UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

Sterlite Industries (India) Limited

Vedanta, 75 Nehru Road
Vile Parle East
Mumbai, Maharashtra 400-099, India
+91-22-6646-1000
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F   þ          Form 40-F   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o

Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes   o          No   þ

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g3-2(b): Not applicable.

 

 

Conventions used in this report

Unless otherwise stated in this report or unless the context otherwise requires, references herein to “we,” “us,” “our,” “Sterlite,” the “Company” or “our consolidated group of companies” mean Sterlite Industries (India) Limited, and its consolidated subsidiaries and its predecessors, collectively, including Monte Cello BV, or Monte Cello, Copper Mines of Tasmania Pty Ltd, or CMT, Thalanga Copper Mines Pty Ltd, or TCM, Bharat Aluminium Company Limited, or BALCO, Sterlite Energy Limited, or Sterlite Energy, Sterlite Opportunities and Ventures Limited, or SOVL, and Hindustan Zinc Limited, or HZL. Our financial information does not include Vedanta Resources plc, or Vedanta, Vedanta Resources Holdings Limited, or VRHL, Konkola Copper Mines plc, or KCM, Twin Star Holdings Limited, or Twin Star, The Madras Aluminium Company Limited, or MALCO, India Foils Limited, or IFL, Sterlite Technologies Limited (formerly Sterlite Optical Technologies Limited), or STL, SIL Employees Welfare Trust, or SEWT, Monte Cello Corporation NV, or MCNV, Twin Star Infrastructure Limited, Sesa Goa Limited, or Sesa Goa, or Vedanta Aluminium Limited (formerly Vedanta Alumina Limited), or Vedanta Aluminium, except that as to Vedanta Aluminium, our consolidated financial statements account for our 29.5% minority interest therein under the equity method of accounting, but Vedanta Aluminium is not otherwise included in our consolidated group of companies or our consolidated financial statements. References to the “Vedanta group” are to Vedanta and its subsidiaries.

In this report, references to The London Metal Exchange Limited, or LME, price of copper, zinc or aluminum are to the cash seller and settlement price on the LME for copper, zinc or aluminum for the period indicated.

In this report, all references herein to “US” or the “United States” are to the United States of America, its territories and its possessions. References to “UK” are to the United Kingdom. References to “India” are to the Republic of India. References to “$,” “US$,” “dollars” or “US dollars” are to the legal currency of the United States, references to “Rs.,” “Rupees” or “Indian Rupee” are to the legal currency of India and references to “AUD,” “Australian dollars” or “A$” are to the legal currency of the Commonwealth of Australia. References to “¢” are to US cents and references to “lb” are to the imperial pounds (mass) equivalent to 0.4536 kilograms. References to “tons” are to metric tons, a unit of mass equivalent to 1,000 kilograms or 2,204.6 lb. Unless otherwise indicated, the accompanying financial information for our company has been prepared in accordance with US generally accepted accounting principles, or US GAAP, for the fiscal years ended March 31, 2007 and for the nine-month periods ended December 31, 2006 and 2007. References to a particular “fiscal” year are to our fiscal year ended March 31 of that year. Our fiscal quarters end on June 30, September 30 and December 31. References to a year other than a “fiscal” year are to the calendar year ended December 31.

Special note regarding forward-looking statements

This report contains “forward-looking statements,” as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our company and our industry. These forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “project,” “seek,” “should” and similar expressions. These statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that, although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions could be materially incorrect. Factors which could cause these assumptions to be incorrect include but are not limited to:

	•		a decline or volatility in the prices of or demand for copper, zinc or aluminum;
	•		events that could cause a decrease in our production of copper, zinc or aluminum;
	•		unavailability or increased costs of raw materials for our products;
	•		our actual economically recoverable copper ore, lead-zinc ore or bauxite reserves being lower than we have estimated;
	•		our ability to expand our business, effectively manage our growth or implement our strategy, including our planned entry into the commercial power business;
	•		our ability to retain our senior management team and hire and retain sufficiently skilled labor to support our operations;

	•		regulatory, legislative and judicial developments and future regulatory actions and conditions in our operating areas;
	•		increasing competition in the copper, zinc or aluminum industry;
	•		political or economic instability in India or around the region;
	•		worldwide economic and business conditions;
	•		our ability to successfully consummate strategic acquisitions;
	•		the outcome of outstanding litigation in which we are involved;
	•		our ability to maintain good relations with our trade unions and avoid strikes and lock-outs;
	•		any actions of our controlling shareholder, Vedanta;
	•		our business’ future capital requirements and the availability of financing on favorable terms;
	•		the continuation of tax holidays, exemptions and deferred tax schemes we enjoy;
	•		changes in tariffs, royalties, customs duties and government assistance; and
	•		terrorist attacks and other acts of violence, natural disasters and other environmental conditions and outbreaks of infectious diseases and other public health concerns in India, Asia and elsewhere.

These and other factors are more fully discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report and in our other filings with the U.S. Securities and Exchange Commission, or the SEC, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our registration statement on Form F-1, as amended (Registration No. 333-138739). In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans, objectives or projected financial results referred to in any of the forward-looking statements. Except as required by law, we do not undertake to release revisions of any of these forward-looking statements to reflect future events or circumstances.

Index to Unaudited Condensed Consolidated Financial Statements

		Page(s)
Unaudited Condensed Consolidated Statements of Operations for the nine-month periods ended December 31, 2006 and 2007			F-1
Unaudited Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2007			F-2
Unaudited Condensed Consolidated Statements of Cash Flows for the nine-month periods ended December 31, 2006 and 2007			F-3
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine-month periods ended December 31, 2006 and 2007			F-4
Notes to the Unaudited Condensed Consolidated Financial Statements			F-5

