REPLACEMENT Preliminary Results

15 May 2014

GENERAL TEXT AMENDMENT

The following amendment has been made to the ' Vedanta Resources PLC Preliminary Results ' announcement released on 15 May 2014 at 07.00 under RNS No 1634H.

n Final dividend of 39 US cents per share, up 5% not 3% as stated in the original release

All other details remain unchanged.

The full amended text is shown below.

Vedanta Resources plc

Preliminary Results for the Year Ended 31 March 2014

Vedanta marks 10 Years since London IPO

n Built a diversified portfolio of high-quality, world class assets

n Delivered Total Shareholder Return of 200%, higher than the FTSE 100 and FTSE 350 Mining Index

n Increased dividend nine of the last 10 years; dividend growth CAGR of 14% since IPO

Financial Highlights

n Revenue of US$12.9 billion

n EBITDA(1) of US$4.5 billion; EBITDA margin of 45%(2)

n Underlying attributable profit US$93.4 million

n Basic EPS (71.7) US cents, Underlying EPS(3) of 34.2 US cents

n Free cash flow of US$3.0 billion before growth capex and US$1.6 billion after growth capex

n Net Debt reduced by $0.7 billion over the last 12 months and by $2.1 billion over the last 24 months

n Final dividend of 39 US cents per share, up 5%

Business Highlights

n Sesa Sterlite Merger and Group consolidation completed

n Record Oil & Gas production at Rajasthan: Achieved milestone of 200kbopd in March 2014 and cumulative production of 200 million barrels until end FY 2014; 100% reserve replacement during the year

n Record production of mined and integrated metal at Zinc India

n Improved operating performance at Aluminium smelters without captive bauxite and commissioning of new pot-lines commenced

n Strong utilisations at Tuticorin copper smelter; 2nd 80MW unit of power plant commissioned during Q4

n Synchronised first 660MW unit of 1980MW Talwandi Sabo power plant

n Continued cost control and efficiency improvements across businesses

n Iron ore production restarted in Karnataka and mining ban in Goa lifted with certain conditions laid out by the Supreme Court

n Key priorities for the coming year is to improve operating performance at KCM, restart iron ore mining, improving capacity utilisation at Aluminium and Power and improvement in safety performance

Mr. Anil Agarwal, Chairman of Vedanta Resources plc said, "This has been another year of progress for Vedanta as we celebrate 10 years since our London listing. We achieved record oil and gas production, driven by the ramp up in the Rajasthan block, as well as record production at Zinc India and with improved operating performance at our Aluminium business. Building on these results, as a major global diversified natural resources company, we continue to focus on delivering value for our shareholders through operational excellence, exploration upside and increasing cash flows from our well-invested assets."

(in US$ millions, except as stated)

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

(2) Excludes custom smelting revenue and EBITDA at Copper and Zinc-India operations from purchased concentrate

(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 11 of financial statements)

(4) The comparative information has been restated so as to reflect the adoption of new accounting standards

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About Vedanta Resources plc

Vedanta Resources plc ("Vedanta") is a London listed diversified global resources major. The group produces Aluminium, Copper, Zinc, Lead, Silver, Iron ore, Power, and Oil and Gas. Vedanta has world-class assets in India, Zambia, South Africa, Namibia, Ireland, Liberia, Australia and Sri Lanka and a strong organic growth pipeline of projects. 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

Diversified portfolio delivering consistent performance in a challenging market.

I have always believed that the ability to produce robust results in volatile markets is the hallmark of a strong and agile company. I am therefore pleased to announce another set of commendable operating and financial results delivered by our management team and employees, as we mark a decade at Vedanta.

Ten years ago we had a vision to create a large global diversified natural resources major that unlocks the remarkable resource potential of India, meets the growing demand of a nation of a billion people, and gives investors an opportunity to participate in the journey with the comfort of a premium listing on the London Stock Exchange.

We believe the benefits have been felt all-round: since our IPO at 390p in December 2003, shareholders have seen a Total Shareholder Return of over 200% and we have paid a progressive dividend that was increased in 9 out of 10 years and held constant for one year.

We now stand as one of the world's largest diversified resources company with operations in India, Zambia, Namibia, South Africa, Ireland, Liberia, Australia and Sri Lanka, which directly and indirectly, enhances the lives of at least 4.1 million people across the world. As we look back over this first decade I am proud of the contribution that we have made, both fiscally and socially, to the exchequer, our employees and the numerous communities in and around our operations.

Highlights of the year

Vedanta has again shown that the fundamentals of our business remain strong. We have a diversified portfolio of assets that have cost-efficient operations, are highly productive, and have generated strong free cash flows of $1.6bn after capital expenditure on sustaining and expansion projects.

In particular we were delighted with the performance of the oil & gas division, Cairn India, which passed two notable milestones during the year. The onshore, prolific, Rajasthan block achieved the landmark of 200 million barrels of cumulative oil production over its life, and also reached a production rate of 200,000 barrels of oil equivalent per day in March 2014, against a production rate of 125,000 barrels of oil equivalent per day, when we acquired this business.

I warmly congratulate the team on this fine achievement, and I also thank the Indian government whose partnership has been crucial. Cairn now produces 27% of India's oil production and with the Government's focus on increasing India's oil production , it can contribute further to helping reduce India's dependence on imported oil & gas which still accounts for 75% of its needs.

Zinc India is the second largest integrated zinc producer globally with a mine life of more than 25 years and costs in the lowest quartile of the global cost curve. It delivered an excellent performance with a record production of mined and integrated refined metal.

Financial performance

The year saw revenues of US$12.9 billion and an EBITDA of US$4.5 billion despite lower commodity prices.

EBITDA reflected weaker global commodity and oil prices, increased rate of share of profit petroleum to Government of India, although these were partly offset by lower costs in aluminium, increased volumes at Zinc India and our record oil production.

We also experienced lower volumes at Konkola Copper Mine (KCM) and Zinc International and Iron Ore, where the state-wide bans on mining in Karnataka and Goa were lifted in December 2013 and April 2014 respectively, albeit with conditions. We resumed mining in Karnataka in December, and are currently working with the State of Government and the Environment Ministry to restart operations in Goa.

Delivering against our strategy

As well as producing satisfactory results, we remained focused on our core strategy.

It was a year when we eased back on capital expenditure and concentrated on production. Despite inflationary pressures, we succeeded in controlling our costs; in aluminium, for example, we rank in the second quartile, even ahead of many others who enjoy the advantage of captive bauxite.

We continued to reduce net debt which now stands 8% down at US$7.9 billion, and generated strong free cash flow of US$3.0 billion.

I was also pleased to see further progress on our goal to discover more than we mine out. During the year we delivered a 100% reserve replacement at Oil & Gas and Zinc India.

In addition, we responded to a often-received feedback from shareholders for a simpler group structure by completing the Sesa Sterlite merger during the year, which has eliminated cross-holdings, better aligns cash flow generation and debt across the group structure and delivers valuable synergies.

Sustainability

I have always felt deeply that it is our employees who drive our success. It has therefore been a priority that they have been able to grow with us, both financially and personally, and that we contribute to their well-being and development. We've developed incentive plans to broaden share ownership among our middle and senior management, so they also become shareholders of our company.

However, even growth is a secondary consideration compared to the need to work safely and to minimise our impact on the environment. We were deeply saddened by the 19 fatalities that occurred during the year and both our incoming CEO and I are determined to address this as we make personal safety an absolute priority. It was good to see a reduction of 37% in lost time incidents over the last four years, and 74% of non-hazardous waste being recycled during the year which shows an encouraging progress. Over the past year, I have been particularly pleased with the success our businesses' have had in implementing our Sustainability Framework underpinned by our successful Scott Wilson audit and the insights we have gained from this exercise.

Out in our communities, we continued to expand our support programmes. We have seven discrete focus areas: health, education, sustainable livelihoods, women empowerment, community asset creation, bio-investment and integrated village development. During the year we spent US$49 million, benefitting over 4.1 million people.

Governance

At the close of the year our CEO of five years M.S. Mehta took well-earned retirement. I wish to place on record my thanks to him; he joined us around 14 years ago and led various operations across the Group. His insight and leadership have been pivotal to our success over this first decade and he departs with our warmest wishes.

We are also delighted to have secured a replacement of the calibre of Tom Albanese, who took up the reins as our new CEO in 1 April 2014. Tom brings with him a lifetime's experience in resource mining and operations and will add considerable value as we meet the opportunities and challenges ahead.

During the year, Deepak Parekh, the non-executive Chairman of the Housing Development Finance Corporation (HDFC) Limited, India's premier housing finance company, joined the Vedanta Board as an independent Non-Executive Director. I would also like to thank Naresh Chandra who retired from the Board following the conclusion of the our 2013 Annual General Meeting having served nearly nine years on the Board.

Outlook

India's per capita consumption of commodities is expected to rise consistently and strongly over the next 2-3 decades with favourable demographics and growing urbanisation, and as a large and responsible corporation, Vedanta is well positioned to supply to India's need for commodities while operating at international standards of sustainable development. FY2013-14 has been a year of building momentum in the right direction, and I see it as a powerful springboard for the year ahead as we build on the significant headway achieved in production ramp-ups, cost controls, regulatory clearances and sustainability. We remain focused on our stated strategic priorities of ramping up production across our portfolio and to deleverage the balance sheet.

Anil Agarwal

Chairman

15 May 2014

INCOMING CHIEF EXECUTIVE'S STATEMENT

Tom Albanese became our new Chief Executive Officer on 1 April 2014. Here he gives his initial impressions of the Company and outlines his first priorities.

"Taking the helm of a world class business is an honour, and I am especially excited to be leading a diversified resources company like Vedanta with a large presence in India, a country where I see the potential for significant demand growth and the opportunity to develop and harness natural resources to meet this surge in demand."

India has long held a fascination for me. It is endowed with a vast and largely untapped potential in natural resources, and it is also a country of fast-growing aspirations. It is home to over a billion people driving demand for consumer durables, transportation, telecommunications and new infrastructure.

Just prior to taking up the role, I spent six months as Chairman of Vedanta Resources Holdings Limited, that operates as a subsidiary of Vedanta Resources plc and the holding company for the operating companies, which gave me an opportunity to know the Company well, visit the operations and chair several monthly Executive Committee meetings going through detailed reviews of business performance. I visited almost every asset and spent a lot of time underground which left me as energized as my first mining job more than 30 years ago. I wanted the opportunity to look and learn, engage with the workforce and gain a well-informed first-hand impression.

