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

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;
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