PRESENTED BY:-

NAME ROLL No.

DHARMESH CHANDRA 08
ERUM AFREEN KHAN 24
NISHIL LALAN 26
ROSHAN PARIDA 37
NIRALI SHAH 48

CLASS: - T.Y.B.F.M

SUBJECT: - GLOBAL CAPITAL MARKETS

TOPIC: - VEDANTA BALCO

COLLEGE: - S.K SOMAIYA COLLEGE OF ARTS, SCIENCE &

COMMERCE.

ASSIGNED BY:-
PROFESSOR: - ARVIND IYER
 ACKNOWLEDGMENT
First we thank our faculty for their continuous
support in our course. They are always there to listen and
to give advice. They are responsible for involving us in
doing presentations in the first place. They taught us how
to ask question and express our ideas. They showed us
different ways to approach a research problem and need
to persistent to accomplish our goal.
Special thanks go to our PROF. ARVIND IYER, who
is most responsible for helping us to complete this project
as well as the challenging research that lies behind it.
Without his encouragement and constant guidance, we
could not have finished this project.
Last but not the least, we thank our family, our
parents for giving us life in the first place for educating us
with aspects from both arts & sciences for unconditional
support and encouragement to pursue our interests, even
when the interest went beyond boundaries.
We have something interesting to say, for reminding us
that our research should always be useful and serve good
purposes for all humankind.
 VEDANTA RESOURCES
VEDANTA RESOURCES PLC IS A LONDON-BASED DIVERSIFIED FTSE 100
METALS AND MINING GROUP, WITH EXTENSIVE INTERESTS IN ALUMINIUM,
COPPER, ZINC AND LEAD, IRON ORE AND COMMERCIAL ENERGY. THE
COMPANY CURRENTLY OPERATES IN INDIA, ZAMBIA AND AUSTRALIA. With a
talent pool of over 29,000 employees globally, Vedanta’s focus is clear and
committed. Vedanta was the first Indian company to be listed on the
London Stock Exchange in December 2003. Vedanta’s Indian subsidiary,
Sterlite Industries India Limited (‘Sterlite’) also achieved a successful US
listing on the New York Stock Exchange in June 2007, raising $2.0 billion.

Vedanta’s 2008 revenues were $8.2 billion, demonstrating a five-year

compounded annual growth rate (‘CAGR’) of 53.5% with 2008 EBITDA at
$3.0 billion or five year CAGR of 68.1%. The Group’s 2008 profits after tax
of $2.0 billion grew at 103.2% on a compounded basis over the last five
years. For 2008 our operating costs were $5698.1 million which includes
employee compensation of $344.7 million. Tax holidays and similar
exemptions of $160.6 million were received, while donations of $3.5 million
were made during 2008 (EC1, EC4).

Vedanta’s principal operating companies comprise Hindustan Zinc

Limited (‘HZL’) for its fully integrated zinc and lead operations; Sterlite and
Copper Mines of Tasmania Pty Limited (‘CMT’) for its copper operations in
India/Australia; Konkola Copper Mines plc (‘KCM’) for its fully integrated
Zambian copper operations; and Bharat Aluminium Company (‘BALCO’),
Madras Aluminium Company (‘MALCO’); Vedanta Aluminium Limited (‘VAL’)
for its aluminium and alumina operations; Sterlite Energy Limited (‘SEL’) for
its commercial power generation business and Sesa Goa Limited (‘SESA’),
for its iron ore business.

To take advantage of the growth and development in India’s electricity

sector, Vedanta has entered the commercial power generation business.
The Group is currently implementing a 2,400 MW commercial energy
project at Jharsuguda, Orissa at an estimated cost of $1.9 billion. The power
business will be operated through SEL, a wholly owned subsidiary of
Sterlite.

In the last five years, the Group has grown production capacities
between 3-7 times in each of its primary metals. The Group currently has a
production capacity of 754,000 tonnes in zinc and lead, 650,000 tonnes in
copper, 400,000 tonnes in aluminium and over 12 million tonnes in iron ore.
It has a clear roadmap of becoming a milliontonne per annum producer at
the lowest decile costs in aluminium, copper and zinc as well as becoming a
25 million tonne producer of iron ore within the next 2-3 years. Vedanta has
undertaken several green field and brown field expansion projects to
achieve this.

Vedanta has continually demonstrated its ability to deliver major value

creating projects, offering unparalleled growth at lowest costs and
generating superior financial returns for its shareholders. The capital
expansions completed under the first phase of expansion, entailing an
investment of $2.2 billion, involved highly energy efficient and environment
friendly technologies. These were completed at costs significantly lower
than international benchmarks and in record periods. The next phase of the
expansion pipeline has an investment of over $6.5 billion and is now
underway.

Vedanta develops and manages a diverse portfolio of mining and

metals businesses whilst carrying out its activities in a socially and
environmentally responsible manner. The management of environment,
employees, health and safety and community issues, in respect of its
operations is central to the success of the company’s business.

VED DETAILS
Vedanta Resources plc operates as a diversified metals and mining
company in India, Zambia, and Australia. The company primarily produces
aluminum, copper, zinc, lead, and iron ore. It involves in bauxite mining,
alumina refining, aluminum smelting, smelting and refining of copper, zinc-
lead mining and smelting, and an iron ore mine operations in India. The
company also involves in copper ore mining in Australia; and an integrated
copper production operation in Zambia. In addition, it operates a coal based
independent thermal power plant in Jharsuguda, India. Vedanta Resources
plc was founded in 1976 and is headquartered in London, the United
Kingdom.

Vedanta Resources plc

 Vedanta Resources plc is a diversified metals and mining company
with revenues in excess of US$6 billion. We are proud to be the first Indian
manufacturing company to be listed on the London Stock Exchange.