Our people

What I have found is a very effective management team and a professional and committed workforce, and I express my thanks to the outgoing CEO of the Group, Mr. M.S. Mehta and the outgoing CEOs of the Iron Ore division, Mr. P.K. Mukherjee, and Oil & Gas division, Mr. P. Elango, whose efforts to build these teams have been commendable.

There are some gaps which we need to fill, such as boosting underground mining expertise, but the organisation is staffed by highly capable teams. It is clear to me we have commercial acumen in depth, as well as a proven process engineering capability and a tremendous culture of leadership development.

We will be building on our teams in the coming year, benefiting from strong internal talent and complementing it with fresh perspectives from external hires. On that note I am delighted that we have hired a new CEO at our KCM business and a new head of Corporate Communications and Corporate Social Responsibility who is taking up this role with a strong emphasis on CSR; an area where I think we can present ourselves better.

Our assets

My tour of the assets confirmed to me that we have much to be proud about. The Company's ethos of keeping a firm control on costs is clearly translated into action on the ground, with our largest businesses ranking in the lowest cost quartile of the global cost curve.

I have also been struck by the world class quality of resources and resource potential. In particular, four assets come to mind. Our prolific onshore Rajasthan oil and gas block; the Zinc India assets, also in Rajasthan, with the largest zinc-lead mine in the world; our low-cost iron ore mines in Goa; and, with some operational improvements, the long life potential of the high-grade copper assets at Konkola Copper Mines (KCM) in Zambia.

These are just four examples in a very exciting landscape. As a resources explorer, I know that this sector and our organisation can play a vital role in India's growth and prosperity. It will be part of my remit to engage with policymakers to help in harnessing India's resource potential and thereby create growth and employment.

Immediate operating priorities

In the near-term, I see a number of key operating priorities and these will receive immediate focus. They are:

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

I will also focus on driving further the already successful businesses, and this will include maximising exploration and optimising production at the Rajasthan oil and gas block and a proper transition of the Rampura Agucha mine at Zinc India from open-cast to underground in the next few years.

Safety: zero harm

Having spent my professional life involved with the mining industry across different countries, I know first-hand the absolutely necessity to strive for a zero harm environment.

So although there have been some improvements in the Company's lost time injury frequency rate metrics, I have communicated to the Board, the management team and the entire workforce that the fatality rates at our operations are wholly unacceptable.

I am therefore conducting a personal and thorough appraisal of our safety management processes, contractor management and compliance, and internal safety leadership with the clear target of moving towards a zero harm record.

This is not only the right thing to do by the workforce, but in my experience, the safest businesses are also the most capably led and efficient, with all the benefits that flow to employees, communities and shareholders alike.

Protecting our licence to operate

The most successful businesses in our sector have not merely gained a licence to operate; every day, they work to protect and maintain that licence. In turn, they have assets that don't just last a decade but have productive lives that can span generations of workers.

At the heart of this longevity is Corporate Social Responsibility in its fullest sense: a commitment to engage with local communities; to safeguard the wellbeing of the workforce; and to minimise wherever possible the impact made on the environment. Indeed, legislation is raising the bar on these issues, not just in India but around the world. While Vedanta meets or exceeds regulatory requirements, I am focused on raising standards further.

One of the first locations I visited was Lanjigarh, where we have ambitions to ramp-up the refinery to a capacity of 5 million tonnes of alumina. However, the bauxite for this is to be supplied by the State Government as per our existing Memorandum of Understanding. On behalf of Vedanta, I reiterate that we will not consider developing any bauxite resources including the Niyamgiri mines, without the consent of the local communities.

Regarding our employees, we are conducting a gap analysis to ensure our compliance with the UN Principles of Human Rights. I am also introducing two non-negotiables: the radical improvement in safety I mentioned above, and a reinforcement of the strong principles already in place here surrounding compliance, integrity and ethics. Our performance in both these areas will be led by a strong tone from the top.

So as I set to work in my first year as CEO, I'm very excited about the potential ahead. We have the people and the assets and I look forward to setting a stage that will enable even greater performances ahead.

We are all here for the purpose of adding value, for our shareholders, our employees, and all stakeholders. Over the past ten years the Company has created tremendous value for all three, and I am committed to continue to do this in the future, and take Vedanta to the next level of performance in all aspects.

TOM ALBANESE

Chief Executive Officer

Overview

The strength of our portfolio continued to support the business performance during a year where we faced subdued commodity prices. There has been an improvement in global financial condition and several economies have begun to recover but growth still remains weak. Worldwide economic growth for 2013 was stable at 3.0%, just slightly lower than the 3.1 % recorded in 2012. Growth rates in both emerging and advanced economies declined slightly. The slowdown in the early part of the year in China contributed to the 4.7% overall growth rate in emerging markets and the developed economies only recorded a 1.3% rise. There were more encouraging signs in the second half of the year as the new Chinese government accelerated investment in infrastructure and the European economy began to move out of recession.

The world economy is expected to strengthen in 2014, with growth rising to 3.7%, closer to its historical average. Growth orientated monetary policies are expected to drive growth in advanced economies up to 2.2%, increasing demand that will impact emerging economies and deliver predicted growth rates of 5.1%. The World Economic Forum cites fiscal crisis in key economies, global governance failure, high unemployment, political and social instability among the top 10 concerns for 2014 and these risks remain common to all emerging economies as well. China has moved to a more sustainable albeit lower growth trajectory with the focus now moving to demand driven growth from investment driven growth.

India's growth is still one of the highest in the world, although it slowed to 4.6% in 2013 reflecting government measures to reduce the current account deficit and tighten monetary policy. Improving export competitiveness and a favorable monsoon season are expected to contribute to a modest rise to 5.4 % in 2014 with the potential to recover to 6.75% in the medium term if structural reforms can be implemented to accelerate investment projects to improve infrastructure and bring persistent high inflation levels under control. With these measures the Indian economy now seems to be better placed to handle the impact of advanced economies reducing the quantitative easing policies that have been used extensively to mitigate the recession.

Investment in infrastructure for transportation, housing and power will continue to drive demand for aluminium, zinc, copper and iron ore in India fuelled by a rising population of working age, increasing income per capita and a growing middle class.

In the longer term, China and India are expected to be the main engine for recovery in global growth and support strong commodity demand.

As the leading natural resources provider in India, Vedanta is well-positioned to respond to the on-going demand for raw materials with strategically located, high quality production and processing assets, where capacity can be ramped up to respond to market demands.

Close proximity to growing Asian markets and commodities in the lower half of the global cost curve puts the company in a strong competitive position to advantage of the opportunities in both emerging markets and in India.

Vedanta's strategy remains focused on delivering growth, long-term value and sustainable development through our diversified portfolio of Tier-1 assets. Our diversified portfolio spread across base metals, bulks, oil & gas and commercial power comprises large, low cost, long life and scalable assets. Our assets have delivered consistent EBITDA margins (excluding custom smelting) of around ~45%. We are now delivering strong growth in free cash flows from most of our businesses, with production growth coming through and bulk of our investment programme in our metals business now largely complete. Growth projects in our Aluminium and Power businesses are also nearing completion and with the captive sources of bauxite , will contribute to cash generation in medium term.

This is supplemented by a disciplined approach to capital allocation, in order to generate superior shareholder returns. Our capital allocation policy prioritises low risk, phased developments, with the emphasis on those businesses that generate highest returns.

We continue to drive our strategic priorities of long term value creation with a focus on sustainability. All of our assets have cost competitive positioning helping us sustain industry leading margins throughout the commodity cycle.

Key strategic priorities

n Production ramp up from well invested assets driving strong free cash flow

n Disciplined capital allocation : low risk and phased development

n Generate positive free cash flow from all businesses and utilize cash flows to de-lever

n Continue to add R&R to more than replace production

n Preserve and enhance our licence to operate

Reserves and Resources

In FY 2013-14 Zinc India added 26.1 million metric tonnes gross to reserves and resources ('R&R'), prior to a depletion of 9.3 million metric tonnes, replacing 120% of zinc-lead metal mined during the year. Total R&R as at March 31, 2014 were 365.1 million metric tonnes containing 35.2 million metric tonnes of zinc-lead metal and 926 million ounces of silver. Overall mine life continues to be 25+ years.

During FY 2013-14 Cairn India achieved a reserves replacement ratio of ~1, following the submission of Field Development Programmes (FDPs) for Bhagyam Polymer flood, Raageshwari Deep gas development and Aishwariya reservoir performance.15 exploratory wells were drilled in the Rajasthan asset and 50% of the prospective resources have been drilled out. Of these 12 wells have found hydrocarbons; with nearly 1.5 billion barrels of hydrocarbons in place discovered. Our 26th discovery, the Raageshwari S-1 wellis in production within a year of its discovery through the IDP policy.

We have identified significant, potentially low cost, "start-up" ores at all three Liberian iron ore projects, with tailings at Bomi and soft weathered cap ore at Bea and Mano. Initial studies indicate that these resources will be easy to process. These resources have potential for further enhancement with more exploration.

Group consolidation and simplification

The Group structure consolidation and simplification exercise, announced in February 2012, was concluded and took effect in two phases on 17 August 2013 and 19 August 2013. The merger of Sterlite Industries (India) Ltd. and Sesa Goa Ltd., and the consolidation of the Vedanta Group has created India's largest and one of the world's top seven diversified natural resource majors by market capitalisation and EBITDA.

The merger creates a platform for reinforcing the Company's position with a diversified portfolio to reduce volatility of earnings through commodity cycles, lowering the cost of capital and enhancing value. The consolidation will generate significant operational and financial synergies such as procurement, marketing, human resources and the improved opportunity to transfer cash between subsidiary companies and the holding company will facilitate debt servicing and efficient cash management.

Key developments

The National Green Tribunal's favourable order paved way for restarting the Tuticorin smelter, following the temporary closure in the first quarter of the year. The smelter operated at its rated capacity in last six months in FY 2013-14, following the ramp up in Q2.

Production also restarted at the 1 mtpa capacity Lanjigarh alumina refinery in July 2013 after a temporary shutdown and the refinery operated at 91% in 4th quarter. The Ministry of Environment and Forests ('MOEF') has rejected the grant of stage II forest clearance for the Niyamgiri mining project of Odisha Mining Corporation Limited ('OMC'), which is one of the sources for supply of bauxite to the alumina refinery at Lanjigarh. Consequently, certain idle mining assets amounting to US$11 million related to Niyamgiri mines have been impaired to the income statement as a special item.

The Memorandum of Understanding with the Government of Odisha (through the OMC), required 150 million tonnes of bauxite to be made available to the Company. We continue to actively engage in discussions with the Odisha State Government for allotment of alternative bauxite mines. The Company is also considering sourcing bauxite from alternate sources to support the existing and expanded refinery operations.

