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Sesa Goa LimitedAnnual Report 2011

DeliveringGrowthLong term valueSustainability

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Our ValuesEntrepreneurship

We oster an entrepreneurial spiritthroughout our businesses and value theability to oresee business opportunitiesearly in the cycle and act on them switly.Whether it be developing organic growthprojects, making strategic acquisitionsor creating entrepreneurs rom within,we ensure an entrepreneurial spiritat the heart o our workplace.

Growth

We continue to deliver growth andgenerate significant value or ourshareholders. Moreover, our organicgrowth pipeline is strong as we seek tocontinue to deliver significant growthor shareholders in the uture. We havepursued growth across all our businessesand into new areas, always on thebasis that value must be delivered.

Excellence

Achieving excellence in all that we do isour way o lie. We strive to consistentlydeliver projects ahead o time at industry-leading costs o construction and withinbudget. We are constantly ocusedon it with aspiring to achieve a topdecile cost o production in each o ourbusinesses. o achieve this, we ollow aculture o best practice benchmarking.

rust

Te trust that our stakeholders placein us is key to our success. We recognisethat we must responsibly deliver onthe promises we make to earn thattrust. We constantly strive to meetstakeholder expectations o us anddeliver ahead o expectations withoutcompromising our other values.

Sustainability

We practice sustainability within theramework o well defined governancestructures and policies and with thedemonstrated commitment o ourmanagement and employees. We aimnot only to minimise damage to theenvironment rom our projects butto make a net positive impact on theenvironment wherever we work.

Missiono maximise stakeholder wealth by exploiting

core skills o iron ore mining, coke andiron making

o constantly seek high levels o productivityand technical efciency; to maintaintechnological superiority over competitors

o aggressively seek additional resources

o maintain costs in the lowestquartile globally

o be an organisation with best-in-class peopleand a perormance driven culture by attractingand retaining quality manpower

o continue to maintain pre-eminent position insaety, environment and quality controlmanagement in the respective industry sectors

o contribute to the development o the

communities that the Company operates inor have influence on its business activities

Our Vision

To be one o the top our iron oremining companies in the world

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Sesa Goa Limited Annual Report 2011

Company Overview02 Our Operations03 Highlights

04 Chie Executives Statement08 Board o Directors10 Creating Shareholder Value

Business Review11 Market Overview13 Financial Highlights16 Business Segment Review17 Iron Ore20 Pig Iron21 Met Coke

22 Human Resource23 Risks and Uncertainties

Sustainability24 Health Saety and Environment27 Corporate Social Responsibility

Corporate Governance33 Directors Report39 Annexure-A to Directors Report40 Annexure-B to Directors Report41 CEO / CFO Certification42 Report on Corporate Governance60 Auditors Certificate on Compliance o

Conditions o Corporate Governance

105 Auditors Report on the ConsolidatedFinancial Statements

106 Consolidated Balance Sheet107 Consolidated Profit and Loss Account108 Consolidated Cash Flow Statement110 Schedules Annexed to and Forming

Part o the Balance Sheet118 Schedules Annexed to and Forming

Part o the Profit and Loss Account121 Notes Forming Part o the Accounts137 Notice o Annual General Meeting

Attendance / Proxy (Annexed)

Financial Statements61 Auditors Report62 Annexure to the Auditors Report64 Balance Sheet65 Profit and Loss Account66 Cash Flow Statement

68 Schedules Annexed to and FormingPart o the Balance Sheet

76 Schedules Annexed to and FormingPart o the Profit and Loss Account

79 Notes Forming Part o the Accounts102 Balance Sheet Abstract and

Companys General Business Profile103 Sesa Goa Limited Ten Year Record104 Statement Pursuant to Section 212 o

the Companies Act, 1956

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Sesa Goa Limited Annual Report 2011 www.sesagoa.com

2 Our Operations

Sesa Goa is Indiaslargest private sectoriron ore producerand exporter. It alsoproduces pig iron andmetallurgical coke.

06

01

05

02

01 Codli Mines02 Sonshi/Surla Mines03 Bicholim Mines04 A Narrain Mine05 Pig Iron Plant06 Met Coke Plant

India

Goa

04

03

ote: Map not to scaleMajor operating mines are shown in the map

Iron Ore Operations

Pig Iron Operations

Met Coke Operations

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Consolidated Financial Summary(in ` crore, except as stated)

2011 2010 Change

Net Income rom Operations 9,205 5,859 57%

EBIDA 5,214 3,156 65%

EBIDA Margin 57% 54%

Net Profit (PA) 4,222 2,639 60%

Earnings Per Share (`)

Basic 49.17 32.41 52%

Diluted 48.17 31.62 52%

Highlights

Financial Highlights Consolidated EBIDA o ` 5,214 crore, up 65%

Consolidated PA o ` 4,222 crore, up 60%

Basic Earnings per share o ` 49.17 up 52%

Dividend proposed at ` 3.50 per share as against o` 3.25 per share declared in the previous year

Strategic Investment to acquire 20% stake inCairn India Limited.

Business Highlights Iron ore capacity expansion is progressing well;

planned investment o approximately US$ 500million or Goa and Karnataka

Expansion o Pig Iron and Met Coke on track orcompletion by Q3 FY2012

Acquired the upcoming steel plant assets o BellarySteel & Alloys Limited or a cash deal o ` 220 crore

Amalgamation o Sesa Industries Limited with SesaGoa Limited completed

Exploration - Gross addition o 53 million tonnes oreserves and resources taking the total R&R to 306million tonnes

0 2000 4000 6000 8000 10000

2006-07

2007-08

2008-09

2009-10

2010-11

otal Revenues (` crore)

0 1000 2000 3000 4000 5000

2006-07

2007-08

2008-09

2009-10

2010-11

Profit After Tax (` crore)

0 3 00 0 6 00 0 9 00 0 1 20 00 1 50 00

2006-07

2007-08

2008-09

2009-10

2010-11

Net Worth (` crore)

0 5 10 15 20 25

2006-07

2007-08

2008-09

2009-10

2010-11

Iron Ore Sales (Mln n)

0 50 100 150 200 250 300

2006-07

2007-08

2008-09

2009-10

2010-11

Pig Iron Sales (000 Tn)

0 50 100 150 200 250 300

2006-07

2007-08

2008-09

2009-10

2010-11

Met Coke Sales (000 n)

Delivering Sustainable Shareholder Value

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4

Dear Shareholders,

2010-11 has been a mixed year or Sesa Goa Limited.here was plenty o good news. First, the yearsaw the global economic crisis becoming a thingo the past, with both advanced and emergingeconomies registering positivegrowth during 2010. hiscontributed to resurgence insteel demand. Second, globalron ore consumption increased

significantly and demand remainedrobust throughout the year. hird,

steel output in China continued togrow, and with it the demand ormported iron ore and price.

hese positive market conditionscontributed to a 52% increasein Sesa Goas turnover. With thisgrowth, Sesa Goa today is anenterprise with a gross turnover exceeding US$ 2

illion.

here were also some actors that adversely aectedour production and sales o iron ore. In an eort tocurb illegal mining, the Government o Karnatakabanned export o iron ore mined in the state since end

July 2010. In addition longer than normal monsoonsin Goa and logistics constraints in Orissa and Goaurther aected ore sales. Despite these constraints,your Company managed to nearly maintainproduction and sales volume levels at par with 2009-10.

International developments in 2010-11 has urtherstrengthened our conviction o Sesa Goas strategicpositioning. In the near uture, there is considerablemarket potential or a low cost producer like SesaGoa to efciently service the global seaborne iron oretrade. here are, however, some external uncertaintieson the supply side, which are causes or concern.

Sesa Goa is continuously working on reorienting its

plans to meet these challenges. In addition, in 2010-11, we have taken some long term steps and utilisedour strong cash reserves or strategic investments.

The Macroeconomic Environment

It seems clear that the worst is behind us, and globaleconomic recovery is on its way. Ater contracting by

0.5%, world output growth is backin positive territory at 5%. Emergingand developing economies continueto drive most o this growth.Renewed growth has revived steeldemand. Global crude steel outputincreased by 16.8% in 2010. hisprovided or strong demand pullright across the errous metal valuechain.

China and India are back on theirhigh growth momentum. Indiagrew by 8.6% in 2010-11, whileChina recorded a growth o around

10% in 2010. here are some causes o concern interms o overheating, but the quarter-on-quarter

Chie Executives Statement

Delivering

strong results

hese positive marketconditions contributed

to a 52% increase in SesaGoas turnover. With this

growth, Sesa Goa today isan enterprise with a grossturnover exceeding US$ 2

billion.

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growth rates still do not indicatethat these two countries will see asignificant slowdown in the nearuture.

Nevertheless, there are someworries. One o these is highproducer and consumer priceinflation across emerging markets,especially in India and China. Inthe short term, higher commodityprices augur well or a companylike Sesa Goa. However, high andrising cost-push inflation cancause social problems in emerging

economies and hinder long termgrowth. Already, in an attempt tocurb inflation, the Reserve Bank oIndia has increased interest rateson seven occasions since April2010 the last one being a hike o50 basis points. Such high interestrates can have a negative impact oninvestments and uture growth. Sotoo oil prices, which remain at highlevels.

The Business Environment

As stated in earlier annual reports,over the last ew years Sesa Goa hasdeveloped a growth strategy witha ocus on serving the increasingdemand or iron ore, especially inemerging economies, but in mostresponsible manner.

