parties or the Sponsor commences a voluntary proceeding under any applicable bankruptcy, insolvency, winding up or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary proceeding under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee (or similar official) for any or a substantial part of its property.
(ii)	If a receiver has been appointed in respect of the whole or any material or substantial part of the property of the Borrower or the Project and such appointment is not stayed, quashed or dismissed within a period of ninety (90) days from the date of such appointment.
(iii)	The Borrower or any Major Project Party or the Sponsor has taken or suffered to be taken any action towards its reorganisation (to the extent that this would constitute a Material Adverse Effect), or its liquidation or dissolution.
(iv)	Any of the Borrower or Major Project Party (ies) or the Sponsor has been declared as a sick industry or is, in the reasonable apprehension of the Facility Agent or the Secured Parties, likely to be declared as a sick industry under the Sick Industrial Companies (Special Provisions) Act, 1985.

20.10 Environmental Compliance

(i)	Any administrative, regulatory or judicial action, suit or proceeding under or relating to any Environmental Law or asserting any environmental claim is instituted against the Borrower and has not been discharged within thirty (30) days or such shorter period as the Lender may determine necessary so as to avoid a Material Adverse Effect.
(ii)	The operation and maintenance of the Project by the Borrower or any operator in any manner that poses a hazard to the Environment, health or safety or would result in a breach its obligations under any Transaction Documents.

20.11	Change in Control
	If any Person acting singularly or with any other Person (either directly or indirectly) acquires control of the Borrower or of any other Person who controls the Borrower, without the approval of the Facility Agent/ Lender.

100

20.12 Illegality

(i)	It is or becomes unlawful for the Borrower or any Person (including the Lender) to perform any of their respective obligations under any Transaction Document; or
(ii)	Any Transaction Document or any provision thereof are required by any law to be: (a) amended or waived (to the extent this adversely affects the rights or remedies of the Lender under the Transaction Documents); or (b) repudiated; or
(iii)	Any obligation under the Transaction Documents is not or ceases to be a valid and binding obligation of any Person party to it or becomes void, illegal, unenforceable or is repudiated by such Person (other than the Secured Parties).

20.13	Material Adverse Effect
	One or more events, conditions or circumstances (including any Change in Law) shall occur or exist and which could have a Material Adverse Effect and such event or circumstance continues to have an effect for a period in excess of ninety (90) days.
20.14	Borrower ceases to carry on business
	If the Borrower ceases or threatens to cease to carry on its business for a period exceeding ninety (90) days.
20.15	Financial Position
	The financial position of the Borrower is unsatisfactory.
20.16	Extraordinary Situation
	Any extra-ordinary situation makes it improbable that the Borrower would be able to perform its obligations under the Finance Documents.
20.17	Specific Obligations
	Non-fulfilment by the Borrower of its obligations specified in Clauses 18.6.2 (A), (C), (D) and (E) and 18.16 (A) and (B) of this Agreement unless the Lender determine at the relevant time, upon review of the status of the Project, that such non-fulfilment by the Borrower shall not constitute an Event of Default.
20.18	Insolvency

(a) The Borrower by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to

101

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

20.19	Judgments, creditors’ process
	The Borrower fails to comply with or pay any sum due from it under any final and non-appealable judgment or any final and non-appealable order made or given by a court of competent jurisdiction and such judgment or order is not discharged within fifteen (15) Business Days.
20.20	Moratorium
	Any relevant Governmental Agency declares a general moratorium or “standstill” (or makes or passes any order or regulation having a similar effect) in respect of the payment or repayment of any Financial Indebtedness (whether in the nature of principal, interest or otherwise) (or any indebtedness which includes Financial Indebtedness) owed by Indian companies or other persons (and whether or not such declaration, order or regulation is of general application, applies to a class of persons which includes the Borrower).
20.21	Material Litigation
	Any litigation, arbitration, investigative or administrative proceeding or enquiry is current, pending or threatened:

(a)	to restrain the Borrower’s entry into, the exercise of the Borrower’s rights under, or compliance by the Borrower with any of its obligations under, the Finance Documents; or
(b)	which the Lender otherwise determines has (or might, if adversely determined, and is so adversely determined, could have) a Material Adverse Effect.

20.22	Revocation of Clearances
	Any Clearance, approval, consent, license, exception, filing, registration, notarization or other requirement necessary to: (i) enable the Borrower to comply with any of its obligations under the Finance Documents; or (ii) carry on its business as is substantially being carried on the date of execution of this Agreement is modified, revoked or withheld or does not remain in full force and effect and such modification or revocation is not cured within thirty (30) days.
20.23	Consequences of Event of Default
20.23.1	If an Event of Default has occurred, the Secured Parties may, without prejudice to any rights that they may have and by notice to the Borrower, take one or more

102

of the following actions including but not limited to:

(i)	to enter upon and take possession of the assets of the Borrower;
(ii)	to transfer the assets of the Borrower comprised within the Security created in favour of the Secured Parties or such other Person by way of lease, leave and licence, sale or otherwise;
(iii)	place the Facility on demand or declare all amounts payable by the Borrower in respect of the Facility to be due and payable immediately;
(iv)	require the Borrower to immediately put the Lender in funds in an amount equivalent to 100% (One Hundred per cent) of the outstanding face value of all Letters of Comfort issued hereunder;
(v)	sue for creditors’ process and/or exercise rights with respect to the Security in accordance with the Finance Documents;
(vi)	suspend further drawings;
(vii)	declare the Commitment to be cancelled;
(viii)	call on undrawn and unsubscribed position of the Required Equity under the Sponsor Support Agreement;
(ix)	utilise any amounts in the sub -accounts under the Account (as defined in the Trust and Retention Account Agreement) or any Additional Accounts to service and repay the Facility;
(x)	appoint two whole-time nominee Directors on behalf of all the Lender on the terms and conditions contained in Schedule 12;
(xi)	review, restructure and/or substitute the Management or organisation of the Borrower in a manner acceptable to the Facility Agent and as may be considered necessary by the Facility Agent, including the formation of management committees with such powers and functions as may be considered suitable by the Facility Agent. The Borrower shall comply with all such requirements of the Facility Agent; and
(xii)	Exercise such other rights as may be available to the Secured Parties under the Transaction Documents and all Applicable Laws.

Notwithstanding any suspension or cancellation pursuant to Clauses 20.25 (v) or (vi) above, all the provisions of the Finance Documents for the benefit or protection of the Lender and their interests shall continue to be in full force and effect as specifically provided in the Finance Documents.

103

CLAUSE 21 — CHANGES TO THE LENDER

21.	CHANGES TO THE LENDER
21.1	Assignments and transfer by the Lender
	Subject to this Clause 21, the Lender (the “Existing Lender”) may:

(a)	assign any of its rights; or
(b)	transfer by novation any of its rights and obligations,

	with the prior consent of the Borrower during the Availability Period, and thereafter upon intimation to the Borrower, to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”).
	provided that the Borrower shall be informed of such assignment, transfer or novation by the Existing Lender within one (1) Business Day of the Transfer Date, in the event that such assignment, transfer or novation by the Existing Lender is to be done in favor of an entity which is a competitor of the Borrower.
21.2	Conditions of assignment or transfer

(a) An assignment will, subject to Clause 21.1(b) (Assignments and transfers by the Lender), only be effective on:

• receipt by the Existing Lender of written confirmation from the New Lender (in form and substance satisfactory to the Lender) that the New Lender will assume the same obligations to the Borrower as it would have been under if it was an Existing Lender; and

• performance by the Existing Lender of all necessary “know your customer” or other similar checks under all Applicable Law and regulations in relation to such assignment to a New Lender, the completion of which the Existing Lender shall promptly notify the New Lender.

(b) A transfer will only be effective if the procedure set out in Clause 21.4 (Procedure for transfer) is complied with.

21.3 Limitation of responsibility of Existing Lender

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

104

(i)	the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;
(ii)	the financial condition of the Borrower;
(iii)	the performance and observance by the Borrower of its obligations under the Finance Documents or any other documents; or
(iv)	the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

	and any representations or warranties implied by law are excluded.
(b)	Each New Lender confirms to the Existing Lender that it:

(i)	has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of the Borrower and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and
(ii)	will continue to make its own independent appraisal of the creditworthiness of the Borrower and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

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

(i)	accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 21 (Changes to the Lender); or
(ii)	support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by the Borrower of its obligations under the Finance Documents or otherwise.

21.4 Procedure for transfer

(a) Subject to the conditions set out in Clause 21.2 (Conditions of assignment or transfer) a transfer is effected in accordance with Clause 21.4 (b) below when the Lender executes an otherwise duly completed Transfer Certificate delivered to it by the New Lender. The Lender shall, subject to Clause 21.4 (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

105

(b)	The Lender shall only be obliged to execute a Transfer Certificate delivered to the New Lender once it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.
(c)	On the Transfer Date:

(i)	to the extent that in the Transfer Certificate the Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Borrower and the Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);
(ii)	the Borrower and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Existing Lender;
(iii)	the New Lender shall acquire the same rights and assume the same obligations it would have acquired and assumed had the New Lender been the Existing Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Existing Lender shall be released from further obligations to the Borrower under the Finance Documents.
(iv)	the Borrower and Facility Agent agree to accept the assignment of a New Lender upon being notified by the Lender of such assignment and the New Lender shall become a Party as a “Lender”.

21.5	Indemnity
	The Lender, and its officers, directors, employees, agents and Affiliates shall be entitled to rights of indemnity under, inter alia, Clause 13 (Other indemnities).

106

CLAUSE 22 — CHANGES TO THE BORROWER

22.	CHANGES TO THE BORROWER
	The Borrower shall not assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

107

CLAUSE 23 — CONDUCT OF BUSINESS BY LENDER

23.	CONDUCT OF BUSINESS BY THE LENDER
	No provision of this Agreement will:

(a)	interfere with the right of the Lender to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)	oblige the Lender to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)	oblige the Lender to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

108

CLAUSE 24 — ADMINISTRATION

24.	Payment mechanics
24.1	No set-off by the Borrower
	All payments by the Borrower, or by any other person on behalf of the Borrower, under the Finance Documents shall be made to the Lender, at par without deduction of any charge or costs thereof (including set-off or counterclaim), to the accounts or bank as the Lender may notify to the Borrower at least two (2) Business Days in advance for this purpose.
24.2	Business Days

(a)	Any payment which is due to be made on a day that is not a Business Day shall be made on the previous Business Day in the same calendar month.
(b)	During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

24.3 Currency of account

(a)	Subject to paragraphs (b) to (e) below, US Dollars is the currency of account and payment for any sum due from the Borrower under any Finance Document.
(b)	A repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum shall be made in the currency in which that Loan or Unpaid Sum is denominated on its due date.
(c)	Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
(d)	Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e)	Any amount expressed to be payable in a currency other than US Dollars shall be paid in that other currency.

109

CLAUSE 25 — SET OFF

25.

SET-OFF

Without prior notice to the Borrower, the Lender may but is not obliged to, set off any matured obligation due from the Borrower under the Finance Documents (to the extent beneficially owned by the Lender) against any obligation owed by the Lender to the Borrower (whether or not matured), regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. The Lender shall as soon as reasonably practicable and in any event not later than three (3) Business Days after the exercise of such right notify the Borrower of such exercise.

110

CLAUSE 26 — NOTICES

26.	NOTICES
26.1	Communications in writing
	Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax, or letter.
26.2	Addresses
	The address, fax number and (if applicable) email address (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication to be made or document to be delivered under or in connection with the Finance Documents is in the case of the Borrower, that identified with its name below or any substitute address, fax number, email address or department or officer as the Party may notify to the Lender by not less than five (5) Business Days’ notice.
26.3	Delivery

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

(i)	if sent by fax before 5 p.m. (local time in the place to which it is sent) on a working day in that place, when sent or, if sent by fax at any other time, at 9 a.m. (local time in the place to which it is sent) on the next working day in that place, provided, in each case, that the person sending the fax shall have received a transmission receipt if by way of fax, when received in legible form;
(ii)	if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or
(iii)	if by way of email, if it complies with the rules under Clause 26.6 (Electronic Communication)

	and, if a particular department or officer is specified as part of its address details provided under Clause 26.2 (Addresses), if addressed to that department or officer. For this purpose, working days are days other than Saturdays, Sundays and bank holidays.
(b)	Any communication or document to be made or delivered to the Lender will be effective only when actually received by the Lender and then only if it is expressly marked for the attention of the department or officer

111

identified by the Lender (or any substitute department or officer as the Lender shall specify for this purpose).

26.4 Reliance

(a)	Any notice sent under this Clause 26 (Notices) can be relied on by the recipient if the recipient reasonably believes the notice to be genuine and if it bears what appears to be the signature (original or facsimile) of an authorised signatory of the sender (in each case without the need for further enquiry or confirmation).
(b)	Each Party must take reasonable care to ensure that no forged, false or unauthorised notices are sent to another Party.

26.5 English language

(a)	Any notice given under or in connection with any Finance Document must be in English.
(b)	All other documents provided under or in connection with any Finance Document must be:

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

26.6 Electronic Communication

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

(i)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(ii)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iii)	notify each other of any change to their electronic mail address or any other such information supplied by them.

(b) Any electronic communication made will be effective only when actually received by the other Party.

112

(c)

The Borrower or the Lender shall notify the affected Party promptly upon becoming aware that its electronic mail system or other electronic means of communication cannot be used due to technical failure (and that failure is or is likely to be continuing for more than two (2) Business Days). Until the Borrower or the Lender has notified the affected Party that the failure has been remedied, all notices between those parties shall be sent by fax or letter in accordance with this Clause 26 (Notices).

(d)

Each Party acknowledges and agrees that the privacy and integrity of electronic transmissions cannot be guaranteed. To the extent that any information relating to the Finance Documents is transmitted electronically, the Borrower agrees to release the Lender from any loss or liability incurred in connection with the electronic transmission of such information, including the unauthorised interception, alteration or fraudulent generation and transmission of electronic transmission by third parties provided that the transmitting Party has taken all reasonable prudent precautions to protect the integrity of its electronic communication system.

113

CLAUSE 27 — CALCULATIONS AND CERTIFICATES

27.	CALCULATIONS AND CERTIFICATES
27.1	Accounts
	In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by the Lender are prima facie evidence of the matters to which they relate.
27.2	Certificates and Determinations
	Any certification or determination by the Lender of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
27.3	Day count convention
	Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

114

CLAUSE 28 — CONFIDENTIALITY

28.	CONFIDENTIALITY
	Each Party shall keep all information (“Information”) (including the terms and conditions of the Finance Documents) made available (whether before or after the date of this Agreement) by the other Party concerning this Agreement, confidential and shall not communicate any Information, or allow any Information to be communicated to any third party unless such communication or information is:

(a)	In connection with any proceedings arising out of or in connection with this Agreement to the extent that the Lender may consider it necessary to protect its interest; or
(b)	Required to do so by an order of a court of competent jurisdiction whether or not in pursuance of any procedure for discovering documents; or
(c)	Pursuant to any Applicable Law in accordance with which such person is required to act, including without limitation, the right of the Lender and/or the RBI, in the event that the Borrower commits a default in payment or repayment of the principal amount, interest or any other monies under the Facility, or utilises the Facility for purposes other than those specified in the Finance Documents without the prior written consent of the Lender, to disclose or publish the details of the default and the name of the Borrower and its Directors as defaulters in such manner and through such medium as the Lender, and/or RBI or such other agency appointed by them in their absolute discretion may think fit; or
(d)	To its auditors for the purposes of enabling the auditors to complete an audit of such Party or to its legal advisers when seeking bona fide legal advice in connection with the Transaction Documents; or
(e)	In circumstances where the relevant Information has been published or announced by the other Party in conditions free from confidentiality or has otherwise entered the public domain without default on the part of the relevant party; or
(f)	The Information was obtained by the other party from an independent or third party source.

115

CLAUSE 29 — PARTIAL INVALIDITY

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

116

CLAUSE 30 — REMEDIES AND WAIVERS

30.

REMEDIES AND WAIVERS

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

117

CLAUSE 31 — AMENDMENTS AND WAIVERS

31.	AMENDMENTS AND WAIVERS
	This Agreement may only be amended by the consent of all Parties in writing.

118

CLAUSE 32 — COUNTERPARTS

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

119

CLAUSE 33 — GOVERNING LAW

33.	GOVERNING LAW
	This Agreement and any non-contractual obligations arising out of or connected with this Agreement are governed by the laws of England and Wales.

120

CLAUSE 34 — ENFORCEMENT

34.	ENFORCEMENT
34.1	Jurisdiction

(a)	The courts of London have jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”).
(b)	The Parties agree that the courts of London are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
(c)	This Clause 34.1 is for the benefit of the Lender only. As a result, the Lender shall not be prevented from taking proceedings relating to a Dispute in any other court with jurisdiction. To the extent allowed by law, the Lender may take concurrent proceedings in any number of jurisdictions.

34.2	Service of process
	Without prejudice to any other mode of service allowed under any relevant law: the Borrower:

(a)	appoints SBI Capital Markets (UK) Limited, having its address at 29-30, Cornhill, London, EC3V3NF (Attention: Mr. T. Chandran, Chief Executive, Tel: 020- 79293529), England, or any other person as may be acceptable to the Lender as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and
(b)	agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned.

34.3	Consent to enforcement etc.
	The Borrower irrevocably and generally consents in respect of any proceedings anywhere in connection with any Finance Document to the giving of any relief or the issue of any process in connection with those proceedings including, the making, enforcement or execution against any assets whatsoever (irrespective of their use or intended use) of any order or judgment which may be made or given in those proceedings.
34.4	Waiver of Immunity
	The Borrower irrevocably agrees that, should any Party take any proceedings anywhere (whether for an injunction, specific performance, damages or otherwise

121

in connection with any Finance Document), no immunity (to the extent that it may at any time exist, whether on the grounds of sovereignty or otherwise) from those proceedings, from attachment (whether in aid of execution, before judgment or otherwise) of its assets or from execution of judgment shall be claimed by it or with respect to its assets, any such immunity being irrevocably waived. The Borrower irrevocably agrees that it and its assets are, and shall be, subject to such proceedings, attachment or execution in respect of its obligations under the Finance Documents.

122

CLAUSE 35 — CONDITIONS OF OTHER FINANCE PARTIES

35.