With regard to the expansion project at Lanjigarh, the Company's fresh application for environmental clearance is in process and in the meantime the expansion plans are on hold. These matters are critical to the planned aluminium refinery operations of the Company. The management expects that with the timely support of relevant authorities, these matters will be satisfactorily resolved.

Following the lifting of restrictions on mining at Karnataka by the Honourable Supreme Court ('The Court') in April 2013, we received final statutory clearance in December 2013 and resumed mining at Karnataka, optimising our approved annual capacity of 2.29mtpa, which resulted in a production of 1.5mt in the fourth quarter of the year.

The Court lifted the ban on mining in the State of Goa subject to certain conditions, through its order dated 21 April, 2014. The Court also imposed an interim state-wide cap of 20 million tonnes, subject to determination of final capacity by an Expert Committee.

The Court also decreed that all mining leases in the State of Goa, including those of Sesa Sterlite, have expired in 2007. Consequently, no mining operations can be carried out until renewal/execution of mining lease deeds by the State Government. The State Government is in process of setting out rules and regulation to start mining activity in the State of Goa. We are working towards securing the necessary permissions for commencement of operations at the earliest opportunity.

The Court has also directed that the entire sale value arising out of e-auction of inventories to date be appropriated to various purposes specified in the order with only the average cost of excavation of iron ores paid to the mining lessees.

In addition all new production of iron ore will incur a payment of 10% of the sale price to be made by all lessees towards the Goa Iron Ore Permanent Fund.

The Court also announced an interim order allowing the sale of iron ore in Goa.

Work on the major mining capacity expansion projects in Zinc India is making good progress. The Rampura Agucha underground mining is now operational using a ramp. The Kayad mine has also commenced production in the current financial year. Although the project to expand production from 1 mtpa to 1.2 mtpa is not due for completion until 2019, the project is designed to start delivering positive cash flow from FY 2014-15. The yearly capital expenditure is forecast to be around US$250 million. We are also exploring an option to expand the life of the open pit mine at Rampura Agucha.

Sustainability

The resources we bring to market create the basic building blocks of society and are essential sources of socio-economic growth, both within and beyond the regions where we have operations. We believe that we can strengthen our business and positively impact the world by managing all our business operations sustainably and we maintain constructive and mutually respectful relationships with all our key stakeholders. We are guided by our three sustainability pillars- Responsible Stewardship, Building Strong Relationship and Adding & Sharing Value.

Implementing our sustainability framework

We continued providing training to our management teams to ensure there was a solid understanding of the Framework's requirements. Now all our new projects are implemented as per our sustainability framework guidelines. We are using the Vedanta Sustainability Assurance Programme (VSAP) as our internal sustainability risk management tool to ensure Framework compliance.

Responsible stewardship

This pillar of our Sustainability Model encapsulates our approach to managing our risks and how we conduct our business ethically. It also guides us in ensuring the health and safety of our workforce and how we minimise our environmental footprint.

Health & Safety

The health and safety of the people who work for Vedanta remains a key focus and we are saddened to report 19 fatalities this year. Despite these tragedies, we see a continued reduction in the injury rates, and over the past five years our Lost Time Injury Frequency Rate as decreased from 0.86 to 0.54. Whilst safety management is continually improving around the Group, we remain focused on improving our performance and meeting our target of zero fatalities.

Environment

Our continuous improvement projects in air, water and energy management have made good progress, but the business has much more to do to meet our own challenging targets. During the year, we recycled 74% of overall non-hazardous waste. We disclose our environmental performance to the Carbon Disclosure Project, and in the last three years we have consistently improved our score, achieving 82 points this year and a performance grade B. This saw Vedanta ranked ninth among 31 FTSE 350 companies in the materials category.

Building strong relationships

Stakeholder engagement is an ongoing process and, to add additional rigour, this year we undertook a focused materiality assessment to understand stakeholders' expectations of us as a global business. We have identified and engaged with seven stakeholder groups i.e. Employees, Communities, Industry, Host Governments, Civil Societies, Shareholders and Investors.

Throughout the year around 3800 stakeholder engagement meetings took place, with community leaders, non-governmental organisations (NGOs), governments and government bodies, academic institutions and more than 250 partnerships are now in place.

Led by the Sustainability Committee we also undertook internal reviews related to human rights and child labour risk assessments.

Adding & sharing value

We believe our role is to create value for all our stakeholders; not just through the financial value we create for our shareholders but the non-financial value we add to society. To deliver this role we employ, directly and through contractors, around 90,000 people. We play a significant role in growing local skills and in the development of local infrastructure, including roads, sanitation, education and medical facilities. We made a community investment of US$49 million this year, reaching 4.1 million people and providing support for schools, hospitals, health centres and farmers.

We contributed US$5.3 billion to the Exchequer through direct and indirect taxes, royalty and oil tax.

Finance Review

Robust performance with subdued prices

Vedanta delivered US$4.5 billion EBITDA with a backdrop of a challenging economic environment, volatile markets and generally low global growth rate. EBITDA was down by 8.5% compared with FY 2012-13 driven by lower commodity prices, reduced volumes at Copper Zambia and Zinc International, lack of sales from our Iron Ore business and temporary closure of the Sterlite copper smelter in Q1 FY 2013-14. However improved operational performance with volume increase in Cairn, Zinc India and effective cost control measures across our businesses partially mitigated the downside. EBITDA margin excluding custom smelting of 44.9%, continued to be healthy at similar levels to last year as a result of a continued track record of stable operating performance.

The metals businesses are well placed on the cost front with a majority of our businesses in the lowest quartiles of the global cost curve. At Zinc India, we are placed in the first quartile, at Jharsuguda aluminium smelter we are in lowest quartile of the cost curve. Zinc International is in second quartile while the BALCO operations maintained second quartile cost positioning despite the lack of captive alumina. Copper India's smelter also maintained its second quartile cost positioning achieving best in class operational standards.

The Group structure consolidation and simplification exercise, announced in February 2012, was concluded and took effect in two phases on 17 August 2013 and 19 August 2013. As part of the reorganisation Sterlite Industries India Limited (SIIL), Vedanta Aluminium Limited (VAL), Madras Aluminium Company Limited (MALCO) and Sterlite Energy Limited (SEL) were merged with Sesa Goa Limited and renamed Sesa Sterlite Limited (SSL). On 26 August 2013, Vedanta also transferred the shareholding of one of its subsidiaries which held 38.7% stake in Cairn India Limited (Cairn), to SSL, along with the associated debt of US$5.9 billion. On 19 August 2013, the Power business was transferred from VAL to SSL at its carrying value through a sale and purchase agreement on a going concern basis. The Power business consists of the 1,215MW thermal power facility at Jharsuguda and the 300MW co-generation facility (90MW operational and 210MW under development) at Lanjigarh. These transactions are within the subsidiaries of the Company and will not have any acquisition accounting impact other than a change in the economic shareholding percentage. The simplification exercise has resulted in a change in economic holding percentage mainly in VAL and Cairn India. VAL's effective holding has decreased from 87.6% to 58.3% whereas Cairn India's reduced from 49.8% to 34.3%. The equity and non-controlling interest have been adjusted to reflect these changes in the economic shareholding.

Consolidated Operating Profit before special items

(in US$ million, except as stated)

Consolidated Operating Profit Variance

(In US$ million)

Volumes

Operations excluding plant closures

Volume growth generated a positive contribution of US$424.6 million, mainly due to record oil and gas production and increased volume of refined zinc, lead and silver at Zinc India. This was partially offset by lower volumes at Konkola Copper Mines (KCM) and Zinc International resulting in a US$117.8 million reduction in operating profit, net positive impact of US$306.8 million.

Plant closures due to regulatory matters

Lack of sales at our Iron Ore business due to the continued iron ore mining ban in Goa, combined with only marginal sales in Karnataka in Q4 , contributed to a negative variance of US$123.7 million to the operating profits compared with FY 2012-13. Due to regulatory issues, the Tuticorin Smelter was closed temporarily in Q1, which impacted operating profit by US$32.9 million. In addition the closure of our Australian mine in Q4 following a mud rush incident, meant operating profit was down by US$30.9 million. In total, operating profit was adversely impacted by US$187.5 million due to plant closures following regulatory issues.

Prices

The prices of many commodities declined during the financial year resulting in lower operating profits.

Average aluminium prices declined by 10.2% due to extraordinarily high levels of legacy inventories.

Average copper prices were also lower by 9.5% as base metals have come under pressure due to concerns about a less commodity- intensive expansion in China. However new LME warehousing rules in 2014 could alleviate storage bottle necks and raise supply going forward.

Average Brent crude prices dropped by 2.3% in the year. Sluggish demand and a strong supply in the US market led the decline in prices in first half. This was followed by several supply disruptions in the rest of the world in the second half of 2013, mitigated by the reduction in imports in the US, leading to more stable prices.

Average zinc prices reduced by 2.0% as the global refined market moved into deficit and the concentrate market moved into surplus. However, with ample stocks of zinc in China and the rest of the world, the zinc price did not respond to the improved fundamentals. Average lead prices declined by 1.0%. Silver prices were lower by 29.8% as compared to the previous year.

Our Power business also witnessed lower energy prices primarily due to lower demand.

The lower commodity and oil prices across our businesses resulted in an adverse impact of US$562.4 million which was marginally offset by higher premia to LME prices in zinc and aluminium of US$54.6 million.

The movement of average commodity prices in FY 2013-14 is shown in the table below:

(in US$/MT)

The impact of lower prices was US$150.1 million for our Zinc business, US$141.1 million in our Aluminium business, US$177.0 million in our Oil & Gas business and US$86.0 million in Copper Zambia and India/Australia. In aggregate, the operating profit for the year was reduced by US$562.4 million as a result of lower prices.

Currency & Foreign Exchange fluctuation

The Indian rupee: USD exchange rate at the beginning of the year was 54.4 Indian rupees per USD closing at 60.1 Indian rupees per USD at the year end. The average exchange rate for the year FY 2013-14 was 60.5 Indian rupees per USD, an 11% increase against the average 54.5 Indian rupees per USD for FY 2012-13. This improved operating profits by US$169.8 million.

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

(1) Kwacha has been devalued with effect from January 2013

Cash costs of production

The cost-inflationary environment prevailing in the sector was largely mitigated by higher production volumes at Cairn India, Zinc India, the Jharsuguda aluminium smelter, operational efficiencies of our plants and the depreciation of the Indian rupee against the US dollar in which most of our costs are denominated. The cost of production had a favourable impact on operating profit at our Aluminium business, Cairn India and Copper Zambia by US$181.0 million compared with an increase in the previous year in Zinc India and International and Copper India/Australia of around US$105.5 million. Our overall operating profits increased by US$75.5 million due to the improved costs compared with the previous year.

