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

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.
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