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

										2007
		2006				2007				US dollars in
For the nine-month period ended December 31,		Rs. in millions				Rs. in millions				millions (Note 2)
Sales
— External			189,386				192,245				4,878.1
— Related parties			2,639				3,055				77.5
Less : Excise duty			(12,688	)			(16,032	)			(406.8	)
Net sales			179,337				179,268				4,548.8
Other operating revenues			1,672				1,761				44.7
Total revenue			181,009				181,029				4,593.5
Cost of sales			(105,691	)			(119,717	)			(3,037.7	)
Selling and distribution expenses			(2,376	)			(2,650	)			(67.2	)
General and administration expenses			(2,513	)			(3,423	)			(86.9	)
Voluntary retirement scheme expenses			(97	)			—				—
Operating income			70,332				55,239				1,401.7
Interest and dividend income			1,314				4,473				113.5
Interest expense			(2,856	)			(2,481	)			(63.0	)
Net realized and unrealized investment gain			1,637				3,502				88.9
Income before income taxes, minority interests and equity in net income of associate			70,427				60,733				1,541.1
Income taxes
— Current			(17,646	)			(14,131	)			(358.6	)
— Deferred			(2,538	)			(1,873	)			(47.5	)
Income after income taxes, before minority interests and equity in net income of associate			50,243				44,729				1,135.0
Minority interests			(14,941	)			(13,925	)			(353.3	)
Equity in net income of associate, net of taxes			167				888				22.5
Net income from continuing operations			35,469				31,692				804.2
Discontinued operations:
Income from divested business, net of tax			86				—				—
Net income			35,555				31,692				804.2
Earnings per share:
Income from continuing operations			64.11				47.67				1.21
Income from discontinued operations			0.16				—				—
Earnings per share			64.27				47.67				1.21
Weighted average number of equity shares used in computing earnings per share			553,216,634				664,858,077				664,858,077

     The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars
		Rs. in				Rs. in				in millions
As of		millions				millions				(Note 2)
ASSETS
Current assets
Cash and cash equivalents			9,436				8,443				214.2
Restricted — cash, deposits and investments			1,093				1,208				30.7
Short-term investments and deposits			51,325				151,898				3,854.3
Accounts receivable, net			15,769				14,696				372.9
Inventories			28,645				35,046				889.3
Deferred income taxes			1,152				460				11.7
Other current assets,net			11,771				13,489				342.3
Total current assets			119,191				225,240				5,715.4
Non-current assets
Long-term investments			1,139				1,269				32.2
Equity investment in associate			3,033				3,921				99.5
Deferred income taxes			1,455				1,220				31.0
Property, plant and equipment, net			99,513				108,633				2,756.5
Other non-current assets, net			1,550				13,883				352.3
Total non-current assets			106,690				128,926				3,271.5
Total assets			225,881				354,166				8,986.9
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term and current portion of long-term debt			8,353				11,119				282.1
Accounts payable			35,336				35,473				900.1
Accrued expenses			2,411				3,477				88.2
Current income taxes payable			2,349				1,656				42.0
Deferred income taxes			1,479				1,500				38.1
Other current liabilities			7,996				8,706				221.1
Total current liabilities			57,924				61,931				1,571.6
Non-current liabilities
Long-term debt, net of current portion			13,128				9,951				252.5
Deferred income taxes			13,985				15,404				390.9
Other non-current liabilities			4,194				4,383				111.2
Total non-current liabilities			31,307				29,738				754.6
Total liabilities			89,231				91,669				2,326.2
Minority interests			39,690				53,050				1,346.1
Commitments and contingencies (Note 11)
Shareholders’ equity
Equity Shares — par value Rs.2 per equity share (925,000,000 shares authorized as of March 31, 2007 and December 31, 2007; 558,494,411 and 708,494,411 equity shares issued and outstanding as of March 31, 2007 and December 31, 2007, respectively (Note 10)			1,117				1,417				36.0
Additional paid-in-capital			26,220				106,436				2,700.7
Retained earnings			70,463				102,690				2,605.7
Accumulated other comprehensive losses			(840	)			(1,096	)			(27.8	)
Total shareholders’ equity			96,960				209,447				5,314.6
Total liabilities and shareholders’ equity			225,881				354,166				8,986.9

     The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

										2007
		2006				2007				US dollars in
For the nine-month period ended December 31,		Rs. in millions				Rs. in millions				millions (Note 2)
Cash flows from operating activities
Net income			35,555				31,692				804.2
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization			4,383				5,138				130.4
Net realized and unrealized investment gains			(885	)			(3,502	)			(88.9	)
Loss on sale of property, plant and equipment			40				—				—
Equity in net income of associate			(167	)			(888	)			(22.5	)
Deferred income taxes			2,538				1,873				47.5
Minority interests			14,941				13,925				353.3
Other non cash expense			—				12				0.4
Changes in assets and liabilities:
Accounts receivable, net			(12,205	)			1,065				27.0
Other current and non-current assets			(10,673	)			(1,347	)			(34.2	)
Inventories			(11,583	)			(6,401	)			(162.5	)
Accounts payable and accrued expenses			8,527				(54	)			(1.1	)
Other current and non-current liabilities			4,263				1,889				47.9
Short-term investments and deposits, net			(21,735	)			(97,071	)			(2,463.1	)
Net cash provided /(used in) in operating activities			12,999				(53,669	)			(1,361.6	)
Cash flows from investing activities
Purchases of property, plant and equipment			(16,995	)			(15,014	)			(381.0	)
Proceeds from sale of property, plant and equipment			645				21				0.5
Net changes in restricted — deposits and investments			20				(200	)			(5.1	)
Loans given to affiliates			—				(12,330	)			(312.9	)
Investment in subsidiaries			(5	)			—				—
Proceeds from sale of non-core business			41				—				—
Net cash used in investing activities			(16,294	)			(27,523	)			(698.5	)
Cash flows from financing activities
Proceeds from issuance of equity shares, net			—				80,516				2,042.9
Net changes in restricted cash			(33	)			85				2.2
Proceeds from short-term debt, net			10,772				6,819				173.0
Proceeds from long-term debt			1,849				—				—
Repayment of long-term debt			(13,244	)			(6,304	)			(160.0	)
Payment of dividends, including dividend tax			(3,766	)			(935	)			(23.7	)
Net cash (used)/provided by financing activities			(4,422	)			80,181				2,034.4
Effect of exchange rate changes on cash and cash equivalents			101				18				0.5
Net decrease in cash and cash equivalents			(7,616	)			(993	)			(25.2	)
Cash and cash equivalents at the beginning of the period			9,258				9,436				239.4
Cash and cash equivalents at the end of the period			1,642				8,443				214.2
Supplementary information:
Interest paid			2,894				2,017				51.2
Income taxes paid			16,706				13,715				348.0