Depreciation

The depreciation was almost flat during FY 2013-14 with a US$19.5 million increase in depreciation charge mainly at Cairn India driven by the capitalisation of wells, whereas in other businesses it reduced due to currency translation impacts.

Amortisation

The reserves related to our acquisitions mainly of 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 in amortisation charges in FY 2013-14 as compared to the previous year was US$153.6 million, mainly due to lower production volumes in Zinc International and our Iron Ore business.

Income statement

 (in US$ million, except as stated)

Revenue

Revenue was down 11.6% at US$12,945.0 million primarily driven by weaker commodity and oil price environment, and temporary business closures due to regulatory issues though partly offset by improved volumes at Cairn India, Zinc India.

Consolidated revenue

(in US$ million, except as stated)

Consolidated EBITDA

The consolidated EBITDA by sector is set out in the table below:

(in US$ million, except as stated)

EBITDA for FY 2013-14 was lower by 8.5% at US$4,491.2 million as compared to US$4,908.9 million in FY 2012-13 as explained in the initial part of this financial review section.

EBITDA margin

Despite lower EBITDA, our EBITDA margin remained strong at 34.7% (FY 2012-13 at 33.5%) and improved marginally. EBITDA margin excluding custom smelting operations, remained stable at 44.9% (FY 2012-13 at 45.1%). The diversified portfolio helped us improve overall margins despite the weak commodity price environment.

In our Zinc India business, margin was largely maintained despite reductions in zinc, lead and silver prices. This was a result of higher mined metal, silver production and robust cost management. At Zinc International margin were lower by 4.6% as a result of lower volumes and slightly higher costs.

EBITDA margin in our Copper businesses in India/Australia improved marginally due to lower conversion cost backed by better operating performance of the smelter in the second half supported by higher Treatment and Refining charges ('TCs and RCs') though offset by Australian operations temporary closure impact in Q4 and lower by-products credits at Tuticorin. At Zambia though the margins drifted lower following the impact of lower volumes.

Aluminium business delivered an increase in EBITDA margin due to an improvement in operating performance with a reduction in the cost of production which was partially offset by a significant decrease in aluminium prices.

The Power business EBITDA margin decreased significantly this year as a result of the lower tariff currently being recognised from the power supply company Grid Corporation of Odisha Limited (Gridco) in Odisha. Other factors like lower PLF as a result of lower demand, but better variable costs largely offset each other.

Oil & Gas EBITDA margin continued to be stable during the year at 75.9%.

Special items

US$138.0 million has been charged to our Income Statement as a result of special items. An impairment charge of US$81.6 million being recorded against the value of reserves in our Lisheen mine for US$47.5 million with impairment of idle mining assets worth US$11.0 million and US$23.1 million towards open pit mining assets of Copper Zambia at Nchanga. It also includes a one time charge towards Land tax of previous years paid to Sesa Goa State Government of US$16.6 million for regularising mining dumps on Government and private land and US$15.1 million relating to voluntary redundancy charges at Zinc India. US$22.1 million has been provided in Copper Zambia as a settlement agreement with a mining contractor. Finally, Group simplification and restructuring related costs of US$2.6 million have been accounted as special items.

 Depreciation and amortisation

The depreciation was up marginally by around US$19.5 million as explained earlier. Amortisation charges of our acquisition related expenses were lower by US$153.6 million mainly due to reduced production volumes.

Net interest

The finance costs charged to the income statement were higher by US$165.8 million at US$1,355.7 million in FY 2013-14 (FY 2012-13 US$1,189.9 million). This was primarily due to non capitalisation of interest at Jharsuguda Plant 2 of around US$116.0 million due to the delay in commissioning. During the year we have also accelerated the fair value amortisation by US$71.0 million on convertible bonds where the put option is likely to be exercised in May 2014.

Investment revenues were marginally higher at US$687.7 million as compared to US$669.0 million in the previous year despite mark to market (MTM) losses of US$17.0 million on certain investment in duration funds and bonds.

As a result net interest expenses increased to US$668.0 million from US$520.9 million in FY 2012-13.

Other gains and losses

Other gains and losses include the impact of MTM changes on foreign currency borrowings, primarily at our Indian businesses. The other gains and losses in FY 2013-14 were US$364.0 million, as compared with a loss of US$285.2 million in FY 2012-13.

Taxation

The effective tax rate has gone up during the year from 2.7% to 11.5% largely due to the credit of US$290.0 million in Cairn India following a reorganisation in previous year. The impact of a tax reversal of US$257.0 million during the year as a result of the Sesa Sterlite merger is largely offset by the creation of a deferred tax liability on the fair valuation of Cairn India following an increase in surcharges by 5% and other one time provisions.

Attributable (loss) / profit

The attributable loss in FY 2013-14 was US$196.0 million, significantly lower than the US$162.0 million attributable profit in FY 2012-13. This was primarily due to a decrease in EBITDA of US$417.7 million, with higher special items and one offs like accelarated amortisation on a large convertible bond series in the current year, interest charged to income statement instead of capitalisation at Jharsuguda Plant 2.

Apart from lower EBITDA, special and one off items as explained above, profit mix i.e. better performance at partly owned subsidiaries as compared to wholly owned subsidiaries resulted in higher economic interest of minorities, leading to an attributable loss.

Underlying attributable profit

Underlying profit for the year, excluding the impact of MTM losses and special items was lower at US$93.4 million as compared with US$367.9 million in FY 2012-13. This follows from the above.

Earnings per share

Basic loss per share in FY 2013-14 was at 71.7 US cents per share (FY 2012-13 59.4 US cents profit per share).

However, if we exclude special items and other gains and losses, the underlying EPS for the year was 34.2 US cents per share (FY 2012-13 134.8 US cents).

The Board has declared final dividend of 39 US cents per share an increase of 5.4% as compared to 37 US cents in FY 2012-13.

Balance sheet

(In US$ million, except as stated)

Shareholder's equity was US$4,010.4 million at 31 March 2014 compared to US$4,401.3 million at 31 March 2013 reflecting the impact of currency depreciation against US dollar (mainly, the Indian rupee) by US$1,239.6 million, attributable losses of US$196.0 million due to equity holders during the period, dividend payment and movement of convertible bond reserves. These negative effects were partially offset by an increase in equity attributable to shareholders of US$626.8. million due to changes in economic holding percentages as result of group simplification and consolidation.

Non controlling interests decreased to US$13,964.4 million at 31 March 2014 from US$14,467.7 million as at 31 March 2013, due to share of losses, change in economic holding percentages as well as foreign currency movements.

Tangible fixed assets

During the year, we added US$1,745.3 million to property, plant and equipment comprising of US$1,424.6 million on our expansion and improvement projects and US$320.7 million spent on sustaining capital expenditure. Expansion project expenses were US$649.0 million in our Oil & Gas business at Cairn India, US$283.0 million in Power business mainly at Talwandi Sabo , US$147.0 million in our Aluminium business, US$243.0 million at Zinc India and the balance in other projects at Liberia, KCM, , Sterlite Copper. The decline in capital expenditure shows our commitment to generate higher cash and deleverage balance sheet.

Net debt

Net debt reduced by US$696.1 million to US$7,919.5 million at 31 March 2014, (31 March 2013 US$8,615.6 million). Our net debt has consistently reduced since FY 2011-12, when it reached US$10,064.4 million. Cash and liquid investments were US$8,937.9 million as at 31 March 2014 with the increase mainly at Zinc India and Cairn India.

Gross debt as at 31 March 2014 was US$16,871.2 million (31 March 2013 US$16,592.8 million) increasing marginally for project payments at Talwandi Sabo Power plant, debt and interest servicing at Vedanta Resources Plc and fund requirements for Copper Zambia.

The average debt in FY 2013-14 was US$16,850.0 million, which was in line with the previous year (FY 2012-13 US$16,791.9 million).The average debt maturity at 31 March 2014 increased to 3.5 years from 3.3 years as at 31 March 2013, excluding working capital loans at operating subsidiaries. As on 31 March 2014, the Group had available unutilised fund based credit lines amounting to US$1,539.0 million.

The Company continued to maintain its ratings from Standard & Poor's, Moody's & Fitch: ratings are BB, Ba1 and BB+ respectively.

Net gearing reduced to 30.6% as compared to 31.4% in FY 2012-13.

Of our total gross debt of US$16.6 billion ( at face value excluding working capital loans), debt at our subsidiaries is US$8.2 billion, with the balance in the holding company. The future maturity profile of debt (in US$ billion) at our subsidiary companies and at the holding company Vedanta Resources Plc is as follows:

A 5.5%, US$1.25 billion (face value) convertible bond issued in July 2009 has a put option with an exercise notice period between April 14, 2014 to May 29, 2014 and if exercised, the payment date is July 14, 2014. As a contingency measure we have put funding in place to meet the repayment requirement.

FCCB debt of US$0.7 billion at Sesa Sterlite Limited maturing in FY 2014-15, will partly be paid out of internal accruals and balance through refinancing.

US$0.2 billion due from KCM in FY 2014-15 has been restructured with banks and documentation is in progress. Post completion of restructuring, nothing will be due in FY 2014-15.

The balance of US$1.50 billion debt due in FY 2014-15 is largely in the Aluminum and Power businesses and is currently funded by short term loans which will be refinanced from long term sources.

Cash flows

The movement in net (debt)/cash in FY 2013-14 are set out below.

(in US$ million, except as stated)

(1) On an accrual basis

(2) Includes foreign exchange movements

Operating free cash flow before expansion capital expenditure in FY 2013-14 was US$3,016.5 million as compared to US$3,534.7 million in FY 2012-13. EBITDA conversion to free cash flow was 67.2% as compared to EBITDA conversion to free cash flow of 72.0% in FY 2012-13 due to higher one off items and higher interest. Expansion capital expenditure during the year was US$1,424.6 million as compared to US$2,019.1 million, lower by US$594.5 million, and cash flow generation after expansion capital expenditure was US$1,591.9 million, marginally higher than the previous year.

Project capex

Operating Reviews

Zinc-Lead-Silver - India

Production Performance

(1) Including captive consumption of 7 kt v/s 7 kt in FY 2013-14 v/s FY 2012-13.

(2) Excluding captive consumption of 1232 thousand ounces v/s 1088 thousand ounces in FY 2013-14 vs FY 2012-13.

