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

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. 870 million ($17.1 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 76,415 Vedanta ordinary shares under the Vedanta LTIP vested to our directors and executive
officers.
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.
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