Consider China. With a reductionin steel output in that country inthe second hal o calendar 2010,there were ears o a slowdown iniron ore imports. It turned out to bea temporary aberration. China wasat the cusp o two dierent growthphases. Projects that were part othe earlier fiscal stimulus were beingcompleted; hence, steel demandwas tapering o. However, rom thebeginning o calendar 2011, Chinahas launched another round oeconomic growth initiatives, withthe ocus on social housing andinrastructure, especially railways.

his has led to major growth insteel output in China in Q1, 2011,which has increased both iron oreimports and prices. his phase osteel-led GDP growth is expectedto continue in the near uture, withhigh demand rom the constructionindustry. In the long run, however,there will be some slowdown in theChinese steel sector as the countrymatures into being more consumer-driven economy.

We are optimistic that the strategicpositioning o Sesa Goa with its lowcost capabilities, easy accessibilityto ports and strong customerrelations will hold us in good steadto mitigate any downside risks and

exploit the upside opportunities.

I have touched upon the supplyside constraints that we aced as anIndian iron ore mining enterprise.he other major iron ore exportingcountry like Brazil, also aced issuesregarding environmental clearancesand port logistics. hus, there wereglobal supply side constraints inthe seaborne iron ore trade. Hence,in an environment o ast growingChinese demand, the prices o ironore increased in the latter hal o

2010-11.

Perormance

he Company sold 18.1 milliontonnes o iron ore (20.4 milliontonnes on a wet metric tonne orWM basis) in 2010-11, which wasmarginally lower than the 18.4million tonnes o iron ore (20.5

million tonnes on a WM basis) soldin 2009-10. However, external salesrevenue rom iron ore increased by62% rom ` 5,170 crore in 2009-10to ` 8,387 crore in 2010-11.

his trend was replicated in thepig iron business. Although salesvolumes decreased by 5%, externalsales revenues grew by 22% to` 674 crore in 2010-11.

Sales and production volumes ometallurgical coke (met coke) werealmost similar at 252,074 tonnes and263,269 tonnes respectively in 2010-11. External sales revenues increasedby 6% to ` 152 crore in 2010-11.

Sesa Goas net income rom

operations grew by 57% to ` 9,205crore in 2010-11. EBIDA by 65%to ` 5,214 crore in 2010-11. PAincreased by 60% to ` 4,222 crore,and diluted earnings per share grewrom ` 31.62 in 2009-10 to ` 48.17 in2010-11.

We remain ocused on cost controland productivity. hese eorts havehelped to partially oset the higherexport duties paid out in 2010-11.

Healthy accruals during the year

contributed urther to our strongcash position. As o 31st March,2011, Sesa Goa had cash and cashequivalents o ` 10,682 crore. Wehave used this healthy cash reserveto make commitments to strategicinvestments that should generatehigh returns and diversiy theCompanys business to which I

now turn.

We are optimistic that the strategic positioningo Sesa Goa with its low cost capabilities, easyaccessibility to ports and strong customerrelations will hold us in good stead to mitigateany downside risks and exploit the upsideopportunities.

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Strategic Developments

We have made two long termcommitments in 2010-11.

he first is a commitment to buy20% stake in Cairn India Limited(CIL) as part o the Vedanta Groupsbid to buy majority stake in thatentity. he value o the 20% stakeis estimated at around US$3 billion.his will be a financial investmentor Sesa Goa that provides theCompany an opportunity to earnsuperior returns in an investmentin a leading hydrocarbonsenterprise, which will benefitrom value creation as part o theVedanta Group while providingthe protection o participating in acontrolling interest.

he proposed takeover by theVedanta Group is presently awaitingGovernment o India approvals.

In a major development post theend o the financial year but priorto writing this letter, we acquired200 million shares amounting to10.4% stake in CIL rom Petronas

International Corporation Ltd. ina block deal at a price o ` 331 pershare.

he open oer closed on 30thApril, 2011. Some 155 million sharesrepresenting approximately 8.1%o the share capital o Cairn IndiaLtd. have been tendered. he totalconsideration to be paid or thesetendered shares is ` 5,504 crore(approximately US$ 1,241 million) atthe oer price o `355 per share.

hus, post the open oer, Sesa Goa

will have 18.5% stake in Cairn IndiaLtd 8.1% rom the shares tenderedduring the tenure o the oer, andanother 10.4% rom Petronas.

he second is a move to diversiyup the errous metal value chain.We acquired the assets o theupcoming steel plant unit o BellarySteel and Alloys Limited or an all

cash deal o ` 220 crore. Apart romthe direct benefits o leveraginggrowing opportunities in the Indiansteel sector, this acquisition shouldallow us to add value to the iron oremined in the state o Karnataka.

At this juncture, it gives me greatpleasure to inorm you that thelong pending case regarding theamalgamation o Sesa IndustriesLimited, the subsidiary thatproduces pig iron, and Sesa Goafinally received the approval o theSupreme Court. he merger was

completed in February 2011.

I am also pleased to inorm you thatwe have successully integratedthe operations o Sesa ResourcesLimited (SRL) and the Sesa MiningCorporation (SMC) the erstwhileV S Dempo Limited with theCompanys operations. SRL andSMC continue to perorm toexpected levels. We have alsoadded additional resources in SRLand SMC post-acquisition throughexplorations, thus reinorcing our

sustainable growth strategy.

Growth and Long Term Value

In last years annual report, I hadstated our iron ore vision o 50million tonnes (mt) production andsales by 2012-13. here has been arevision to this. In 2010-11, we didnot renew our agreement or thirdparty operations at the hakuranimines in Barbil, Orissa, due tounavourable commercial terms,and terminated our operations inOrissa. We continue to maintain our

target or increasing ore productionin Goa and Karnataka to 40 mt.

Exploration activities continue asplanned, with 53 mt being added tothe gross reserves and resources. Ason 31st March, 2011, the Companystotal reserves and resources were306 mt.

We have progressed on all the

projects to double our iron orecapacities and also increasing pigiron capacities by 375,000 metrictonnes (M) . Regarding iron ore,in 2010-11, although we madesatisactory progress in logistics,mining and processing capacities,however we are awaiting certainstatutory clearances. Expansion othe pig iron capacity is progressingwell, or completion by Q3, 2011-12.

Sustainability

Sesa Goa remains committed tosustainable development, which

ocuses on maintaining a pre-eminent position in health, saetyand environment practices, and incontributing to the development ocommunities where it operates. Allour locations, are certified or ISO9001, ISO 14001 and OHSAS 18001 except or SRL which is yet to becertified or OHSAS 18001.

Health and saety always remained apriority or Sesa Goa. he Companycontinues to take a proactive rolein providing the employees a saeworking environment throughresponsibility, training, monitoringand implementing the best saetypractices across all locations.

In 2010-11, our Lost ime InjuryFrequency Rate (LIFR) reducedrom 1.13 in 2009-10 to 0.86 permillion hours worked in 2010-11.I am also happy to report that theMet Coke Division (MCD) achievedzero lost time accidents or the lasttwo consecutive years. 2010-11also saw the Pig Iron Division (PID)achieve zero lost time accidents.

Nevertheless, I must inorm withdeep regret o a atality, whichoccurred at a jetty in Goa wherea barge sailor lost his lie in anaccident. We have thoroughlyinvestigated the causes, and put inthe necessary saety measures.

he community development work through the Sesa CommunityDevelopment Foundation, Mineral

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Foundation o Goa and specificneed based initiatives continuesto ocus on social projects in linewith our over-all sustainabilityobjectives. More details on health,saety, environment and corporatesocial responsibility are given in thechapter on Management Discussionand Analysis.

In 2010-11, Rs 2,571 crore waspaid by your company in the ormo various taxes, duties, levies,royalties, etc to Government o Indiaand other Government agencies.

Outlook

For the near term, we remainoptimistic about the prospects oiron ore demand and consequentlythe price, in the global seabornetrade. In line with consensusexpectations, we expect globaldeficit in iron ore to continue orthe next two years. In the longerterm, the market will move towardsequilibrium at lower prices as newcapacities or iron ore come onstream.

On the cost ront, we expectroyalty rates, railway & road reightand export duties to exert somepressure, while volumes could

be challenged by uncertainties inpolicy decisions and hurdles inlogistics. We remain cautiouslyoptimistic o overcoming suchobstacles.

Corporate Governance

You would recall that in 2009-10, Sesa Goa was subjected toinvestigation by the Serious FraudInvestigation Ofce, Ministry oCorporate Aairs, New Delhi. heinvestigation is still in progess.Further update on this issue will be

provided in due course.Acknowledgement

I would like to take this opportunityto thank all our employees,employee unions, my colleaguesat the executive team o Sesa, theGroup Management and the Boardo Directors or their unwaveringsupport in helping us enhance ourposition as the Indias leading ironore company.

hanks are also due to governmentdepartments & authorities, villagepanchayats, our solicitor & counsels,consultants, suppliers, contractors,various, port authorities and allother business associates.