(3) All change in production figures have been calculated without rounding the number up to 1000.

Operations

We were pleased with our mining performance during the year with each key area showing record output.

At 880,000 tonnes, mined metal production showed an increase of 1.1%. Production in the second half of FY 2014 was lower than what we had planned initially due to slower than expected ramp up of underground mining projects and changes in mining sequence, wherein preference was given to primary mine development.

The integrated production of refined zinc was 743,000 tonnes. This 12.6% increase over the previous year was driven by three main factors: higher mined metal production, improved operational efficiencies and higher roaster availability.

There were no sales of Zinc MIC whereas 61,000 tonnes were sold in FY 2012-13. Integrated production of refined lead was up 10.3% at 118,000 tonnes due to better utilisation of smelter capacity.

Integrated production of silver achieved a record 9.66moz for the financial year. This was up 4.3%, driven by higher output from the Zawar mine, partially offset by lower silver grade in ore from other mines.

During the year we started the transition from open-pit to underground mining with higher production from underground mines more than making up for the tapering of open-cast mine. We have gained momentum in terms of primary mine development and are optimising the eventual transition. This includes significant improvements in infrastructure development such as production shaft, ventilation, communication networking, paste fill plant and workshops in our major underground mining projects.

We are also skilling-up our operators with structured training programmes designed to strengthen our underground mine organisation. Our team is being reinforced by recruiting high-level expatriates for critical technical roles in underground mines.

Markets

Zinc

Global zinc demand grew at ~4% in 2013 to 13.3 million mt, up from 12.8 million mt the previous year. Zinc metal supply fell short of demand by 2%, even though global production recovered from the sharp decline witnessed in 2012. Consequently, the refined metal market remained in deficit for the year.

The tightness in the physical zinc market has firmed up premiums and it is anticipated that this upward trend will continue in the near future.

We currently hold an 89% share of the Indian domestic market, where strong growth in 2013 was driven mainly by the galvanizing sector. This momentum is expected to continue in the next few years as investment in infrastructure projects underpins demand for industrial metals including zinc.

Lead

The global lead metal market was in surplus in 2013, driven by higher Chinese production. It reached 11.2 million mt compared to demand of 11.1 million mt.

The market is anticipated to shift into deficit in 2014 as demand growth remains robust but lead production is hampered by weak mine supply and stringent environmental regulations.

India is the second most important growth prospect in the Asian region with demand growth estimated at close to 7%. We have approximately 50% of primary lead market share in India.

LME zinc prices averaged US$1,909 per tonne compared to US$1,948 per tonne in the same period in FY2012-13. Lead and silver prices also followed the same trend and reduced by 1% and 29.8% respectively.

Unit Costs

(1) With IFRIC 20 impact

During FY 2013-14, the unit cost of zinc production was marginally higher at US$985 per tonne. This was due to higher volumes and the depreciation of the Indian rupee partially offset by despite lower by-product sulphuric acid prices and higher petroleum prices which were partially offset by the depreciation of the Indian rupee and higher volumes.

The business remains in the lowest cost quartile compared with other global producers, backed by high quality assets and operational efficiencies.

Financial Performance

(in US$ million, except as stated)

EBITDA for FY 2013-14 decreased to US$1,145.0 million, compared with US$1,182.5 million during FY 2012-13.

Despite enjoying record volumes of zinc, lead and silver, and the depreciation of the Indian rupee, EBITDA declined marginally due to lower metal prices and lower by-product credits. The price of zinc was down by 2.0% over the year, while lead reduced by 1.0% and silver fell by 29.8%. EBITDA for silver was US$188.0 million, 31% lower than FY 2012-13.

Projects

The Kayad and Rampura Agucha underground mine projects commenced commercial production during the year. After initial difficulties, both are now ramping up well. We are also evaluating optimisation of the Rampura Agucha open pit, to ensure consistent output from the mine. The Sindesar Khurd expansion project is on schedule.

During the year, total mine development increased by over 75%, marking the beginning of the transition from open-cast to underground mining.

Capital expenditure for the year was US$243.0 million and we expect it to remain in the US$250.0 million range annually in the coming years.

Exploration

In FY 2013-14, there was a gross addition to reserves and resources ('R&R') of 26.1 million tonnes, prior to a depletion of 9.3 million tonnes. Zinc-lead metal increased by 1.1 million tonnes, prior to depletion of 0.9 million tonnes. Total R&R at 31 March 2014 were 365.1 million tonnes, containing 35.2 million tonnes of zinc-lead metal and 926 million ounces of silver. The overall mine life continues to be 25+ years.

THE COMING YEAR

Outlook

Rampura Agucha will continue to provide the majority of mined metal in FY 2014-15. Its underground mine is now developing in line with expectations. In FY 2014-15, mined metal, and integrated refined metal production including silver, is expected to be marginally higher than in FY 2013-14. The cost of production is expected to remain stable.

Our Strategic Priorities

n Brownfield expansion of mines to achieve 1.2mtpa of mined zinc-lead

n Managing the transition from open-pit to underground mining at Rampura Agucha

n Ramping up silver volumes to 16moz

n Asset optimisation and operational efficiencies to maintain cost leadership

n Continuing focus on adding reserves and resources through exploration.

Zinc-Lead- Zinc International

Production Performance

Our total production of zinc, lead MIC and zinc refined metal stood at 364,000 tonnes, 15.0% lower than the 426,000 tonnes produced in FY 2012-13. This was caused by an unplanned maintenance shut down at Skorpion after a tank failure in Q3 FY 2013-14. Accidents at Lisheen and BMM in Q1 FY 2013-14 also impacted the production.

Markets

As stated earlier the global market including the south African market is seeing a rise in demand due to higher consumption and thereby leading to higher premiums.

Unit Costs

We saw an increase in the unit cost of production to US$1,167 per tonne, up from US$1,092 per tonne in FY2012-13. This was mainly driven by lower production due to lower ore grades and increasing treatment and refining charges.

Financial Performance

(in US$ million, except as stated)

EBITDA for FY 2013-14 was US$213.4 million, 27.5% lower than the previous year. Operating profit was US$76.1 million, down by 31.2%. This was the result of lower volumes, lower zinc and lead prices, and higher costs.

THE COMING YEAR

Outlook

The Lisheen mine is scheduled for closure in FY 2014-15 and we are looking at further exploration opportunities. At Skorpion and BMM, we are conducting studies to extend mine life. We are also evaluating the installation of a roaster at the Skorpion refinery to treat sulphide ores from BMM and other neighbouring mines.

We expect volumes for FY 2014-15 at Zinc International to remain in line with FY 2013-14, with a drop in Lisheen's production expected to be compensated by Skorpion and BMM. However, in the coming fiscal, all the three operations are experiencing declining ore grades and Skorpion, in particular, would witness a major increase in strip ratio to expose the ore for future production.

Our Strategic Priorities

n Focusing on increasing the mine life of assets through in-pit and near-pit drilling and continued exploration

n Completing the feasibility studies currently in progress for the Gamsberg and Swartberg

n Completing the feasibility study for the refinery conversion project to co-treat sulphide ore at Skorpion

n The phased closure of the Lisheen mine.

Oil & Gas

Production Performance

Operations

Cairn India achieved average gross production of 218,651 barrels of oil equivalent per day (boepd) during FY 2013-14, 6.5% higher than the previous year. During the year, the Company's operations helped reduce the nation's dependence on oil imports to the tune of US$7.5 billion, and contributed over US$4.0 billion to the exchequer.

In Rajasthan, the Company successfully achieved its target for FY 2013-14 of production of 200,000 boepd, in March. During the quarter, the block produced 17.2 mmboe of oil equivalent, achieving record total production for the year of 66.3 mmboe. In the process, the block also reached a landmark cumulative crude oil production milestone of 200 mmbbls for the year. As at 31 March, the cumulative total production from Rajasthan stood at ~216 mmboe.

A total of 129 new wells were brought into production during the year, with 45 wells added in Q4 FY 2013-14. This has led to the block achieving gross average production of 181,530 boepd for FY 2013-14, up 7% Year on Year ('YoY')

In FY 2013-14, Development Area (DA) 1, comprising the Mangala, Aishwariya, Saraswati and Raageshwari oil and gas fields, produced a gross average 156,662 boepd, up 6% YoY. The Mangala field was the largest contributor, with the Aishwariya field adding to volume growth. During the year, DA 2, comprising the Bhagyam field, produced a gross average of 24,867 boepd, up 15% YoY as a result of the infill drilling programme.

In FY 2013-14, production at Cambay was 44% higher YoY at 9,735 boepd, due to the infill drilling campaign that was completed in FY 2012-13. Production at Ravva was lower in FY 2013-14 at 27,386 boepd, although recovery rates continue to exceed 47%.

At Rajasthan, we are focused on infrastructure development for the early monetisation of exploration success and improved reservoir recovery through EOR, infill drilling and facilities upgrades.

Market

The year saw a rise in the global demand for oil, driven mainly by increasing demand in non-OECD countries and by the general economic recovery in the developed world in the second half of 2013 (source: IEA report, February 2014).

Demand increased to 91.3mb/d, a rise of 1.4% over 2012. However, global supply reached 91.5 mb/d, an increase of 0.7% year on year. The US shale revolution dominated production growth in North America, while production in OPEC countries was lower by 2.1% due to several disruptions in the second half of the year.

Average Brent prices for the year were lower by 2.3% at US$107.6/bbl as compared to FY 2012-13.It reached a high of ~US$118/bbland a low of ~97/bblduring the fiscal.

In 2014, oil prices are expected to be stable. Consumption is expected to grow but it is the balance of supply between OPEC and non-OPEC producers that will be the key driver of oil price movement.

Financial Performance

(in US$ million, except as stated)

Despite the positive impact of higher volumes, Revenue was offset by higher profit sharing with the Government of India ('GoI') in DA1 as a result of tranche change and lower realizations. This led to a lower EBITDA of US$2,347.0 million, and a reduced operating profit for the period of US$933.6 million.

Direct operating expenses (including transportation) relating to the Rajasthan field increased to US$3.9/bbl for the year, compared with US$3.3/bbllast year.

Exploration

Rajasthan

During the year, Cairn India has added significant oil-in-place resources of over 1 billion boe to the existing 4.2 billion boe. Out of the 17 wells drilled since the resumption of exploration in 2013, over 80% have shown hydrocarbons and the Company has established six discoveries (2 in Q4 FY 2013-14 and 1 in April 2014). In addition, 266 km2 (14%) of the planned 1900 km2 of 3D seismic data acquisition has been completed.