Our experienced workforce of over 30,000 people is distributed among

our operating locations in India, Zambia and Australia. The principal
members of our consolidated group of companies are as follows:

COPPER BUSINESS
Sterlite Industries (India) Ltd. Sterlite is headquartered in Mumbai.
Sterlite has been a public listed company in India since 1988, and its equity
shares are listed and traded on the NSE and the BSE, and are also listed and
traded on the NYSE in the form of ADSs. Vedanta owns 53.9% of Sterlite and
have management control of the company.

Konkola Copper Mines. We own 79.4% of KCM’s share capital and have
management control of the company. KCM’s other shareholder is ZCCM
Investment Holdings Plc. The Government of Zambia has a controlling stake
in ZCCM Investment Holdings Plc.

Copper Mines of Tasmania Pty Ltd. CMT is headquartered in

Queenstown, Tasmania. Sterlite owns 100.0% of CMT and has management
control of the company.

ZINC BUSINESS
Hindustan Zinc Limited. HZL is headquartered in Udaipur in the State of
Rajasthan. HZL’s equity shares are listed and traded on the NSE and BSE.
Sterlite owns 64.9% of the share capital in HZL and has management
control. Sterlite has a call option to acquire the Government of India’s
remaining ownership interest.

ALUMINIUM BUSINESS
Bharat Aluminium Company Ltd. BALCO is headquartered at Korba in
the State of Chhattisgarh. Sterlite owns 51.0% of the share capital of BALCO
and has management control of the company. The Government of India
owns the remaining 49.0%. Sterlite exercised an option to acquire the
Government of India’s remaining ownership interest in BALCO in March
2004.

Vedanta Aluminium Ltd. Vedanta Aluminium is headquartered in

Lanjigarh, State of Orissa. Vedanta owns 70.5% of the share capital of
Vedanta Aluminium and Sterlite owns the remaining 29.5% share capital of
Vedanta Aluminium.

IRON ORE BUSINESS

Sesa Goa Limited. Sesa Goa is headquartered in Panaji, India, and its
equity shares are listed and traded on the NSE and BSE. We own 57.1% of
Sesa and have management control of the company.

COMMERCIAL POWER GENERATION BUSINESS

Sterlite Energy Limited. Sterlite Energy is headquartered in Mumbai.
Sterlite owns 100.0% of Sterlite Energy and has management control of the
company.

Madras Aluminium Company Ltd. MALCO is headquartered in Mettur,

India. MALCO’s equity shares are listed and traded on the NSE and BSE. We
own 93.9% of MALCO’s share capital and have management control of the
company.
 Bharat Aluminium Company Ltd. (BALCO) has been closely
associated with the Indian aluminium industry, playing a pivotal role in
making aluminium a leading metal with myriad uses ranging from
household and industrial requirements to aerospace applications. BALCO is
part of Vedanta Resources, a London listed metals and mining major with
Aluminium, Copper and Zinc operations in UK, India and Australia.

The Vedanta threat increases

As predicted by website in January Vedanta, the new mining company
launched with such clamour last year on London's Stock Exchange, isn't
letting the grass grow under its feet (or that of many other people). This
week, the company's chief architect, Anil Agarwal of Sterlite Industries,
announced that, Vedanta/Sterlite is to up the capacity of its planned Orissa
alumina refinery by another 40,000 tonnes per year, in the teeth of growing
opposition from local people and human rights activists.

Even while the Indian Supreme Court debates whether or not it was
legal for Sterlite to take over formerly government-owned Hindustan Zinc
five years ago, Agarwal now threatens to bid for the 49% he doesn't yet
own of Balco - the other publicly-owned minerals company which Sterlite
came to control at around the same time.

Meanwhile Vedanta's London-based financial officer announces that

the company intends to increase its holding of Sterlite to 75%, so long as it
can raise new funds.This is despite the fact that Vedanta's share price fell
11% in late January, when US investment bank Morgan Stanley warned that
Vedanta was over-reaching itself.
 Vedanta to consolidate India operations
Vedanta Resources, which was the first primary listing by an Indian
company on the London Stock Exchange (LSE) in December 2003, has
chalked out a strategy to consolidate its position in the Indian metals
industry.

VR's capital programme involves investment of $2 billion in India and

according to Brian Gilbertson, non-executive director and Chairman,
Vedanta Resources, the $ 870 million raised offshore, will be brought back
and invested here. Vedanta will also be appointing one or two non-
executive directors this week.

Essentially, Vedanta has controlling interests in Sterlite, Orissa

Alumina, Malco, Hindustan Zinc and Balco. Vedanta acquired 5 per cent of
Sterlite's equity in January taking its holding to 65.8 per cent. Sterlite also
announced $350 million rights issue in December 2003.

According to Anil Agarwal, CEO and Managing Director, VR, "the

company is positioned to meet metal demand in India. In zinc, through
Vedanta-Hindustan Zinc, we have 62 per cent of the market and are the
only integrated player, in copper, through Sterlite, we have 42 per cent of
the market and are one of two players and in aluminium, through Balco and
Malco, we have 21 per cent of the market and are one of three players.''

In zinc, the company is planning a $320 million expansion from the

current 2.10 lakh tpa [210,000 tonnes per year] four lakh [400,000] tpa zinc
ingots by January 2006. In copper, the company has a 1.80 lakh tpa of
copper anode and cathode and 1.40 lakh tpa copper rods and is expanding
the anode and cathode capacity to three lakh tpa by June at a cost of $80
million.

In aluminium, it has a 135,000 tonne capacity and is adding a 2.50

lakh brownfield aluminium smelter and power plant at the cost of $800
million to be ready by January 2006. The company is also setting up a 1.4
million tpa alumina refinery and a 85-125 MW captive power plant at a cost
of $800 million.
 The company's strategy revolves around optimising the asset base by
de-bottlenecking plants, expanding capacities and driving down unit costs.
Also, the completion of the two major projects for the 2.50 lakh aluminium
smelter at Korba in Orissa and entry into the alumina market through the
1.4 million tpa refinery. Mr. Gilbertson said half of the output would be used
captively and the other could be supplied to consumers.