We recently announced that ourChairman, Mr SD Kulkarni, hasstepped down rom the Board aterserving the Company or 10 years.On behal o the Board o Directors,I would like to take this opportunityto thank, Mr Kulkarni or hissubstantial contributions, and orguiding Sesa Goa to its pioneeringposition.

he Company has recentlyappointed Mr Jagdish P Singh andMr Ashok Kini as Directors, subjectto the approval o shareholders

in the Companys ensuing annualgeneral meeting. I welcome themon board and look orward to theirsupport and guidance in taking SesaGoa to new levels o success.

My thanks to our shareholdersor reposing aith in our business.Let me say to them, We have theability. We have the desire. And wehave the belie that we can and willdeliver our targets.

P K MukherjeeChie Executive Ofcer /Managing Director

5th May, 2011

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8 Board o Directors

Let to right: Kuldip K. Kaura, Jagdish P. Singh, Amit Pradhan, Arun K. Rai, Ashok Kini, Gurudas D. Kamat, Prasun K. Mukherjee

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Mr. Pandurang G. KakodkarDirector

Pandurang G. Kakodkar is a non-executive independent Director oSGL. He holds a Postgraduate in M.A.(Economics) rom Bombay Universityand was appointed as Director o SGL on31st March, 2000.

He has over 41 years o experiencein the State Bank o India, retiring asthe Chairman in 1997. He is currentlya private inormation technologyand banking consultant. His otherdirectorships include: Goa CarbonLtd., Uttam Galva Steel Ltd., Financial

echnologies (India) Ltd., AuditimeInormation Systems (I) Private Ltd.,Fomento Resorts and Hotels Ltd.,Centrum Finance Ltd., Multi CommodityExchange o India Ltd., IBXForex Ltd. andAnand Rathi Financial Services Ltd.

Mr. Kuldip K. Kaura

Director

Kuldip K. Kaura is a non-executiveDirector o SGL. Mr. Kaura is currentlyChie Executive Ofcer and ManagingDirector o ACC Limited. Mr. Kaura wasappointed as Director o SGL on 30thOctober, 2007.

He holds a Bachelor o Engineering

(Hons) in Mechanical Engineering romBirla Institute o echnology & Science,Pilani.

Mr. Kaura retired as the Chie ExecutiveOfcer o Vedanta Resources plc inSeptember 2008. Beore joining theVedanta group, Mr.Kaura served at ABBIndia or 18 years and was the ManagingDirector and Country Manager rom1998 to 2001. He has served as membero National Council o Conederation oIndian Industries and is ofce bearer osuch proessional bodies.

Mr Jagdish P. Singh

Director

Jagdish P. Singh is a distinguished civilservant with over 37 years o executiveexperience in key positions in theUnion and State Government. He isan alumnus o the Harvard Universitywhere he attended the Kennedy Schoolo Government as a Mason Fellow. Healso holds a Masters degree rom theUniversity o Allahabad.

Mr. Singh has occupied varied positions

in his career such as district anddivisional administrator, to later workingas Chie Executive and Chairman o theBoard o numerous corporate bodies. Hewas responsible or turning around oseveral State and Central corporationsengaged in Industrial and Servicesactivities such as ourism, Inrastructure,Co-operative Finance, Mining andMinerals exploration. He initiatedmeasures in amendments in LabourLaws. He shaped the new NationalMineral Policy in 2008 and piloted itspassage.

He has conducted bilateral and countryspecific discussions to urther joint

economic activities with South Arica,Australia and Indonesia.

Mr. Amit Pradhan

Whole ime Director, Director - Iron& Coke

Amit Pradhan is a Whole ime Directoro SGL. Currently responsible or theGroups business in Pig Iron, Coke andPower, Mr. Pradhan joined SGL in January1990 as Manager - Purchase. Mr Pradhanholds a Postgraduate in M.Sc. (Physics)rom the Indian Institute o echnology,Delhi. Mr. Pradhan was appointed asDirector o SGL on 1st July, 2000.

He has 33 years o experience in

materials/project management andBusiness Development. Mr. Pradhan wasappointed as Whole ime Director o theCompany eective rom 1st May, 2006.He is also distinguished and listed by theInternational Whos Who Proessionalsin 2007.

Mr. Arun K. Rai

Whole ime Director, Director -Production and Logistics

Arun K. Rai is a Whole ime Director oSGL. Mr. Rai holds a degree in MiningEngineering rom Banaras HinduUniversity. Mr. Rai was appointed asDirector o SGL on 1st February 1999.

He has 35 years o experience in the fieldo Mining and allied areas. Mr. Rai wasre-appointed as Whole ime Director othe Company eective rom 1st February,2009.

Mr. Ashok Kini

Director

Ashok Kini is a non-executiveindependent Director o SGL. He holds

a Postgraduate rom Madras ChristianCollege, Chennai.

Mr. Ashok Kini is ormer ManagingDirector, State Bank o India. He wasresponsible or the Banks I plans,rom concept and RFP to executionand vendor management, domesticdistribution, retail business, consumerbanking, marketing/brand management,etc. He is currently on Board o IndusIndBank Limited, Gul Oil CorporationLimited, UI Asset ManagementCompany and Financial InormationNetwork & Operations Pvt. Limited.

Mr. Gurudas D. Kamat

Director

Gurudas D. Kamat is a non-executiveindependent Director o SGL. Mr. Kamatretired as Chie Justice o Gujarat HighCourt in January 1997. Mr. Kamat isengaged in judicial work relating toarbitration and conciliation. Mr. Kamatwas appointed as a judge o the BombayHigh Court on 29 November, 1983. Mr.Kamat was appointed as Director o SGLon 23rd December, 2005.

He has over 46 years o experience inthe field o legal practice and judiciary,having practiced in Bombay as wellas in Goa in various branches o law.Mr. Kamat was prosecutor or the

Government o Goa rom 1967 to 1969and was a member o the senate andaculty o law o Bombay University rom1978 to 1980. From 1980 onwards, Mr.Kamat was an advocate or the Customsand Central Excise Departments o theGovernment o India.

Mr. Prasun K. Mukherjee

Managing Director

Prasun K. Mukherjee is the ManagingDirector o SGL since April 2006. Mr.Mukherjee holds a Bachelor o Commerce(Hons) degree rom Calcutta University.He is a ellow member o the Institute oChartered Accountants o India and an

associate member o the Institute o Costand Works Accountants o India.

He has around 32 years o experience infinance, accounts, costing, taxation, legaland general management. Mr. Mukherjeewas rated as one o Indias Best ChieFinancial Ofcers (CFOs) in the year2005 by Business oday magazine and in2009, Business World magazine declaredMr. Mukherjee as Indias most ValueableCEO.

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We are Indias largest producer and exporter o iron orecommitted to providing superior returns and miningresponsibly

Creating Shareholder Value

Organic growth

We have doubled our capacities inthe last 3 years and similar growthprograms are on track to urtherenhance our existing operations.We have continuously increased ourresource base through extensiveexploration.

Additional investment opportunities

Our first acquisition having enabled usto deliver industry leading growth, wecontinue to selectively pursue valueenhancing opportunities where we canleverage our skills and experience.

Optimise returns

We have a culture o continuousimprovement, and are ocused onmaintaining our low cost position. Weare leveraging the Sesa Resources ironore acquisition to realise synergies.

Group structure

Our priority is to create value or allour shareholders through optimisingthe capital structuring and means odelivering returns.

People

Our people are the oundation oour business and a key ingredientor our success. Our people strategyis ounded on the recruitment,development and retention o thetalented men and women who run and

grow our businesses.

Community and Environment

We are committed to the goal osustainable development by adoptingleading global standards o health,saety & environmental managementand community development.

Our expansion programmeso doubling our currentcapacities across all ourbusinesses are progressingwell.

Gross addition o over 170 mt

o R&R in last 3 years.

Acquisition o assets oupcoming steel plant oBellary Steel and AlloysLimited

Strategic Investment -Acquisition o 20% stake inCairn India Limited

EBIDA up 65% to 5,214crores, Earnings per shareup 52% to 49.17, Proposed

dividend o 3.50 per share.

Amalgamation o SesaIndustries Limited with SesaGoa Limited completed

Successully integrated theoperations o Sesa ResourcesLtd. with Sesa Goa Ltd.

Around 4,600 employees,including +680 proessionals.

LIFR reduced by 60% over aperiod o 5 years.

ouching lives o thousandso persons directly &indirectly through itscontinuous communitydevelopment initiatives.

Growth

Long termvalue

Sustainability

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Market OverviewSesa Goa Limited (or Sesa Goa

or the Company) is part o the

Vedanta Group, a diversified global

metals and mining major. It drives

the Groups errous minerals

business with a commitment to

create a world class enterprise

through high quality assets,

competitive cost o production and

superior returns to shareholders.

he Companys core business is

iron ore mining. oday, it is Indias

largest private sector iron ore

producer and exporter. In addition,

Sesa Goa produces pig iron, met

coke and provides proprietary

technology in coke manuacturing.

While all these businesses have their

ocused markets, their perormances

have a strong relationship to the

prevailing economic environment.

Macroeconomic Developments

2010-11 saw the global economic

recovery gaining strength. Ater ade-growth o 0.5% in 2009, world

economic output rebounded

strongly to register 5% growth in

2010. Much o this impetus came

rom developing and emerging

economies, which witnessed 7.3%

growth in 2010 compared to 2.7% in

2009. hankully, even the advanced

economies recovered rom a 3.4%

contraction in output in 2009 to a

growth o 3% in 2010 (see Chart A).

