Interim Results

13 November 2014

Vedanta Resources Plc

Interim Results for the Six Months ended 30 September 2014

Financial Highlights

n Revenue of US$6.5 billion, up 6% from H1 FY 2014

n EBITDA(1) of US$2.1 billion, marginally lower than H1 FY 2014

n Adjusted EBITDA margin remains robust at 43%(2) (H1 FY 2014 : 45%)

n Basic Earnings Per Share (EPS) of (4.7) cents, underlying Earnings Per Share(3) of 9.4 US cents down primarily due to normalised tax rates

n Free cash flow before growth capex of US$1.2 billion, up 15%; free cash after growth capex of US$0.4 billion

n Net debt up by US$1.1 billion (compared to 31 March 2014) to US$9.0 billion ; US$0.8 billion spent on increasing our stake in subsidiaries, Sesa Sterlite and Cairn India

n Interim dividend of 23 US cents per share, up 4.5%

Business Overview

Operations

n Production proceeding as planned at Zinc-India and Oil & Gas; strong outlook for H2

- Zinc-India: mined metal improving as planned

- Oil & Gas: Rajasthan production normalised after planned maintenance shutdown in H1

n Strong operating performance in Aluminium, with commissioning of new potlines in progress

n Continued commitment to delivering an operational turnaround at Copper-Zambia

Projects

n Mangala Enhanced Oil Recovery Project: first polymer injection in October 2014 and gas development projects on track

n Gamsberg-Skorpion integrated zinc project: 250ktpa mine and 150ktpa refinery conversion approved by the Board. Gamsberg is one of the world's largest undeveloped zinc deposits.

Mr Anil Agarwal, Chairman of Vedanta Resources Plc, said: "EBITDA of US$2.1 billion and robust adjusted EBITDA margins maintained reflects the diversified and balanced portfolio of the Group. Recently, Vedanta celebrated 10 years of being listed on the London Stock Exchange. Over this decade, we have built a strong portfolio of high quality, low cost assets, enabling us to increase production ten-fold and generate significant value for our shareholders. We have also maintained our progressive dividend policy throughout. Our success over this time is also a testament to India, our home base, where we have always seen great potential. We are confident that with the new Government focused on economic growth, Vedanta, with its strong presence and long term commitment to India, is well-placed to contribute to the country's economic progress. I am confident that our diversified business model, experienced management team and dedicated employees will help ensure Vedanta continues to deliver decades of value for shareholders."

 (in $ millions, except as stated)

1 Earnings before interest, taxation, depreciation, amortisation/impairment and special items.

2 Adjusted EBITDA excludes custom smelting at Copper and Zinc-India operations.

3 Based on profit for the period after adding back special items and other gains and losses, and their resultant tax and non-controlling interest effects (refer to note 7 of Condensed financial statements). In the prior period, the underlying attributable profit included the net tax benefit from the Sesa Sterlite merger offset by a deferred tax charge due to the change in tax rates at Cairn India.

There will be a conference call at 9:00 a.m. UK time (2:30 p.m. India time), where senior management will discuss the results.

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About Vedanta Resources

Vedanta Resources Plc ("Vedanta") is a London-listed diversified global resources company. The group produces aluminium, copper, zinc, lead, silver, iron ore, oil & gas and commercial energy. Vedanta has operations in India, Zambia, Namibia, South Africa, Ireland, Liberia, Australia and Sri Lanka. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness and growth. For more information, please visit www.vedantaresources.com.

Disclaimer

This press release contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "should" or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

CHAIRMAN'S STATEMENT

In September, we celebrated Vedanta's 10-year anniversary of listing on the London Stock Exchange, a decade marked by very significant growth and value creation. As evidenced in today's announcement, I am pleased to say that the Group is delivering a robust performance in a challenging environment.

It is an exciting time for the group as India, the largest democracy in the world, adapts to economic change. The new Government is looking favourably at enhancing growth; attracting foreign investment to the country, creating jobs, and investing in infrastructure, with a vision to make India a manufacturing hub and to deliver overall economic development.

Vedanta is a global diversified natural resources company, rooted in India; a richly-endowed country which has enormous potential through significant untapped natural resources. The new Government is keen to develop these resources, and to leverage India's significant potential with a policy framework that will attract international investment.

The operational highlights of the first half of this financial year are marked, in particular by a recently improving production rate at the Zinc-India, Copper-India and Oil & Gas businesses during Q2. We also enjoyed strong performance from our Aluminium business, where the commissioning of new pot lines is in progress. At our Iron ore business in Goa, we are working towards restarting operations, given the recent policy announcements and expect to be mining by the last quarter of the current financial year. The value added Pig Iron business and Phosphoric Acid business have also contributed well to the first half performance.

We are facing challenges at our Copper-Zambia business; we remain committed to delivering an operational turnaround and we continue to engage with various stakeholders, including the Government of Zambia, to improve productivity, volumes and profitability. While costs have been higher in some businesses, we continue to focus on cost control and efficiency improvements across all business lines.

The success of our strategy and benefits of a diversified model with focus on natural resources are reflected in the robust adjusted EBITDA margin (excluding custom smelting) of 43% in H1, only marginally lower on last year despite industry-wide commodity price volatility this year. Free cash flow generation remains strong, thanks to a well-invested asset base, with pre-growth capex levels of $1.2 billion over the period, equating to 57% of EBITDA.

We are focused on allocating capital in a disciplined manner, and have been prioritising investments in Zinc and Oil & Gas, where we have high quality assets, and generate some of the highest returns in our portfolio. The Board has approved the Gamsberg-Skorpion integrated zinc project, where we plan to invest c. $0.8 billion over three years, to develop the Gamsberg mine with a capacity of 250 ktpa, and convert the Skorpion refinery to handle 150 ktpa of ore from Gamsberg. Gamsberg is one of the world's largest undeveloped zinc deposits, and zinc has attractive fundamentals as several large global mines reach the end of their lives.

Our strategic priorities as articulated in the annual report remain unchanged, including the simplification and consolidation of the Vedanta Group structure; accordingly, we have acquired a 4.2% stake in Sesa Sterlite, and Cairn India completed its share repurchase exercise with approximately 2% of its issued share capital. We continue to work towards the minority buyouts of HZL and BALCO, for which the Government is currently conducting its own valuation exercise.

Sustainability and safety are fundamental to Vedanta's operations. We have consistently reduced our lost-time injury frequency rate, and we continue to work towards eliminating fatalities. We are committed to building strong relationships with our local stakeholders in order to directly and indirectly develop the local economy and communities in which we operate. We have more than 250 partnerships with NGOs, local governments, academic institutions and private hospitals, and our community programmes have benefitted over 4.1 million people in the past financial year.

We have maintained a progressive dividend policy since Vedanta's listing on the London Stock Exchange in 2003. This year the Board has recommended an interim dividend of 23 US cents per share, an increase of 4.5%. Last month, I announced my intention to donate 75% of my wealth to benefit society through various philanthropic causes. Based on my personal current ownership of Vedanta, this translates into over 50% of Vedanta's dividends being directed towards charities in both Africa and India.

On behalf of the Board, I would like to extend our thanks to the Group's employees for their contribution to this set of results. Their commitment and efforts, combined with the strength of our management team, continue to drive our performance and to make Vedanta the company it is today.

I am delighted with Vedanta's achievements in its first decade since listing, and look to the Group's future with great excitement. Vedanta has the people, infrastructure and leadership which we believe will generate strong returns for our shareholders.

Anil Agarwal

Chairman

12 November 2014

.

Interim Results for the Half Year Ended 30 September 2014

Consolidated Group

(In US$ million unless otherwise stated)

1 Earnings before interest, taxation, depreciation, amortisation/impairment and special items

2 Excludes custom smelting at Copper and Zinc - India operations

3 After adding back special items and other gains and losses and their resultant tax and non-controlling interest effects.