Third, the company will go in for increasing shareholder value by

using IPO (International Public Offering) proceeds for growth, consolidate
Hindustan Zinc and Balco ownership and offer a medium term exchange
offer for Sterlite shareholders.

The company is also looking at growth opportunities inside and

outside India. Regarding the exchange offer, Mr. Gilbertson said in future,
VR and Sterlite could see a consolidated shareholder base. Regarding
opportunities, Mr. Gilbertson said, "Further privatisations would be in the
frontline. Nalco privatisation is unlikely to happen soon. Orissa is a mineral-
rich state and we could see other opportunities in areas like even Iron ore
mining."

Sterlite may buy govt's 49% stake in Balco

Sterlite Industries is looking at buying Bharat Aluminium Company
from the government. Sterlite, which controls 51 per cent in the aluminium
major, has a call option for the residual 49 per cent stake, which can be
exercised after March 1.

Sterlite chairman Anil Agarwal told Business Standard, "We are

planning to put forth a proposal to the Sterlite board on this issue as we are
inclined to increase our stake in the company. However, no final decision
has yet been taken. At the moment, we are in the process of evaluating
various options."

Sterlite had acquired 51 per cent stake in Balco from the government
in 2001 at a consideration of Rs 551.5 crore (Rs 5.51 billion).The company
had yet not decided on the method of raising funds for picking up the
remaining stake in Balco, Agarwal said.

Sterlite has also lined up expansion plans for Balco. It is planning to

invest around $800 million for the expansion project.The existing one lakh
tonne capacity at Balco's Korba smelter will stand enhanced to 350,000
tonne by March 2006.

Sterlite is also planning to set up a 1.4 million tonne alumina refining

unit in Orissa. "We are looking at using 50 per cent of the alumina produced
at the Orissa refinery for captive purposes. The alumina will be used for the
expanded capacity at Balco's Korba smelter," Agarwal said.

The combined domestic market share of Balco and Madras Aluminium

Company in which Sterlite holds an 80 per cent stake, is almost 21 per cent
of aluminium sales.Vedanta Resources, which holds around 60 per cent in
Sterlite, has recently raised $1 billion at the London Stock Exchange
through an initial public offering.

The proceeds from the IPO will be used to fund Sterlite's expansion
projects in group companies Balco, and Hindustan Zinc.

Vedanta plans to hike Sterlite stake to 75%

Vedanta Resources, the holding company of Sterlite Industries, is
planning to increase its stake in the company to 75 per cent from its current
holding of 65 per cent.

Peter Sydney Smith, CFO, Vedanta, said: "We are looking at bringing
in more funds into Sterlite. We are considering the option of increasing our
stake in Sterlite to the permissible 75 per cent. We may try to bring in the
funds through loans or through external commercial borrowings as well."

Vedanta has recently hiked its stake in Sterlite to 60 per cent from
55.1 per cent by purchasing 4.98 per cent shares from the market. The
acquisition had raised Vedanta's stake in Sterlite to 65.8 per cent owing to
the additional 5 per cent stake that it owns in Sterlite, through its 80 per
cent subsidiary Madras Aluminium Company. Madras Aluminium holds 7 per
cent in Sterlite.

"About 50 per cent of the total proceeds of the Vedanta IPO have
already come in to Sterlite. We are looking at bringing in some more funds
in the near future," Smith added. Vedanta Resources raised $1 billion at the
London Stock Exchange at pounds 3.9 a share.
 Sterlite had also come out with a 3:10 rights issue in December 2003,
which will rake in Rs 1,400 crore. The company had come out with a rights
issue to transfer the funds from Vedanta into Sterlite. Sterlite has slated an
investment of $2 billion for its expansion projects in its group firms Balco
and Hindustan Zinc.

The company will be investing $800 million for the expansion at Balco
to take the installed capacity to 3.5 lakh tonne a year and another $800
million for setting up an alumina refinery in Orissa with 1.4 million tonne

Vedanta plans aluminium plants in Orissa Times of India, February 25

2004.UK- based Vedanta PLC, the holding company of Sterlite Industries,
would invest about $1600 million to set up a 2.5 lakh tonnes per annum
aluminium smelter at Korba and 1.4 mtpa alumina refinary in Orissa. The
group is considering to bid along with other investors for Nalco when the
PSU (Public Service Unit) comes up on the disenvestment block.

" We would invest about $ 800 million each in the Korba and Orrisa
projects as part of our growth strategy for 2-3 years" Vedanta's non-
executive chairman Brian Gilbertson told reporters. The Orissa project,
which includes bauxite mining, and the establishment of of a 1.4 mtpa
alumina refinary and 85-125 mw captive power plant would be
commissioned by March 31, 2007, he said, adding that half of the alumina
production in the project would be utilized internally. The company founded
by Anil Agarwal, would add about 2.5 lakh mta aluminium to the present
smelter capacity of 1.35 mtpa and a power plant and would also spend
$350 million for expansion to touch 4 lakh tonnes zinc ingot capacity.
Gilbertson said that the company was interested in Nalco and would
consider partnering with other players to jointly bid for it.

Vedanta may offer swap to Sterlite

shareholders
Indian investors may soon be able to own shares of Vedanta
Resources Plc, the LSE-listed holding company of the $981-million Sterlite
group.

The mining and metals major is planning a medium-term exchange of

Sterlite shares listed on Indian stock exchanges with that of Vedanta, which
recently collected about $1 billion through a global IPO, Mr Brian Gilbertson,
Chairman of Vedanta Resources, told newspersons here.
 Mr Gilbertson said that the company was working on how its
ownership could be offered to Indian investors. He said they could be given
a choice of holding Vedanta shares in exchange of equity holding in Sterlite
Industries that also owns controlling equity stakes in Hindustan Zinc, Balco
and the 1.4-mtpa alumina project in Orissa. Vedanta shares should be more
valuable because it also owns the other assets of the group such as Malco.