Economic growth has a directlinkage to steel and, hence, iron ore

demand. By October 2010, industrial

production in emerging economies

such as India and China had already

surpassed the pre-crisis levels. Even

some o the advanced economies

witnessed a pick-up in industrial

production.

here is, however, some ear o

overheating in key emerging

markets such as China and India. In

an environment o rising domestic

demand, supply side constraints and

increased speculative activities are

leading to sharp rise in commodity

prices such as hydrocarbons,

crude oil, minerals, metals and

ood. With higher consumer and

producer price inflation in all key

emerging markets, especially India

and China, it is not surprising that

central banks are raising interest

rates and tightening money supply.

his carries two risks: first, higher

cost o finance aecting consumer

demand, current profitability and

uture investments; and second, the

possible slowing down o economic

growth.

Having said so, the act is that two

o Sesa Goas primary markets

China and India have continued

Source: IMF estimates

Source: CSO, National Bureau o Statistics,China

Source: World Steel Association

-4 -3 -2 -1 0 1 2 3 4 5 6 7 8

Emerging andDevelopingEconomies

AdvancedEconomies

WorldOutput

Chart A: Output growth (%)

2009

2010

0 2 4 6 8 10 12

Q4, 2010

Q3, 2010

Q2, 2010

Q1, 2010

Q4, 2009

Q3, 2009

Q2, 2009

Q1, 2009

Q4, 2008

Q3, 2008

Q2, 2008

Chart B: Real GDP growth (%)

China

India

0

400

800

1,200

1,600

Jan-11

Jul-1

0

Jan-1

0

Jul-0

9

Jan-0

9

Jul-0

8

Jan-0

8

Jul-0

7

Jan-0

7

Chart C: Global crudesteel production (million tonnes)

Pre-Crisis

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to grow at high rates. Chart B

shows how, rom the third quartero calendar 2009, both China and

India have registered strong growthrates with the trend continuing

throughout 2010. Advancedestimates suggest that while China

grew by around 10% in 2010, India

will register GDP growth o 8.6% in

2010-11.

The Global Iron and Steel Market

he macroeconomic environmenthas a significant bearing on

global steel demand and supply.

Estimates suggest that global steel

consumption has grown by around1.5x o world GDP growth over the

last decade. Steel consumption

has gained traction with global

economic recovery. Chart C showsthat ater the dip in mid-2008, world

crude steel production started

recovering in 2009; and by March

2010 it exceeded the pre-crisis level.

Global steel production rose by

16.8%, to 1,414 million tonnes in

2010. With a share o over 44%,

China continued to be the drivingorce in the industry. Crude steel

output in China grew by 9.3% to 627

million tonnes.

here were apprehensions in some

quarters about a possible long term

slowdown in the output o Chinesesteel, on account o the completion

o many government-backed

stimulus projects and restrictions

levied by the Chinese governmenton energy inefcient steel

producers. hat has not happened.he first quarter o 2011 has again

seen a strong uptick in Chinese

steel production, driven mainly bythe demand or social housing in

the interior provinces o China and

railways.

In the short- to medium-term,

thereore, Chinese steel production

is expected to continue to grow

airly rapidly. However, over a longerhorizon, one could expect Chinas

steel intensity to start declining asthe economy moves away rom

being investment-driven to beingmore consumption determined.

he growth in steel output resulted

in strong demand or iron oreand met coke. his, coupled with

logistics and environment related

constraints on the supply side, saw

significant increases in prices othese raw materials during much o

2010-11.

With its low cost production baseand ocus on growing markets,

such as China and India, 2010-11

has been a avourable year or Sesa

Goa. However, rom the supply side,there were some issues, mainly

regulatory in nature, that prevented

urther growth. hese are detailed in

the business segment review.

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Financial HighlightsGrowing demand and greater operational efciencies have contributed torecord sales and profits. It should be noted that ater the acquisition o SRLin 2009-10, nine month o its operations were consolidated in the accountsor the previous year, versus all twelve months in 2010-11. able 1 gives thesummarised consolidated profit and loss account o Sesa Goa.

Table 1: Abridged Consolidated Profit and Loss Account o Sesa Goa` in crore)

Particulars 010-11 2009-10

INCOME

Gross sales 10,151 6,654Less: Excise duty 64 44Less: Ocean reight 943 812

Add: Other operating income 61 61Net Income rom Operations 9,205 5,859EXPENDITURE

Production and operational expenses 3,866 2,616Administration expenses and selling expenses 133 94Exchange (gain)/loss on FCCB 49 (122)Operating PBDIT 5,157 3,271Less: Depreciation 96 5Operating PBIT beore other income 5,061 3,196Less: Interest 42 55Add: Interest, dividend and other income 540 304PBT 5,559 3,445Less: Provision or taxation 1,337 806PAT 4,222 ,639

Less: Minority interests 10Consolidated PAT ater minority interest 4,222 2,629

Sesa Goas Financial Perormance, 2010-11

10,151 crore in 2010-11. With this, Sesa Goa has become a companyexceeding US$ 2 billion in turnover on a consolidated basis.

9,205 crore in 2010-11.

` 5,157 crore in 2010-11. Operating PBDI margin (operating PBDIdivided by net income rom operations) was 56%.

` 5,655 crore an increase o 61% over 2009-10.

` 5,559 crore in 2010-11.

` 4,222 crore.

` 3.50 per equity share o ` 1.00 each or 2010-11

` 31.62 in 2009-10 to ` 48.17 in 2010-11.

` 12,810 crore.

` 10,682 crore consisting o ` 8,800 crore in debtmutual unds, ` 1,000 crore in inter-corporate deposits since repaid, and balance 882 crore in fixed deposits, cashwith banks, cash in hand, etc.

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Business DevelopmentHaving built strong cash reserve

over time, the Company has

started using its balance sheet

strength to make strategic

business investments. In 2009-10,

Sesa Goa planned investment o

approximately US$500 million or

investments in Iron ore expansions

to support higher growth or the

business.

In 2010-11, Sesa Goa made urther

commitments to investments, whichare given below.

Investment in Cairn India Limited

In August 2010, Sesa Goa proposed

to take a 20% stake in Cairn India

Limited (CIL) under an open oer.

Subject to any higher price required

to be paid in accordance with the

SEBI rules on takeovers and mergers

in India, the price payable per share

in the open oer will be ` 355 per

CIL share tendered. his is part o

the Vedanta Groups oer to acquiremajority o CIL shares.

CIL is a listed company. It has a

unique oil and gas exploration and

production platorm with the third

largest oil reserves in India, with a

proven management team and a

low-cost production set up. Cairn

Indias principal asset is its 70% stake

in the Rajasthan oil development

project, as well as some 600 km

o heated pipeline rom Barmer in

Rajasthan to Bhogat on the Gujaratcoast.

Currently CIL is producingapproximately 125,000 barrels o

crude oil per day, which can be

significantly enhanced subject to

approvals. he project representsa significant potential resource

base with estimated oil in place in

excess o 6.5 billion barrels. heglobal oil and gas markets continue

to be demand driven, and low cost

producers generate high returns on

investments.

For Sesa Goa, this is a financial

investment, which will also support

the Vedanta Groups long term

growth objectives. he transaction,

which is estimated to be EPS

accretive or Sesa Goa, gives the

Company a stake in a world class

asset with significant growth

potential.

While the Board o Sesa Goa has

cleared this investment, the entire

takeover process is going through

regulatory clearances.

In a major development ater

31st March, 2011, but prior to the

release o this document, Sesa

Goa acquired 200 million sharesamounting to 10.4% stake in Cairn

India rom Petronas International

Corporation Ltd in April 2011, at

a price o ` 331 per share. his

acquisition is in addition to the

open oer launched by Sesa Goa on

11th April, 2011.

he Open Oer or CILs shares

closed on 30th April, 2011. A total

o around 155 million shares

representing approximately 8.1%

o the share capital o Cairn India

Ltd. have been tendered. he totalconsideration to be paid or the

tendered shares is ` 5,504 crore

(approx. US$1,241 million) at the

oer price o ` 355 per share.

Consequently, post the Open Oer,

Sesa Goa will have 18.5% stake in

CIL (i.e. 8.1% through the Open Oer

plus 10.4% rom Petronas).

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Acquisition o the Assets o BellarySteel and Alloys Limited

In March 2011, Sesa Goa acquired

the assets o the upcoming steel

plant unit o Bellary Steel and Alloys

Limited (BSAL) or an all cash deal o

` 220 crore. he secured creditors

to BSAL represented by IFCI Ltd

had taken over possession o the

properties o BSAL in association

with the ofcial liquidator. IFCI

Ltd then conducted a sale process

or the assets o BSAL under the

SARFAESI Act, 2002.

BSAL was in the process o putting

up a steel plant project at Bellary.

he acquired properties o the plant

include a 0.5 million tonnes per

annum capacity steel plant which

is under construction, reehold land

o around 700 acres, building and

structures, plant and machinery

and other related assets. hese have

been transerred on an as is where

is basis to Sesa Goa.

Sesa Goa has been looking at value

addition in the errous metal chain.

As a first step, it had moved into

pig iron production. Now, with this

acquisition, the Company is taking

its first steps in steel manuacturing.

In the process, it is widening its

presence across the errous metal

production chain.

he steel plant under construction

is located in the rich iron ore belt

o Karnataka, and provides the

Company a good opportunity to

expeditiously set up a value adding

acility on reehold land which is in

close proximity o state highways,

railways and source o water.