4 Refer to calculation given on page no. 18.

Highlights:

n Revenue increased by 6% to US$6.5 billion, reflecting higher zinc and aluminium LME premia and higher volume at the Copper India custom smelting business. The increase was partially offset by lower volumes at Zinc India, lower Brent prices, a higher share of profit petroleum payable to the Government and a planned maintenance shutdown at Cairn India.

n EBITDA decreased by 5% to US$2.1 billion, due to lower volume and higher cost at KCM and Oil & Gas, our Australian mine being placed on care and maintenance which more than offset higher LME prices and Premia in Zinc and Aluminium. The volumes at Zinc India and Oil & Gas are expected to improve in H2 due to mine sequencing and higher plant availability respectively.

n The Adjusted EBITDA margin (excluding custom smelting) remains robust at 43.3% (H1 FY 2014 : 45.3%), which reflects the strength of our diversified portfolio.

n Attributable loss reduced by 94% to US$12.8 million, largely due to lower mark to market foreign exchange losses given the reduction in currency volatility, in particular the INR-USD exchange rate.

n Free cash flow of US$1.2 billion up 15%. The funds were utilized for growth capex of US$0.8 billion mainly at Oil & Gas, Zinc India & TSPL projects. Free cash flow after project capital expenditure remained stable at US$0.4 billion.

n Healthier interest cover driven by higher investment income in treasury and lower interest cost due to refinancing efforts.

n Net debt increased by US$1.1 billion, driven by Cairn India share buyback of 1.75% (1.92% since January 2014) for US$189.9 million (US$212.0 million since January) and the acquisition of 4.24% of Sesa Sterlite shares for US$588.7 million, which was EPS accretive.

n Interim dividend of 23 US cents per share, a 4.5% increase on the interim dividend of FY 2013-14.

Performance Review

Overview

With volatile commodity prices and a challenging macro-economic environment globally in H1 FY 2015, Vedanta remains focused on improving its operating performance and building momentum towards achieving its strategic objectives of value-accretive growth, long term value and sustainability.

Production over the six months was as forecast, with mine plan and maintenance shutdowns resulting in lower production at some businesses, which are expected to consequently deliver higher production and normalised costs in H2. We also brought capacities into production as we focus on ramping up utilizations and cash generation. While EBITDA was 5% lower at US$2.1 billion, we continued to deliver robust adjusted EBITDA margins excluding custom smelting of 43%, primarily driven by our diversified business model and low cost assets.

Vedanta's significant presence in India as a leading commodity producer is a key strength as India's prominence on the global economic landscape continues to increase. With a new Government elected to an overwhelming majority on the mandate of economic growth and job creation, India is expected to deliver strong economic growth in the near term. The new Government has launched broad initiatives for promoting investment in manufacturing and infrastructure, attracting foreign capital for growth, and improving transparency and the ease of doing business in India. India's GDP grew by 5.70% in the second quarter of 2014, the highest growth rate reported since the last quarter of 2011. Vedanta contributes to 0.3% of India's GDP and has the potential to increase this further.

Progress against strategic priorities

As a global diversified natural resources company with businesses across base metals, oil & gas, and commercial power, Vedanta's strategy is to deliver growth, long-term value and sustainable development. Our strategic priorities remain unchanged. This translates into our stated objectives of delivering growth, sustainability, disciplined capital allocation to Zinc and Oil & Gas, driving operational excellence, ramping up production and free cash flows, deleveraging, driving exploration to increase mine life, and the simplification of the Group structure.

As discussed in the annual report, the key operating priorities are as follows

n To ramp up aluminium production and obtain access to bauxite

n To resume iron ore mining operations at Goa

n To improve the business at KCM

Sustainability

The development of our Sustainability Framework over the last few years provides us with a robust structure supported by our three sustainability pillars; responsible stewardship, building strong relationships, and adding and sharing value. During the period, we have further embedded these standards and processes, and this approach has enabled us to drive consistency in our sustainability efforts across our subsidiary companies.

Health & Safety

We continue to strive for zero harm at the workplace, implementing a range of structured programmes to enhance safety, focused on processes, behaviour and continuous improvement based on our experience. While the leading indicators such as Lost Time Injuries Frequency Rate per million man-hours worked have shown an improving trend, we remain concerned about high-impact, low-probability incidents. Over the first six months of the year, six contractor employees lost their lives tragically in workplace accidents. We are focussed on strengthening our safety programmes to eliminate fatal accidents.

We continue to maintain our good track record in managing our performance in health and environment. There were no significant environmental incidents during the first six months of the year, and no significant health-related observations over the same period. All our businesses continue to run structured improvement projects to continuously improve our performance on air, water and land use. The company has joined the World Business Council for Sustainable Development's-WASH initiative as a commitment to provide access to safe Water, Sanitation and Hygiene at all operating locations.

Capital Allocation

In line with our focus on disciplined capital allocation, we are allocating new capital to Zinc and Oil, and towards completing ongoing existing projects and moving them into production.

At Zinc India, the expansion to 1.2mtpa of mined metal by 2018 is on track. At Rampura Agucha we are deepening the pit to ensure stable mined metal output while we transition to underground mining. At Zinc International, the Gamsberg-Skorpion integrated zinc project has been approved by the Board and we expect to start development in the next financial year, with an aim to commission the Gamsberg mine by FY 2018.

At our Rajasthan Oil & Gas block, we commenced polymer injection at the Mangala EOR project in October and this will help improve recovery rates. The Aishwariya field has received JV approvals to ramp-up to 30kboepd. In the Barmer Hill formation, we have commenced fracking, and initial results are encouraging. We have plans to ramp up gas development to c.100 mmscfd by FY 2017.

At our BALCO and Jharsuguda Aluminium operations, we reported strong operating performance due to our operational excellence initiatives, and higher premiums resulted in strong EBITDA margins of 19% despite nation-wide coal availability constraints, leading to higher costs. Using existing available power, we brought 84 pots at the BALCO 325kt smelter into production and commenced the start-up of 50 pots at the Jharsuguda 1.25mt smelter, as we seek to complete and operationalize existing projects. We are working towards regulatory clearances for further power supply from our own plants for both these new smelters, which will drive the ramp-up of further potlines.

At Goa, a policy for grant of iron ore mining leases has been announced by the State Government in October 2014. The High Court of Bombay at Goa has directed the State Government to renew mining leases for mines that have paid stamp duty, and we are working with the State Government to obtain clearances to resume mining in Q4 FY 2015.

At Copper-Zambia, we remain committed to delivering an operational turnaround, despite several challenges. We continue to engage with various stakeholders, including the Government of Zambia, to improve productivity, volumes and profitability.

In line with our priority to simplify and consolidate the Group structure, we have increased Vedanta Resources Plc's holding in its key subsidiary, Sesa Sterlite Limited, through the open market purchase of a 4.24% equity stake for US$589 million, taking our ownership in Sesa Sterlite from 58.3% to 62.5% during the half-year. Our subsidiary, Cairn India, completed a buyback program, purchasing approximately 2% of its equity for US$190 million, consequently leading to an increase in our ownership.

Finance Review

Basics of presentation of financial information

Our interim financial report is prepared in accordance with International Financial Reporting Standards ('IFRS'), as adopted by the European Union. Our reporting currency is US dollar.

Consolidated Group Results

(in US$ million, except as stated)

1 Earnings before interest, taxation, depreciation, amortisation/impairment and special items.

Operating Profit Variance

Consolidated Group

(In US$ million)

Note : Other than depreciation & amortization, all other headings of variance (controllable and non-controllable) above feature as the reasons for EBITDA variance in the subsequent part of this document.