A company official told Business Line that the exchange could be

either through an issue of Indian Depository Receipts or by a simple swap of
Sterlite shares with those of Vedanta. Even though the Government has in-
principle approved issue of IDRs by foreign companies, a regulatory
framework for it is yet to be put in place. Similarly, even though the
Government has allowed Indians to invest in listed foreign companies that
have a listed Indian subsidiary, it is yet to issue clear guidelines for such
investments.

"We would do it as soon as there is regulatory clarity on IDRs or the

international swap," the official said. Meanwhile, Sterlite has just completed
a one-for-one share bonus issue and a three-for-10 rights is underway. The
price of the issue has yet to be announced but Vedanta had earlier said that
it would use funds it raised through the IPO to subscribe to the rights.

Vedanta debuted on the London Stock Exchange in December at a

price of £3.9 per share but currently trades at about £3.6 a share. Even
though the global IPO of the company was oversubscribed five times, it
could manage a price only towards the lower end of the book-building band.
The share has never really recovered from the lows that it touched
immediately after listing.

Mr Gilbertson said the share price was depressed after the Indian
Government slashed duties helping imports to compete with domestic
products. Litigation against the Government's privatisation programme also
affected Vedanta shares. He, however, insisted that overseas investors
were yet bullish on the `India story', especially about the prospects of the
mining and minerals industry.

Vedanta may spin off aluminium project

Vedanta Resources — the mining major owned by London-based
tycoon Anil Agarwal — is likely to demerge a large aluminium project in
Orissa into a separate entity to help the conglomerate get a better
valuation for the aluminium business.

London-listed Vedanta has hired Morgan Stanley, Credit Suisse and JP

Morgan Cazenove to put together a plan that would result — if approved by
shareholders and creditors — in Vedanta Aluminium, the subsidiary which
has operations in Orissa, being listed on NSE and BSE. Bharat Aluminium, or
Balco, another aluminium company in the Vedanta fold, is not part of this
plan, since the government owns 49% of it, said people familiar with the
development. This is the second major corporate restructuring proposal that
Vedanta has planned in two years. It had to go back on the earlier proposal
— a complicated plan which proposed the unbundling of its aluminium, zinc,
copper and mining businesses — due to the liquidity crisis and opposition
from institutional shareholders. Vedanta Resources declined to comment for
this story.

The people familiar with the matter said Vedanta wanted to make its
Indian business — which are currently consolidated under Sterlite Industries
which directly makes copper and holds stakes in companies smelting
aluminium and zinc — easier for investors to understand. If the plan is
approved by shareholders and regulators, Sterlite will end up as primarily a
maker of copper, zinc and lead while the bulk of the aluminium business will
be with the new listed company, Vedanta Aluminium.

Vedanta Aluminium is 70% owned by Vedanta Resources and the rest

is with Sterlite Industries.The details of the listing plan are not available, but
logically there are three ways in which Vedanta Aluminium can be listed.
The company could list through an initial public offer, or IPO, in which new
shares would be issued, or the owners could divest their stake. The third
option is to issue new shares to existing shareholders of Sterlite on a
proportionate basis by valuing the contribution of the aluminium business.
Shareholders, other than the owners, have to own 10% in all listed Indian
companies, and that number will go up to 25% in the new fiscal starting
April 1.

Apart from shareholder approval, the demerger proposal would also

require clearance from a high court, which could take about three
months.The demerger proposal comes at a time when Vedanta Aluminium’s
mining project in Niyamgiri in Orissa has come under regulatory glare for
alleged environmental and human rights transgressions with organisations,
such as the UK-based Amnesty International and Survival, alleging that the
company hasn’t involved the local populace in the project, despite the fact
that the project could displace them.

This narrative — popular among sections of non-governmental

organisations, or NGOs, — has been strongly denied by both Vedanta and
the Orissa government. Both say that the mining project, currently
undertaken jointly by Vedanta and the state government-owned Orissa
Mining Corporation, has not violated any Act.

The demerger proposal for Vedanta Aluminium doesn’t include Bharat

Aluminium, or Balco, as the Indian government owns 49% in it. Sterlite
acquired a 51% stake in Balco through a divestment programme in 2001.
Any consolidation of Balco into the new aluminium business would happen
only if the government sells its stake. Sterlite and the government have so
far not been able to agree on a price.

While Balco makes about 350,000 tonne of aluminium at its smelter in

Korba, Vedanta Aluminium plans to put together an integrated aluminium
operation in Orissa which would consist of a 1.75-million-tonne aluminium
smelter at Jharsuguda, 5-million-tonne alumina refinery that will convert the
bauxite proposed to be mined at Niyamgiri into alumina and a captive
power plant of 1,215 megawatts, as the entire conversion process is done
through electricity.

On completion, Vedanta Aluminium, along with Balco, will catapult the

Vedanta Group into the world’s fourth-largest aluminium player, behind
Rusal of Russia, Alcoa of US and Chalco of China.The valuations for Vedanta
Aluminium, once the Orissa project is complete, could touch $20 billion,
based on the low cost of production, said analysts. Currently, since Vedanta
Aluminium buys alumina — the main raw material for making aluminium —
from outside, its cost of production is $1,400 per tonne, which could fall to
about $1,000 per tonne, once the Niyamgiri mining project takes off.

Globally, the lowest cost of production — at $1,300 per tonne — is that

of China’s Chalco.But it is far from clear if Vedanta will get a mining licence
in Niyamgiri anytime in the near future or ever. On Friday, the
government’s forest advisory committee, or FAC, submitted a lengthy
report on the Vedanta project.

While the project found no major violations of environmental norms, it

said the local tribal population, which is classified as a ‘primitive tribal
group’, were in no position to benefit from the project. Further, the report
calls for the proper implementation of a central Act — called the Forest
Produce Act — in Niyamgiri. The environment ministry is likely to refer this
to the tribal affairs ministry.