Ravva

The drilling of this 'high temperature, high pressure' prospect reached a depth of 2720m as at 31st March, 2014. Although the campaign has witnessed some weather and operational challenges, the Company expects to complete the drilling activity before the onset of monsoons.

KG Onshore

The extended flow test on the Nagayalanka-1z-ST appraisal well was completed in March 2014 and the maximum combined flow rate achieved was ~850 bopd.

Other Indian Assets

In KG Offshore, 1050 km2 of 3D seismic data is expected to be acquired over the course of FY 2014-15. The tender has been awarded for acquisition of ~2,000 line-km of 2D seismic in the Mumbai Offshore block.

International Assets

In Sri Lanka, discussions are ongoing with the Sri Lankan Government regarding commercial terms to monetise the discovered In-place gas resources of 73 mmboe on the block.

In South Africa, acquisition of 1,981 km2 of 3D seismic and 3,000 line km of 2D seismic data has been completed and processing is underway.

Development

The ongoing capex program is focused on exploration and development activities across all the assets, with 87% of the budget to be invested in the Rajasthan block over the next three years.

As part of this programme, plans for the redevelopment of the Raageshwari Deep Gas field, implementation of the full field polymer flood EOR in the Bhagyam field, and better reservoir performance of the Aishwariya field have all contributed to a net addition of ~50mmboe to 2P reserves. This has resulted in a 2P Reserve Replacement Ratio of ~100% for FY 14.

The Company is embarking on the implementation of three major development projects in the Rajasthan block with a net capex of US$2.4 billion over the next three years:

n Enhanced Oil Recovery (EOR) project including a drilling campaign and facilities upgrade: Net Capex - US$1.6 billion

- We are targeting the first polymer injection in the Mangala field EOR project within FY2014-15 and have awarded all contracts for the execution.

- The polymer flood EOR plan is in place for the Bhagyam field and JV alignment is underway. Plans are being prepared to extend the polymer flood EOR to the Aishwariya field.

- The Alkaline Surfactant Polymer pilot at Mangala has commenced.

n Barmer Hill development: Net Capex-US$0.6 billion

- Exploration results confirm BH potential across the block.

- We are replicating the North American development model to scale up the development.

- Satellite fields are to be put into production through the Integrated Block Development Policy (IDP). Raag-S-1, the 26th discovery in DA 1, was brought into test production within a year of discovery.

n Gas development: Net Capex - US$0.2 billion

- Development of the Raageshwari Deep Gas field is underway.

- Upgrading the RDG terminal to higher capacity and plans to create higher capacity pipeline infrastructure are ongoing in order to monetise the additional gas potential in the block.

THE COMING YEAR

Outlook

The Company will continue to focus on key development projects aimed at enhancing recovery rates, supported by an overall planned net capex of US$3.0 billion by FY17.

We are targeting a reserve-replacement ratio of 150% in next three years, subject to a PSC extension. We are also looking to deliver a three-year production CAGR of 7-10% from known discoveries with flat production in FY2014-15.

Further exploration activity across the portfolio will provide additional upside value and momentum, and adopting technology will support low-cost operations and development.

The industry is looking forward to future growth opportunities in India, from the PSC extension policy, the fiscal model for the next round of auctions and the shale gas policy for pre-NELP and NELP blocks. 

Our Strategic Priorities

n Rajasthan development:

- Sustaining production at MBA fields through EOR, drilling campaign and facilities upgrade

- Application of North American model to target world class recovery at Barmer Hill

- Leverage gas potential through step-wise development ramp-up.

n Increase recovery from mature assets through infill drilling and technology adoption

n Continue exploration and appraisal program across the portfolio, with a sharper focus on Rajasthan

n Pursue for extension of Production Sharing Contracts

IRON ORE

Production Performance

Operations-Goa

Through its order dated 21 April 2014, the Honourable Supreme Court (The Court) lifted the ban on mining in the State of Goa, subject to certain conditions.

The ruling imposed an interim restriction on the maximum annual excavation from the mining leases in the State of Goa. This restriction (of 20 million tonnes) was subject to a determination of final capacity by the Expert Committee appointed by the court.

The Court also ruled that all mining leases in the State of Goa, including those of Sesa Sterlite, expired in 2007. Consequently, no mining operations can be carried out until the renewal and execution of mining lease deeds by the State Government. At the close of the reporting year the Company was working towards securing the necessary permissions to resume operations at the earliest opportunity.

The Court further directed that the entire sale value arising out of the e-auction of inventories should be appropriated for various purposes specified in the order, with only the average cost of excavation of iron ores to be paid to the mining lessees.

Further, all sales of iron ore will attract a payment of 10% of the sale price to be made by all lessees to the Goa Iron Ore Permanent Fund.

In Goa, we participated in e-auctions of inventory and sold 0.3 million tonnes during the quarter; however, these were not accounted for in this reporting year as sales since delivery did not take place during the quarter.

The production volumes of pig iron (+66%) and metallurgical coke (+23%) were significantly higher, at 510,000 tonnes and 408,000 tonnes respectively. These increases are primarily due to the commissioning of new pig iron capacity and the associated metallurgical coke facilities in FY 2012-13.

Operations - Karnataka

Following the clearance from the Court to resume operations at Karnataka, we optimised our approved capped annual capacity of mining at the site. Operations restarted on 28 December 2013 and resulted in production of 1.5 million tonnes in this reporting year. However, only 27,000 tonnes were sold during the year.

Market

World steel production in 2013 was 4.2% higher than in 2012, standing at a total of 1.6 billion tonnes. This significant growth was driven mainly by a 66 million tonne increase in China's steel production.

World steel consumption in 2013 is estimated to have increased by 2.9% to a total of 1.59 billion tonnes. The chief driver of this growth was a 6% increase in China's consumption as the country continued to be the world's largest consumer of steel.

In 2014, India's steel consumption is also forecast to grow; a 5% increase is projected as a result of government spending on infrastructure and a higher demand for consumer durables.

Iron ore spot prices averaged US$126 (FOB) a tonne, an increase of 3.4 % over the previous year. Spot prices have been declining through the last quarter of FY 2013-14 and are not expected to recover to their previously high levels. This is due to the increased availability of supplies from new mines starting up in 2015.

Financial Performance

(in US$ million, except as stated)

EBITDA in FY 2013-14 was US$(24.2) million, compared with US$84.9 million in the previous year. This negative EBITDA was mainly due to the continued mining ban in Goa, and the ban in Karnataka prior to the Court lifting it in December 2013. Operating profit was US$(70.0) million in FY 2013-14.

Liberia Project

We are currently working with the government of Liberia on infrastructure solutions for evacuation of the ore once mining operations starts.

Reserves & Resources

We have identified significant and potentially low cost 'start-up' ores at all three Liberian projects, with tailings at Bomi and soft weathered cap ore at Bea and Mano. Initial studies indicate that these are resources that are easy to process. These resources have potential for further enhancement with more exploration.

THE COMING YEAR

Outlook

We are engaging with the State Government and MoEF to gain approvals for starting mining on our leases in Goa, and we expect production to start in the second half of the financial year.

Our Strategic Priorities

n Resuming mining in Goa

n Continuing to add to reserves and resources by active exploration in existing brown field areas

n Infrastructure options for the Liberia mining project

COPPER - INDIA / AUSTRALIA

Production Performance

Operations

Production during the year was affected by two main events. In January 2014 operations at our Australian mine were suspended following a mud rush incident. We are working with Work Safe Tasmania to resume once operating practices have been modified.

Our Tuticorin smelter also had to be temporarily suspended, post favourable order of National Green Tribunal, the smelter restarted in end June 2013. As a result, our copper cathode production was reduced by 16.6% to 294,000 tonnes. However, when operations were restarted the smelter operated at its full rated capacity.

In March 2014, the Company received the long-awaited regulatory approval for the second unit of the 2 x 80MW power plant in Tuticorin. We duly commissioned the unit which generated 25 million units over the year.

Market

The year saw the average LME copper price fall by 9.6% while treatment and refining charges (TCs/RCs) increased by 30% compared to 2012.

Global refined copper production in 2013 was 21 million tonnes, an increase of 3.2% over 2012, with global consumption growing by 5.6%.

Global copper mine production improved considerably from the third quarter of FY 2013-14 as stable operations continued. This led to an increase in availability of copper concentrates with attendant higher TCs/RCs. Annual market settlement of TCs/RCs for supplies in the calendar year 2014 saw an increase of around 31% over the market terms in 2013.

The premiums also rose significantly in the international markets in Q3 and Q4 due to supply disruptions and increased demand from customers in China. The annual premiums for 2014 have risen over 50% compared to 2013.

Consumption in the Indian primary copper market increased slightly in 2013, although our share of the refined copper market fell due to production disruption experienced in Q1. We currently hold an 29% share of the refined domestic market. The demand for refined copper in India is expected to grow to 2 million tonnes by 2030, representing a Compounded Annual Growth Rate (CAGR) of approximately 7%. Indian copper demand will be driven by investments in infrastructure projects, development of power generation capacities and continued urbanisation.

Unit Costs

In the Tuticorin smelter, cost of production ('CoP') increased from 8.7 US cents per/lb to 9.7 US cents per/lb, mainly due to lower volumes and significantly lower by-product credits.

TCs/RCs have improved significantly - by 30% - compared to last year.

In FY 2013-14, the unit cost of production at our Australian operations, including TCs/RCs and freight, was 240 US cents per lb; this was up from 220 US cents in the previous year, due to lower volumes and lower by-product credits.

Financial Performance

(in US$ million, except as stated)

EBITDA for FY 2013-14 was US$197.9 million compared with US$219.1 million in the previous year. This reduction was mainly driven by lower profit from our Australian operations due to the suspension of operations in Q4 FY 2013-14. Higher CoP at our Indian operations, lower volumes partially offset by higher TCs/RCs.

Operating profit was US$155.7 million in FY 2013-14, down from US$175.9 million the previous year.

Outlook

At Copper India, the Tuticorin smelter underwent a planned 22-day maintenance shutdown, starting on 26 April 2014. This came after a record campaign life of 45 months and we are now targeting improved plant availability and reliability. Mine production at our Australian mine is expected to start in a staged manner and at lower volumes, once regulatory approvals are received.

Our Strategic Priorities

n Sustaining operating efficiencies and cost leadership at copper smelting operations

n Implementing a safe way to resume mining and production in the Mt. Lyell district in Australia

COPPER - ZAMBIA

Production Performance

Operations

The year saw mined metal production fall by 19.2% in FY 2013-14 compared to the previous year.