Prices

LME & Brent - The H1 FY 2014-15 average LME price for zinc was up 19% at US$2,196 per tonne and aluminium was up 5% at US$1896 per tonne as compared to H1 FY 2014, which contributed to a US$146 million increase in operating profits. This was partly offset by weaker Brent prices at US$105.7 per barrel, down 0.8%.

Premia & Tc/Rc - Realised premium, primarily in aluminium, increased significantly by 32% in line with global trends as compared to H1 FY 2014. Stronger zinc domestic premium, which almost doubled from US$103 per tonne to US$187 per tonne, also resulted in a US$76 million gain. Favourable Tc/Rc at 20c/lb in the Copper India smelting business further helped contribute another US$16.0 million.

Overall, there was a favourable impact of US$201.0 million on operating profit from prices, both LME/Brent and premia.

Exchange rates

Most of our operating currencies depreciated against the US Dollar. Given the US Dollar-linked pricing in our domestic markets, this lead to higher realisations, especially in Zinc-India (domestic sales : 60% on average) and Aluminium (domestic sales : 65% on average). In Zinc International, we were benefitted by US$7 million, whereas in KCM, the benefit of local currency movement was US$10 million. As a result, operating profit improved by US$69.0 million.

The following exchange rates against the US dollar have been applied:

Profit petroleum

For the first six months of the year, the share of profit petroleum outflow for Cairn India payable to the Government of India increased from 30% to 40%, as per production sharing contract terms, resulting in a charge increase of US$56.0 million.

Temporary Suspension/Recommencement of operations

Australian copper mines are under care and maintenance and were not producing for the first six months of our financial year, compared to operating at normal capacity in the corresponding previous year. This led to an adverse impact of US$42.0 million on the operating profit. The effect was partly mitigated by the restart of sale from Iron Ore operations at Karnataka, leading to a positive impact on operating profit of US$24.0 million.

Volume

The expected lower volume of 376kt (a year-on-year reduction of 18%) at Zinc India impacted operating profit adversely by US$90.0 million. The lower production at Zinc International (down 17% year-on-year) was mainly due to lower ore grade as well as declining production at Lisheen mine which is nearing end-of-life. This reduced the operating profits by US$50.0 million. Lower volumes at Copper Zambia also impacted operating profit by US$27.0 million.

This was partly offset by higher volumes from Copper India, leading to a net reduction of operating profit of US$155.0 million. It is expected that the entire volume loss of Zinc India will be offset in H2 FY 2015, as full-year production volumes for Zinc India are forecast to be marginally higher than FY 2014. Moreover, Cairn India volumes are also expected to increase.

Costs

Cost increase is mainly due to KCM (US$63.0 million) given the lower volumes and its higher fixed-cost base adversely affecting unit costs. Zinc India (US$25.0 million) and Zinc International (US$17.0 million) variances are both due to lower volumes as compared to the previous period. There were also cost increases in Aluminium (US$33.0 million) due to higher coal and alumina costs. The aggregate of the above cost increases resulted in an overall adverse impact of US$145.0 million on the operating profit.

We expect lower costs in Zinc India and Zinc International during the second half of the year, driven by higher volume.

Allied Businesses

The value-added Pig Iron businesses at Goa and Phosphoric Acid business at Sesa Sterlite copper division contributed to the positive variance of US$42.0 million, due to higher volumes and stronger pricing in the domestic market.

Depreciation

There was an increase of US$40.8 million in depreciation in the first half, due to higher capitalization in Cairn India.

Amortisation

The mining reserves related to our acquisitions mainly for Cairn India, Zinc International and Sesa Goa are being amortised on a unit of production basis over the total estimated remaining commercial reserves. The reduction of US$58.4 million in amortisation charges in H1 FY 2014-15 when compared to the previous period is primarily due to lower production volumes in Cairn India and Zinc International.

Others

There is an adverse variance of US$40.0 million mainly due to higher exploration costs from dry wells at Cairn India and voluntary retirement at Korba during the reporting period.

Income Statement

(in US$ million, unless otherwise stated)

1 Earnings before interest, taxation, depreciation, amortisation/impairment and special items.

2 Excludes custom smelting at Copper and Zinc-India operations.

Revenue

Revenue was up 6% in H1 at US$6,455.8 million compared to H1 FY 2014. The increase was primarily driven by higher LME prices and premia in Aluminium and Zinc businesses, and higher volume at Copper India (even after 23 days shutdown in Q1 FY 2015) compared to reduced volume due to the temporary closure in Q1 FY 2014. Iron Ore was marginally stronger due to higher pig iron output and realisations.

These increases were partially offset by Cairn India, where revenue was lower due to planned maintenance shut down for nine days and higher share of profit petroleum outflow to the Government of India for this financial year. Zinc India volumes were 13% lower following mine plan and the Australian copper mines did not produce during the current period as it was put under care and maintenance.

EBITDA and Adjusted EBITDA margin

EBITDA at US$2,105.1 million was down 5% - see 'Operating Profit Variance' for more detail. Adjusted EBITDA margin excluding custom smelting operations at 43.3% remained robust, though marginally lower than the first half of the corresponding previous period. This was primarily due to softer margins in Zinc (1% lower compared to H1 FY 2014) due to lower volumes, which are expected to recover in H2 2014-15. At Cairn India, margins reduced from 76% to 72% compared to H1 FY 2015 due to higher planned maintenance expenses as well as a higher share of the profit petroleum outflow to the Government of India. Margins reduced at Zinc International business after lower volume and higher costs, and are likely to improve in second half of the year. These were offset by a strong performance in Aluminium - margins here increased 500 bps to 19%, with a better performance in value-added business in the Iron Ore and Phosphoric Acid business at Sterlite copper.

Special Items

The special items includes a provision of US$36.9 million to reduce inventories to a net realisable value in view of the Supreme Court ruling for Iron Ore mining at Goa, and US$7.6 million for expenditure incurred on Coal blocks allotted to company's subsidiaries, subsequent to the cancellation of coal blocks by the Supreme Court of India.

Depreciation and Amortisation

Higher capex expenditure by Cairn India resulted in a 6%increase in depreciation in the first half of FY 2014-15of US$687.9 million. Amortisation of mining reserves declined13% to US$387.0 million, mainly due to reduced production volumes in Cairn India and Zinc International.

The company has commenced a full technical review of the useful lives of its property plant and equipment, which would be concluded by the end of the financial year.

Net interest

Finance costs increased by 6% to US$742.6 million in H1 FY 2015, compared to US$701.3 million in H1 FY 2014. This is largely due to grouping a result of additional forward cover expenses on maturing of long-term loans. Investment revenues in H1 increased to US$444.0 million compared to US$302.6 million in the corresponding prior period, mainly at Zinc India and Cairn India, due to higher return on investments in debt instruments (softer yields).

As a result of significantly higher investment revenues, net interest expense decreased by US$100.1 million in H1 FY 2015.

Other Gains and Losses

Other gains and losses include the impact of mark to market (MTM) on foreign currency borrowings, primarily at our Indian businesses. Depreciation in the Indian rupee against the US dollar during H1 FY 2015 was 2.5% as against an unprecedented 15% in the corresponding period previous year. The MTM cost in H1 FY 2015 at US$47.5 million was hence significantly lower than US$393.0 million for H1 FY 2014.

Taxation

The effective tax rate for H1 FY 2015 was at 22.7% compared to 6.8%; in H1 FY 2014. The effective tax rate last year was lower, as the Group consolidation and simplification undertaken during the period resulted in a current tax credit booked during the previous years.

