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

We have consistently paid dividends and have declared dividends of Rs. 2,834 million for fiscal 2008 and Rs. 2,480 million ($48.8 million)
for fiscal 2009.
Capital Resources
We plan to finance our capital requirements through a mix of cash flows from operating and financing activities. We do not depend on offbalance
sheet financing arrangements.
Net Cash Provided by or Used in Operating Activities
Net cash provided by continuing operating activities was Rs. 78,204 million ($1,537.3 million) in fiscal 2009 compared to net cash used by
continuing operating activities of Rs. 17,594 million in fiscal 2008 and net cash provided by operating activities of Rs. 40,418 million in fiscal
2007. The cash provided by operating assets and liabilities in fiscal 2009 was Rs. 27,706 million ($544.6 million), primarily consisting of Rs.
8,548 million ($168.0 million) from short-term investments. The cash provided by working capital in fiscal 2009 was Rs. 19,158 million
($376.6 million), primarily consisting of Rs. 6,715 million ($132.0 million) and Rs. 8,738 million ($171.8 million) resulting from reductions in
account receivables and inventories, respectively, and Rs. 4,108 million ($80.8 million) resulting from an increase in accounts payable and
accrued expenses. Cash generation decreased in fiscal 2008 primarily on account of lower operating income across all our businesses, with our
zinc business accounting for a substantial portion of this decrease. The cash used in operating assets and liabilities in fiscal 2008 was Rs.
85,179 million, primarily consisting of Rs. 88,021 million towards short-term investments, which was partially offset by cash provided by
working capital of Rs. 2,842 million. For fiscal 2007, the cash used in operating assets and liabilities was Rs. 32,750 million, of which Rs.
24,174 million was towards short-term investments. Cash used for working capital purposes was Rs. 8,576 million in fiscal 2007, which
consisted of an increase in accounts receivables, other current and non-current assets, and inventories which were partially offset by an increase
in accounts payable and accrued expenses and other current and non-current liabilities. We believe our current working capital is sufficient for
our present capital requirements.
Net Cash Used in Investing Activities
Net cash used in investing activities was Rs. 24,006 million in fiscal 2007, Rs. 56,404 million in fiscal 2008 and Rs. 95,458 million
($1,876.5 million) in fiscal 2009. The major part of the cash used in investing activities for fiscal 2007 and 2008 was towards our expansion
projects across our copper, zinc and aluminum businesses, and for fiscal 2009, on our zinc, aluminum and commercial power generation
businesses. We also used cash to meet ongoing maintenance capital expenditure requirements.
In fiscal 2009, we spent Rs. 12,763 million ($250.9 million) on capital expenditures on HZL’s second hydrometallurgical zinc smelter and
an additional captive power plant at Chanderiya, HZL’s construction of wind power plants and a project to increase the capacity of HZL’s
Debari smelter from 80,000 tpa to 88,000 tpa through improvements in operational efficiencies. We also spent Rs. 18,612 million
($365.9 million) on Sterlite Energy’s construction of a thermal coal-based 2,400 MW power facility. In addition, we advanced Rs.
11,450 million ($225.1 million) to Vedanta Aluminium for its expansion projects, and Rs. 3,931 million ($77.3 million) to KCM. We used Rs.
36,923 million ($725.8 million) towards investing in short term investments. In fiscal 2008, we spent Rs. 13,536 million on capital
expenditures, mainly on HZL’s second hydrometallurgical zinc smelter and an additional captive power plant at Chanderiya, HZL’s
construction of wind power plants and an 88,000 tpa debottlenecking project at HZL. We also spent Rs. 8,040 million on Sterlite Energy’s
construction of a thermal coal-based 2,400 MW power facility and invested Rs. 16,000 million in, and advanced Rs. 3,890 million to, Vedanta
Aluminium for its expansion projects. In fiscal 2007, we spent Rs. 25,362 million on capital expenditures, mainly on our capacity expansion
projects to add a second new zinc smelter and an additional 80 MW captive power plant at Chanderiya, HZL’s construction of wind power
plants and Sterlite Energy’s construction of a thermal coal-based 2,400 MW power facility. We also realized Rs. 1,171 million from sale of
property, plant and equipment, primarily from the sale of a property consisting of land and buildings in Mumbai for Rs. 1,000 million and Rs.
1,485 million from the sale of our aluminum conductor business. In addition, we paid Rs. 1,315 million to subscribe to a rights issue by
Vedanta Aluminium to maintain our 29.5% ownership interest in that company.
Net Cash Provided by or Used in Financing Activities
Net cash provided by financing activities was Rs. 7,986 million ($157.0 million) in fiscal 2009, primarily as a result of the net proceeds
from long-term and short-term debts of Rs. 15,388 million ($302.5 million) which were partially offset by repayment of working capital loan of
Rs. 3,588 million ($70.5 million) and payment of dividends of Rs. 3,812 million ($74.9 million). Net cash provided by financing activities was
Rs. 76,582 million in fiscal 2008 primarily as a result of proceeds from the ADS offering, net of expense, of Rs. 80,506 million which were
partially offset by net repayment of debt of Rs. 2,928 million and by the payment of dividends of Rs. 1,030 million. Net cash used in financing
activities was Rs. 15,910 million in fiscal 2007 primarily as a result of a net repayment of debt of Rs. 11,451 million and by a payment of
dividends of Rs. 4,450 million.
89