We want higher prices for BALCO, HZL

residual stake: Handique
The government will sell its residual stake in metal firms BALCO and
HZL for a much higher price as the strategic sale of equity in these
companies was done in "haste", Mines Minister BK Handique said on
Sunday.

"Disinvestment in Balco and Hindustan Zinc (HZL) was done in haste. I

personally feel it needs to be more priced," he said PTI on the issue of sale
of the government's stake in the erstwhile PSUs. The NDA government had
sold the majority stake in Bharat Aluminimum Company (Balco) in 2001. It
also divested 45 per cent in Hindustan Zinc Ltd in two tranches to strategic
partner Sterlite group. Sterlite acquired additional 20 per cent shares of HZL
from the market by way of open offer, taking its stake in the firm to about
65 per cent.

It is now looking to purchase the remaining stake in the two

entities. The government has not ceded to the proposal of Sterlite and the
matter is before arbitration in the Balco case. In Balco, the government still
has a 49 per cent stake, while in HZL, it has about 29 per cent.

Handique said that internal assessment for pricing of the remaining 49

per cent stake in BALCO is "very difficult" as the company is not listed on
the stock exchange, but it is being done. "Very difficult to say. It is not
listed. It (internal assessment) is being done," Handique said, exuding
confidence that it will get a good price for Balco this time. "We expect to get
a good price," he said.

NRI billionaire Anil Agarwal-led Vedanta Group's Sterlite Industries had

bought a 51 per cent stake in Balco and 64 per cent in Hindustan Zinc for Rs
551 crore and over Rs 750 crore respectively. However, the matter of
buying the residual stake in Balco has been stuck in arbitration for a long
time now. A final hearing is expected by August this year.

Handique said the matter of Hindustan Zinc was a "similar case"

too. The acquisition of the residual equity in the two companies is crucial for
Vedanta's overall corporate restructuring programme and continuing its
thrust on Indian operations, the mining major had last month expressed
hope to buy the government's remaining stake by the end of this fiscal.

"We have already made provisions in the accounts of Hindustan Zinc

and Balco. We believe this year we can have the mandate of minority
buyouts of Hindustan Zinc and Balco," Vedanta Chief Anil Agarwal had
said. Vedanta Resources had a total revenue of USD 7.93 billion in the fiscal
year ended March 31, up 21 per cent from FY'09.

BALCO to have world's largest

aluminium plant

Vedanta Resources plc, a London-based mining and metal major, will

set up a 650,000 tonnes per annum (tpa) smelter plant in its Bharat
Aluminium Company Limited (BALCO) facility located in Korba district of
Chhattisgarh, an official said on Tuesday. The company will sign a
memorandum of understanding (MoU) with the state government on
Wednesday to set up another smelter plant in the BALCO complex in Korba,
about 200 km from Raipur, the official said. On completion of the project,
the production output of BALCO will go up from 135,000 tpa to 1,000,000
tpa. As of now, no company in the world produces 1 million tpa aluminium
from a single location.

In 2001, Vedanta Resources plc took over the management control of

BALCO, formerly owned 100 per cent by the government of India, after the
then National Democratic Alliance (NDA) government divested 51 per cent
equity and management control in favour of the then Sterlite Industries (I)
Limited (now Vedanta Resources).
The company went for a major expansion drive and recently increased
the total aluminium output from 135,000 tpa to 350,000 tpa in the existing
plant. The new smelter plant, to be set up at an estimated cost of Rs 80
billion, is also part of the same drive. (IANS)
 Vedanta, Chidambaram, Chattisgarh
And Maoist
Vedanta is a mining company headquartered in London. Anil Aggarwal
and Naveen Aggarwal are the owners of this company. They have huge
mining interest in several states of the country including in the Chattisgarh
state of India.

Chattisgarh is a mineral rich state that was carved out of Madhya

Pradesh on November 1, 2000. The state has 75 million tones of bauxite
mine at Lanjigarh. In the Dantewada and Bijapur districts of Chattisgarh
there are iron and bauxite deposits worth several crores of rupees. The
Vedanta Company wants to lay their hands on all these precious minerals.

When Chhattisgarh came into being, the Vedanta group owned

company ‘Strelite’ bought a 51 percent stake in state owned BALCO for
about Rs 551 crores and took over the company's management. It was the
first public sector undertaking to be disinvested under the National
Democratic Alliance (NDA) government at the Centre.

The Sterlite group excavates around five lakh tonnes of bauxite every
year from a place called Mainpat in Chhattisgarh annually. Besides, it’s also
excavates 300,000 metric tonnes of bauxite in Kabirdham every year. In
spite of reaping such rich dividends, Sterlite never bothers to pass on even
a few benefits to its workers.

In fact, the list of the irregularities committed by the Sterlite Company

is endless. The Company resorted to deep-hole blasting for excavating
bauxite, and this has a violent impact on the whole area. It created cracks
in the farm land, and farming cannot be done on cracked surfaces. The
blasting has also caused an increase in health problems among the
residents.
 The farmers whose land was taken were promised huge compensation
but were left at the mercy of private contractors. Not only did the farmers
lose their land and their houses, but they were also forced to live in small
camps or rented houses.

In 2003 Sterlite Company cheated the government crores of rupees in

taxes and got caught. The person who took up their legal case was PC
Chidambaram, who is currently the home Minster of India, and a lawyer by
profession. Chidambaram was also a member on the board of directors of
Vedanta Company for a while.

The forests of Chattisgarh which contain these mineral deposits are

also home to lakhs of Adivasi or indigenous people who are variously called
Koli, Munda, etc. Even though sixty three years have lapsed to our country’s
freedom, no government till this date has provided these Adivasis with even
basic amenities like education, roads, ration cards, etc

The condition in the areas where Adivasis reside is so miserable that

hardly many of the people there cross the age of 40 years. In this short
lifespan they have to survive on the forests whatever little the Mother
Nature can offer them.

