Vedanta FY 2013 Interim Results

7 November 2012

Vedanta Resources plc

Interim Results for the Six Months Ended 30 September 2012

Financial Highlights

n Revenue of US$7.5 billion, up 14%

n EBITDA of US$2.6 billion, up 49%; EBITDA margin1 of 47%

n Underlying EPS2 of US$0.97, up 40%

n Interim dividend of 21 US cents per share, up 5%

n Free cash flow of US$1.4 billion before growth capex and US$484 million after growth capex

n Strong balance sheet with Cash and Liquid Investments of US$7.2 billion

Business Highlights

n Group consolidation and simplification - on track for completion in CY 2012

n Record production at Cairn India, driven by 35% higher output at Rajasthan block

n 23% increase in integrated production at Copper Zambia

n Strong cost performance despite industry inflationary trends

n Cairn India farm-in agreement signed with Petro SA for Block 1 in South Africa

n Temporary state-wide restriction on iron ore mining in Goa

(in US$ millions, except as stated)

 1 Excludes custom smelting at Copper and Zinc-India operations

 2 Based on profit for the period, after excluding special items and other gains and losses, and their resultant tax and minority interest effects (refer to note 6 of Consolidated financial statements)

Mr Anil Agarwal, Chairman of Vedanta Resources plc said, "Vedanta has delivered a strong financial performance driven by production growth across the portfolio and strong cost performance, especially at the newly acquired oil and gas business which has significantly ramped-up production since acquisition. Our growth capex is now largely invested, which will continue to drive production and cash flow growth. This, combined with our proximity to fast growing markets and the simplification of our corporate structure, positions the Group well for the future."

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About Vedanta Resources plc

Vedanta Resources plc ("Vedanta") is a London listed FTSE 100 diversified global natural resources major. The group produces aluminium, copper, zinc, lead, silver, iron ore, oil & gas and commercial energy. Vedanta has operations in India, Zambia, Namibia, South Africa, Ireland, Liberia, Australia and Sri Lanka. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness and growth. For more information, please visit www.vedantaresources.com.

Disclaimer

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

CHAIRMAN'S STATEMENT

Vedanta Half Year Report FY2012-13, September 2012

Overview

In the first half of the financial year (H1 FY2013), Vedanta has delivered strong operational and financial results driven by production growth across the portfolio and strong cost performance. The Cairn India acquisition that was completed in December last year has been performing well and has delivered significant increase in production. Further, the simplification of our Group structure is progressing well, laying the foundation for a more efficient corporate and capital structure. I would like to thank our employees for their contribution to these results and our shareholders for their continued support. 

Financial results

Vedanta has consistently delivered strong profitability across business cycles with EBITDA margins1 consistently above 32% since IPO in FY 2004. We have delivered strong EBITDA margins1 of 47% driven by production growth and improved operating costs. EBITDA increased 49% to US$2.6 billion and free cash flow after capex was positive at $484 million ($1.4 billion of free cash flow before growth capex). 

Our net debt was marginally lower at $9.8bn compared to $10.0 bn at 31 March 2012, with $7.2bn of cash and liquid investments and $3.1 billion in undrawn lines of credit, and we remain committed to maintaining investment grade credit metrics. Overall, our balance sheet remains strong and we remain focused on reducing our gearing.

Operating Performance

We delivered significant production growth across the portfolio in H1.

At our Copper Zambia segment, we delivered 23% higher integrated copper volumes and achieved a major milestone with the commissioning of the bottom shaft loading facilities in October 2012. Ramp-ups of the Sindesar Khurd mine and the Dariba lead smelter drove higher silver and lead production in H1, while zinc production at Zinc India was in line with the mine plan. Both Zinc-India and Zinc-International had strong cost performances with costs going down year on year.

Gross oil and gas production was a record 207,105 barrels of oil equivalent per day (boepd) in H1, driven by 35% higher production at our Rajasthan block. Commercial power sales were 64% higher, driven by higher volumes from the 2,400MW power plant at Jharsuguda.

Our aluminium smelters at VAL and BALCO had a strong half year with production at rated capacity and substantially lower costs although alumina production at our Lanjigarh refinery was constrained by availability of third party bauxite. Iron ore volumes were affected by state-wide mining bans in Karnataka and Goa. We are working closely with the regulatory authorities to obtain necessary approvals to resume mining in Karnataka and Goa.

Market conditions

Global economic conditions remain challenging, with subdued growth in the developed markets. Growth rates in emerging markets seem to have softened from the highs of the last decade, but remain firmly in the positive territory with fundamental demand drivers (industrialisation and urbanization) still intact. The quality of our tier-1 assets with low operating costs positions us well to take advantage of these markets conditions, and deliver strong results across business cycles. We remain the market leader across various commodities in India where growth is forecast to recover to 6% in 2013 and the global growth at 3.6% (source: IMF Sept 2012).

Key strategic developments

Growth

We continued to build on our track record of successful project executions, delivering production ramp-ups in H1. Our Oil and Gas operations at Rajasthan ramped up by 40% since acquisition last December to 175,000 boepd, representing more than 20% of India's domestic oil production. At Zinc India, ramp-ups of the 2mtpa silver-rich Sindesar Khurd mine and the 100kt Dariba lead smelter drove higher silver and lead production, and we are currently evaluating the next phase of growth. At the Konkola Deeps in Zambia, the commissioning of the bottom shaft loading provides a platform for growth in mined metal from Konkola. We synchronized the first 80MW unit of the captive power plant at Tuticorin, India which will further reduce operating costs at the efficient Tuticorin copper smelter. Overall, our well invested asset base coupled with the project ramp-ups is driving positive free cash flow after growth capex.

Following our acquisition of iron ore deposits in Liberia last year, aeromagnetic studies and initial drilling have indicated significant upside to the resource base estimate of 1 billion tonne, and the first shipment is on track for FY 2014. Cairn India remains focused on realizing the full potential of its world-class Rajasthan asset through exploration and fast track development to realize its basin potential of producing at 300,000 bopd. Cairn India also signed a farm-in agreement with PetroSA, the national oil company of South Africa, to explore crude oil and natural gas in the geologically proven Orange basin off the west coast of South Africa.

