The Directors of your Company are pleased to present the 37th Annual
Report, with the statement of the audited accounts for the financial
year ended on March 31, 2012.
FINANCIAL PERFORMANCE SUMMARY
The financial performance of the Company, for the year ended March 31,
2012 is summarized bellow
Rs. in Crore
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Revenue 18,092.06 15,307.14
Earnings before Interest, Tax,
Depreciation 3,191.08 2,343.80
Less: Interest 597.46 317.02
Gross Profit 2,593.62 2,026.78
Less: Depreciation and Amortisation 162.46 152.65
Exceptional items 423.32 -
Profit Before Tax 2,007.84 1,874.13
Taxation 350.36 454.42
Net profit for the year 1,657.48 1,419.71
Add: Balance brought forward from 3,089.48 2,590.98
Amount available for appropriation 4,746.96 4,010.69
General Reserve 400.00 500.00
Interim Dividend 336.12 -
Debenture Redemption Reserve 1.50 (8.50)
Proposed dividend on Equity
shares(incl 350.15 429.71
Dividend distribution tax)
Balance carry forward to next year 3659.19 3,089.48
During the year under review, the Turnover of your Company increased by
18.19% from ? 15,307.14 Crore to ? 18,092.06 Crore. The increase in
turnover by 18.19% was primarily due to the increase in the average
Copper LME prices from US$ 8,138/MT to US$ 8,457 /MT and higher sales
TC / RC (Treatment Charges and Refining Charges) realization in the
financial year 2012 was 14.5 US Cents / lb, as compared to 11.9 US
Cents / lb in the previous year due to improved market conditions and
higher benchmark long term TC/RCs.
The earnings before interest, tax depreciation and amortization for the
same period increased by 36.15% from X 2,343.80 Crore to X 3,191.08
Crore and the Net Profit increased by 16.75% from X 1419.71 Crore to X
1657.48 Crore in the current year.
The year under review witnessed increased production, improved TC/RCs,
copper recovery and sulphuric acid realization. The gains were
partially set off by higher inputs costs and lower product premiums.
Production was higher than the previous year due to planned bi-annual
maintenance shutdown taken in the year 2010-11.
The operational performance was as follows: (MT)
Product 2011-12 2010-11 Variance
Copper Cathodes 3,25,877 3,03,991 21,886
Copper Rods 1,61,421 1,87,892 (26,471)
Sulphuric Acid 10,26,471 9,68,760 57,711
Phosphoric Acid 1,53,243 1,54,232 (989)
During the year under review, your Company maintained its leadership
position in domestic copper with record sales of 1,97,434 MT.
Production of cathodes was 3,25,877 MT in the financial year 2012,
higher by 7% over financial year 2011 mainly due to the planned
bi-annual shutdown taken in FY 2011. Your Company also exported
1,23,084 MT of copper, including exports of 4,906 MT of copper rods.
The Four Lakhs Tonnes Per Annum (4 LTPA) Copper Smelter Expansion
Project at Tuticorin is awaiting regulatory clearance from the State
Pollution Control Board. The Company has already received the
environmental clearance from Ministry of Environment & Forest in 2009.
The construction of the 160 MW (2x 80 MW) Captive Power Plant (CPP) at
Tuticorin is in the final stages of completion. The CPP is now
scheduled for commissioning in end of Ql of FY 2012-13 and second unit
by end of Q2 of FY 2012-13.
TRANSFER TO GENERAL RESERVES
Out of the total profit of? 1,657.48 Crore for the financial year
2011-12, an amount of X 400.00 Crore is proposed to be transferred to
the General Reserve. The above transfer to general reserves is in
compliance to the Companies (Transfer of Profits to Reserves) Rules,
The Board of Directors of your Company at its meeting held on October
24, 2011 approved payment of Interim Dividend @ X 1/- per share (i.e.
