UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 20-F

(Mark One)

o

Registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act of 1934

or

þ

Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 2010

or

o

Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                                to

or

o

Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report

Sterlite Industries (India) Limited

		SIPCOT Industrial Complex, Madurai Bypass Road, T. V.
		Puram P.O.,
		Tuticorin — 628002,
Republic of India		Tamil Nadu, India
(Jurisdiction of Incorporation or Organization)		(Address of Principal Executive Offices)

Rajiv Choubey
Company Secretary and Head Legal
SIPCOT Industrial Complex, Madurai Bypass Road, TV Puram P.O.
Tuticorin — 628002
Tamil Nadu, India
(91) 461 661 2982
rajiv.choubey@vedanta.co.in
(Name, Telephone, E-mail and/or facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

American Depositary Shares
Prior to June 25, 2010, each represent one equity share,
par value Rs. 2 per equity share.		New York Stock Exchange
Effective June 25, 2010, each represent four equity
shares, par value Re. 1 per equity share.
(Title of Class)		(Name of Exchange On Which Registered)

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None
(Title of Class)

     Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

     As of March 31, 2010, 840,400,422 equity shares, par value Rs. 2 per equity share, were issued and outstanding, of which 124,992,080 equity shares were held in the form of 124,992,080 American Depositary Shares, or ADSs. Effective June 25, 2010, following the split of each of the Rs. 2 shares into two equity shares of par value Re. 1 each and the bonus issue of one equity share in the ratio of 1:1, 3,361,207,534 equity shares, par value Re. 1 per equity share, were issued and outstanding, of which 483,366,416 equity shares were held in the form of 120,841,604 American Depository Shares or ADSs. Effective June 25, 2010, each ADS represents four equity shares.

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ          No o

     If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o          No þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ          No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o          No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o

     Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o		International Financial Reporting Standards as issued by the International Accounting Standards Board þ		Other o

     If “Other” has been checked in the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o          Item 18 o

     If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes o          No þ

 

 

TABLE OF CONTENTS

						PAGE
PART I							3
ITEM 1.		IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS					3
ITEM 2.		OFFER STATISTICS AND EXPECTED TIMETABLE					3
ITEM 3.		KEY INFORMATION					3
ITEM 4.		INFORMATION ON THE COMPANY					28
ITEM 4A.		UNRESOLVED STAFF COMMENTS					118
ITEM 5.		OPERATING AND FINANCIAL REVIEW AND PROSPECTS					118
ITEM 6.		DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES					149
ITEM 7.		MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS					159
ITEM 8.		FINANCIAL INFORMATION					167
ITEM 9.		THE OFFER AND LISTING					172
ITEM 10.		ADDITIONAL INFORMATION					174
ITEM 11.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK					215
ITEM 12.		DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES					217
PART II							218
ITEM 13.		DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES					218
ITEM 14.		MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS					218
ITEM 15.		CONTROLS AND PROCEDURES					219
ITEM 16A.		AUDIT COMMITTEE FINANCIAL EXPERT					221
ITEM 16B.		CODE OF ETHICS					222
ITEM 16C.		PRINCIPAL ACCOUNTANT FEES AND SERVICES					222
ITEM 16D.		EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES					222
ITEM 16E.		PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS					223
ITEM 16F.		CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT					223
ITEM 16G.		CORPORATE GOVERNANCE					223
PART III							225
ITEM 17.		FINANCIAL STATEMENTS					225
ITEM 18.		FINANCIAL STATEMENTS					225
ITEM 19.		EXHIBITS					225
SIGNATURES							232
INDEX TO FINANCIAL STATEMENTS							F-1
EX-8.1 List of subsidiaries of Sterlite Industries (India) Limited
EX-12.1 Certification by the Chief Executive Officer pursuant to 17 CFR 240. 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-12.2 Certification of the Chief Financial Officer pursuant to 17 CFR 240. 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-13.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-13.2 Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Ex-15.1 Consent of Independent Registered Public Accounting Firm

CONVENTIONS USED IN THIS ANNUAL REPORT

     In this annual report, we refer to information regarding the copper, zinc, aluminum and power industries and our competitors from market research reports, analyst reports and other publicly available sources. Although we believe that this information is reliable, we have not independently verified the accuracy and completeness of the information. We caution you not to place undue reliance on this data.

     With effect from June 25, 2010, there was a stock split of each of the Rs. 2 shares into two equity shares of par value Rs. 1 each and bonus issue of one equity share in the ratio of 1:1 (“stock split and bonus issue”). Prior to the stock split and bonus issue, each ADS represented one equity share, par value Rs. 2 each. Following the stock split and bonus issue, each ADS represents four equity shares, par value Re. 1 each. The computations of basic and diluted EPS have been adjusted retroactively for all periods presented to reflect the change in capital structure. All references in these consolidated financial statements to number of shares and per share amounts have been retroactively restated to reflect bonus and stock split made.

     Unless otherwise indicated, our accompanying financial information has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, or IASB, (“IFRS”) for the fiscal years ended March 31, 2009 and 2010. This is the first time our audited consolidated financial statements included in Form 20-F are prepared in accordance with IFRS. During fiscal 2010, we prepared our unaudited consolidated financial statements for each of the quarters ended June 30, 2009 and September 30, 2009 in accordance with IFRS. For the years prior to fiscal 2009, we prepared our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), which differs in certain significant respects from and is not comparable with IFRS. 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.

     In this annual report, references 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.” “Re.” “Rupees” or “Indian Rupees” 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. 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, references to “oz” are to ounces, with one kilogram being equivalent to 35.2740 oz and one ton equivalent to 32,000 oz, and references to “ha” are to hectares, a unit of area equal to 10,000 square meters or 107,639 square feet.

     We conduct our businesses both directly and through a consolidated group of companies that we have ownership interests in. See “Item 4. Information on the Company — A. History and Development of our Company” for more information on these companies and their relationships to us. Unless otherwise stated in this annual report or unless the context otherwise requires, references in this annual report to “we,” “us,” “our,” “Sterlite,” “our company” or “our consolidated group of companies” mean Sterlite Industries (India) Limited, 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, Hindustan Zinc Limited, or HZL, Sterlite Infra Limited (formerly known as Sterlite Paper Limited), or SIL, Fujairah Gold FZE, Sterlite (USA), Inc., or Sterlite USA, and Talwandi Sabo Power Limited, or TSPL. References in this annual report to “SIIL” mean Sterlite Industries (India) Limited. Our consolidated 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, Welter Trading Limited, or Welter Trading, the Anil Agarwal Discretionary Trust, Onclave PTC Limited, or Onclave, The Madras Aluminium Company Limited, or MALCO, Sterlite Technologies Limited, or STL, Monte Cello Corporation NV, or MCNV, Twin Star Infrastructure Limited, Sesa Goa Limited, Sesa Industries Limited, and Vedanta Aluminium 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 annual 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. References to primary market share in this annual report are to the market that includes sales by producers of metal from copper concentrate or alumina, as applicable, and do not include sales by producers of recycled metal or imports.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This annual report contains “forward-looking statements” as defined in the safe harbor provisions of the US 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 forward-looking 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, aluminum or power;
	•		events that could cause a decrease in our production of copper, zinc, aluminum or power;
	•		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;
	•		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, aluminum or power 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 “Item 3. Key Information — D. Risk Factors,” “Item 5. Operating and Financial Review and Prospects” and elsewhere in this annual report. 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 to any of these forward-looking statements to reflect future events or circumstances.

PART I

ITEM 1.		IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     Not applicable

ITEM 2.		OFFER STATISTICS AND EXPECTED TIMETABLE

     Not applicable

ITEM 3.		KEY INFORMATION

A.		Selected Consolidated Financial Data

     Our consolidated financial statements as of and for the years ended March 31, 2010 and 2009 included in this annual report on Form 20-F have been prepared in conformity with the IFRS as issued by the IASB. These are our first IFRS audited consolidated financial statements and we applied IFRS 1: First Time Adoption of International Reporting Standards. Our consolidated financial statements as of and for the year ended March 31, 2009 were originally prepared in accordance with U.S. GAAP and were restated in accordance with IFRS for comparative purposes only. An explanation of how the transition to IFRS from U.S. GAAP has affected our reported financial position, financial performance and cash flows is provided in Note 4 on Explanation of transition to IFRS in the audited consolidated financial statements in Item 18.

     In accordance with rule amendments adopted by the U.S. Securities Exchange Commission, or SEC, which became effective on March 4, 2008, we do not provide a reconciliation to U.S. GAAP. Furthermore, pursuant to the transitional relief granted by the U.S. SEC in respect of the first-time adoption of IFRS, we have only provided financial statements and financial information for two fiscal years ended March 31, 2010 in this annual report as presented under IFRS.

     The selected historical consolidated statements of income, cash flows and other consolidated financial data presented below for fiscal 2009 and 2010, and the selected historical consolidated financial position data as of April 1, 2008, March 31, 2009 and 2010, have been derived from our audited consolidated financial statements, which have been audited by Deloitte Haskins & Sells, Mumbai, India, or Deloitte, our independent registered public accounting firm, and included elsewhere in this annual report.

     Our historical results do not necessarily indicate our expected results for any future period. The translations of Indian Rupee amounts to US dollars are solely for the convenience of the reader and are based on the noon buying rate of Rs. 44.95 per $1.00 and AUD 1.09 per $1.00 in the City of New York for cable transfers of Indian Rupees and the Australian dollar, respectively, as certified for customs purposes by the Federal Reserve Bank of New York on March 31, 2010. No representation is made that the Indian Rupee and Australian dollar amounts represent US dollar amounts or have been, could have been or could be converted into US dollars at such rates or any other rates.

     You should read the following information in conjunction with “Item 5. Operating and Financial Review and Prospects” and the consolidated financial statements included elsewhere in this annual report.

     Amount in conformity with IFRS

						Year ended March 31,
		2009				2010				2010
										(US dollars) (in
		(Rs.) (in millions,				(Rs.) (in millions,				millions, except
		except shares and				except shares and				shares and per
		per share data)				per share data)				share data)
Revenue			212,192				244,903				5,448.3
Cost of sales			(165,097	)			(181,928	)			(4,047.3	)
Gross profit			47,095				62,975				1,401.0
Other operating income			3,750				1,907				42.4
Distribution expenses			(3,388	)			(3,022	)			(67.2	)
Administration expenses			(4,367	)			(8,026	)			(178.6	)
Operating profit			43,090				53,834				1,197.6
Investment and other income			18,772				13,811				307.3
Finance and other costs			(6,244	)			214				4.8
Share in consolidated (loss)/profit of associate			(3,160	)			2,051				45.6
Profit before taxes			52,458				69,910				1,555.3
Income Tax expense			(7,782	)			(13,247	)			(294.7	)
Profit for the year			44,676				56,663				1,260.6
Profit attributable to:
Equity holders of the parent			32,228				39,263				873.5
Minority interest			12,448				17,400				387.1
Earnings per share (Refer to Note 29 to consolidated financial statements)
Basic			11.37				12.27				0.3
Diluted			11.37				12.03				0.3
Weighted average number of equity shares used in computing earnings per share
Basic			2,833,583,490				3,199,826,061				3,199,826,061
Diluted			2,833,583,490				3,236,000,281				3,236,000,281
Dividend declared per share (1)(2)			3.50				3.75				0.08

		As of March 31,
		2009				2010				2010
		(in millions)
Consolidated Financial Position Data:
Cash and cash equivalents		Rs.	2,701			Rs.	2,021			$	45.0
Restricted Cash and cash equivalents			2,011				60				1.3
Total assets			444,578				606,854				13,500.6
Net assets			320,603				451,988				10,055.3
Long-term borrowings			14,384				43,578				969.4
Short-term borrowings			20,202				19,121				425.4
Total shareholders’ equity			250,533				365,172				8123.9

		Year Ended March 31,
		2009				2010
		(in millions)
Cash Flow Data:
Net cash provided by (used in):
Operating activities		Rs.	72,585			Rs.	14,249			$	317.1
Investing activities			(95,295	)			(117,582	)			(2,615.9	)
Financing activities			13,442				102,322				2,276.3
Other Consolidated Financial Data:
Revenue :
Copper		Rs.	116,525			Rs.	130,608			$	2905.6
Zinc			55,724				79,434				1,767.2
Aluminum			39,170				28,289				629.3
Power			773				6,572				146.2
Others			—				—				—
Total		Rs.	212,192			Rs.	244,903			$	5,448.3
Operating profit:
Copper		Rs.	11,121			Rs.	3,138			$	69.8
Zinc			25,158				44,071				980.4
Aluminum			6,494				3,189				70.9
Power			323				3,445				76.6
Others			(6	)			(9	)			(0.2	)
Total		Rs.	43,090			Rs.	53,834			$	1,197.6
Segment profit:(1)
Copper		Rs.	13,312			Rs.	5,120			$	113.9
Zinc			27,773				47,124				1,048.3
Aluminum			9,103				5,499				122.3
Power			931				4,160				92.5
Others			(5	)			(8	)			(0.2	)
Total		Rs.	51,114			Rs.	61,895			$	1,376.9

		Year ended March 31,
		2009				2010				2010
		(in millions)
Copper:
Operating profit		Rs.	11,121			Rs.	3,138			$	69.8
Plus:

		Year ended March 31,
		2009				2010				2010
		(in millions)
Depreciation and amortization			2,191				1,982				44.1
Segment profit		Rs.	13,312			Rs.	5,120			$	113.9
Zinc:
Operating profit		Rs.	25,158			Rs.	44,071			$	980.4
Plus:
Depreciation and amortization			2,615				3,053				68.0
Segment profit		Rs.	27,773			Rs.	47,124			$	1048.4
Aluminum:
Operating profit		Rs.	6,494			Rs.	3,189			$	71.0
Plus:
Depreciation and amortization			2,609				2,310				51.4
Segment profit		Rs.	9,103			Rs.	5,499			$	122.3
Power:
Operating profit		Rs.	323			Rs.	3,445			$	76.6
Plus:
Depreciation and amortization			608				715				15.9
Segment profit		Rs.	931			Rs.	4,160			$	92.5
Others:
Operating profit		Rs.	(6	)		Rs.	(9	)		$	(0.2	)
Plus:
Depreciation and amortization			1				1				—
Segment profit		Rs.	(5	)		Rs.	(8	)		$	(0.2	)

		Year Ended March 31,
		2009				2010
		(in millions, except Production output and Cost of production)
Copper:
Segment sales		Rs.	116,670			Rs.	130,608
Less:
Segment profit			(13,312	)			(5,120	)
Segment cost			103,358				125,488
Less:
Purchased concentrate/rock			(94,873	)			(114,923	)
By-product/free copper net sale			(4,337	)			(1,981	)
Cost for downstream products			(1,613	)			(1,543	)
Others, net			(1,556	)			(3,386	)
Total expenses		Rs.	979			Rs.	3,655
Production output (in tons)			312,833				334,202
Cost of production(a)			3.1	¢/lb			10.46	¢/lb
Zinc:
Segment sales		Rs.	55,724			Rs.	79,434
Less:

		Year Ended March 31,
		2009				2010
		(in millions, except Production output and Cost of production)
Segment profit			(27,773	)			(47,124	)
Segment cost			27,951				32,310
Less:
Cost of tolling including raw material cost			(409	)			—
Cost of intermediary product sold			(1,301	)			(3,060	)
By-product revenue			(4,848	)			(1,871	)
Cost of lead metal sold			(2,079	)			(2,652	)
Others, net			(1,312	)			(1,406	)
Total expenses		Rs.	18,002			Rs.	23,321
Production output (in tons)			551,724				578,411
Cost of production (per ton)(a)		$	710			$	850
Aluminum:
Segment sales		Rs.	39,336			Rs.	28,367
Less:
Segment profit			(9,103	)			(5,499	)
Segment cost			30,233				22,868
Less: Cost of intermediary product sold			—				(304	)
By-product revenue			(328	)			(126	)
Cost for downstream products			(1,966	)			(1,767	)
Others, net			(314	)			(1,455	)
Total expenses		Rs.	27,625,			Rs.	19,216
Production output (hot metal) (in tons)			355,733				262,760
Cost of production (per ton)(a)		$	1,700			$	1,542

B.		Capitalization and Indebtedness

     Not applicable

C.		Reasons for the Offer and Use of Proceeds

     Not applicable

D.		Risk Factors

     This annual report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those described in the following risk factors and elsewhere in this annual report. If any of the following risks actually occur, our business, financial condition and results of operations could suffer and the trading price of our ADSs could decline.

