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

Customer Concentration
The following table sets forth for the periods indicated:
• the percentage of our net sales accounted for by our ten largest customers on a consolidated basis; and
• for each of our three primary businesses, the percentage of the net sales of such business accounted for by the ten largest customers of
such business.
Year Ended March 31,
2007 2008 2009
Consolidated 22.2% 26.5% 32.4%
Copper 33.9 16.8 32.5
Zinc 47.0 36.4 23.6
Aluminum 39.9 37.2 44.6
No single customer accounted for 10% or more of our net sales on a consolidated basis or for any of our primary businesses in any of the
periods indicated.
Comparison of Years Ended March 31, 2008 and March 31, 2009
Net Sales, Other Operating Revenues and Operating Income
Consolidated
Net sales decreased from Rs. 246,414 million in fiscal 2008 to Rs. 212,192 million ($4,171.3 million) in fiscal 2009, a decrease of Rs.
34,222 million, or 13.9%. Net sales decreased primarily as a result of lower daily average copper, zinc and aluminum LME prices in fiscal
2009 compared to fiscal 2008 and decreased sales volume in our copper business due to lower copper cathode production as a result of a
planned bi-annual plant maintenance shut down for 26 days in May and June 2008 and an unplanned 34-day interruption in production between
November and December 2008 due to damage in a cooling tower at the Tuticorin facility in November 2008 as a result of collapses in its
foundation. The decrease in net sales was partially offset by a depreciation of the Indian Rupee against the US dollar by 14.1%. The net sales of
our copper, zinc and aluminum businesses decreased by 7.7%, 28.8% and 5.8%, respectively, with the increase in the sales volume in our zinc
business being more than fully offset by lower zinc and lead LME prices.
Other operating revenues increased from Rs. 2,616 million in fiscal 2008 to Rs. 3,683 million ($72.4 million) in fiscal 2009, an increase of
Rs. 1,067 million, or 40.8%. The increase was primarily due to increased sales of surplus electric power from BALCO’s captive power plants
at Korba due to the planned permanent shut down of 204 out of 408 pots in the old Korba smelter in February and March 2009 due to the
smelter’s higher cost of production and the recognition of Rs. 491 million in amounts due to us from an insurance policy covering loss on profit
on account of the unplanned shut down of the cooling tower at the Tuticorin facility, which covered a substantial portion of our estimated
losses.
Operating income decreased from Rs. 75,153 million in fiscal 2008 to Rs. 42,247 million ($830.5 million) in fiscal 2009, a decrease of Rs.
32,906 million, or 43.8%. The decrease was due to a decrease in TcRc rates for our copper smelting business by 25.1%, a decrease in byproduct
realization in our copper business and a decline in the daily average copper, zinc and aluminum LME prices, partially offset by a
depreciation of the Indian Rupee against the US dollar. Operating margin decreased from 30.5% in fiscal 2008 to 19.8% in fiscal 2009 as a
result of a decrease in the operating margins in our zinc and aluminum business due to decreases in the daily average zinc and aluminum LME
prices. Contributing factors to our consolidated operating income were as follows:
• Cost of sales decreased slightly from Rs. 164,869 million in fiscal 2008 to Rs. 164,566 million ($3,235.1 million) in fiscal 2009, a
decrease of Rs. 303 million, or 0.2%. Cost of sales decreased primarily due to a reduction in global commodity and crude prices, lower
input prices and lower production volumes in our copper and aluminum business, which was partly offset by higher realization from
the sale of by-products in our zinc business. Cost of sales as a percentage of net sales increased from 66.9% in fiscal 2008 to 77.6% in
fiscal 2009 primarily due to the significant decrease in net sales, due in significant part to lower daily average copper, zinc and
aluminum LME prices in fiscal 2009, as compared to only a slight decrease in the cost of sales.
• Selling and distribution expenses increased slightly from Rs. 3,808 million in fiscal 2008 to Rs. 3,847 million ($75.6 million) in fiscal
2009, an increase of Rs. 39 million, or 1.0%. This increase was due to increased sales volumes in our zinc business as some of the
selling and distribution expenses are proportional to the sales volume. As a percentage of net sales, however, selling and distribution
expenses increased from 1.5% in fiscal 2008 to 1.8% in fiscal 2009.
• General and administrative expenses increased from Rs. 4,572 million in fiscal 2008 to Rs. 5,078 million ($99.8 million) in fiscal
2009, an increase of Rs. 506 million, or 11.1%, primarily as a result of an increase in exploration and technical consultancy costs at
HZL and an increase in salaries and other general costs as a result of expansion of our business. As a percentage of net sales, general
and administrative expenses increased from 1.9% in fiscal 2008 to 2.4% in fiscal 2009. These expenses increased primarily in our zinc
and aluminum business as a result of an increase in capacities and the scale of our operations.
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