This was mainly due to the suspension of mining operations in January 2013 at the Chingola open pit mine (COP F&D). Konkola production was also affected by the temporary closure of shafts 1 & 4 due to safety and the integrity and availability of equipment. Mined metal production also included higher tailings leach plant primary copper production of 56,000 tonnes.

Copper custom production was lower by 5.8%, constrained by blending challenges and by an ongoing issue regarding the recovery of VAT credits. On this latter point we are in discussions with the Zambian Government on this pressing industry-wide matter.

Markets

KCMs traditional markets in Asia and the Middle East experienced improved demand in the latter half of the year, leading to improvement in premium in the annual negotiations for CY 2014.

Unit Costs(Integrated Production)

(1) C1 cash cost, excludes royalty, logistics, depreciation, interest, sustaining capex

(2) Total Cash Cost includes sustaining capex

The unit cost of production without royalty, logistics, depreciation, interest and sustaining capex decreased to 238.4 US cents per lb in FY 2013-14, 6.5% lower than the previous year. This was due to the suspension of operations at the high-cost COP F&D mine, partially offset by lower volumes.

Financial Performance

(in US$ million, except as stated)

EBITDA in FY 2013-14 was US$156.3 million compared with US$257.3 million in the previous year, impacted by lower volumes and lower metal prices. These factors also contributed to a loss of US$89.0 million after tax at Copper Zambia during FY 2013-14.

THE COMING YEAR

Outlook

At Konkola, we are working to improve the trackless equipment's availability and utilisation rates, as well as recruiting key underground specialists and trainers. Several improvement initiatives and technical interventions have been planned to bring about a gradual improvement in production from current levels. Safety, management of underground contractors and productivity are the key focus areas.

We are working to secure custom concentrates which, when blended with integrated production, will enable us to run the smelter at the minimum optimum level that is technically possible.

Our Strategic Priorities

n Ramping up mine development at Konkola to realise its ore production potential

n Optimising the blend and throughput of feed to the Tailings Leach Plant for higher production

n Realising cost efficiency, driven by volume growth and other measures

n Improving productivity

ALUMINIUM

Production Performance

Operations

Following the resumption of operations at our Lanjigarh refinery in July 2013, the facility ramped up well and delivered 524kt production through to March 2014. In Q4, the refinery had a capacity utilisation of 91%. This resulted in a steady increase of alumina feed from Lanjigarh to our smelters, contributing to 28% of the smelters' alumina requirements in FY 2013-14 and 49% in Q4.

The MoEF rejected the grant of stage II forest clearance for the Niyamgiri mining project of Odisha Mining Corporation Limited (OMC). The area is one of the sources in Odisha for the supply of bauxite to the alumina refinery at Lanjigarh. As we have stated, the Company will not consider developing any bauxite resources, including the Niyamgiri mines, without the invitation and consent of the local communities. Certain mining assets (amounting to US$11 million) which relate to the Niyamgiri mines have been charged to the income statement as a special item during the year.

A Memorandum of Understanding ('MoU') with the Government of Odisha (through OMC) states that we require 150 million tonnes of bauxite. We are actively working with the Odisha State Government to agree the allocation of other bauxite mines. The Company is also considering sourcing bauxite from alternative sources to support the existing and expanded refinery operations.

With regard to the expansion project at Lanjigarh, the Company's fresh application for environmental clearance is under consideration. In the meantime the expansion plans are on hold.

Production of aluminium in FY 2013-14 was a record 794,000 tonnes, an increase of 2.6% compared to the previous year. During the year the Jharsuguda-I and Korba-II smelters were both operating above their rated capacity.

Unit Costs

(US$ per tonne)

Alumina CoP was US$358 per tonne in FY 2013-2014. The CoP of hot metal at Jharsuguda was US$1,602 per tonne compared with US$1,869 per tonne in the previous year, a 14.3% decrease. This was due mainly to the decrease in our power costs, driven by operational efficiencies, better coal mix, reduced specific coal consumption and specific power consumption.

At the Korba smelter, the CoP decreased to US$1,781 as a result of the depreciation of the Indian rupee, although in Indian rupee terms the CoP actually increased. This was due to increased power costs when the agreed coal quota allowances tapered by another 25% this year. However, this was partially offset by the improved operational efficiency of the plant.

Even without captive bauxite, and despite having to rely on imported alumina, our aluminium operations at Jharsuguda and Korba were ranked in the first and second quartile of the global cost curve respectively.

Market

Average LME prices for aluminium for the year were US$1,773, a decline of 10.2% on the previous year's average price level of US$1,974.

Global primary aluminium consumption recorded growth of 5.3% to 49 million tonnes in 2013 over 2012 (47 million tonnes).Primary aluminium demand is expected to grow by 6% per year during the period 2013 - 2017, supported by the transport sector worldwide and substitutions in favour of aluminium. We also anticipate a near-term increase in demand from the transport sector in 2015. Domestically, investments in the infrastructure and transport segments are also expected to boost demand. We currently have a market share of 48% in India.

Financial Performance

(in US$ million, except as stated)

EBITDA for FY 2013-14 was up by 41.8% at US$287.3 million, compared with US$202.6 million in the previous year. This increase was due to lower CoP, Indian rupee depreciation and higher volumes, but was also partially offset by lower LME prices which dropped by 10%.

Further MTM foreign exchange losses on operational payables were decreased by ~ US$27.4 million as a result of the prudent step of taking forward cover on US dollars. This helped to increase EBITDA and operating profit was also higher at US$112.5 million.

Projects

We commenced operation of the Korba-III 325kt smelter, achieving first metal tapping in Q4. We produced around 900 tonnes of aluminium with power sourced from the BALCO 810MW power plants. Of the first 84 pots, 36 pots had been started as at 31 March 2014. We can support up to 84 pots with the existing power plants at BALCO. We expect to ramp up the 325 ktpa BALCO-III Aluminium smelter in Q2 FY 2014-15 once the Korba 1200 MW power plant is operational. The first unit of this power plant is expected to be synchronized in Q1 FY 2014-15.

The Company expects to commence mining coal from its Durgapur coal block in Chattisgarh once we receive the mining lease and lease deed as well as the requisite permission from the DGMS/Coal Controller of Mines, expected by the end of Q2. Mining operations are likely to commence in Q3 FY 2014-15 and excavation of coal is expected by Q4 FY 2014-15.

THE COMING YEAR

Outlook

We are optimistic that our existing facilities will continue to operate at above their rated capacities in the coming year. We are focused on putting the new capacities and the associated power plants into operation. We are also working on feedstock security in terms of bauxite sourcing, alumina sourcing and the coal block start-up at BALCO.

We also expect a progressive start-up of new pot lines at our Jharsuguda smelter, once we have permission from the authorities to use power from our 2400 MW power plant.

The resulting increase in volumes, combined with operational efficiencies and an expected higher proportion of value-added products, should provide improved returns.

We are working on securing captive feed for the Alumina refinery, but will not access Niyamgiri or other deposits without the prior consent of local communities. We will also work with OMC to help them meet their MoU commitment to us from other regional resources.

Strategic Priorities

n Securing captive refinery feed to realise the full potential of cost efficiencies and increase capacity utilisation

n Securing regulatory approvals for refinery expansion

n Commissioning the unused smelter capacities at BALCO and Jharsuguda

n Expediting development of the captive coal block at BALCO

POWER

Production Performance

(1) Includes production under trial run nil million units in FY 2013-14 vs 795 million units in FY 2012-13

Operations

Overall power sales declined over the year to 9,374 million units, a fall of 7.5% on the previous year. This was mainly due to lower sales by the BALCO 270 MW power plant, resulting from lower power tariffs and weak demand. This was partially offset by marginal higher volumes from the Jharsuguda 2400 MW power plant. It operated at a 40% plant load factor (PLF) but was affected by weak demand and transmission constraints.

Market

Capacity of more than 23,000 MW has been added in India over the last five years by independent power producers (IPPs). This is derived from mainly thermal sources at around 68% and renewables at around 13%. Although this has not exceeded the Government's target, more capacity has been added than in the preceding 15 years.

Per capita consumption of electricity in the country was about 917.18 kWh in 2013.

Unit Costs

We saw an improvement in average power generation costs in FY 2013-14, falling to 3.7 US cents per unit compared with 4.1 US cents per unit in the previous year. This was driven by the Indian rupee's depreciation translating into lower costs in US dollar terms.

Average power sales prices were lower in FY 2013-14 at US cents 5.9 per unit compared with US cents 6.5 per unit in the previous year.

Financial Performance

(US$ million, except as stated)

EBITDA decreased significantly in FY 2013-14 at US$168.4 million compared with the previous year's US$228.5 million, primarily as a result of the lower tariff currently being recognised from the power supply company Gridco in Odisha where the interpretation of the tariff agreement is subject to ongoing dispute. Other factors like lower PLF as a result of lower demand, but better variable costs largely offset each other.

As a result operating profit was also reduced by 41.8% to US$68.9 million coupled with higher depreciation of the Indian rupee.

THE COMING YEAR

Projects

The boiler light-up of the first 660MW unit of the 1,980MW Talwandi Sabo power plant was achieved in Q3, followed by the synchronisation. Coal logistics were established in Q4 and we expect to commence trial runs in Q1 FY 2015.

Outlook

We are focused on commissioning and ramping-up the Talwandi Sabo power plant.

Our exposure to third party sales will reduce as we gradually ramp up our Aluminium smelter production at Jharsuguda. We also anticipate that with the improvement in the economic climate and industrial performance generally, the demand and hence the open market price for power is expected to recover significantly in next few years.

Our Strategic Priorities

n Enhancing access to power transmission facilities

n Working with the Government on coal sourcing

n Completing the 1,980MW Talwandi Sabo power project

Port Business

We commissioned the Vizag General Cargo Berth (VGCB) in Q4 FY 2013. There has been a continuous increase in the tonnage handled at VGCB, and during FY 2014 we handled 4.7 million tonnes and generated an EBITDA of US$4 million.

VGCB is one of the deepest coal terminals on the eastern coast of India, which enables docking of large Capesize vessels.

Principal Risks and Uncertainties

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. In addition, the nature of our business operations is long term, resulting in several of the identified risks being enduring in nature.

Our risk management framework is designed to be a 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. Materiality and tolerance for risk are key considerations in our decision-making.

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, using the Turnbull matrix.

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 mitigation plans form an integral part of KRA / KPI process of process owners. Structured discussion on risk management also happens at SBU levels on their respective risk matrix and mitigation plans. Governance of risk management framework in the businesses is anchored with their leadership team.