Risks Relating to Our Business

Our copper and aluminum businesses depend upon third party suppliers for a substantial portion of their copper concentrate and alumina requirements, and their profitability and operating margins depend upon the market prices for those raw materials.

     Our copper and aluminum businesses source a majority of their copper concentrate and alumina requirements from third parties. For example, in fiscal 2010, we sourced 92.2% of our copper requirements and BALCO sourced in excess of 91.0% of its alumina requirements from third parties. As a result, profitability and operating margins of our copper and aluminum businesses depend upon our ability to obtain the required copper concentrate and alumina at prices that are low relative to the market prices of the copper and aluminum products that we sell.

     We purchase copper concentrate at the LME price for copper metal for the relevant quotational period less a treatment charge and refining charge, or TcRc, that we negotiate with our suppliers but which is influenced by the prevailing market rate for the TcRc. The TcRc has historically fluctuated independently and significantly from the copper LME price. We attempt to make the LME price a pass through for us as both our copper concentrate purchases and sales of finished copper products are based on LME prices. Nevertheless, we are also exposed to differences in the LME price between the quotational periods for the purchase of copper concentrate and sale of the finished copper products, and any decline in the copper LME price between these periods will adversely affect us. We attempt to hedge against such risks, but are still exposed to timing and quantity mismatches. In addition, some of our long-term copper concentrate supply agreements provide for a TcRc that is a percentage of the prevailing LME price, and hence would fluctuate with the LME price, or provide our third party supplier with price participation terms linked to LME prices. See “Item 5. Operating and Financial Review and Prospects — Factors Affecting Results of Operations — Metal Prices and Copper TcRc.”

     We purchase alumina from third party suppliers through short-term contracts and on the spot market. The market price for alumina has historically fluctuated independently and significantly from the market price of aluminum. See “Item 5. Operating and Financial Review and Prospects — Factors Affecting Results of Operations — Metal Prices and Copper TcRc — Zinc and Aluminum”. Both the market prices of the copper concentrate and alumina that we purchase and the market prices of the copper and aluminum metals that we sell have experienced volatility in the past, and any increases in the market prices of these raw materials relative to the market prices of the metals that we sell would adversely affect the profitability and operating margins of our copper and aluminum businesses, which could have a material and adverse effect on our results of operations and financial condition.

Our operations are subject to operating risks that could result in decreased production, increased cost of production and increased cost of or disruptions in transportation, which could adversely affect our revenue, results of operations and financial condition.

     We are subject to operating conditions and events beyond our control that could, among other things, increase our mining, transportation or production costs, disrupt or halt operations at our mines and production facilities permanently or for varying lengths of time or interrupt the transport of our products to our customers. These conditions and events include:

	•		Disruptions in mining and production due to equipment failures, unexpected maintenance problems and other interruptions. All of our operations are vulnerable to disruptions. Our aluminum smelters are particularly vulnerable to disruptions in the supply of power which, even if lasting only a few hours, can cause the contents of the furnaces or cells to solidify, which would necessitate a plant closure and a shutdown in operations for a significant period, as well as involve expensive repairs. For example, power interruptions caused BALCO to partially suspend operations at its 245,000 tpa aluminum smelter at Korba (“Korba smelter”) in May 2006, and as a result of this interruption the Korba smelter did not become fully operational again until November 2006. Similarly, our Tuticorin copper refining and smelting facility had a four-day delay in ramp-up following a scheduled maintenance shutdown between April and May 2008 due to stabilization issues faced during the post-shutdown ramp-up and an unscheduled 34-day interruption in production between November and December 2008 due to damage in a cooling tower as a result of the collapse of its foundation. CMT’s Mt. Lyell processing plant was disrupted and experienced a 68 days shutdown due to a mud slide at the mine resulting from high rainfall in end August 2009. The losses from these interruptions include lost production, repair costs and other expenses.
	•		Availability of raw materials for energy requirements. Any shortage of or increase in the prices of any of the raw materials needed to satisfy our businesses’ energy requirements may interrupt our operations or increase our cost of production. We are particularly dependent on coal, which is used in many of our captive power plants. Our aluminum business, which has high energy consumption due to the energy-intensive nature of aluminum smelting, is significantly dependent on receiving allocations from Coal India Limited, or Coal India, the government-owned coal monopoly in India, and its subsidiaries. A shortage of coal from April 2005 led Coal India to reduce the amount of coal supplied to all of its non-utility customers, including BALCO. As a result, BALCO was forced to utilize higher-priced imported coal and coal from non-linkage sources, which resulted in higher power generation costs. In fiscal 2010, 98.0 per cent of the allocated coal was supplied.
	•		Availability of water. The mining operations of our zinc and aluminum businesses and our captive power plants depend upon the supply of a significant amount of water. There is no assurance that the water required will continue to be available in sufficient quantities or that the cost of water will not increase. For example, BALCO is currently in a dispute with the National Thermal Power Corporation Limited, or NTPC, regarding the right of way for a water pipeline that provides one of BALCO’s captive power plants access to a body of water adjacent to NTPC premises. Arbitration proceedings commenced on May 18, 2009 and are ongoing. An unfavorable resolution to this dispute may significantly increase BALCO’s costs of obtaining water for that power plant.
	•		Disruptions to or increased costs of transport services. We depend upon seaborne freight, inland water transport, rail, trucking, overland conveyor and other systems to transport bauxite, alumina, zinc concentrate, copper concentrate, coal and other supplies to our operations and to deliver our products to customers. Any disruption to or increase in the cost of these transport services, including as a result of interruptions that decrease the availability of these transport services or as a result of increases in demand for transport services from our competitors or from other businesses, or any failure of these transport services to be expanded in a timely manner to support an expansion of our operations, could have a material adverse effect on our operations and operating results.

	•		Accidents at mines, smelters, refineries, cargo terminals and related facilities. Any accidents or explosions causing personal injury, property damage or environmental damage at or to our mines, smelters, refineries, cargo terminals and related facilities may result in expensive litigation, imposition of penalties and sanctions or suspension or revocation of permits and licenses. Risks associated with our open-pit mining operations include flooding of the open-pit, collapses of the open-pit wall and operation of large open-pit mining and rock transportation equipment. Risks associated with our underground mining operations include underground fires and explosions (including those caused by flammable gas), cave-ins or ground falls, discharges of gases or toxic chemicals, flooding, sinkhole formation and ground subsidence and underground drilling, blasting and removal and processing of ore. Injuries to and deaths of workers at our mines and facilities have occurred in the past and may occur in the future. We are required by law to compensate employees for work-related injuries. Failure to make adequate provisions for our workers’ compensation liabilities could harm our future operating results.
	•		Strikes and industrial actions or disputes. The majority of the total workforce of our consolidated group of companies is unionized. Strikes and industrial actions or disputes have in the past and may in the future lead to business interruptions and halts in production. For example, the trade unions of BALCO initiated a 67-day-long strike in May 2001 in opposition to the divestment of equity shares of BALCO by the Government of India. We also experienced short strikes and work stoppages in 2005 and 2006. In addition, we may be subject to union demands and litigation for pay raises and increased benefits, and our existing arrangements with the trade unions may not be renewed on terms favorable to us, or at all. The wage settlement agreement with HZL was executed on November 13, 2009 for a period of 5 years with effect from July 1, 2007. The wage settlement agreement entered into by BALCO with the union expired on April 1, 2009. We are currently in negotiations with the union to renew the wage settlement agreement. Other work stoppages or other labor-related developments, including the introduction of new labor regulations in India or Australia, may occur in the future.

     The occurrence of any one or more of these conditions or events could have a material adverse effect on our results of operations and financial condition.

We are substantially dependent upon our Rampura Agucha zinc mine, and any interruption in our operations at that mine could have a material adverse effect on our results of operations and financial condition.

     Our Rampura Agucha zinc mine produced 90.0% of the total mined metal in zinc concentrate that we produced in fiscal 2010 and constituted 74.0% of our proven and probable zinc reserves as of March 31, 2010. Our zinc business provided 81.9% of our operating income in fiscal 2010. Our results of operations have been and are expected to continue to be substantially dependent on the reserves and low cost of production of our Rampura Agucha mine and any interruption in our operations at the mine for any reason could have a material adverse effect on the results of operations and financial condition of our business as a whole.

If we are unable to secure additional reserves of copper, zinc and bauxite that can be mined at competitive costs or cannot mine existing reserves at competitive costs, our profitability and operating margins could decline.

     If our existing copper, zinc and bauxite reserves cannot be mined at competitive costs or if we cannot secure additional reserves that can be mined at competitive costs, we may become more dependent upon third parties for copper concentrate, zinc concentrate and alumina. Because our mineral reserves decline as we mine the ore, our future profitability and operating margins depend upon our ability to access mineral reserves that have geological characteristics enabling mining at competitive costs. Replacement reserves may not be available when required or, if available, may not be of a quality capable of being mined at costs comparable to the existing or exhausted mines.

     We may not be able to accurately assess the geological characteristics of any reserves that we acquire, which may adversely affect our profitability and financial condition. Because the value of reserves is calculated based on that part of our mineral deposits that are economically and legally exploitable at the time of the reserve calculation, a decrease in commodity prices of the metals may result in a reduction in the value of any mineral reserves that we do obtain as less of the mineral deposits contained therein would be economically exploitable at the lower prices.

Exhaustion of reserves at particular mines may also have an adverse effect on our operating results that is disproportionate to the percentage of overall production represented by such mines. Further, with depletion of reserves, we will face higher unit extraction costs per mine.

     Our ability to obtain additional reserves in the future could be limited by restrictions under our existing or future debt agreements, competition from other copper, zinc and aluminum companies, lack of suitable acquisition candidates, government regulatory and licensing restrictions, difficulties in obtaining mining leases and surface rights or the inability to acquire such properties on commercially reasonable terms, or at all. To increase production from our existing bauxite and lead-zinc mines, we must apply for governmental approvals, which we may not be able to obtain in a timely manner, or at all.

Our business requires substantial capital expenditures and the dedication of management and other resources to maintain ongoing operations and to grow our business through projects, expansions and acquisitions, which projects, expansions and acquisitions are subject to additional risks that could adversely affect our business, financial condition and results of operations.

     Capital requirements. We require capital for, among other purposes, expanding our operations, making acquisitions, managing acquired assets, acquiring new equipment, maintaining the condition of our existing equipment and maintaining compliance with environmental laws and regulations. To the extent that cash generated internally and cash available under our existing credit facilities are not sufficient to fund our capital requirements, we will require additional debt or equity financing, which may not be available on favorable terms, or at all. Since the second half of 2008, this uncertainty has increased due to the disruption in the global financial markets. See “— Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations — Recent global economic conditions have been unprecedented and challenging and have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs.” Future debt financing, if available, may result in increased finance charges, increased financial leverage, and decreased income available to fund further acquisitions and expansions and the imposition of restrictive covenants on our business and operations. In addition, future debt financing may limit our ability to withstand competitive pressures and render us more vulnerable to economic downturns. If we fail to generate or obtain sufficient additional capital in the future, we could be forced to reduce or delay capital expenditures, sell assets or restructure or refinance our indebtedness.

     In light of this, our planned and any proposed future expansions and projects may be materially and adversely affected if we are unable to obtain funding for such capital expenditures on satisfactory terms, or at all, including as a result of any of our existing facilities becoming repayable before its due date. In addition, there can be no assurance that our planned or any proposed future expansions and projects will be completed on time or within budget, which may adversely affect our cash flow. These expansions and projects include those described in “Item 4. Information on the Company — B. Business Overview — Our Business — Competitive Strengths — Strong pipeline of growth projects.”

     Cost overruns and delays. Our current and future projects may be significantly delayed by failure to receive regulatory approvals or renewal of approvals, failure to obtain sufficient funding, and technical difficulties due to human resource, technological or other resource constraints or for other unforeseen reasons, events or circumstances. As a result, these projects may incur significant cost overruns and may not be completed on time, or at all. Our decision to undertake or continue any of these projects will be based on assumptions of future demand for our products which may not materialize. As a consequence of project delays, cost overruns, changes in demand for our products and other reasons, we may not achieve the reductions in the cost of production or other economic benefits expected from these projects, which could adversely affect our business, financial condition and results of operations.

     Demands on management. Our efforts to continue our growth will place significant demands on our management and other resources and we will be required to continue to improve operational, financial and other internal controls, both in India and elsewhere. Our ability to maintain and grow our existing business and integrate new businesses will depend on our ability to maintain the necessary management resources and on our ability to attract, train and retain personnel with skills that enable us to keep pace with growing demands and evolving industry standards.