CONDITIONS OF OTHER FINANCE PARTIES

35.1

The Borrower hereby agrees and confirms that in case any other person providing any financial assistance to the Borrower with terms and conditions more favourable to the ones laid down in this Agreement or imposes any conditions not included herein, or in case any of the terms offered by the Borrower to such person is more favourable to such person than the terms stipulated by, or offered to, the Lenders, the such favourable terms shall mutatis mutandis apply to the Facility as if the Borrower had specifically agreed to such terms and conditions, which terms and conditions shall be regarded as being expressly incorporated herein.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

123

SCHEDULE 1
CONDITIONS PRECEDENT

Part A: Conditions Precedent to Effectiveness

(a) Corporate Clearances, Clearances and Evidences

(i)	The Borrower shall have agreed to amend its Memorandum and Articles of Association, for inter alia enhancing the authorized capital and borrowing power of the Borrower as required under the Financing Plan, and appointment of nominee directors as required under this Agreement, and making such other changes as may be required by the Lender.
(ii)	The Lender shall have received all corporate documents, incumbency certificates and resolutions in each case certified by the appropriate officers of such Person which shall include, but not be limited to:

(A)	up-to-date certified true copies of the constitutional documents and certificate of incorporation and commencement of business of the Borrower and the Sponsor including any amendments required as per the provisions of the Finance Documents;
(B)	certified true copy of resolutions of the Board of Directors of each of the Borrower and Sponsor, as the case may be:

(i)	approving the terms and execution of, and the transactions contemplated by the Finance Documents to which it is a party;
(ii)	authorizing, the affixation of the common seal on the Finance Documents, and/or a director or directors or other authorized executives to execute the Finance Documents to which it is a party;
(iii)	authorizing a Person or Persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under or in connection with the Finance Documents to which it is a party; and
(iv)	specimen signatures of each such Person authorized by the resolutions referred to in sub-Clauses (B)(ii) and (B)(iii) above.

(C)	recent certified Audited Annual Financial Statements;
(D)	certified copy of the resolution of the shareholders of the Borrower under Section 293(1)(a) and Section 293 (1)(d) of the Companies Act authorising such borrowing and creation of Security and

124

	approving the Borrower’s participation and undertaking of obligations in the Project;
(E)	a certificate of the Auditors of the Borrower confirming that the borrowing or the availing of the Facility under the Agreement would not cause any borrowing limit binding on the Borrower to be exceeded;
(F)	a certificate from the company secretary/Director of the Borrower certifying that the Borrower and its Directors have the necessary powers under the constitutional documents of the Borrower to borrow or avail the Facility and enter into the Finance Documents and that the borrowing or availing of the Facility would not cause any borrowing limit binding on the Borrower to be exceeded;
(G)	certified copy of the resolution of the shareholders of the Sponsor under Section 372A of the Companies Act authorising the Sponsors’ participation and undertaking of obligations in the Project or a certificate from a director of the Sponsor certifying the non-applicability of the same;
(H)	certificate of the Borrower (signed by a director) confirming that borrowing the Commitment does not violate the ECB Guidelines, and the approval of the RBI obtained in this respect.
(I)	all other corporate authorizations/resolutions as may be required under the Applicable Law and for the purposes of the Project Documents; and
(J)	all Clearances, including without limitation, the RBI Approval, and all necessary third party consents, waivers and other approvals, required for the Project and for the execution, delivery, and enforcement of the Transaction Documents except for the following:

(a)	Clearances required for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person, which shall be required to be obtained on or before June 30, 2009;
(b)	Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India, which shall be required to be obtained on or before June 30, 2009; and
(c)	environmental Clearances from the Government of Orissa/other statutory bodies with respect to any Unit, which shall be required to be obtained on or before a date

125

which is six (6) months prior to the Date of Commercial Operation of such Unit, provided that with respect to the first Unit, such environmental Clearances (other than those specified in sub-Clauses (i) and (ii) above) shall be obtained on or before a date which is three (3) months prior to the Date of Commercial Operations of the first Unit.

(K)	evidence that the process agent referred to in Clause 34.2 (Service of process) has accepted its appointment.
(L)	certificate from the Borrower, certifying that the fees, costs and expenses due prior to the date of First Utilisation, from the Borrower pursuant to Clause 8.8 (Fees) and Clause 15 (Costs and expenses) have been paid or will be paid by the date of First Utilisation.
(M)	certificate from the Borrower, certifying that all Taxes (including stamp duty) payable (if any) in connection with the execution, performance and/or enforcement of the Finance Documents have been paid.
(N)	Evidence that the Lender has completed all “know your customer” checks required by law or regulation to be undertaken by it in relation to the Borrower.
(O)	Evidence of: (i) receipt of the loan registration number approved by the Department of Statistical Analysis and Computer Services of the Reserve Bank of India in relation to this Agreement, and (ii) notification by the Borrower to the Registrar of Companies of receipt of: (a) the loan registration number, and (b) any other Clearance or authorisation required under Applicable Law to be obtained, from the appropriate authority, for the purpose of creating the Initial Security, in a manner satisfactory to the Lender.
(P)	The Borrower shall tie up entire debt amounting to Rupees Six Thousand One Hundred and Fifty Crores (Rs. 6150,00,00,000) for the Project.

(b) Appointments

(i)	Lenders Engineer and Lenders Insurance Consultant
	The Borrower shall have appointed or agreed to appoint the Lenders Engineer and Lenders Insurance Consultant (hereinafter referred to as “Lenders Consultants”) in consultation with the Facility Agent to undertake the roles described in the Lenders Engineer Appointment Letter (including but not limited to review of Project Costs, including reasonability of contract prices, and

126

	Project Documents, review of technical configuration of the Plant, conducting pre- construction due diligence monitoring the construction and performance tests and monitor the operations of the Project and submitting reports to the Facility Agent every financial quarter, or such other intervals as the Lender may require) and the Insurance Consultancy Appointment Letter (including to review and finalise the Insurance Contracts), respectively and shall have undertaken to pay or arrange or shall have paid or arranged the payment of all fees, expenses and other charges payable to the Lenders Consultants. The Borrower shall have agreed and undertaken to provide all information and other assistance required by the Lenders Consultant for the discharge of their services and to carry out all such changes/alterations as may be recommended by them.
(ii)	Lenders Counsel
	The Borrower shall have appointed the Lenders Counsel to inter alia assist the Lender in reviewing and finalizing the Transaction Documents and shall have undertaken to pay or arrange the payment of all fees, expenses and other charges payable to the Lenders Counsel. The Borrower shall have agreed and undertaken to provide all information and other assistance required by the Lenders Counsel for the discharge of its services and to carry out all such changes/alterations as may be recommended by it.
(iii)	Auditors
	The Borrower shall have appointed the Auditors to the satisfaction of the Lender. The Auditors shall have certified all expenses incurred by the Borrower prior to the First Utilisation Date.
(iv)	Other Consultants
	Any other consultant/advisor as may be required by the Lender/Facility Agent shall have been appointed, and the Borrower shall have agreed to bear all expenses, fees and costs in relation to such appointment.

(c) The Borrower shall have caused the Sponsor to execute the Sponsor Support Agreement in form and substance satisfactory to the Facility Agent, wherein the Sponsor shall have undertaken to, inter alia, do the following:

(i)	contribute such additional funds as may be required to meet the shortfall, if any, in the Required Equity of the Borrower;
(ii)	in the event of any Cost Overrun, contribute the amounts by which

127

	the Project Costs exceed the Estimated Project Costs without recourse to the Project assets;
(iii)	meet the export obligations (from its operations) as required under the available export promotion capital good scheme (“EPCG Scheme”) based upon the duty benefit made available to the Borrower by way of concessional duty payable for import of plant and machinery and equipments or any benefit of deemed exports on domestic acquisition, if any under EPCG Scheme for the Project and agree that any increase in Project Costs due to non-availability of such import duty/deemed export benefits under the EPCG Scheme, shall be met by the Sponsor from its own resources to the satisfaction of the Lender;
(iv)	ensure that the Borrower shall raise the necessary funds for refinancing of the Foreign Currency Bullet Repayment Amount;
(v)	provide the Borrower with all funds required by the Borrower for the development of the Coal Blocks under the Mining JV Agreement;
(vi)	in the event of failure by the Borrower to:

(a)	enter into transmission arrangements satisfactory to the Lender for evacuation of power generated from the Project at least six (6) months prior to the Date of Commercial Operation for each Unit;
(b)	make suitable arrangements for adequate supply and transportation of coal by entering into the Fuel Supply Agreements and Coal Transportation Agreements at least six (6) months prior to the Date of Commercial Operation of each Unit other than the first Unit, for which the Fuel Supply Agreements and the Coal Transportation Agreement need to be in place prior to the First Utilisation Date;
(c)	enter into such PPAs so as to achieve a minimum DSCR of 1.1, in the manner contemplated in the Finance Documents, at least six (6) months prior to Project COD;
(d)	make necessary arrangements and obtain necessary Clearances for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, on or before June 30, 2009; and
(e)	obtain Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India, on or before June 30, 2009,

128

the Sponsor shall make available funds to the Borrower, in a manner satisfactory to the Lender, to enable the Borrower to so discharge its Obligations; and

(d)

The Borrower shall have finalized to the satisfaction of the Facility Agent the Insurance Contracts as provided in Clause 18.19 (Insurance) and shall have provided to the Facility Agent a certificate or other acceptable evidence and such certificate or other evidence shall accurately describe the insurance already obtained by the Borrower and shall also certify that all such insurance is in full force and effect and conforms in all respects to the insurance required to be obtained on or before the date of this Agreement.

(e)

Accounts

(i)	The Borrower shall have provided sufficient evidence of having established, in the manner satisfactory to the Facility Agent, each of the Accounts, including the Debt Service Reserve Account, in the manner contemplated in the Trust and Retention Account Agreement and this Agreement.
(ii)	The Borrower shall deposit all the cash inflows of the Project in the Account as specified in the Trust and Retention Account Agreement and ensure that the reserves required to be maintained in accordance with the Trust and Retention Account Agreement are maintained.
(iii)	The Borrower shall utilise the Project Proceeds in a manner and priority as agreed to in the Trust and Retention Account Agreement.

Part B: Conditions Precedent to First Utilisation

(a) Transaction Documents

(i) Other than the Transaction Documents expressly permitted to be executed at a different time under Clause 18.6.2, each of the Transaction Documents shall have been executed by the respective parties thereto and shall have become (or, as the case may be, shall remain) effective and enforceable in accordance with their respective terms and copies thereof shall have been delivered to the Facility Agent together with a certificate of the Borrower to the effect that each of such Transaction Documents as are required to be executed on the first Utilisation Date are true, correct and complete in all respects, and in full force and effect including without limitation the Fuel Supply Agreements and Coal Transportation Agreements for meeting the coal requirements of the first Unit.

129

(ii)	The Borrower shall have provided a certificate signed by an Authorized Officer of the Borrower and expressed to be effective as of the date of the First Utilisation, stating that the Borrower is in compliance with all provisions of the Transaction Documents.
(iii)	The Lenders Engineer shall have reviewed each of the Project Documents and shall have submitted its report and certified that the Project Documents are adequate for implementation of the Project.
(b)	Opinion of Counsels

(i)

The Borrower shall have provided confirmation from its legal counsels: (i) that the Borrower has entered into valid, binding and enforceable Project Documents required by it to be executed prior to First Utilisation; (ii) that the Borrower has entered into binding agreements for financing as required under the Financing Plan to meet the Estimated Project Costs and that the conditions for Utilisation of amounts under such Finance Documents have been satisfied or waived; (iii) that the Borrower accepts to provide, effectuate and perfect the Security Interest in the form and manner as may be required by the Lender from time to time; (iv) all Clearances required prior to First Utilisation have been obtained and are in full force and effect; and (v) all Taxes (including the stamp duty and registration fees) other than those Contested in Good Faith have been duly and validly paid.

The Facility Agent shall have received legal opinions pertaining inter alia to the validity and enforceability of the Transaction Documents, each dated the date of the Utilisation Request in relation to the First Utilisation from the following persons:

(A)	Lenders Counsel;
(B)	Legal advisors to the Borrower and Sponsor; and
(C)	Where any of the counterparties to the Project Documents are not Persons organised under the laws of, or residents of, India, the international counsel of such counterparties to the Project Documents.

(c) Clearances

(i) Other than the Clearances which are expressly permitted under Clause 18.16 to be obtained at a different time, the Borrower shall have obtained all Clearances as may be required for the Project, and such Clearances shall be in full force and effect and the Borrower shall have fulfilled the conditions stipulated in such Clearances and the Facility Agent shall have received certified copies of each Clearance, together with a certificate from the

130

	Borrower certifying that all such Clearances have been obtained and are in full force and effect.
(ii)	The Borrower shall have obtained all necessary third party consents, waivers and other approvals required for the Project and for the execution, delivery, and enforcement of the Transaction Documents. The permission of the assessing officer under Section 281(1)(ii) of the Income Tax Act, 1961 shall have been obtained by the Borrower prior to creation of any Security.
(iii)	The Lenders Engineer shall have certified the adequacy and validity of the Clearances.

(d) Project

(i)	The Facility Agent shall have received a report from the Lenders Engineer inter alia certifying the Estimated Project Costs in the form and manner as provided in Schedule 8, a preliminary legal due diligence report from the Lenders Counsel and the Borrower shall have resolved all issues raised in all of the abovementioned reports and incorporated necessary changes to the satisfaction of the Facility Agent in the Project Documents, the Estimated Project Cost and the Financing Plan.
(ii)	The Facility Agent shall have received satisfactory evidence from the Lenders Engineer that the Project Site is suitable for the Project and suitable security and other arrangements have been made with respect thereto as also a report in relation to Project Cost, the Project Documents (other than Insurance Contracts), provision of liquidated damages by the Major Project Parties, performance guarantees and such other matters as may be specified by the Facility Agent.
(iii)	The Facility Agent shall have received a schedule for award of contracts matching with the implementation schedule for the Project, which shall have been reviewed by the Lenders Engineer.

(e)	Project Documents
	The Borrower shall have identified all key contractors (including any Major Project Parties) required for the implementation of the Project and finalized all key Project Documents, which shall have been reviewed by the Lenders Engineer.
(f)	Applicable Law
	The Borrower shall have received a certificate from an Authorized Officer of the Borrower certifying that the Project and the Borrower are in

131

	compliance in all respects with all Applicable Law as in effect on the Utilisation Date.
(g)	Representations and Warranties
	The Borrower shall have provided a certificate issued by an Authorized Officer of the Borrower stating that all representations and warranties of the Borrower, Sponsor, and to the best of knowledge of the Borrower after due enquiry of the Major Project Parties under the Transaction Documents are true and correct in all respects with the same force and effect as though such representations and warranties have been made on and as of the date of such certificate.
(h)	Events of Default and Legal Proceedings

(i)	There shall be no Event of Default or Potential Event of Default under the Transaction Documents which has not been cured or waived in accordance with the terms of the Transaction Documents and all Transaction Documents shall be in full force and effect.
(ii)	There shall not have occurred any event that would restrict directly or indirectly the Borrower’s borrowing power or authority or its ability to borrow under the Finance Documents due to any provision in its Memorandum and Articles of Association or any provision contained in any document by which the Borrower is bound, or any Applicable Law.

(i)	Sponsor Support
	The Facility Agent shall have received the following:

(a)	satisfactory evidence that 30% (thirty per cent) of the Required Equity (“Upfront Equity”) has been subscribed and paid up in full and has been either (a) deposited in the Account; or (b) certified by the Auditor as having been utilised for payment of Project Costs. Provided that the Upfront Equity shall not include any equity contributed by the Sponsor for the purpose of investment in any subsidiary of the Borrower in accordance with Clause 19.3;
(b)	an undertaking from the Sponsor, in the form and manner acceptable to the Lender, and any other evidence required by the Facility Agent in relation to the same, to subscribe to the balance 70% (seventy per cent) of the Required Equity in the manner specified in the Sponsor Support Agreement; and
(c)	An undertaking from the Sponsor that the management and control of the Borrower shall not change during the currency of the Loan without the consent of the Lender.

132

(j)	Personnel
	The Borrower shall have appointed such technical, financial and executive personnel (including auditors and/or management personnel) of proper qualification and experience, satisfactory to the Facility Agent, and shall have ensured that the organizational set-up is adequate, so as to ensure smooth implementation of the Project by the Borrower.
(k)	Security
	The Borrower shall have created and perfected the Initial Security in favour of the Security Trustee prior to the First Utilisation Date, in accordance with the terms of this Agreement, to the satisfaction of the Security Trustee and the same shall be in full force and effect.
(l)	Construction Budget

(i) The Lender shall have received a copy of the Construction Budget in a form satisfactory to the Lenders Engineer. The Construction Budget should:

(A)	reflect the amount of all Estimated Project Costs; and
(B)	conform to the Base Case.

(ii) The Facility Agent shall have received a true, correct and completed copy of the Project Schedule certified by an Authorised Officer of the Borrower.

(m) Insurance

(i)

The Borrower shall have obtained the Insurance Contracts (including reinsurance) in accordance with the recommendations of the Lenders Insurance Consultant, suitably endorsed in favour of the Lender and naming the Lender /Security Trustee as loss payees as recommended by the Lenders Insurance Consultant and shall have provided to the Facility Agent a certificate or other acceptable evidence and such certificate or other evidence shall accurately describe the insurance obtained by the Borrower and shall also certify that all such insurance is in full force and effect and conforms in all respects to the insurance required to be obtained on or before the First Utilisation Date.

(ii)

The Facility Agent shall have received a letter from the Borrower’s insurer confirming that all premia due and payable with respect to the insurance as of the First Utilisation Date have been paid and no insurance premia are overdue.

133

(iii)	The Facility Agent shall have received a list of the existing Insurance Contracts detailing therein the names and addresses of the insurer, brief particulars of goods covered, type of cover, amount of cover and date of expiry of each policy.
(iv)	The Borrower shall duly pay all premia and other sums payable for the aforesaid Insurance Contracts, at least thirty (30) days prior to the shipment in respect of the Project.

(n)	English Translations
	If any Transaction Document, Clearance, notice, certificate, instrument, communication or other document required to be delivered to any Person pursuant to Clause 4.2 (Conditions Precedent to First Utilization) is not originally executed, delivered or given in English (regardless of whether such requirement arises before or after the date of Financial Close), the Borrower, shall concurrently with the delivery of such Transaction Document, Clearance, notice, certificate, instrument or other document, additionally and at its own expense, provide to such Person: (i) in the case of any Transaction Document, any communication from any Governmental Agency and any Clearance, certified, official English translation prepared by: (A) a translator identified as an approved translator for the high court of any State in India; or (B) another translator reasonably acceptable to the Lender; and (ii) in the case of any other document, an English translation thereof certified by an Authorized Officer of the Borrower to be complete and accurate in all material respects.
(o)	Project Costs and Financing Plan
	The Borrower shall have finalized the Project Cost and the Financing Plan after incorporating the views of the Lenders Engineer to the satisfaction of the Facility Agent.
(p)	Other Conditions
	The Lender shall have the right to stipulate other conditions, after consultation with the Borrower, prior to the First Utilisation Date and the Borrower agrees to abide by the same.

Part C: Conditions Precedent to each Utilisation

(a) Obligations

(i) The Borrower shall have performed in all respects, all of its obligations required to be performed under the Transaction Documents prior to the date of such Utilisation and the other Material Project Participants shall have performed in all respects all of their respective material obligations

134

	required to be performed under the Transaction Documents prior to the date of such Utilisation.
(ii)	The Borrower shall have paid all fees, expenses and other charges then payable by it under the Finance Documents.

