2010-11 has been a mixed year for Sesa Goa Limited.  There was plenty
 of good news. First, the year saw the global economic crisis becoming a
 thing of the past, with both advanced and emerging economies
 registering positive growth during 2010. This contributed to resurgence
 in steel demand. Second, global iron ore consumption increased
 significantly and demand remained robust throughout the year.  Third,
 steel output in China continued to grow, and with it the demand for
 imported iron ore and price.
 
 These positive market conditions contributed to a 52% increase in Sesa
 Goa’s turnover. With this growth, Sesa Goa today is an enterprise with
 a gross turnover exceeding US$ 2 billion.
 
 There were also some factors that adversely afected our production and
 sales of iron ore. In an effort to curb illegal mining, the Government
 of Karnataka banned export of iron ore mined in the state since end
 July 2010. In addition longer than normal monsoons in Goa and logistics
 constraints in Orissa and Goa further affected ore sales. Despite these
 constraints, your Company managed to nearly maintain production and
 sales volume levels at par with 2009-10.
 
 International developments in 2010-11 has further strengthened our
 conviction of Sesa Goa’s strategic positioning. In the near future,
 there is considerable market potential for a low cost producer like
 Sesa Goa to effciently service the global seaborne iron ore trade.
 There are, however, some external uncertainties on the supply side,
 which are causes for concern.
 
 Sesa Goa is continuously working on reorienting its plans to meet these
 challenges. In addition, in 2010- 11, we have taken some long term
 steps and utilised our strong cash reserves for strategic investments.
 
 The Macroeconomic Environment
 
 It seems clear that the worst is behind us, and global economic
 recovery is on its way. After contracting by 0.5%, world output growth
 is back in positive territory at 5%. Emerging and developing economies
 continue to drive most of this growth.  Renewed growth has revived
 steel demand. Global crude steel output increased by 16.8% in 2010.
 This provided for strong demand pull right across the ferrous metal
 value chain.
 
 China and India are back on their high growth momentum. India grew by
 8.6% in 2010-11, while China recorded a growth of around 10% in 2010.
 There are some causes of concern in terms of overheating, but the
 quarter-on-quarter growth rates still do not indicate that these two 
 countries will see a significant slowdown in the near future.
 
 Nevertheless, there are some worries. One of these is high producer and
 consumer price inflation across emerging markets, especially in India
 and China. In the short term, higher commodity prices augur well for a
 company like Sesa Goa. However, high and rising cost-push inflation can
 cause social problems in emerging economies and hinder long term
 growth. Already, in an attempt to curb inflation, the Reserve Bank of
 India has increased interest rates on seven occasions since April 2010
 - the last one being a hike of 50 basis points. Such high interest
 rates can have a negative impact on investments and future growth. So
 too oil prices, which remain at high levels.
 
 The Business Environment
 
 As stated in earlier annual reports, over the last few years Sesa Goa
 has developed a growth strategy with a focus on serving the increasing
 demand for iron ore, especially in emerging economies, but in most
 responsible manner.
 
 Consider China. With a reduction in steel output in that country in the
 second half of calendar 2010, there were fears of a slowdown in iron
 ore imports. It turned out to be a temporary aberration. China was at
 the cusp of two different growth phases. Projects that were part of the
 earlier fiscal stimulus were being completed; hence, steel demand was
 tapering of. However, from the beginning of calendar 2011, China has
 launched another round of economic growth initiatives, with the focus
 on social housing and infrastructure, especially railways.
 
 We are optimistic that the strategic positioning of Sesa Goa with its
 low cost capabilities, easy accessibility to ports and strong customer
 relations will hold us in good stead to mitigate any downside risks and
 exploit the upside opportunities”.
 
 This has led to major growth in steel output in China in Q1, 2011,
 which has increased both iron ore imports and prices. This phase of
 steel-led’ GDP growth is expected to continue in the near future, with
 high demand from the construction industry. In the long run, however,
 there will be some slowdown in the Chinese steel sector as the country
 matures into being more consumer- driven economy.
 
 We are optimistic that the strategic positioning of Sesa Goa with its
 low cost capabilities, easy accessibility to ports and strong customer
 relations will hold us in good stead to mitigate any downside risks and
 exploit the upside opportunities.
 
 I have touched upon the supply side constraints that we faced as an
 Indian iron ore mining enterprise.  The other major iron ore exporting
 country like Brazil, also faced issues regarding environmental
 clearances and port logistics. Thus, there were global supply side
 constraints in the seaborne iron ore trade. Hence, in an environment of
 fast growing Chinese demand, the prices of iron ore increased in the
 latter half of 2010-11.
 