Moreover, this acility provides Sesa

Goa with better opportunities to

add value to the iron ore extracted

within Karnataka which is in

line with the state governmentsobjective.

he Company is presently

conducting a detailed assessment

in order to determine the best way

orward or commissioning the steel

plant at the earliest. However, the

acquisition has been challenged by

JSW Steel Ltd in the Supreme Court

o India, which has asked the parties

to maintain status quo until the

matter is decided.

Merger o Sesa Industries Limited

with Sesa Goa Limited

In 2010-11, ater a long legal

process, Sesa Industries Limited

(SIL) was merged with Sesa Goa. On

7th February, 2011, the Company

received the order o Supreme

Court o India that upheld the order

o a Single Judge o High Court o

Bombay at Goa, dated 18 December

2008, approving the Scheme o

Amalgamation o SIL with Sesa Goa

Limited with appointed date o 1

April, 2005.

he Board o Directors, at its

meeting held on 12th March, 2011,

has taken the ollowing decisions:

shares o ace value o ` 1, each

bearing distinctive numbers

859,702,560 to 869,101,423to the shareholders o the

erstwhile SIL, who were

holding shares as on the record

date, i.e. 28th February, 2011.

he allotment was done in the

ratio o 1:5, with benefits o

sub-division and bonus. As a

result o allotment, the paid up

share capital o the Company

has gone up rom `85.97 crore

to `86.91 crore.

dividend to the shareholders o

SIL who were allotted Sesa Goa

shares in terms o the Scheme

o Amalgamation. his works

out to `11.05 crore.

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Sesa Goas primary business is the

exploration, mining and processingo iron-ore. Its mining operations

are carried out in the states o

Goa and Karnataka in India. he

Company has also diversified itsoperations into manuacturing o

met coke and pig iron.

Charts D and E give the share o

each o the operating business in

Sesa Goas consolidated external

revenues and consolidated segmentprofits (profit beore tax, interest,

dividend and non-allocable items),respectively.

Iron ore: his is Sesa Goas core

business segment, and contributed

to 91% o consolidated external

revenues and 95% o segmentprofits in 2010-11. he Company

has a niche positioning with cost

competitive ore base, and mines

that have relatively easy access toports to support the global seaborne

iron ore trade.

Business Segment Review

Chart D: Share o Sesasconsolidated external revenues

Pig Iron 7%

Iron Ore 91%

Met Coke 2%

Chart E: Share o Sesasconsolidated segment profits

Pig Iron 3%

Iron Ore 95%

Met Coke 2%

Pig iron: his business, carried outthrough the erstwhile subsidiarySIL, has now been merged withSesa Goa. It contributed 7% to totalexternal revenues in 2010-11, andits share in segment profits was 3%.he business ocuses mainly on thedomestic Indian market, especiallyto oundries and steel mills inwestern and southern India. It alsoexports to the Middle-East andSouth East Asia.

Metallurgical Coke (met coke):he met coke business is larger

than what it seems rom its 2%contribution to external salesand 2% contribution to segmentprofits. his is because 70% o itssales is to the pig iron division,which is adjusted in inter-segmentrevenues. his business is primarilya backward integration initiativeto support pig iron. Some o theproduction is also sold externally.

Let us look at the developments ineach o these businesses in greaterdetail.

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0 200 400 600 800 1000

2001200220032004200520062007200820092010

Chart F: Seaborne Iron Orerade (million tonnes)

geography, the Company is ocusingon developing other markets. Withthe growth in the domestic Indiansteel industry, there is a growingemphasis on domestic iron oresales. Indias share o Sesa Goastotal iron ore sales has risen rom6% in 2009-10 to 10% in 2010-11.Similarly, the share o Japan andKorea has increased rom 7% to 10%.

Table 2: Share o Sesa Goas Total Iron Ore

Sales

2010-11 2009-10

China 77% 85%

Europe 2% 2%

Japan & Korea 10% 7%

India-Domestic 10% 6%

Others 1% -

Regulatory Issues

he perormance could have beeneven better had it not been or someregulatory issues that aected bothvolume growth and profitability othe iron ore business in 2010-11, towhich we now turn.

Karnataka Export Ban

In order to curb illegal mining, thestate government o Karnatakaimposed a temporary ban on ironore exports rom its ten minor portssince end July 2010. Consequently,a group o miners including SesaGoa, approached the High Courto Karnataka to revoke this ban.Ater the hearing, the High Courtprovided six months or the stategovernment to enorce requisite

regulations to mitigate illegalmining. o get aster resolution, thisorder was urther challenged in theSupreme Court.

he Supreme Court heard thematter on 12th February, 2011. Itstated that the ban could not be oran indefinite period and directedthe government o Karnataka to

Iron Ore

adjusting or inter segment

sales) rom iron ore

operations increased by

62% rom ` 5,170 crore in

2009-10 to ` 8,387 crore

in 2010-11. his was the

highest ever annual sale.

tax, dividends and other

non-recurring or

non-allocable incomes

grew by 67% rom ` 2,926

crore in 2009-10 to ` 4,884

crore in 2010-11.

Markets

Sesa Goa ocuses on the globalseaborne trade in iron ore whichcaters to the import demand ovarious countries, especially China.Seaborne iron ore trade increasedby 7.3% to 973 million tonnes in2010. Chart F plots its growth overthe last 10 years when it registereda compound annual growth rate(CAGR) o 9.1%.

During the last decade, China hasemerged as the worlds leading

producer o steel. However, it relieson imports to substantially meet itsore needs. Chinese imports o ironore have increased at a CAGR o23% rom 92 million tonnes in 2001to 594 million tonnes in 2010. Withthis growth, its share in global ironore imports has risen rom 20.7% in2001 to 61.1% in 2010.

In 2010, Chinese import o iron orereduced by 3.7% in terms o volume.Much o this was on account osupply side constraints in major

iron ore producing countries.Brazil suered rom productionshortalls due to heavy rainall;while in India, exports were bannedrom the state o Karnataka. Boththese countries are also acingseveral environmental restrictionsin increasing iron ore supplies.In addition, development o portcapacities and inland logistics inBrazil and India has not been inpace with growing requirements othe seaborne iron ore trade.

In an environment o strongdemand, these supply-sideconstraints resulted in a steadyincrease in iron ore prices. Chart Gshows how prices have risen sinceQ2, 2010-11.

able 2 gives the regionaldistribution o the Companyssales. While China remains the coreSource: My Steel

Source: Metalytics

0

40

80

120

160

200

01-04-2011

04-01-2011

01-10-2010

01-07-2010

01-04-2010

01-01-2010

01-10-2009

01-07-2009

01-04-2009

01-01-2009

01-10-2008

01-07-2008

01-04-2008

Chart G: Spot Price (FOB $/DM)

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rame new rules or controllingillegal mining by 31st March, 2011.

Meanwhile, it directed the state

government to allow the exports o

iron ore lying at major ports.

On 5th April, 2011, the Supreme

Court passed its interim order

staying the government ordinanceon issuance o Mineral Despatch

Permits or exports by the state o

Karnataka with eect rom 20th

April, 2011.

Export Duty StructureOn 28th February, 2011,Government o India raised export

duty on both lumps and fines to

20%. he eect o this was restricted

to only the month o March in

2010-11, but going orward this willadversely aect margins.

Operations

he regulatory issues discussed

above made it difcult to increase

production and sale o iron ore.

In addition, there were natural

disruptions like extended monsoons

in Goa. Sesa Goa launched several

internal operational initiatives to

overcome these adversities. hese

have helped the Company to

produce 18.8 million tonnes o iron

ore (21.1 million tonnes on a WM

basis), which is almost in line with

the 19.2 million tonnes (21.4 million

tonnes on a WM basis) o the

previous year.

Sesa Goa operates mines in Goa

and Karnataka. While or most o

the mines, the Company has direct

ownership in the orm o mining

leases rom the state governments,

some o these are under third-

party operations. able 3 gives the

Companys production data across

dierent states.

Table 3: State-wise production volumes (in

million tonnes)

2010-11 2009-10

Goa 14.4 13.8

Karnataka 3.0 3.7

Orissa 1.4 1.7

otal 18.8 19.2

Note: As international sale prices are quotedin dry metric tonne (DM), all our iron orevolumes are reported on a DM basis, versusthe earlier basis o wet metric tonne (WM).

he third-party mining contractor the hakurani Mine in Barbil,

Orissa expired on 30th November,2010. Sesa Goa did not renewthe mining contract because ounviable commercial terms. hus,the Company has ceased its miningoperations at the hakurani minerom 1st December, 2010. Withthis, the Company has no miningoperations in Orissa.

Iron Ore Mining: A Progress Report

A number o initiatives are being

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undertaken to expand miningcapacity and logistics at Goa andKarnataka. he goal is to increaseproduction at Goa and Karnatakato 40 mt. hese include additionalinvestment in mining equipment,processing plants, barges, landand inrastructures at an estimatedcapital expenditure o aroundUS$500 million.

We have made substantial progresson the logistics capacity: witha new railway siding alreadycommissioned in Karnataka and

work progressing on widening othe existing roads and buildingdedicated road corridors in bothKarnataka and Goa.

We are also adding capacity in riverand port logistics with five newbarges already on stream.