Long-term value

In line with our strategy, the simplification of the Group structure is on track for completion by the end of CY 2012, creating a more efficient capital and corporate structure and delivering significant synergies. Shareholder and other regulatory approvals have been obtained and we are now awaiting approvals from the High Courts in India. Separately, we have submitted an offer to the Government of India to buy out their minority shareholding in HZL and BALCO.

Sustainability

Sustainability is core to our philosophy and operations, and I have personally set the goal to embed sustainability into all our business decisions and processes. We have rolled out a Sustainability Framework across the group and recently completed a Group-wide self-assessment process with improvement plans to address any gaps. Our efforts are broadly categorized in three areas:

n Responsible stewardship

n Building strong relationships and

n Adding and sharing value 

Safety is our top priority. We have continued to reduce our lost time injury frequency rate (LTIFR) to 0.87 for the last 12 months from 0.99 in the last financial year, and remain committed to reduce injuries and eliminate fatalities.

Dividends

In line with our progressive dividend policy, we have announced an interim dividend of 21 US cents per share.

Outlook

We are operating in challenging market conditions with tapering global growth, and emerging markets continue to be the major contributor to growth. With well invested assets and a diversified portfolio across metals and oil & gas we are strongly positioned to deliver industry leading production growth across our portfolio of diversified

Tier 1 assets. In the near term, our strong free cash flow from operations, would drive deleveraging and deliver long-term value to shareholders.

Anil Agarwal

Chairman

6 November 2012

Interim Results for the Half Year Ended 30 September 2012

Consolidated Group

(In US$ million unless otherwise stated)

 1 Refer to Glossary and Definitions section

 2 Refer to note 6 of Condensed financial statements

Highlights:

n EBITDA up by 49% to US$2.6 billion, EBITDA margin at 47% (excluding custom smelting).

n Strong free cash flow up by 93% at US$1.4 billion; Free cash flow after project capital expenditure of US$0.5 billion.

n Strong performance driven by a diversified portfolio of world-class, low cost, scalable assets

n Significant contribution from Cairn India.

n Achieved record production of Oil & Gas, Copper in Zambia and commercial power.

n Strong cost performance despite global inflationary pressures.

n Iron Ore operation impacted by state-wide restriction on iron ore mining announced in Goa.

n Cash and liquid investments of US$7.2 billion (March 2012: US$6.9 billion) and net debt of US$9.8 billion as at 30 September 2012 (March2012: US$10.0 billion)

n Interim dividend of US21 cents per share, 5% increase over interim dividend of FY2011-2012

Vedanta has once again delivered a strong set of financial results in H1 FY 2012-13 underpinned by our diversified portfolio of low cost, world class assets. Most of our businesses including recently acquired Cairn India, delivered improved operational and cost performances despite a challenging economic environment. The production at Cairn India Oil & Gas operation has increased by 21% compared to same period last year, reflecting the high quality of the asset we have acquired and smooth integration of the Company into the Vedanta Group. Integrated production at Copper Zambia increased by 23%, reflecting the planned ramp up in capacity. Aluminium assets both at Korba and Jharsuguda performed ahead of their rated capacity. Strong cost management and better premiums enabled Vedanta Aluminium to maintain its double digit EBITDA margin despite falling prices. Our robust approach to cost control helped us to improve and maintain our competitive cost positioning in most sectors despite inflationary pressures.

The ongoing European sovereign debt crisis and fears of Chinese growth moderating, have built pressure on the global economy over the past few quarters. Though growth rates in the Chinese and Indian economies have been stronger than in the rest of the world, slowing demand in China combined with unrelenting inflation have put pressure on profitability for mining companies across the world. We consider ourselves to be geographically well placed and in the medium to long term, we remain positive on the outlook for commodity markets. Urbanisation and industrialisation, primarily in developing countries, will continue to fuel consumption of basic commodities. Limited availability of quality assets in a number of commodities will also support prices and will ensure appropriate returns.

The unprecedented growth of the commodity sector in the last decade has run parallel to changing regulations, growing activism against mining and increasing complex social issues. These are clearly reflected by the recent developments in South Africa, Australia, Chile, Indonesia and India. While no one can be immune to these developments we believe these to be temporary and transitionary and will eventually help strengthening the sector in the long run. Our Iron Ore mining operations in India is passing through a similar phase. Iron Ore mining in Goa has been suspended with effect from 11 September 2012 and our Karnataka mine is awaiting the final approval from the Supreme Court before recommencing production. Despite these issues affecting mining companies globally, we believe that we are well positioned over the long term to sustain and grow the business.

The Lanjigarh alumina refinery is operating at a capacity of 1 mtpa, which is presently constrained by bauxite supply, however we are in active discussions with the Orissa State Government for allotment of alternative bauxite mines. Work on the alumina refinery expansions is on hold pending environment clearance from MoEF. Please refer to Aluminium section later in the report for more details.

On the Tuticorin smelter, the company has complied with all the directions of the TNPCB and the consent to operate the plant has been renewed till 31 March 2013. The Supreme Court completed all the hearings on 6th November 2012 and has asked all parties to file written submissions within three weeks and have reserved the judgment in this matter.

Maintaining a strong credit profile has always been a priority for us and we remain focused on this particularly in the current market scenario. In H1 FY2012-13, we generated US$0.5 billion free cash after project capital expenditure. Our project capital expenditure reached an inflection point as the majority of our major expansion programmes are nearing completion.

First Half Performance

Our financial performance in the first half of the year reflects volume growth across most of our businesses with the exception of Iron Ore. This volume growth has been driven by the ramp up of production volumes in our zinc, lead, silver, aluminium and power businesses where our expansion projects have been successfully executed. Our Oil & Gas operations and Copper Zambia have delivered record production in the first half of the year. Global economic concern and uncertainties have driven down commodity prices. In the commercial power sector, sales prices weakened, however the impact was partly mitigated by the lower cash costs of power generation. We achieved EBITDA of US$2.6 billion in the first half of the year 49%, higher than the same period last year (H1 FY 2011-12 US$1.7 billion). Cairn India's first full half year results contributed US$1.3 billion to this increase in EBITDA.

