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

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 firm of SRK
Consulting (UK) Ltd, or 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.
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