Attributable (Loss)/Profit

Attributable loss over the six months in H1 FY 2015 was US$12.8 million, a significant improvement from H1 FY 2014. The improvement is primarily on account of the change in economic shareholding as a result of the restructuring exercise in H1 FY 2014 and the stake consolidation initiatives undertaken in the first half of this year. The wholly owned operating subsidiaries performed relatively better compared to other subsidiaries thus also contributing to the favourable position in attributable profits.

Earnings Per Share ('EPS') and Dividend

Basic EPS increased by 94% in H1 FY 2015, though it was (4.7) US cents per share (H1 FY 2014:(79.4) US cents per share).

In line with our progressive dividend policy, the Board has declared an interim dividend of 23 US cents per share an increase of 4.5% compared to 22 US cents in H1 FY 2013-14.

Balance Sheet

(In US$ million, except as stated)

Shareholders' equity was US$3,566.1 million as at 30 September 2014 compared to US$4,010.4 million at 31 March 2014, reflecting the impact of changes in the percentage economic holding as a result of buyback of shares by Cairn India and the acquisition of shares in Sesa Sterlite Limited. FY 2013-14 final dividend pay-out and currency translation further impacted the shareholders' equity.

Non-controlling interest decreased to US$13,348.4 million at 30 September 2014 from US$13,964.4 million at 31 March 2014 despite the profit attributable to minority shareholders during the period, on account of change in economic holding percentages and foreign currency movements.

Tangible Fixed Assets

During the first half of the year, we added US$958.0 million to property, plant and equipment comprising of US$820.6 million for our expansion and improvement projects and US$137.4 million spent on sustaining or ongoing capital expenditure. Expansion project expenses were mainly incurred at Cairn India & Zinc-India and to progress on ongoing project at Talwandi Sabo Power Limited (TSPL).

Net Debt

Net debt increased by US$1,135.1 million at 30 September 2014, where net debt was US$9,054.6 million (31 March 2014: US$7,919.5 million). As a result of this increase, net gearing increased to 34.9%. Cash and liquid investments were US$8,171.0 million at 30 September 2014.

Gross debt at 30 September 2014 was US$17,234.0 million (31 March 2014: US$16,871.2 million). The average gross debt in H1 FY 2015 was also US$17.2 billion, (H1 FY 2014: US$16.6 billion). The gross debt increase of US$362.8 million is mainly driven by borrowings in the aluminium sector for completion of projects and settlement of related creditors. The net debt increase was additionally impacted by the US$189.9 million cash outflow towards Cairn shares buyback under the programme completed in July 2014, and US$588.7 million towards the acquisition of 4.24% stake in Sesa Sterlite in line with Group's stated policy of consolidation. External debt at our operating subsidiaries was US$9.7 billion and debt at Vedanta Resources Plc and its investment subsidiaries was US$7.5 billion (which net of intercompany loan to TMHL, would be US$4.8 billion). Of the total debt of US$17.2 billion, US$1.9 billion consists of convertible bonds.

The average debt maturity at 30 September 2014 was 3.45 years, excluding working capital loans at operating subsidiaries. Refinancing for FY 2015 maturities of US$2.2 billion (of which short-term commercial paper & like instrument maturity is US$0.9 billion) is largely complete, the short-term paper being rolled over accordingly. Unutilised fund based line of credit available is US$1.4 billion.

The significant debt movements include:

n Sesa Sterlite borrowed US$1.25 billion from Cairn India and utilised to repay outstanding interest and intercompany debt to Plc.

n The put option in respect of US$1,250.0 million 5.5% convertible bonds became exercisable by bondholders. Consequently the put option to the extent of US$113.8 million was exercised and redeemed.

n FCCB of US$717.0 million at Sesa Sterlite Limited due in October 2014 were paid through refinancing and internal accruals.

Our cash and liquid investments portfolio continues to be conservatively invested in debt mutual funds and in cash & fixed deposits with the banks.

The Company maintained its ratings from Standard & Poor's(S&P), Moody's: ratings are BB, Ba1 respectively. During the period S&P has improved its outlook to stable.

Our credit matrix remain stronger as follows:

(in US$ billion, except as stated)

1 Pro forma numbers to indicate Cairn acquisition at FY2012

Debt maturity profile at Vedanta Resources Plc is as follows:

(in US$ million, except as stated)

1 Debt numbers shown at face value, excludes one year rolling working capital facilities of $834mn due in FY 2015.

2 Convertibles at Vedanta Resources Plc of $73.2 million due in FY 2017 have a put option in March 2015 and are shown at put dates.

Cash Flows

(in US$ million, except as stated)

* Includes foreign exchange movements.

Free cash flow before growth capital expenditure in H1 FY 2015 was US$1,203.8 million which represents 57% of EBITDA as compared to 47 % in H1 FY 2014.

PROJECTS

Projects under execution

(in US$ million, except as stated)

Interim Results For The Half Year Ended 30 September 2014

Operational Performance:

Oil & Gas

Production Performance

In H1 FY 2015, gross operated production and working interest production were 3% and 1% lower as compared to corresponding prior year period at 206,125 boepd and 130,502 boepd, respectively. At Rajasthan, we successfully completed the planned maintenance shutdown for routine operational and statutory maintenance activity at the Mangala Processing Terminal (MPT), which resulted in lower production at 173,158 boepd, with Development Area (DA)-1 and DA-2 producing gross averages of 143,951 boepd and 29,207 boepd respectively. Following the shut down, normal production rates have returned, and are higher than the corresponding prior year period. Consequently, we have tied-in new facility enhancements related to development projects.

At Ravva, gas sales were suspended from July 2014 to the end of September 2014 due to a single customer undertaking a major unplanned maintenance activity within the Andhra Pradesh pipeline network. Hence production at Ravva was lower at 22,259 boepd during the first half, despite a positive oil contribution from the 4D infill well campaign. Gas sales recommenced on 15 October 2014.

At Cambay, production increased by 11% as against H1 FY 2014 at 10,708 boepd due to successful well intervention measures undertaken during the period.

Market

(US$ per barrel)

Average Brent prices for the first half of FY 2014-15 reduced 0.8% at US$105.7/bbl compared to FY 2014. Brent dropped to a two-year low of US$94.6/bbl during September 2014, driven by weaker global demand and excess supply.

During the second half of FY 2015, oil prices are expected to remain subdued on the back of oversupply concerns. In October 2014, Brent dropped to a three-year low of US$83.4/bbl, and averaged US$87.4/bbl.

Financial Performance

(in US$ millions, except as stated)

EBITDA of US$1,012.2 million was lower than H1 FY 2014 due to lower volumes, marginally lower oil prices and a higher profit petroleum tranche at the Rajasthan block. Higher maintenance expenses due to the planned shutdown and higher exploration expenses also contributed to lower EBITDA. Operating expenses in Rajasthan were US$5.2/bbl for H1 FY 2015 as compared to US$3.7/bbl during the earlier year period. However, the fall was partly offset by the increase in capital expenditure during the comparative period impacting the profit petroleum charge.

Development and Exploration Projects

Rajasthan Exploration: three discoveries were made in Q2, taking the total to 11 new discoveries since the resumption of exploration in March 2013, and a total of 36 discoveries so far. Cairn India has established 1.4 billion boe (barrel of oil equivalent) of hydrocarbons in-place to date, tested and announced, and an additional 0.6 bn boe discovered but yet to be tested, ahead of the three-year drill-out target of 3 bn boe.

Throughout the remainder of FY 2015, exploration and appraisal activity continues to be focused upon appraisal of the Raag Deep Gas Field and key oil discoveries at Raageshwari and Guda, DP, NL and V&V, flow testing the backlog of exploration discoveries to date and drilling high-impact exploration prospects, aimed at adding significant resources. In addition, focus will be on horizontal well drilling to accelerate early production.