In line with our strategy to maintain long mine life of our assets and target to add more than we mine, we continue to focus on our exploration programmes - on both brown field and green field sites. As a result, extensive exploration work is going on in Cairn India, Zinc India, Zinc International, Iron Ore, and Copper Zambia.

The initiative to simplify and consolidate the group structure is progressing well and is on track for completion by the end of CY 2012. We have received approval from Vedanta, Sterlite and Sesa shareholders and have received approvals from the Supreme Court of Mauritius while the necessary hearings in Indian High Courts are in progress.

Strategic Priorities

n Deliver industry-leading production growth across our portfolio complemented by strategic acquisitions of large-scale proven assets to drive growth going forward.

n Continue to add reserves and resources to drive long-term value by extending resources at a faster rate than we deplete them through a continued focus on drilling and exploration program.

n Reduce gearing from cash flow as capital expenditure reaches inflection and deleverage the balance sheet.

n Complete the simplification of the Group structure to eliminate cross-holding, bring debt near to the cash flow and deliver significant synergies.

n Complete minority buyouts at HZL and BALCO with an objective to improve the attributable profit of the company and fungibility of the cash.

Finance Review

Basis of presentation of financial information

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

Consolidated Group Results

(in US$ million, except as stated)

 *Acquired on 8 December 2011

Operating Profit Variance

Consolidated Group

(In US$ million)

 *Excluding Cairn

New and Acquired Operations

Assets are reported as new and acquired operations until there is a full year period for comparison. Our diversification into the high margin oil & gas sector through our acquisition of Cairn India on 8 December 2011, contributed US$633 million to the total operating profit of US$1,424 million in the first half of the year. EBITDA for Cairn India in the first half was US$1,290 million after netting off depreciation and amortisation charge of US$657 million resulted in a net gain of US$633 million to the operating profit.

Prices

During the reporting period we witnessed a moderation in prices. Average prices of aluminium in the first half of the year fell by about 22%. In the same period, average lead prices were down by 21%, average zinc prices were down by 15%, average copper prices fell by 14% and we experienced lower iron ore prices as the index reduced by 26% (at 56% grade). In India, where our Commercial Power business is situated, demand continues to exceed supply with the precarious health of power distribution companies frequently creating downward pressure on energy prices. These lower average prices across all commodities (except oil & gas) had a negative impact of US$539 million on operating profits.

Exchange Rates

Exchange rate volatility increased during the first half of the year. The depreciation of the Indian rupee against the US dollar had a positive impact on our operating profit of US$170 million. Higher sales realisation due to depreciation of the rupee, net off EBITDA translation accounted for this gain.

Volumes

During the first half of the year, record integrated copper cathode production was achieved at Copper Zambia along with strong integrated production of silver and lead at Zinc India. Record sales of power were also achieved during this period. Finished aluminium production was up by 18%. These increases in volume contributed a positive variance of US$57 million to operating profits. The mining ban and other logistic restrictions reduced volume in our Iron Ore business contributing a negative variance of US$110 million to operating profits compared with H1 FY 2011-12.

Costs

The cost-inflationary environment prevailing in the sector was largely mitigated by our presence in India and Zambia, higher production volumes, operational efficiencies and the depreciation of the Indian rupee against the US dollar in which most of our costs are denominated. These cost increases reduced operating profits by US$26 million including the impact related to commodities prices of US$18 million during the first half of the year.

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

Special Items

Special items relating to voluntary redundancy charges and acquisition related costs amounting to US$48 million were incurred in H1 FY 2011-12, as compared with US$7 million in H1 FY 2012-13.

Depreciation

The depreciation charge in H1 FY 2012 -13 was US$389 million compared to US$363 million in H1 FY 2011-12. The capitalisation of major growth projects at Copper Zambia, Zinc India and Sterlite Energy in FY 2011-12, resulted in higher depreciation charges of US$26 million.

Amortisation

The mining reserves related to our acquisitions are being amortised based on a unit of production basis over the total estimated remaining commercial reserves.

The amortisation charge in H1 FY 2012-13 was US$85 million compared to US$138 million in H1 FY 2011 - 12. Lower volume resulted in a decrease in amortisation charges by US$53 million in the Iron Ore and Zinc International businesses.

Income Statement

(in US$ million, unless otherwise stated)

Revenue

Revenue for the first half of the year was US$7,452 million up by 14% largely as a result of incremental revenues of US$1,629 million from Cairn India, the oil & gas business acquired in December 2011. Across other businesses, with the exception of Power, revenue decreased due to significantly lower commodity prices despite higher volumes of lead, silver, aluminium and copper. Iron Ore revenue was significantly impacted by the mining restrictions in Goa and Karnataka.

EBITDA Margin

Our EBITDA margin was 34% in H1 FY 2012-13 compared with 26% in H1 FY 2011-12. Our EBITDA margin, excluding custom smelting operations and profit sharing, was 47% in H1 FY 2012-13 as compared with 37% in H1 FY 2011-112. Despite the weaker commodity price environment in the period, the strength of our diversified portfolio and Tier 1 assets further benefitted from the high margins in newly acquired Oil & Gas business, helping us to improve overall margin performance.

Depreciation and Amortisation

The additional depreciation charge of US$300 million in H1 FY 2012- 13 -13 included US$275 million from Cairn India with the balance due to the capitalisation of major growth projects at KCM, Zinc India and Sterlite Energy commissioned in FY 2011-12. The Cairn India acquisition amortisation charge was US$383 million in H1 FY 2012 -13 which was partially offset by lower amortisation costs of US$53 million for previous acquisitions by our Iron Ore business and Zinc International.

Net Interest

Net interest expense was US$236 million in H1 FY 2012-13 compared with US$110 million in H1 FY 2011-12, primarily due to additional debt for the Cairn India acquisition, partially offset by higher income received on cash and liquid investments.

Gross finance costs increased to US$680 million in H1 FY 2012-13 up from US$527 million in H1 FY 2011-12. The interest capitalised in H1 FY 2012-13 was US$134 million (H1 FY 2011-12 US$132 million). As a result the finance costs charged to the income statement increased to US$546 million in H1 FY 2012-13 up from US$395 million in H1 FY 2011-12.

The average debt in H1 FY 2012-13 was US$16,778 million, compared with H1 FY 2011-12 levels of US$12,030 million. The average debt maturity at 30 September 2012 was 3.23 years.