Exploration

Any natural resource basedbusiness with long term growthpriorities must be backed by strongexploration skills and eorts. At SesaGoa, the exploration initiatives aredriven by its ocus on sustainablegrowth. With this objective, theCompany is continuously lookingto add more resources throughexploration, acquisitions and alsothrough new mine leases.

During 2010-11, six drilling rigs were

deployed across leases in Goa andKarnataka. By 31st March, 2011,over 68,900 metres were drilled.his resulted in a gross addition o53 mt to the Companys reserves,and resources base prior to adepletion o 21 mt in 2010-11. able4 gives the last three years resourceaddition and depletion.

Table 4: Sesa Goas Iron Ore Reserves & Resources (R&R), are in million tonnes

Gross Addition Depletion Acquisition Total R&R

2008-09 54 16 - 240

2009-10 64 21 70 353

2010-11 53 21 - 306

Note: otal R&R at the end o 2010-11 is excluding Orissa mine which was included in earlier years.

As on 31st March, 2011, total reserves and resources at the mines that theCompany held on lease and/or right to mine stood at 306 million tonnes.he reserves and resources position has been independently reviewed andcertified as per Joint Ore Reserves Committee (JORC) standards.

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he Companys pig iron business isoperated by its erstwhile subsidiary,Sesa Industries Limited (SIL), whichhas been merged with Sesa GoaLimited and now known as thePig Iron Division (PID). Havingcommenced its operations in 1992,the PID was the first to introducelow phosphorous oundry grade pigiron in India.

oday, the PID produces severalgrades o pig iron, including basic,oundry and spheroidal (nodular)grades that cater to steel mills and

oundries in India and abroad.PID also produces slag as a by-product which is sold to the cementindustries.

he demand or pig iron fluctuatedthroughout the year. Overall,production reduced by 1% rom280,130 M in 2009-10 to 276,117M in 2010-11. However, marketprices improved and the PIDmanaged better sales realisation in2010-11.

Pig Ironhe key data are given below.

Sales volumes decreased by 5%rom 278,747 M in 2009-10 to266,090 M in 2010-11.

However, external salesrevenues increased by 22%rom ` 552 crore in 2009-10 to` 674 crore in 2010-11.

Profits beore interest, tax,dividends and other non-recurring or non-allocableincomes or the pig iron

business increased by 21% rom` 117 crore in 2009-10 to` 141 crore in 2010-11.

he PIDs acility, located in thevillage o Amona, Bicholim taluka,North Goa, consists o two blasturnaces each having a workingvolume o 173 cubic metres, witha combined annual rated capacityo 250,000 M o pig iron, with aconsent capacity o 292,000 M.he plant adheres to the beststandards o quality, environment,

health and saety. It is certifiedto ISO9001, ISO14001 andOHSAS18001 systems or quality,environment and saety respectively,through a third party certificationagency, Bureau Veritas Certification(India) Pvt. Ltd., ormerly known asBVQI. he PIDs R&D activities haveresulted in reduction in operatingcosts, improvement o productquality and development o newproducts or downstream industries.It has developed special grades opig iron to cater to the ast growingniche market o ductile iron castingsin India.

he Companys expansion projectis progressing well ater whichthe rated capacity o the pig ironplant will increase rom 0.25 milliontonnes per annum (MPA) to 0.625MPA, along with expansion o themetallurgical coke plant, a newsinter plant and a 30 MW powerplant based on waste heat recovery.Commissioning is expected in Q3,2011-12.

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Sesa Goa's met coke division isoperated as an independent businessunit. he business is primarily a

backward integration initiative tosupport the pig iron operations70% o the met coke output wasconsumed internally in 2010-11.

he met coke plant at Amonaproduces a range o coke ractionsrom over 70 mm or oundries,20 mm to 60 mm or blast urnaces,and 6 mm to 25 mm or the errousalloy industries. he productis mainly o low ash coke. heprincipal input, low ash cokingcoal, is imported. o ensure stable

raw material supply, the Companyenters long-term procurementcontracts. Coking coal is careullyblended with accurate controls toproduce the desired high qualitylow ash met coke, using the cost-eective proprietary Sesa EnergyRecovery Coke Making echnology.his process produces high qualitymet coke, and has the lowest

Met Coke

pollution levels among comparabletechnologies.

here was moderate growth inproduction and external sales.However, profit margins increasedsignificantly due to higher salesrealisation with an increase in globalprices o met coke.

Sales volume (internal &external) was at 252,074 M in2010-11.

External sales revenuesincreased by 6% to ` 152 crorein 2010-11.

Profits beore interest, tax,dividends and other non-recurring or non-allocableincomes or the met cokebusiness increased by 161% to` 89 crore in 2010-11.

In line with the expansion o the pigiron acility, the Company is alsoexpanding its met coke production

capacity by another 280,000 M per

annum, which will increase the total

production capacity to 560,000 M

per annum.

Sesa Goa has developed a

technology or energy recovery in

coke making. his is environmentriendly, characterised by low capital

and operating costs, high levels

o energy recovery, and has the

capability to produce high qualitymetallurgical coke. he Company

has received a European and an

Indian patent or this technology.

In addition, the Company has

introduced a German technologyor densification o coal charge,

employing vibro-compaction or

producing stable coal cake with bulk

density. he met coke division hasalso set up a state-o-the art coal

carbonisation laboratory or coal

characterisation and evaluation o

coke quality.

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he primary goal rom a HRperspective is to a build a robustand agile world class organisationwith a culture o high perormanceembedded in a value system thatpromotes respect or individuals,diversity and entrepreneurship.

In 2009-10, the organisation wasrecast into SBUs. he Companyhas continued this transormationexercise through various peopledevelopment initiatives. In thecourse o 2010-11, a number olearning initiatives were carriedout. hese included managementdevelopment programmes orgraduate engineers, trainingon structured problem solving,technical as well as behaviouralaspects, and saety. During 2010-11, 5,900 man-days o training wasimparted.

he Company has a special ocusto identiy and nurture leadershiptalent within the organisation.Assessment Centers wereconducted to identiy high potential

employees to be designated as Staro Business. In 2010-11, 34 suchstars were identified, and individual

Human Resource (HR)development plans were created toensure their career progression inthe Company with challenging rolesand assignments.

he Gen-next OperationalLeadership (GOLD) programmelaunched in the previous yearcontinued into 2010-11. he firstbatch completed the programmesuccessully & a second batch o 37high potential employees has beeninducted.

Equity-based awards in the orm o

a long term incentive plan (LIP)are oered to recognise key, highperorming employees o theCompany. LIP acilitates alignmento the interests o management,including younger high potentialuture leaders, with those o theshareholders. It has proved to be aneective motivational and retentiontool or high calibre people.

he Company has also rolled outweb-based initiatives called Any-time Learning and an e-library.hrough sel-learning modules,

these platorms encourageknowledge sharing and provideopportunities or employees

to upgrade their technical andmanagerial skills.

During 2010-11, an innovativemethod o workorce engagementcalled the Idea Mela wasundertaken, which was aimed atcollecting employee suggestions.Most workorce ideas were relatedto productivity improvement,cost reduction, better saety /environment practices, qualityimprovement and employee welare.Over 5,000 ideas were collectedrom 2,000 employees, o which

75% were rom workmen. Some600 ideas were considered easible.hese are being implemented.Already, the ideas have resulted in acost saving o ` 2.5 crore.

o promote operational efcienciesand be in tune with global bestpractices in mining and otherunctions, employees attendeddierent training programmes,conerences and visited someo the world's best minesduring 2010-11. Areas o study

included benchmarking, mergersand acquisitions, sustainabledevelopment, mining logistics andclimate change.

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Sesa Goa has a robust system ointernal controls that helps protectthe interests o the Company andits assets rom unauthorised use ordisposition. his includes a systemo documented policies, guidelinesand procedures, reviews bymanagement and extensive internalaudits by reputed internationalaudit firms.

As with any enterprise, Sesa Goaaces several risks. he main macro-level risks are given below.

Market Risks

Sesa Goa exports over 85% o itsiron ore production. Being a playerin the global seaborne iron oremarket, the Companys business isexposed to adversities in demandand supply. Moreover, with 77%o sales being exported to China,any slowdown in that economycan aect the Companys business.here are two mitigating actors.First, Sesa Goas share o totalChinese iron ore imports is small,and there continues to be variousopportunities in China or theCompany to increase its marketpresence. Second, Sesa Goas lowoperations cost also acts as asignificant assurance o its ability toride out short term adverse marketconditions. he Company continuesto work towards diversiyingits customer mix in terms ogeography.

Regulatory Risks

he mining sector in India is

subject to an uncertain regulatoryenvironment. Being a major miningcompany, Sesa Goa has exposureto these uncertainties. In the lastew years there has been severalnegative developments in theexport duty on iron ore. In 2010-11,it was increased to 20% or iron orelumps and fines. Export bans areperiodically applied to various ores

Risks and Uncertainties such as the one that occurred inthe state o Karnataka in 2010-11.Environmental regulation policiesalso remain unclear; and case-to-case administration o suchregulations leads to uncertainty andrisk in mining activities.

