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

Sterlite Energy — Talwandi Sabo
In July 2008, Sterlite Energy succeeded in an international bidding process and was awarded the project for the construction of a 1,980 MW
coal-based thermal commercial power plant at Talwandi Sabo in the State of Punjab in India. The State of Punjab has a power deficit of supply
versus demand, according to the Northern Regional Power Committee of the Government of India. All necessary approvals for the project have
been obtained and commissioning of this project will be carried out in stages and is expected to be completed in April 2013 at an estimated cost
of Rs. 92,450 million ($1,817.4 million). On September 1, 2008, Sterlite Energy completed the acquisition of TSPL for a purchase price of
Rs. 3,868.4 million ($76.0 million). In September 2008, TSPL entered into a long-term power purchase agreement with the Punjab State
Electricity Board for the sale of power from the completed power plant. This project is expected to be financed by internal sources and/or debt
financing.
HZL — Wind Power Plants
HZL’s board of directors has approved the establishment of wind power plants with a combined capacity of up to 300 MW at an estimated
cost of Rs. 16,000 million ($314.5 million). As of March 31, 2009, wind power plants with a combined power generation capacity of
123.2 MW have been commissioned in the States of Gujarat and Karnataka in India at a total cost of Rs. 6,030 million ($118.5 million). The
electricity from these wind power plants is sold to SEBs. This project is funded through internal accruals and will benefit from the various tax
incentives available under the Income Tax Act.
Other Opportunities in Power
Vedanta Aluminium entered into an agreement on October 1, 2007 with GridCo for the sale of excess power from one unit of its 75 MW
captive power plant at Lanjigarh with a capacity of 30 MW. In addition, Vedanta Aluminium is considering building a 1,980 MW coal-based
captive power plant to provide all the power requirements of its 1,250,000 tpa smelter in Jharsuguda in the State of Orissa, at an estimated cost
of Rs. 80,000 million ($1,572.6 million).
Sterlite Energy intends to participate in projects relating to the generation of coal-based thermal power and ancillary activities, including
UMPPs or other projects announced by the Government of India or any state government. A recent initiative of the Ministry of Power of the
Government of India offers private developers an opportunity to establish a number of UMPP’s. Private developers will be selected on the
basis of competitive bidding and under the initiative, will have the benefit of the assured purchase of power generated and payment security
mechanisms. Four of such UMPPs have been awarded.
Risks in Commercial Power Business
There will be risks involved in entering into the commercial power generation business. See “Item 3. Key Information — D. Risk Factors —
Risks Relating to Our Business — We are developing our commercial power generation business, a line of business in which we have limited
experience, from which we may never recover our investment or realize a profit and which may result in our management’s focus being
diverted from our core copper, zinc and aluminum businesses” and “Item 3. Key Information — D. Risk Factors — Risks Relating to Our
Business — If any power facilities we build and operate as part of our commercial power generation business do not meet operating
performance requirements and agreed norms as may be set out in our agreements, or otherwise do not operate as planned, we may incur
increased costs and penalties and our revenue may be adversely affected” for more details.
Exploration and Development Activities
We are engaged in ongoing exploration activities to locate additional ore bodies in India and Australia. We spent approximately
Rs. 406 million ($8.0 million) in fiscal 2009 on exploration.
The focus of our exploration has been sediment hosted zinc deposits in India. Bauxite exploration concentrates on delineating and
evaluating known deposits within economic transport distance of our alumina refinery at Korba.
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