Other Gains and Losses

Other gains and losses include the impact of mark to market (MTM) foreign currency borrowings, primarily at our Indian businesses and also from the periodical valuation of embedded derivatives relating to the foreign currency convertible bonds at Sterlite and Sesa Goa.

The other losses in H1 FY 2012-13 were US$129 million, as compared with a loss of US$194 million in H1 FY 2011-12. During H1 FY 2012-13, MTM losses on foreign currency borrowings were US$142 million (H1 FY 2011-12 US$253 million), which was mainly due to the depreciation of the Indian Rupee against the US dollar. The gain on MTM of embedded derivatives of US$13 million (HI FY 2011-12 US$59 million) was related to the foreign currency convertible bond at Sterlite and Sesa Goa.

Taxation

The effective tax rate for H1 FY 2012-13 was 12%, significantly lower than 37% in H1 FY 2011-12, largely due to negative tax rates at Cairn India at the back of tax holiday in the Rajasthan oil fields and reversal of deferred tax liabilities on acquisition related amortisation costs.

The effective tax rate excluding Cairn India was 45% in H1 FY 2012-13 as compared to 37% in H1 FY 2011-12 mainly reflecting higher interest costs on increased debt at the standalone Vedanta level and change in profit mix.

Attributable Profit

Attributable profit in H1 FY 2012-13 was US$171 million, significantly higher compared with US$28 million in H1 FY 2011-12, primarily due to higher attributable profit at Cairn India and lower losses at VAL. Attributable profit also increased due to comparatively lower losses on MTM of dollar borrowings at our Indian businesses in particular at VAL. Underlying profit in the first half of the year, excluding the impact of MTM losses, gains on embedded derivatives and special items was higher at US$264 million as compared with US$189 million in H1 FY 2011-12.

Earnings per Share ('EPS') and Dividend

Basic EPS in H1 FY 2012-13 was 63 US cents per share compared with 10 US cents per share in H1 FY2011-12. Diluted EPS in H1 FY2012-13 was 62 US cents per share against 10 US cents per share in H1 FY 2011-12.

The underlying EPS for the first half of the year excluding the impact of MTM losses and gains on embedded derivatives and special items, was 97 US cents as compared with 69 US cents in H1 FY 2011-12.

The Board declared an interim dividend of 21 US cents per share.

Balance Sheet

(In US$ million, except as stated)

Shareholders equity was US$4,651 million at 31 March 2012 compared to US$4,591 million at 30 September 2012 reflecting the increase in attributable profit due to equity holders during the period offset by currency losses following the depreciation of the Indian Rupee against the US dollar.

Minority interests increased to US$14,244 million at 30 September 2012 from US$13,769 million as at 31 March 2012, due to an increased share of profit partially offset by currency losses.

Tangible Fixed Assets

During the half year, we added US$1,128 million to property, plant and equipment comprising of US$954 million on our expansion and improvement projects; and US$174 million spent on sustaining capital expenditure.

We continue to maintain a strong financial profile with US$7.2 billion as cash and liquid investments plus a further US$3.1 billion unused line of credit.

Net Debt

At 30 September 2012, net debt was US$9,835 million (31 March 2012 US$10,064 million), a reduction of US$229 million resulting from strong cash flow. The cash and liquid investments were US$7,163 million at 30 September 2012. There was external debt of US$17,006 million (31 March 2012 US$16,955 million) and after netting off debt related derivatives of US$8 million resulted in debt and debt related derivatives of US$16,998 million. External debt at our operating subsidiaries was US$7,747 million (31 March 2012 US$7,692 million) and debt at Vedanta Resources Plc was US$9,259 million (31 March 2012 US$9,263 million). Of the US$17,006 million total debt, US$2,340 million consists of convertible bonds. Near term debt maturities of US$3,293 million due in FY2012-13 are scheduled to be repaid partly through cash generation and also through refinancing of loans, majority of which is in place.

Our cash and liquid investments portfolio continues to be conservatively invested in debt mutual funds and in cash and fixed deposits with the banks. Additionally, the investments portfolio at our Indian entities is independently reviewed by CRISIL Limited and our investment portfolio has been rated as "Very Good".

Cash Flows

(in US$ million, except as stated)

 * On an accruals basis.

 ** Includes foreign exchange movements

Free cash flow before growth capital expenditure in H1 FY 2012-13 was US$1,438 million which represents 56% of EBITDA as compared to 43 % in H1 FY 2011-12. We have incurred US$174 million in on-going capital expenditure during H1 FY 2012-13.

The Company's capital expenditure programme has started tapering off and reached an inflection point, where we expect substantial cash generation from our well diversified and well invested asset portfolio which will be used largely to deleverage the balance sheet.

PROJECTS

Projects under execution (in US$ million, except as stated)

 Total amount committed but not spent towards above mentioned expansion projects at 30 September 2012 was $2.8 billion.

Interim Results for the Half Year Ended 30 September 2012

Operational Performance:

Zinc - India

Production Performance

1 Including captive consumption of 3kt each in H1 FY13 vs H1 FY12

2 Including captive consumption of 0 52 million ounces in H1 FY 2013 vs 0 46 million ounces in H1 FY 2012

Mined metal production was 377,000 tonnes in the first half of FY 2012-13 in line with our mine plan, compared with 398,000 tonnes in the same period last year. Sindesar Khurd (SK) mine production was up by 39% at 45,000 tonnes.

In line with the mined metal production, integrated production of refined zinc was 310,000 tonnes in the first half of FY 2012-13. Integrated production of refined lead was up by 59% at 53,000 tonnes in the first half of FY 2012-13, reflecting the ramp-up of the SK mine and the new Dariba lead smelter.

Integrated production of silver was 5.14 million ounces in the first half of FY 2012-13, up 66%. This was driven by the ramp-up of the SK mine, the new Dariba lead smelter and the new silver refinery.

Markets

In line with sector trends, global zinc consumption is expected to grow at around 4% in 2012, led by demand in the construction, infrastructure and automotive sectors. Developing economies are driving this growth.

On the supply side, in 2012 refined zinc production is expected to contract marginally, leading to a deficit situation in the year.