     The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

																		Accumulated
		Equity shares																other compre-				Compre-				Total
		No. of								Additional				Retained				hensive				hensive				Shareholders’
		shares				Par value				paid-in-capital				earnings				income /(loss)				income/(loss)				equity
Balance at April 1, 2006			558,494,411				559				26,883				26,575				(519	)			—				53,498
Stock split from Rs. 5 par value to Rs. 2 par value resulting in additional issuance of 2.5 shares per share held (111,738,469 shares to 279,346,173 shares)
Stock Split effected in form of dividend							558				(558	)
Net income															35,555								35,555				35,555
Dividend (including dividend tax)															(3,343	)											(3,343	)
Loss on sale of conductor division											(105	)															(105	)
Unrealized gain on available-for-sale securities, net of tax of Rs. 21 million																			77				77				77
Foreign currency translation adjustment																			9				9				9
Unrealized gain on cash flow hedges, net of tax of Rs.137 million																			(798	)			(798	)			(798	)
Comprehensive income																							34,843
Balance at December 31, 2006			558,494,411				1,117				26,220				58,787				(1,231	)							84,893

																		Accumulated other												Total
		Equity shares								Additional								comprehensive				Compre-				Total				US dollars in
		No. of								paid-in-				Retained				income				hensive				Shareholders’				millions
		shares				Par value				capital				earnings				/(loss)				income/(loss)				equity				(Note 2)
Balance at April 1, 2007			558,494,411				1,117				26,220				70,463				(840	)			—				96,960				2,460.3
Adoption of FIN 48															535												535				13.6
Share Issued (Note 10)			150,000,000				300				80,216																80,516				2,042.9
Net income															31,692								31,692				31,692				804.2
Unrealized gain on available-for-sale securities, net of tax of Rs. 44 million ($1.1 million)																			85				85				85				2.2
Foreign currency translation adjustment																			31				31				31				0.8
Unrealized loss on cash flow hedges, net of tax of Rs. 126 million ($3.2 million)																			(372	)			(372	)			(372	)			(9.4	)
Comprehensive income																							31,436
Balance at December 31, 2007			708,494,411				1,417				106,436				102,690				(1,096	)							209,447				5,314.6
Balance at December 31, 2007 in US dollar in millions (Note 2)							36.0				2,700.7				2,605.7				(27.8	)							5,314.6

     The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements

STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES

1. Background and Operations

     Sterlite Industries (India) Limited and its consolidated subsidiaries (the “Company” or “Sterlite”) are engaged in non-ferrous mining and metals in India and Australia. Sterlite Industries (India) Limited (“SIIL”) was incorporated on September 8, 1975 under the laws of the Republic of India. Its shares are listed on National Stock Exchange and Bombay Stock Exchange in India. In June 2007, Sterlite completed its initial public offering of American Depositary shares (“ADS”), each representing one equity share, and listed its ADSs on the New York Stock Exchange and raised Rs. 80,516 million ($2,042.9 million).

     SIIL is a majority-owned subsidiary of Twin Star Holdings Limited (“Twin Star”), which is in turn a wholly-owned subsidiary of Vedanta Resources plc (“Vedanta”), a public limited company incorporated in the United Kingdom and listed on the London Stock Exchange. Twin Star held 57.0% of SIIL’s equity as of December 31, 2007.

     The Company’s copper business is principally one of custom smelting and includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant and copper rod plant at Tuticorin in Southern India, and a refinery and two copper rod plants at Silvassa in Western India. In addition, the Company owns and operates the Mt. Lyell copper mine in Tasmania, Australia through its subsidiary Copper Mines of Tasmania Pty Ltd (“CMT”), which provides a small percentage of the copper concentrate requirements for its smelter.

     The Company’s zinc business is owned and operated by Hindustan Zinc Limited (“HZL”). The Company has a 64.9% ownership interest in HZL, with the remaining interests owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). HZL’s operations include three lead-zinc mines in Northwest India, three zinc smelters, one lead-zinc smelter and one lead smelter in Northwest India and one zinc smelter in Southeast India.

     The Company’s aluminum business is owned and operated by Bharat Aluminium Company Limited (“BALCO”), in which the Company has a 51.0% ownership interest and the remaining interest is owned by the Government of India. BALCO’s operations include bauxite mines, captive power plants and refining, smelting and fabrication facilities in Central India.

     The Company owns a 29.5% minority interest in Vedanta Aluminium Limited (formerly Vedanta Alumina Limited) (“Vedanta Aluminium”), a 70.5%-owned subsidiary of Vedanta. Vedanta Aluminium commenced construction of an aluminum refinery in the State of Orissa in Eastern India during fiscal 2004.

     SIIL divested its aluminum conductor division, a component of SIIL, during fiscal 2007 through a sale to Sterlite Technologies Limited (formerly Sterlite Opticals and Technologies Limited) (“STL”), a company under common control. Accordingly, the consolidated income statement for the nine months ended December 31, 2006 has been recasted to present the result of the discontinued operations separately from the continuing operations.

     The Company acquired 100% shareholding of Sterlite Energy Limited (“SEL”) during fiscal 2007. SEL is engaged in power generation business in India. SEL has commenced construction of the first phase of a pit-head thermal coal-based power facility in the state of Orissa in Eastern India.

2. Significant Accounting Policies

Basis of preparation

     The unaudited condensed consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) which include industry practices. The unaudited condensed consolidated financial statements are presented in Indian Rupee (“Rs.”). Certain financial information that is normally included in annual financial statements, including certain financial statement notes, prepared in accordance with US GAAP, is not required for interim reporting purposes and has been condensed or omitted.

     The financial information with respect to the nine-month periods ended December 31, 2006 and 2007 is unaudited and as of and for the year ended March 31, 2007 is audited. The unaudited condensed consolidated financial statements have been prepared on the

same basis as the audited financial statements. In the opinion of management, such unaudited financial information contains all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of such periods. The results of operations for the nine-month period ended December 31, 2007 are not necessarily indicative of results to be expected for the full year.

Basis of consolidation

     The consolidated financial statements include the results of SIIL and all its wholly-owned subsidiaries and other subsidiaries in which a controlling interest is maintained.

     All significant inter-company balances and transactions, including unrealized profits arising from transactions between the subsidiaries, have been eliminated upon consolidation.

     Non-Indian subsidiaries have a functional currency (i.e., the currency in which activities are primarily conducted) of the country in which a subsidiary is domiciled. Foreign subsidiaries’ assets and liabilities are translated to Indian Rupee at year-end exchange rates, while revenues and expenses are translated at average exchange rates during the year. Adjustments that result from translating amounts in a subsidiary’s functional currency are reported in shareholders’ equity as a component of accumulated other comprehensive income. Minority interests in subsidiaries represent the minority shareholders’ proportionate share.

