Annual Report and Accounts 2013 Vedanta Resources plc is a FTSE 100 company. Value-Creating Growth We have delivered production ramp-ups and Our focus continues to be on generating cost control driving a 35% CAGR in EBITDA shareholder returns through prudent capital over nine years since our IPO, and remain allocation, with a focus on low-risk, phased well positioned to capitalise on emerging projects with high returns. market growth. p14-15 p10-11 Operating Sustainably Our sustainability strategy is supported by an We have a broad natural resources portfolio enhanced new sustainability framework which has been rolled out across the Group, and gas and have delivered consistent EBITDA enables us to deliver on the three key pillars margins in excess of 30% since our IPO. of our sustainability strategy: responsible p12-13 stewardship, building strong relationships and adding and sharing value. p16-17 Online Sustainability Report: vedantaresources.com vedantaresources.com/ sustainability CORPORATE STRATEGIC GOVERNANCE FINANCIAL ADDITIONAL REPORT REPORT STATEMENTS INFORMATION overview vedanta at a Glance - p04 Chairman’s Statement Strategic Framework - p22 p06 Growth Long-term Value Sustainability Strategic report Governance report operational review - p50 02 2013 Highlights 04 Vedanta at a Glance 74 Senior Management Team 06 Chairman’s Statement 76 Corporate Governance Report 10 Value-creating Growth 87 Audit Committee Report 91 Nominations Committee Report 93 Sustainability Committee Report Management 95 Directors’ Remuneration Report 16 Operating Sustainably 106 Directors’ Report 18 Market Overview 111 Directors’ Responsibilities 20 Business Model 22 Strategic Framework Financial Statements 112 Independent Auditor’s Report Indicators 113 Consolidated Income Statement 26 Strategy Review Comprehensive Income Uncertainties 115 Consolidated Balance Sheet 40 Financial Review 117 Consolidated Cash Flow Statement 50 Operational Review 50 Zinc-Lead-Silver Changes in Equity 54 Oil & Gas 120 Notes to the Consolidated 58 Iron Ore Financial Statements 62 Copper 184 Independent Auditor’s Report 66 Aluminium Additional information 185 Five Year Summary 01 Vedanta Resources plc Annual Report and Accounts 2013 vedantaresources.com 2013 Highlights Financial Revenue (US$bn) 2013 15.0 2 2012 14.0 3 2011 11.4 2010 7.9 EBITDA (US$bn) 2013 4.9 2012 4.0 2011 3.6 2010 2.3 Strong balance sheet with Cash and Dividend per share (US cents) 2013 58.0 2012 55.0 Financial Review - p40 2011 52.5 2010 45.0 Free Cash Flow (US$bn)1 2013 3.5 2012 2.5 2011 2.3 2010 1.8 Consolidated Group results FY 2012–13 FY 2011–12 Revenue 14,989.8 EBITDA 4,888.3 EBITDA margin 32.6% – 2 44.9% – 2,512.0 157.4 3 363.3 57.7 3 133.1 17.5% – 58.0 02 Vedanta Resources plc Annual Report and Accounts 2013 CORPORATE STRATEGIC GOVERNANCE FINANCIAL ADDITIONAL REPORT REPORT STATEMENTS INFORMATION overview Business Sustainability LTIFR (million man hours) 2013 0.7 over the last 5 years – 2012 1.0 Zinc-lead and integrated silver at 2011 1.1 Zinc India 2010 1.5 – Record oil & gas production driven Rajasthan block Women in workforce (%) Sustainability - p32 2013 8.1 2012 8.2 Recommenced oil & gas exploration 2011 8.5 drilling in Rajasthan and achieved a 2010 8.0 Copper and Iron Ore operations Karnataka iron ore mining 2013 3.7 2012 3.1 continued state-wide restriction 2011 2.7 on mining in Goa 2010 2.7 Court Order awaited Operational Review - p50 consistent margins EBITDA (US$m) EBITDA margin (%) By segment 2013 2013 2012 2012 2011 2011 2010 2010 2009 2009 2008 2008 2007 2007 2006 2006 2005 2005 1,000 2,000 3,000 4,000 5,000 0 1 0 20 30 40 50 60 Zinc Iron Ore Copper Aluminium Power Oil & Gas 03 Vedanta Resources plc Annual Report and Accounts 2013 vedantaresources.com Zinc – Lead – Silver Iron Ore Copper Aluminium vedanta at a Glance Oil & Gas 6 development Captive thermal power plant 15 3 15 4 2 1 5 14 13 20 14 7 13 13 20 1 Debari smelter 12 2 Chanderiya smelters 3 Rampura-Agucha mine Our world-class assets 4 Rajpura Dariba mine & smelters and Sindesar Khurd mine 5 Zawar mine 6 Talwandi Sabo power project 16 16 8 Sesa Goa operations – Goa 17 9 Sesa Goa operations – Karnataka 21 18 10 Tu t i co r i n s m e l t e r 8 11 MALCO power plant producing and supplying 13 Jharsuguda smelters & power plants 9 19 14 Korba smelters & power plants commodities to a 15 Rajasthan block 17 KG-ONN-2003/1 block 18 KG-OSN-2009/3 block 11 10 21 MB-DWN-2009/1 block1 22 SL 2007-01-001 block 10 22 Zinc-Lead-Silver p50 oil & Gas p54 iron ore p58 We are the world’s largest integrated We are India’s largest