In the medium to long term, despite some concerns surrounding the near term outlook for the global economy, the zinc market will continue to be dominated by the structural issue of whether the incremental demand will be matched by growth in mine production. While the stock overhang continues to impact the price, we expect the price to be governed by marginal cost of production in the near term.

LME zinc prices averaged US$1,906 per tonne compared to US$2,236 per tonne in the same period in 2011.

Zinc demand in India is estimated to maintain a near double digit growth rate. We are well positioned to participate in this growth. Indian consumption is expected to rise above 700 kt per annum by 2015, largely driven by construction and infrastructure.

Unit Costs

Unit costs of production excluding royalties were marginally lower at US$845 per tonne in the first half of the year as compared with US$861 per tonne in the first half of last year. We expect the cost of production (excluding -royalty) to reduce in the second half of FY 2012-13, driven by higher volumes and improved operating efficiencies. The business remains in the lowest cost quartile compared with the global producers, backed by high quality assets like Rampura Agucha and the SK mine.

Financial Performance

(in US$ million, unless otherwise stated)

EBITDA for H1 FY 2012-13 was US$504 million, 23% lower than the same period last year. The positive impact of higher lead-and silver volumes was offset by lower zinc volumes and lower metal prices. On the back of the rise in integrated silver volumes, the contribution of the silver business in H1, EBITDA was US$140 million compared to US$92 million H1 FY 2011-12.

Outlook

In line with the mine plan and earlier stated guidance, production in H2 should more than make up the shortfall in H1 production. H2 production of mined and finished metal is expected to progressively increase during Q3 and Q4. We expect the mined metal production for the full year to be slightly higher than the previous year. We remain on track to deliver earlier projected growth in integrated silver and lead production for the year as a whole at about 100,000 tonnes of lead and about 11 million ounces of silver, on the back of increased throughput at the SK mine, and lead and silver refining facilities.

Exploration

During FY 2012-13 we have 95,000m of drilling planned. Existing mine block areas at Rampura Agucha, Zawar, Kayar and the Rajpura Dariba Belt continue to be our exploration priority. Overall the Company's strategy is to add more reserves and resources than depletion at the existing mines. Additionally the Company continues to work on several large scale prospecting licences.

Projects

The Rampura Agucha underground mine and Kayar mine projects are progressing well towards delivering commercial production in FY 2013-14. The Kayar mine produced developmental ore in Q2.

Zinc International

Production Performance

Total production of refined zinc and mined zinc-lead metal in concentrate ('MIC') was marginally lower at 220,000 tonnes in the first half, in line with the current year's mine plan largely due to lower grades.

Market

(US$ per tonne)

Unit Costs

(US$ per tonne)

Production costs were US$1,087 per tonne compared to US$1,164 per tonne for the same period last year. Stable volume, improving operational efficiencies and a stronger US dollar against the South African rand resulted in lower cash cost of production.

Financial Performance

(in US$ million, unless otherwise stated)

EBITDA for H1 was US$135 million, primarily due to lower LME prices for zinc and lead, despite lower cash costs.

Outlook

We remain on track to deliver a production volume of 400,000 tonnes of zinc and lead. Overall, the strategy of the businesses is to increase the mine life of all three assets through our exploration programme, alongside developing the Gamsberg project, where a feasibility study is being carried out. Gamsberg is a 186 million tonne zinc deposit, one of the largest undeveloped deposits in the world with a mine life of 20 years and 400,000 tonnes of zinc production capacity.

Oil & Gas

Production Performance

In H1, average daily gross operated production was 207,105 barrels of oil equivalent (boepd), 21% higher than the same period last year. Working interest production was 29% higher at 128,335 barrels of oil equivalent per day (boepd). The increase was driven by the ramp-up at the Rajasthan block, which delivered a 35% higher gross production of 169,486 bopd from the four producing fields. This included gross production from the Mangala and Bhagyam fields of 146,060 bopd and 22,944 bopd, respectively. Work to enhance production from the block continues to remain our primary focus.

Cairn India signed a farm-in agreement with the Petroleum Oil & Gas Corporation of South Africa Ltd. (PetroSA), the national oil company of South Africa, for the 19,922 sq km off-shore Block 1, located in the geologically-proven Orange Basin in South Africa. Cairn India will hold a 60% interest in the block and will be the operator. The agreement was signed in August 2012 and the closure of the transaction is subject to South African regulatory approvals. It is a step in the right direction towards our strategic goal of growing our resource base by building a balanced portfolio with a long term vision.

Market

(US$ per barrel)

Crude oil prices were marginally lower than the same period last year.

Crude oil sales arrangements are in place with public sector and private refiners for volumes in excess of 175,000bopd. The crude is currently being supplied to four refineries Rajasthan crude is well established in the market, generating higher demand and increased value for its stakeholders. We have enough demand for the crude in the current pipeline route. In accordance with the RJ-ON-90/1 PSC, the crude is benchmarked to Bonny Light, West African low sulphur crude that is frequently traded in the region, with appropriate adjustments for crude quality. The implied crude sales price lies within a 10%-15% discount to Brent.

Financial Performance

(in US$ millions, except as stated)

EBITDA for H1 FY 2012-13 was US$1,290 million backed by higher volumes and strong oil prices.

In Cairn India, the oil & gas reserve created on acquisition is amortised on a unit of production basis over the total estimated remaining commercial reserves. Unit of production is calculated as the ratio of oil & gas production in the period to the estimated quantities of commercial reserves. Commercial reserves are proven and probable (2P) oil & gas reserves, which are estimated quantities of crude oil, natural gas and natural gas liquids with a specified degree of certainty to be recoverable in future from known reservoirs and which are considered commercially producible.

During H1 FY 2012-13, Cairn India transferred 10% Participating Interest ('PI') in KG-DWN/98 to Oil and Natural Gas Corporation ('ONGC'). The total sale consideration was US$38.3 million and an amount of US$14.2 million has been recognised as a gain after writing off the carrying value of US$24 million.

Exploration

A comprehensive review of the resource potential in the block was carried out by Cairn India through detailed studies involving the usage of innovative technologies and advanced geosciences. Based on Cairn India's assessment, Rajasthan's potential resource for the block is now estimated to be 7.3 billion boe in place. This is primarily due to an increase in the exploration upside with the prospective resource base now estimated at 3.1 billion boe in place from an earlier estimate of 2.5 billion boe in place.