We are in particular dependent to a large degree on the continued service and performance of our senior management team and other key team members in our business units. These key personnel possess technical and business capabilities that are difficult to replace. The loss or diminution in the services of members of our senior management or other key team members, or our failure otherwise to maintain the necessary management and other resources to maintain and grow our business, could have a material adverse effect on our results of operations, financial condition and prospects.

     Acquisition risks. As part of our growth strategy, we intend to continue to pursue acquisitions to expand our business. There can be no assurance that we will be able to identify suitable acquisition, strategic investment or joint venture opportunities, obtain the financing necessary to complete and support such acquisitions or investments, integrate such businesses or investments or that any business acquired will be profitable. If we attempt to acquire non-Indian companies, we may not be able to satisfy certain Indian regulatory requirements for such acquisitions and may need to obtain the prior approval of the RBI which we may not be able to obtain. In addition, acquisitions and investments involve a number of risks, including possible adverse effects on our operating results, diversion of management’s attention, failure to retain key personnel, risks associated with unanticipated events or liabilities and difficulties in the assimilation of the operations, technologies, systems, services and products of the acquired businesses or investments. Any failure to achieve successful integration of such acquisitions or investments could have a material adverse effect on our business, results of operations or financial condition.

If we do not continue to invest in new technologies and equipment, our technologies and equipment may become obsolete and our cost of production may increase relative to our competitors, which would have a material adverse effect on our ability to compete, results of operations, financial condition and prospects.

     Our profitability and competitiveness are in large part dependent upon our ability to maintain a low cost of production as we sell commodity products with prices we are unable to influence. Unless we continue to invest in newer technologies and equipment and are successful at integrating such newer technologies and equipment to make our operations more efficient, our cost of production relative to our competitors may increase and we may cease to be profitable or competitive. However, newer technologies and equipment are expensive and the necessary investments may be substantial. Moreover, such investments entail additional risks as to whether the newer technologies and equipment will reduce our cost of production sufficiently to justify the capital expenditures to obtain them. Any failure to make sufficient or the right investments in newer technologies and equipment or in integrating such newer technologies and equipment into our operations could have a material adverse effect on our ability to compete and our financial condition, results of operations and prospects.

Our offer to acquire the operating assets of Asarco LLC (“Asarco”) has been rejected by the US District Court and we have appealed against that decision. In addition, Asarco has filed a complaint alleging that we and Sterlite USA had breached our prior agreement to acquire Asarco. Any adverse judgment or settlement may have a material adverse effect on our business, results or operations, financial condition and prospects.

     On August 31, 2009, the US Bankruptcy Court made its recommendation to the US District Court to confirm the reorgnisation plan proposed by Asarco’s parent companies (“Parent Plan”) and to reject the reorgnisation plan proposed by Asarco and sponsored by our wholly owned subsidiary Sterlite USA (“Debtor Plan”). On September 24, 2009, the US Bankruptcy Court recommended to the US District Court that it should also reject our revised offer made on September 10, 2009 and should confirm the Parent Plan. On November 13, 2009, the US District Court confirmed the Parent Plan and rejected the Debtor Plan. We have filed an appeal against the decision of the US District Court. The appeal was heard in the US Court of Appeals for the Fifth Circuit on August 31, 2010 and judgement is reserved. Asarco terminated the agreement it entered with us in March 2009 and has drawn the $50 million provided as deposit under the purchase and sale agreement and returned the other two letters of credit amounting to $75 million in total. We have filed for an application to the US Bankruptcy Court for the return of the $50 million drawn by Asarco.

     On March 17, 2010, Asarco filed a complaint in the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, against Sterlite and Sterlite USA alleging that we and Sterlite USA had breached the May 30, 2008 agreement by, among other things, refusing to pay the $2.6 billion purchase price as allegedly required by an agreement dated May 30, 2008 (the “May 2008 agreement”) and refusing to assume the liabilities and contractual obligations as allegedly required by the May 2008 agreement.

Asarco is seeking to recover from us and Sterlite USA its alleged damages suffered as a result of the alleged breach and certain other amounts, including costs associated with Asarco’s efforts to complete their reorganization and costs, disbursements and attorney’s fees in connection with the proceedings. Asarco’s complaint does not currently specify a quantum of damages suffered by Asarco. We and Sterlite USA intend to defend the complaint vigorously. No hearing date has been fixed for the matter. The Parent Plan estimated the claims of Asarco against us and Sterlite USA to be in the range of US$400 million to US$3 billion, subject to mitigating factors. These factors may include, among other things, the ultimate purchase price for the assets sold by Asarco or consideration received by the estate of Asarco, adjustments to the ultimate purchase price due to changes in value of working capital as provided in the May 2008 agreement and changes in the value of assumed liabilities. Asarco disclosed in the joint disclosure statement its view that the recovery, if any, against such potential claims may be approximately US$100 million. The Parent Plan provided for a cash contribution of US$2.205 billion to the estate of Asarco, a promissory note of US$280 million to the trust for the benefit of asbestos claimants, assumption of certain liabilities and waiver of certain claims against Asarco.

     If either our appeal against the decision of the US District Court is not successful or our application is rejected by the US Bankruptcy Court, we will not be able to acquire Asarco. In addition, any adverse judgment or settlement relating to Asarco’s breach of contract claim against us may have a material adverse effect on our business, results of operations, financial condition and prospects.

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.

     In August 2006, our shareholders approved a new strategy for us to enter into the commercial power generation business in India. We are investing approximately Rs. 82,000 million ($1,824.2 million) to build a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The project is being pursued by our wholly-owned subsidiary Sterlite Energy. The construction work commenced and the first unit was successfully lighted on June 30, 2010 and commercial operation is expected to commence in September 2010. The remaining three units are expected to be progressively commenced by the end of fiscal 2011. For more information, see “Item 4. Information on the Company — B. Business Overview — Our Business — Our Commercial Power Generation Business — Our Plans for Commercial Power Generation.”

     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 commercial thermal power plant at Talwandi Sabo in the State of Punjab in India at an estimated cost of Rs. 92,450 million ($2,056.7 million). Commissioning of this project will be carried out in stages and is expected to be completed by the second quarter of fiscal 2014. On September 1, 2008, Sterlite Energy completed the acquisition of TSPL for a purchase price of Rs. 3,868.4 million ($86.0 million). For more information, see “Item 4. Information on the Company — B. Business Overview — Our Business - Our Commercial Power Generation Business — Our Plans for Commercial Power Generation.”

     Although we have some experience building and managing captive power plants to provide a significant percentage of the power requirements of our copper, zinc and aluminum businesses, and in March 2007 commissioned our first wind power plant, we have limited experience competing in the commercial power generation business. In addition to the significant capital investment, our management’s focus will also be directed towards this new business.

     In particular, the building of coal-based power facilities is a long and capital-intensive process, with typically several years elapsing and significant capital investment required between the time that a decision to commence a project is made and the commencement of commercial operations. The completion targets for our projects and any other projects we may undertake are estimates and are subject to numerous risks and uncertainties, such as:

•

We may face many uncertainties, including regulatory requirements and restrictions which may change by the time our planned power facility is completed. These may include a change in the tariff policy, which may have an adverse impact on our revenues and reduce our margins. We may also face delays in the development of our power plants and any coal mines we may seek to develop, as other coal and power companies in India and Southeast Asia recently have, as a result of protests or other obstructive or delaying activities by displaced persons and others who may oppose such developments.

	•		We must obtain the consent of certain of our lenders to commence a new business, and there can be no assurance that we will obtain such consents.
	•		We will be dependent upon third parties for the construction, delivery and commissioning of the power facilities, the supply and testing of equipment and transmission and distribution of any power we produce.
	•		We do not have our own coal mines, and given recent shortages in coal supplies in India, we may also not be successful at procuring an adequate supply of coal at sufficiently attractive prices, or at all, for our power plant to operate and generate a return on our investment.
	•		We may face opposition to our projects by local communities where these projects are located or from special interest groups, including as a result of the perceived negative impact of coal mines and coal-based power plants to the environment or any required displacement and resettlement of individuals and families in the area of a project.
	•		The commercial power generation business is highly competitive and we will be competing with established commercial power generation companies, including NTPC, the Tata Power Company Limited, or Tata Power, and Reliance Energy Limited, with significant resources and many years of experience in the commercial power generation business.
	•		We may face constraints related to the availability of water which is a critical requirement for power generation.

     There can be no assurance that we will recover our investment in this new business, that we will realize a profit from this new business or that diverting our management’s attention to this new business will not have a material adverse effect on our existing copper, zinc and aluminum businesses, any of which results may have a material adverse effect on our results of operations, financial condition and prospects.

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.

     Operating power plants involves many operational risks, including the breakdown or failure of generation equipment or other equipment or processes, labor disputes, fuel interruption and operating performance below expected levels. However, the power purchase agreements and other agreements we may enter into may require us to guarantee certain minimum performance standards, such as plant availability and generation capacity, to the power purchasers. If our facilities do not meet the required performance standards, the power purchasers with whom we have power purchase agreements may not reimburse us for any increased costs arising as a result of our plants’ failure to operate within the agreed norms, which in turn may affect our results of operations. In addition to the performance requirements specified in our power purchase and other agreements, national and state regulatory bodies and other statutory and government mandated authorities may from time to time impose minimum performance standards upon us. Failure to meet these requirements could expose us to the risk of penalties.

The Government of India may allege a breach of a covenant by our subsidiary SOVL and seek to exercise a put or call right with respect to shares of HZL, which may result in substantial litigation and serious financial harm to our business, results of operations, financial condition and prospects.

     If the Government of India claims that SOVL has breached the covenant related to the Kapasan Project under the shareholders’ agreement between the Government of India and SOVL resulting in litigation, and it was determined that SOVL had breached such covenant triggering an event of default, the Government of India, under the terms of the shareholders’ agreement, may become entitled to the right, which is exercisable at any time within 90 days of the day it became aware of such event of default, to either sell any or all of the shares of HZL held by the Government of India to SOVL at a price equivalent to 150.0% of the market value of such shares, or purchase any or all of the shares of HZL held by SOVL at a price equivalent to 50.0% of the market value of such shares.

Based solely on the closing market price of HZL’s shares on the National Stock Exchange of India Limited, or the NSE, on September 27, 2010 of Rs. 1,126.5 ($25.1) per share, if the Government of India were determined to have, and were to exercise, a right to sell all of its 124,795,059 shares of HZL at a price equivalent to 150.0% of their market value, we would be required to pay Rs. 210,872. million ($4,691.3 million) for those shares, and if the Government of India were determined to have, and were to exercise, a right to purchase all of the 274,315,431 shares of HZL held by SOVL at a price equivalent to 50.0% of their market value, we would receive Rs. 154,508 million ($3,437.3 million) for those shares.

     If the Government of India were to assert that an event of default occurred and seek to exercise a put or call right with respect to shares of HZL, we may face expensive and time-consuming litigation over the matter, uncertainty as to the future of our zinc business, an inability to exercise our call option to acquire the Government of India’s remaining 29.5% ownership interest in HZL and the possibility of serious financial harm if we were unsuccessful in litigation, any of which may have a material adverse effect on our business, results of operations, financial condition and prospects.

Our option to purchase the Government of India’s remaining shares in HZL may be challenged.

     Under the terms of the shareholders’ agreement between the Government of India and SOVL, SOVL was granted two call options to acquire all the shares in HZL held by the Government of India at the time of exercise. SOVL exercised the first call option on August 29, 2003.

     By a letter dated July 21, 2009, SOVL exercised the second call option. The Government of India has stated that the clauses of the shareholders’ agreement relating to Sterlite’s option violated the provisions of Section 111A of the Indian Companies Act, 1956, of India by restricting the right of the Government of India to transfer its shares and that as a result the shareholders’ agreement was null and void. As such, the Government of India has refused to act upon the second call option. Consequently, SOVL commenced arbitral proceedings under the terms of the shareholders’ agreement and has appointed its arbitrator. Under the terms of the shareholders’ agreement, the Government of India is required to nominate an arbitrator, but the Government of India has not made such a nomination. As a result, SOVL has filed an arbitration application pursuant to section 11(6) of the Arbitration and Conciliation Act 1996 in the Delhi High Court petitioning the court to constitute an arbitral tribunal. The arbitration application was heard on May 18, 2010, and the Government of India informed that they had appointed Justice V N Khare as their arbitrator. By an order dated May 18, 2010 the court directed the parties to appoint mediators for mediation of the dispute and if the mediation is not successful, arbitration will commence. The mediation is in progress. See “Business — Options to Increase Interests in HZL and BALCO — HZL Call Options”.

     There can be no assurance that the mediation between SOVL and the Government of India will be successful, or that SOVL will be successful in its arbitral proceedings with the Government of India. Any adverse ruling in the arbitration proceedings, if commenced, may preclude or delay us from exercising our option to increase our ownership interest in HZL, and such an outcome would be likely to have a material adverse effect upon our operational flexibility, results of operations and prospects. Alternatively, we may only be able to acquire the Government of India’s remaining ownership interest in HZL at a price in excess of the market value or fair value of those shares, which could have a material adverse effect on our results of operations and financial condition.

The Government of India has disputed our exercise of the call option to purchase its remaining 49.0% ownership interest in BALCO.

     Under the terms of the shareholders’ agreement between us and the Government of India, we were granted an option to acquire the shares of BALCO held by the Government of India at the time of exercise. We exercised this option on March 19, 2004. However, the Government of India has contested the purchase price and validity of the option. As negotiations for an amicable resolution were unsuccessful, on direction of the court, arbitrators were appointed by the parties, as provided for under the terms of the shareholders’ agreement. Arbitration proceedings

commenced on February 16, 2009 and we submitted our claim statement to the arbitrators. The Government of India filed its reply on July 10, 2009. The arbitration hearing concluded on August 29, 2010 and the award was reserved. The parties have been directed to submit their written submissions within three weeks from August 29, 2010. We have already filed our written submission on September 20, 2010. However, in view of the subsequent judgment of the Bombay High Court, which supported the contentions made by us, the arbitration tribunal has, at the request of Government of India given an opportunity to both the parties to make oral submission on the judgment and the hearing for the same has been fixed on October 9, 2010. Notwithstanding the outcome of the dispute, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

     There is no assurance that the outcome of the arbitration proceedings will be favorable to us. In the event of an unfavorable outcome, we may be unable to purchase the Government of India’s remaining 49.0% stake in BALCO or may be required to pay a higher purchase price, which may adversely affect our operational flexibility, results of operations and prospects.