The Vedanta Company could not start mining for the precious deposits
without driving the hapless Adivasis out of the forests. The government
made some devious plans to force them out and in the beginning, the
Advasis refused to move out but later protested. Government sent in the
armed forces and the Adivasis left their villages and ran into the forests.

The government created a people’s army called ‘Salwa Judum’, which

burnt down villages, beat up children and men and raped women. When
harassment by the government continued, the Adivasis had no option left
but to rally behind the Naxalites and take up an armed struggle.
 Naturally, the government could not tolerate this and that is why it
started sending thousands of CRPFs to wage a war against those Adivasis
who are, incidentally, as much Indian as any Aryans and the Dravidians who
are sitting in the mandarins of power in New Delhi.

The former lawyer of the Vedanta Company and now the honorable
Home minister of this country has recently threatened: “I don’t care how
many men I lose, I will win this war.” He is saying this perhaps because he
wants to finish off the Adivasis so that Vedanta can start mining in those
forests.

Just like they catch the Muslim boys on the suspicion of being Jehadis
in any communally sensitive part of the country, the Chattisgarh
government has imprisoned many tribal boys of young age because it
thinks they are a threat to the security of this country.

This is the way the national security is being handled in this country.
It is with this mindset the power wielders of this nation want to deal with the
problem of social unrest, hunger, deprivation and marginalization.

Now, a few words about the Maoists who are revolutionaries mainly
consisting of the extremely poor people including a large number of Dalits
and Adivasis. They come mainly from the toiling masses and they are trying
to organize the vast population of such masses against those who try to
impinge on their right to life and liberty. They seek to arm and train them so
that these masses can resist the onslaught of the rich and powerful who are
intruding into their land.

In this effort the Maoist go beyond the idea that mass movements
should focus on some specific issues like increase of wages, better health
care, more honesty of public servants and so forth. The view of the rebels is
that the poor and exploited people must first and foremost establish their
own democratic political power and their own state power in various places.

This is because without controlling state power, the poor and the
exploited can at most hope for only limited improvements in their living
conditions. So, the Maoists mobilize the poor to fight against the existing
state, even armed fight if possible, as they consider the existing state to be
a set of agents acting for the big multinational corporations, rich landlords
and the wealthy in general.

The fight is an extremely challenging and unequal one. The rich are
aided by the government bureaucrats, the police and even the military, the
half clad hungry belly people are armed with revolutionary zest and some
country made weapon.

Also, contrary to what the Government and the mainstream media are
propagating, the Maoist rebels are actually completely opposed to
individual killings; they openly denigrate such stray terrorism-like acts.
Their fight is against the flawed state apparatus and they want to change
this decrypt structure that’s cloaked under democracy and being drummed
up by the state sponsored mass media as the best system of governance.

What the Maoist has been attempting to build up is a mass

movement, even armed, to take on the violence of the ruling classes and its
representative state machinery. What the government is trying to do is to
slap them into sanity. This ding- dong battle is going on for the past sixty
three years or so in the country and if at all anyone who has gained ground
in this tussle are the Maoist.

The government policy granting mining rights to the bourgeoisies

have created havoc on the minds of the indigenous people. Their resistance
against such oppression is being construed as rebellion and they are being
treated on par with the terrorists.

It’s unfortunate, that one hand India is extolled for being the largest
democracy, on the other hand no one no one is talking about the injustice
that’s committed by the democratically elected government of this land.

The government which is responsible for creating the Maoists

problems is bent on using its strong arm tactics to tackle the problem as if
unaware of the fact that one can lord over with the bayonet of the gun but
can’t sit on it.

Stake in Balco, Hindustan Zinc

The government now holds 49% stake in Balco and 29.5% in HZL. The
balance of HZL’s equity is held by the public. Metal and mining major
Vedanta Resources hopes to buy out the government’s minority equity in its
group firms Balco and Hindustan Zinc (HZL) in the next three to four
months, a top company official said.
The government now holds 49% stake in Balco and 29.5% in HZL. The
balance of HZL’s equity is held by the public.“As far as our call options are
concerned, in case of Balco we are currently in arbitration, a couple of
arbitration meetings have taken place, and hopefully we believe that based
on the arbitration proceedings, we should see a successful closure of this in
the next three to four months,” Vedanta Resources vice-chairman Naveen
Agarwal said.
Speaking at an analysts call conference after the announcement of
the first quarter results of Vedanta’s flag- ship firm Sterlite Industries,
Agarwal said he hoped the company would be able to also acquire the
minority stake of the government in Hindustan Zinc by the end of this year.
“We continue to be engaged with the government on this matter and
we believe that in view of the current environment on disinvestment, (the
company) should see the closure during the current year,” he added. During
the tenure of NDA government, the NRI billionaire Anil Agarwal-led firm had
bought 51% stake in Bharat Aluminium Company (Balco) for Rs551 crore
and 64% in Hindustan Zinc (HZL) for over Rs750 crore.
Sterlite Industries was slated to exercise its call option to acquire the
residual stake in Balco in 2004. The controller and auditor general valued
the residual stake much higher and the then attorney general even termed
the mining firm’s call option as illegal. The issue of residual equity in Balco
had created a rift between Vedanta and the government, and the matter
reached the Delhi High Court in 2006. Call Option is an agreement that
gives the buyer a right to buy some part of an asset at a specified price at a
specified time frame.
The acquisition of the residual equity in the two companies is crucial
for Vedanta’s overall corporate restructuring programme into a commodity-
focused vertical, which it is hoping to complete in the current fiscal, its
chairman Anil Agarwal had earlier said. Vedanta Resources has earmarked a
sum of Rs7,000-8,000 crore to buy out the residual stakes in both the firms.