EOR Project: The project for first injection of polymer at Mangala commenced in October 2014. Further the FDP for full field EOR at Bhagyam is being reviewed by our JV partner.

MPT De-bottlenecking: a two-phase plan is in place for MPT "de-bottlenecking" and is proceeding per plan. Phase I of handling 800,000 barrels liquid per day was commissioned ahead of schedule in Q2 FY 2015. Cairn India plans to increase the capacity to 1 million barrels per day in the next phase.

Salaya Bhogat Pipeline: Commissioning of gas pipeline is in the final stages of completion, with terminal readiness expected in Q3 FY 2015. Adding sea routes for crude evacuation will give access to significant additional refining capacity in the other parts of the country.

Barmer Hill (BH) and Satellite fields: Cairn India is on track with Barmer Hill project with four wells drilled, fracked and put under long-term production testing. The results so far have been in line with expectations and encouraging for tight oil development in the block.

During Q2, two additional satellite fields (NI and Guda) have been brought online as planned.

Raageshwari Deep Gas : It is planned to double gas production from the current ~12 mmscfd by the end of this fiscal year. FDP for further ramp up to 100 mmscfd has been approved by the Operating Committee (OC) and submitted to the Management Committee (MC).

Sri Lanka Block: Commercialization of the gas discoveries made on the block continues to present challenges. Discussions are still in progress with the Sri Lankan Government regarding commercial terms while Cairn India continues to assess remaining exploration opportunities that could ultimately add to the discovered resource base.

Outlook

The ongoing three-year capex programme of US$3 billion until FY 2017 is on track. The programme will focus on enhancing oil recovery from producing fields, upscaling tight oil development by leveraging existing infrastructure and also explore and develop a long term sustainable gas business. The exploration and appraisal campaign aims to achieve a target reserve replacement ratio of 150% over the three-year period.

Zinc - India

Production Performance

1 Excluding captive consumption of 3,451 tonnes t in H1 FY 15 vs. 3,344 tonnes in H1 FY 14.

2 Excluding captive consumption of 5,74,000 ounces in H1 FY 2015 vs5,74,000 ounces in H1 FY 2014.

For the six-month period, mined metal production was 375,706 tonnes, down 18% from H1 FY 2014. We excavated more waste during H1 FY 2015 as per our mine plan at Rampura Agucha, which has enabled us to expose the desired ore body, and this should translate to higher mined metal production in the second half of FY 2015. The improvement has already been visible in the form of higher mined metal production since October 2014.

Integrated production of refined zinc, lead and silver during H1 FY 2015 reflected the lower mined metal production trend.

Markets

Zinc prices improved during H1 reflecting the fundamental demand/supply situation and the global zinc market is likely to remain in deficit until 2018.

Recently, we witnessed China's zinc export reach a six-year high, mainly due to the increase in treatment charges. This resulted in the premiums being moderated, however they are expected to remain high given the confined stock availability position.

(US$ per tonne)

London Metal Exchange (LME) zinc prices averaged US$2,196 per tonne compared to US$1,850 per tonne in the same period in 2013.

Unit Costs

1 After IFRIC 20 adjustment.

Unit costs of production excluding royalties were higher by 13% at US$914 per tonne in the first half of FY 2015, compared with US$810 per tonne in the first half of FY 2014. The increase is primarily attributed to lower production volumes and one-off smelter shutdown costs. The costs also increased due to settlement of long-term wage agreement due every five years. This settlement resulted in a one-time impact of US$14 per tonne during the period and a further US$16 per tonne, which is expected to recur. Excluding one-off costs, costs excluding royalty were US$900 per tonne.

Higher coal/power costs and higher mine development expenses also increased costs, which have been partly offset by higher credits and rupee depreciation. The royalty rates have been increased with effect from 1 September 2014 for zinc from 8.4% to 10% and for lead from 12.7% to 14.5%. This has an impact of US$37 per tonne on zinc costs an ongoing basis. We expect the cost would be lower in H2 FY 2015, supported by higher volumes as per mine plan.

Financial Performance

(in US$ million, unless otherwise stated)

EBITDA for H1 FY 2015 was US$551.2 million, marginally lower than the same period last year. This decrease was driven by lower volume and higher costs, which was to a large extent offset by higher LME prices and increase in metal premiums.

Projects:

The expansion project to 1.2 mtpa mined metal has been progressing well. Though progress at the Rampura Agucha (RA) underground was slower than expected in H1 FY 2015, the development rate at the mine is expected to improve during H2 with higher productivity and enhanced resources. As a risk mitigation and to extend the life of the open pit, mine design and planning for further deepening of the open pit at Rampura Agucha is under progress. The preparatory work for pit deepening is likely to be initiated in Q4 FY 2015.

Shaft sinking at Sindesar Khurd is ahead of schedule, and has reached a depth of 950m against final depth of 1,050m, while the RA main shaft has reached a depth of 430m a against final depth of 950m. Paste fill plants at these locations were completed and capitalised during the period.

During the period, environmental clearance was received for enhancement of production capacity of Kayad mine from 0.35 MTPA to 1.0 MTPA.

Outlook

We reiterate our guidance of marginal growth in mined metal and silver production for FY 2015 over the previous year. Integrated zinc-lead metal production is expected to witness a strong growth in the second half of the year over H1 of FY 2015, in line with mined metal production growth.

Zinc International

Production Performance

In the first half of FY 2015, refined zinc metal production at Skorpion was lower than the corresponding prior period due to unplanned maintenance activities at the mill. Zinc-lead mined metal production was lower at Lisheen mainly due to lower grades as per mine plan sequencing, and at BMM primarily due to grade slippage.

Unit Costs

(US$ per tonne)

Production costs increased to US$1,331 per tonne compared to US$1,122 per tonne for the same period last year due to lower volumes and a reduction in ore grades.

Financial Performance

(in US$ million, unless otherwise stated)

EBITDA for H1 was US$93.0 million lower by 20%, primarily due to lower volume with an increase in cash costs. Also, EBITDA was affected by US$11 million due to deferring an export shipment to Q3 at Skorpion. Higher zinc prices during the period helped to partially offset the adverse impact.

Projects

The Board has cleared in principle the US$782 million investment into the 250 ktpa open pit mine development at Gamsberg, SA along with an integrated 150 ktpa roaster at Skorpion, Namibia. The detailed feasibility study for the mining project was placed at the board meeting, while the work for setting up pilot plant for refinery conversion is underway. Preliminary work on financing options have also been commenced. The Gamsberg ore is expected to be mined and refined at Skorpion during FY 2017-18.

Outlook

We expect the FY 2015 production at around 330-340kt, primarily driven by lower volumes from Lisheen in line with the mine plan.

Iron Ore

Production and Sales

In October, the Goa State Cabinet approved a new policy for grant of mining leases. The policy states that the legitimate leases will be categorized and renewed and will not be auctioned. The High Court of Bombay at Goa has directed the State Government to renew mining leases for mines that have paid stamp duty, and we are working with the State Government to resume mining by the end of the FY 2015.

At Karnataka, we had resumed production in December 2013 and since then we have produced 1.8 mt and sold 1.1mt through e-auctions. However the production has been stopped at the mine since August 2014, due to the expiry of the temporary forest clearance. We expect to receive the forest clearance and mining lease renewal over Q3 of FY 2015. Overall, we expect to produce at our provisional annual capacity of 2.29 million tonnes during FY 2015.

Production of pig iron was 26% higher compared to the corresponding prior period.

Market

Iron ore prices have fallen 37% since the start of 2014, due to increased supply from Australia and moderating demand growth in China.

In 2014, India's steel consumption is forecast to grow 5% and increase by a further 4.8% in 2015 to 87 million tonnes. Government investment in public infrastructure, including dedicated freight networks linking landlocked northern states to the sea, will underpin this growth.