Appeal proceedings in the High Court of Bombay have been brought by the Securities and Exchange Board of India, or SEBI, to overrule a decision by the Securities Appellate Tribunal, or SAT, that we have not violated regulations prohibiting fraudulent and unfair trading practices.

     In April 2001, SEBI ordered prosecution proceedings to be brought against us, alleging that we have violated regulations prohibiting fraudulent and unfair trading practices and also passed an order prohibiting us from accessing the capital markets for a period of two years. This order of SEBI was overruled by the SAT on October 22, 2001 on the basis of a lack of sufficient material evidence to establish that we had, directly or indirectly, engaged in market manipulation and that SEBI had exercised its jurisdiction incorrectly in prohibiting us from accessing the capital markets. On November 9, 2001, SEBI appealed to the High Court of Bombay. A hearing date has not been fixed.

     SEBI’s order was based on its finding that we had manipulated the price of our shares in connection with our proposed acquisition of shares in Indian Aluminium Company Limited, or INDAL, and our proposed open offer to the shareholders of INDAL in 1998. SEBI also alleged that MALCO, our associate company, provided funds to an entity we allegedly controlled to enable its associate to purchase our shares, as part of a connected price manipulation exercise.

     In the event the High Court of Bombay decides the above matters unfavorably against us, we may be prohibited from accessing the capital markets for a period of two years and may become liable to pay penalties. Further, certain of our key officers and directors may be imprisoned, which would have an adverse effect on our business and operations.

     In addition to the civil proceedings, SEBI also initiated criminal proceedings before the Court of the Metropolitan Magistrate, Mumbai, against us, our present Non-Executive Chairman, Mr. Anil Agarwal and Mr. Tarun Jain, one of our directors until March 31, 2009, and the chief financial officer of MALCO at the time of the alleged price manipulation. When SEBI’s order was overturned in October 2001, we filed a petition before the High Court of Bombay to quash those criminal proceedings on the grounds that the SAT had overruled SEBI’s order on price manipulation. An order has been passed by the High Court of Bombay in our favor, granting an interim stay of the criminal proceedings. The matter is pending at the stage of final arguments. The next date of hearing has not yet been notified. If we and the individuals named in the criminal proceedings do not prevail before the High Court of Bombay, our business and operations may be materially and adversely affected.

We are involved in a number of litigation matters, both civil and criminal in nature, and any final judgments against us could have a material adverse effect on our business, results of operations, financial condition and prospects.

     We are involved in a variety of litigation matters, including matters relating to alleged violations of environmental and tax laws and alleged price manipulation of our equity shares on the NSE and the Bombay Stock Exchange Limited, or the BSE. A final judgment against us or our directors in one or more of these disputes may result in damages being awarded that we must pay or injunctions against us, or criminal proceedings being instituted against us or our directors, which may require us to cease or limit certain of our operations and have a material adverse effect on our business, results of operations, financial condition and prospects.

For a detailed discussion of material litigation matters pending against us, see “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

Defects in title or loss of any leasehold interests in our properties could limit our ability to conduct operations on our properties or result in significant unanticipated costs.

     Our ability to mine the land on which we have been granted mining lease rights is dependent on the surface rights that we acquire separately and subsequently to the grant of mining lease rights and generally over only part of the land leased. Additional surface rights may be negotiated separately with landowners, though there is no guarantee that these rights will be granted. Although we expect to be able to continue to obtain additional surface rights in the future in the ordinary course, any delay in obtaining or inability to obtain surface rights could negatively affect our financial condition and results of operations.

     A significant part of our mining operations are carried out on leasehold properties. Our right to mine some of our reserves may be materially and adversely affected if defects in title or boundary disputes exist or if a lease expires and is not renewed or if a lease is terminated due to our failure to comply with its conditions. Any challenge to our title or leasehold interests could delay our mining operations and could ultimately result in the loss of some or all of our interests. Also, in any such case, the investigation and resolution of title issues would divert management’s time from our business and our results of operations could be adversely affected. Further, if we mine on property that we do not own or lease, we could incur liability for such mining.

     We can also be subject to claims challenging our title to our non-mine properties. For example, BALCO is currently engaged in a dispute with the State Government of Chhattisgarh regarding alleged encroachment on state-owned land at its Korba smelter. On February 6, 2009, the Chhattisgarh High Court held that BALCO is in legal possession of the land and is required to pay premium and rent on the land according to the rates offered by the Government of Chhattisgarh in 1968. The State Government of Chhattisgarh challenged this order in an appeal before the division bench of the Chhattisgarh High Court. This appeal was dismissed on February 25, 2010. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

Our operations are subject to extensive governmental and environmental regulations which have in the past and could in the future cause us to incur significant costs or liabilities or interrupt or close our operations, any of which events may adversely affect our results of operations.

     Numerous governmental permits, approvals and leases are required for our operations as the industries in which we operate and seek to operate are subject to numerous laws and extensive regulation by national, state and local authorities. Failure to comply with any laws or regulations or to obtain or renew the necessary permits, approvals and leases may result in the loss of the right to mine or operate our facilities, the assessment of administrative, civil or criminal penalties, the imposition of cleanup or site restoration costs and liens, the imposition of costly compliance procedures, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could have the effect of closing or limiting production from our operations. In addition, a significant number of approvals are required from government authorities for metals and mining and commercial power generation projects, and any such approvals may be subject to challenge. We are currently primarily subject to laws and regulations relating to our operations in India and Australia. Our business, financial condition, results of operations and prospects may be materially and adversely affected by any of a number of significant legal and regulatory matters to which we are subject. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings” and “Item 4. Information on the Company — B. Business Overview — Our Business — Regulatory Matters.”

     The costs, liabilities and requirements associated with complying with existing and future laws and regulations may be substantial and time-consuming and may delay the commencement or continuation of exploration, mining or production activities. For example, a gas leak at HZL’s sulphuric acid plant in Chanderiya caused the Rajasthan State Pollution Control Board to shut down the entire plant for a period of 12 days in

November 2005. Environmental regulations may also subject us to substantial costs and liabilities for the closure of our mines and other facilities.

     New legislation or regulations may be adopted in the future that may materially and adversely affect our operations, our cost structure or our customers’ ability to use our products. New legislation or regulations, or different or more stringent interpretation or enforcement of existing laws and regulations, may also require us or our customers to change operations significantly or incur increased costs, which could have a material adverse effect on our results of operations or financial condition.

Any increase in competition in our target markets could result in lower prices or sales volumes of the copper, zinc and aluminum products we produce, which may cause our profitability to suffer.

     There is substantial competition in the copper, zinc and aluminum industries, both in India and internationally, and we expect this to continue. Our competitors in the copper, zinc and aluminum markets outside India include major international producers. Certain of these international producers have significantly larger scale of operations, greater financial resources and manufacturing and technological capabilities, more established and larger marketing and sales organizations and larger technical staffs than we do.

     In the Indian copper market, we compete primarily against Hindalco Industries Limited, or Hindalco, the government-owned Hindustan Copper Limited, or Hindustan Copper, and imports. In the Indian zinc market, we compete primarily against imports. In the Indian aluminum market, we compete primarily against National Aluminium Company Limited, or NALCO, a Government of India enterprise, Hindalco and imports. Many of our competitors are also expanding their production capacities. If domestic demand is not sufficient to absorb these increases in capacity, our competitors could reduce their prices, which may force us to do the same or cause us to lose market share or sell our products in overseas markets at lower prices.

     The end-user markets for our metal products are highly competitive. Copper competes with a number of other materials, including aluminum and plastics. Zinc metal faces competition as a result of substitution of materials, including aluminum, stainless steel and other alloys, plastics and other materials being substituted for galvanized steel and epoxies, paints and other chemicals being used to treat steel in place of galvanization in the construction market. Aluminum competes with materials such as plastic, steel, iron, glass and paper, among others, for various applications. In the past, customers have demonstrated a willingness to substitute other materials for copper, zinc and aluminum. The willingness of customers to accept substitutes could have a material adverse effect on our business, results of operations and prospects.

Our insurance coverage may prove inadequate to satisfy future claims against us.

     We maintain insurance which we believe is typical in our industry in India and Australia and in amounts which we believe to be commercially appropriate. Nevertheless, we may become subject to liabilities, including liabilities for pollution or other hazards, against which we have not insured adequately or at all or cannot insure. Our insurance policies contain exclusions and limitations on coverage. In addition, our insurance policies may not continue to be available at economically acceptable premiums, or at all. As a result, our insurance coverage may not cover the extent of any claims against us, including for environmental or industrial accidents or pollution. See “Item 4. Information on the Company — B. Business Overview — Our Business — Insurance.”

Third party interests in our subsidiary companies and restrictions due to stock exchange listings of our subsidiary companies will restrict our ability to deal freely with our subsidiaries, which may have a material adverse effect on our operations.

     We do not wholly own all of our operating subsidiaries. Although we have management control of HZL and BALCO, and we intend to increase our ownership interests in both, each of these companies has other shareholders who, in some cases, hold substantial interests in them. The minority interests in our subsidiaries and the listing of HZL on the NSE and the BSE may limit our ability to increase our equity interests in these subsidiaries, combine similar operations and utilize synergies that may exist between the operations of different subsidiaries or reorganize the structure of our business in a tax effective manner. For example, the Government of India, which is a minority shareholder in each of HZL and BALCO, has entered into shareholders’ agreements for HZL and BALCO and it is a term of the shareholders’ agreements that HZL and BALCO may not grant loans to companies which are under the same management as HZL or BALCO, as the case may be, without the prior consent of the Government of India.

In addition, the Government of India has the right to appoint directors and has veto power over certain management decisions. These restrictions on our ability to deal freely with our subsidiaries caused by the minority interests may have a material adverse effect on our results of operations or financial condition as our ability to move funds among the different parts of our business will be restricted and we will be unable to access cash held in HZL or BALCO except through dividend payments by HZL and BALCO which would be payable to all shareholders. This will limit our ability to make payments of interest and principal in respect of financial liabilities and obligations which we have undertaken on behalf of our consolidated group of companies. Further, pursuant to the requirements for the continued listing of the shares of HZL on the NSE and BSE, in the event we exercise our call option to acquire the Government of India’s remaining ownership interest in HZL, we would have to either divest a portion of our shareholding in HZL within a period of one year from the acquisition such that the minimum public shareholding requirement of 25.0% is complied with or delist HZL’s shares from the NSE and BSE by making an offer to purchase the equity shares held by the remaining HZL’s shareholders at a price determined by way of a reverse book-build process, which could adversely impact our financial condition and results of operations. See “Item 4. Information on the Company — B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO.”

We may be liable for additional taxes if the tax holidays, exemptions and tax deferral schemes which we currently benefit from expire without renewal, and the benefits of the tax holidays, exemptions and tax deferral schemes are limited by the minimum alternative tax, or MAT.

     We currently benefit from significant tax holidays, exemptions and tax deferral schemes. These tax holidays, exemptions and tax deferral schemes are for limited periods. For example, HZL’s captive power plant at Debari, Chanderiya, and Zawar benefits from tax exemptions on the profits generated from transfers of power to HZL’s other units, which are expected to generate substantial savings.

     HZL’S Haridwar zinc plant was set up in the state of Uttrakhand and is eligible for tax incentives applicable to hilly states. Our copper refinery and copper rod plant at Tuticorin and our first hydrometallurgical zinc smelters at Chanderiya with a capacity of 210,000 tpa, of which one has been awarded the status of export oriented units, under which we are eligible for tax exemptions on raw materials, capital goods procured and finished goods sold until March 31, 2011. There can be no assurance that these tax holidays or exemptions will be renewed when they expire or that any applications we make for new tax holidays or exemptions will be successful. Although tax exemptions for export oriented units have been extended in the Government of India’s Budget for 2009-10, any further extensions would be at the discretion of the new Government of India. Similarly, the tax exemptions for captive power plants expire on March 31, 2011 and unless extended, new captive power plants will not be eligible for such tax exemptions. Captive power plants will continue to have the benefit of any existing tax exemptions after March 31, 2010 until such tax exemptions expire. The expiry or loss of existing tax holidays, exemptions and tax deferral schemes or the failure to obtain new tax holidays, exemptions or tax deferral schemes will likely increase our tax obligations and any increase could have a material adverse effect on our financial condition or results of operations.

     In addition, we are subject to a MAT which sets a minimum amount of tax that must be paid each year based on our book profits. The India Finance Bill 2010 has increased the MAT rate from 15.0% to 18.0%, resulting in overall increase from 17.0% to 19.9%, including surcharge and cess. The MAT prevents us from taking full advantage of any tax holidays, exemptions or tax deferral schemes that may be available to us.

Shortage of skilled labor in the metals and mining industry could increase our costs and limit our ability to maintain or expand our operations, which could adversely affect our results of operations.

     Mining and metal refining, smelting and fabrication operations require a skilled and experienced labor force. If we experience a shortage of skilled and experienced labor, our labor productivity could decrease and costs could increase, our operations may be interrupted or we may be unable to maintain our current production or increase our production as otherwise planned, which could have a material adverse effect on our results of operations, financial condition and business prospects.

Risks Relating to Our Industry

Commodity prices and the copper TcRc may be volatile, which would affect our revenue, results of operations and financial condition.

     Historically, the international commodity prices for copper, zinc and aluminum and the prevailing market TcRc rate for copper have been volatile and subject to wide fluctuations in response to relatively minor changes in the supply of, and demand for, such commodities, market uncertainties, the overall performance of world or regional economies and the related cyclicality in industries we directly serve and a variety of other factors. For example, between March 31, 2009 and March 31, 2010, the average LME prices of copper, zinc and lead increased by 3.9%, 23.9% and 19.9%, respectively and the average LME prices of aluminum decreased by 16.4%. Commodity prices and the market TcRc rate for copper may continue to be volatile and subject to wide fluctuations in the future. A decline in the prices we receive for our copper, zinc or aluminum metals and in the market TcRc rate for copper would adversely affect our revenue and results of operations, and a sustained drop would have a material adverse effect on our revenue, results of operations and financial condition.

Our ore reserves are estimates based on a number of assumptions, any changes to which may require us to lower our estimated reserves.