100%) on 336,12,07,534 equity shares of Rs. 1/- each. The Record Date
determined for payment of dividend was November 1, 2011 and the
dividend was paid on November 4, 2011. The Board of Directors have
further recommended a final dividend of X 1/- per shares (ie 100%) on
equity share of Rs. 1/- each thereby taking the total dividend for the
year at Rs. 2/- per share. The payment of final dividend is subject to
the approval of the Shareholders at the ensuing Annual General Meeting.
The Company had bid for the Asarco LLC, USA in 2008. After various
rounds of re-negotiations, offers and counter- offers by the Company
and Group Mexico, the Parent Plan of Group Mexico was confirmed in
November 2009 by the US Bankruptcy Court. Asarco terminated the March
2009 agreement and drew US Million provided as deposit by the
Company. Sterlite and Sterlite USA filed an application to the US
Bankruptcy Court for the return of the US Million drawn by Asarco
and legal costs.
Bankruptcy Court heard the matter and vide its order dated February 13,
2012 and February 27, 2012, has held that Asarco is entitled to an
amount of US$ 132.75 Million as incidental damages. This amount shall
be reduced by Million paid to Asarco in December 2009, making
Asarco entitled for a net amount of US$ 82.75 Million. Your Company in
the interim has recognized Rs. 423.32 Crores (being the US$ 82.75
Million) as an exceptional item during the year ended March 31, 2012
while disputing the same. The Court has rejected Company''s application
for refund of Million. Asarco has filed a notice of appeal against
Additionally, Asarco has also filed a motion seeking pre-judgment
interest on the aforesaid damages and for reimbursement of legal fee
and expenses. Bankruptcy Court will hear the matter further. Your
Company has taken appropriate legal action to protect its interests.
CRISIL has upgraded its ratings of your Company''s ratings on debt
programmes and bank facilities to ''AA /Stable'' from ''AA/Stable''. The
rating upgrade reflects the Company''s strong market position in the
non- ferrous metal industry, improving operating efficiencies, healthy
financial risk profile marked by strong liquidity. The rating on
Sterlite''s short- term facilities has been reaffirmed at ''P1 ''. The
treasury portfolio of fixed income investments has been evaluated as
''Very Good'' (highest safety from credit default on CRISIL''s 4 point
scale). Strong credit ratings by Credit Rating agencies reflect the
Company''s financial discipline and prudence.
SCHEME OF MERGER
Between the Company and Sterlite Opportunities & Ventures Limited
The Board of Directors in their meeting held on October 25, 2011 had
approved a Scheme of Arrangement (Merger) between Sterlite
Opportunities & Ventures Limited (SOVL), the Wholly Owned Subsidiary of
the Company and the Company. The Scheme was approved by the Madras High
Court vide order dated March 29, 2012. The appointed date of the merger
was April 01, 2011 and consequent to the merger of SOVL with the
Company, Hindustan Zinc Limited (HZL) has become a direct subsidiary of
the Company. The Company holds 64.9% of HZL''s equity shares.
Scheme of Arrangement between the Company with Sesa Goa Limited
The Board at its meeting held on February 25, 2012 considered and
approved a composite Scheme of Arrangement (Merger) of the Company,
Sterlite Energy Limited (SEL), Vedanta Aluminium Limited (VAL), The
Madras Aluminium Company Limited (MALCO) with Sesa Goa Ltd (SGL).
Under the Scheme of Arrangement, the following steps are proposed to
(i) Vedanta Resources Plc ( Vedanta ) 70.5 per cent shareholding in
Vedanta Aluminium Limited (VAL) will be consolidated into Sesa Goa
Limited ( Sesa Goa ) in consideration 72.3 Million Sesa Goa shares to
be issued to Vedanta;
(ii) Sterlite will be merged into Sesa Goa, which is proposed to be
renamed as Sesa Sterlite Limited, in consideration for the issue to our
shareholders (other than MALCO) of three Sesa Goa shares for every five
existing shares of our company and the issue to holders of our ADSs of
three Sesa Goa ADSs for every five existing ADSs of our company;
(iii) MALCO''s power business will be hived off to Vedanta Aluminium for
cash consideration of ? 150 Crore;
(iv) MALCO will be merged into Sesa Sterlite in consideration for the
issue of 78.7 Million Sesa Sterlite shares to shareholders of MALCO;
(v) Sterlite Energy will be merged into Sesa Sterlite;
(vi) Vedanta Aluminium''s aluminium business will be demerged into Sesa
(vii) Vedanta''s 38.8 per cent shareholding in Cairn India, together
with debt of approximately $ 5.9 Billion incurred by Vedanta to acquire
that interest in Cairn India, will be transferred to Sesa Sterlite for
The Sesa Goa shares are, and the Sesa Sterlite shares will continue to
be, listed on the Bombay Stock Exchange and the National Stock Exchange
in India. In connection with the merger of Sterlite into Sesa Goa to
form Sesa Sterlite, Sesa Sterlite will establish an ADS facility and
its ADSs will be listed on The New York Stock Exchange.