private sector Zinc-lead producer with operations 1 ranks among the top 20 independent Key Strengths Strong exploration success at India operations – net addition Key Strengths Key Strengths Over 1 billion tonnes iron ore the Rampura Agucha Mine in India deposit at Liberia iron ore The Rajasthan block is the largest onshore discovery in India in 20 years in place and a basin potential to state-wide restrictions on mining in Goa and Khurd lead-zinc mine in India – 26th discovery in the Rajasthan basin achieved recently 1,227kt 205kboepd 3.7mt 13.1moz US$2,440m US$84m EBITDA EBITDA US$1,460m EBITDA 04 Vedanta Resources plc Annual Report and Accounts 2013 CORPORATE STRATEGIC GOVERNANCE FINANCIAL ADDITIONAL REPORT REPORT STATEMENTS INFORMATION overview copper mines & Nchanga 25 24 26 27 23 28 Revenue by Geography 30 29 India China Asia others Middle East Far East others Europe Africa Others Copper p62 Aluminium p66 Power p70 Our Zambia operations have one We are the largest Aluminium independent power producers located large-scale assets including Key Strengths Key Strengths Key Strengths with purchased alumina and bauxite plant in India Operations located in the bauxite mines in the world at Konkola Deeps and coal rich regions in Eastern India custom smelters in the world 569kt 774kt 8,888m kwh US$219m US$214m US$215m EBITDA EBITDA US$257m 05 Vedanta Resources plc Annual Report and Accounts 2013 vedantaresources.com Chairman’s Statement Anil Agarwal “ We have a proven track driven by production ramp-ups and continued growing our reserves and in our mining operations and this year our exploration activities resulted in the achieved exploration success during the Strong position in growth markets Global growth and commodity demand remains volatile and emerging markets Following Government Vedanta is well positioned to capitalise on approval to allow exploration recommenced drilling at our Rajasthan oil & gas operations to realise its basin growth since the Cairn India acquisition and already achieved an early positioned to drive production growth demographics and urbanisation driving placed to meet the growing demand as India’s largest domestic producer performance Zinc-lead and silver at Zinc India and an production driven by higher output at the to control costs and have demonstrated a improvements and maintaining our relatively new asset base at low sustaining 06 Vedanta Resources plc Annual Report and Accounts 2013 CORPORATE STRATEGIC GOVERNANCE FINANCIAL ADDITIONAL REPORT REPORT STATEMENTS INFORMATION overview results Last year we initiated a Group structure 1 balance sheet remains strong with cash and shareholder approvals and various regulatory approvals including the approval organic growth and selective M&A We delivered production ramp-up across robust execution of our strategy Long-term value consistently growing our reserves and production at our Rajasthan operations by operations and this year our exploration Following Government approval to allow gas capex programme on the Rajasthan recommenced drilling at our Rajasthan oil & gas operations to realise its basin potential 1 Excludes custom smelting at Copper and Zinc India 07 Vedanta Resources plc Annual Report and Accounts 2013 vedantaresources.com Chairman’s Statement continued “ We have progressively Last year we acquired iron ore assets close Right: Engineers inspecting 2 in the positive impact we are making across reserves and resources with substantial We have made considerable progress on our are working towards resuming our mining however remains suspended and the Vedanta is India’s largest private sector Sustainability needed to help support a sustainable Following the development and group-wide Further detail will be available in our implemented this across the Group to comprehensive Sustainability Report our risks and preserve our licence 08 Vedanta Resources plc Annual Report and Accounts 2013 CORPORATE STRATEGIC GOVERNANCE FINANCIAL ADDITIONAL REPORT REPORT STATEMENTS INFORMATION overview Vedanta has complied with the Looking forward recommendations outlined in the Middle: Engineer at Rampura and I expect to complete this process during commodity assets despite the volatility in Agucha open cast Zinc-lead to be on generating shareholder returns we are a sustainable business that will Dividends We have progressively increased our Anil Agarwal Chairman 16 May 2013 Governance We have recently inducted two new Independent Non-Executive Directors long serving legal adviser to major listed and the UK corporate governance has extensive experience at India’s