     The ore reserves stated in this annual report are estimates and represent the quantity of copper, zinc, lead and bauxite that we believed, as of March 31, 2010, could be mined, processed, recovered and sold at prices sufficient to cover the estimated future total costs of production, remaining investment and anticipated additional capital expenditures. These estimates are subject to numerous uncertainties inherent in estimating quantities of reserves and could vary in the future as a result of actual exploration and production results, depletion, new information on geology and fluctuations in production, operating and other costs and economic parameters such as metal prices, smelter treatment charges and exchange rates, many of which are beyond our control. As a result, you should not place undue reliance on the reserve data contained in this annual report. In the event that any of these assumptions turn out to be incorrect, we may need to revise our ore reserves downwards and this may adversely affect our life-of-mine plans and consequently the total value of our mining asset base, which could increase our costs and decrease our profitability.

Changes in tariffs, royalties, customs duties and government assistance may reduce our Indian market domestic premium, which would adversely affect our profitability and results of operations.

     Copper, zinc and aluminum are sold in the Indian market at a premium to the international market prices of these metals due to tariffs payable on the import of such metals. The Government of India may reduce or abolish customs duties on copper and aluminum in the future, although the timing and extent of such reductions cannot be predicted. As we sell the majority of the commodities we produce in India, any reduction in Indian tariffs on imports will decrease the premiums we receive in respect of those sales. Our profitability is dependent to a small extent on the continuation of import duties and any reduction would have an adverse effect on our results of operations and financial condition.

     We pay royalties to the State Governments of Chhattisgarh and Rajasthan based on our extraction of bauxite and lead-zinc ore, respectively, and to the State Government of Tasmania in Australia based on our extraction of copper ore. Most significant of these is the royalty that HZL is required to pay to the State Government of Rajasthan, where all of HZL’s mines are located, at a rate of 8.4% with effect from August 13, 2009 (with the rate being 6.6% prior to August 13, 2009) of the zinc LME price payable on the zinc metal contained in the concentrate produced and 12.7% (with the rate being 5.0% prior to August 13, 2009) of the lead LME price payable on the lead metal contained in the concentrate produced. The royalties we pay are subject to change. Any upward revision to the royalty rates being charged currently may adversely affect our profitability. Additionally, the Department of Mines and Geology of the State of Rajasthan has raised additional demands for payment through several show cause notices to HZL for mining minerals associated with lead and zinc such as cadmium and silver. Any upward revision to the royalty rates being charged currently or payment of additional royalty for mining of associated minerals may adversely affect our profitability. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings — Demands against HZL by Department of Mines and Geology.”

     We also pay royalties to the State Government of Tasmania in Australia based on the operations at CMT at a rate equal to (a) the sum of (x) 1.6% of the revenue plus (y) 0.4 times the profit multiplied by (b) the profit margin over revenue, subject to a cap of 5.0% of revenue.

     Indian exports of copper, aluminum and zinc receive assistance premiums from the Government of India, which have been reduced since 2002. These export assistance premiums have been reduced in recent years and may be further reduced in the future. Any reduction in these premiums will decrease the revenue we receive from export sales and may have a material adverse effect on our results of operations or financial condition. See “Item 5. Operating and Financial Review and Prospects — Factors Affecting Results of Operations — Government Policy.”

Regulation of greenhouse gas emissions effects and climate change issues may adversely affect our operations and markets.

     Our mining, smelting and refining operations are energy intensive and depend heavily on electricity, thermal coal, diesel fuel and fuel oil. In addition, our commercial power generation business depends on coal-fired power plants. Many scientists believe that emissions from the combustion of carbon-based fuels contribute to greenhouse effects and therefore potentially to climate change.

     A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the potential impacts of climate change. International treaties or agreements may also result in increasing regulation of greenhouse gas emissions, including the introduction of carbon emissions trading mechanisms, in jurisdictions in which we operate. Any such regulation will likely result in increased future energy and compliance costs. From a medium and long-term perspective, we are likely to see an increase in costs relating to our assets that emit significant amounts of greenhouse gases as a result of these regulatory initiatives. These regulatory initiatives will be either voluntary or mandatory and may impact our operations directly or through our suppliers or customers. Assessments of the potential impact of future climate change regulation are uncertain, given the wide scope of potential regulatory change in countries in which we operate.

     The potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances. These may include changes in rainfall patterns, water shortages, changing sea levels, changing storm patterns and intensities, and changing temperatures. These effects may adversely impact the cost, production and financial performance of our operations.

Risks Relating to Our Relationship with Vedanta

We are controlled by Vedanta and our other shareholders' ability to influence matters requiring shareholder approval will be extremely limited.

     We are a majority-owned and controlled subsidiary of Vedanta. Vedanta is in turn 60.5 % owned by Volcan Investments Limited, or Volcan. Volcan is a holding company 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave PTC Limited, or Onclave, is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that seeks to enable Vedanta to carry on its business independently of Volcan, its direct and indirect shareholders, and their respective associates, or collectively, the Volcan Parties. See “Item 7. Major Shareholders and Related Party Transactions - B. Related Party Transactions — Related Parties — Vedanta.” However, we cannot assure you that the relationship agreement will be effective at insulating Vedanta, and in turn we, from being influenced or controlled by the Volcan Parties, which influence or control could have a material adverse effect on the holders of our equity shares and ADSs.

     As long as Vedanta, through its subsidiaries, owns a majority of our outstanding equity shares, Vedanta will have the ability to control or influence significant matters requiring board approval and to take shareholder action without the vote of any other shareholder, and the holders of our equity shares and ADSs will not be able to affect the outcome of any shareholder vote. Vedanta will have the ability to control all matters affecting us.

     In the event Vedanta ceases to be our majority shareholder, we will be required to immediately repay some of our outstanding long-term debt.

     Vedanta’s voting control may discourage transactions involving a change of control of us, including transactions in which holders of our equity shares and ADSs might otherwise receive a premium therefore over the then-current market prices. Vedanta is not prohibited from selling a controlling interest in us to a third party and may do so without the approval of holders of our equity shares and ADSs and without providing for a purchase of our equity shares or ADSs. Accordingly, our equity shares and ADSs may be worth less than they would be if Vedanta did not maintain voting control over us.

Vedanta may decide to allocate business opportunities to other members of the Vedanta group instead of to us, which may have a material adverse effect on our business, results of operations, financial condition and prospects.

     Vedanta’s control of us means it can determine the allocation of business opportunities among us, itself and its other subsidiaries. For example, as of March 31, 2010, Vedanta owned 79.4% of KCM, an integrated copper producer in Zambia, 94.5% of MALCO, an aluminum metals and mining company in India with which we compete, and 70.5% of Vedanta Aluminium, an alumina refining and aluminum smelting business. As Vedanta controls KCM, MALCO, Vedanta Aluminium and us, it determines the allocation of business opportunities among, as well as strategies and actions of, KCM, MALCO, Vedanta Aluminium and us. Vedanta may determine to have KCM, MALCO, Vedanta Aluminium or another of its subsidiaries, instead of us, pursue business opportunities in the copper, zinc, aluminum or commercial power generation business, or any other business, or cause such companies or us to undertake corporate strategies, the effect of which is to benefit such companies instead of us and which could be detrimental to our interests. If Vedanta were to take any such actions, our business, results of operations, financial condition and prospects could be materially and adversely affected and the value of our equity shares and the ADSs may decline.

We have issued several guarantees as security for the obligations of certain of our subsidiaries and other companies within the Vedanta group and we will have liability under these guarantees in the event of any failure by such entities to perform their obligations, which could have a material adverse effect on our results of operations and financial condition.

     We have issued several guarantees in respect of the obligations of certain of our subsidiaries and other companies within the Vedanta group, including guarantees issued as security for loan obligations, credit facilities or issuance of customs duty bonds for import of capital equipment at concessional rates of duties. Our outstanding guarantees cover obligations aggregating Rs. 53,062 million ($1,180.5 million) as of March 31, 2010, the liabilities for which have not been recorded in our consolidated financial statements. We will have a liability in the event that any of these entities fails to perform its obligations under the loan agreements, credit facilities or bonds, which could have a material adverse effect on our results of operations and financial condition. See “Item 5. Operating and Financial Review and Prospects — Guarantees.”

Any disputes that arise between us and Vedanta or other companies in the Vedanta group could harm our business operations.

     Disputes may arise between Vedanta or other companies in the Vedanta group and us in a number of areas, including:

•

intercompany agreements setting forth services and prices for services between us and Vedanta or other companies in the Vedanta group;

	•		business combinations involving us;
	•		sales or distributions by Vedanta of all or any portion of its ownership interest in us; or
	•		business opportunities that may be attractive to us and Vedanta, or other companies in the Vedanta group.

     We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party.

     Our agreements with Vedanta and other companies in the Vedanta group may be amended upon agreement between the parties. As we are controlled by Vedanta, Vedanta may require us to agree to amendments to these agreements that may be less favorable to us than the original terms of the agreements.

Some of our directors and executive officers may have conflicts of interest because of their ownership of Vedanta shares, options to acquire Vedanta shares and positions with Vedanta.

     Some of our directors and executive officers own Vedanta shares and options to purchase Vedanta shares, including through their continued participation in the Vedanta Long-Term Incentive Plan 2003, or the Vedanta LTIP. In addition, some of our directors and executive officers are directors or executive officers of Vedanta. Ownership of Vedanta shares and options to purchase Vedanta shares and the presence of an executive officer of Vedanta on our board of directors could create, or appear to create, potential conflicts of interest and other issues with respect to their fiduciary duties to us when our directors and officers are faced with decisions that could have different implications for Vedanta than for us.

     In addition, we are a party to a shared services agreement with Vedanta and certain other subsidiaries of Vedanta under which our management’s time and services are shared between the Vedanta group and us. As a result, our management, including our senior management, is not solely focused on our business and may be distracted by, or have conflicts as a result of, the demands of Vedanta or other businesses within the Vedanta group, which may materially and adversely affect our business, results of operations and financial condition. For more information on the shared services agreement, see “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Transactions.”

Risks Relating to Investments in Indian Companies, Global Economic Conditions and International Operations

A substantial portion of our assets and operations are located in India and we are subject to regulatory, economic, social and political uncertainties in India.

     We are incorporated in India. Our primary operating subsidiaries, HZL, BALCO and Sterlite Energy, as well as our associate company, Vedanta Aluminium, are also incorporated in India. A substantial portion of our assets and employees are located in India and we intend to continue to develop and expand our facilities in India. Consequently, our financial performance and the market price of our ADSs will be affected by changes in exchange rates and controls, interest rates, changes in government policies, including taxation policies, social and civil unrest and other political, social and economic developments in or affecting India.

     The Government of India has exercised and continues to exercise significant influence over many aspects of the Indian economy. Since 1991, successive Indian governments have pursued policies of economic liberalization, including by significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will continue. The present government, formed in May 2004 and re-elected in May 2009, has taken initiatives that support the continued economic liberalization policies that have been pursued by previous governments. The present government continues to be a multiparty coalition and therefore there is no assurance that it will be able to generate sufficient cross-party support to implement its liberalization policies. The rate of economic liberalization could change, and specific laws and

policies affecting metals and mining companies, foreign investments, currency exchange rates and other matters affecting investment in India could change as well. Further, protests against privatizations and government corruption scandals, which have occurred in the past, could slow the pace of liberalization and deregulation. Given the changes in government policy on divestments, there can be no assurance that any of the proposed privatizations which we may be interested in pursuing will be implemented or completed in the near future, or at all. A significant change in India’s policy of economic liberalization and deregulation could adversely affect business and economic conditions in India generally and our business in particular if new restrictions on the private sector is introduced or if existing restrictions is increased.

Recent global economic conditions have been unprecedented and challenging and have had, and continue to have, an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs.

     Recent global market and economic conditions have been unprecedented and challenging and have resulted in tighter credit conditions and recession in most major economies in the last several years. Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical issues, the availability and cost of credit, and the global housing and mortgage markets have contributed to increased market volatility and diminished expectations for western and emerging economies. In the second half of 2008, added concerns fueled by the United States government conservatorship of the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, the declared bankruptcy of Lehman Brothers Holdings Inc., the United States government financial assistance to American International Group Inc., Citigroup Inc., Bank of America and other federal government interventions in the United States financial system led to increased market uncertainty and instability in both United States and international capital and credit markets. These conditions, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have contributed to volatility of unprecedented levels.

     As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide credit to businesses and consumers. These factors have led to a decrease in spending by businesses and consumers alike and corresponding decreases in global infrastructure spending and commodity prices. Continued turbulence in the United States and international markets and economies and prolonged declines in business consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to refinance maturing liabilities and access the capital markets to meet liquidity needs. These global market and economic conditions have had an adverse effect on the Indian financial markets and the Indian economy in general, which has had, and may continue to have, a material adverse effect on our business, our financial performance and the prices of our equity shares and ADSs. For example, in response to recent global economic conditions and a decline in commodity prices, we have ceased operations at one of our aluminum smelters at the Korba complex which may have a material adverse effect on our business and financial performance.

As the domestic Indian market constitutes the major source of our revenue, the downturn in the rate of economic growth in India due to the unprecedented and challenging global market and economic conditions, or any other such downturn for any other reason, will be detrimental to our results of operations.

     In fiscal 2010, approximately 63.4% of our revenue was derived from commodities that we sold to customers in India. The performance and growth of our business are necessarily dependent on the health of the overall Indian economy. Any downturn in the rate of economic growth in India, whether due to political instability or regional conflicts, economic slowdown elsewhere in the world or otherwise, may have a material adverse effect on demand for the commodities we produce. The Indian economy, following a period of significant growth, has more recently been adversely affected by the unprecedented and challenging global market and economic conditions that has caused and may continue to cause a downturn in the rate of economic growth in India. The Indian economy is also largely driven by the performance of the agriculture sector, which depends on the quality of the monsoon, which is difficult to predict. In the past, economic slowdowns have harmed manufacturing industries, including companies engaged in the copper, zinc and aluminum sectors, as well as the customers of manufacturing industries. The recent economic slowdown has had and could continue to have, and any future slowdown in the Indian economy could have, a material adverse effect on our financial condition and results of operations.

Terrorist attacks and other acts of violence involving India or other neighboring countries could adversely affect our operations directly, or may result in a more general loss of customer confidence and reduced investment in these countries that reduces the demand for our products, which would have a material adverse effect on our business, results of operations, financial condition and cash flows.