(b) Utilisation

(i)	The Borrower shall have delivered to the Facility Agent in the form set out in Schedule 2 duly completed and in substance satisfactory to the Facility Agent, a Utilisation Request.
(ii)	The Facility Agent shall have received the certification of the Lenders Engineer referred to in Clause 8.4 (Commitment Fee) with respect to the Drawdown Schedule Period in which the relevant Utilisation occurs.
(iii)	The Borrower shall have procured and furnished to the Facility Agent, prior to each subsequent Utilisation, a certificate each from: (a) a chartered accountant; and (b) a Director of the Borrower, confirming that the proceeds of the preceding Utilisation have been utilized only for the purposes of Project Costs as permitted under this Agreement.
(iv)	The Borrower shall have complied with the provisions of Clause 18.9(i) of this Agreement.

(c) Debt: Equity Ratio

(i)	The Borrower shall have provided evidence to the satisfaction of the Lender that the ratio of Debt to Equity for meeting the Project Cost does not exceed 75:25. The Facility Agent shall have received a certificate from an Authorized Officer of the Borrower confirming that the Debt to Equity ratio of the Borrower would not exceed 75:25 after the relevant Utilisation. For the purpose of calculating Debt to Equity ratio, any Cost Overrun which has been funded by way of subscription to Equity shall be excluded.
(ii)	The Facility Agent shall have received a certificate each from: (a) a chartered accountant; and (b) a Director of the Borrower stating that the Required Equity required to have been brought in as on the relevant Utilisation Date has been brought in.
(iii)	The Borrower shall have complied with the provisions of Clause 18.9(ii) of this Agreement.
(iv)	For the purpose of calculating the ratio under this sub-clause (c)(iv):

(a) any Equity invested by or in the Borrower other than for the purposes of the Project or any equity/ shareholding of the Borrower in any Person shall be excluded, and

135

(b) the calculation of Equity for the purposes of this sub-clause (c)(iv) shall be done on an unconsolidated basis. By way of illustration, if Rs. 100 is invested into the Borrower by way of equity, of which Rs. 40 is used by the Borrower to subscribe to shares of its subsidiary, only the remainder Rs. 60 shall be used for the purposes of calculating Equity under this sub-clause (c)(iv).

(d) Events of Default, Legal Proceedings, Representations and Warranties

(i)	There shall be no Event of Default or Potential Event of Default under the Transaction Documents which has not been cured or waived in accordance with the terms of the Transaction Documents, and all Transaction Documents shall be in full force and effect and all representations and warranties made by the Borrower and any other Material Project Participant in any Transaction Documents shall be true and correct in all respects with the same force and effect as though such representations and warranties had been made on and as of such date of Utilisation.
(ii)	The Borrower shall have delivered to the Facility Agent, a certificate of an Authorized Officer of the Borrower stating that there are no Legal Proceedings having a value over Rs. 10,00,00,000 (Rupees Ten crores) pending or threatened (as evidenced by a notice or receipt of communication in writing) in India or any other jurisdiction against the Borrower or Sponsor or their assets or the Major Project Parties and there are no Legal Proceedings pending or threatened in India or any other jurisdiction regarding the effectiveness or validity of any of the Clearances or the Transaction Documents.
(iii)	The Borrower shall certify that no Adverse Change has occurred with respect to the Project.
(iv)	There shall not have occurred any event that would restrict directly or indirectly the Borrower’s borrowing power or authority or its ability to borrow under the Finance Documents due to any provision in its Memorandum and Articles of Association or any provision contained in any document by which the Borrower is bound, or any Applicable Law.

(e) Security

(i) Each of the Security Documents and the Security Interest over the assets created thereunder in favour of the Security Trustee required, under the terms of this Agreement, to be created as of the relevant Utilisation Date for the benefit of the Secured Parties shall be in full force and effect including without limitation, the Security Interest required to be created over any property in accordance with Clause 18.7.3.

136

(ii)	Without prejudice to the generality of Clause (e)(i) above, the Borrower shall have entered into the Share Pledge Agreement and the same shall be in full force and effect, (including obtaining of all consents, authorisations, registrations and filings required to create, perfect and maintain the same in full force and effect) prior to the Coal Investment JV Utilisation.
(iii)	The Borrower shall have obtained the written consent of the relevant parties for execution and performance of the Security Documents.
(iv)	The requirements of this Clause (e) shall not apply to the extent that they are already satisfied as per the requirements of Clause (k) of Part B above.

(f) Permits and Consents

(i)	The Borrower shall have obtained and cause to be maintained in full force and effect all Clearances (other than those Clearances which are expressly permitted under this Clause (f) to be obtained at a different time) required to be obtained prior to the date of the particular Utilisation;
(ii)	The Borrower shall confirm that all Clearances and corporate approvals previously obtained shall remain in full force and effect and no event shall have occurred which would render void any of the above;
(iii)	With respect to any Utilisation occurring on or after June 30, 2009, the Borrower shall have obtained and shall cause to be maintained in full force and effect the: (a) chimney height clearance as may be required for the Project, from the Airports Authority of India; and (b) all Clearances required for obtaining the requisite water drawal required for the Project from the Hirakud Dam/any other source; and
(iv)	With respect to any Utilisation occurring on or after a date which is six (6) months prior to the Date of Commercial Operation of each Unit (and, in the case of the first Unit, three (3) months prior to the Date of Commercial Operations of the first Unit), all required environmental Clearances (other than those specifically mentioned in sub-Clause (iii) above) from the Government of Orissa/other statutory bodies, shall have been obtained by the Borrower to the satisfaction of the Lender.

(g) Certificates

(i)	On the date of each Utilisation, after giving effect thereto, the Borrower shall have provided a certificate to the Facility Agent confirming: (a) satisfaction of all ratios and financial covenants as set out in the Finance Documents; and (b) compliance with all Finance Documents.
(ii)	The Borrower shall have provided a certificate issued by an Authorized Officer of the Borrower stating that all representations and warranties of the Borrower, Sponsor and to the best of the knowledge of the Borrower

137

	after due enquiry of the Major Project Parties to the Transaction Documents are true and correct in all respects with the same force and effect as though such representations and warranties have been made on and as of the date of Utilisation.
(iii)	The Facility Agent shall have received a certificate from an Authorized Officer of the Borrower certifying that the Project and the Borrower are in compliance in all respects with all Applicable Law as in effect on date of the relevant Utilisation.
(iv)	The Borrower shall have provided a certificate, in form satisfactory to the Facility Agent signed by an Authorized Officer of the Borrower and expressed to be effective as of the date of the relevant Utilisation, stating that the Borrower is in compliance with all provisions of the Transaction Documents.
(v)	The Borrower shall have provided a certificate to the Facility Agent from the Lenders Engineer (or confirmed by the Lenders Engineer) that the amounts requested under the Utilisation are in accordance with the Base Case, and the Lenders Engineer shall have raised no objection to the making of the relevant Utilisation.

(h)	Absence of Unsatisfied CP Notice and Drawstop Notice
	The Facility Agent shall not have issued or received an Unsatisfied CP Notice or Drawstop Notice with respect to such Utilisation, which has not been withdrawn or revoked.
(i)	Development Expenses
	If any part of any Utilisation is to be utilised to pay or reimburse any Project Costs constituting development expenses, preoperative expenses and preliminary expenses, the Facility Agent shall have received a certificate from an Authorized Officer of the Borrower setting forth the amounts and nature of such expenses, to the extent the Facility Agent shall not have received an audit with respect to such expenses.
(j)	Lien Waivers
	The Facility Agent shall have received the lien waivers, if any, contemplated to be delivered pursuant to the provisions of the Project Documents.
(k)	Project
	The Borrower shall be lawfully possessed of the ownership, use and other interests or rights with respect to the Project Site and on which it purports to grant Security Interest including any special purpose facilities on the Project Site, free of all Security Interests (other than Permitted Security Interest), the adequacy of

138

which shall be satisfactory to the Lenders Engineer. Provided that, the Borrower shall only be required to be so possessed:

(i)	of the land to be transferred from the Sponsor and Vedanta Aluminium Limited prior to any Utilisation occurring six (6) months after First Utilisation; and
(ii)	of the land required for ash disposal for any Unit prior to any Utilisation occurring on or after a date which is six (6) months before the Date of Commercial Operation of such Unit.

(l)	Cost Overrun
	The Sponsor shall have financed/funded the Cost Overrun if any, in the form and manner as provided in the Sponsor Support Agreement.
(m)	Sale of Balance Power
	With respect to any Utilisation occurring on or after a date which is two (2) months prior to the Project COD, the Borrower shall have finalized and entered into the PPA (other than GRIDCO PPA) or other sale arrangement(s), to the satisfaction of the Lender, for the offtake of the balance power of the total 2400 MW power generation capacity of the Project.
(n)	Arrangements for water
	With respect to any Utilisation occurring on or after June 30, 2009, the Borrower shall have made the necessary arrangements and obtained the necessary approvals, to the satisfaction of the Facility Agent, for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, or any other Person as may be required for the Project, which will have been reviewed by the Lenders Engineer.
(o)	Transaction Documents

(i)	The Borrower shall have entered into the Transaction Documents required to be entered into as of the relevant Utilisation Date.
(ii)	All Transaction Documents entered into by the Borrower shall be in full force and effect.
(iii)	The Borrower shall, in a manner satisfactory to the Lender, carry out necessary changes and modifications as are required by the Lender or are recommended by the Lenders Counsel, Lenders Engineer and Lenders Insurance Consultant and deemed necessary by the Lender to be made to the Transaction Documents arising out of any due diligence conducted by them or otherwise.

139

(iv) The Borrower shall ensure that the Major Project Documents contain adequate liquidated damages for delay in commissioning of the Plant and performance of the shortfall guarantees.

(p)	Amendment to Articles of Association
	With respect to any Utilisation occurring on or after a date which is three (3) months from the date of this Agreement, the Borrower shall have amended its Articles of Association, for inter alia enhancing the authorized capital and borrowing power of the Borrower as required under the Financing Plan, and appointment of nominee directors as required under this Agreement, and making such other changes as may be required by the Lender.
(q)	Credit Rating
	With respect to any Utilisation occurring after a date which is three (3) months from the date of this Agreement, or such other time period as may be agreed by Facility Agent, the Borrower shall have complied with its obligations under Clause 18.26 (Credit Rating).
(r)	Drawstop Notice and Lending Confirmation Notice
	With respect to the relevant Utilisation, No Drawstop Notice referred to in Clause 5.5 (Drawstop Notices) shall have been issued, which has not been subsequently revoked and a Lending Confirmation Notice referred to in Clause 5.4 (Procedure for Utilization) shall have been issued.

140

SCHEDULE 2

REQUESTS

PART I
UTILISATION REQUEST

From:	Sterlite Energy Limited
	(as the Borrower)
To:	(i) The Facility Agent (ii) Lender
	Dated: [•]
	UTILISATION REQUEST (NO [•])
	Dear Sirs
	USD 140,000,000/- Foreign Currency Facility Agreement dated [_______________] (the “Facility Agreement”)

1.	We refer to the Facility Agreement. This is an utilisation request. Terms defined in the Facility Agreement shall have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
2.	We request you for the disbursement of loan as follows;

Proposed Disbursement Date:	[•] (or, if that is not a Business Day, the next Business Day)
Amount:	[•] or, if less, the Available Facility
First Interest Period	[• Months]

3. The disbursement of loan is required for the import of capital Equipment and Machinery as under:

		Name and particulars
	Description of the	of standard overseas
	capital Equipment	supplier
Sr. No.	and Machinery	(“Supplier”)	Amount in USD

141

4.	We confirm that each condition specified in clause [___] (Conditions precedent, as applicable to this disbursement) of the Facility Agreement is satisfied on the date of this Utilisation Request unless otherwise stated in this paragraph.
5.	We confirm that no default has occurred and is continuing or would occur as a result of the utilisation which is the subject of this Utilisation Request.
6.	We hereby make the Repeating Representations.
7.	We request you to:
	* make disbursement of USD (______ ), to the following USD Nostro account of the bank handling the import documents for onward credit to the Supplier, as per the documents evidencing import of equipment and machinery based on the certificate issued by the relevant bank nominated to handle documents evidencing the import (which include interalia shipping documents, commercial invoice and other such document) and release of invoice payment accompanied by the confirmation in relation to the documents from the Facility Agent, as and when received by the Lender in a form satisfactory to it.
	* make disbursement of USD (______ ) to the following USD Nostro account of the LC issuing bank for onward credit to the Supplier based on the confirmation of the LC issuing bank for compliance of all the terms of the LC.

Bank:	[•]
Branch:		[•]
SWIFT Code:	[•]
Account name:		[•]
Account number:	[•]
Project Details:	[•]
Payment reference:	[•]

8. This Utilisation Request is irrevocable.

For and on behalf of Sterlite Energy Limited

(Sign)
Name:	[•]
Title:	[•]

*Strike out whichever is not applicable.

142

SCHEDULE 3

FORM OF TRANSFER CERTIFICATE

To:	[Borrower] [Facility Agent] [Security Trustee]
From:	[The New Lender] (the “New Lender”) and [The Original Lender] (the “Original Lender”)

Dated:

US$140,000,000 Facility Agreement
dated [                    ] 2009 (the “Facility Agreement”)

1.	We refer to the Facility Agreement. This is a Transfer Certificate. Terms defined in the Facility Agreement shall have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.
2.	We refer to Clause 21.4 (Procedure for transfer) of the Facility Agreement:

(a)	The Original Lender and the New Lender agree to the Original Lender transferring to the New Lender by novation all or part of the Original Lender’s Commitment, rights and obligations referred to in the Schedule in accordance with Clause 21.4 (Procedure for transfer) of the Facility Agreement.
(b)	The proposed Transfer Date is [                    ].
(c)	The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 26.2 (Addresses) of the Facility Agreement are set out in the Schedule.

3.	The New Lender expressly acknowledges the limitations on the Original Lender’s obligations set out in Clause 21.3 (c) (Limitation of responsibility of Existing Lender) of the Facility Agreement.
4.	This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.
5.	This Transfer Certificate is governed by English law.

143

THE SCHEDULE
Commitment/rights and obligations to be transferred

	Participation in Loans	Next Interest Payment
Commitment Transferred	Transferred	Date
Facility : [•]	Facility : [•]	Facility : [•]

Administration Details:
New Lender’s Standing Payment Instructions:	[                              ]
Facility Office address:	[                              ]
Telephone:	[                              ]
Fax:	[                              ]
[Email Address:]	[                              ]
Attn/Ref:	[                              ]

The Transfer Date is confirmed as [                    ].

[Existing Lender]	[New Lender]
By:	By:
[Existing Lender]
By:

144

SCHEDULE 4

BASE CASE

PROFIT & LOSS ACCOUNT

Profit & Loss	31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Account	Mar-07		Mar-08		Mar-09		Mar-10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Revenue
Revenue from Tariff — GRIDCO		0.00		0.00		0.00		461.40		868.00		882.17		898.47		907.37		921.29		936.15		951.97		968.81		986.69		1005.67		1025.78		1047.08		1077.01
Revenue from Sale to others		0.00		0.00		0.00		342.17		2326.73		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59		2463.59
Interest Income on DSRA & Cash Balance		0.00		0.00		0.00		0.00		3.20		7.53		7.25		6.98		6.70		6.42		6.15		5.87		5.59		5.32		5.04		4.76		4.64
Total Revenue		0.00		0.00		0.00		803.57		3197.92		3353.30		3369.31		3377.94		3391.58		3406.16		3421.71		3438.27		3455.88		3474.58		3494.42		3515.43		3545.24
Expenditure
Fuel Cost		0.00		0.00		0.00		313.41		1249.20		1355.64		1409.87		1466.26		1524.91		1585.91		1649.35		1715.32		1783.93		1855.29		1929.50		2006.68		2086.95
O&M		0.00		0.00		0.00		58.41		232.85		252.69		262.80		273.31		284.24		295.61		307.44		319.73		332.52		345.82		359.66		374.04		389.00

145

Profit & Loss	31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Account	Mar-07		Mar-08		Mar-09		Mar-10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Expense
Orissa Cess on sale outside state		0.00		0.00		0.00		9.78		66.48		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39		70.39
Total Expenditure		0.00		0.00		0.00		381.60		1548.52		1678.72		1743.05		1809.96		1879.54		1951.91		2027.17		2105.44		2186.84		2271.50		2359.54		2451.11		2546.34
PBDIT		0.00		0.00		0.00		421.97		1649.40		1674.58		1626.26		1567.98		1512.04		1454.25		1394.54		1332.83		1269.04		1203.08		1134.87		1064.32		998.90
Interest
Interest on Loan		0.00		0.00		0.00		179.43		716.68		701.10		664.20		627		590.40		553.50		516.60		479.70		442.80		405.90		369.00		332.10		294.54
Interest on WC		0.00		0.00		0.00		13.05		44.61		47.24		48.22		49		50.15		51.21		52.32		53.48		54.70		55.98		57.31		58.71		60.27
Total Interest		0.00		0.00		0.00		192.47		761.30		748.34		712.42		676		640.54		604.71		568.92		533.18		497.50		461.88		426.31		390.81		354.81
PBDT		0.00		0.00		0.00		229.49		888.10		926.24		913.84		892		871.50		849.55		825.62		799.65		771.54		741.20		708.56		673.51		644.09
Depreciation		0.00		0.00		0.00		104.28		404.94		422.89		422.89		423		422.89		422.89		422.89		422.89		422.89		422.89		422.89		422.89		422.89
PBT		0.00		0.00		0.00		125.21		483.16		503.35		490.96		469		448.61		426.66		402.74		376.76		348.65		318.32		285.67		250.63		221.21
Tax		0.00		0.00		0.00		14.19		54.74		57.03		55.63		53		50.83		48.34		45.63		42.69		39.50		36.07		32.37		28.40		25.06
Deferred Tax		0.00		0.00		0.00		28.37		109.48		114.06		111.25		0		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
PAT		0.00		0.00		0.00		82.65		318.93		332.26		324.08		416		397.78		378.32		357.11		334.07		309.15		282.25		253.31		222.23		196.14

146

Projected Cash Flow of the Company

	31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Cash Flow Statement	Mar-07		Mar-08		Mar-09		Mar-10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Inflows
Cash flow from Operations		0.00		0.00		0.00		186.93		723.88		755.15		746.97		838.45		820.67		801.21		779.99		756.96		732.03		705.14		676.19		645.12		619.03
Deferred Tax		0.00		0.00		0.00		28.37		109.48		114.06		111.25		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Equity		512.06		102.94		728.80		636.28		69.92		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Subordinate Loans		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Senior Loans		0.00		901.12		3130.29		1908.83		209.76		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Working capital Finance		0.00		0.00		0.00		296.37		123.00		10.06		8.92		8.29		9.22		9.66		10.11		10.58		11.08		11.59		12.13		12.69		14.19
Total inflows		512.06		1004.06		3859.09		3056.79		1236.03		879.27		867.14		846.74		829.89		810.86		790.11		767.54		743.11		716.73		688.32		657.80		633.23
Outflows
Capital Expenditure		512.06		1004.06		3859.09		2432.87		251.12		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Loan Repayments-Senior Loans		0.00		0.00		0.00		0.00		153.75		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		307.50		329.46
Loan Repayments-Subordinated		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00		0.00