Convenience translation

     The accompanying unaudited condensed consolidated financial are presented in Indian Rupee, the functional currency of the Company. Solely for the convenience of the readers, the unaudited condensed consolidated financial statements as of and for the nine months ended December 31, 2007 have been translated into US dollars (“$”) at the noon buying rates of $1.00 = Rs. 39.41 in the City of New York for cable transfers of Indian Rupee as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2007. No representation is made that the Indian Rupee amounts represent US dollar amounts or have been, could have been or could be converted into US dollars at such a rate or any other rate.

Income taxes

     The Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, on April 1, 2007. FIN 48 provides specific guidance on the financial statement recognition, measurement, reporting and disclosure of uncertain tax positions taken or expected to be taken in a tax return. FIN 48 addresses the manner in which tax positions, either permanent or temporary, should be reflected in the financial statements.

     In accordance with the adoption of FIN 48, we evaluate our tax positions to determine if it is more likely than not that a tax position is sustainable, based on its technical merits. If a tax position does not meet the more likely than not standard, a liability is established. Additionally, for a position that is determined to, more likely than not, be sustainable, we measure the benefit at the highest cumulative probability of being realized and establish a liability for the remaining portion. A material change in our tax liabilities could have an impact on our results. The company recognizes potential interest and penalties related to unrecognized tax benefits in income tax expense.

Recently issued accounting pronouncements

     Statement of financial Accounting Standard (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140”

     In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140,” which eliminates the exemption from applying SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” to interests on securitized financial assets so that similar instruments are accounted for similarly regardless of form. The statement allows the election of a fair value measurement at acquisition, at issuance or when a previously recognized financial instrument is subject to a remeasurement event, on an instrument-by-instrument basis, in cases in which a derivative would otherwise have to be bifurcated. The statement applies to all financial instruments acquired, issued, or subject to a remeasurement (new basis) event occurring after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Adoption of the standard in fiscal 2007 had no material impact on the financial position or results of operation of the Company.

SFAS No. 157, “Fair Value Measurements”

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company’s management is currently evaluating the impact, if any, of the adoption of SFAS No. 157 will have on the Company’s financial reporting and disclosures.

SFAS No. 158,”Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R)”

     In September 2006, the FASB issued SFAS No.158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R)”, which requires recognition of a net liability or asset to report the funded status of defined benefit pension and other postretirement plans on the balance sheet and recognition (as a component of other comprehensive income) of changes in the funded status in the year in which the changes occur. SFAS No. 158 also requires measurement of a plan’s assets and obligations as of the balance sheet date and additional annual disclosures in the notes to the financial statements. The recognition and disclosure provisions of SFAS No. 158 are effective for fiscal years ending after December 15, 2006 while the requirement to measure the plan’s assets and obligations as of the balance sheet is effective for fiscal years ending after December 15, 2008. Adoption of the standard in fiscal 2007 had no material impact on the financial position or results of operation of the Company.

Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”

     In September 2006, the SEC issued SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB No. 108 is effective for annual financial statements for fiscal years ending after November 15, 2006, and requires registrants to assess the effects of correcting prior years’ misstatements on the current year’s statement of income. The cumulative effect, if any, of initial application is to be reported as of the beginning of such fiscal year. The adoption of SAB No. 108 in fiscal 2007 did not have a material effect on the consolidated financial position or results of operations of the Company.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115”

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. This standard is effective for fiscal years beginning after November 15, 2007. The Company’s management is currently evaluating the impact, if any, of the adoption of SFAS No. 159 will have on the Company’s financial reporting and disclosures.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51”

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.” SFAS No. 160 improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard is effective for fiscal years beginning on or after December 15, 2008. The Company’s management is currently evaluating the impact, if any, the adoption of SFAS No. 160 will have on the Company’s financial reporting and disclosures.

SFAS No. 141 (Revised), “Business Combination”

     In December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combination.” SFAS 141(R) improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This standard is effective for fiscal years beginning on or after December 15, 2008. The Company’s management is currently evaluating the impact, if any, the adoption of SFAS No. 141(R) will have on the Company’s financial reporting and disclosures.

3. Interest and Dividend Income

     Interest and dividend income include foreign currency gain/ (loss) on foreign currency investments.

4. Inventories

     Inventories consist of the following as of the date indicated:

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Finished goods			1,414				1,478				37.6
Work-in-progress			9,860				10,030				254.5
Raw materials			14,584				20,096				509.9
Stores and spares			2,787				3,442				87.3
Inventories			28,645				35,046				889.3

5. Accounts Receivable, Net

     Accounts receivable, net consists of the following as of the date indicated:

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Accounts receivable			14,874				13,713				348.0
Related party receivable			910				998				25.3
Total receivables			15,784				14,711				373.3
Allowances for doubtful accounts			(15	)			(15	)			(0.4	)
Accounts receivable, net			15,769				14,696				372.9

6. Other Current and Non-Current Assets, Net

     Other current and non-current assets consists of the following as of the date indicated:

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Other current and non-current assets			13,321				15,170				385.0
Advance to related party			—				12,331				312.9
Total other current and non-current assets			13,321				27,501				697.9
Allowances for doubtful advances			—				(129	)			(3.3	)
Other current and non-current assets, net			13,321				27,372				694.6

7. Short-Term and Long-Term Debt

     Short-term debt represents borrowings with an original maturity of less than one year. Long-term debt represents borrowings with an original maturity of greater than one year. Maturity distribution is based on contractual maturities or earlier dates at which debt is callable at the option of the holder or the Company. Interest rates on floating-rate debt are generally linked to benchmark rates.

Working capital loans

     The Company has credit facilities from various banks for meeting working capital requirements, generally in the form of credit lines for establishing letters of credit, packing credit in foreign currency (“PCFC”), cash credit and issuing bank guarantees.

Amounts due under working capital loans as of March 31, 2007 and December 31, 2007 were nil and Rs. 6,148 million, respectively. The Rs.6,148 million working capital loan due as of December 31, 2007 was an Indian Rupee denominated loan. Interest on this facility is based on the London Inter-Bank Offer Rate (“LIBOR”) plus 57 basis points. These working loans are secured against the inventories and trade accounts receivables.

Floating rate notes

     The Company issued US dollar denominated, floating rate, unsecured notes of $81.0 million in June 1997 repayable at the end of ten years. In June 2004, $67.6 million was repaid and the remainder was repaid in June 2007. Amounts outstanding under this facility were Rs. 584 million and nil as of March 31, 2007 and December 31, 2007 respectively. Interest on this facility was based on the LIBOR plus 130 basis points.