     Terrorist attacks and other acts of violence or war involving India or other neighboring countries may adversely affect the Indian markets and the worldwide financial markets. In recent years, there have been incidents in and near India such as the November 2008 terrorist shootings and bombings in Mumbai, the July 2006 bombings of suburban trains in Mumbai and other terrorist attacks in Mumbai, Delhi and other parts of India, a terrorist attack on the Indian Parliament, troop mobilizations and military confrontations in Kashmir and along the India/Pakistan border and an aggravated geopolitical situation in the region. In addition, South Asia more generally has experienced instances of civil unrest and hostilities among neighboring countries from time to time. The occurrence of any of any such terrorist attacks or acts of violence or war in the future may disrupt communications, make travel more difficult, create the perception that investments in Indian companies involve a high degree of risk and result in a loss of business confidence, which could potentially lead to economic recession and generally have an adverse effect on our business, results of operations, financial condition and cash flows. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that were protracted or involved the threat or use of nuclear weapons, we might not be able to continue our operations. Our insurance policies for a substantial part of our business do not cover terrorist attacks or business interruptions from terrorist attacks or for other reasons. As a result, any terrorist attacks or other acts of violence or war or deterioration in international relations may result in investor concern regarding regional stability which could adversely affect the price of our equity shares and ADSs.

If natural disasters or environmental conditions in India, including floods and earthquakes, affect our mining and production facilities, our revenue could decline.

     Our mines and production facilities are spread across India, and our sales force is spread throughout the country. Natural calamities such as floods, rains, heavy downpours (such as heavy downpours in Tuticorin in 2008 which caused the closure of our Tuticorin facilities for 2-3 days, as well as the rains in Mumbai and other parts of the State of Maharashtra in 2005 and other states in 2006) and earthquakes could disrupt our mining and production activities and distribution chains and damage our storage facilities. Other regions in India have also experienced floods, earthquakes, tsunamis and droughts in recent years. In December 2004, Southeast Asia, including the eastern coast of India, experienced a massive tsunami, and in October 2005, the State of Jammu and Kashmir experienced an earthquake, both of which events caused significant loss of life and property damage. Substantially all of our facilities and employees are located in India and there can be no assurance that we will not be affected by natural disasters in the future. In addition, if there were a drought or general water shortage in India or any part of India where our operations are located, the Government of India or local, state or other authorities may restrict water supplies to us and other industrial operations in order to maintain water supplies for drinking and other public necessities which would cause us to reduce or close our operations.

Currency fluctuations among the Indian Rupee, the Australian dollar and the US dollar could have a material adverse effect on our results of operations.

     Although substantially all of our revenue is tied to commodity prices that are typically priced by reference to the US dollar, most of our expenses are incurred and paid in Indian Rupees or Australian dollars. In addition, in fiscal 2010, approximately 36.6 % of our revenue was derived from commodities that we sold to customers outside India. The exchange rates between the Indian Rupee and the US dollar and between the Australian dollar and the US dollar have changed substantially in recent years and may fluctuate substantially in the future. Our results of operations could be adversely affected if the US dollar depreciates against the Indian Rupee or Australian dollar or the Indian Rupee or Australian dollar appreciates against the US dollar. We seek to mitigate the impact of short-term movements in currency on our business by hedging most of our near-term exposures. Typically, most of our exposures with a maturity of less than two years are hedged completely. However, large or prolonged movements in exchange rates may have a material adverse effect on our results of operations and financial condition.

If India’s inflation worsens or the prices of oil or other raw materials rise, we may not be able to pass the resulting increased costs to our customers and this may adversely affect our profitability or cause us to suffer operating losses.

     India has recently experienced fluctuating wholesale price inflation compared to historical levels due to the global economic downturn. In addition, international prices of crude oil have recently experienced significant volatility, including a rise to historical highs that increased transportation costs followed more recently by a significant decline as global economic conditions have deteriorated. Inflation, increased transportation costs and an increase in energy prices generally, which may be caused by a rise in the price of oil, or an increase in the price of thermal coking coal in particular, could cause our costs for raw material inputs required for production of our products to increase, which would adversely affect our financial condition and results of operations if we cannot pass these added costs along to customers.

Stringent labor laws in India may adversely affect our profitability.

     India has stringent labor legislation that protects the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and imposes financial obligations on employers upon employee layoffs. This makes it difficult for us to maintain flexible human resource policies, discharge employees or downsize, which may adversely affect our business and profitability.

As a foreign private issuer and a “controlled company” within the meaning of the New York Stock Exchange, or NYSE, rules, we are subject to different NYSE rules than non-controlled domestic US issuers. Consequently, the corporate governance standards which we are required to adhere to are different than those applicable to such companies, which may limit the information available to, and the shareholder rights of, holders of our ADSs.

     We qualify as a “controlled company” within the meaning of the NYSE rules as Vedanta has effective control of a majority of our equity shares. This will allow Vedanta to, among other things, control the composition of our board of directors and direct our management and policies.

     As a foreign private issuer and a “controlled company,” we are exempt from complying with certain corporate governance requirements of the NYSE, including the requirement that a majority of our board of directors consist of independent directors. As the corporate governance standards applicable to us are different than those applicable to domestic non-controlled US issuers, holders of our equity shares and ADSs may not have the same protections afforded under the NYSE rules as shareholders of companies that do not have such exemptions. It is also possible that the Agarwal family’s significant ownership interest of us as a result of its majority ownership of Vedanta’s majority shareholder, Volcan, could adversely affect investors’ perceptions of our corporate governance. For a summary of the differences between the corporate governance standards applicable to us as a listed company in India and as a foreign private issuer and “controlled company” in the United States and such standards applicable to a domestic non-controlled US issuer, see “Item 10. Additional Information — B. Memorandum and Articles of Association — Comparison of Corporate Governance Standards.”

There are certain differences in shareholder rights and protections between the laws of India and the United States and between governance standards for a US public company and a foreign private issuer such as us.

     We are incorporated in India and investors should be aware that there are certain differences in the shareholder rights and protections between the laws of India and the United States. There are also certain differences in the corporate governance standards for a domestic US issuer and those applicable to a foreign private issuer such as us. See “Item 10. Additional Information — B. Memorandum and Articles of Association — Comparison of Shareholders’ Rights.”

     SEBI and the various Indian stock exchanges are responsible for improving and setting standards for disclosure and other regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters. Nevertheless, there may be less information made publicly available in respect of Indian companies than is regularly made available by public companies in the United States as a result of differences between the level of regulation and monitoring of the Indian securities

markets and of the transparency of the activities of investors and brokers in India compared to the United States. Similarly, our disclosure obligations under the rules of the NSE and BSE on which our equity shares are listed may be less than the disclosure obligations of public companies on the NYSE.

Risks Relating to our ADSs

Substantial future sales of our equity shares or ADSs in the public market, or the perception of such sales, could cause the market price of our ADSs to fall.

     If our existing shareholders sell a substantial number of our equity shares in the open market, or if there is a perception that such sale or distribution could occur, the market price of our equity shares and ADSs could be adversely affected. These sales, or the perception that these sales could occur, also might make it more difficult for us to sell securities in the future at a time or at a price that we deem appropriate or pay for acquisitions using our equity securities.

     As of June 30, 2010, we had 3,361,207,534 equity shares outstanding, including 483,366,416 equity shares represented by 120,841,604 ADSs. All our outstanding equity shares, 3,361,207,534 were freely tradable on the NSE and BSE as of June 30, 2010. Furthermore, Vedanta, through Twin Star and MALCO, continued to have effective control over 1,939,086,376 of our outstanding equity shares, which represented 57.7% of our outstanding share capital as of June 30, 2010.

Fluctuations in the exchange rate between the Indian Rupee and the US dollar could have a material adverse effect on the value of our ADSs, independent of our actual operating results.

     The price of the ADSs is quoted in dollars. Our equity shares are quoted in Indian Rupees on the NSE and BSE. Any dividends in respect of our equity shares will be paid in Indian Rupees and subsequently converted into US dollars for distribution to ADS holders.

     Currency exchange rate fluctuations will affect the dollar equivalent of the Indian Rupee price of our equity shares on the NSE and BSE and, as a result, the prices of our ADSs, as well as the US dollar value of the proceeds a holder would receive upon the sale in India of any of our equity shares withdrawn from the depositary under the deposit agreement and the US dollar value of any cash dividends we pay on our equity shares. Holders may not be able to convert Indian Rupee proceeds into US dollars or any other currency, and there is no guarantee of the rate at which any such conversion will occur, if at all. Currency exchange rate fluctuations will also affect the value received by ADS holders from any dividends paid by us in respect of our equity shares. Holders of our ADSs will bear all of the risks with respect to a decline in the value of the Indian Rupee as compared to the US dollar, which would adversely affect the price of our ADSs and the US dollar value of any dividends we pay that are received by ADS holders.

Transfers of the underlying shares by persons resident outside India to residents of India are subject to certain pricing norms.

     Under current Indian regulations, subject to certain conditions, no prior regulatory approval is required for the sale of any equity shares, including any equity shares withdrawn from the ADS facilities, by a person resident outside India to a resident of India. However, certain reporting requirements would need to be complied with by the parties to the sale transaction. Also, the prior approval of the RBI would be required in the event of a sale of the equity shares underlying our ADSs by a non-resident investor to a resident investor if the sale price is greater than the maximum price set by the RBI under Indian foreign exchange laws. Any such approval required from the RBI or any other government agency may not be obtained on terms favorable to a non-resident investor, or at all.

Holders of ADSs may be restricted in their ability to exercise preemptive rights under Indian law and thereby may suffer future dilution of their ownership positions.

     Under the Indian Companies Act, 1956, or the Indian Companies Act, the holders of equity shares of a company incorporated in India have a preemptive right to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares by the company, unless the preemptive rights have been waived by adopting a special resolution passed by 75% of the shareholders present and voting at a general meeting.

     Holders of ADSs may be unable to exercise preemptive rights for the underlying equity shares of the ADSs unless a registration statement under the Securities Act of 1933, as amended, or the Securities Act is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to prepare and file such a registration statement and our decision to do so will depend on the costs and potential liabilities associated with any such registration statement, as well as any other factors we consider appropriate at the time. No assurance can be given that we would file a registration statement under these circumstances. If we issue any such securities in the future, such securities may be issued to the depositary, which may sell the securities for the benefit of the holders of the ADSs. The value the depositary would receive from the sale of such securities cannot be predicted. To the extent that holders of ADSs are unable to exercise preemptive rights granted in respect of our equity shares represented by their ADSs, their proportional ownership interests in us would be diluted.

We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax consequences to US Holders.

     A non-United States corporation will be considered a passive foreign investment company, or PFIC, for any taxable year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the total value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets, including cash, that produce or are held for the production of passive income, or passive assets. For this purpose, the total value of our assets generally will be determined by reference to the market price of our equity shares and ADSs. Based on the market prices of our equity shares and ADSs and the composition of our income and assets, including goodwill, we do not believe we were a PFIC for United States federal income tax purposes for our taxable year ended March 31, 2010. However, the application of the asset test described above is subject to ambiguity in several respects and, therefore, the US Internal Revenue Service may assert that, contrary to our belief, we were a PFIC for such taxable year. In addition, we must make a separate determination each taxable year as to whether we are a PFIC (after the close of each taxable year). A decrease in the market value of our equity shares and ADSs and/or an increase in cash or other passive assets would increase the relative percentage of our passive assets. Accordingly, we cannot assure you that we will not be a PFIC for the taxable year that will end on March 31, 2011 or any future taxable year. If we were a PFIC for any taxable year during which a US Holder (as defined under “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation”) holds an ADS or an equity share, certain adverse United States federal income tax consequences could apply to the US Holder. See “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation - Passive Foreign Investment Company.” US Holders are urged to consult their own tax advisors regarding the potential application of the PFIC rules to their ownership of ADSs or equity shares and the availability and advisability of any elections.

ITEM 4.		INFORMATION ON THE COMPANY

A.		History and Development of our Company

     Sterlite Industries (India) Limited was incorporated on September 8, 1975 under the laws of India and maintains a registered office at SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin, State of Tamil Nadu 628 002, India. Our principal executive office is located at SIPCOT Industrial Complex, Medurai Bypass Road, T.V. Puram P.O., Tuticorin, State of Tamil Nadu 628 002, India and the telephone number for this office is (91) 461 661 2982. Our website address is www.sterlite-industries.com. Information contained on our website, or the website of any of our subsidiaries or affiliates, including Vedanta and other members of the Vedanta group, is not a part of this annual report. Our agent for service in the United States is CT Corporation System, 111 Eighth Avenue, New York, New York 10011.

     We were acquired by Mr. Anil Agarwal and his family in 1979 and have grown from a small wire and cable manufacturing company to one of India’s leading non-ferrous metals and mining companies. In 1988, we completed an initial public offering of our shares in India to finance in part our first polythene insulated jelly filled copper telephone cables plant. As part of our strategy to concentrate on businesses with high growth potential, we discontinued production of polyvinyl chloride power and control cables and enameled copper wires in 1990 and in 1991 commissioned a continuous cast copper rod plant.

     In 1997, in order to obtain captive sources of copper for our copper rod plant, we commissioned the first privately developed copper smelter in India at Tuticorin.

     In 2000, we acquired CMT, which owns the Mt. Lyell copper mine in Australia. CMT had been acquired by Monte Cello in 1999, and we acquired it through our acquisition of Monte Cello from a subsidiary of Twin Star in 2000.

     In July 2000, our telecommunications cables and optical fiber business was spun-off into a new company, Sterlite Technologies Limited, or STL. The Agarwal family has substantial interests in STL. STL is not a part of our group of companies.

     We acquired our aluminum business through our acquisition of a 51.0% interest in BALCO from the Government of India on March 2, 2001. On March 19, 2004, we gave notice to exercise our call option to purchase the Government of India’s remaining 49.0% shareholding in BALCO at a price determined in accordance with the shareholders’ agreement entered into by us and the Government of India. The exercise of this option has been contested by the Government of India. Further, the Government of India retains the right and has expressed an intention to sell 5.0% of BALCO to BALCO employees. See “— B. Business Overview — Our Business — Options to Increase Interests in HZL and BALCO” for more information.

     On April 11, 2002, we acquired through SOVL a 26.0% interest in HZL from the Government of India and a further 20.0% interest through an open market offer. On November 12, 2003, we acquired through SOVL a further 18.9% interest in HZL following the exercise of a call option granted by the Government of India, taking our interest in HZL to 64.9%. In addition, SOVL has a call option, which became exercisable beginning on April 11, 2007, to acquire the Government of India’s remaining ownership interest in HZL.