147

	31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-		31-
Cash Flow Statement	Mar-07		Mar-08		Mar-09		Mar-10		Mar-11		Mar-12		Mar-13		Mar-14		Mar-15		Mar-16		Mar-17		Mar-18		Mar-19		Mar-20		Mar-21		Mar-22		Mar-23
Loans
Increase in Current Assets		0.00		0.00		0.00		395.16		164.00		13.42		11.90		11.05		12.30		12.88		13.48		14.11		14.77		15.45		16.17		16.91		18.93
Total outflows		512.06		1004.06		3859.09		2828.03		568.87		320.92		319.40		318.55		319.80		320.38		320.98		321.61		322.27		322.95		323.67		324.41		348.39
Opening cash		0.00		0.00		0.00		0.00		228.76		640.31		908.09		1105.30		1282.95		1442.51		1582.47		1701.05		1796.45		1866.76		1910.00		1924.12		1906.97
Additions		0.00		0.00		0.00		228.76		667.16		558.36		547.74		528.18		510.09		490.49		469.12		445.93		420.84		393.77		364.65		333.39		284.83
Cash available before DSRA		0.00		0.00		0.00		228.76		895.92		1198.67		1455.84		1633.49		1793.05		1933.00		2051.59		2146.99		2217.29		2260.53		2274.65		2257.51		2191.81
Transfer to DSRA Account		0.00		0.00		0.00		0.00		255.61		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		-9.22		0.93
Equity Dividend paid		0.00		0.00		0.00		0.00		0.00		299.80		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76		359.76
Closing balance		0.00		0.00		0.00		228.76		640.31		908.09		1105.30		1282.95		1442.51		1582.47		1701.05		1796.45		1866.76		1910.00		1924.12		1906.97		1831.11

148

SCHEDULE 5
CLEARANCES

1.	Final approval of the Orissa Electricity Regulatory Commission for the tariff to be paid under the PPA where required under Applicable Law.
2.	Environmental Clearance(s) from the Ministry of Environment and Forests, Government of India for the setting up and operation of the Project (including intake channel).
3.	Clearance in connection with the height of the chimney(s) from the Airports Authority of India.
4.	All consents and permissions required for supply of requisite water for the Project from Hirakud dam or any other source.
5.	Registration from the Provident Fund Commissioner.
6.	Registration under Section 7 of the Contract Labour (Regulation and Abolition) Act, 1970.
7.	Import licenses from the Director General of Foreign Trade for automatic clearance for the import of capital goods and raw materials.
8.	Sales Tax Registration, Government of Orissa.
9.	Insurance policy under the Public Liability Insurance Act, 1991.
10.	Applicable town planning/ local authority approval for construction, if required.
11.	Rights of Way for project roads, access roads, water intake/outlet and coal transportation from the concerned private parties.
12.	Approval of the Labour Commissioner under the Employees State Insurance Act, 1948, if applicable.
13.	Pollution Control Board approvals with respect to air and water pollution for the commencement of construction and for operation.
14.	Consent of Chief Controller of Explosives, Nagpur and Home Department, Government of Orissa/District Magistrate for the storage, possession and use of explosives, and also for fuel and flammable gas if required.
15.	Approval for communications facilities (wireless) from the Department of Telecommunications, Ministry of Communication and Information Technology, Government of India, if required.
16.	Authorization to collect, treat, store and dispose of waste (including fly ash).
17.	Permissions from the appropriate fire authorities, if applicable.

149

18.	All necessary requisite approval/s under Factories Act, 1948 and from Chief Inspector of Factories including in relation to fire fighting.
19.	Approvals from the Electrical Inspectorate or other relevant authorities in respect of equipment.
20.	Certificate of Importer-Exporter Code from the Ministry of Commerce, Government of India.
21.	Coal Block Allocation from the Ministry of Coal, Government of India, dated for allocation of the Coal Mines.
22.	Central Excise Registration Certificate from Ministry of Finance (Department of Revenue) for manufacturing of excisable goods.
23.	Railway Approval for proposed private siding near the Project Side to service the Project.
24.	Permission under Section 281(1)(ii) of the Income Tax Act, 1961.
25.	Any other clearances required as may be specified by the Facility Agent.

150

SCHEDULE 6

LENDERS ENGINEER SCOPE OF WORK

Sterlite Energy Limited (SEL)
Scope of Services for Lenders Independent Engineer (LIE)

The Scope of LIE Services is broadly mentioned as below. However, the Scope shall not be limited to what is specified here & it is the sole responsibility of the LIE to provide the LIE Services as required for successful completion and operation of 4*600 MW Coal based Thermal Power Plant at Jharsuguda, Orissa.

The Scope of Services is divided into four phases:

Phase I	Project Review and Assessment (Until Financial Closure)
Phase II	Construction Monitoring
Phase III	Performance Testing
Phase IV	Annual Operational Review

Phase I: Project Review and Assessment (Until Financial Closure)

The Lenders Independent Engineer shall provide professional engineering consultancy services to the Lenders or other party so designated by the Sponsors and approved of by the Lenders in writing as well as SEL (the “Clients”).The Lenders Independent Engineer’s review and recommendation (where appropriate) shall include, but will not be limited to, the following:

36.

37. A. PLANT DESIGN REQUIREMENTS

The Lenders Independent Engineer will assess the compatibility of the design on the basis of following:

*	Requirement of Power Purchase Agreement/s (PPA)
*	Plant operating requirements
*	Site characteristics and its acceptability for the development proposed
*	Fuel Characteristics
*	Off-site transport requirements
*	Evacuation requirements
*	Compliance with statutory regulations

38.	B. DESIGN OF PROJECT FACILITIES
	The Lenders Independent Engineer will review the conceptual design of major on-site facilities included within the Project boundary as well as Project-related off-site facilities such as those associated with the transmission of electric power to the procurers, transmission line, coal transportation /MGR facility, fuel but not to include, make-up water, wastewater and water etc.
	Major equipment components and systems will be reviewed by mechanical, electrical, civil / structural, and environmental engineers for Boiler, turbine and

151

Generator (BTG) including its Control system and any other major critical equipment/system, with regard to:

*	Capability of design to perform as required in all anticipated operating modes meeting all health and safety standards.
*	Capability of design to meet plant availability and reliability requirements.
*	Conformance of design with “good engineering practice”, i.e. industry standards.
*	Any major equipment component or system design feature that does not appear to meet design, performance or operating requirements or fails to adhere to good engineering practice will be identified. The Lenders Independent Engineer will provide an opinion on the quality of the design and equipment with respect to their effect on the anticipated service life of the facility, the degree of maintenance needed to meet performance requirements, long-term availability, and anticipated performance degradation over the term of the Client’s interest in the Project.
*	The extent to which each major equipment component proposed for the Project has been operating commercially under similar conditions and comment on the anticipated impact of limited operating experience, where applicable, on plant performance including expected plant degradation.
*	For any information not available, the Lenders Independent Engineer will note the significant issues requiring review, which could not be addressed at this time.

The above scope comprise broadly review of the following:

*	Design Criteria and Design Basis Reports
*	Plot Plan & Equipment floor drawings of all the systems
*	Design Calculations

The purpose of this review would be to determine if the equipment can meet the project requirements and to identify any risks associated with the project as planned.

39. C. EPC AND OTHER PACKAGES

The Lenders Independent Engineer will review the following elements relating to the EPC and
other various equipment packages:

*	Scope of supply of EPC and other various equipment packages including water supply pipeline contract, transmission line contract, coal transportation / MGR facility construction contract etc.
*	Assessment of EPC contractor and other subcontractors, equipment suppliers based on their past experience, projects executed with similar technology, operational parameters of projects already implemented alongwith period of operations etc.
*	Terms and conditions (including a comparison with terms and conditions of PPA with regards to performance guarantees, force majeures, damages for delays etc. and potential liabilities arising thereon)
*	Integration issues between the EPC and other various equipment packages
*	Technical provisions associated with equipment supplier’s responsibilities
*	Provisions for provisional and final acceptance.

152

*	Provisions for qualifying and selecting sub-contractors.
*	Provisions for liquidated damages
*	Limits on total liability and individual liability caps.
*	Change order procedures.
*	Quality assurance measures
*	The procedures to develop, review, and approve periodic drawdown requests.
*	Scheduling and lay down provisions for interconnecting to off-site (out-of-scope) facilities.
*	Evaluation of project schedule and potential for delays, damages or force majeure provisions for spares.

D.	CONSTRUCTION SCHEDULE
	The Lenders Independent Engineer will review the proposed construction milestone schedule for the Project and determine that adequate provisions have been made for the following:

*	Design
*	Equipment procurement
*	Equipment fabrication
*	Shipment / Transportation
*	Installation
*	Start-up
*	Testing
*	Unknown or variable elements in the schedule

E.	TOTAL PROJECT COST ESTIMATE
	The Lenders Independent Engineer will review the following:

*	The EPC and various other equipment suppliers’ scope of supply and corresponding cost estimate methodology.
*	The EPC / civil works contracts and corresponding cost estimate methodology.
*	Assessment of the EPC and other equipment packages finalized for optimization of performance and costs
*	The taxes, levies, freight and inflation indexation applicable to the EPC and other equipment suppliers’ costs
*	Identify major equipment not covered in the EPC and other equipment packages finalized and cost impact, if any.
*	Assess the methodology used to develop the total Project cost estimate.
*	Compare the total Project cost estimate to that of similar projects.
*	Evaluate to what extent cost items are based on estimates versus an actual fixed price and identify those items that are not fixed price along with the possible risk associated with these variables.
*	Opine on the adequacy of the contingency and total project cost estimate.

F.	DRAWDOWN SCHEDULE
	The Lenders Independent Engineer will review the drawdown schedule prepared by the Company and comment on whether each monthly/quarterly cash

153

	drawdown amount is consistent with the likely Project schedule and requirements under EPC and the various equipment supply contracts.
G.	REVIEW PERFORMANCE GUARANTEES
	The Lenders Independent Engineer will review and comment on the following:

*	The guarantees provided by EPC and other package suppliers to assess the potential for compliance with the applicable project contracts and permits.
*	The guarantees provided by EPC and other equipment manufacturer to assess the level of support that these equipment guarantees provide to the major package suppliers’ guarantees.

H.	REVIEW PERFORMANCE TESTING CRITERIA
	The Lenders Independent Engineer will review the plant performance test criteria as proposed by the contractor and comment on the following:

*	Adequacy of arrangements made by the company
*	Review of the Performance Test plans and procedures.
*	Reasonableness of performance criteria.
*	Ability of the test to unambiguously demonstrate net power output, total input, emissions, load-following capability, and other characteristics of the Project to determine whether manufacturers’ and contractor’s guarantees are met.
*	Adequacy of the test design.
*	Ability to extrapolate test results over the expected life of the Project.
*	Conformance of test procedures to established codes and standards for testing power plant equipment.

I.	OPERATIONS AND MAINTENANCE (“O&M”) ARRANGEMENTS
	Based on the O&M arrangements to be undertaken in-house Or through and O&M operator, the Lenders Independent Engineer will review and comment on the following atleast 6 months prior to commencement of operations of Unit 1 of the project:

*	Proposed staffing levels.
*	Provisions for Major and Minor Maintenance
*	The Technical Services Agreement for adequacy.
*	The adequacy of the start-up and long-term operating procedures.
*	The reasonableness of the annual Technical Services Agreement fee.
*	The guarantees, LDs under the Technical Services Agreement and the cap on the LDs.
*	The reasonableness of the proposed training and preventive maintenance programs.
*	Adequacy of projected non-operating days due to maintenance.
*	Risk sharing between Owner and Technical Services Agent.

J.	NON-FUEL OPERATING AND MAINTENANCE COST ESTIMATE
	The Lenders Independent Engineer will review and comment on the O&M cost estimate and comment on its adequacy/ reasonableness.
K.	TECHNICAL INPUT TO THE PROJECT PRO FORMA/ FINANCIAL MODEL

154

The Lenders Independent Engineer will review and comment on all inputs to the Proforma which have a technical content, including but not limited to the following:

*	The technical data input to the Client’s or the Owner’s Project Pro forma.
*	The model used to estimate annual fuel and operating costs and annual revenues from the sale of power will be evaluated to determine if it accurately accounts for variation in, but not limited to, ambient temperature, power sales, and estimated plant availability.
*	How well the assumptions and projections made in the Pro Forma are supported by contract guarantees, performance testing, quality of the design and equipment, and the experience of the Project participants.
*	That the model accurately reflects the performance requirements of the Project documents (to include, but not limited to the PPA, EPC and other the Equipment Supply Contracts and O&M arrangements

L.	PROJECT PRO FORMA/ FINANCIAL MODEL SENSITIVITIES
	The Lenders Independent Engineer will conduct analysis on the Project Pro Forma as directed by the Client. The analysis shall include, but not be limited to, the following:

*	Fuel price increases.
*	Performance shortfalls compared to liquidated damages payments.
*	Determination of acceptable levels of End Finance requirements

M.	FUEL SUPPLY ARRANGEMENTS, MINING ARRANGEMENTS & FUEL TRANSPORTATION
	The Lenders Independent Engineer will review the following aspects of the fuel supply and determine:

*	The Primary and Secondary Fuel required for the Project
*	Coal Linkage arrangements
*	Whether the quality of the coal available in the mines meets the standard operating requirements of the equipments supplied for the Project and enables the Project to operate within projections.
*	Coal Block allotment letters
*	Approvals required for commencement of mining operations including availability of mining rights
*	Whether the proportionate mining reserve allocated to the project meets the envisaged requirement for 1000 MW on an annual basis
*	Milestones for satisfactory progress on construction of any fuel supply infrastructure required for delivery of fuel to the Project, identify incompatibilities of any required infrastructure with requirements of Project
*	Any fuel supply infrastructure and/or transportation constraints of any party involved in fuel supply and Project
*	Any terms relating to interruptibility in supply of fuel or availability of fuel.
*	Adequacy of supply arrangements during testing period
*	Adequacy of the Project’s fuel storage capability
*	Adequacy of fuel measurement facilities to satisfy requirement of fuel related agreements

155

*	Fuel sampling procedures
*	Insurance issues
*	List any required fuel related permits which the Project or fuel related third-parties must obtain in order for the Project to receive delivery of fuel and operate; discuss any issues associated with any of these permits that may affect the Project’s construction schedule or operation
*	Proposed fuel delivery system, delivery schedule, flexibility of delivery schedule, and adequacy of unloading facilities
*	The coal transportation, loading and unloading facilities.
*	Alternative routes for fuel supply
*	Provisions for back-up fuel arrangements
*	The annual quantum of requirement and closest available source for the secondary fuel
*	Any other issues that would be faced while sourcing the fuel for the Project.

N.	WATER SUPPLY
	The Lenders Independent Engineer will review and comment on the Water Supply arrangements for the Project including, but not limited to, the following:

*	Provisions for sufficient water supply to the project throughout the year and availability of a reliable source of suitable quality water for the full term of the Lenders’ loan
*	Construction water availability
*	Water works for water intake

O.	POWER EVACUATION ARRANGEMENTS
	The Lenders Independent Engineer will review and comment on the power evacuation arrangements for the Project including, but not limited to, the following:

*	Provisions for sufficient evacuation capacity for all envisaged procurers
*	Feasibility of as also the arrangements for interconnection with regional and national grid

P.	ASH DISPOSAL ARRANGEMENTS
	The Lenders Independent Engineer will review and comment on the ash disposal arrangements for the Project including, but not limited to, the following:

*	Provisions for sufficient space and infrastructure for ash evacuation and disposal from the project
*	Compliance with regulatory guidelines for ash disposal for the thermal power projects

Q.	CONSISTENCY OF PROJECT DOCUMENTATION
	Considering the interrelationship between the various documents, the Lenders Independent Engineer will review all available Project documentation for the purpose of identifying missing, inconsistent or unresolved issues. The Lenders Independent Engineer will review and comment on:

* The consistency of the various contract provisions within each of the technical contracts.

156

* The capability of the Project as designed to meet the Project operating, contractual and licensing requirements.

	For each of the activities in the scope of work the Independent Engineer shall, at all the times, compare with the requirements of the PPA.
R.	REVIEW OF PERMITS AND LICENSES
	The Lenders Independent Engineer will review the permitting schedule and all available permits and licenses or permit/license applications for the project. Independent Engineer will:

*	Assess the capability of the Project as designed to meet the technical requirements specified in the Project’s permits licenses
*	Establish contact with the appropriate environmental or energy regulatory agencies for the purpose of independently identifying and determining the current status of the major permits and licenses to construct and operate the Project.
*	Review permits and approvals required for coal mining of the allotted coal block and preparedness of JV partners for the same
*	Identify what major permits have not been obtained and comment on the likelihood that they may or may not be able to be obtained in a timely manner to support the Project schedule.
*	Assess the adequacy of proposed evacuation facilities for the off take of power.

S.

ENVIRONMENTAL IMPACT ASSESSMENT

The Lenders Independent Engineer would review the permits and licenses required for the construction and operation of the facility. The Environmental Impact Assessment report would be reviewed to address the general quality and accuracy of the environmental assessment of the project, the plume and dispersion modeling techniques and the meteorological data used. Guaranteed Emission levels would also be reviewed. The typical environmental issued to be addressed are:

*	Erosion Control Measures and other environmental protection measures during construction
*	Storage and handling of oils and hazardous chemicals during construction and operation.
*	Provisions for disposal of wastes and control of flooding during plant operation.
*	Provisions for control of air pollution emissions during plant operation.

T. WORK PRODUCT

*	Preparation and delivery to the Client of:
*	Preliminary reports as required, and a final report at Financial Closure evaluating the proposed Project
*	Attendance at meetings with the Client, and their counsel as needed.
*	Participation in conference calls with Client, and their counsel as needed.
*	Advise and consult with independent insurance consultant.
*	Issue Independent Engineer’s Certificate verifying progress claimed in

157

	each periodic cash drawdown request by contractor throughout the construction period, as will be required under the loan documents.
*	Review and comment on:

1)	The contractor’s Loan Requisition Certificate, and
2)	The contractor’s Completion Certificate, and
3)	The testing procedures.