Govt rejects Balco expansion plans

The environment and forests ministry has rejected a fourfold
expansion of bauxite mining capacity in Chhattisgarh sought by Bharat
Aluminium Co. Ltd, or Balco, severely castigating the firm for what it
describes as a “deplorably callous and casual attitude” in addressing
concerns the ministry had raised earlier.

Balco, which is 51% owned by Sterlite Industries (India) Ltd and is the
third largest aluminium producer in India, says it will reapply. Sterlite
Industries is a wholly owned subsidiary of London-based Vedanta Resources
Plc.

Anil Agarwal, chairman of Vedanta Resources Plc . Sterlite Industries,

which owns 51% of Balco, is the wholly-owned subsidiary of Vedanta. The
rejection, which took place following a 12 October meeting at the ministry,
is only now coming to light.

“We were quite taken aback at the committee’s stern words as well,
but our person in the presentation was not able to convince the committee.
We shall go back in a month’s time and we are hopeful that we will get
clearance,” maintained Pramod Suri, chief executive officer of Balco.

Mining leases in India have to be cleared by the environment ministry

on the basis of an environmental impact assessment, or EIA, which studies
and determines the environmental and social impact of such a project.

Balco had filed applications to expand its mining capacity in Sarguja,

from 0.45 million tonnes per annum, or mtpa, to 0.75 mtpa, and in
Kabirdham, from 0.3 mtpa to 1.25 mtpa.

The expert appraisal committee, the internal panel in the ministry that
decides on an EIA, in its 12 October report, the minutes of which have been
reviewed by Mint, said: “The project proponent (Balco) has been in an
unusual hurry in responding to the issues raised by the Expert Appraisal
Committee in its meeting dated 18.7.2007 and, in the process, it has shown
a deplorably callous and casual attitude in its replies, which are either
incomplete or inappropriate and, on few vital issues, the replies have been
in the form of assurances to give the details on an uncertain future date.”

Balco, which ceased to be a public sector undertaking in 2001, has

expanded its aluminium production capacity from 0.13mt to 0.36mt. Balco
has ambitious expansion plans in the pipeline, with a new 0.65mt smelter
estimated at $2 billion and a 1,200MW power plant in Chhattisgarh.

Expansion of its mining capacities in Chhattisgarh would significantly

boost Balco’s ability to source more quantities of bauxite domestically. In its
rejection of Balco’s Kabirdham proposal, the appraisal committee said: “The
status of compliance to the specific conditions to environmental clearance
was accorded in 2003 is far from satisfactory.”

The committee noted that Balco had not shown any “inclination” to
think of a scheme to provide gainful economic activities on a sustained
basis for these families that the company knew—well in advance—would
have to be shifted when the proposed mining activities commence.

In a telephone conversation with Mint, Balco’s Suri said: “Flora, fauna,

tribes or whosoever is there, we shall take care. We are committed to that.”
Suri insisted that the ministry’s rejection of its mining plans will not impact
Balco’s ability to get adequate raw materials.

Balco obtains a little less than one-third of the raw material, alumina,
from its Lanjigarh refinery in Orissa and the rest, some 0.5mt, are imported
by the company.Though he agreed that there are risks, especially of rising
prices, associated with the dependence on imports, Suri says the price of
alumina depends on the negotiated long-term contracts.

A senior ministry official, who did not wish to be identified, explained

that the ministry approves expansion plans only after it has reviewed a
company’s compliance with social and environmental obligations that it had
already undertaken.

“In case the company has not been abiding by the previous
regulations, expansion proposal should be rejected,” said the senior
ministry official, explaining why Balco’s plans were rejected.“There are key
issues surrounding mining approvals, and it’s a significant risk factor,
especially because there are only a few aluminium producers in India,” said
Naveen Vohra, an analyst with Ernst and Young. He wasn’t talking
specifically about the Balco case.
 “If you compare India to other countries, such as Australia, on
environmental benchmarks, India’s performance is abysmal,” Vohra said.
“Ensuring environmental compliance is costly and the process needs to be
transparent, which lacks in India and given the increasing importance of the
environment, there are bound to be rejections.”

Balco’s Suri put it somewhat differently. “Definitely the way we have

to go through the clearances in India is long drawn and tedious,” he
complained. “There is no single window clearance. We hope it will improve
with liberalization, so that so much time is not wasted. First, we have to get
environmental clearances from state and then the Centre, then land
acquisition and then rehabilitation. We have one-fifth of the world’s best
bauxite reserves but produce only 3% of world’s aluminium.”Another
Vedanta affiliate also ran into unrelated legal and environmental issues in
2007.

Central Electricity Authority to seek

report from Balco
Balco’s CEO blames heavy rains, lightning for the chimney collapse at
its project in Korba; says details will be known after inquiry. The Central
Electricity Authority (CEA) will ask Vedanta Resources Plc-controlled Bharat
Aluminium Co. Ltd (Balco) to submit a report on the chimney collapse at its
project in Korba, Chhattisgarh.

The accident on Wednesday has so far claimed 18 lives, according to a

Balco statement.Chinese power generation equipment maker Shandong
Electric Power Construction Corp. (Sepco) was awarded the engineering,
procurement and construction contract for the 1,200MW power project.
Sepco had, in turn, outsourced the chimney construction work to New Delhi-
based Gannon Dunkerley and Co. Ltd.

“This is a private sector project and we will ask for a report from
Balco,” said Rakesh Nath, chairman, CEA, India’s apex power sector
planning body. Balco’s chief executive Gunjan Gupta blamed heavy rains
and lightning at Korba but said in the statement that the specific reasons
for this incident would be known only after an inquiry.

It was unclear if any of those missing were still alive after the
Wednesday accident. Rescuers are using cranes and saws to clear the
mound of rubble consisting of big chunks of concrete slabs and twisted
steel, said Vishwa Ranjan, director general of police in Chhattisgarh.
 The CEA decision on Thursday follows a judicial inquiry ordered by
Chhattisgarh chief minister Raman Singh, who has also asked for filing a
first information report with the police against the Balco management.
Questions emailed to billionaire Anil Agarwal’s Vedanta Resources, Sepco
and Gannon Dunkerley on Thursday remained unanswered.