     On October 3, 2006, we acquired 100% of Sterlite Energy from Twin Star Infrastructure Limited, Mr. Anil Agarwal and Mr. Dwarka Prasad Agarwal, one of our directors until March 31, 2009, for a total consideration of Rs. 4.9 million ($0.1 million). Sterlite Energy is our subsidiary through which we are setting up a thermal coal-based 2,400 MW power facility in the State of Orissa.

     In June 2007, we completed an initial public offering of our shares in the form of ADSs in the US and our ADSs were listed on the NYSE. Vedanta’s ownership interest, held through its subsidiaries, decreased to 59.9%.

     In July 2009, in connection with our follow-on offering of ADS, each representing one equity share of par value Rs. 2, we issued 131,906,011 new equity shares in the form of ADSs, at a price of $12.15 per ADS, aggregating approximately $1,602.7 million. Out of 131,906,011 equity shares, 41,152,263 equity shares were allotted to our parent company, Twin Star, which is a wholly-owned subsidiary of Vedanta.

     In October 2009, we issued $500 million aggregate principal amount of 4% Convertible Senior Note (the “Convertible Notes”). Subject to certain exceptions, the Convertible Notes are convertible, at the option of the holder, into ADSs at a conversion rate of 42.8688 ADSs per $1,000 principal amount of Convertible Notes, which is equal to a conversion price of approximately $23.33 per ADS. The Convertible Notes will mature on October 30, 2014, unless earlier repurchased or redeemed by us or converted.

     On October 30, 2009, Sterlite Energy filed its draft red herring prospectus with SEBI for a proposed initial public offering of its equity shares for up to Rs. 51,000 million ($1,134.6 million) on October 30, 2009.

     Our equity shares are listed and traded on the NSE and BSE. Our equity shares have been included in S&P CNX Nifty, a diversified index of 50 Indian stocks listed on the NSE, since April 5, 2007 and has been included in BSE Sensex, a diversified index of 30 Indian stocks listed on the BSE, since July 28, 2008. Our ADSs are quoted on the NYSE (NYSE: SLT).

     We are a majority-owned and controlled subsidiary of Vedanta, a public company in the United Kingdom listed on the London Stock Exchange plc, or LSE, and included in the FTSE 100 Index. Vedanta is a leading metals and mining company with operations in copper, zinc and aluminum located primarily in India, though with a copper business in Zambia. We and Vedanta share a common management team with a common strategic vision, and we form the core of Vedanta’s operations.

     Vedanta is 60.5% owned by Volcan, a holding company 100% owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil Agarwal are parties to a relationship agreement that seeks to enable Vedanta to carry on its business independently of the Volcan Parties. See “Item 7. Major Shareholders and Related Party Transactions — B. Related Party Transactions — Related Parties — Vedanta.”

     Our capital expenditures spent in fiscal 2009 and 2010 were Rs 40,623 million and Rs 61,875 million ($1,376.5 million) respectively. See “Item 5. Operating and Financial Review and Prospects — Off Balance Sheet Arrangements — Capital Expenditures and Commitments” for more information.

B.		Business Overview

OUR INDUSTRY

     Unless otherwise indicated, all data relating to the copper, zinc and aluminum industries contained in this annual report is primarily derived from Brook Hunt & Associates Ltd, or Brook Hunt, (a Wood Mackenzie company) and other industry sources.

     Unless otherwise indicated, all financial and statistical data relating to the power industry in India in the following discussion is derived from the Ministry of Power’s Annual Report (2005-06, 2006-07, 2007-08 and 2009-10), the Central Electricity Authority of India’s General Review (2004-05 and 2007-08), and the Ministry of Power website. The data may have been re-classified for the purpose of presentation. Unless otherwise indicated, the data presented excludes captive power generation capacity and captive power generation. The term “units” as used herein refers to kilowatt-hours (kWh).

Copper

Global Copper Market

     Background

     Copper is a non-magnetic, reddish-colored metal with a high electrical and thermal conductivity (among pure metals at room temperature, only silver has a higher electrical conductivity), high tensile strength and resistance to corrosion.

     Copper consumption has three main product groups: copper wire rods, copper alloy products and other copper products. The predominant intermediate use of copper has been the production of copper wire rods, which accounted for approximately half of total copper production in 2009. Copper rods are used in wire and cable products such as energy cables, building wires and magnet wires. Copper alloy products were the next largest users of copper in 2009, followed by other copper products, which include non-electrical applications such as tubes for air conditioners and refrigerators, foils for printed circuit boards and other industrial and consumer applications.

     In the global copper consumer market in 2009, the construction segment and electrical and electronic products accounted for 33% of copper consumption each followed by the industrial machinery segment and the transportation segment (13% each) and the consumer products segment (8%).

     The copper industry has three broad categories of producers:

	•		Miners, which mine the copper ore and produce copper concentrate;
	•		Custom smelters, which smelt and refine copper concentrate to produce copper metal; and
	•		Integrated producers, which mine copper ore from captive mines and produce copper metal either through smelting and refining or through leaching.

     Refined Copper Consumption

     Global copper consumption decreased from 18.0 million tons globally in 2008 to 17.3 million tonnes in 2009. Demand declined by 21% in both Europe and North America. In terms of copper demand, the recession had a significant adverse impact. Demand in Europe in 2009 was hampered by the slowdown in the regional construction sector. Similarly, demand for copper in the United States was also affected by the slow construction activities in 2009. Elsewhere, a slowdown in both the construction and automobile sectors contributed to the fall in copper demand in Japan. Meanwhile, the sharp downturn was offset by a significant uplift in Chinese demand during 2009. Consumption increased by 28% in China while it increased by 5% in Africa. The main factors contributing to the surge in Chinese demand were the investments in the power and construction sectors, helped by an increase in the availability of credit and the introduction of government incentive schemes in both the auto and home appliances sectors.

     Asia (including the Middle East), Western Europe and North America together accounted for 88% of global copper consumption in 2009. Europe and North America accounted for over 60% of copper consumption during the 1980s, but strong growth in Asia, led by China and Japan, has since significantly changed global consumption patterns. Asia is the fastest growing copper market in the world. Strong growth in Asia (including the Middle East), Russia and the Commonwealth of Independent States, or CIS, and Eastern European countries is expected from 2011 onwards following a recovery in demand from the recent slowdown.

     The following table sets forth the regional consumption pattern of refined copper from 2006 to 2009:

		Year Ended December 31,
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
		(thousands of tons, except percentages)
Rest of Asia(1)			4,246				24.3	%			4,182				23.3	%			4,153				23.1	%			3,713				21.5	%
Western Europe			3,923				22.4				3,661				20.4				3,413				19.0				2,687				15.5
China			3,967				22.7				4,600				25.7				5,014				27.9				6,520				37.7
North America			2,408				13.8				2,395				13.4				2,200				12.2				1,705				9.8
CEE(2) and CIS			1,210				6.9				1,251				7.0				1,240				6.9				806				4.6
Latin America			895				5.1				863				4.8				906				5.0				781				4.5
India			458				2.6				568				3.2				598				3.3				607				3.6
Africa			243				1.4				275				1.5				295				1.6				340				2.0
Oceania			143				0.8				148				0.8				144				0.8				143				0.8
Total			17,493				100.0	%			17,943				100.0	%			17,963				100.0	%			17,302				100.0	%

     Copper Supply

     Global mine production is the principal source of copper, with scrap recycling accounting for only a minor part of the aggregate supplies. The five largest copper mining countries were Chile (34%), the United States (7.6%), Peru (7.7%), China (6.6%) and Australia (5.2%), which together accounted for approximately 61% of the total copper mined worldwide in 2009. Less than 50% of global copper mine production is integrated, with the remainder sold in the custom smelting market. The five largest copper mining companies in 2008 were Corporación Nacional del Cobre, Chile, or Codelco, Freeport-McMoRan, BHP Billiton Limited, or BHP Billiton, Xstrata AG, or Xstrata, and Rio Tinto Alcan Ltd, or Rio Tinto.

     The major smelting locations include China (20.4%), Japan (10.7%), Chile (10.6%), Russia (5.2%) and India (4.8%), which together accounted for 51.7% of global production and thus are major importers of copper concentrate in 2008. The five largest refined copper producing countries were China (22.5%), Chile (17.8%), Japan (7.8%), the United States (6.5%) and Russia (4.5%), which together accounted for about 59.2% of the total copper produced worldwide in 2009. The five largest copper smelting companies in 2009 were Codelco, Xstrata, Jiangxi Copper Company, Aurubis AG and Nippon Mining and Metals Co. Ltd, while the five largest copper refining companies in 2009 were Codelco, Aurubis AG, Freeport-McMoran, Jiangxi Copper Company and Xstrata.

     Global refined copper production decreased very marginally from 18.4 million tons in 2008 to 18.33 million tons in 2009. There was a production surplus in 2009.

     The following table sets forth the regional production pattern of refined copper from 2006 to 2009:

		Year Ended December 31,
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
		(thousands of tons, except percentages)
Latin America			3,906				22.6	%			3,953				22.0	%			4,070				22.2	%			4,184				22.8	%
Rest of Asia(1)			2,953				17.1				2,995				16.6				2,927				15.9				2,766				15.1
China			3,003				17.4				3,497				19.4				3,779				20.6				4,110				22.4
CEE(2) and CIS			2,173				12.6				2,123				11.8				2,087				11.4				1,992				10.9
North America			1,758				10.2				1,786				9.9				1,733				9.4				1,538				8.4
Western Europe			1,877				10.9				1,846				10.3				1,945				10.6				1,816				9.8
Africa			567				3.3				638				3.5				645				3.5				751				4.1
Australia			430				2.5				443				2.5				502				2.7				458				2.5
India			629				3.6				722				4.0				683				3.7				721				4.0
Total			17,296				100.0	%			18,003				100.0	%			18,371				100.0	%			18,336				100.0	%

     Pricing

     Copper is traded on the LME. Although prices are determined by LME price movements, producers normally charge a regional premium that is market driven. The significant price increase in 2006 resulted from healthy demand growth and supply, due to limited ore availability and labor disruptions at several of the large mines. Strong imports into China due to increased domestic consumption in 2007 reduced international inventories and saw the price trade above $7,000 per ton for most of the second and third quarters of 2007. The same trend

continued in the first nine months of 2008, but in the fourth quarter of 2008 the price decreased to below $4,000 per ton mainly due to the turmoil in the financial markets and the fall in global demand. Copper prices on the LME increased consistently during the second half of 2009 and were at an average of around US$ 8,000 per metric ton levels.

     The following table sets forth the movement in copper prices from 2000 to 2009:

		Year Ended December 31,
		2000				2001				2002				2003				2004				2005				2006				2007				2008				2009
		($ per ton, except percentages)
LME Cash Price($)			1,814				1,577				1,557				1,779				2,869				3,683				6,729				7,124				6,966				5,170
% Change			15.3				(13.1	)			(1.3	)			14.3				61.2				28.4				82.7				5.9				(2.2	)			(25.7	)

     The LME copper cash price was $5,170 per ton as of March 31, 2010.

     For custom smelters, TcRc rates have a significant impact on profitability as prices for copper concentrate are equal to the LME price net of TcRc and prices of finished copper products are equal to the LME price plus a premium. A significant proportion of concentrates are sold under frame contracts and TcRc is negotiated annually. The main aspects of the contract that are subject to negotiation are the TcRcs that are expressed in US dollars per dry metric ton, or dmt, of concentrate (the Tc) and in cents per pound of payable copper (the Rc) and, until recently (under long-term contracts) price participation. The TcRc rates are influenced by the demand-supply situation in the concentrate market, prevailing and forecasted LME prices and mining and freight costs.

     Since 2006, TcRcs have fallen significantly, reflecting a continuing tightening in the physical concentrate demand/supply balance. The annual negotiations for copper concentrate TcRc charges (excluding price participation, if any) between the Japanese smelters and BHP Billiton (which traditionally set the market benchmark) settled at $75.00 per ton and $0.075 per pound in 2009.

     The following table sets forth the movement in copper TcRc from 2000 to 2009:

		Year Ended December 31,
		2000				2001				2002				2003				2004				2005				2006				2007				2008				2009
		(US cents per lb, except percentages)
TcRc(1)			15.9				17.4				15.5				13.9				13.0				29.6				45.9				15.4				11.5				19.5
% Change			3.9				9.4				(10.9	)			(10.3	)			(6.5	)			127.7				55.1				(66.4	)			(24.7	)			69.6

Indian Copper Market

     Background

     The Indian copper industry consists primarily of custom smelters as there are limited copper deposits in the country. The available deposits are owned by the government-owned Hindustan Copper, which was the only producer in India until 1995. Since then, the industry has transformed significantly with our entry and the entry of Birla Copper, now owned by Hindalco. We are one of the two custom copper smelters in India with a primary market share of 33.0% in fiscal 2010, according to the International Copper Promotion Council, India, or ICPCI. The other custom copper smelter in India is Hindalco, which had a primary market share in India of 32.0% in fiscal 2010. The remainder of the primary copper market in India was served by Hindustan Copper (3.5%) and SWIL Limited (0.8%) in fiscal 2010. Copper refining output in India has grown at a compound annual growth rate of 9.64% from 499,000 tons in 2005 to 721,000 tons in 2009.

     Consumption Pattern

     From 2007 to 2009, consumption in the Indian primary copper market increased at a compound annual growth rate of 8.27%. The total domestic demand for copper is estimated to have increased from 415,000 tons in 2005 to 628,000 tons in 2009, a compound annual growth rate of 9.84% over three years. In addition, the demand for copper in India is expected to grow from 628,000 tons in 2009 to 1.5 million tons in 2020, representing a compound annual growth rate of 7.6%. This compares to world demand for copper, which Brook Hunt estimates will grow from 17.0 million tons in 2009 to 24.6 million tons in 2020, representing a compound annual growth rate of 3.3%, according to Brook Hunt.

     Pricing and Tariff

     Indian copper prices track global prices as the metal is priced on the basis of landed costs of imported metal. Copper imports in India are currently subject to a customs duty of 5.0% and an additional surcharge of 3.0% of the customs duty. The customs duty has been reduced in a series of steps from 25.0% in 2003 to 5.0% in January 2007. Indian producers are also able to charge a regional premium, which is market driven.

Market Outlook

     Global Copper Outlook

     The rapidly developing Asian market is expected to drive copper consumption growth. The countries from Asia that are contributing to this rapid growth are primarily China and India. Copper demand is expected to continue to be dominated by its use in electric wires and cables. Global refined consumption of copper is expected to increase from approximately 17.3 million tons in 2008 to 18.2 million tons in 2010, an increase of 5.4%.