Financial Performance

(in US$ million, except as stated)

EBITDA of US$27.6 million was primarily contributed by sale of iron ore at Karnataka, as well as improved volumes and better price realisation in the pig iron business.

Projects

At Liberia, a part of our team has been temporarily moved out of the country and we continue to monitor the Ebola epidemic. The local Government is focused on containing the situation and our Liberian team is working with the Government on infrastructure solutions for an early phase mining operation.

Copper

Copper India/Australia

Production Performance

Copper cathode production during the first half of FY 2015 was significantly higher than H1 FY 2014, as the plant was under temporary closure in Q1 FY 2014. The Tuticorin smelter has been delivering record production since its planned shutdown in Q1 FY 2015, and is expected to produce at over 90% capacity utilization going forward.

The 160MW power plant at Tuticorin continued to operate efficiently at a Plant Load Factor (PLF) of 82% in H1.

Our Australian mine was put on care and maintenance in July 2014. Technical and economic feasibility of a program for additional exploration is progressing satisfactorily, which if successful, should enable re-opening of the mine after FY 2016. Drilling at D-Panel and other areas is currently underway.

Market

Average LME copper prices fell by 3% and Treatment charges/Refining charges (Tc/Rc) increased by 38% during the six months to September 2014, compared to the corresponding prior year period.

The World Bureau of Metal Statistics estimates world refined copper consumption increased 9.5% in the first six months of 2014 and totalled 11.1 million tonnes. This growth was underpinned by copper consumption in China increasing 19% to 5.3 million tonnes.

Consumption growth in China is likely to slow for the remainder of 2014 due to a downturn in housing sales in early 2014. For the year 2014, world copper consumption is forecast to increase 4.1% and total around 21.9 million tonnes.

Unit Cost

The net unit conversion cost at Copper India was 4.8 US cents per lb in H1 FY 2014-15, compared with 13.8 US cents per lb in the H1 FY 2014. The cost reduction is largely on account of higher sulphuric acid by-product sale prices and lower power rate as the power was supplied by our captive power plant. During H1 of FY 2015, Tc/Rc, acid prices and metal premium continued to remain strong.

Financial Performance

(in US$ million, except as stated)

EBITDA increased significantly to US$110.0 million due to higher volumes, better Tc/Rc and healthier by product credits. H1 FY 2015 This period included the 23 day planned shutdown as compared to corresponding prior period, which is not comparable as the smelter was temporarily shut down for almost whole of the first quarter of FY 2014.

Outlook

The Tuticorin smelter is expected to produce at over 90% capacity utilization going forward for H2 of FY 2015.

Copper Zambia

Production Performance

During H1 FY 2015, mined metal production was at 59,000 tonnes, 15% lower that the corresponding prior year period.

At the Konkola mine operational issues driven by shaft interruptions and low equipment availability affected production. At Nchanga, production was affected primarily by lower grades. The Upper ore body project remains suspended, pending further review. Mined metal production also included Tailings Leach Plant (TLP) primary copper production of 26,400 tonnes which was 10% lower due to lower feed grades.

The Nchanga smelter undertook a one-month planned maintenance shutdown during Q2 of FY 2015. The shutdown has been successfully completed and the smelter has restarted and is ramping up.

Unit Costs

Unit cash costs of integrated production in H1 FY 2015 were 273 US cents per lb, and increased by 20% mainly due to lower volumes as a result of operational issues referred above.

Financial Performance

(in US$ million, except as stated)

EBITDA in H1 FY 2015 was US$16.2 million, significantly lower than the corresponding previous year, primarily due to lower volumes, LME prices and higher costs.

Outlook

We have been implementing various interventions to improve the overall operating performance, drive higher equipment availability, utilization and skill transfer. We have also progressed on recruitment with several key roles now filled. Following this, we expect to ramp-up production at Konkola and maximize throughput at our Nchanga TP operations. We also continue to engage the Zambian Government on VAT and the proposed new tax regime.

We expect to deliver 120,000 tonnes of integrated production in the current financial year and achieve costs of around 270 US c/lb in H2 FY 2015.

Aluminium

Production and Sales

The 1 mtpa Lanjigarh alumina refinery operated at above 90% of its rated capacity in H1 FY 2015 and produced 460,000 tonnes. The numbers for the corresponding prior year period are not comparable as the plant restarted in July 2013, post temporary suspension caused by non-availability of bauxite, and ramped up thereafter.

Production at the 500kt Jharsuguda-I & 245kt Korba-I smelters remained stable and above rated capacities, despite incidences of grid failures causing interruption in power supply to the aluminium smelter.

Market

Average LME prices for aluminium for the six months to September 2014 were US$1,896, an increase of 5% from the average price level during same period last year (H1 FY 2014: US$1807). This year, the aluminium market has shown mixed trends, ranging from US$1,900 in April 2014 to US$2,119 in August 2014, receding to US$1,992 by September 2014.

Tight supply in the physical market has led to an increase of US$136 (benchmark Japanese premium -MJP) in H1 FY 2015 (US$385) over H1 FY 2014 (US$249). Given the rising trend of mid-west premia, the Asian markets are expected to follow suit and expected to further increase by around $30 in H2 FY 2015.

Global primary aluminium consumption is expected to be 53.6 million tonnes in FY 2015, a growth of 5.8% year-on-year.

Unit Costs

(in US$ per tonne)

1 Smelting cost comprises production cost excluding alumina cost.

Cost of production at Lanjigarh has increased primarily due to change in bauxite mix as compared to H1 of FY 2014. Reliance on imported bauxite increased to meet the higher volume requirements as compared to H1 FY 2014. We believe the bauxite mix would improve in H2 with higher bauxite supply from Balco and other domestic sources.

The continued challenges of coal availability in the country, due to lower volumes of e-auction coal, rail logistics constraints and increased reliance on imports, continue to adversely impact costs. Due to low coal availability, we also resorted to some temporary power purchases at Korba-I during the quarter. Availability of domestic coal is expected to be higher in the second half of this financial year. However, the coal availability is expected to remain challenging.

Hot Metal cost at Jharsuguda-I was 3% higher at US$1,688 per tonne as compared to US$1,637 per tonne during the corresponding period earlier year, primarily on account of higher alumina and coal costs.

Hot Metal cost at Korba-I was up 6% at US$1,964 per tonne as compared to US$1,844 per tonne in the earlier year period, primarily on account of further tapering of linkage coal and higher alumina costs.

Financial Performance

(in US$ million, except as stated)

EBITDA for the first half of the year was significantly higher by 43% at US$179.7 million as against the corresponding previous period, mainly due to higher LME prices (up 5%) and premia of ~$475 per tonne (ingot ~$383), despite Korba's profitability being impacted by higher coal costs and temporary power purchases.

Expansion Projects

Korba pot start up: 84 pots at the 325kt Korba-II smelter ramped up and were capitalized in September 2014. We will further ramp up the smelter to full capacity subsequent to the commissioning of the 1,200 MW power plant, for which we are awaiting the final regulatory approvals.

Jharsuguda pot start up: we have also commenced the start up of the first phase of 50 pots of the 1.25 mtpa Jharsuguda II pot-lines, using surplus power from the 1,215 MW power plant.

BALCO Coal block: in September 2014, the Supreme Court of India passed a judgment cancelling 214 coal block allocations since 1993, which included our coal block at BALCO. This block was at advanced stages of approvals but had not commenced mining. Consequent to this judgement, we have written off US$7 million expenditure towards the coal block. The company awaits further Government action on this matter.

Lanjigarh Refinery Expansion Project (1mtpa to 5mtpa): the Public Hearing was successfully conducted at Lanjigarh in July 2014. The Ministry of Environment and Forest's Expert Advisory Committee meeting has been conducted during the second quarter of this year. Post Environmental Clearance expansion will be undertaken in a phased manner.