 Performance
 
 The Company sold 18.1 million tonnes of iron ore (20.4 million tonnes
 on a wet metric tonne or WMT basis) in 2010-11, which was marginally
 lower than the 18.4 million tonnes of iron ore (20.5
 
 million tonnes on a WMT basis) sold in 2009-10. However, external sales
 revenue from iron ore increased by 62% - from Rs. 5,170 crore in
 2009-10 to Rs. 8,387 crore in 2010-11.
 
 This trend was replicated in the pig iron business. Although sales
 volumes decreased by 5%, external sales revenues grew by 22% to Rs. 674
 crore in 2010-11.
 
 Sales and production volumes of metallurgical coke (met coke) were
 almost similar at 252,074 tonnes and 263,269 tonnes respectively in
 2010- 11. External sales revenues increased by 6% to Rs. 152 crore in
 2010-11.
 
 Sesa Goa’s net income from operations grew by 57% to Rs. 9,205 crore in
 2010-11. EBITDA by 65% to Rs. 5,214 crore in 2010-11. PAT increased by
 60% to Rs. 4,222 crore, and diluted earnings per share grew from Rs.
 31.62 in 2009-10 to Rs. 48.17 in 2010-11.
 
 We remain focused on cost control and productivity. These efforts have
 helped to partially offset the higher export duties paid out in
 2010-11.
 
 Healthy accruals during the year contributed further to our strong cash
 position. As of 31st March, 2011, Sesa Goa had cash and cash
 equivalents of Rs. 10,682 crore. We have used this healthy cash reserve
 to make commitments to strategic investments that should generate high
 returns and diversify the Company’s business - to which I now turn.
 
 Strategic Developments
 
 We have made two long term commitments in 2010-11.
 
 The first is a commitment to buy 20% stake in Cairn India Limited (CIL)
 as part of the Vedanta Group’s bid to buy majority stake in that
 entity. The value of the 20% stake is estimated at around US billion.
 This will be a financial investment for Sesa Goa that provides the
 Company an opportunity to earn superior returns in an investment in a
 leading hydrocarbons enterprise, which will benefit from value creation
 as part of the Vedanta Group while providing the protection of
 participating in a controlling interest.
 
 The proposed takeover by the Vedanta Group is presently awaiting
 Government of India approvals.
 
 In a major development post the end of the financial year but prior to
 writing this letter, we acquired 200 million shares amounting to 10.4%
 stake in CIL from Petronas International Corporation Ltd. in a block
 deal at a price of Rs. 331 per share.
 
 The open offer closed on 30th April, 2011. Some 155 million shares
 representing approximately 8.1% of the share capital of Cairn India
 Ltd. have been tendered. The total consideration to be paid for these
 tendered shares is Rs. 5,504 crore (approximately US$ 1,241 million) at
 the offer price of Rs.355 per share.
 
 Thus, post the open offer, Sesa Goa will have 18.5% stake in Cairn
 India Ltd — 8.1% from the shares tendered during the tenure of the
 offer, and another 10.4% from Petronas.
 
 The second is a move to diversify up the ferrous metal value chain.  We
 acquired the assets of the upcoming steel plant unit of Bellary Steel
 and Alloys Limited for an all
 
 cash deal of Rs. 220 crore. Apart from the direct benefits of
 leveraging growing opportunities in the Indian steel sector, this
 acquisition should allow us to add value to the iron ore mined in the
 state of Karnataka.
 
 At this juncture, it gives me great pleasure to inform you that the
 long pending case regarding the amalgamation of Sesa Industries
 Limited, the subsidiary that produces pig iron, and Sesa Goa finally
 received the approval of the Supreme Court. The merger was completed in
 February 2011.
 
 I am also pleased to inform you that we have successfully integrated
 the operations of Sesa Resources Limited (SRL) and the Sesa Mining
 Corporation (SMC) — the erstwhile V S Dempo Limited — with the
 Company’s operations. SRL and SMC continue to perform to expected
 levels. We have also added additional resources in SRL and SMC
 post-acquisition through explorations, thus reinforcing our sustainable
 growth strategy.
 
 Growth and Long Term Value
 
 In last year’s annual report, I had stated our iron ore vision of 50
 million tonnes (mt) production and sales by 2012-13. There has been a
 revision to this. In 2010-11, we did not renew our agreement for third
 party operations at the Thakurani mines in Barbil, Orissa, due to
 unfavourable commercial terms, and terminated our operations in Orissa.
 We continue to maintain our target for increasing ore production in Goa
 and Karnataka to 40 mt.
 
