Sterlite Industries (India) Limited - Sterlite Industries India Ltd.

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.
92