The Boards of Directors of Sterlite, Sesa Goa and Vedanta have approved
the Scheme of Arrangement. The Scheme of Arrangement requires approval
from the shareholders of each of our company, Sesa Goa, MALCO and
The Scheme of Arrangement also requires court approval and hence the
Scheme has been filed with the respective jurisdictional High Courts of
the respective Companies. For their approval and directions for
convening the meetings of each Companys'' shareholders and creditors, as
may be necessary under the applicable laws. The notices of such
meetings together with copies of the Scheme of Arrangement and other
relevant documentation will be provided to the shareholders, in
compliance with the applicable laws and the directions issued by the
CORPORATE GOVERNANCE AND ADDITIONAL INFORMATION TO SHAREHOLDERS
The Company is committed to maintain highest standards of corporate
governance. A separate report on Corporate Governance, pursuant to
Clause 49 of the Listing Agreement with the stock exchange(s),
Auditors'' Certificate on its compliance, including the Management
Discussion and Analysis, and shareholders'' information, forms a part of
this annual report.
MANAGEMENT DISCUSSION AND ANALYSIS
Global Economy Outlook
2011-12 has been a year of mixed fortunes due to the significant change
and volatility in the global economy. The Euro-Zone crisis downgrade of
sovereign credit ratings of various Euro-zone countries, sluggish
growth in many industrialised countries including USA, political unrest
on the African continent and the resulting escalation in crude oil
prices had all dampened the growth euphoria. Despites these challenges
commodity prices generally averaged higher than during FY 2010-2011.
Demand for commodities in 2012 will be supported by improving global
economic growth particularly in Chinese and emerging markets, which are
expected to remain relatively robust. The global developments
constrained the Indian growth story, with India''s GDP expected to grow
by 6.9% during FY 2011-12. India is expected to maintain its robust
economic growth over the long term, due to its domestic market size and
Global Market Overview
Global refined copper production in 2011 was reported as 19.6mt, an
increase of about 3% over the 2010 figure of 19.0mt despite uncertain
macroeconomic conditions in 2011. Global refined consumption exceeded
supply by about 93,000 tonnes. Global mine production growth slowed to
0.6% in 2011, hampered by falling copper grades and labour disputes.
Global copper consumption is estimated to increase by about 4% during
China, with the biggest consumption of copper in the world (with 40%
consumption of total copper produced), remains the preferred
destination for the exports. In the first half of the year, the spot
concentrates market was dominated by the impact of the Japanese tsunami
on smelter production, which drove spot treatment and refining charges
to high levels and resulted in a mid-year benchmark settlement of U
per tonne and 8.5 cents/lb. However, growing rates of mine supply
disruption during the second half tightened the market and generated a
sharp decline in spot treatment and refining charges. 2012 annual
copper concentrate TC/RC settlement were in the range of 15.4 to 16.3
cents/lb against 14.4 cents/lb in 2011.
Similar to the previous year, overall Indian copper consumption grew by
6% in FY 2011-12, constrained by increased imports of finished
electrical machinery. We sold 61% of production in the Indian local
market and the remaining 39% was exported to China and South East Asia.
Growth in the power sector in India, and increased spending on
infrastructure including housing, continued to drive the growth of
copper consumption. Over the medium- to long- term it is expected to
grow at about 7-8% per annum.