Rajasthan recoverable prospective resources increased from 250 mmboe to 530 mmboe on a risked basis, primarily due to the generation of additional leads and prospects.

Cairn India and ONGC are working with the Government of India ('GoI') to obtain the necessary approvals required to conduct exploration and appraisal activity in the block.

Sri Lanka

We have completed the acquisition of 600 sq km of 3D seismic data under the Phase 2 exploration programme; preparatory work is on-going to drill an exploration well in mid CY 2013.

Outlook

Since April this year we have been consistently producing about 175,000 bopd from Rajasthan Block, with main the production coming from Mangala at 150,000 bopd and Bhagyam at approximately 25,000 bopd. Currently we are optimizing production from Mangala, Bhagyam, Raageshwari and Saraswati and cumulatively reach production rate of around 175,000. Our mature assets, Ravva and Cambay continue to be our pillars of strength and we will embark on a drilling campaign in both the assets targeting additional resources with the aim of extending their economic life.

Iron Ore

Production and Sales

Sales of iron ore were 3.1 million tonnes in the first half, as compared with 5.8 million tonnes in the same period last year. Our iron ore operations were affected by the mining ban in Karnataka, a temporary restriction on iron ore extraction in Goa and transportation restrictions in South Goa.

On 12 September, the Supreme Court allowed some mines in Karnataka to resume mining operations in line with the recommendations of the Central Empowered Committee ('CEC'), and has now commenced the process for other mines including our mine in Karnataka. The CEC has approved our Reclamation and Rehabilitation plan at a provisional production capacity of 2.29mtpa and we expect to commence mining in Karnataka, subject to receiving the Court's approval. The next date of hearing is 30 November 2012.

The Goa State Government ordered a temporary suspension on extraction of ore across the State of Goa from 11 September 2012 pending verification of various approval documents, but stated that the ore already mined-out could be transported and sold after inspection and clearance by the State Government. Further to this, the Ministry of Environment and Forests (MoEF) suspended existing environmental clearances of mines across the State from 14 September 2012 and is verifying documents related to environmental clearances. On 5 October 2012, the Supreme Court ruled that the ban on mining activities in Goa continue, and asked the CEC to file a preliminary report in four weeks. From this date, the Court has also restricted any movement of ore from mines or stockyards. We are working closely with the regulatory authorities to complete the review processes.

Market

Whilst the year started with record levels of steel production in China in April and May, the strength of demand from downstream industries eventually slowed down the pace of steel consumption. As the year progressed, overall market sentiments improved with positive developments in infrastructure spending in China and quantitative easing in the United States which buoyed commodities prices across the board and briefly supported a sharp rally in Chinese steel prices and spot iron ore delivered into the country.

Iron ore prices in H1 of FY 2012-13 were on a downward trend and prices dropped by around US$40, partially recovering towards the end of the period. The iron ore price slump caused project plan uncertainties, with many leading miners scaling back their investment plans.

Financial Performance

(in US$ million, except as stated)

EBITDA in H1 FY 2012-13 was down at US$115 million, due to both lower volume and lower prices.

Exploration

For the current year, 73,000m drilling is planned for Goa and Karnataka. In Liberia a total of 98,000m drilling is planned.

Projects

Expansion of pig iron capacity to 625 ktpa and the associated metallurgical coke capacity was successfully commissioned during Q2.

At our Liberian iron ore project, exploration activities are progressing well with over 31,000 meters of drilling completed by 30 September 2012. The drilling in Liberia at the Bomi project area has given encouraging results. The Banded Magnetite Quartzite ('BMQ') ore encountered at Bomi is expected to have iron grade of 36%. Preliminary results of beneficiation studies conducted on the BMQ have indicated a yield of 44 to 51% weight recovery of magnetic concentrate with an excellent iron grade of 66 to 68%.

We remain on track to deliver the first shipment in FY 2013-14.

Outlook

We are hopeful of seeing an early resolution of the mining ban in Karnataka with the Supreme Court currently reviewing the category B mines. On temporary restriction on ore mining in Goa, we believe, considering the situation in Goa, the Supreme Court and CEC will take a pragmatic view and will allow resumption of legal mining as soon as possible.

Copper

Copper India/Australia

Production Performance

Copper cathode production was 9% higher at 175,000 tonnes in the first half of FY 2012-13, driven by operational efficiency despite an eight day planned shutdown during the period.

Mined metal production at Australia was 13% higher in the first half of the year at 13,000 tonnes.

Market

Average LME copper prices fell by 14% and Tc/Rc by 12% during the six months to September 2012 from the average price level for at the same period last year.

Tc/Rcs received in the first half of FY 2012-13 were lower at 11.8 US cents per lb compared with 13.4 US cents per lb in the first half of the previous year.

Unit Cost

Net unit conversion cost at Copper India was 6.27 US cents per lb in the first half of the year, compared with a negative 3.3 US cents per lb in the first half of FY 2011-12 largely due to reduced sulphuric acid sales and higher power costs.

Financial Performance

(in US$ million, except as stated)

EBITDA for H1 was lower reflecting lower sulphuric acid credit partially offset by improved production volumes.

Higher copper recovery, higher copper rod production, a well developed by-product management strategy coupled with recently added captive power plant will further reinforce the global cost positioning of this business.

Projects

The first 80MW unit of the 160MW captive power plant at Tuticorin was synchronised in Q2, which will predominantly provide power to the copper smelter.

The 400 ktpa copper smelter expansion project at Tuticorin is on hold, as the project is awaiting consent from the State Pollution Control Board while the MoEF clearance is in place.

Outlook

We expect stable operation during the remaining period of the financial year.

Copper Zambia

Production Performance

Mined metal production was 14% higher at 86,000 tonnes in the first half of FY 2012-13 as compared to the same period last year. The increase was driven by a production ramp-up at Konkola due to faster mine development and higher throughput from the newly commissioned Nchanga concentrator. The commissioning of a high speed tramming facility helped accelerate the pace of mine development at Konkola.

Higher mined metal production contributed to a robust 23% increase in integrated production to 83,000 tonnes in the first half of FY 2012-13. Total production of copper cathode was up by 8% at 110,000 tonnes in the first half of the year.