Laterite Mines: The Government of Odisha has granted Prospecting Licenses (PLs) for three laterite deposits. We will apply for Mining Lease (ML) and take Environmental Clearance following exploration.

Outlook

The 500kt Jharsuguda-I & 245kt Korba-I smelter will continue to operate at its current high levels. Production at Korba-II will ramp up beyond 84 pots consequent to the commencement of the 1,200MW power plant and regularization of coal supply chain. The Jharsuguda-II smelter will ramp up to 50 pots during the second half of the financial year with existing surplus captive power.

Coal: We are taking numerous initiatives to meet our coal requirements. We have replaced a large part of our purchases of e-auction coal with imported coal, where global seaborne prices have reduced substantially. We have increased our imported coal mix from less than 10% to 25%-35%. We are concurrently working with the Government to restore our coal linkage, in expectance of the deal location of our coal block. We are also evaluating the impact of the recent ordinance issued by the Government in October 2014 regarding potential auctioning of the cancelled coal blocks. At this point of time, the detailed policy guidelines are awaited.

Power

Production and Sales

Power sales were lower at 4,627 million units as compared to 5,087 million units in the corresponding previous period. The Jharsuguda 2,400MW power plant operated at a PLF of 40% in H1 FY 2015, lower than previous corresponding period, on account of power evacuation constraints for open access sales and weaker power market. Power from the Korba 270MW power plant was primarily used to ramp up 84 pots of the 325kt Korba-II smelter. MALCO operated at 103% PLF, lower than previous corresponding period due to lower off take by Tamil Nadu Electricity Board given the higher availability of wind power in the state.

Market

The Government of India's agenda to extend universal access and 24/7 supply to all households will need both private and state sectors to ramp up their investments in generation. The short- term power rates continue to be volatile and are at a five-year low, though Q2 FY 2015 improved on Q1 FY 2015.

Unit Costs

Average power generation costs in H1 FY 2015 were 3.46 US cents per unit compared with 3.89 US cents per unit in H1 FY 2014, due to better coal mix on account of lower generation.

Financial Performance

(in US$ million, except as stated)

EBITDA in H1 FY 2015 was US$108.9 million, lower than the previous year, largely due to lower power sales volumes.

Projects

The first 660MW unit of the Talwandi Sabo power plant is currently under commissioning and its reliability run is expected to take place during Q3 FY 2015, and the commissioning of the balance two units is expected during the last quarter of the year.

Other Matters:

Update on Asarco

During the period, the Company paid US$82.75 million to Asarco LLC, post the receipt of the requisite approval from Reserve Bank of India, in accordance with the settlement agreement entered in between the parties. The parties have now settled all their claims against each other in this matter. Accordingly, all pending appeals have been withdrawn by the parties, all enforcement actions have been terminated by Asarco LLC and the Turnover Order has been vacated by the US Bankruptcy Court. The Company had already recognized the Judgment amount of US$82.75 million as expense in FY 2011-12, the amount was paid in October 2014.

With the aforesaid settlement, the matter pertaining to payment of dividend to eligible ADR holders has been resolved.

Konkola Copper Mines : Value Added Tax

An assessment of output tax amounting to US$600 million has been raised by the Zambia Revenue Authority ("ZRA") covering the years 2011, 2012 and the first quarter of 2013. The basis of assessment is that KCM has not provided all the documentary evidence that is required under Rule 18 of the Value Added Tax Rules to prove an export and as a consequence, all sales of product that were zero rated in the returns have been standard rated by assessment. KCM has filed for judicial review of the ZRA's decision to standard rate the export products. After legally analysing the interpretation of Rule 18, management believes that KCM has got reasonably strong arguable defence in the case.

Going Concern

The directors have considered the Group's cash flow forecasts for the next twelve month period from the date of signing of the interim financial statements ending September 30, 2015. The Board is satisfied that the Group's forecasts and projections, taking into account reasonably possible changes in trading performance and other uncertainties, show that the Group will be able to operate within the level of its current facilities for the foreseeable future. For this reason the Group continues to adopt the going concern basis in preparing its condensed financial statements. Further analysis of net debt is set out in note 9 of the interim financial statements and details of borrowings and facilities are set out in the Financial Review on page 16-17.

Risks and Uncertainties

Vedanta operates across the value chain, undertaking exploration, asset development, extraction, processing and value addition with a primary focus on upstream operations. Our vision is to be a world class, diversified resources company providing superior returns to its shareholders, with high quality assets, low-cost operations and sustainable development. We capitalize on our strategic capabilities to create value for all our stake holders, our employees, our customers and communities where we operate.

In the process, our businesses are exposed to variety of risks which are inherent to an international mining and resources organisation. Resource companies carry with it a significant element of constantly evolving risks, making it essential for them to develop necessary systems to manage the risks, while simultaneously balancing the relative risk/reward equations demanded by its stakeholders.

Our risk management framework is designed to be simple, consistent and clear for managing and reporting risks from the Group's businesses to the board. Risk management is embedded in our critical business activities, functions and processes. Our management systems, organisational structures, processes, standards, code of conduct together form the system of internal control that govern how we conduct the Group's business and manage the associated risks.

We have a multi-layered risk management framework aimed at effectively mitigating the various risks which our businesses are exposed to in the course of their operations as well as in their strategic actions. We identify risk at the individual business level for existing operations as well as for ongoing projects through a consistently applied methodology.

Formal discussion on risk management happens in business level review meetings at least once in a quarter. The respective businesses review the risks, change in the nature and extent of the major risks since the last assessment, control measures established for the risk and further action plans. The control measures stated in the risk matrix are also periodically reviewed by the business management teams to verify their effectiveness.

These meetings are chaired by business CEOs and attended by CXOs, senior management and concern functional heads. Risk officers have been formally nominated at all operating businesses as well as Group level whose role is to create awareness on risks at senior management level and to develop and nurture a risk management culture within the businesses. Risk Management forms an integral part of performance management process in the organization. Risk Management meetings also happen periodically at group level.

The Board of Directors has the ultimate responsibility for management of risks and for ensuring the effectiveness of internal control systems. The Audit Committee aids the Board in this process by identification and assessment of any changes in risk exposure, review of risk control measures and by approval of remedial actions, where appropriate.

In addition to the above structure, other key risk governance and oversight committees include following:

n Group Treasury Risk Management Committee has an oversight on the treasury related risks.

n Group Capex Sub-Committee which evaluates the risks while reviewing any capital investment decisions as well as institutes a risk management framework in expansion projects.

n Vedanta Board Level Sustainability Committee which looks at sustainability relates risks.

Principal risks and uncertainties and detailed information on the impact of these risks as well as the identification and mitigation measures adopted by management have been documented in Vedanta's Annual Report for FY 2014 on page 32 to 38, copies of which are available at www.vedantaresources.com. Manifestation of any or all of these risks could have a significant impact on the performance of our Group going forward.

Listing of significant risks:

n Delay in commencement of production facilities in aluminium business.

n Extension of Production Sharing Contract of Cairn beyond 2020 or extension at less favourable terms.

n Operational Performance - Reliability, Productivity and Predictability.

n Challenges in resumption, continuation of Iron Ore business.

n Community relations.

n Health, safety and environment (HSE).

n Transitioning of Zinc and Lead mining operations from open pit to underground mining.

n Political, legal and regulatory risk.

n Fluctuation in commodity prices.

n Currency exchange rate fluctuations.

n Discovery new reserves, enhance existing reserves, acquire new assets.

n IT security/Cyber Security associated risks.

n Talent/skill shortage risk.

n Liquidity risk.

n Loss of assets/disruption of operations due to natural calamities.

