Simplifying the corporate structure

Mumbai, Sept 9 (ANI/Business Wire India): Sterlite Industries (India) Limited ("Sterlite") announced that its parent company, Vedanta Resources Plc ("Vedanta" or the "Group") today announced a restructuring to simplify the Group corporate structure into three commodity focused verticals: Copper and Zinc-Lead; Aluminium and Energy; and Iron Ore.

Consolidation of minorities and simplification of the Group structure has been a strategic priority and the proposed restructuring is an important step in this strategy. The Group believes that the corporate restructuring will:

-- Simplify the corporate structure;

-- Eliminate conflicts of interest, and

-- Increase efficiency.

The respective Boards of Directors of Vedanta, Sterlite, and The Madras Aluminium Company Limited ("MALCO") have unanimously approved a Scheme of Restructuring (the "Scheme") of the entities and businesses of the Group.

Under the Scheme which will be effective from 1 April 2009, Sterlite will demerge its aluminium and energy businesses to MALCO (to be simultaneously renamed Sterlite Aluminium Limited) and Vedanta will transfer its 79.4 per cent equity interest in Konkola Copper Mines plc ("KCM") to Sterlite. The Scheme will also eliminate cross holdings between businesses arising out of MALCO's holding in Sterlite. The corporate restructuring is expected to be completed by March 2009.

"We are delighted to announce a significant milestone for the group in the streamlining of our corporate structure following a number of years of industry leading growth." said Anil Agarwal, Chairman of Vedanta. "We believe that the resulting structure will bring material improvements to our organization and will improve focus and transparency across our businesses."

Strategic Rationale

The Group has delivered superior returns through both organic growth and acquisitions. The acquisitions of MALCO, BALCO, HZL, CMT and KCM have resulted in a group structure with cross holdings between group companies and overlapping businesses.

The Group believes that the corporate restructuring will secure the following benefits for shareholders:

-- It will simplify the corporate structure into three focused commodity businesses with fewer cross-shareholdings and overlapping businesses. It aligns legal and management structures and increases transparency, further enhancing corporate governance;

-- It will increase efficiency, streamlining decision making and business processes through focused management teams; and,

-- It will eliminate conflicts of interest by providing strategic clarity. Opportunities - either organic growth projects or M and A - will be allocated to the relevant commodity business. Furthermore, it provides each business with the strategic flexibility and scale to pursue their respective growth opportunities.

Consolidation of minorities remains a strategic priority. The buyout of minorities in both BALCO and HZL will remain unaffected by the restructuring.

Share Exchange Ratios

-- MALCO will issue equity shares to the shareholders of Sterlite in the ratio of Seven (7) Equity Shares of Rupees Two each of MALCO for every Four (4) Equity Shares of Rupees Two each held in Sterlite;

-- Sterlite will issue One (1) fully paid up equity share of Rupees Two each in exchange for One (1) Equity Share of US$0.01 each of THL KCM Limited, a wholly owned subsidiary of Vedanta; and

-- Sterlite will issue equity shares to the shareholders of MALCO in the ratio of One (1) Equity Share of Rupees Two each of Sterlite for every Fifty One (51) Equity Shares of Rupees Two each held in MALCO.

To ensure the equitable treatment for all shareholders, the independent valuation has been conducted by Grant Thornton India. JM Financial Consultants Private Limited ("JMFC") provided a fairness opinion on the share swap ratio. This independent exercise ensures fair treatment for all shareholders in a transparent manner.

The Scheme is expected to be completed in March 2009 and is subject to the requisite approvals of the shareholders, creditors, lenders, Indian Stock Exchanges, Indian and Mauritius Courts and such other regulatory authorities.

Three Large Scale, High Growth and Focused Businesses

The restructuring will consolidate and simplify the Group corporate structure into three commodity focused groups: Copper and Zinc-Lead; Aluminium and Energy; and Iron Ore. Each of these businesses has the scale and potential to continue to deliver industry leading organic growth:

- Copper and Zinc-Lead (Sterlite Industries)

-- World's largest integrated zinc-lead producer -- Large scale copper producer; 1.1mtpa post Asarco -- Lowest decile cost zinc producer -- Lowest cost custom copper smelter in the world -- World class resource base: Konkola Deep and Rampura Agucha mines

-- Aluminium and Energy (VAL and Sterlite Aluminium)

-- Top 5 global aluminium producer by 2012 with c2.6mtpa -- Ideally positioned to develop India's abundant bauxite and coal reserves -- Lowest decile production costs -- Benchmark costs and timelines of project development

-- Iron Ore (Sesa Goa) -- Indian's largest private sector iron ore producer-exporter: 2008 production - 12.4mt -- Significant growth in capacity to 25 mtpa by CY2010 -- Long life resources -- Low costs of production. (ANI)