Foreign currency loans

     The Company had a US dollar denominated unsecured term loan facility of $92.6 million, the purpose of which was to refinance foreign currency loans with various banks. This facility consisted of a Tranche A of $67.6 million which has been repaid in June 2007 and a Tranche B of $25.0 million repayable in September 2008. As per the loan agreement, in April, 2006, these loans were converted into Japanese yen loans amounting to Tranche A to Japanese yen 8,012.6 million and Tranche B to Japanese yen 2,862.5 million. Amounts due under this facility as of March 31, 2007 and December 31, 2007 were Rs. 4,024 million and Rs. 1,008 million ($25.6 million), respectively. Interest on this facility is based on Japanese yen LIBOR plus 44 basis points.

     The Company entered into an unsecured term loan facility consisting of Japanese yen 3,570 million and $19.7 million in September 2005, the purpose of which was to refinance foreign currency borrowings made in August 2002. This loan is to be repaid between August 2006 and August 2008 in five tranches. The first three tranches amounting to Japanese yen 2,142 million and $11.8 million were repaid on or prior to December 31, 2007. The balances under this facility as of March 31, 2007 and December 31, 2007 were Rs. 1,306 million and Rs. 812 million ($20.6 million), respectively. Interest on Japanese yen facility is based on Japanese yen LIBOR plus 42 basis points and on the US dollar denominated facility is based on LIBOR plus 42 basis points.

Term loans

     As of December 31, 2007, the Company held syndicated Indian Rupee fixed rate term loan facilities totaling Rs. 10,118 million ($256.7 million) and bearing an average interest rate of 7.14% per annum. The amount outstanding was Rs. 11,862 million as of March 31, 2007. These facilities are secured by a first charge on the movable and immovable properties, present and future tangible or intangible assets and other than current assets of BALCO. The first loan, under which Rs. 4,214 million was outstanding, as of December 31, 2007, is repayable in 12 quarterly installments beginning January 2007 and the second loan, under which Rs. 5,904 million was outstanding, as of December 31, 2007 is repayable in eight quarterly installments beginning May 2009. As of December 31, 2007, the Company have repaid Rs. 5,786 million under these loans, out of the initial borrowing of Rs. 15,904 million.

Buyers’ credit

     As of December 31, 2007, the Company had extended credit terms relating to purchases of property, plant and equipment for its projects. As of March 31, 2007 and December 31, 2007, the balances were Rs. 1,452 million and Rs. 527 million ($13.4 million), respectively. These loans bear interest at LIBOR plus 50 basis points. These are long-term loans secured by all the fixed assets of BALCO, immovable or movable, present and future, on a pari passu basis with other term lenders and with priority to other creditors.

Non-convertible debentures

     In April 2003 the Company had issued Rs. 1,000 million ($25.4 million) Indian Rupee denominated non-convertible debentures to the Life Insurance Corporation of India (“LIC”). The debentures were established in two tranches. Tranche A, which is in the amount of Rs. 400 million ($10.1 million), is due in April 2010 and Tranche B, which is in the amount of Rs. 600 million ($15.2 million), is due in April 2013. Interest rates are linked to annualized Indian Government Security rates. The applicable interest rates have varied from 7.9% to 8.0% per annum. These debentures are secured by certain of SIIL’s immoveable properties.

     Short-term and current portion of long-term debt consist of the following as of the date indicated:

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Short-term debt			—				6,819				173.0
Current portion of long-term debt			8,353				4,300				109.1
Short-term and current portion of long-term debt			8,353				11,119				282.1
Weighted average interest rate on short-term debts			—				5.4	%			5.4	%
Unused line of credit on short-term debts			38,675				50,279				1,275.8

     Long-term debt, net of current portion consists of the following as of the date indicated:

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Bank and financial institutions			19,319				12,532				318.0
Non-convertible debentures			1,000				1,000				25.4
Others			1,162				719				18.2
Long-term debt			21,481				14,251				361.6
Less : Current portion of long-term debt			(8,353	)			(4,300	)			(109.1	)
Long-term debt, net of current portion			13,128				9,951				252.5

8. Business Combinations and Divestures

a. Call option — HZL

     The Company’s wholly-owned subsidiary Sterlite Opportunities and Ventures Limited has the right to purchase all of the Government of India’s remaining shares in HZL at fair market value. As of March 31, 2007 and December 31, 2007, the Government of India’s holding in HZL was 29.5%. This call option is subject to the right of the Government of India to sell 3.5% of HZL to HZL employees. This call option is also subject to the Government of India’s right, prior to the exercise of this call option, to sell its shares in HZL through a public offer. This call option became exercisable on April 11, 2007 and remains exercisable thereafter so long as the Government of India has not sold its remaining interest pursuant to a public offer of its shares. If the Company exercises this call option, the exercise price will be equal to the fair market value of the Government of India’s shares as determined by an independent appraiser, which may take into consideration a number of factors including the current market price of HZL’s shares.

b. Call option — BALCO

     The Company purchased a 51.0% holding in BALCO from the Government of India on March 2, 2001. Under the terms of the purchase agreement for BALCO and the shareholders’ agreement by and among BALCO, the Company and the Government of India, the Company had a call option that allowed it to purchase any remaining shares held by the Government of India in BALCO at any time on or after March 2, 2004. The purchase price per share under this option would be the higher of the fair market value and Rs. 49.01 (plus 14.0% interest per annum compounded semi-annually). During the year ended March 31, 2004, the Company exercised its call option pursuant to the terms of the shareholders’ agreement. An independent valuer was appointed by the Government of India in December 2005 to determine the fair market value of the shares held by the Government of India. The independent valuer submitted its valuation report in January 2006. The Government of India is contesting the purchase price and the validity of the call option. The Company filed an arbitration petition on May 17, 2007 before the High Court of Delhi requesting the court to appoint an arbitrator. As directed by the court, mediation proceedings have begun and the Government of India and the Company have each appointed their respective independent mediators. The Company expects the mediation proceedings to be completed in near future. In the event that the mediation proceedings, do not resolve the matter, the Company has the option of seeking arbitration. The Government of India also retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees.