Phase II: Construction Monitoring

The Project will be supervised and monitored on a regular quarterly basis through successful construction and commissioning completion which will include:

*	Attending quarterly Project review meetings to assess quarterly progress in engineering, procurement, and construction activities and to review contractor’s presentation of problem areas.
*	Advising client on possible problems and delays that may arise in future, to ensure timely action to prevent the problems.
*	Advise client immediately of major problems that may arise.
*	Reviewing progress of design effort for compliance with the Project schedule.
*	Reviewing progress of preparation of procurement specification for timely issuance and allowance for lead times.
*	Reviewing progress of issuance of procurement contracts for conformity with the Project Schedule.
*	Reviewing overall procurement contracts progress.
*	Reviewing work plans and quality control procedures.
*	Conducting quarterly on-site visits for observations of the work in progress to determine that the Project is proceeding in general accordance with the Project schedule and the agreed upon design concepts.
*	Advise client on any dispute that arises between contractor and the company.
*	Reviewing quality control reports and field laboratory test reports.
*	Consulting with Client in advance of scheduled major inspections, tests, or start of important phases of work, including witness of major equipment tests at Sub-Contractors sites.
*	Reviewing change orders to the EPC Contract and other Equipment Supply Contracts and informing Client of the amount of change order(s) and its status. Lenders Independent Engineer will apprise the Client if the change has an impact on operations and maintenance of the facility and whether the cost indicated is satisfactory. In addition client shall be advised if design or construction is deviating from the agreed specifications.
*	Issue of Certification of completion of site work in accordance with approved Drawings / specifications
*	Review & approval of EPC contractor’s commissioning schedule, procedure and checklist and ensuring that these are followed
*	Supervision & co-ordination of commissioning and start-up activities
*	Reviewing monthly/quarterly Loan Requisition Certificate and supporting documentation. Reviewing actual budget and schedule against contract budget and schedule. Requesting changes or supplemental information as

158

	required to approve drawdown request. Signing monthly/quarterly Consulting Engineer’s Certificate and submitting to the Client.
*	Review and confirm contractor’s punch list items to be identified and completed in accordance with the construction contract. Verify facility is ready to start up and begin performance testing. The Independent Engineers’ representative would be present at site during start-up and commissioning.
*	Conference calls and briefings for the Client
*	Prepare and submit monthly/quarterly written reports to client.
*	After every visit the Independent Engineer would prepare a progress report outlining all activities completed and those scheduled for the coming and an independent assessment of the status. On conclusion of the site visit the Independent Engineer will issue a communication covering their expert recommendation on the request for draw of loan funds.

Phase III: Performance Testing

During performance testing, the Lenders Independent Engineer will:

*	Review test procedures developed by contractor and confirm compliance with applicable test codes and standards and with testing criteria specified in EPC and other Equipment Supply contract.
*	Monitor on site overall plant performance tests including, data collection procedures, testing instrumentation, and plant operating and testing personnel throughout the plant performance test.
*	Review test reports prepared by contractor or contractor’s testing consultant and verify data reduction procedures and correction calculations to EPC and other Equipment Supply Contract guarantee conditions.
*	Submit letter summarizing testing procedures and verifying attainment of each performance guarantee specified in the EPC and other Equipment Supply Contracts. Comment on accuracy of Contractor’s Test Report and identify any discrepancies or errors noted.
*	Monitor successful completion of each punch-list item by telephone. Make one final visit to Project site to verify punch-list items have been completed. Sign and submit Project Completion Certificate. Completion Report to include :

*	Facility design versus actual installation
*	Adequacy of facility interconnection for fuel, power, water and other requirements
*	Compliance with health, safety and other regulatory requirements
*	Confirmation that required governmental permits and licenses have been obtained for construction and operation.
*	Certification of Performance Test Results.

After performance testing Lenders Independent engineer shall:

*	Review of EPC Contractor’s final O&M Manual
*	Review of Plant completion report prepared by EPC Contractor

Phase IV: Annual Operational Review

During commercial operation, the Lenders Independent Engineer will:

159

*	Review the O&M manuals and comment on their completeness and compatibility to those of similar facilities. In particular, the scheduled maintenance, preventive maintenance, and spare parts programs will be reviewed.
*	Review the O&M training program and the O&M manuals, periodically monitoring actual classroom and hands-on instruction and reporting to lender on the training programs.
*	Review the O&M monthly report issued by the operator. Actual plant performance, heat rate, and on-line availability will be compared to expected performance. Causes for equipment component and plant forced outages will be assessed. Conformance with scheduled maintenance, preventive maintenance, and spare parts programs will be evaluated.
*	Conduct periodic site visits to assess overall operation. During the first visit each year, the operation would be renewed. The station outage records, and any planned modifications for the period since the last visit would be reviewed. One of the site visits will be scheduled to coincide with the annual plant maintenance outage to review the condition of the facility while the plant is shut down.
*	Submit periodic report to the Client, noting recurring problems along with recommendations for improving plant operations.
*	Review the budget and actual expenditure to ensure that operational parameters are generally following the input assumptions in the project pro-forma.

Further, an indicative list of documents to be submitted by SEL to the Lenders and to be reviewed by the Lenders Independent Engineer including inter-alia, the following:

Permits and Licenses:

Ø	Issued Permits and Permit Applications
Ø	Licensing Agency Correspondence (As Required)
Ø	Site Lease or Acquisition Agreement
Ø	Land Lease Agreement
Ø	Coal block allotment letters
Ø	Coal Mining JV agreement

Design and Operating Information:

Ø	Construction Contracts
Ø	Facility Design Criteria
Ø	Site Plan and General Arrangements
Ø	Electrical Single-Line Diagrams
Ø	Performance and Acceptance Testing Plan
Ø	Turbine /Generator Performance Data
Ø	Major Equipment Specifications and Purchase Orders
Ø	Auxiliary Power Listing
Ø	Selected Detailed Design Drawing
Ø	Construction Methodology and Construction Equipment to be utilized

Reports and Analysis:

160

Ø	Environment Impact Analysis
Ø	Mass Wasting Impact Analysis
Ø	Energy Output Analysis

Business Information:

Ø	Financial Model and Supporting Documents
Ø	Power Purchase Agreement
Ø	Electrical Interconnection Agreement
Ø	Operation and Maintenance Plan
Ø	Project Operating and Management Structure
Ø	Credit Facility Document

Cost and Schedule:

Ø	Project Cost Estimates (Detailed)
Ø	Engineering & Procurement Schedule
Ø	Construction Schedule
Ø	Project Schedule
Ø	Operation and Maintenance Cost Estimates (Including Spare Parts and Plant Staffing)

The Lenders Independent Engineer shall ask the Borrower & Lead Institution for any further documents, if required for execution of the assignment.

The scope of services provided above is not exhaustive and it shall be the sole responsibility of the LIE to render all services required to fulfill the obligations broadly envisaged herein. Further, LIE may have to provide written opinions/clarifications on any of the techno-commercial issues related to the project as requested by the lenders.

161

SCHEDULE 7

REPAYMENT SCHEDULE

NOS.	QTR. ENDING	YEAR	PRINCIPAL REPAYMENT		PERCENTAGE
			USD MILLION
1	DEC	2010		1.75		1.25	%
2	MAR	2011		1.75		1.25	%
3	JUNE	2011		1.75		1.25	%
4	SEPT	2011		1.75		1.25	%
5	DEC	2011		1.75		1.25	%
6	MAR	2012		1.75		1.25	%
7	JUNE	2012		1.75		1.25	%
8	SEPT	2012		1.75		1.25	%
9	DEC	2012		1.75		1.25	%
10	MAR	2013		1.75		1.25	%
11	JUNE	2013		1.75		1.25	%
12	SEPT	2013		1.75		1.25	%
13	DEC	2013		1.75		1.25	%
14	MAR	2014		1.75		1.25	%
15	JUNE	2014		1.75		1.25	%
16	SEPT	2014		1.75		1.25	%
17	DEC	2014		1.75		1.25	%
18	MAR	2015		1.75		1.25	%
19	JUNE	2015		1.75		1.25	%
20	SEPT	2015		1.75		1.25	%
21	DEC	2015		1.75		1.25	%
22	MAR	2016		1.75		1.25	%
23	JUNE	2016		1.75		1.25	%
24	SEPT	2016		1.75		1.25	%
25	DEC	2016		1.75		1.25	%
26	MAR	2017		1.75		1.25	%
27	JUNE	2017		1.75		1.25	%
28	SEPT	2017		1.75		1.25	%
29	DEC	2017		1.75		1.25	%
30	MAR	2018		1.75		1.25	%
31	JUNE	2018		1.75		1.25	%
32	SEPT	2018		1.75		1.25	%
33	DEC	2018		1.75		1.25	%
34	MAR	2019		1.75		1.25	%
35	JUNE	2019		1.75		1.25	%
36	SEPT	2019		1.75		1.25	%
37	DEC	2019		1.75		1.25	%
38	MAR	2020		1.75		1.25	%
39	JUNE	2020		1.75		1.25	%

162

NOS.	QTR. ENDING	YEAR	PRINCIPAL REPAYMENT		PERCENTAGE
			USD MILLION
40	SEPT	2020		1.75		1.25	%
41	DEC	2020		1.75		1.25	%
42	MAR	2021		1.75		1.25	%
43	JUNE	2021		1.75		1.25	%
44	SEPT	2021		1.75		1.25	%
45	DEC	2021		1.75		1.25	%
46	MAR	2022		1.75		1.25	%
47	JUNE	2022		1.75		1.25	%
48	SEPT	2022		52.15		37.25	%
49	DEC	2022		0.7		0.50	%
50	MAR	2023		0.7		0.50	%
51	JUNE	2023		0.7		0.50	%
52	SEPT	2023		0.7		0.50	%
53	DEC	2023		0.7		0.50	%
54	MAR	2024		0.7		0.50	%
55	JUNE	2024		0.7		0.50	%
56	SEPT	2024		0.7		0.50	%
TOTAL	140	100.00%

163

SCHEDULE 8

ESTIMATED PROJECT COSTS

Particulars	(Rs. in crore)
Land & site development etc.		50.00
EPC Cost		5555.24
Transmission Line		400.00
Railway Line (MGR)		504.00
Water Line		125.00
Ash Pond		50.00
Township		75.00
Captive Coal Block Dev. Contribution		150.00
Total Hard Cost (incl. of Land) (A)		6909.24
Preoperative Expenditure (B)		146.58
Interest During Construction Period (C)		707.37
Contingencies (D)		296.24
Margin Money for working capital (E)		140.57
Total Cost (A + B + C + D + E )		8200.00

164

SCHEDULE 9

FINANCING PLAN

Particulars	Rupees. Crore		Percentage (%)
Capital Contribution — Equity Capital		2050		25	%
Senior Debt Finance		6150		75	%
Total		8200		100	%

165

SCHEDULE 10

MAJOR PROJECT DOCUMENTS

1.	PPA;
2.	Fuel Supply Agreements;
3.	Coal Transportation Agreements;
4.	Mining JV Agreement;
5.	Any agreements, documents or instruments entered into by the Borrower or by any Person in its favour in respect of the operation and maintenance of the Project;
6.	Memorandum of Understanding between Governor of Orissa through Commissioner cum Secretary, Energy Department and the Borrower dated September 26, 2006;
7.	Offshore Supply Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
8.	Onshore Supply Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
9.	Offshore Engineering and Technical Services Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
10.	Onshore Services and Construction Contract between the Borrower and SEPCOIII Electric Power Construction Corporation, dated May 10, 2006 for the Project;
11.	Design, Engineering, Supply, Services and Construction Contract for the long distance raw water pumping and delivery system at the Project Site between the Borrower and Simplex Infrastructures Limited dated March 27, 2007;
12.	All documents reflecting the Borrower’s ownership/title in respect of the site of the Project, Borrower’s title to the fixed assets, easements, water rights and other documents analogous to the above, including but not limited to:

(i)	Lease Deed for industrial plots between Orissa Industrial Infrastructure Development Corporation (Lessor) and the Borrower (Lessee) dated August 7, 2007; and
(ii)	Lease Deed for industrial plots between Orissa Industrial Infrastructure Development Corporation (Lessor) and the Borrower (Lessee) dated December 13, 2006;

13. Letter of Award for design, engineering, obtaining statutory approvals from

166

	Railways and other relevant authorities, procurement, supply, transportation, unloading, civil works, storage, erection/construction, testing, commissioning and PMC services for Railway Siding to the Project Site issued by the Borrower to Larsen & Tourbo Limited dated June 11, 2008;
14.	Letter of Award for obtaining Right of Way for 5 (five) tower locations in the Interconnection transmission line between 9 X 135 MW captive power plant and 4 X 600 MW power plant issued by the Borrower to ABB Limited dated October 10, 2008;
15.	Purchase Order for Interconnection transmission line between 9 X 135 MW captive power plant and 4 X 600 MW power plant issued by the Borrower to ABB Limited dated August 22, 2008;
16.	Purchase Order for supply of transformer, fire fighting equipment and spares issued by the Borrower to Crompton Greaves Limited dated October 8, 2008;
17.	Work Order for Interconnection transmission line between 9 X 135 MW Captive Power Plant and 4 X 600 MW Power Plant issued by the Borrower to ABB Limited dated August 22, 2008.
18.	Any bonds, letters of credit or guarantees, consent agreements, side letters under (a) to (q) above; and
19.	Any other document or agreement with respect to the Project designated as such by the Facility Agent and/or the Lenders Engineer after consultation with the Borrower.

167

SCHEDULE 11

CONSTRUCTION BUDGET

	30-Jun-09		30-Sep-09		31-Dec-09		31-Mar-10		30-Jun-10		Total
Land, Site Development and Non-EPC cost		30.00		5.00		5.00		5.00		5.00		50.00
Civil & Structural Works other than EPC		0.00		0.00		0.00		0.00		0.00		0.00
EPC Cost		2000.00		1500.00		800.00		700.00		555.24		5555.24
Balance of Plant (including Coal Mine)		750.00		250.00		100.00		100.00		104.00		1304.00
Preliminary & Pre-operative Expenses		100.10		47.00		0.00		0.00		0.00		147.10
Contingencies		30.00		30.00		30.00		30.00		37.50		157.50
Margin Money for WC		0.00				0.00		0.00		140.79		140.79
Total project Cost		2910.10		1832.00		935.00		835.00		842.53		7354.64
IDC						845.36						845.36
Total Project Cost including IDC					Total							8200.00

168

SCHEDULE 12

NOMINEE DIRECTORS

1.

The Borrower acknowledges and consents to the right of the Lenders to appoint to the Board and replace from time to time while the Facility is outstanding directors of the Borrower in accordance with the provisions of this Agreement (“Nominee Directors”) /or an observer (the “Observer”) on behalf of all the Lenders, and will take all corporate action to effectuate such right (including, without limitation, amending the Borrower’s articles of association). Such appointment shall be in accordance with the Intercreditor Agreement.

2.

The Nominee Directors shall:

(a)	not be required to hold qualification shares nor be liable to retire by rotation.
(b)	any expenditure incurred by the Lenders and/ or the Nominee Directors in connection with their appointment of directorship shall be borne and payable by the Borrower.
(c)	be appointed members of committees of the Board, if so desired by the Lenders.

3.	The Nominee Directors and the Observer(s) shall be entitled to receive all notices, agenda, etc. and to attend all General Meetings and Board Meetings and Meetings of any committees of the Board of which they are members.
4.	If, at any time, the Nominee Director is not able to attend a meeting of the Board of Directors or any of its committees of which he is a member, the Lenders may depute an Observer to attend the meeting. The expenses incurred by the Lenders in this connection shall be borne and payable by the Borrower.
5.	The Nominee Directors/the Observers shall furnish to the Lenders reports of the proceedings of all such meetings and the Borrower shall not have any objection to the same.
6.	The appointment/removal of the Nominee Directors shall be by notice in writing by the Lenders addressed to the Borrower and shall (unless otherwise indicated by the Lenders) take effect forthwith upon such a notice being delivered to the Borrower.
7.	The Nominee Directors shall be entitled to all the rights, privileges and indemnities of other Directors including the sitting fees and expenses as are payable by the Borrower to the other Directors, but if any other fees, commission, moneys or remuneration in any form are payable by the Borrower to the Directors in their capacity as Directors, the fees, commission, moneys and remuneration in relation to such Nominee Directors shall accrue to the Lenders in proportion to their respective Facility then outstanding and the same shall accordingly be paid

169

by the Borrower directly for the respective accounts of the Lenders; provided, that if such Nominee Director is an officer of any of the Lenders the sitting fees in relation to such Nominee Director shall accrue to the relevant Lender and the same shall accordingly be paid by the Borrower directly to such Lender for its account. Any expenditure incurred by a Nominee Director or any Lender in connection with such appointment or directorship shall be borne by the Borrower.

8.

The Borrower shall ensure that the Observer shall be entitled to the same indemnities as the Directors and shall be indemnified by the Borrower against any liabilities, losses, damages, claims, penalties, judgments, suits, costs and expenses arising as a result of its actions pursuant to appointment as an Observer.

170

SCHEDULE 13

PROJECT SCHEDULE

Particulars	Start	Completion
Advance Payment Date	Day 0 (Nov. 30, 2006)
Civil Works	Day 0 + 2 mths	Day 0 + 20 mths
Technical & Engineering	Day 0	Day 0 + 15 mths
Manufacturing & Delivery	Day 0 + 4 mths	Day 0 + 29 mths
Installation of Equipment	Day 0 + 13 mths	Day 0 + 38 mths
Unit I Trial Runs	Day 0 + 30 mths	Day 0 + 33 mths
Unit II Trial Runs	Day 0 + 33 mths	Day 0 + 36 mths
Unit III Trial Runs	Day 0 + 36 mths	Day 0 + 39 mths
Unit IV Trial Runs	Day 0 + 39 mths	Day 0 + 42 mths
Commercial Operation Date (Unit I)	Day 0 + 33 mths (September 1, 2009)
Commercial Operation Date (Unit II)	Day 0 + 36 mths (December 1, 2009)
Commercial Operation Date (Unit III)	Day 0 + 39 mths (March 1, 2010)
Commercial Operation Date (Unit IV)	Day 0 + 42 mths (June 1, 2010)
Total Implementation Period	42 Months (June 2010)

171

EXHIBIT 1

LENDING CONFIRMATION NOTICE

To:	Sterlite Energy Limited
Cc:	[•]

Lending Confirmation Notice

Ladies and Gentlemen:

This notice is issued pursuant to Clause 5.4(vii) of the Foreign Currency Facility Agreement, dated as of                                (the “Foreign Currency Facility Agreement”), among the Borrower, the Lender and the Facility Agent in connection with the, Utilization Request of the Borrower dated                     , 20     .

1.	We hereby state that as of the date hereof, we have not received an Unsatisfied CP Notice from the Lender in accordance with the Foreign Currency Facility Agreement.
2.	Based on the information supplied to us by the Borrower, we also certify that the conditions precedent to Drawdown stipulated in Schedule I of the Foreign Currency Facility Agreement have been satisfied.
3.	Pursuant to Section 5.4 of the Foreign Currency Facility Agreement, Drawdown may occur in terms of the Utilization Request of the Borrower dated                     , 20     .

For and on behalf of [ ], as Facility Agent

Name:
Designation:

172

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and acknowledged by their respective officers or representatives hereunto duly authorized, as of the date first above written.