Questions have been already asked about Chinese power generation

equipment manufacturers in India. Mint reported on 16 October about a CEA
audit of Chinese equipment, raising questions about the operation and
maintenance of such equipment, the lack of a quality plan and the
insufficient number of Chinese engineers at site locations.

Several Indian power project developers have placed orders with

Chinese firms such as Dongfang Electric Corp. Ltd, Shanghai Electric Power
Co. Ltd and Harbin Power Equipment Co. Ltd, on account of the inability of
local manufacturers to meet growing demand for equipment in India.

The CEA survey was conducted at the behest of state-owned Bharat

Heavy Electricals Ltd, which competes with Chinese firms.Some power
plants that have used Chinese equipment have run into trouble. For
instance, a turbine supplied by Dongfang Electric for the West Bengal
Power Development Corp. Ltd’s 300MW Sagardighi project failed.

However, analysts don’t agree with these concerns. “I do not see this
development as a threat to Chinese equipment manufacturers. We rather
need the Chinese till we ramp up domestic manufacturing capacities,” said
Madanagopal R., an equity research analyst at Mumbai-based Centrum
Broking Pvt. Ltd.

Moody’s reviews Vedanta’s ratings for

possible downgrade
The review follows the company’s announcement that it would more
than double its aluminium capacity with an overall cost of $9.8 billion.
Moody’s Investors Service has placed the Baa3 corporate family rating and
the Ba1 long-term senior unsecured rating of Vedanta Resources plc
(Vedanta) on review for possible downgrade.

The review follows the company’s announcement that it would more

than double its aluminium capacity with an overall cost of $9.8 billion. “The
rating action reflects Moody’s concern that such capital investment would
weaken Vedanta within its ratings depending on the additional debt to be
raised, combined with material project execution risks” says Ivan Palacios, a
Moody’s AVP/Analyst.
 The rating agency also notes Vedanta’s additional capital requirement
in relation to the recently-announced acquisition of Asarco, the planned
buy-out of minority stakes in Hindustan Zinc Ltd and Balco, and the
construction of substantial power generation capacity.Accordingly, total
capital investment requirement over the next 4 years is pegged at around
$18 billion.

Restructuring plans

Vedanta also announced a plan to simplify its corporate structure

which will see the company increase its direct shareholding in Sterlite
Industries Ltd from 57% to 73%.Moody’s sees the simplification of the
corporate structure as a positive step, albeit it remains relatively complex,
as Vedanta will not fully own all of its operating subsidiaries.

Vedanta set for ‘smart entry' into

petroleum sector
Going by its track record of acquisitions in India, Vedanta Resources
Plc could possibly acquire majority stake in Cairn India. If Vedanta does go
for a majority acquisition, analysts feel it may trigger an open offer.

Terming the latest move as a ‘smart entry' into oil and gas sector, Mr
Gokul Chaudhri of BMR & Associates said Vedanta has built its business
through brownfield acquisitions. Besides, the metal and mining giant
understands the commodities market well.

This acquisition would mark Vedanta's global entry into the oil and gas
upstream business. Vedanta, which already has an exposure to
commodities such as iron ore, aluminium, zinc, lead and copper, will now
add two major commodities — crude oil and gas — to its portfolio. The
company has a cash balance of about $7.5 billion, according to Vedanta
spokesperson.

“Vedanta is known for its fund raising capabilities and managing

mineral resources,” Mr Chaudhri said. Vedanta has a history of acquiring
controlling stakes in all its acquisitions till date. In 2007, it had acquired a
51 per cent stake in iron ore company Sesa Goa Ltd from Mitsui & Co for
$981 million. Earlier in 2002, Vedanta had bought a 64 per cent stake in
Hindustan Zinc and in 2001, it had acquired 51 per cent stake in
Balco.

Vedanta to enter steel sector with 5 mt plant

 Non-ferrous metals giant Vedanta Resources is planning to enter the
Indian steel sector with a 5 million tonne plant near Palaspanga in the
Keonjhar district of Orissa.

Vedanta, which is the holding company of Sterlite Industries, has

proposed to form a company, Sterlite Iron & Steel Company for the project,
which is estimated to cost Rs 12,500 crore (Rs 125 billion). Apart from the
steel plant, the project will involve developing iron ore mines. Sterlite Iron &
Steel will be a joint venture between the Vedanta group and Volcan
Investments, Vedanta's holding company. The project is estimated to
generate 8,000 jobs.

If the plant comes up, Vedanta will become the third-largest steel
player in the country after the Steel Authority of India Ltd and Tata Steel.
The chairman of Sterlite group, Anil Agrawal on Tuesday met Orissa Chief
Minister Naveen Patnaik and discussed about the project. Many senior
government officials were present in the meeting.

Sources said, the project will be fully integrated and the final output
will range from hot rolled and cold rolled coils to long products. The company
has entrusted M N Dastur & Co to prepare the feasibility study of the project.

"Iron ore mining was on the company's long term plans and given the
current scenario in the steel industry, this seems to be a right time to get
into the sector," group sources said.

Meanwhile, the chief minister has assured the company top brass that
the government is committed to provide necessary support to accelerate
development of the project, including support in securing iron ore and coal.
For five million tonne capacity, the company will require about 500 million
tonne of iron ore reserve for which it is expected to apply for the necessary
mining lease later.

The chief minister, during the discussion, underscored the need for
proper environmental protection and compensation to the families going to
be affected by the project. It may be noted that Sterlite is currently engaged
in setting up of a one million tonne alumina refinery at Lanjigarh in Orissa at
an estimated cost of Rs 4,000 crore (Rs 40 billion). The alumina refinery is a
backward integration venture to support the expansion of smelting capacity
of Balco at Korba. The Vedanta group has interests in aluminium, copper and
zinc.