9. Accumulated Other Comprehensive Loss

     The components of accumulated other comprehensive losses consist of the following as of the date indicated:

										December 31,
		March 31,				December 31,				2007
		2007				2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Unrealized gain on available-for-sale securities			70				155				3.9
Foreign currency translation adjustment			(388	)			(357	)			(9.0	)
Unrealized loss on cash flow hedges			(522	)			(894	)			(22.7	)
Accumulated other comprehensive losses			(840	)			(1,096	)			(27.8	)

     The entire balance of unrealized loss on the cash flow hedges is expected to be recognized in the statement of operation within one year.

10. Shareholders’ Equity

Issued shares

     SIIL’s issued equity share capital as of March 31, 2007 and December 31, 2007 was Rs. 1,117 million and Rs. 1,417 million ($35.6 million), consisting of 558,494,411 shares and 708,494,411 shares, respectively, of Rs. 2 each including 4,099,400 equity shares allotted as fully paid upon conversion of 50,000 foreign currency redeemable convertible bonds.

     SIIL issued an additional 150,000,000 equity share in June 2007, resulting in an increase in issued equity share capital from 558,494,411 shares to 708,494,411 shares. The net proceeds from the initial public offering of ADS of Rs. 80,516 million ($2,042.9 million) have been accounted for as an addition of Rs. 300 million ($7.6 million) to equity share capital and Rs. 80,216 million ($2,035.3 million) to additional paid-in-capital.

     Retained earning includes among others balances of general reserve, debenture redemption reserve and preference share redemption reserve.

General reserves

     Under the Companies Act, a general reserve is created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers is to ensure that if a dividend distribution in a given year is more than 10.0% of the paid-up capital of the company for that year, then the total dividend distribution is less than the total distributable results for that year. The balances in the standalone financial statements of SIIL’s general reserves as determined in accordance with applicable regulations were Rs. 2,148 million and Rs. 2,148 million ($54.5 million) as of March 31, 2007 and December 31, 2007, respectively.

Debenture redemption reserve

     The Companies Act requires companies that issue debentures to create a debenture redemption reserve from annual profits until such debentures are redeemed. Companies are required to maintain a minimum proportion of outstanding redeemable debentures as a reserve. The amounts credited to the debenture redemption reserve may not be utilized by the Company except to redeem debentures. Retained earnings of the standalone financial statements of SIIL as of March 31, 2007 and December 31, 2007 include Rs. 117 million and Rs. 117 million ($3.0 million) of debenture redemption reserve, respectively.

Preference share redemption reserve

     The Companies Act provides that companies that issue preference shares may redeem those shares from profits of the company which otherwise would be available for dividends or from proceeds of a new issue of shares made for the purpose of redemption of the preference shares. If there is a premium payable on redemption, the premium must be provided for, either by reducing the additional paid in capital (shares premium account) or net income, before the shares are redeemed.

     If profits are used to redeem preference shares, the value of the nominal amount of shares redeemed should be transferred from profits (retained earnings) to the capital redemption reserve account. This amount should then be utilized for the purpose of redemption of redeemable preference shares. This reserve can be used to issue fully paid-up bonus shares to the shareholders of the Company. Retained earnings of the standalone financial statements of SIIL includes Rs. 769 million and Rs. 769 million ($19.5 million) of preference share redemption reserve as of March 31, 2007 and December 31, 2007, respectively.

Dividends

     Each equity share holder is entitled to dividends as and when the Company declares and pays dividends after obtaining shareholder approval. Dividends are paid in Indian Rupees. Remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable taxes. Equity dividends paid were Rs. 2,932 million (Rs. 5.25 per share) and nil for the year ended March 31, 2007 and nine-month period ended December 31, 2007, respectively. Dividend distribution taxes on the equity dividends were Rs. 411 million and nil for the year ended March 31, 2007 and the nine-month period ended December 31, 2007, respectively, which were paid by the Company.

     Dividends are payable from the profits determined under Indian GAAP statutory standalone financial statements of SIIL and its subsidiaries. Under Indian law, a company is allowed to pay dividends in excess of 10.0% of its paid-up capital in any year from profits for that year only if it transfers a specified percentage of the profits of that year to reserves. The Company makes such transfers to general reserves.

11. Commitments, Contingencies and Guarantees

(a) Commitments and contingencies

(i) Commitments

     The Company has a number of continuing operational and financial commitments in the normal course of business including completion of the construction and expansion of certain assets.

•

Capital commitments

     Significant capital commitments of the Company as of December 31, 2007 amounted to Rs. 59,276 million ($1,504.1 million) and these are related to the capacity expansion projects including commitments amounting to Rs. 51,509 million ($1,307.0 million) for the Company’s new energy business.

•

Export obligations

     The Company has export obligations of Rs. 23,276 million ($590.6 million) over eight years on account of concessional rates received on import duties paid on capital goods under the Export Promotion Capital Goods Scheme enacted by the Government of India. If the Company is unable to meet these obligations, the Company’s liability would be Rs. 3,346 million ($84.9 million), reduced in proportion to actual exports. Due to a remote likelihood of the Company being unable to meet its export obligations, no loss is anticipated with respect to these obligations and hence no provision has been made in its unaudited condensed consolidated financial statements.

(ii) Contingencies

     The Company is from time to time subject to litigation and other legal proceedings. Certain operating subsidiaries of the Company have been named as parties to legal actions by third party claimants and by the Indian sales tax, excise and related tax authorities for additional sales tax, excise and indirect duties. These claims primarily relate either to the assessable values of sales and purchases or to incomplete documentation supporting the Company’s tax returns. The total claims related to these tax liabilities is Rs. 3,772 million ($95.7 million). Management has evaluated these contingencies and hence has recorded Rs. 752 million ($19.1 million) as current liabilities as of December 31, 2007.

     The Company has ongoing disputes with income tax authorities relating to tax treatment of certain items. These mainly include disallowed expenses, tax treatment of certain expenses claimed by the Company as deductions, and the computation of, or eligibility of, certain tax incentives or allowances. Some of the disputes relate to the year in which the tax consequences of financial transactions were recognized and in the event these disputes are not resolved in the Company’s favor, the tax consequences may be reflected in the tax year allowed by the income tax authorities and are, therefore, timing differences. Most of these disputes/disallowances, being repetitive in nature, have been raised by the department consistently in most of the years. The Company has a right of appeal to the High Court or Supreme Court against adverse initial assessments by the appellate authorities for matters involving questions of law. The tax authorities have similar rights of appeal. The total claims related to income taxes is Rs. 3,342 million ($84.8 million). Management has evaluated these contingencies and hence has recorded Rs. 987 million ($25.0 million) as provision for current income taxes as of December 31, 2007.