 Exploration activities continue as planned, with 53 mt being added to
 the gross reserves and resources. As on 31st March, 2011, the Company’s
 total reserves and resources were 306 mt.
 
 We have progressed on all the
 
 projects to double our iron ore capacities — and also increasing pig
 iron capacities by 375,000 metric tonnes (MT) . Regarding iron ore, in
 2010-11, although we made satisfactory progress in logistics, mining
 and processing capacities, however we are awaiting certain statutory
 clearances. Expansion of the pig iron capacity is progressing well, for
 completion by Q3, 2011-12.
 
 Sustainability
 
 Sesa Goa remains committed to sustainable development, which focuses on
 maintaining a pre- eminent position in health, safety and environment
 practices, and in contributing to the development of communities where
 it operates. All our locations, are certified for ISO 9001, ISO 14001
 and OHSAS 18001- except for SRL which is yet to be certified for OHSAS
 18001.
 
 Health and safety always remained a priority for Sesa Goa. The Company
 continues to take a proactive role in providing the employees a safe
 working environment through responsibility, training, monitoring and
 implementing the best safety practices across all locations.
 
 In 2010-11, our Lost Time Injury Frequency Rate (LTIFR) reduced from
 1.13 in 2009-10 to 0.86 per million hours worked in 2010-11.  I am also
 happy to report that the Met Coke Division (MCD) achieved zero lost
 time accidents for the last two consecutive years. 2010-11 also saw the
 Pig Iron Division (PID) achieve zero lost time accidents.
 Nevertheless, I must inform with deep regret of a fatality, which
 occurred at a jetty in Goa where a barge sailor lost his life in an
 accident. We have thoroughly investigated the causes, and put in the
 necessary safety measures.
 
 The community development work - through the Sesa Community Development
 Foundation, Mineral
 
 Foundation of Goa and specific need based initiatives - continues to
 focus on social projects in line with our over-all sustainability
 objectives. More details on health, safety, environment and corporate
 social responsibility are given in the chapter on Management Discussion
 and Analysis.
 
 In 2010-11, Rs 2,571 crore was paid by your company in the form of
 various taxes, duties, levies, royalties, etc to Government of India
 and other Government agencies.
 
 Outlook
 
 For the near term, we remain optimistic about the prospects of iron ore
 demand and consequently the price, in the global seaborne trade. In
 line with consensus expectations, we expect global deficit in iron ore
 to continue for the next two years. In the longer term, the market will
 move towards equilibrium at lower prices as new capacities for iron ore
 come on stream.
 
 On the cost front, we expect royalty rates, railway & road freight and
 export duties to exert some pressure, while volumes could
 
 be challenged by uncertainties in policy decisions and hurdles in
 logistics. We remain cautiously optimistic of overcoming such
 obstacles.
 
 Corporate Governance
 
 You would recall that in 2009- 10, Sesa Goa was subjected to
 investigation by the Serious Fraud Investigation Office, Ministry of
 Corporate Affairs, New Delhi. The investigation is still in progess.
 Further update on this issue will be provided in due course.
 
 Acknowledgement
 
 I would like to take this opportunity to thank all our employees,
 employee unions, my colleagues at the executive team of Sesa, the Group
 Management and the Board of Directors for their unwavering support in
 helping us enhance our position as the India’s leading iron ore
 company.
 
 Thanks are also due to government departments & authorities, village
 panchayats, our solicitor & counsels, consultants, suppliers,
 contractors, various, port authorities and all other business
 associates.
 
 We recently announced that our Chairman, Mr SD Kulkarni, has stepped
 down from the Board after serving the Company for 10 years.  On behalf
 of the Board of Directors, I would like to take this opportunity to
 thank, Mr Kulkarni for his substantial contributions, and for guiding
 Sesa Goa to its pioneering position.
 
 The Company has recently appointed Mr Jagdish P Singh and Mr Ashok Kini
 as Directors, subject to the approval of shareholders in the Company’s
 ensuing annual general meeting. I welcome them on board and look
 forward to their support and guidance in taking Sesa Goa to new levels
 of success.
 
 My thanks to our shareholders for reposing faith in our business.  Let
 me say to them, We have the ability. We have the desire. And we have
 the belief that we can and will deliver our targets.”
 
 
 
 P K Mukherjee
 
 Chief Executive Officer / 
 
 Managing Director
 
 5th May, 2011