Chairman's Statement

28 July 2010

CHAIRMAN'S STATEMENT

At the Annual General Meeting for shareholders in London today, Anil Agarwal, Chairman will make the following remarks.

I am pleased that your company's commitment to delivery, long term value, people and a sustainable future has resulted in strong growth in a challenging year for our industry. It is a happy augury that today, Prime Minister Cameron is in India with a high level delegation to further boost economic ties between UK and India.

The group has begun the current year positively, building on the strong FY 2010 performance. The projects within our industry-leading organic growth programme are on track, and will deliver a significant increase in production. We announced the acquisition of Anglo American's Zinc assets in May and the successful boiler lightup at our 2,400MW power plant at Jharsuguda in June, both important milestones in our growth journey.

As a world-class company, our success turns around the dedicated efforts of our employees. On behalf of the board I would like to thank our employees, who have contributed to the excellent performance during the year.

2010 Results

Revenues rose by 21% to US$ 7.9 billion and EBITDA rose by 42% to US$2.3 billion during the year. Basic earnings per share increased 187% to US$2.20. We generated US$1.8 billion of free cash flow, representing 79% of the EBITDA. Our balance sheet and liquidity remains strong with cash, including liquid investments, of US$7.2 billion and net debt of $ 0.9 bn at 31 March 2010.

Strategy

We continue to take a disciplined approach to growth, with a focus on shareholder value and a prudent approach to funding and capital structure. Vedanta remains committed to maintaining an investment grade balance sheet throughout the economic cycle.

Our financial strength and performance enabled us to maintain our progressive dividend policy. Despite economic challenges, this year we increased the final dividend by 10 per cent to 27.5 cents a share. Since our IPO in 2003 we have returned about $1 billion to shareholders in the form of dividends and share buy-backs up to 31 March 2010.

Sustainable Development

Vedanta has a long-standing commitment to sustainability, and we believe that businesses will play an increasingly important role in driving sustainable development. An integral part of managing our operations is a commitment to health, safety, the environment and our communities. We believe in engaging and working with local communities towards building a sustainable future and enhancing their quality of life.

Safety has always remained a focus area, and we have well established policies and practices in our operations and projects, and a robust supervisory governance structure. Safety training programmes are regularly conducted at our sites. With a view to further enhancing our safety performance, during the last year, we engaged the services of global safety consultants. As I had shared in my last communication with you, we regret the unfortunate accident at BALCO, where a chimney under construction by the power plant EPC contractor collapsed. We took immediate steps to compensate and support the families that were affected, and have strengthened monitoring and systems at all our project sites to prevent such accidents in the future. Investigations have revealed that this was caused by severe thunderstorms and lightning.

This year, our Lanjigarh Alumina Refinery was awarded the International British Safety Award in May 2010, and the Green Business Leadership Award in June 2010 for excellent performance in the areas of Health, Safety and Environment.

As Vedanta grows, it generates significant employment opportunities. During FY 2010, we added over 22,000 direct and contract employees, over 75% of whom were local.

Lanjigarh Project

We understand the challenges, concerns and opportunities around the Lanjigarh project. I would like to take a little time to explain its important aspects. India has one of the largest bauxite deposits in the world - the estimated proven reserves of Bauxite in India are approximately 2.9 billion tonnes and Orissa alone has over 50% of India's Bauxite Reserves. The proposed Niyamgiri bauxite deposit in Kalahandi district was identified for mining by the Government of Orissa as far back in the late 1970's. Kalahandi is one of the most underdeveloped districts in India, suffering from child malnutrition, high infant mortality rates, and lack of schooling and healthcare.

India has stringent rules and regulations for the approval of mining projects. Multiple processes and procedures are in place to assess the merit of every project. Vedanta's Lanjigarh project has been put through exhaustive scrutiny. Only after receiving all approvals the refinery commenced operations. Not a blade of grass has been touched at the mining site- we will commence mining only after receiving all approvals.

Vedanta moved ahead with construction of the refinery in 2004 only after extensive studies of the impact of the project on the environment, wildlife, and most importantly, the people living in the area, had been conducted. A rigorous process of consultation was followed for the mining and refinery project, involving a series of public hearings, village council meetings. These hearings received wide participation of local people including elected representatives and village elders. The Vedanta Alumina Refinery is the first Alumina Refinery in India to adopt the Zero Discharge System, i.e. no water or effluent is discharged externally from the refinery, and uses modern technology to minimize air and noise pollution. Vedanta designed this project to minimize displacement of the people who lived in the area. In the alumina refinery project, 121 families were relocated after consultation with them, and only after obtaining their consent. These families have been resettled in a modern housing colony that was built by Vedanta, just 1-2 km from their original homes. One person from each family has been provided employment at our plant, or some families have chosen to take one-time compensation in lieu of the job.

The proposed bauxite mine is located just 5 km from the refinery, and the bauxite will be transported to the refinery by an environment-friendly pipe conveyor system, thus minimizing noise and dust, and avoiding road transportation. The proposed bauxite mines are located in an uninhabited area, hence no families will be displaced from the mining area. Further, there is no vegetation on the proposed mining area because of a hard layer of laterite on the surface.

Besides the regular and rigorous approval process, the Bauxite mining project has undergone additional scrutiny in a Public Interest Litigation in the Supreme Court of India.

On receipt of Central Empowerment Committee report submitted on 21 September 2005, the Supreme Court, on the advice of the Ministry of Environment and Forests (MOEF), ordered special studies on various issues. Based on all the facts and rigorous assessment, the Supreme Court approved this Government of Orissa-supported bauxite mining project in August 2008. The MOEF has called for further panel review and this process is still ongoing. As you can see, that this process of government oversight has been on for 8 years and it is clearly an exhaustive process.

India has rich Bauxite deposits and is a natural home for Aluminium production. While India has around 12% of global Bauxite deposits, its share of Aluminium production is less than 2%. We believe that the bauxite mining project will not only help the nation to harness natural mineral deposits for the economic progress of the country, but will also bring needed improvement in the living conditions of the region. We are committed and sensitive to the social and cultural aspects of the region and would do whatever is required to meet the needs of local people. I am thankful to the people of Lanjigarh who have supported us in building and operating the refinery - of the approximately 3,000 people working at the refinery site, over 2,000 people are from Orissa.

As we continue to share information on what we do, of particular interest would be a recently launched microsite on our Lanjigarh project, which is available at http://www.vedantaaluminium.com/lanjigarhproject/. All matters of fact reported therein have been independently verified by a reputed international expert. Additionally, we have recently set up an Advisory Board of eminent persons drawn from different disciplines to visit our project sites and advise us on the gamut of CSR and sustainability issues.

I am pleased that many international NGO's are focused on Kalahandi. I would invite them to join hands with us, and bring their resources to improve the lives of the people in this region.

Outlook

Our markets have improved significantly during the course of the last year. Economic indicators are providing greater confidence of a more stable economic environment than a year ago. We are well placed to benefit given our structurally low cost position, presence in growing economies, industry leading organic growth programme and, of course, with the continued support of our shareholders.

I am confident that FY 2011 will be another successful year.

Anil Agarwal

Chairman

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