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

Power Business
We expect our future results of operations to be affected by our entry into the commercial power generation business. The effect of this new
business will depend on the timing of and our success in executing this plan. See “Item 4. Information on the Company — B. Business
Overview — Our Business — Our Commercial Power Generation Business” for additional details on our plans for this future business.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with US GAAP. In the course of preparing these financial statements, our management has made estimates
based on, and assumptions that impact, the amounts recognized in our consolidated financial statements. For a discussion of our significant
accounting policies, see note 2 to our consolidated financial statements included in this annual report. We believe the critical accounting
estimates described below are those that are both important to reflect our financial condition and results and require difficult, subjective or
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Mine Properties
Exploration and evaluation expenditures are written off in the year in which they are incurred. The costs of mine properties, which include
the costs of acquiring and developing mine properties and mineral rights, are capitalized and included in property, plant and equipment under
the heading “Mine properties” in the year in which they are incurred.
When it is determined that a mining property has begun production of saleable minerals extracted from an ore body, all further preproduction
primary development expenditures are capitalized as part of the cost of the mining property until the mining property begins
production of saleable minerals. From the time mining property is capable of producing saleable minerals the capitalized mining property costs
are amortized on a unit-of-production basis over the total estimated remaining commercial reserves of each property or group of properties.
Stripping costs or secondary development expenditures incurred during the production stage of operations of an ore body are included in the
costs of the ore extracted during the period that the stripping costs are incurred. Secondary development costs refer to expenses incurred after
the mining property has begun production of saleable minerals extracted from an ore body. Such costs include the costs of removal of
overburden and other mine waste materials to access mineral deposits incurred during the production phase of a mine.
When mine property is abandoned, the cumulative capitalized costs relating to the property are written off in the period of abandonment.
Commercial reserves are proven and probable reserves. Changes in the commercial reserves affecting unit of production calculations are
accounted for prospectively over the revised remaining reserves. Proven and probable reserve quantities attributable to stockpiled inventory are
classified as inventory and are not included in the total proven and probable reserve quantities used in the units of production depreciation,
depletion and amortization calculations.
Useful Economic Lives of Assets and Impairment
Property, plant and equipment, other than mine properties, are depreciated over their useful economic lives. Our management reviews the
useful economic lives at least once a year and any changes could affect the depreciation rates prospectively and hence the asset carrying values.
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