Production Risks

Sesa Goa adopts a sustainableproduction platorm. Consequently,the addition o new mineralresources is critical or sustaininggrowth oriented mining and

production plans. As on 31stMarch, 2011, Sesa Goa has totalreserves and resources at 306 mt.It continues to ocus on addingnew mineral resources throughexploration and the grant o newmining leases rom central and stategovernments. In the last three years,the Company has added over 170 mtto its gross reserves and resourcesthrough exploration activities and70 mt through acquisition. hereare risks in terms o getting thefinal government clearances or

increasing our current productioncapacities. Besides, delays inallocation o new mineral leases orchanges in the policy on allocationo such leases in avour o captivesteel companies could aect utureplans o the Company.

Project Execution Risks

Sesa Goas aggressive growthplan initiated in 2009-10 hasresulted in investments in severaldevelopmental projects. Many o

these are linked to creating theunderlying inrastructure to supportlogistics o ore. In addition, in2010-11, the Company has takenover the upcoming steel plant assetso Bellary Steel and Alloys Limited.All these new investments requireproject management skills, and haveexposure to project execution risks.

Currency Risks

With a majority o its iron ore beingexported, Sesa Goas revenues areprimarily quoted in US dollars.his gives the Company significantexposure to oreign exchangefluctuation risks, particularly inrelation to the US dollar.

Industry Risks

Iron ore production is concentratedin the hands o a ew with thetop three producers accountingor more than 70% o the global

seaborne iron ore trade. Suchscale provides these playerswith a significant ability toaect competition, and pose apotential threat to the Companysexports. Sesa Goa continues toocus on building relationshipswith the major customers andin geographically diversiying itscustomer base.

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24 Sustainable DevelopmentSesa Goa is committed to createvalue or its stakeholders in asustainable manner, minimiseadverse environmental impacts,and work in cohesion with thecommunity, government bodies,non-governmental organisationsand other groups. Health, saety andenvironment (HSE) and corporatesocial responsibility (CSR) are oparamount importance to SesaGoa. In addition, the Companyssustainable development modelpromotes efcient use o resourcessuch as energy and water, minimises

the negative impact on biodiversity,and reduces waste and emissionsincluding greenhouse gases.

As a part o its sustainabledevelopment communicationand reporting system, SesaGoa produces every year itsSustainability Development Report,complaint to GRI G3 guidelines andmaintaining its appliction level A+since last 3 years. All the reports arealso available on GRI website apartrom the Companies website.

he Company is signatory to UNGlobal Compact rom 2009-10, andsubmitting the communication oprogress to the principles o UNGC.

Health, Saety and Environment(HSE)

Sesa Goas top management,through its HSE Committee, steersthe Companys initiatives by settingannual targets and reviewingprogress. he emphasis is onintegrating HSE with the decision-making process. oday, all the

Companys locations are certifiedor ISO 9001, ISO 14001 and OHSAS18001 except Sesa ResourcesLimited, which is yet to be certifiedor OHSAS 18001. Sesa Goa has wellqualified HSE and CSR teams acrossall its operations. At present, thereare 54 such proessionals.

Occupational Health

he Company aims to provide a

workplace that is ree rom hazardso occupational illness. he healtho all employees is checked annuallyacross the group companies. In-house acilities or occupationalhealth monitoring are availablein the mines and the actory sites.Dust, noise and lighting levels areregularly monitored to ensure goodworkplace hygiene. Whenever a riskis identified, the Company takesearly steps to quantiy, controland prevent it through proactivemeasures.

he Companys doctors impartawareness about health educationand related issues to the employeesand local communities around itsoperations. he emphasis is onimproving health and hygiene andpreventing communicable diseases.During 2010-11, there were nooccupational illnesses reported inSesa Goa.

Saety

he Company aims or zeroaccidents and a sae workingenvironment. his is promotedthrough a well established systemo checks and balances, andthe reporting o accidents andincidents, including the near-misses. hese are thoroughlyinvestigated to identiy systematicsaety deficiencies. On identiyingsuch gaps, preventative measuresare put in place.

here is sharing o saety lessonslearned and best practices throughexchange o inormation across thegroup. he organisation encourages

employee participation in saetycommittees and saety promotionalprogrammes. New initiatives areregularly introduced or continualimprovement in saety perormance.

Chart H shows that or theCompany as a whole, the requencyand severity o accidents (FSI) hasdeclined rom 0.93 in 2009-10 to0.50 in 2010-11. FSI increase in the

0 1 2 3 4 5 6

SGL Group

Pig Iron

Met Coke

Ship Building

Shipping

Mining

Chart H: FSI measures

2010-112009-10

LTIFR reduced

by 60% over

a period o 5

years

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shipping business is because o aatality occurred at one o our jettywhere a barge sailor lost his liein an unusual accident. he metcoke plant achieved zero lost timeinjury incidents or the secondconsecutive year and the pig irondivision has also achieved zero lost

time injury incidents during 2010-11.

Environment

Mining is about exhausting naturalresources. hus, it is important toreplenish as much as possible andextract ore with minimal peripheraldamage to the environment. SesaGoa is conscious o this challenge.From planting trees at the miningsites to conserving water, managingsolid waste and reducing energyconsumption, the Company takesmany steps towards environmentconservation and minimisingthe impact o mining on thesurrounding environment andsociety.

he Companys responsibility doesnot end with operating the mines. Itextends ater the mine site is closed.Sesa Goa ensures regenerationo the earth that has been mined,helps sustain the biodiversity

and addresses the needs o localcommunities. In the long term, thegoal is to restore the land to as closeto its original state as possible.

he Company has a ull-fledgedenvironment management teamto plan, implement and monitorenvironment managementprogrammes. he ocus is on:

Pre-planning o miningoperations.

Adoption o new and efcienttechnologies.

Modernisation o equipment. Implementing new wayso operating to minimisethe negative impact onenvironment.

Conserving natural resourcesthrough efcient use.

Energy Conservation

Sesa Goa has established andimplemented clear energyconservation targets, which vary rom3% to 5% reduction o specific energyconsumption across all locations.Projects or energy conservation

are identified and undertaken in asystematic manner and are reviewedevery quarter to ensure the targetsare actually achieved.

In 2010-11, the Company hasbeen able to maintain specificenergy consumptions at 0.106giga joule per M (GJ/M) ooutput in mining.

For the PID, it reduced rom0.560 GJ/M in 2009-10 to0.501 GJ/M in 2010-11.

In met coke, it reduced rom0.139 GJ/M in 2009-10 to 0.136in 2010-11.

Water Conservation

he main ocus on the watermanagement is on reducing reshwater consumption, increasing theuse o harvested rain water, reducingspecific consumption, and increasingrecycling and re-use o treatedeuent. he Company ollows the

In 2010-11, the

Company has been

able to maintain

specific energyconsumptions at

0.106 giga joule per

MT (GJ/MT) o output

in mining.

For the PID, it

reduced rom 0.560

GJ/MT in 2009-10 to

0.501 GJ/MT in

2010-11.

In met coke, it

reduced rom 0.139

GJ/MT in 2009-10 to

0.136 in 2010-11.

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concept o zero discharge, with arobust system to undertake andmonitor tight water conservationtargets every quarter. Watermanagers are located at each o thesites to identiy water conservationprojects in consultation with theoperating team.

Water conservation is managedthrough:

Continuous use o recycledwater or mining operationsand or beneficiating iron ore,

thereby reducing reshwaterconsumption by about 70%. he rainwater accumulated

in mine pits is used orbeneficiation and spraying.he tailings generated duringbeneficiation are treated andwater is then recycled back.

he water requirement o thepig iron and met coke plants ismet rom rainwater harvestedin the exhausted Sanquelimmine pit and partly throughgovernment supply.

In case o Karnataka operations,

ground water is used to meetdust suppression requirements.his is supplemented byrainwater harvesting in pondsduring the monsoon, whichis also used or the nurseryplantations.

otal water consumed in miningoperations has reduced rom 14.9million kilolitres in 2009-10 to 11million kilolitres in 2010-11.

Climate Change

Climate change is an importantaspect to Sesa Goa. he Companyhas undertaken steps to measureits impact on the environment byperiodically mapping its carbonootprint. he registration othe Waste Heat Recovery Based

Power Plant Project with the UNFramework Convention or ClimateChange (UNFCCC) has led togeneration o carbon revenue which not only makes the projectsustainable but also creates anadditional revenue stream. 1,00,438CERs was accrued during 2010-11.

During the year, Sesa Goa wasselected as one among the 10leaders or CDLI (Carbon DisclosureLeadership Index) shortlisted

companies rom 200 CDP (CarbonDisclosure Project) respondents andpublished in the CDP report 2010,India 200.

Waste Management

Sesa Goa adopts a 4R wastestrategy - reduce, recycle, reuse and

reclaim. he ocus is on improvingmaterial efciency; reducingwaste generation; and enhancingrecovery and reuse o discardedmaterial. he mining, beneficiation,metal extraction and coke makingactivities result in the generation oboth hazardous and non-hazardouswaste. An example o wastemanagement is given below.

Iron ore tailings contain ironconcentrations o around 45%.Due to increasing cost o land andscarcity o mining assets, it makes

economic and environmental senseto reduce the proportion o tailingsin the beneficiation process. hiswas achieved by adding Wet HighIntensity Magnetic Separation(WHIMS) units to the beneficiationplants. Due to this innovation, therewas a gain o ~11,000 tonnes peryear o usable iron ore, representingaround 2% o the eed material.