THE COMMON SEAL OF STERLITE ENERGY LIMITED has pursuant to the Resolution of its Board of Directors passed in that behalf on                                                                 hereunto been affixed in the presence of Shri.                                                                           Director/Company Secretary/Authorised Signatory, who has signed these presents in token thereof and Shri.                                                                                                   Company Secretary /Authorised Signatory who has signed these presents in token thereof.		) ) ) ) /s/ Manish Bhatter ) ) ) ) /s/ V. Ramanathan ) ) ) )
STATE BANK OF INDIA as Facility Agent, for the Lenders		) )
By:	/s/ VRK Saxena
	Name: VRK Saxena
	Title: Assistant General Manager

173

As Lender
EXECUTED by INDIA INFRASTRUCTURE FINANCE COMPANY (UK)  LIMITED acting by: Name: N.K. Mada Title:	) ) ) ) ) ) ) (Sign) /s/ N.K. Mada ) ) )

Address:

Attention: 

Fax: 
Email id:

174

EX-4.53

Exhibit 4.53

STERLITE 2400 MW COAL BASED POWER PROJECT

SPONSOR SUPPORT AGREEMENT

AMONG

STERLITE INDUSTRIES (INDIA) LIMITED
as the Sponsor

AND

STERLITE ENERGY LIMITED
as the Borrower

AND

STATE BANK OF INDIA
as the Facility Agent

Amarchand & Mangaldas & Suresh A. Shroff & Co.
Solicitors & Advocates

TABLE OF CONTENTS

1. DEFINITIONS AND INTERPRETATION	3
2. SPONSOR SUPPORT	6
3. INDEMNITY BY THE SPONSOR	10
4. OBLIGATIONS OF THE SPONSOR	10
5. VOTING RIGHTS	10
6. UNDERTAKING BY THE SPONSOR	11
7. WAIVER OF DEFENCES	12
8. COVENANTS	13
9. REPRESENTATIONS, WARRANTIES AND COVENANTS	14
10. PAYMENTS	17
11. MISCELLANEOUS	17
12. TERMINATION	19
13. CHANGES TO THE PARTIES	19
14. NOTICES	20
15. GOVERNING LAW AND JURISDICTION	20
SCHEDULE I	23

i

SPONSOR SUPPORT AGREEMENT

THIS SPONSOR SUPPORT AGREEMENT (the “Agreement”) is made at Mumbai on this 29th day of June, 2009 among:

1.	STERLITE INDUSTRIES (INDIA) LIMITED, a company incorporated in India under the Companies Act, 1956, having its registered office at SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin — 628 002, Tamil Nadu, India (hereinafter referred to as the “Sponsor”, which expression shall, unless repugnant to the context, be deemed to include its successors and permitted assigns);
2.	STERLITE ENERGY LIMITED, a company incorporated in India under the Companies Act, 1956, having its registered office at SIPCOT Industrial Complex, Madurai Bypass Road, T V Puram P.O., Tuticorin — 628 002, Tamil Nadu, India (hereinafter referred to as the “Borrower”, which expression shall, unless repugnant to the context, be deemed to include its successors and permitted assigns); and

1

3. STATE BANK OF INDIA, a body corporate constituted under the State Bank of India Act, 1955 with its Corporate Centre at Project Finance SBU, State Bank Bhavan, Madame Cama Road, Mumbai 400 021, in its capacity as facility agent for and on behalf of the Lenders (as defined below) (hereinafter referred to as the “Facility Agent”, which expression shall, unless repugnant to the context, be deemed to include its successors, transferees and assigns).

(The Sponsor, the Borrower and the Facility Agent collectively known as “Parties” and individually as “Party”).

WHEREAS:

(A)	The Borrower has undertaken the development, design, procurement, ownership, construction, commissioning, operation and maintenance of the Project (as defined hereinafter).
(B)	Upon the request of the Borrower and to enable the Borrower to partly finance implementation of the Project, the Rupee Lenders and the Issuing Bank have agreed to grant to the Borrower the Rupee Facility upon the terms and conditions as more particularly set out in the common rupee loan agreement dated June 29, 2009 entered into between, inter alia, the Borrower, the Rupee Lenders, the Issuing Bank and the Facility Agent (the “Common Rupee Loan Agreement”).
(C)	Upon request of the Borrower and to enable the Borrower to partly finance the cost of import of capital equipment and machinery for the Project, the Foreign Currency Lender has agreed to grant to the Borrower the Foreign Currency Facility upon the terms and conditions as more particularly set out in the foreign currency facility agreement dated June 29, 2009 entered into between the Borrower, the Foreign Currency Lender and the Facility Agent (“Foreign Currency Facility Agreement”).
(D)	It is one of the conditions precedent to disbursement under the Common Rupee Loan Agreement and the Foreign Currency Facility Agreement that the Sponsor undertakes to extend support for the Project for the benefit of the Borrower and the Lenders, and the Sponsor has in consideration of the Lenders providing the Facility to the Borrower agreed to the same, as per the terms and conditions of this Agreement.
(E)	In pursuance of the above obligations of the Sponsor, the Lenders have called upon and requested the Sponsor to execute this Agreement, which the Sponsor hereby irrevocably undertakes and agrees as hereunder.

NOW THEREFORE in consideration of the Lenders having agreed to extend to the Borrower the Facility for the purposes and subject to the terms and conditions set out in the Financing Documents and in consideration of the premises provided therein, it is hereby agreed as follows:

2

1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions
	Unless otherwise defined, capitalized terms in this Agreement shall: (a) in relation to the Rupee Facility, Rupee Lenders and the Issuing Bank have the meanings given to them in the Common Rupee Loan Agreement; and (b) in relation to the Foreign Currency Facility and the Foreign Currency Lender, have the meanings given to them in the Foreign Currency Facility Agreement. In this Agreement, the capitalized terms listed below shall have the following meanings:
	Agreement means this Agreement together with any amendments hereto.
	Base Equity means an aggregate amount of Rupees Two Thousand and Fifty Crores (Rs. 2050,00,00,000) only.
	Cost Overrun(s) means the amount by which the Project Costs exceeds the Estimated Project Cost(s) including without limitation, as a result of any increase in Project Cost due to non-availability of exemption on import duty/deemed export benefits under the EPCG scheme.
	Common Rupee Loan Agreement shall have the meaning given to it in Recital (B).
	Control as applied to any Party, means the possession, directly or indirectly, of the power to direct or cause the direction of the management of the board of directors of that Party.
	EPCG Scheme shall mean the export promotion of capital goods scheme specified in Chapter 5 of the foreign trade policy 2004-2009 notified by the Ministry of Commerce and Industry, GOI on August 31, 2004 as may be amended or replaced from time to time.
	Encumber or Encumbrance shall mean any form of transfer or disposal of any asset or any form of Security Interest, voting trust agreement, third party escrow, third party custody, and includes any sale or attempt to sell beneficial interest or execution of non-disposal undertakings.
	Facility shall mean the Rupee Facility and the LOC Facility extended by the Rupee Lenders and the Issuing Bank upon the terms and conditions contained in the Common Rupee Loan Agreement and the Foreign Currency Facility extended by the Foreign Currency Lender upon the terms and conditions contained in the Foreign Currency Facility Agreement.
	Financing Documents shall, with respect to the Rupee Lenders and the Issuing Bank, have the meaning given to it in the Common Rupee Loan Agreement, and with respect to the Foreign Currency Lender, have the meaning given to the term “Finance Documents” in the Foreign Currency Facility Agreement.

3

Foreign Currency Facility shall have the meaning given to “Facility” in the Foreign Currency Facility Agreement.

Foreign Currency Facility Agreement shall have the meaning given to it in Recital (C).

Lenders shall mean each of the Rupee Lenders, the Foreign Currency Lender and the Issuing Bank as listed in Schedule I and any other bank or financial institution that may accede to the Common Rupee Loan Agreement or the Foreign Currency Facility Agreement, and the other relevant Financing Documents in relation to any financial assistance provided to the Project.

NDU Assets means the NDU Shares together with the following to the extent applicable to NDU Shares:

(i)	Sponsor’s DP Account;
(ii)	All instruments, records, forms, confirmations, consents, approvals, agreements, writings, powers of attorney, deeds and documents in connection with the Sponsor’s DP Account at any time together with all rights in connection therewith or accruing thereto and the share certificates in the event that any part of the NDU Shares held in electronic form are rematerialised.

NDU Shares shall mean Shares constituting fifty one percent (51%) of the issued and paid up capital of the Borrower from time to time.

Overrun Notice shall have the meaning given to it in Section 2.2.2 herein.

Project shall mean the development, design, procurement, ownership, construction, commissioning, operation and maintenance of the 2400 MW coal based power project using sub-critical technology, comprised of four (4) Units at the Project Site formulated by the Borrower at Jharsuguda, Orissa, including development of the Coal Blocks.

Rupee Facility shall have the meaning given to “Facility” in the Common Rupee Loan Agreement.

Share(s) shall mean issued and fully paid-up shares (equity or preference) in the share capital of the Borrower.

Sponsor’s DP Account shall mean the account established and maintained by the Sponsor with its depository participant through which the NDU Shares are held by the Sponsor.

Sponsor Support shall have the meaning ascribed to it in Section 2.8.

4

1.2	Construction
1.2.1	In this Agreement:

(A)	reference to an Account includes a reference to any sub-account of that Account;
(B)	reference to an “amendment” includes a supplement, modification, novation, replacement or re-enactment and “amended” is to be construed accordingly;
(C)	a reference to “assets” include all properties whatsoever both present and future, (whether tangible, intangible or otherwise) (including Intellectual Property and Intellectual Property Rights), investments, cash-flows, revenues, rights, benefits, interests and title of every description;
(D)	a reference to “authorisation” includes an authorisation, consent, clearance, approval, permission, resolution, licence, exemption, filing and registration;
(E)	a reference to “control” includes the power to direct the management and policies of an entity, whether through the ownership of voting capital, by contract or otherwise;
(F)	a reference to “encumbrance” includes a mortgage, charge, lien, pledge, hypothecation, Security Interest or any lien of any description whatsoever;
(G)	unless the context otherwise requires, the singular includes the plural and vice versa;
(H)	headings and the use of bold typeface shall be ignored in its construction;
(I)	a reference to a Section or Schedule is, unless indicated to the contrary, a reference to a section or schedule to this Agreement;
(J)	references to this Agreement shall be construed as references also to any separate or independent stipulation or agreement contained in it;
(K)	the words “other”, “or otherwise” and “whatsoever” shall not be construed ejusdem generis or be construed as any limitation upon the generality of any preceding words or matters specifically referred to;
(L)	references to the word “includes” or “including” are to be construed without limitation;
(M)	references to a person shall include such person’s successors and permitted assignees or transferees;
(N)	all references to agreements, documents or other instruments include

5

	(subject to all relevant approvals) a reference to that agreement, document or instrument as amended, supplemented, substituted, novated or assigned from time to time;
(O)	words importing a particular gender include all genders;
(P)	any reference to a public organisation shall be deemed to include a reference to any successor to such public organisation or any organisation or entity which has taken over the functions or responsibilities of such public organisation;
(Q)	references to “Party” means a party to this Agreement and references to “Parties” shall be construed accordingly;
(R)	references to any law shall include any constitution, statute, law, rule, regulation, ordinance, judgment, order, decree, authorisation, or any published directive, guideline, requirement or governmental restriction having the force of law, or any determination by, or interpretation of any of the foregoing by, any judicial authority, whether in effect as of the date of the Financing Documents or thereafter and each as amended from time to time;
(S)	capitalised terms and expressions not defined herein shall have the meanings specified in the Financing Documents;
(T)	words and abbreviations, which have, well known technical or trade/commercial meanings are used in the Agreement in accordance with such meanings; and
(U)	“repayment” includes “redemption” and vice-versa and repaid, repayable, repay, redeemed, redeemable and redemption shall be construed accordingly.

	In the event of any disagreement or dispute between the Lenders and the Borrower regarding the materiality of any matter including any event, occurrence, circumstance, change, fact, information, document, authorisation, proceeding, act, omission, claims, breach, default or otherwise, the opinion of the Lenders as to the materiality of any of the foregoing shall be final and binding on the Borrower.
1.2.2	In case of any inconsistency between the provisions of any of the Financing Documents and those of any other agreement between the Sponsor and the Borrower, it is hereby agreed amongst the Parties for the benefit of the Secured Parties that the provisions in that Financing Document shall prevail.
2.	SPONSOR SUPPORT
2.1	Equity Commitment
2.1.1	Prior to Initial Drawdown Date, the Sponsor shall make a contribution to the

6

	Borrower by way of subscription to Shares of an aggregate amount of at least Rupees Six Hundred and Fifteen crores (Rs. 615,00,00,000) (such contribution referred to as the “Upfront Equity”).
2.1.2	The Sponsor agrees and undertakes that it shall arrange for infusion of the balance Base Equity to the satisfaction of the Facility Agent and in the manner prescribed in Section 2.1.3 below.
2.1.3	Without prejudice to its obligations hereinabove, the Sponsor: (a) shall in any event ensure that prior to and following the making of any Drawdown, the ratio of Debt to Equity does not exceed 75:25; and (b) shall contribute by way of subscription to Shares, from time to time, within seven (7) Business Days from issue of notice of demand from the Borrower or the Facility Agent, all such requirements of Equity to maintain the Debt:Equity ratio mentioned herein. For the purpose of this paragraph, ‘Equity’ shall exclude any amounts advanced towards subscription of shares to the Borrower to: (1) fund the amount of a Cost Overrun pursuant to an Overrun Notice; (2) fund any amount of any Sponsor Support (other than Base Equity); and (3) fund any investment that the Borrower may be permitted to make in any other Person.
2.1.4	If an Event of Default has occurred under the Financing Documents, the Secured Parties will have the right to immediately call on undrawn and unsubscribed portion of the Base Equity in the manner prescribed in the Financing Documents.
2.2	Overrun and Shortfall Undertaking
2.2.1	The Sponsor hereby unconditionally and irrevocably undertakes to and agrees with the Facility Agent acting on behalf of the Lenders that until the occurrence of Final Completion it shall from time to time following the issuance of the Overrun Notice by the Borrower or the Facility Agent, make contributions or ensure contributions to the Borrower (as may be specified in such notice) for meeting any Cost Overrun by way of:

(i)	subscription to Shares of the Borrower;
(ii)	by way of subordinated debt from the Sponsor without creation of any Security Interest over the Project assets; or
(iii)	loans arranged by Sponsor without creation of any Security Interest over the Project assets.

2.2.2	Overrun Notice
	If the Facility Agent, at any time, determines that a Cost Overrun event has occurred, the Borrower or the Facility Agent (if the Borrower fails to do so) may, issue a notice to the Sponsor requiring the Sponsor to fund the amount of such Cost Overrun (hereinafter referred to as the “Overrun Notice”). Upon receipt of an Overrun Notice, the Sponsor shall arrange for infusion of funds to the

7

	Borrower in the manner specified in Section 2.2.1 above, to the extent specified in the Overrun Notice within such time period as may be specified by the Facility Agent.
	The Facility Agent shall be entitled to make multiple determinations regarding the occurrence of event of Cost Overrun and upon making any such determination from time to time the provisions specified in Sections 2.1 and 2.2 shall be followed.
2.3	Control
	Until Final Settlement Date, the Sponsor shall:

(i)	Retain Management and Control of the Borrower and shall not undertake any actions which would lead to loss of such Control without the prior written permission of the Facility Agent, which shall not be unreasonably withheld;
(ii)	hold and retain the NDU Assets; and
(iii)	retain the right to exercise at least 51% (fifty one percent) of the voting rights attached to the Shares of the Borrower in accordance with Applicable Law.

2.4

Infusion of Funds for Debt Servicing by Sponsor

The Sponsor shall, in the event of the Borrower being unable to discharge its Obligations within the time specified under the Financing Documents due to the occurrence of any of the following and upon issuance of a notice by the Borrower or the Facility Agent, make available funds to the Borrower, in a manner satisfactory to the Facility Agent, to enable the Borrower to so discharge its Obligations in accordance with the provisions of the Financing Documents:

(i)

Failure of the Borrower to make arrangements for adequate supply of coal to the Project and enter into the Fuel Supply Agreements for meeting its entire requirement of coal for the Project (at least six (6) months prior to the Date of Commercial Operation of each Unit other than the first Unit, for which Fuel Supply Agreements are required to be executed prior to the Initial Drawdown Date) to the satisfaction of the Facility Agent;

(ii)

Failure by the Borrower to make suitable transportation arrangements for supply of coal to the Project (including obtaining the necessary Clearances required for the same and entering into the requisite Coal Transportation Agreements at least six (6) months prior to the Date of Commercial Operation of each Unit other than the first Unit, for which Coal Transportation Agreements are required to be executed prior to the Initial Drawdown Date) to the satisfaction of the Facility Agent;

8

(iii)	Failure by the Borrower to enter into adequate PPA for sale of power generated from the Project so as to ensure that a minimum DSCR of 1.1 is achieved to the satisfaction of the Facility Agent on or before a date which is 6 (six) months prior to Project COD;
(iv)	Failure by the Borrower to enter into transmission arrangements satisfactory to the Facility Agent for evacuation of power generated from the Project at least six (6) months prior to the Date of Commercial Operation for that Unit;
(v)	Failure by the Borrower to make necessary arrangements and obtain necessary Clearances for requisite water drawal required for the Project from the Hirakud Dam/any other source from the Government of Orissa, on or before June 30, 2009; and/or
(vi)	Failure by the Borrower to obtain Clearances required in connection with the height of the chimney(s) as may be required for the Project, from the Airports Authority of India, on or before June 30, 2009.

2.5 Export Obligations

	Until the Final Settlement Date, the Sponsor shall meet the export obligations (from its operations) as are required under the EPCG Scheme based upon the duty benefit made available to the Borrower by way of concessional duty payable for import of plant and machinery and equipments or any benefit of deemed export on domestic acquisition, if any, under the EPCG scheme for the Project. Further, upon any increase in cost of the Project Cost due to non-availability of such import duty/deemed export benefits under EPCG, the same shall be met by the Sponsors from their own resources to the satisfaction of the Lenders.
2.6	Refinancing of Bullet Repayment
	The Sponsor shall, in a manner reasonably satisfactory to the Lenders, promptly provide all assistance to the Borrower to enable it to meet its repayment obligations under the Financing Documents, in respect of the Rupee Bullet Repayment Amount and the Foreign Currency Bullet Repayment Amount, or otherwise including, by providing assistance to the Borrower in raising further loans, if required, and if permitted under the terms of the Financing Documents.
2.7	Coal Blocks
	The Sponsor shall make available to the Borrower the necessary funds (including any such funds which do not form a part of the Project Cost) in a manner reasonably satisfactory to and at the times required by, the Facility Agent, for the development of the Coal Blocks which are proposed to be jointly developed through a JV Company formed under a Mining JV Agreement by the Borrower along with five other companies.