A detailed Management Discussion & Analysis Report forming part of this
report as required under Clause 49(IV) (F) of the Listing Agreement
with the Stock Exchanges is provided in a separate section of this
Your Company had 35 subsidiary companies as on March 31, 2012.
The shareholders may refer to the statement under Section 212 of the
Companies Act, 1956 and information on the financial statements of
subsidiaries appended to the above Statement under Section 212 of the
Companies Act, 1956 in this Annual Report for further information on
The Company undertakes that annual accounts of the subsidiary companies
and the related detailed information be made available to shareholders
of the holding and subsidiary companies seeking such information at any
point of time. The annual accounts of the subsidiary companies are also
kept for inspection by any shareholders at the registered office of the
holding company and of the subsidiary companies concerned at the
respective companies'' registered offices. The Company will make
available the Annual Accounts of the subsidiaries and their related
information to any member of the Company who may be interested in
obtaining the same.
Members may write to the Company Secretary at Sterlite Industries
(India) Limited, SIPCOT Industrial Complex, Madurai Bypass Road,
Tuticorin - 628 002 to obtain a copy of the financial statements of the
The consolidated financial statements, in terms of Clause 32 of the
Listing Agreement and in terms of Accounting Standards 21, as
prescribed by Companies (Accounting Standards) Rules, 2006 issued by
Ministry of Corporate Affairs vide notification no. G.S.R. 739 (E)
dated December 07, 2006, also form part of this Annual Report.
Mr. Anil Agarwal and Mr. Berjis Desai retire by rotation at the ensuing
Annual General Meeting and being eligible offer themselves for
re-appointment at the ensuing Annual General Meeting. The brief
profiles of Mr. Anil Agarwal and Mr. Berjis Desai is given in the
chapter on Corporate Governance.
SECRETARIAL AUDIT REPORT
A secretarial audit for the year 2011-12 was carried out by Dr. K. R.
Chandratre, Practicing Company Secretary. The said secretarial audit
unqualified report forms part of this Annual Report.
The secretarial audit report confirms that the Company has complied
with all the applicable provisions of the Companies Act, 1956,
Depositories Act, 1996, Listing Agreements with the Stock Exchanges,
Securities Contracts (Regulation) Act, 1956 and all the regulations of
SEBI as applicable to the Company, including the Securities and
Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 and the Securities and Exchange Board of
India (Prohibition of Insider Trading) Regulations, 1992.
INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956
A. Conservation of Energy, Research & Developments, Technology
Absorption, Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 217(l)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988 are set out as an
annexure to the Directors'' Report.
B. Particulars of Employees
Pursuant to the provisions of Section 217(2 A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of employees are set out as an
annexure to the Directors'' Report. However, as per provisions of
Section 219(l)(b)(iv) of the Companies Act, 1956, the report and the
accounts are being sent to all the shareholders excluding the aforesaid
information. Any shareholder desirous of obtaining such particulars may
write to the Company Secretary at the registered office of the Company.
C. Directors'' Responsibility Statement
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors hereby confirm that:
In the preparation of the annual accounts, applicable accounting
standards have been followed along with proper explanations relating to
Such accounting policies have been selected and they have consistently
applied them and madejudgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit of the
Company for that period;
Proper and sufficient care for maintenance of adequate accounting
records have been taken in accordance with the provisions of this Act,
for safeguarding the assets of the Company, and for preventing and
detecting fraud and other irregularities;
The accounts are prepared on ''going concern'' basis.
The statutory auditors of the Company, M/s. Chaturvedi & Shah,
Chartered Accountants and M/s. Deloitte Haskins & Sells, Chartered
Accountants, hold office until the conclusion of the ensuing Annual
M/s. Chaturvedi & Shah and M/s. Deloitte Haskins & Sells, Chartered
Accountants have confirmed their eligibility and willingness to accept
office of Auditors.
The Audit Committee and the Board of Directors therefore recommend M/s.