It may be noted that the order in which these risks appear does not necessarily reflect the likelihood of their occurrence or the relative magnitude of their impact on our business.

Responsibility Statement

We confirm that to the best of our knowledge:

n The condensed set of financial statements has been prepared in accordance with IAS 34, Interim Financial Reporting; and give a true and fair view of the assets, liabilities, financial position and profit of the undertakings included in the consolidation as a whole by DTR 4.2.4R.

n The interim management report includes a fair view of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

n The interim management report includes a fair view of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Tom Albanese D D Jalan

Chief Executive Officer Chief Financial Officer

12 November 2014 12 November 2014

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30 September 2014

(US$ million except as stated)

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2014

 (US$ million)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(US$ million)

Financial statements of Vedanta Resources plc, registration number 4740415 were approved by the Board of Directors on 12 November 2014 and signed on behalf by

Tom Albanese

Chief Executive Officer

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 September 2014

 (US$ million)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2014

(US$ million)

For the year ended 31 March 2014:

(US$ million)

 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

For the six months ended 30 September 2013

(US$ million)

1 Other reserves comprise the currency translation reserve, merger reserve, investment revaluation reserve, debenture redemption reserve, capital redemption reserve and the general reserves established in the statutory accounts of the Group's Indian subsidiaries. Under Indian law, a general reserve is created through an annual transfer of net income to general reserves at a specified percentage in accordance with applicable regulations. The purpose of these transfers is to ensure that the total dividend distribution is less than the total distributable results for that year.

Notes to the financial information

1. Basis of preparation

The Condensed financial statements for the six months ended 30 September 2014 have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting as adopted by the European Union ('EU') and the requirements of the Disclosure and Transparency Rules ('DTR') of the Financial Conduct Authority ('FCA') in the United Kingdom as applicable to interim financial reporting.

The Condensed financial statements represent a 'condensed set of financial statements' as referred to in the DTR issued by the FCA. Accordingly, they do not include all of the information required for a full annual financial report and are to be read in conjunction with the Group's financial statements for the year ended 31 March 2014, which were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by EU. The financial statements for the six months ended 30 September 2014 and 30 September 2013 do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the year ended 31 March 2014 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. This information was derived from the statutory accounts for the year ended 31 March 2014, a copy of which has been delivered to the Registrar of Companies. The auditor's report on these accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of an emphasis of matter and did not contain a statement under sections 498 (2) or (3) of the Companies Act 2006.

The financial information prepared under IFRS in respect of six months ended 30 September 2014 and 30 September 2013 are unaudited but has been reviewed by the auditor and their report is set out on page 67.

The Group published full financial statements that comply with IFRS as adopted by the European Union for the year ended 31 March 2014.

The set of financial statements included in the interim financial report has been prepared using the going concern basis of accounting for the reasons set out in the Going Concern section of the Financial Review.

The Group is presenting forward premium on the forward covers within finance costs rather than Other gains and losses. The presentation of the comparative amounts for the six months ended 30 September 2013 and year ended 31 March 2014 of US$40.3 million and US$84.1 million respectively have been adjusted to be on a consistent basis.

Certain amounts which were included in Administrative expenses in the prior periods have been regrouped to Cost of sales to conform to current period presentation.

2. Accounting policies

During the period interim consolidated financial statements are prepared using the same accounting policies as applied in the audited 31 March 2014 annual report. However, during the interim period the following new accounting pronouncements were adopted for preparation of the interim consolidated financial statements.

Accounting pronouncements that became effective in the current period:

Amendments to IAS 36 Impairment of Assets: Recoverable amount disclosure for Non-Financial Assets

The amendment requires the disclosure of the recoverable amount of an asset (or CGU) only in periods in which impairment is recorded or reversed in respect of that asset (or CGU). The amendment also expands and requires the disclosure when an asset's (CGUs) recoverable amount is determined on the basis of fair value less disposal. This amendment is effective for annual periods beginning on or after 1 January 2014.

Amendments to IAS 39 Financial Instruments: Recognition and measurement: Novation of Derivatives and Continuation of Hedge accounting

The amendment states that the novation of hedging instrument should not be considered an expiration or termination giving rise to discontinuation of hedge accounting when a hedging derivative is novated. It provides relief from discontinuing an existing hedging relationship when a novation that as not contemplated in the original hedging documentation meets specific criteria. This amendment is effective for annual periods beginning on or after 1 January 2014.

Amendments to IAS 32 Financial Instruments: Offsetting Financial Assets and Financial Liabilities

The amendments to IAS 32 (amended)-offsetting financial assets and liabilities do not change the current offsetting model in IAS 32. Current offsetting model requires an entity to offset a financial asset and financial liability in the statement of financial position only when the entity currently has a legally enforceable right of set-off and intends either to settle the asset and liability on a net basis or to realise the asset and settle the liability simultaneously. Through these amendments, IASB has clarified the meaning of 'currently have a legally enforceable right to set off' and 'simultaneous realisation and settlement'.

The amendments clarify that to result in offset of a financial asset and financial liability, a right to set off must be available today rather than being contingent on a future event and must be exercisable by any of the counterparties. It must be legally enforceable in the normal course of business. This amendment is effective for annual periods beginning on or after 1 January 2014.

Amendments to IFRS 10, IFRS 12 and IAS 27 (Oct 2012) Investment entities

The amendments define an investment entity and introduce an exception to consolidating the investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments in its consolidated and separate financial statements. The amendments also introduce new disclosure requirements for investment entities in IFRS 12 and IAS 27. The amendments also introduce new disclosure requirements related to investment entities and provide scope exemption for investment entities from IFRS 3 Business Combinations. This amendment is effective for annual periods beginning on or after 1 January 2014.

The Group has early adopted IFRIC 21 Levies which has been endorsed by EU but is effective for the annual periods beginning on or after June 2014

IFRIC 21 provides guidance recognition of a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain. This interpretation clarifies that the obligating event that gives rise to a liability to pay a government levy is the activity that triggers the payment of levy as set out in the relevant legislation. An entity does not have constructive obligation to pay a levy that will be triggered by operating in a future period. However, it does not include income taxes, fines and other penalties, liabilities arising from emissions trading schemes and outflows within the scope of other Standards.

The adoption of these new accounting pronouncements has not had any significant impact on the amounts reported in the financial statements.

The Group has not early adopted any other amendments, standards or interpretations that have been issued but are not yet effective.

Foreign Exchange Rate

The following exchange rate to US dollar ($) have been applied:

3. Segmental Reporting

The Group's primary format for segmental reporting is based on its business segments. The business segments consist of zinc, oil and gas, iron ore, copper, aluminium and power with components not meeting the quantitative threshold for reporting being reported as "Others". Business segment financial data includes certain corporate costs, which have been allocated on an appropriate basis. The risks and returns of the Group's operations are primarily determined by the nature of the different activities in which the Group is engaged. Inter-segment sales are charged based on prevailing market prices.

Vedanta Resources plc is a company incorporated in the United Kingdom under the Companies Act. The Group's reportable segments defined in accordance with IFRS 8 are as follows:

n Zinc-India

n Zinc-International

n Oil and gas

n Iron Ore

n Copper-India/Australia

n Copper-Zambia

n Aluminium

n Power

Other business segment comprises of port/berth, paper and other investment companies.

Management monitors the operating results of reportable segments for the purpose of making decisions about resources to be allocated and for assessing performance. Segment performance is evaluated based on the EBITDA of each segment.

The following tables present revenue and profit information and certain asset and liability information regarding the Group's reportable segments for the six months ended 30 September 2014 and 30 September 2013 and for the year ended 31 March 2014.

(a) Reportable segments

Six months ended 30 September 2014

(US$ million)