9

2.8	Sponsor Support
	This obligation of the Sponsor set out in this Section 2 is referred to as the “Sponsor Support”.
3.	INDEMNITY BY THE SPONSOR
	Until the Final Settlement Date, the Sponsor as a separate, independent and additional stipulation shall on demand indemnify all the Secured Parties and the Facility Agent against:

(i)	all losses, expenses, claims and liabilities incurred or suffered by them in relation to breach of any obligations by the Sponsor under this Agreement or as a result of any of its obligations being or becoming void, voidable or unenforceable for any reason, whether or not now existing and whether or not now known or becoming known to any Party to this Agreement; and
(ii)	any funding or other cost, loss, expense or liability (including loss of margin) sustained or incurred by the Secured Parties and the Facility Agent as a result of the Secured Parties or the Facility Agent being required for any reason (including any bankruptcy, insolvency, winding up or similar law of any jurisdiction) to refund any sum payable by the Sponsor under this Agreement.

4.	OBLIGATIONS OF THE SPONSOR
4.1	Facility Agent determination to be binding and conclusive
	The Sponsor and the Borrower agree that any determination by the Facility Agent as to the existence of any of the conditions or matters set out in Section 2 shall be conclusive and binding on the Sponsor and the Borrower, and the Sponsor and the Borrower shall not dispute the same, save for manifest error.
4.2	Sponsor to hold amounts in trust
	Until the Final Settlement Date, any amount whether in cash or securities, received or recovered by the Sponsor in respect of the Project, in contravention of the terms of this Agreement:

(i)	as a result of exercise of any right against the Borrower; or
(ii)	in the winding-up of the Borrower,

	shall be held by the Sponsor in trust for the Lenders and immediately paid to the Facility Agent for discharge of the Borrower’s Obligations.
5.	VOTING RIGHTS
	Until the Final Settlement Date, the Sponsor undertakes to the Secured Parties and

10

	the Facility Agent that it shall exercise its voting rights to give effect to, and comply with, the terms of the Transaction Documents and shall not vote in a manner, which causes the Borrower or the Sponsor to contravene the terms and provisions of the Transaction Documents or has the effect of adversely affecting any of the rights of the Lenders under the Transaction Documents.
6.	UNDERTAKING BY THE SPONSOR
	The Sponsor further undertakes/confirms, for the benefit of the Lenders as follows:
6.1	Abandonment, Merger, etc. of Borrower

(i)	Until the Final Settlement Date, it shall not Abandon the Project or allow the Borrower to Abandon the Project.
(ii)	Until the Final Settlement Date, it shall not exercise any rights in respect of the Shares held by the Sponsor or take or support any actions, which results in the merger of, or, permits the merger of, the Borrower with, any other entity without the prior approval of the Facility Agent, which shall not be unreasonably withheld.

6.2	Obligations under Transaction Documents
	Until the Final Settlement Date, it shall duly observe, perform and comply with its duties and obligations under the Transaction Documents to which it is a party, in accordance with the terms thereof.
6.3	Support Resolutions
	Until the Final Settlement Date, it shall support all necessary resolutions at the meetings of the shareholders of the Borrower to ensure that the Borrower complies with the terms of the Financing Documents and shall oppose all resolutions at the meetings of the shareholders that may result in the Borrower being in breach of the Financing Documents.
6.4	Equity Obligations
	The Sponsor shall have performed and satisfied all its obligations to subscribe to the equity share capital of the Borrower and the Sponsor does not have outstanding obligation in this behalf.
6.5	Non Declaration of Dividend
	It shall not without the prior written approval of the Facility Agent, allow declaration of any dividend by the Borrower till the time the Borrower has discharged all its Obligations which have fallen due towards Project Costs including in meeting any Cost Overrun and shall have fulfilled all the conditions specified in the Trust and Retention Account Agreement, unless specifically

11

	permitted by the Facility Agent or the Lenders under the other Financing Documents.
6.6	Further Undertaking
	Until the Final Settlement Date, the Sponsor further undertakes/ confirms, for the benefit of the Lenders that it shall not undertake or take any steps that could result in or cause the Borrower to commit an Event of Default or have a Material Adverse Effect affecting the Project or the non performance or a breach of the obligations of the Borrower under this Agreement or under the Transaction Documents.
6.7	No Creation of Encumbrance on the NDU Assets
	Save and except as created or permitted to be created in accordance with the terms of this Agreement or the other Financing Documents, the Sponsor shall not, without prior written approval of the Facility Agent, create or attempt or agree to create or permit to arise or exist, any Encumbrance on the NDU Assets in favour of any Person; and save as permitted under the other Financing Documents, creation of any Encumbrance or attempt to create any Encumbrance on the NDU Assets, in violation of the provisions of this Agreement and the other Financing Documents shall be null and void.
6.8	Sole Owner of NDU Assets
	The Sponsor shall ensure that at all times till the Loan together with all other amounts due and payable by the Borrower to the Lenders under or pursuant to this Agreement, the Common Rupee Loan Agreement, the Foreign Currency Facility Agreement and other Financing Documents are paid in full, the Sponsor shall, subject to the terms of this Agreement and the other Financing Documents, be the sole legal and beneficial owner of the NDU Assets.
7.	WAIVER OF DEFENCES
7.1	The obligations of the Sponsor and the Borrower under this Agreement will not be affected by any act, omission, matter or thing (including whether or not known to the Sponsor and the Borrower) or any act or omission of the Facility Agent or any Secured Party which would reduce, release or diminish those obligations in whole or in part including:

(a)	any variation in the terms, conditions or manner of disbursement of monies under the Common Rupee Loan Agreement or the Foreign Currency Facility Agreement by the Lenders;
(b)	any time or waiver granted to, or composition with, another person;
(c)	the taking, variation, compromise, exchange, renewal, dispensation or release of, or refusal or neglect to perfect, take up or enforce, any rights

12

against, or Security Interests over assets of, another person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any Security Interests;

(d)	any incapacity or lack of powers, authority or legal personality of or dissolution or change in the constitution or status of another person;
(e)	any variation, modification or alteration of the Transaction Documents or any other document including postponement or preponement of the time or revision of terms for repayment of any monies payable by the Borrower to the Lenders including the principal amounts due under the Common Rupee Loan Agreement and the Foreign Currency Facility Agreement, or order of appropriation of the monies paid by the Borrower to the Lenders, except to the extent references to the Transaction Documents or any of them or such other document in this Agreement shall include such variation;
(f)	the winding-up, bankruptcy, change in constitution or official management or re-organisation, nationalisation or acquisition of any other Person or any change in its status, function, control or ownership;
(g)	any unenforceability, illegality or invalidity of any obligation of any Person due to any other document, to the extent that the Sponsor’s and the Borrower’s obligations under this Agreement shall remain in full force and its obligations be construed accordingly, as if there were no unenforceability, illegality or invalidity; or
(h)	any other act or thing whatsoever.

8.	COVENANTS
8.1	Sponsor and Borrower Covenants
	Each of the Sponsor and the Borrower covenant with the Facility Agent that:
8.1.1	Corporate Existence

(i)	It shall preserve its corporate existence, power and authority to carry on its operations and to own its assets; and
(ii)	It shall perform all actions required of it, to the extent consistent with Applicable Law, whether corporate or otherwise, to enable it to enter into, comply with its obligations hereunder in all respects and maintain in full force and effect any of the Transaction Documents to which it is party.

8.1.2	Clearances
	It shall maintain or cause to be maintained in full force and effect, and act in compliance with, all Clearances that may from time to time become necessary for

13

	it to maintain in connection with the execution, delivery, validity, enforceability and performance of its obligations hereunder or any of the Transaction Documents to which it is a party.
8.1.3	Release, Waiver
	It hereby irrevocably and unconditionally releases and waives, for the benefit of the Secured Parties, any and all conditions, restrictions, terms and covenants under any agreement between the Borrower and/or the Sponsor, if any, to the extent that the same restrict or prohibit the performance by the Sponsor or the Borrower of any of the terms of this Agreement or any other any Financing Document.
8.1.4	Agreement
	The Sponsor is not bound by any agreement with the Borrower or any other Person that is in conflict with this Agreement.
8.1.5	Actions
	It shall ensure that its actions do not contravene its obligations and those of the Borrower under the Financing Documents.
8.1.6	Constitutional Documents
	The Memorandum and Articles of Association of the Borrower shall not be amended without the prior written approval of the Facility Agent.
8.1.7	Sponsor’s DP Accounts
	The Sponsor shall, within seven (7) Business Days of this Agreement, furnish to the Facility Agent, all information relating to the Sponsor’s DP Account, and in the event of any change in the information so provided, the Sponsor shall promptly, and in any event no later than three (3) Business Days of such change, provide details of such change to the Facility Agent.
8.2	Additional Covenants from the Borrower
	The Borrower covenants with the Facility Agent that, till Final Settlement Date, it shall not issue further Shares or any instrument convertible into Shares or alter its share capital if such issue of shares or alteration of share capital were to result in a breach of the obligations of the Sponsor set out in Section 2.
9.	REPRESENTATIONS, WARRANTIES AND COVENANTS
9.1	Representation and Warranties of the Sponsor and the Borrower
	The Borrower and the Sponsor represent and warrant in respect of itself to the Facility Agent for the benefit of the Secured Parties that:

14

9.1.1 Formation, Capacity and Authorisation

(a)

It is a company duly organised and existing in accordance with the laws of India and it has the power and authority to own its assets and to enter into and perform its obligations under each of the Transaction Documents to which it is a party, to transact the business in which it is engaged and to consummate the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party.

(b)

It has the corporate power to execute, deliver and perform the terms and provisions of this Agreement and of each of the Transaction Documents to which it is a party and has taken all the necessary corporate action to authorise execution, delivery and performance by it of each of the Transaction Documents as have been executed and delivered.

9.1.2	Transaction Documents
	Each of the Transaction Documents to which it is a party has been duly executed and delivered by it and is legal, valid, binding and enforceable against it in accordance with its terms without any further action being required on the part of the Facility Agent or the Secured Parties and each of such Transaction Documents are in full force and effect.
9.1.3	Non-conflict
	The execution, delivery and performance by it of each of the Transaction Documents to which it is a party will not violate or conflict with:

(i)	its constitutional documents, any Applicable Law to which it is subject; and/or
(ii)	any existing Clearances granted to it; and/or
(iii)	any order, writ, injunction or decree of any court or Governmental Authority binding on the Borrower and/or the Sponsor; and/or
(iv)	any agreement previously executed by the Sponsor and/or the Borrower.

9.1.4

Clearances

All Clearances, as are required to be obtained or effected by it, by or under Applicable Law, in connection with the execution, delivery, validity, enforceability or performance of each of the Transaction Documents to which it is a party and the transactions contemplated thereby have been or will be obtained or effected and are or will be in full force and effect at the time that they are so required to be obtained, effected and maintained in full force and effect.

15

9.1.5	Legal Proceedings
	No legal proceedings (current or pending) exist against it or the Project, which if adversely determined, could reasonably be expected to have a Material Adverse Effect.
9.1.6	No Default
	No default exists under any agreement, which is binding on it and which could reasonably be expected to have a Material Adverse Effect.
9.1.7	Immunity
	Neither it nor its assets are entitled to immunity from execution, attachment or other legal process in connection with the Transaction Documents. Its execution of each of the Transaction Documents to which it is a party and the performance of its respective obligations thereunder will constitute private and commercial acts done and performed for private and commercial purposes.
9.1.8	Shareholdings

(a)	The Sponsor is and, shall at all times be, the sole beneficial owners of the NDU Assets, as the case may be, acquired or to be acquired by them.
(b)	No Security Interest, except as permitted under this Agreement or the other Financing Documents, has been created on the NDU Assets or any part thereof.

9.1.9	True and Complete Disclosure
	All information provided in writing or documents furnished to the Secured Parties and the Facility Agent or any representatives of the Secured Parties or the Facility Agent by it in connection with the transaction contemplated by this Agreement hereby, by or on behalf of the Borrower, the Sponsor and its respective representatives and Affiliates, is true, correct and complete in all respects as of the date provided (or such other date as is specifically referred). It is not bound by any agreement with the Borrower, which is in conflict with the provisions of this Agreement. Its actions shall not contravene its obligations and those of the Borrower under the Financing Documents.
9.1.10	Validity
	Its obligations contained in this Agreement are in full force and effect and constitute valid, binding and enforceable obligations on it and it shall carry out all acts to fulfil the same under this Agreement.
9.1.11	Adverse Impact
	No event or circumstance exists which results in a Material Adverse Effect, which

16

	can affect its ability to perform its obligations under this Agreement.
9.1.12	Other agreements
	It is not a party to any agreement that contains terms or provisions contrary to this Agreement.
10.	PAYMENTS
10.1	Commitment
	Unless expressly provided in this Agreement, all amounts payable by the Sponsor in cash pursuant to this Agreement shall be paid within such time from the demand for payment, as may be specified by the Facility Agent after consultation with the Borrower, and deposited in accordance with the Trust and Retention Account Agreement.
10.2	Deductions, Set-off and counterclaim
	All payments by the Sponsor and the Borrower under this Agreement will be made in full, without set-off or counterclaim or any deduction, and, free and clear of any and all taxes of whatsoever nature.
11.	MISCELLANEOUS
11.1	Event of Default
	The Sponsor and the Borrower acknowledge that any failure of the Sponsor to comply with the covenants set forth herein, or on any of the representations and warranties of the Sponsor and the Borrowers in this Agreement being proven to have been wrong, shall inter alia constitute an Event of Default under the Financing Documents and the Facility Agent shall be entitled to exercise any and all the remedies set forth in the respective Financing Documents.
11.2	Severability of Obligations
	The obligations of the Sponsor under this Agreement are joint and several and the failure of the Sponsor to carry out any of its obligations under this Agreement will not relieve the Sponsor of any of its obligations under this Agreement.
11.3	Expenses
	The Borrower and the Sponsor agree to pay on demand to the Facility Agent, all reasonable and actual out-of-pocket costs and expenses (including all Taxes, duties, fees or other charges, and legal fees) incurred directly or indirectly in connection with the enforcement of this Agreement against the Sponsor and/or the Borrower subject to submission of evidence as is available at the time supporting the same or a certificate from the Facility Agent certifying such expenditure.

17

11.4	Certificates and Determinations
	Any certification or determination by the Secured Parties and Facility Agent of a rate or amount under this Agreement is conclusive evidence of the matters to which it relates and the same shall be binding upon the Sponsor and the Borrower save for any manifest error.
11.5	Waivers, Remedies Cumulative
	A delay in exercising or omission to exercise any right, power or remedy accruing to the Secured Parties or the Facility Agent upon any default or otherwise under this Agreement shall not impair any such right, power or remedy or shall not be construed to be a waiver thereof or any acquiescence in such default, nor shall the action or inaction of any of the Secured Parties or the Facility Agent in respect of any default or any acquiescence by it in any default, affect or impair any right, power or remedy of any of the Secured Parties or the Facility Agent in respect of any other default. The rights of the Secured Parties or the Facility Agent under this Agreement may be exercised as often as necessary, are cumulative and not exclusive of their rights under the general law and may be waived only in writing, specifically and at the Secured Parties or the Facility Agent’s sole discretion.
11.6	Severability of Provisions Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of prohibition or unenforceability but that shall not invalidate the remaining provisions of this Agreement or affect such provision in any other jurisdiction.
11.7	Further Assurances The Sponsor shall, and shall cause the Borrower to, at the request of the Facility Agent, at any time and from time to time, at its own cost and expense, execute such further agreements and do all such assurances, acts and things that may be necessary or desirable, or as the Secured Parties may request or require to comply with its obligations under this Agreement in accordance with Applicable Law.
11.8	Disclosures
	The Sponsor hereby agrees, confirms and undertakes that:

(a) the Lenders shall, as they may deem appropriate and necessary, be entitled to disclose all or any: (i) information and data relating to the Sponsor, (ii) information or data relating to this Agreement or any other securities furnished by the Sponsor in favour of the Lenders; (iii) obligations assumed/to be assumed by the Sponsor in relation to the Facility under this Agreement or any other securities furnished by the Sponsor to the Lenders; (iv) default, if any, committed by the Sponsor in discharge of the aforesaid obligations, to Credit Information Bureau (India) Limited (“CIBIL”) and

18

any other agency authorised in this behalf by Reserve Bank of India (“RBI”);

(b)	CIBIL and/or any other agency so authorised may use, process the aforesaid information and data disclosed by the Lenders in the manner as deemed fit by them;
(c)	CIBIL and/or any other agency so authorised may furnish for consideration, the processed information and data or products thereof prepared by them, to the Lenders /financial institutions and other credit grantors or registered users, as may be specified by RBI in this behalf; and
(d)	the information and data furnished by the Sponsor to the Lenders from time to time shall be true and correct.

12.	TERMINATION
	The obligations of the Sponsor and the Borrower under this Agreement shall continue until the Final Settlement Date save in respect of any obligations which arose prior to, and remain unperformed on such Final Settlement Date.
13.	CHANGES TO THE PARTIES
13.1	Transfers by the Sponsor and the Borrower
	Neither the Sponsor nor the Borrower shall assign or transfer any interest in, its rights, benefits and/or obligations under this Agreement without the prior written consent of the Facility Agent.
13.2	Transfers by Facility Agent
	The Facility Agent may transfer its rights hereunder to a successor Facility Agent in accordance with the provisions of the Financing Documents and any such transfer of rights by the Facility Agent shall be intimated to the Borrower. Upon any such transfer by the Facility Agent, the successor Facility Agent shall be deemed to be acting as Facility Agent for the purpose of this Agreement in place of the previous Facility Agent. The successor Facility Agent shall inform the Sponsor of the transfer upon the transfer becoming effective.
13.3	Confirmation and acknowledgement of Sponsor and the Borrower
13.3.1	The Sponsor and the Borrower acknowledge that under the Common Rupee Loan Agreement and the Foreign Currency Facility Agreement, any Lender may transfer its rights and/or obligations under the Financing Documents subject to the terms set out therein; and
13.3.2	Each of the Sponsor and the Borrower irrevocably and unconditionally confirms that it shall continue to be bound by the terms of this Agreement, notwithstanding the transfer by any Lender of any of its rights or obligations in accordance with

19

	the Common Rupee Loan Agreement or the Foreign Currency Facility Agreement and that the transferee shall (through the Facility Agent) acquire an interest in this Agreement upon the transfer taking effect.
14.	NOTICES
	In relation to the Rupee Lenders and the Issuing Bank, the provisions of Section 21.3 (Notices) of the Common Rupee Loan Agreement shall apply, and in relation to the Foreign Currency Lender, the provisions of Clause 26 (Notices) of the Foreign Currency Facility Agreement, shall apply for the giving of all notices or other communications to be given or made under this Agreement as if expressly set out herein. The address for notices and communication in respect of the Borrower shall be as set out in the Common Rupee Loan Agreement. The address for notices and communication in respect of this Agreement shall be as follows:

FACILITY AGENT:

Attention:	Deputy General Manager Project Finance SBU
Address:	Corporate Centre, 3rd Floor, State Bank Bhawan, Madame Cama Road, Mumbai — 400 021.
Fax Number:	022-22883021
Tel Number:	022-22740387

SPONSOR:

Attention	Chief Financial Officer
Address	Sterlite Industries (India) Ltd. SIPCOT Industrial Complex, Madurai Bypass Road, T V Puram P.O., Tuticorin — 628 002, Tamil Nadu, India
Fax No.	022-66461450
Telephone No.	022-66461000

15.	GOVERNING LAW AND JURISDICTION
15.1	This Agreement is governed by and shall be construed in accordance with the

20

	laws of India.
15.2	Exclusive Jurisdiction
	The Borrower and the Sponsor agree that the courts and tribunals (including the Debt Recovery Tribunal) in Mumbai shall have non-exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Financing Documents and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with the Financing Documents may be brought in such courts or the tribunals and the Borrower and the Sponsor irrevocably submit to and accept for themselves and in respect of their property, generally and unconditionally, the jurisdiction of those courts or tribunals to the extent permissible under Applicable Law.
15.3	Waiver of Objection
	Each of the Borrower and the Sponsor irrevocably waive any objection now or in future, to the laying of the venue of any Proceedings in the courts and tribunals at Mumbai, India and any claim that any such Proceedings have been brought in an inconvenient forum and further irrevocably agrees that a judgement in any Proceedings brought in such courts and tribunals shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction, a certified copy of which shall be conclusive evidence of such judgement, or in any other manner provided by law.
15.4	Right to take Proceedings in other Jurisdictions
	Nothing contained in Section 15.3 shall, subject to Applicable Law, limit any right of the Secured Parties and the Facility Agent to take Proceedings in any other court or tribunal of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction whether concurrently or not and the Borrower and the Sponsor irrevocably submits to and accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of such court or tribunal, and the Borrower and the Sponsor irrevocably waive any objection it may have now or in the future to the laying of the venue of any Proceedings and any claim that any such Proceedings have been brought in an inconvenient forum.
15.5	General Consent
	The Borrower and the Sponsor hereby consent generally in respect of any Proceedings arising out of or in connection with this Agreement to the issue of any process in connection with such Proceedings including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such Proceedings.