Production from custom smelting was affected by lower availability of third party concentrate.

Market

Average LME copper prices for the six months to September 2012 had fallen by 14% from the average price level of the previous year for the same period.

Unit Costs

Unit Costs

Unit cash costs of integrated production in H1 FY 2012-13 was 226 US cents per lb, equivalent to the same period last year, on the back of a growth in volume despite inflationary pressures from increased wages, higher pre-stripping costs and a rise in input prices.

Ongoing continuous improvement initiatives and expected growth in volume in the forthcoming quarters will help to push down unit cash costs.

Financial Performance

(in US$ million, except as stated)

EBITDA in H1 FY 2012-13 was US$185 million, 24% lower than the EBITDA of US$244 million in H1 FY 2011-12, primarily due to lower LME prices partially offset by higher integrated production volume.

Exploration

During FY 2012-13, an extensive plan to undertake surface drilling in open pits at Nchanga has been initiated. A total of 11,600m have been drilled with the aim of maintaining our track record of reserves and resources replacement. 

Projects

At the Konkola Deep Mine Project ('KDMP'), the bottom-shaft loading has been commissioned and waste hoisting has commenced ahead of schedule. The 3mtpa Nchanga West Mill has been commissioned and production is ramping up.

Outlook

We expect to deliver a planned 175,000 tonnes of integrated production volume in the current financial year.

Aluminium

Production and Sales

Alumina production at the Lanjigarh refinery was 423,000 tonnes in the first half of the year, 6% lower than the same period last year due to a lower availability of third-party bauxite.

The Jharsuguda-I and Korba-II smelters operated above their rated capacities, with significant improvements in specific power consumption and throughput at Jharsuguda-I. Aluminium production was 18% higher at 382,000 tonnes in the first half of the year. Total production of value-added products was 11% higher at 215,000 tonnes in the first half of FY 2012-13. Power sales at 270MW BALCO CPP were lower due to a shortfall in demand.

Market

Average LME prices of aluminium for the six months to September 2012 have fallen by 22% from the average price level during the same period last year. While the price in the LME has been falling since April, market premiums have been escalating, representing around 15% of producers' prices during September 2012, up from less than 10% at the beginning of the financial year.

Global primary aluminium production in H1 FY 2012-13 stood at 23.8 million tonnes and is expected to be 48.8 million tonnes in FY 2012-13 projecting a total growth of 5.6% over FY 2011-12. Global primary aluminium consumption however, is expected to be 48.6 million tonnes in FY 2012-13, a growth of 7.7% year-on-year. Aluminium is expected to continue to lead the metals pack in term of consumption growth rates.

Due to low LME aluminium prices and the marginal cost of production of aluminium, some announcements regarding capacity reduction have been made which may be implemented in the next 6-12 months.

Unit Costs

 1. Smelting cost comprises production cost excluding alumina cost

Unit costs of production decreased to US$1,873 per tonne in H1 FY 2012-13 compared with US$2,282 per tonne in H1 FY 2011-12, primarily due to lower coal costs and better operating efficiencies at VAL Jharsuguda. Even without a captive bauxite source, our aluminium operations were ranked in the 2nd quartile of the global cost curve in H1 FY 2012-13, and our cash costs were in line with leading fully integrated aluminium producers, reflecting the operational efficiencies of our plants.

Financial Performance

(in US$ million, except as stated)

EBITDA in the period was US$106 million, an increase over the US$91 million generated in H1 FY 2011-12 due to improved operational efficiency. This resulted in higher production volumes, lower costs and higher sales premiums, despite the negative impact of a 22% drop in LME prices.

Supply of bauxite by Orissa Mining Corporation (OMC) from Niyamgiri mines

After granting Stage I approval for forest clearance and also the environment clearance for Niyamgiri mining project in 2009, the final Stage II forest clearance approval was not granted until 2010 and the environmental clearance originally granted was withdrawn . OMC has challenged the decision of the MoEF in the Supreme Court where the hearing for the final decision is in progress. All preliminary submissions and hearings have already been completed. The matter was heard on 5 October and 12 October 2012 consecutively and the next hearing is scheduled for 23 & 26 November 2012.

Expansion Project

With regard to the expansion project at Lanjigarh, following VAL's Review Petition, the Honourable Orissa High Court found that the clarification issued by the MoEF on November 16 2010 with regard to the granting of environmental clearance lacked statutory authority. VAL has now re-applied for environmental clearance and the application is under process. The MoEF has now sought certain clarification from the Government of Orissa and following this it will advise on the public hearing for the proposed expansion project. In the meantime, VAL has put the expansion activity on hold. On 6 September 62012, due to the scarcity of bauxite, VAL has given a Temporary Closure (Stoppage of Work) notice , to the Government of Orissa with effect from 5 December 2012.

Projects

The first 300MW unit of the BALCO 1,200MW captive power plant is expected to be synchronised in the current quarter. Following this we plan to tap the first metal at the 325 ktpa Korba-III aluminium smelter in Q4 FY 2012-13. We are progressing well towards obtaining the second stage forest clearance for the 211mt coal block at BALCO, and once this has been secured we intend to commence mining this year.

Outlook

We continue to evaluate the start-up of the 1.25 million tonne smelter at Jharsuguda and in the meantime are working on completing the project ready for operations. . Until then we will continue to sell surplus power.

Power

Production and Sales

 * Includes SEL trial run production of 339 million units in H1 FY 2013 vs 288 million units in H1 FY 2012

Power sales were 4,680 million units, 64% higher than the same period last year. This significant increase was primarily due to higher power sales from three units of the Jharsuguda 2,400MW power plant, operating with availability of over 80% and a plant load factor ('PLF') of 50%, with the fourth unit generating power under trial running The PLF of the Jharsuguda 2,400MW power plant was constrained due to power transmission limitations imposed following a grid failure at the end of August 2012. We continue to work towards debottlenecking our transmission capacity which is currently at 1,850 MW and aim to enhance it by adding an additional 1,000MW transmission capacity by Q4 FY 2012-13.

Power sales were augmented by higher sales at HZL wind power, which was expanded by 150MW to 274MW last year, and higher sales at MALCO, which operated at 109% PLF.