As mentioned in the last years report, formal discussion on risk management happens at Group level once in a quarter. Group Level Risk Management Committee meeting is attended by Group senior management, entity CXOs, risk officers and other members.

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.

The Audit Committee is in turn supported by the Group Level Risk Management Committee (GRMC), which helps the Audit Committee in evaluating the design and operating effectiveness of the risk mitigation program and the control systems.

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. This committee comprises of Group CFO, business CFOs and Treasury Heads at respective businesses

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. This committee is headed by a non-Executive Director and has Group CEO and other business leaders as its members

As stated above, every business division in the Group has developed its own risk matrix of Top 20 risks which gets reviewed at Business Management Committee level. In addition, business divisions have also developed their own risk registers (comprising of 75 - 100 risks or at times even more) depending on size of operations and number of SBUs / locations. These risks get reviewed in SBU level meetings.

Our principal risks, which have been assessed according to impact and likelihood, are described on the following pages. 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. While our risk management framework is designed to help the organisation meet its objectives, there can be no guarantee that our risk management activities will mitigate or prevent these or other risks from occurring.

Going Concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Operational and Financial Review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Finance Review on pages 21 to 22.

The Group requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth projects. The Group generates sufficient cash flows from its current operations which, together with the available cash and cash equivalents and liquid financial asset investments, provide liquidity both in the short term as well as in the long-term. Anticipated future cash flows and undrawn committed facilities of US$2,370.6 million, together with cash and liquid investments of US$8,938.8 million as at 31 March 2014, are expected to be sufficient to meet the ongoing capital investment programme and liquidity requirement of the Group in the foreseeable future.

The Group has a strong Balance Sheet that gives sufficient headroom to raise further debt should the need arise. The Group's current ratings from Standard & Poor's, Moody's and Fitch are BB, Ba1 and BB+ respectively. These ratings support the necessary financial leverage and access to debt or equity markets at competitive terms, taking into consideration current market conditions. The Group generally maintains a healthy gearing ratio and retains flexibility in the financing structure to alter the ratio when the need arises. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

CONSOLIDATED INCOME STATEMENT

 (US$ million except as stated)

(1) The comparative information has been restated so as to reflect the adoption of new accounting pronouncements, details of which have been set out in note 15.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(US$ million)

(1) The comparative information has been restated so as to reflect the adoption of new accounting pronouncements, details of which have been set out in note 15.

CONSOLIDATED BALANCE SHEET

 (US$ million)

(1) The comparative information has been restated so as to reflect the adoption of new accounting pronouncements, details of which have been set out in note 15.

Financial Statements of Vedanta Resources plc, registration number 4740415 were approved by the Board of Directors on 14 May 2014 and signed on behalf by

Tom Albanese - Chief Executive Officer

CONSOLIDATED CASH FLOW STATEMENT

(US$ million)

(1) The comparative information has been restated so as to reflect the adoption of new accounting pronouncements, details of which have been set out in note 15.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(US$ million)

(US$ million)

* The comparative information has been restated so as to reflect the adoption of new accounting pronouncements, details of which have been set out in note 15.

(1) OTHER RESERVES COMPRISE

(US$ million)

(2) 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. Transfer to General reserves also includes US$2.5 million of debenture redemption reserve and remeasurement reserve related to net defined benefit liability of US$1.1 million.

(3) In December 2012, the Group acquired remaining 49% stake in Western Cluster Limited ('WCL') at a consideration of US$33.5 million. This resulted in increase in Group's stake in WCL from 51% to 100%. The increase has been accounted in the financial statements as an equity transaction. The carrying amount of the non-controlling interest has been adjusted to reflect the change in Group's interest in the Net assets of WCL.

(4) The merger reserve arose on incorporation of the Company during the year ended 31 March 2004. The investment in Twin Star had a carrying amount value of US$20.0 million in the accounts of Volcan. As required by the Companies act 1985, Section 132, upon issue of 156,000,000 Ordinary shares to Volcan, Twin Star's issued share capital and share premium account have been eliminated and a merger reserve of US$4.4 million arose, being the difference between the carrying value of the investment in Twin Star in Volcan's accounts and the nominal value of the shares issued to Volcan.

NOTES TO PRELIMINARY ANNOUNCEMENT

1. General information and accounting policies

This preliminary results announcement is for the year ended 31 March 2014. While the financial information contained in this preliminary results announcement has been computed in accordance with International Financial Reporting Standards ("IFRS"), this announcement does not itself contain sufficient information to comply with IFRS. For these purposes, IFRS comprise the Standards issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the IFRS Interpretations Committee ("IFRIC") that have been endorsed by the European Union. The financial information contained in the preliminary announcement has been prepared on the same basis of accounting policies as set out in the previous financial statements.

Going Concern:

The Group requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth projects. The Group generates sufficient cash flows from its current operations which, together with the available cash and cash equivalents and liquid financial asset investments, provide liquidity both in the short term as well as in the long term. Anticipated future cash flows and undrawn funding facilities of US$2,370.6 million, together with cash and liquid investments of US$8,938 million as at 31 March 2014, are expected to be sufficient to meet the ongoing capital investment programme and liquidity requirement of the Group in the foreseeable future.

The Group has a strong Balance Sheet that gives sufficient headroom to raise further debt should the need arise. The Group's current ratings from Standard & Poor's, Moody's and Fitch are BB, Ba1 and BB+ respectively. These ratings support the necessary financial leverage and access to debt or equity markets at competitive terms, taking into consideration current market conditions. The Group generally maintains a healthy gearing ratio and retains flexibility in the financing structure to alter the ratio when the need arises. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

2. Compliance with applicable law and IFRS

The financial information contained in this preliminary results announcement has been prepared on the going concern basis. This preliminary results announcement does not constitute the Group's statutory accounts as defined in section 434 of the Companies Act 2006(the "Act") but is derived from those accounts. The statutory accounts for the year ended 31 March 2014 have been approved by the Board and will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held on 1 August 2014. The auditors have reported on those accounts and their report was unqualified, with no matters by way of emphasis, and did not contain statements under section 498(2) of the Act(regarding adequacy of accounting records and returns) or under section 498(3) (regarding provision of necessary information and explanations).

The information contained in this announcement for the year ended 31 March 2014 also does not constitute statutory accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, with no matters by way of emphasis, and did not contain statements under sections 498(2) or (3) of the Companies Act 2006.

3. Critical accounting judgment and estimation uncertainty

Assessment of impairment at Lanjigarh Refinery

The Group has considered that the delay in obtaining regulatory approval for the expansion of the alumina refinery at Lanjigarh and regulatory approval for bauxite mining as an indication of impairment. Hence, the Group have reviewed the carrying value of its property, plant and equipments at Lanjigarh as at balance sheet date, estimated the recoverable amounts of these assets and concluded that there was no impairment because the recoverable amount (estimated based on value in use) exceeded the carrying amounts.

The key assumptions and estimates used in determining the value in use of these assets were:

n The State of Odisha has abundant bauxite resources and under the terms of the Memorandum of understanding ('MOU') with the Government of Odisha, management is confident that bauxite will be made available in the short to medium term. The Company is also considering purchase / sourcing bauxite from alternate sources to support the existing and expanded refinery operations. In the initial years, the Company has assumed that bauxite will be purchased from third party suppliers in India and other countries, till the bauxite is sourced from own mines.

n The State of Odisha has taken certain measures including reservation of areas for mining operations or undertaking prospecting and constitution of Ministerial Committee for formulation of policy for supply of ores to Odisha based industries on long term basis.

n The management expects that the conditions for construction of the alumina refinery will be fulfilled and it is assumed that the approval for the expansion of the refinery would be received for commencement of production by fiscal 2018.

Management expects that the mining approvals for mining and the statutory approvals for the expansion project will be received as anticipated. Additionally the Group carries out impairment assessment for carrying value of these assets, every half year and challenges these assumptions.

As at March 31, 2014 the carrying amount of property plant and equipment related to alumina refinery operations at Lanjigarh and related mining assets is US$1,231 million (31 March 2013: US$1,423.6 million).

Assessment of Impairment of Karnataka and Goa iron ore mines

Karnataka mining

The mining ban in Karnataka was lifted on 17 April 2013. The Group has complied with all conditions for the recommencement of operations, and mining operations resumed in December 2013 with a production 1.5 MT during the year. The carrying value of assets as at31 March 2014 is US$260.4 million (31 March 2013: US$296 million).

Goa mining

The Supreme Court passed an order on 21 April 2014 whereby the ban was lifted, subject to certain conditions. The key conditions are as follows

n The maximum annual excavation for Goa has been limited to 20 mt until the Expert Committee issues determines the final annual capacity of mining at Goa;

n All mining leases in the State of Goa are suspended and State Government would grant mining leases in accordance with the Mines and Minerals (Development and regulation) Act, 1957;

n 10 percent of the sale price of the iron ore sold by the mining lessees to be contributed to a separate fund;

n Out of the sale proceeds of excavated ore, the leaseholders would be paid only the average cost of excavation of Iron ore and the balance amount to be allocated amongst various affected stakeholders and the Government of Goa.

Vedanta is expecting to start mining activities at iron ore mines at Goa in the second half of fiscal 2015, after receipt of all regulatory clearances and approving of mining leases. Management has reviewed the carrying value of the assets as at balance sheet date, estimated the recoverable amounts of these assets and concluded that there was no impairment because the recoverable amount (estimated based on value in use) exceeded the carrying amounts.

The carrying value of assets affected as at 31 March 2014 is US$1,045.0 million (31 March 2013 :US$799 million).

4. Segment information

The Group's primary format for segmental reporting is based on its business segments. The business segments consist of zinc, iron ore, copper, aluminium, power and oil and gas 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. The Group's activities are organised on a global basis.

Vedanta Resources plc is company incorporated in the United Kingdom under the Companies Act 2006. 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

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 year ended 31 March 2014 and 31 March 2013. Items after operating profit are not allocated by segment.

(a) Reportable segments

The following tables present revenue and profit information and certain asset and liability information regarding the Group's reportable segments for the years ended 31 March 2014 and 31 March 2013

Year ended 31 March 2014

(US$ million)

(1) EBITDA is a non-IFRS measure and represents operating profit before special items, depreciation and amortisation.

(2) Depreciation and amortisation is also provided to the chief operating decision maker on a regular basis.

(3) Transfer prices between operating segment sales are on an arm's length basis in a manner similar to transactions with third parties except from power segment sales amounting to US$36.6 million for the year ended 31 March 2014 (March 2013: US$9.8 million), which is at cost.

Year ended 31 March 2013 (Restated)(1)

(US$ million)