     Claims by third parties amounted to Rs. 5,644 million ($143.2 million) as of December 31, 2007, of which Rs. 287 million ($7.3 million) has been recorded as current liabilities. The Company intends to vigorously defend these claims as necessary. Although the results of legal actions cannot be predicted with certainty, it is the opinion of management, after taking appropriate legal advice, that the likelihood of these claims becoming the obligations of the Company is remote and hence the resolution of these actions will not have a material adverse effect, if any, on the Company’s business, financial condition or results of operations. Therefore, the Company has not recorded any additional liability beyond what is stated above in relation to litigation matters in the accompanying unaudited condensed consolidated financial statements.

(b) Guarantees and put option

     The Company has given guarantees on the issuance of customs duty bonds amounting to Rs. 334 million ($8.5 million) for import of capital equipment at concessional rates of duty. The Company has fulfilled its obligations under the bonds and procedural formalities are yet to be completed by the authorities for releasing the bonds. The Company does not anticipate any liability on these guarantees.

     The Company has provided guarantees on behalf of India Foils Limited, or IFL, for its loan obligations to the extent of Rs. 1,820 million ($46.2 million) and the outstanding amounts against these guarantees as of December 31, 2007 was Rs. 1,710 million ($43.4 million). For IFL’s loan obligations of Rs. 1,270 million guaranteed by the Company, the Company has also granted a put option to a bank under which the bank may require the Company to repurchase the loan in lieu of looking to the Company’s guarantee. The Company would have a liability under the guarantees and the put option in the event IFL fails to fulfill its loan obligations. The maximum potential amount of future payments the Company would be required to pay is Rs. 1,710 million ($43.4 million) as of December 31, 2007. The Company reviewed its liabilities under the guarantees and the put option taking into consideration the financial position of IFL and estimated that the fair value of the guarantees as of December 31, 2007 was Rs. 926 million ($23.5 million). As a result, the Company recognized a liability of Rs. 784 million ($19.9 million) for the guarantees and the put option in fiscal 2006. No further provision during the nine months ending December 31, 2007 is deemed necessary.

     The Company has issued a corporate guarantee of Rs. 7,000 million ($177.6 million) on behalf of Vedanta Aluminium for obtaining credit facilities. The Company has also issued a corporate guarantee of Rs. 9,479 million ($240.5 million) for importing capital equipment at concessional rates of duty under the Export Promotion Capital Goods scheme enacted by the Government of India and Rs 1,556 million ($39.5 million) for raw material imports. Vedanta Aluminium is obligated to export goods worth eight times the value of concessions enjoyed in a period of eight years following the date of import, failing which the Company is liable to pay the dues to the government. With respect to the corporate guarantee of Rs. 7,000 million ($177.6 million), Vedanta Aluminium has issued a counter guarantee to the Company indemnifying the Company for any liability on such guarantee. Vedanta Aluminium began the progressive commissioning of its new alumina refinery in March 2007 and anticipates its full ramp up by March 2008, after which it is expected to start fulfilling its obligations under this scheme. As of December 31, 2007, management determined that the Company has no liability on either of these corporate guarantees.

     The Company has given a bank guarantee amounting to Australian dollar 5.0 million (Rs. 174 million or $4.4 million) in favor of the Ministry for Economic Development, Energy and Resources as a security against rehabilitation liability on behalf of CMT. The same guarantee is backed by the issuance of a corporate guarantee of Rs. 320 million ($8.1 million). These liabilities are fully recognized in the consolidated financial statements of the Company. The management of the company does not anticipate any liability on these guarantees.

     The Company has given bank indemnity guarantees amounting to Australian dollar 2.9 million (Rs. 95 million or $2.4 million) in favor of the State Government of Queensland, Australia as a security against rehabilitation liabilities that are expected to occur at the closure of the mine. The environmental liability is fully recognized in the condensed consolidated financial statements of the Company. The management of the Company does not anticipate any liability on these guarantees.

     The Company has issued corporate guarantees on behalf of CMT amounting to Rs 1,096 million ($27.8 million) for obtaining credit facility from banks. The management of the Company does not anticipate any liability on these guarantees.

     The Company has given performance bank guarantees amounting to Rs. 4,786 million ($121.4 million) as of December 31, 2007. These guarantees are issued in the normal course of business while bidding for supply contracts or in lieu of advances received from customers. The guarantees have varying maturity dates normally ranging from six months to three years. These are contractual guarantees and are enforceable if the terms and conditions of the contracts are not met and the maximum liability on these contracts is the amount mentioned above. The management of the Company does not anticipate any liability on these guarantees.

     The Company has given bank guarantees for securing supplies of materials and services in the normal course of business. The value of these guarantees as of December 31, 2007 is Rs. 2,460 million ($62.4 million). The Company has also issued bank guarantees in the normal course of business for an aggregate value of Rs. 451 million ($11.4 million) for litigations, against provisional valuation and for other liabilities. The management of the Company does not expect any liability on these guarantees.

     The Company’s outstanding guarantees and put option cover obligations aggregating Rs. 29,396 million ($745.9 million) as of December 31, 2007. The Company estimates that the likelihood of these claims becoming obligations of the Company is remote and as such no provision has been made in the condensed consolidated financial statements for these guarantees and put option.

     12. Income Taxes

     The following are the details of tax expense charged to statements of operations for the periods indicated:

		Nine months ended
										December 31, 2007
		December 31, 2006				December 31, 2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Current tax:
Indian income tax			16,709				13,466				341.8
Foreign income tax			937				665				16.8
Total current tax			17,646				14,131				358.6
Deferred tax:
Indian income tax			2,273				1,819				46.1
Foreign income tax			265				54				1.4
Total deferred tax			2,538				1,873				47.5
Income taxes for the period			20,184				16,004				406.1
Effective tax rate			28.7	%			26.4	%			26.4	%

     The following are the details of the deferred tax assets and liabilities as of the dates indicated:

						December				December 31, 2007
		March 31, 2007				31, 2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Deferred tax assets
Current			1,152				460				11.7
Non-current			1,455				1,220				31.0
Total			2,607				1,680				42.7
Deferred tax liabilities
Current			1,479				1,500				38.1
Non-current			13,985				15,404				390.9
Total			15,464				16,904				429.0

     The Company’s income tax provision from continuing operations for the nine-month period ended December 31, 2007 was Rs. 16,004 million ($406.1 million). The effective tax rate for the nine-month period ended December 31, 2007 is 26.4% and the difference between the statutory tax rate of 34.0% and the effective tax rate is primarily due to tax holidays and exemptions enjoyed by the Indian companies.