Market

The power supply deficit in India stood at 9% and peak load deficit stood at 11% during FY 2011-12 and this situation is likely to prevail in the current year. A sustained and healthy GDP growth rate will maintain pressure on the demand/supply gap.

Unit Costs

Average power generation costs in H1 FY 2012-13 were 4.1 US cents per unit compared with 6.2 US cents per unit in H1 FY 2011-12 primarily driven by higher volume and plant stabilisation. Availability, the cost of coal and the PLF will remain key drivers. Overall we were able to deliver better margins in H1 FY 2012 -13 compared to the previous corresponding period due to low cost of production. The Power Distribution company (DISCOM) reforms are important for a healthy power sector.

Financial Performance

(in US$ million, except as stated)

EBITDA in H1 FY 2012-13 was US$121 million, higher than the EBITDA of US$51 million in the same period last year due to increased generation from SEL and improved margins.

Projects

Work at the Talwandi Sabo power project is progressing well and the first unit is now expected to be synchronised in Q2 FY 2013-14.

Other matters

Contingent Liabilities and Commitments

In the normal course of business, we enter into certain commitments for capital and other expenditure and certain performance guarantees. The aggregate amount of indemnities and other guarantees was US$1,983 million at 30 September 2012. Details of related party transactions, contingent liabilities and commitments are set out in note 9 of the accompanying interim financial statements.

Risks and Uncertainties

The Vedanta Group is exposed to a variety of risks which are inherent in an international mining and resources business. Manifestation of any or all of these risks could have a significant impact on the operational or financial performance of our Group.

Principal risks and uncertainties and detailed information on the impact of these risks as well as the identification and mitigation measures adopted by management have been documented in Vedanta's Annual Report for FY 2011-12. A summary of these risks and their possible impact is presented below:

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 Review in our last Annual Report on pages 38 to 57. These activities and factors have not materially changed since the issue of the last Annual Report.

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$3,131 million, together with cash and liquid investments of US$7,163 million as at 30 September 2012, 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 and Moody's are BB and Ba1 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 net debt-equity 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.

After making enquiries, we have a reasonable expectation that the Company and the Group have adequate resources to continue operating for the foreseeable future. Accordingly, we continue to adopt the going concern basis in preparing the Interim Financial Report.

Responsibility Statement

We confirm that to the best of our knowledge:

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

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

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

By order of the Board

M S Mehta D D Jalan

Chief Executive Officer Chief Financial Officer

6 November 2012 6 November 2012

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six month period ended 30 September 2012

(US$ million except as stated)

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six month period ended 30 September 2012

(US$ million)

CONDENSED CONSOLIDATED BALANCE SHEET

At 30 September 2012

(US$ million)

 1 The balance sheet as at 30 September 2011 has been restated to give effect to the fair value adjustments to provisional fair values and business combination accounting relating to acquisition of Zinc International entities.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the period ended 30 September 2012

(US$ million)

 1 Year ended 31 March 2012 includes cash paid for acquisition of US$8,683.2 million and cash acquired on acquisition of US$665.8 million.

 2 September 2011 figure includes acquisition of intangible assets in Western Cluster Limited of US$102.5 million, which has been reclassified into purchases of property, plant and equipment during the year ended 31 March 2012. This has been made to give a more appropriate disclosure in the financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 30 September 2012

(US$ million)

For the year ended 31 March 2012:

(US$ million)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

For the period ended 30 September 2011

(US$ million)

 1 Other reserves comprise the currency translation reserve, merger reserve, investment revaluation reserve and the general reserves established in the statutory accounts of the Group's Indian subsidiaries.

 2 Under Indian law, a general reserve is created through a year-on-year transfer from the income statement. The purpose of these transfers is to ensure that distributions in a year are less than the total distributable results for that year. This general reserve becomes fully distributable in future periods.

Notes to the financial information

1. Basis of preparation

The financial information in this interim financial report is prepared under International Financial Reporting Standards ('IFRS') as adopted by the European Union. The interim condensed consolidated financial information for the period ended 30 September 2012 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

The financial information for the full preceding financial year has been derived from the statutory accounts for the financial year ended 31 March 2012 as filed with the Registrar of Companies. The auditor's report on the statutory accounts for the year ended 31 March 2012 was unqualified, did not draw attention by way of emphasis of matter and did not contain statements under section 498(2) (regarding adequacy of accounting records and returns) or under section 498(3) (regarding provision of necessary information and explanations) of the Companies Act 2006.

The financial information prepared under IFRS in respect of the six months ended 30 September 2012 and 30 September 2011 is unaudited but has been reviewed by the auditor and their report is set out on page 54.

This interim financial report for the half-year ended 30 September 2012 is unaudited and has been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted by the European Union.

The half-year financial statements represent a "condensed set of financial statements" as referred to in the UK Disclosure and Transparency Rules issued by the Financial Services Authority. Accordingly, they do not include all of the information required for a full annual report and are to be read in conjunction with the most recent annual financial report.

The Company published full financial statements that comply with IFRS as adopted by the European Union for the year ended 31 March 2012.

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

The income statement for the six month period ended 30 September 2011 has been restated to give effect of reclassification of US$9.8 million from Special items to Cost of sales, in order to reflect the reversal of provision for onerous contract which was previously included in Special items. This reclassification has been made for better presentation of the financial statements and in consistence with year ended 31 March 2012.

2. Accounting policies

This interim financial report, including all comparatives, has been prepared using the same accounting policies and methods of computation as followed in the annual financial statements for the year ended 31 March 2012 as published by the Company.

Foreign Exchange Rate

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

3. Segmental Reporting

The Group's primary format for segmental reporting is based on business segments. The business segments consist of zinc, iron ore, copper, aluminium, power and oil and gas with residual components being reported as 'Others'. Business segment data includes an allocation of certain corporate costs, 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

The Group's reportable segments under IFRS 8 are as follows:

n Zinc-India

n Zinc-International

n Oil & 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 six months ended 30 September 2012 and 30 September 2011 and for the year ended 31 March 2012. Items after operating profit are not allocated by segment.

(a) Reportable segments

Period ended 30 September 2012

(US$ million)

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

Period ended 30 September 2011 (restated)

(US$ million)