Chaturvedi & Shah and M/s. Deloitte Haskins & Sells, Chartered
Accountants as Statutory Auditors of the Company for 2012-13 for the
approval of shareholders.
ADEQUACY OF INTERNAL CONTROLS
The Company, as part of Vedanta Group, has a strong internal control
system in place. The internal control system of the Company is
supported by the Management Assurances Services (MAS) function. Your
Company is having a documented Standard Operating System (SOPs) for
procurement, project/ expansion management, capex, human resources,
sales and marketing, finance, treasury, compliance, Safety, Health and
Environment (SHE) and manufacturing.
An annual audit plan is drawn in consultation with the MAS team as
approved by the Audit Committee. The internal controls system and
mechanism is reviewed periodically to make it robust, so as to meet the
challenges of the business. The Company has a system of carrying out
internal audit, covering monthly physical verification of inventory,
monthly review of accounts and a quarterly review of all business
processes. To enhance internal controls, the internal audit follows
stringent grading mechanism, focusing on the implementation of all
recommendations of internal auditors. The internal auditors make
periodical presentations to the Audit Committee, who review the same
and ensure strict compliance.
Our risk management framework acts as an effective tool in mitigating
the various risks which our business are exposed in the course of their
operations as well as in their strategic action. The risk management
framework ''Turnbull Risk Matrix'' is designed to help the organisation
meet its objectives through alignment of the operating controls to the
mission and vision of the Company. The Company also has a well
documented internal controls systems and disclosure control required
for compliance to the Sarbanes Oxley Act of 2002.
AUDITORS'' QUALIFICATION SYSTEM ON ACCOUNTS
Notes to the accounts, as referred in the auditors report, are
self-explanatory and consistently followed, and therefore do not call
for any further comments and explanations.
DEPOSITORY SYSTEM AND LISTING OF SHARES
Details of the depository system and listing of shares are given in the
section Additional Shareholder Information, which forms a part of the
Corporate Governance Report and is attached with the Annual Accounts.
REGISTRAR AND SHARE TRANSFER AGENT
M/s. Karvy Computershare Private Limited, Hyderabad, is the Registrar
and Share Transfer Agent of the Company. Details of the depository
system and listing of shares are given in the section Additional
Shareholder Information, which forms a part of the Corporate
Governance Report and is attached with the Annual Accounts.
Your Company, as a part of ''Vedanta'' group, believes that people are
the biggest strength in line with its vision to create a world-class
organisation. It focuses on learning and development, to enhance the
knowledge & skill and preparing its people to face the challenges.
During the year, your Company organised various training programmes.
During the year, your Company has rolled out new sustainability
framework including sustainability policies, technical and management
standard across group companies with a focus on ensuring that our
projects are carried out as per highest standard.
Concern for the environment is of vital importance to the Company. The
Company is also deeply committed to sustainable means of conducting its
operations. Towards this end, the Company has undertaken a number of
initiatives and projects. Your Company is committed to minimize the
impact of waste from its operations, using water and energy more
efficiently, recycle and reuse wherever possible.
Community Development and Corporate Social responsibility
All our CSR activities are determined by the concept of ''Changing
Lives'', where we constantly endeavour to improve the quality of life of
the communities where we operate. Our CSR activities are conceived to
bridge gaps in society and help transform communities around our
workplace and enhance the quality life of the people. The Company does
its maximum contribution to uplift the quality of life of women,
children and youth in the communities where we operate.
A detailed sustainability report of your Company is given in a separate
section in this Annual Report.
Your Company maintained healthy, cordial and harmonious industrial
relations at all levels. The enthusiasm and unstinting efforts of the
employee have enabled your Company to remain at the forefront of the
industry. The Directors place on record, their sincere appreciation for
significant contributions made by the employees through their
dedication, hard work and commitment towards the success and growth of
The Directors also acknowledge the support and assistance extended to
us by the Government of India, various State Governments and Government
Departments, Financial Institutions, Bankers, Shareholders and
Investors at large, and look forward to having the same support in our
For and on behalf of the Board of Directors,
Dated: April 25, 2012