     The mine production is expected to rise by 4.8% in 2010 year on year (“YoY”), mainly due to an increase in investments in Africa (21.8% in 2010 YoY) and Latin America (5.0% in 2010 YoY). However, the long term view on the availability of concentrates remains subdued since the mining projects are taking longer to implement due to depleting resources of copper and availability of funds after the financial crisis last year. Existing mining projects are experiencing problems such as power shortage, depleting ore grades and labor issues. Global copper concentrate demand will outperform the production by 103,000 metric ton in 2010 and is expected to be stable in 2011.

     The global copper smelter production capacity is expected to increase by 8.6% in 2010 YoY with a production of 15.3 million tons, and by 8.7% for the years 2011 and 2012 at a production of 16.6 million tons and 18.1 million tons respectively. The largest rise in 2010 will be seen in China with the commissioning of the Baoding, Liangshan (100,000 tons per annum) smelters and several smelter expansions.

     The catalyst for any meaningful recovery in long-term TcRcs will be a rationalization, or at least restructuring, of the custom smelting industry. Until then, TcRcs are likely to remain well below their previous long-term average.

     Indian Copper Outlook

     The Indian market outlook is expected to remain positive, with strong growth in key user segments such as power, construction and engineering. Domestic consumption is expected to increase in 2010, primarily driven by rising living standards and the development of the domestic power sector. Growing industrialization and regulatory reforms are attracting huge investments to the power sector and the transmission and distribution segments. Increased residential and infrastructure development is also expected to generate demand for copper.

Zinc

Global Zinc Market

     Background

     Zinc is the fourth most common metal in the world, trailing only iron, aluminum and copper in worldwide annual production.

     The principal use for zinc in the world is galvanizing, which involves coating steel with zinc to guard against corrosion. Galvanizing, including sheet, tube, wire and general galvanizing, accounted for approximately 48% of world consumption of zinc in 2010. The main end-use industries for galvanized steel products are the automobile manufacturing, domestic appliance manufacturing and construction industries, and it is these industries on which zinc consumption ultimately depends. Other major uses for zinc include brass semis alloys and castings (11%), die-casting (17%) and oxides and chemicals (10%). Alloys are principally used in toys, vehicles and hardware.

     The zinc industry has three broad categories of producers:

	•		Miners, which mine the lead-zinc ore and produce zinc concentrate for sale to smelters, and usually receive payment for 85% of the zinc contained in the concentrate less a Tc;
	•		Smelters, which purchase concentrate and sell refined metal, with some smelters also having some integrated production downstream; and
	•		Integrated producers, which are involved in both the mining and smelting of zinc.

     Most integrated producers are only partially integrated and therefore need to either buy or sell some concentrate. Only approximately one-third of total western world zinc production can be attributed to integrated producers.

     Zinc Consumption

     Global zinc consumption decreased by 2% from 11.4 million tons in 2007 to 11.2 million tons in 2008. In 2009, this decreased further by 9% to 10.1 million tons according to Brook Hunt Zinc Metal Services Report, March 2010. The decline was a result of the financial crisis at the beginning of 2009. In both absolute and percentage terms, galvanisizing is forecasted to be the fastest growing end use with the principal applications being found in the construction and the automotive industries. By 2020, it is expected to account for 55% of global zinc usage.

     China, Europe and North America together accounted for approximately 70% of global zinc consumption in 2009. With a compound annual growth rate of 2.1% between 2006 and 2009, Asia has been the fastest growing zinc market in the world. Driven by continuing strong growth in China and other regional markets, strong growth in Asia is expected to continue over the next few years.

     The following table sets forth the regional consumption pattern of refined zinc from 2006 to 2009:

		Year Ended December 31,
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
		(thousands of tons, except percentages)
Europe			2,843				25.5	%			2,894				25.2	%			2,592				23.1	%			1,973				19.4	%
China			3,166				28.4				3,531				30.8				3,795				33.9				4,061				40.0
India			428				3.8				469				4.1				479				4.3				495				4.8
Rest of Asia(1)			2,190				19.6				2,149				18.7				2,075				18.5				1,677				16.5
North America			1,409				12.6				1,275				11.1				1,131				10.1				1,028				10.0
Latin America			647				5.8				673				5.9				671				6.0				559				5.5
Oceania			273				2.4				284				2.5				284				2.5				226				2.2

		Year Ended December 31,
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
		(thousands of tons, except percentages)
Africa			193				1.7				198				1.7				178				1.6				164				1.6
Total			11,149				100.0	%			11,473				100.0	%			11,205				100.0	%			10,183				100.0	%

Source: Brook Hunt Zinc Metal Services Report, March 2010

     Zinc Supply

     There are zinc mining operations in approximately 50 countries. The five largest zinc mining countries are China (27.9%), Peru (12.6%), Australia (11.6%), the United States (6.2%) and Canada (6.1%), which together accounted for 65% of total zinc mined worldwide in 2009. India accounted for about 6.1% of the global mine output in 2009. Mine production has fallen in North America in the last few years as a result of mine closures, which has resulted principally from reserve exhaustion and also from economic pressures. The five largest zinc mining companies in 2009 were Xstrata (9.1%), HZL (6%), Minmetals (5.6%), Teck (5.4%) and Glencore International AG (3.8%).

     Australia and Peru are the largest net exporters. Much of this is supplied through traders rather than sold directly to smelters. The largest importing region is Western Europe, followed by China, South Korea and Japan. The main custom smelters are located in these regions.

     Zinc smelting is less geographically concentrated than zinc mining. With a production of 4.2 million tons of zinc in 2009, China is the largest single zinc-producing country in the world. The other major zinc producing countries and regions include Western Europe and the US, which along with China accounts for approximately 60% of total global zinc production. The three largest zinc producing companies in 2009 were Nyrstar NV, or Nyrstar (8.3%), Korea Zinc Company Limited (7.1%) and HZL (5.5%), which together accounted for about 21% of the total zinc produced worldwide in 2009.

     The following table sets forth the regional production pattern of refined zinc from 2006 to 2009:

		Year Ended December 31,
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
		(thousands of tons, except percentages)
Europe			2,436				23.3	%			2,474				22.2	%			2,454				21.3	%			2,068				18.5	%
China			3,163				30.2				3,728				33.4				3,909				34.0				4,246				38.0
India			410				3.9				444				4.0				595				5.2				646				5.8
Rest of Asia(1)			1,907				18.2				1,893				17.0				1,944				16.9				1,784				16.0
North America			1,079				10.3				1,057				9.5				1,018				8.8				888				8.0
Latin America			766				7.3				778				7.0				802				7.0				754				6.7
Australia			461				4.4				501				4.5				506				4.4				514				4.6
Africa			256				2.4				286				2.6				280				2.4				273				2.4
Total			10,475				100.0	%			11,162				100.0	%			11,541				100.0	%			11,173				100.0	%

Source: Brook Hunt Zinc Metal Services Report, March 2010.

     Pricing

     Zinc is traded on the LME. Although prices are determined by LME price movements, producers normally charge a regional premium that is market driven. A surge of large mine start-ups in the period from 1999 to 2000 led to substantial global zinc supply surpluses and a build-up of commercial stocks from 2002 to 2003. As a result, the refined zinc price slumped, reaching a low of $779 per ton in 2002. The most vulnerable mines closed down during this period. However, China’s consumption growth increased rapidly and in 2004, refined zinc consumption surpassed production. With strong consumption growth and rapidly falling commercial stocks, zinc prices appreciated strongly in 2004 and 2005. A fundamentally strong market in 2006, also fueled by speculation as base metals, including zinc, were increasingly traded like financial instruments, saw a market deficit of 659,000 tons and prices reaching a peak of $4,620 per ton in November 2006.

     Zinc prices declined in 2007 and continued to decline during 2008 as the metal market remained in surplus throughout 2008. The LME cash price for zinc in October 2008 averaged $1,301 per ton, an approximate 70% decline in value from its peak reached in 2006. A wave of zinc mine closings and cutbacks (particularly in Australia, Canada, and the United States) began mid-2008 as prices began to fall below operating costs, and a few smelters announced production cutbacks towards the end of the year in order to prevent an accumulation of stocks. Mines in New York and Tennessee closed in 2008 because of low zinc prices.

     In 2009, prices began to increase. In the last quarter of 2009, the average price was $2, 214 per ton. This increase was caused by improved industry performance.

     The following table sets forth the movement in zinc prices from 2000 to 2009:

		Year Ended December 31,
Zinc Prices		2000				2001				2002				2003				2004				2005				2006				2007				2008				2009
		($ per ton, except percentages)
LME Cash Price			1,128				885				778				827				1,047				1,381				3,274				3,240				1,874				1,655
% Change			4.8				(21.5	)			(12.1	)			6.3				26.6				31.9				137.0				(1.0	)			(42.2	)			(11.7	)

Indian Zinc Market

     Background

     The Indian zinc industry has only two producers. The leading producer is our majority-owned subsidiary, HZL, which had a 74% market share by sale volume in India in fiscal 2010, according to the India Lead Zinc Development Association, or ILZDA. HZL has a refining capacity of 669,000 tpa. The other producer is Binani Zinc Limited, or Binani Zinc, which has a refining capacity of 38,000 tpa.

     Consumption Pattern

     Consumption of refined zinc in India reached 512,000 tons in 2009, a increase of 20.8% from the previous year. The principal use of zinc in the Indian market is in the galvanizing sector, which currently accounts for an estimated 70% of total consumption. Galvanization is primarily used for tube, sheet and structural products. The other significant end-user of zinc in India is the alloys sector. This contrasts with western world consumption trends, where galvanizing, although still the most common use of zinc, is relatively less important and increased demand has been seen for die-casting alloys, and reflects the emphasis of the Government of India’s current five-year economic program on infrastructure. With expected infrastructure development such as roads, irrigation, construction, oil and gas and ports, there is expected to be increased demand for steel, thus providing significant opportunities for zinc in India.

Market Outlook

     Global Zinc Outlook

     According to Brook Hunt, the combination of stronger economic growth and restocking will result in zinc consumption growth increasing to an average of 7% per annum in 2011 and 2012. This increase in consumption will compensate for the current downturn and result in global zinc consumption growing at an average rate 2.8 % per annum over the period from 2008 to 2012. For the period from 2012 to 2020, consumption growth is forecast to be at an average of 3.5% per annum. As a result of these growth rates, global zinc consumption is forecast to reach 16.5 million tons in 2020, an increase of 5.1 million tons from 2007.

     Indian Zinc Outlook

     The Indian market outlook is expected to remain positive, with strong growth in key user segments such as sheet galvanizing and zinc alloys for the construction segment. Domestic consumption increased by 20.8% to 512, 000 tons in 2009 and consumption growth for the period from 2009 to 2012 is forecast to average 6.8% per annum.

Aluminum

Global Aluminum Market

     Background

     Aluminum is lightweight in relation to its strength, durability and resistance to corrosion. It can be extruded, rolled, formed and painted for a wide variety of uses. The importance of different sectors in aluminum demand varies significantly between developed and developing nations and this variation has become increasingly important with the emergence of China as the world’s largest consumer of aluminum. In mature economies, transport plays a more important role in aluminum demand than construction, while packaging is typically the third largest application. In comparison, the latest reports for China show construction as the largest aluminum consuming sector mainly due to high investment in infrastructure, followed by transport as the second largest consuming sector and electrical products as the third largest consuming sector.

     Aluminum Consumption

     Brookhunt has forecast global primary aluminum consumption in 2010 to be 38.5 metric tons, 1.3 metric tons higher than their earliest forecast.

     The following table sets forth the regional consumption of primary aluminum from 2006 to 2009:

		Year Ended December 31,2009
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
North America			7,219				20.9	%			6,698				17.6	%			6,049				16.0	%			4705				13.0	%
Western Europe			6,796				19.8				7,160				18.9				6882				18.0	%			5560				16.0	%
China			8,790				25.6				12,300				32.4				12,560				33.0	%			13879				39.0	%
Rest of Asia(1)			6,299				18.3				6,260				16.5				6,275				17.0	%			5411				15.0	%
CEE(2)			1,972				5.7				1,918				5.0				1,967				5.0	%			1638				5.0	%
Latin America			1,364				4.0				1,502				4.0				1681				4.0	%			1513				4.0	%
India			1,080				3.1				1,207				3.2				1312				3.0	%			1439				4.0	%
Oceania			422				1.2				444				1.2				463				1.0	%			443				1.0	%
Africa			466				1.3				492				1.3				641				2.0	%			558				2.0	%
Total			34,408				100.0	%			37,981				100.0	%			37,830				100.0	%			35,146				100.0	%

Source: Brook Hunt Aluminium Metal Service Report, Q1 2010.

     Aluminum Supply

     Brookhunt has forecasted that global aluminum production will grow from 37.0 metric ton in 2009 to 70.1 metric ton in 2025 with a compound annual growth rate of 4.4%. Driven by rising LME aluminum prices, global production growth had increased steadily since April 2009, due primarily to the large increase in Chinese production. LME inventory levels have been at an average of around 4.6 metric ton since mid-2009 and there are indications that inventories are also being accumulated elsewhere. The aluminum held in financial or rent deals are expected to be released gradually through 2010, adding to available inventory and pushing the LME aluminum price lower, which is expected to temporarily discourage production.

     The following table sets forth the actual and estimated regional production of primary aluminum from 2006 to 2009:

		Year Ended December 31,
		2006								2007								2008								2009
Region		Volume				%				Volume				%				Volume				%				Volume				%
China			9,349				27.6	%			12,588				33.0	%			13177				33.0	%			12965				35.0	%
North America			5,333				15.7				5,643				14.8				5781				15.0	%			4759				13.0	%
CEE(2)			4,678				13.8				4,899				12.8				5101				13.0	%			4425				12.0	%
Western Europe			4,174				12.3				4,321				11.3				4625				12.0	%			3728				10.0	%
Latin America			2,493				7.4				2,559				6.7				2660				7.0	%			2507				7.0	%
Oceania			2,274				6.7				2,316				6.1				2297				6.0	%			2211				6.0	%
Rest of Asia(1)			2,626				7.7				2,763				7.2				2944				7.0	%			3257				9.0	%
Africa			1,865				5.5				1,815				4.8				1699				4.0	%			1681				5.0	%
India			1,115				3.3				1,222				3.2				1296				3.0	%			1474				4.0	%
Total			33,907				100.0	%			38,127				100.0	%			39,580				100.0	%			37,007				100.0	%