     Effective April 1, 2007, the company adopted the provisions of FIN 48. This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes” and prescribes a recognition threshold of more-likely-than-not to be sustained upon examination. As a result of the implementation of FIN 48, the company have to recognize a Rs. 535 million ($13.6 million) decrease in the liability for unrecognized tax benefits related to tax positions taken in prior periods, which was accounted for as an increase to the April 1, 2007 balance of retained earnings.

     In addition, the Company has accrued interest and necessary penalties, where applicable, of Rs. 40 million ($1.0 million) related to unrecognized tax positions in provision for income taxes.

13. Earnings Per Share (“EPS”)

     The following EPS is adjusted retroactively for all the periods presented to reflect the impact of stock dividend, rights issue and stock split effective as of May 12, 2006 in the tables below for the period indicated:

		Nine months ended
										December 31, 2007
		December 31, 2006				December 31, 2007				US dollars in
		Rs. in millions				Rs. in millions				millions
Net income from continuing operations			35,469				31,692				804.2
Net income from discontinued operations			86				—				—
Net income			35,555				31,692				804.2
Weighted average number of ordinary shares for earnings per share			553,216,634				664,858,077				664,858,077
Earnings from per share :
Income from continuing operations			64.11				47.67				1.21
Income from discontinued operations			0.16				—				—
Earnings from per share			64.27				47.67				1.21

14. Segment Information

     The Company is in the business of non-ferrous mining and metals in India and Australia. The Company has four reportable segments: copper, zinc, aluminum and corporate and others. The management of the Company is organized by its main products: copper, zinc and aluminum. Each of the reported segment derives its revenues from these main products and hence these have been identified as reportable segments by the Company’s Chief Operating Decision Maker (“CODM”). Segment profit amounts are evaluated regularly by the Company’s Managing Director and CEO who has been identified as its CODM in deciding how to allocate resources and in assessing performance.

     Copper

     The copper business is principally one of custom smelting and includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant and copper rod plant at Tuticorin in Southern India and a refinery and two copper rod plants at Silvassa in Western India. The Company obtains a small quantity of copper concentrate from the Mt. Lyell copper mine in Tasmania, Australia, owned by CMT.

     Zinc

     The zinc business is owned and operated by HZL, India’s leading zinc producer in the Indian zinc market. The Company has a 64.9% ownership interest in HZL, with the remainder owned by the Government of India (29.5%) and institutional and public shareholders (5.6%). HZL’s operations include three zinc smelters, one lead-zinc smelter and one lead smelter in Northwest India, one zinc smelter in Southeast India and three lead-zinc mines in Northwest India.

     Aluminum

     The aluminum business is owned and operated by BALCO, in which the Company has a 51.0% ownership interest. The remainder of BALCO is owned by the Government of India. BALCO’s operations include bauxite mines, captive power plants, and refining, smelting and fabrication facilities in Central India.

     Corporate and others

     The operating segment “Corporate and others” is primarily commercial power generation business and other corporate activities.

Business segments

     The operating segments reported are the segments of the Company for which separate financial information is available. Segment profit amounts are evaluated regularly by the Company’s managing director and CEO who has been identified as its chief operating decision maker in deciding how to allocate resources and in assessing performance. The following table presents revenue and profit information and certain asset and liability information regarding the Company’s business segments for the nine months ended December 31, 2006 and 2007.

For the nine-month period ended December 31, 2006

														Corporate
Rs. in millions		Copper				Zinc				Aluminium				and others				Elimination				Total
Net sales to external customers			86,230				65,765				27,342				—				—				179,337
Inter-segment sales			—				—				903				—				(903	)			—
Segment sales			86,230				65,765				28,245				—				(903	)			179,337
Segment profit			13,607				50,702				10,495				(5	)			—				74,799
Depreciation, depletion and amortization			(1,060	)			(1,534	)			(1,776	)			—				—				(4,370	)
Voluntary retirement scheme expenses			—				(97	)			—				—				—				(97	)
Operating income			12,547				49,071				8,719				(5	)			—				70,332
Interest and dividend income																							1,314
Interest expense																							(2,856	)
Net realized and unrealized investment gain																							1,637
Income before income taxes, minority interests and equity in net loss of associate																							70,427
Income taxes																							(20,184	)
Income after income taxes, before minority interests and equity in net loss of associate																							50,243
Minority interests																							(14,941	)
Equity in net income of associate, net of taxes																							167
Net income from continuing operations																							35,469
Income from divested business, net of tax																							86
Net income																							35,555

For the nine-month period ended December 31, 2007

																						Total				US
																						Rs.				dollars
														Corporate								in				in
Rs. in millions		Copper				Zinc				Aluminium				and others				Elimination				millions				millions
Net sales to external customers			92,785				55,900				30,382				201				—				179,268				4,548.8
Inter-segment sales			—				—				67				—				(67	)			—				—
Segment sales			92,785				55,900				30,449				201				(67	)			179,268				4,548.8
Segment profit			9,451				40,849				9,875				202				—				60,377				1,532.0
Depreciation, depletion and amortization			(1,161	)			(1,795	)			(1,965	)			(217	)			—				(5,138	)			(130.3	)
Operating income			8,290				39,054				7,910				(15	)			—				55,239				1,401.7
Interest and dividend income																							4,473				113.5
Interest expense																							(2,481	)			(63.0	)
Net realized and unrealized investment gain																							3,502				88.9
Income before income taxes, minority interests and equity in net income of associate																							60,733				1,541.1
Income taxes																							(16,004	)			(406.1	)
Income after income taxes, before minority interests and equity in net income of associate																							44,729				1,135.0
Minority interests																							(13,925	)			(353.3	)
Equity in net income of associate, net of taxes																							888				22.5
Net income from continuing operations																							31,692				804.2
Income from divested business, net of taxes																							—				—
Net income																							31,692				804.2
Assets
Segment assets			155,778				123,764				56,575				14,128				—				350,245				8,887.4
Equity investment in associate															3,921				—				3,921				99.5
Total assets			155,778				123,764				56,575				18,048				—				354,166				8,986.9
Additions to Property, plant and equipment			817				8,679				683				4,102				—				14,281				362.4