21

15.6

Waiver of Immunity

To the extent that the Borrower and the Sponsor may in any jurisdiction claim for themselves or their assets immunity from suit, execution, attachment (whether in aid of execution, before judgement or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to themselves or their assets such immunity (whether or not claimed), the Borrower and the Sponsor hereby irrevocably agree not to claim and hereby irrevocably waive such immunity.

22

SCHEDULE I

LENDERS AND COMMITMENTS

Part A — Rupee Lenders

		Rupee Commitment Amount
Sr. No.	Name of Lender	(in Rupees Crores)
1.	State Bank of India,		1540.0
2.	IDBI Bank Limited		569.0
3.	Punjab National Bank		405.0
4.	Andhra Bank		100.0
5.	United Bank of India		200.0
6.	Life Insurance Corporation of India		350.0
7.	Syndicate Bank		200.0
8.	Tamilnad Mercantile Bank Limited		100.0
9.	Bank of India		200.0
10.	Canara Bank		100.0
11.	Union Bank of India		300.0
12.	Corporation Bank		200.0
13.	Allahabad Bank		350.0
14.	Oriental Bank of Commerce		150.0
15.	UCO Bank		405.0
16.	Jammu and Kashmir Bank Limited		200.0
17.	Central Bank of India		100.0
18.	The Bank of Rajasthan Limited		100.0

23

		Rupee Commitment Amount
Sr. No.	Name of Lender	(in Rupees Crores)
	Total		5569.0

Part B — Issuing Bank

	Issuing Bank	Commitment
1.	State Bank of India Address: 23, J.N. Heredia Marg, Ballard Estate, Mumbai — 400 001 Attn: Deputy General Manager Fax: 022-2267 9030 Telephone No.: 022 66356611/ 22671916	To issue Letter(s) of Commitment upto a maximum of Rs. 2600,00,00,000/- (Rupees Twenty Six Hundred Crores Only). Provided that the Issuing Bank shall not issue any Letter of Commitment if the issue of such Letter of Commitment results in the aggregate of the Participating Interests of all Rupee Lenders (other than State Bank of India) under all Letter(s) of Commitment issued by it under this Agreement to exceed Rs. 1400,00,00,000/- (Rupees Fourteen Hundred Crores Only).

Part C — Foreign Currency Lender

	Foreign Currency Lender	Commitment
1.	India Infrastructure Finance Company (UK) Limited Address: 87, Gresham Street, London FC2V 7NQ United Kingdom Tel No.: +44(0)2077768950, 2076006564 Fax: + 44(0)2077768958 Email: info@iifc.org.uk	Foreign currency facility to the extent of US$140, 000,000. (US Dollars One Hundred and Forty Million)

24

IN WITNESS WHEREOF, this Agreement has been executed by the Sponsor, the Borrower and the Facility Agent at the place and on the date mentioned above.

THE COMMON SEAL of STERLITE ENERGY LIMITED has pursuant to the Resolution of its Board of Directors passed in that behalf on the 27th day of April, 2009 hereunto been affixed in the presence of Shri V. Ramanathan, Authorized Signatory, and Shri Manish Bhatter, Authorized Signatory who have signed these presents in token thereof.	) ) ) ) ) )    /s/ V. Ramanathan )    /s/ Manish Bhatter ) )
STERLITE INDUSTRIES (INDIA) LIMITED has pursuant to the Resolution of its Board of Directors passed in that behalf on the 15th day of June, 2009 executed and delivered this Agreement by Shri Punnet Jagatramka, Authorized Person and Shri Shedesh Mittal, Authorized Person who have signed these presents in token thereof.	) ) ) ) )    /s/ Punnet Jagatramka )    /s/ Shedesh Mittal ) ) )

SIGNED, SEALED AND DELIVERED BY
STATE BANK OF INDIA, the Facility Agent by

/s/ VRK Saxena
Name:	VRK Saxena
Designation:		Assistant General Manager

25

EX-4.54

Exhibit 4.54

VEDANTA ALUMINIUM LIMITED

Project Office: 232, Solitaire Corporate Park, Andheri-Ghatkopar Link Road,

Chakala, Andheri (E), Mumbai-400 093

Tel: +91 (22) 4005 8000 Fax: +91 (22) 4005 8021

TERM SHEET FOR THE NCD ISSUE OF 1500 CRORES TO SIIL

1	Instruments	Taxable Redeemable, Secured Non-convertible Debentures
2	Aggregate Issue Amount	Rs.1500 crores
3	Object Of the Issue	Meeting the Company’s Project Commitments
4	Tenor	1 year from deemed date of allotment
5	Mode of Placement	Private Placement
6	Date of Allotment	5250 NCD allotted on 16/03/2009
		1600 NCD allotted on 27/03/2009
		2250 NCD allotted on 27/04/2009
		5900 NCD allotted on 22/05/2009
7	Denomination	Rs.10,00,000
8	Issue price	Rs.10,00,000
9	Maturity price	Rs.10,00,000
10	Interest Rate	9.75% payable semi annually
11	Security	First Pari Passu charge on land at Gujarat of the Company
12	Debenture Holder	Sterlite Industries (India) Limited
13	Debenture Trustees	IL & FS Trust Company Ltd
14	Existing chargeholders	1. Sterlite Industries (India) Limited
		2. LIC
15	Status	The security shall be first pari passu with all the existing charge holders.
16	Default Interest	2% pa
17	Security Cover	No security cover is stipulated. However SIIL/Debenture Holder will issue a letter of security sufficiency.

For VEDANTA ALUMINIUM LTD.	For STERLITE INDUSTRIES (I) LTD.
/s/ Manish Bhatter	/s/ A. Satish
(Authorized Signatory)	(Authorized Signatory)

Dated: 22/05/2009

Regd Office: SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram, P.O., Tuticorin — 628 002

EX-4.55

Exhibit 4.55

AGREEMENT

     This Agreement is made on this 18^th day of February, Two Thousand and Nine at Bhubaneshwar

BETWEEN

     The ORISSA MINING CORPORATION LIMITED, a company incorporated under the Companies Act, 1956 having its registered office at “OMC House” Bhubaneshwar, District Khurda (Orissa) hereinafter called “OMC” (which expression shall, unless excluded by or repugnant to the context or meaning thereof, include its associates and successors) of the one part

AND

     STERLITE INDUSTRIES (INDIA) LIMITED, a company incorporated under the Companies Act, 1956 having its registered office at SIPCOT Industrial Complex, Madurai By Pass Road, TV Puram PO, Tuticorin — 628 002, Tamil Nadu hereinafter called “SIIL” (which expression shall, unless excluded by or repugnant to the context or meaning thereof, include its associates and successors) of the other part.

     OMC and SIIL are hereafter collectively referred to as “Parties” and individually as OMC and SIIL, as the case may be.

     WHEREAS Vedanta Aluminium Limited, (herein after called VAL) was desirous to set up an integrated aluminium complex in Orissa with an alumina refinery of about one (1) million ton per year capacity at Niyamdanger (Lanjigarh) in Kalahandi district to be catered by the bauxite deposits of Lanjigarh Mine along with another mine (both such mines having a cumulative deposit of bauxite ore of about 150 million tonnes) besides a 6´120 MW Captive Power Plant and Aluminium Smelter of about 2.2 lakh tones per year capacity at Bhurkhamunda of Jharsuguda district, Orissa;

     And whereas OMC is a lessee of Lanjigarh bauxite mines and an applicant for certain other bauxite mines in Orissa;

     And whereas OMC and VAL had entered into an Agreement on the 5^th October, 2004 for the purpose mentioned in the said Agreement (A copy of the said Agreement is annexed hereto as Annexure-A.) In order to operate the Lanjigarh mines and another mine (both such mines having a cumulative deposit of bauxite ore of about 150 million tonnes), OMC & VAL agreed to set up a joint venture company (hereinafter called “JVC”) on the principal terms and conditions set forth in the said Agreement dated the 5^th October, 2004. The bauxite mined from the aforesaid mines was agreed to be sold by OMC to VAL for its refinery on terms and conditions stated in the said Agreement;

     And whereas VAL has now completed the setting up of the aforesaid alumina refinery;

     And whereas the forest diversion proposal for about 660.749 hectares for the Lanjigarh mines filed by OMC which was approved by Forest Advisory Committee (FAC) was heard by the Hon’ble Supreme Court of India;

     And whereas the Hon’ble Supreme Court by its order dated 23^rd November, 2007 in I.A. No. 1324 and 1474 arising out of Writ Petition (C) No. 202/1995 (Copy annexed hereto as Annexure-B) has observed that VAL will be substituted by SIIL in the Joint Venture Agreement dated the 5^th October, 2004 executed between OMC and VAL;

     And Whereas the Hon’ble Apex Court has granted clearance to the forest diversion proposal for diversion of 660.749 Ha of forest land to undertake bauxite mining on the Niyamgiri Hills in Lanjigarh subject to their lordships observations under Para-8 of the order dated 8^th August, 2008 in I.A.No.2134/2007 in W.P.(C) No.202/1995 on price discovery/mechanism formula suggested by CEC as reproduced below:

     “We may state that price discovery/mechanism is a complicated exercise. Moreover, on account of economic factors, price variation takes place throughout the year. We do not wish to rule out the formula suggested by CEC. Ultimately, as stated in our Order dated 23.11.2007, SIIL is required to deposit 5% of its annual profits before tax and interest from Lanjigarh Project or Rs10 crore whichever is higher as contribution for Scheduled Area Development. This contribution is to be made every year commencing from 01.04.2007. Under clause (i) of Rehabilitation Package, SPV has to account for Scheduled Area Development. Further under the said Package, SIIL is also required to contribute Rs 12,20 crores towards tribal development apart from payment of NPV and apart from contribution to the Management of Wild Life around Lanjigarh Bauxite Mine (See clause (ii) of the Rehabilitation Package). While allocating

Compensatory Afforestation Fund Management and Planning Authority (CAMPA) Funds the said amount of Rs 12.20 crores shall be earmarked specifically for tribal development. Therefore, we are of the view that, at the pre-operational stage, we need not apply the price mechanism suggested by CEC. If at the end of the Accounting Year of SILL, CEC finds that the annual profits before tax and interest is depressed by the pricing mechanism mentioned in joint venture Agreement dated 05.10.2004 vide clause 2.3.3(a) then it would be open to CEC to move this court with the suggested price mechanism in its Report. In fact, in our Order dated 23.11.2007 we have directed that the Accounts of SPV to be audited by Auditor General for State of Orissa after they are prepared by the Statutory auditors of OMCL. It would be open to the statutory auditors of OMCL as well as CEC to inform this Court at the end of the Accounting Year whether annual profits before tax and interest stands depressed for any reason and at that stage we will certainly consider the price mechanism suggested by CEC in it’s Report placed before us.”

     A certified copy of the order dated 8^th August, 2008 passed by the Hon’ble Court is Annexed hereto as Annexure “C”.

     And whereas SIIL has agreed to become the joint venture partner with OMC for bauxite mining at Lanjigarh in Orissa and comply with all the conditions laid down by the Hon’ble Apex Court vide order dated 23^rd November, 2007 passed in I.A. No. 1324 and 1474 including forming a Special Purpose Vehicle (SPV) with the State Government and OMC for Lanjigarh Scheduled Area Development and order dated 8^th August, 2008 in I.A.No. 2134/2007 all arising out of W.P.(C) No. 202 / 1995;

     And whereas SIIL has represented to OMC that it has got consent and approval of VAL that VAL will abide by and comply with all the

conditions laid down by the Hon’ble Apex Court vide order dated 23^rd November, 2007 passed in I.A. No. 1324 and 1474 and order dated 8^th August, 2008 in I.A. No.2134/2007 all arising out of WP(C) No. 202/1995;

     And whereas Clause 7 of the agreement dated 5^th October, 2004 permitted VAL to assign the rights and obligations under the said Agreement to any Company only with the approval of OMC and GoO, and VAL has accordingly assigned the bauxite mining in favour of SIIL;

     And whereas OMC and the Government of Orissa have agreed for substitution of VAL with SIIL in the Agreement dated 5^th October, 2004 (Annexure-A) for bauxite mining at Lanjigarh on the same terms and conditions incorporated in the said Agreement to comply with the direction of the Hon’ble Apex Court vide order dated 23^rd November, 2007;

     And whereas it is also the intention of the parties that the bauxite mined by the JVC for and on behalf of OMC shall be sold by OMC to SIIL or its nominee on the terms and conditions as per the said Agreement in Annexure-A;

     Now, therefore, in consideration of the foregoing and respective covenants set forth in the Agreement and intending to be legally bound thereby, the parties agree as follows :-

1.	In order to operate the Lanjigarh mines, OMC and SIIL agree to set up a Joint Venture Company (JVC).
2.	Subject to obtaining necessary approvals for working the mining lease for the Lanjigarh mines, OMC and SIIL hereby agree to enter into the following definitive agreements :-

(i)	A Shareholders and Share Subscription Agreement between OMC and SIIL for and in relation to the JVC as per terms and conditions incorporated in the said Agreement dated 5th October, 2004;
(ii)	A Raising Contract Agreement between JVC and OMC for and in relation to the raising of Bauxite in the Lanjigarh Mines as per terms and conditions incorporated in the said Agreement dated 5th October, 2004;
(iii)	A long term purchase Agreement between SIIL and OMC for supply of bauxite mined from the Lanjigarh Mines to SIIL or its nominee as per terms and conditions incorporated in the said Agreement dated 5th October, 2004.
(iv)	The pricing mechanism for sale/supply of bauxite mined from Niyamgiri bauxite Mines as stipulated in the long term sale Agreement dated 5th October, 2004, may be changed/reviewed under the orders of Hon’ble Supreme Court as laid down in Para-8 of the order dated 8th August, 2008.

3. The duties, responsibilities, rights and obligations in the said Agreement dated 5^th October, 2004 being Annexure-A herein with regard to bauxite mining project shall stand assigned by VAL and vested with SIIL.

4.	OMC’s duties, responsibilities, rights and obligations in the said Agreement dated 5th October, 2004 shall remain unchanged and unmitigated.
5.	The parties can amend any clause of this Agreement with mutual consent in writing subject to ratification by the Government of Orissa, and in terms of the order passed by the Hon’ble Supreme Court of India.
6.	Affidavits filed by parties in I.A.No.2134 of 2007 as Annexed to this Agreement and the judgement of the Hon’ble Apex Court shall form part of this Agreement.

In witness, whereof, the parties have executed this Agreement at Bhubaneswar, on the day, month and year first above written.

For and on behalf of ORISSA MINING CORPORATION LIMITED

/s/ Mahmood Ahmed  

Mahmood Ahmed 

G.M. (F) 

In the presence of

1.	(signed)
2.	(signed)

For and on behalf of STERLITE INDUSTRIES (INDIA) LIMITED

/s/ P.K. Parda  

P.K. Parda 

In the presence of

1.	(signed)
2.	(signed)

EX-8.1

Exhibit 8.1

Subsidiaries of Sterlite Industries (India) Limited

	Subsidiary	Country of Incorporation
1.	Bharat Aluminium Company Limited	India
2.	Copper Mines of Tasmania Pty. Ltd.	Australia
3.	Fujairah Gold FZE	UAE
4.	Hindustan Zinc Limited	India
5.	Monte Cello BV	The Netherlands
6.	Sterlite Energy Limited	India
7.	Sterlite Opportunities and Ventures Limited	India
8.	Sterlite Paper Limited	India
9.	Sterlite (USA), Inc.	USA
10.	Thalanga Copper Mines Pty. Ltd.	Australia
11.	Talwandi Sabo Power Limited	India

EX-12.1

Exhibit 12.1

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Rajagopal Kishore Kumar, certify that:

1.	I have reviewed this annual report on Form 20-F of Sterlite Industries (India) Limited;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: July 10, 2009

By:	/s/ Rajagopal Kishore Kumar
Name:	Rajagopal Kishore Kumar
Title:	Chief Executive Officer

EX-12.2

Exhibit 12.2

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Vinod Bhandawat, certify that:

1.	I have reviewed this annual report on Form 20-F of Sterlite Industries (India) Limited;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.	The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: July 10, 2009

By:	/s/ Vinod Bhandawat
Name:	Vinod Bhandawat
Title:	Chief Financial Officer

EX-13.1

Exhibit 13.1

Certification of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Sterlite Industries (India) Limited (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i)	the accompanying annual report on Form 20-F of the Company for the year ended March 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 10, 2009

/s/ Rajagopal Kishore Kumar
Name:	Rajagopal Kishore Kumar
Title:	Chief Executive Officer

     The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being “filed” either as part of the Report or as a separate disclosure statement, and is not to be incorporated by reference into the Report or any other filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. The foregoing certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18 or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

EX-13.2

Exhibit 13.2

Certification of Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Sterlite Industries (India) Limited (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i)	the accompanying annual report on Form 20-F of the Company for the year ended March 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 10, 2009

/s/ Vinod Bhandawat
Name:	Vinod Bhandawat
Title:	Chief Financial Officer

     The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being “filed” either as part of the Report or as a separate disclosure statement, and is not to be incorporated by reference into the Report or any other filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. The foregoing certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18 or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.