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Sterlite Industries (India) Ltd.(Merged) is not traded on BSE in the last 5 days

DIRECTOR'S REPORT

DEAR SHAREHOLDERS,

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

During the year under review, the Turnover of your Company increased by 18.19% from Rs. 15,307.14 Crore to Rs. 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 volume.

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 Rs. 2,343.80 Crore to Rs. 3,191.08 Crore and the Net Profit increased by 16.75% from Rs. 1419.71 Crore to Rs. 1657.48 Crore in the current year.

OPERATIONAL PERFORMANCE

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.

PROJECTS

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 Q1 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 Rs. 1,657.48 Crore for the financial year 2011–12, an amount of Rs. 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, 1975.

DIVIDEND

The Board of Directors of your Company at its meeting held on October 24, 2011 approved payment of Interim Dividend @ Rs. 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 Rs. 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.

ASARCO

The Company had bid for the Asarco LLC, USA in 2008. After various rounds of re–negotiations, offers and counteroffers 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$50 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$50 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 $50 Million paid to Asarco in December 2009, making Asarco entitled for a net amount of US$ 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 $50 Million. Asarco has filed a notice of appeal against this judgment.

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.

CREDIT RATING

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 occur:

(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 Rs. 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; Sterlite Industries (India) Limited Annual Report 2011–12

(vi) Vedanta Aluminium's aluminium business will be demerged into Sesa Sterlite; and

(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 nominal consideration.

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 Vedanta Aluminium.

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 courts.

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 demographic advantage.

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 2012.

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$85 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 Annual Report.

SUBSIDIARY COMPANIES

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 these subsidiaries.

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 subsidiary companies.

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.

DIRECTORS

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(2A) 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 material departures;

Such accounting policies have been selected and they have consistently applied them and made judgments 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.

AUDITORS

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 General Meeting.

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.

HUMAN RESOURCES

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.

SUSTAINABILITY

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.

Environment

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.

ACKNOWLEDGEMENTS

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 Company.

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 endeavours.

For and on behalf of the Board of Directors,

Anil Agarwal

Chairman

Place: Mumbai

Dated: April 25, 2012

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