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Sesa Goas approach to communitydevelopment is holistic andlong-term. Public Private Partnerships(PPP) and community consultationare the core drivers o theCompanys work with communities.It engages with its stakeholdersby a consultation process. his,coupled with base line studies andneed-based assessments, providethe ramework or developing thevarious social interventions. SesaGoa partners with like-mindedorganisations in most o theprojects, such as governmentagencies, NGOs, local communitiesand panchayats.

Sesa Community DevelopmentFoundation

he Sesa Community DevelopmentFoundation, initiated by theCompany, is registered under theSocieties Act. he Foundations coreocus is to oster the development othe community and youth aroundSesa Goas areas o operations inGoa through providing technicaleducation and sports training

Corporate Social Responsibility (CSR)as well as various communitydevelopment initiatives. Someinitiatives are listed below.

Sesa Technical School (STS)

he Sesa echnical School wasestablished in 1994 on an oldiron ore mining workshop atSanquelim. SS aims at providingthe youth in and around Sesa Goasmining operations with technicalskills and knowledge to enablethem earn a living. SS studentsspecialise in becoming machinists,fitters, electricians or instrumentmechanics, and secure placementsin various nearby companies. Forthe last several years, SS hasmaintained 100% results in theIndustrial raining Institute (II)trade examinations.

Since the inception 16 batches havebeen rolled out making 726 youngGoan's employable till date on theirown merit.

Sesa Football Academy (SFA)

o nurture the talent o Goa's young

ootballers, SFA was established in1999 to oer junior level trainingat Sanquelim, Goa. Its senior levelacademy began operations romJune 2008 at Sirsaim, Goa.

Junior Academy

It houses 36 Goan boys. Once intwo years, boys in the age group o14 to 16 years are selected on meritand are provided with proessionalootball training as well as ormaleducation. he team has won manychampionships and its graduatesplay or top teams o the country.

Senior Academy

For the last 3 years, Sesa GoasSenior Academy has been an activeparticipant in the Goa ProessionalLeague, besides participating in theSecond Division o the I-League,the Governors Cup and variousother tournaments. Within twoyears o the senior academycoming into being, eminent clubshave approached students orrecruitment

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Sesa has two ootball grounds inGoa created in restored mining land.o urther nurture the young talent,a new inrastructure at Sirsaim

was inaugurated last financialyear. Built at an estimated cost oover `4 crore, it has an all-seasonootball tur, a hostel acility that canaccommodate 30 boys, an in-housegymnasium, indoor sports hall,audio visual room and sauna bathacilities.

In March 2011, Sesa FootballAcademy (SFA) signed Mr erryPhelan, a ormer English premierleague ootballer, who representedhis country, the Republic o Ireland,

in the 1994 FIFA World Cup asthe chie mentor or significantlydeveloping the Academy. he SFAhas also appointed Libero Sports a subsidiary o the US-basedLibero Sports LLC as its strategicmarketing consultants.

Development o Social

Inrastructure

Sesa Goa believes that buildingappropriate inrastructure canhelp develop communities.he Companys inrastructuredevelopment initiatives include:

Water pipeline at Bagwada,Pilgaon, Bicholim as a partdrinking water acility to thevillagers. he beneficiaries are102 villagers.

Constructed 115 metre water

canal at Kalsai, Kirlapal Dabalvillage in Goa. he beneficiarieswere 40 arming amilies.

Constructed compound wallsand other inrastructure orprimary, middle and highschool at Goa and Karnataka.

Constructed a large communityhall in village o Navelim, Goa.

Constructed concrete cementroad connecting the village oMedikeripura in Karnataka.

Constructed the CommunityMedical Centre at the village oMegalahalli in Karnataka.

Constructed watersheddevelopment and drainagesystems at several villagesadjoining the Companys minesin Karnataka.

Created drinking water acilityor around 1,500 people at thevillage o Playa in Karnataka.

Distributed smokeless biomassstoves to around 700 amilies inKarnataka.

Education

Education has been one o themajor ocus areas o the CompanysCSR initiatives. Given beloware examples o the educationinitiatives.

Project Manthan: A school-based intervention orpromoting adolescent healthand improving educationaloutcomes. A total o 13 schoolsare covered under the project,with over 2,600 students asbeneficiaries.

Launched a scholarshipscheme called the SesaDnyanjyoti Shishyavritti or

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meritorious students romStandard 5 to Standard 12. Ithas benefited 292 studentsrom 57 schools.

Launched the VedantaComputer EducationProgramme called E-shikshain 295 schools in Goa and 250schools in Karnataka.

Distributed notebooks tostudents o several schools inKarnataka and Goa.

Conducted vocational tuitionclasses in Karnataka benefitingover 900 high school students.

Started evening study centresin villages o Karnataka orStandard 3 to Standard 7students.

Distributed balwadi play

equipment to 20 balwadis,involving 400 children.

Set up an orientation andmobility course or poor,visually impaired students. 20students were taught variousskills like negotiating steps,recognising places and daily

living skills. During the 75-daycourse, these students wereoered ree boarding andlodging.

Health Initiatives

Some o the key health initiatives o2010-11 are given below:

here are 10 community

medical centres runningaround Sesa Goas mines andoperational areas. ill March2011, these have benefitedaround 118,000 people.

A mobile health unit waslaunched or the South Goamines, which covers over33,670 people.

An anaemia detection andtreatment campaign wasconducted in the villages oPissurlem and Advalpal in

Goa, which benefited over 300women.

Reproductive child healthcamps were organised at thevillages o Mulgao, Piligaon,Mayem and Surla in Goa, whichwere attended by 645 women.

Organised ree eye screeningcamps in Goa and Karnataka,which has led to eye surgery,cataract operations and reespectacles to those who wereaected.

Organised a cancer awarenessand detection campaign in thevillages o Pissurlem, Cudnemand Surla in Goa, whichcovered 133 women.

As in previous years, organiseda blood donation camp on

1st December, 2010, the WorldAIDS Day, where 199 companyemployees donated blood.

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30 Sustainable LivelihoodAgriculture Livelihood Promotion

Agriculture is the main source oincome in rural areas. But today,it is suering due to variousreasons, such as high input costs,low returns, shortage o skilledmanpower, lack o interest inarming and inclination towardswhite-collar jobs. Sesa GoasCSR philosophy aims to enhancethe economic lie o villagers byimproving arming systems, as wellas developing micro enterprisesto provide alternative means o

livelihood.he learnings gained through theBack to Farming project initiated inWagona, Kirlapal Dabal panchayatin Goa motivated Sesa Goa toreplicate it in Cudnem and Navelim also in Goa. he project involved:

Organising awarenessprogrammes/meetings oarmers along with villagepanchayat members.

Providing guidance on best

agricultural practices, improvedtechnologies, hybrid seeds,proper application o ertilisers,etc.

Facilitating armers in availinggovernment subsidy onmechanised ploughing o fieldsand contributing to residualshare.

Distributing ree o costpaddy seeds, organic manure,chemical ertilisers, irrigationacilities, encing o fields, etc.

Repairing o sluice gates,bandharas, bandhs, etc.

Sustainable Livelihood throughAgriculture

For the eective implementationo agriculture-based communityprojects, Sesa Goa has tied upwith Betki Khandola Panlot Sangh

(BKPS), a water-shed organisationregistered under the SocietiesAct. At Wadiwada (Goa), armerscultivate rice and vegetables infields next to the river Mandovi.Over the years, a bandh meant toprevent saline water rom enteringthe fields had got damaged atmany places. A group o 15-20

beneficiaries took up the task ostrengthening the bandh. oday,

there is a strengthened bandh thatis 1 km in length and with a width o2.5 metres.

Inland Canal De-Silting in Bagwada

In Bagwada (Goa), an inland watercanal had not been de-silted severalyears resulting in flooding o thefields during high tide, thus making

it unfit or cultivation. he projectwas taken up. Around 600 metrescanal was de-silted, benefitingabout 70 armers.

In addition, several armers wereacilitated with ertilisers andarming machineries like powertiller, weed cutting machines, etc.Other initiatives included trainingprogrammes or women sel-help groups on making artificial

jewellery, which were conductedin Amona-Navelim through theAmona Panlot Sangh.

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Accolades

Sesa Goa won several awards during2010-11 in various categories. Someo these are listed below.

Awarded the Goan AchieversAward or Corporate SocialResponsibility at an awardunction organised by Navhindimes and Viva Goa Magazinein Goa on 28th March, 2011.

Won the EnvironmentalSustainability Excellence Award2010-11, by the Indian Chamber

o Commerce at Kolkata on9th March, 2011.

Conerred the award o beingan Excellent Water EfcientUnit Beyond Fence at theSeventh Award or Excellencein Water Management 2010,organised by the Conederationo Indian Industry (CII), GodrejGreen Business Centre.

Excellence award orAorestation or Sanquelim andoverall perormance Award orCodli Mines by Indian Bureauo Mines (IBM).

Sesa Goa received British SaetyCouncils International SaetyAward 2011 or its 5 units.

Pig Iron Division and MetCoke Division received theGomantak Suraksha Patra orsaety perormance or 2009during an award unctionorganised by the Green riangleSociety o Goa, in collaborationwith Inspectorate o Factories &Boilers, in May 2010.

Received the best perormeraward instituted by FinancialExpressEVI in the Metalsand Mining category orits contributions towardsthe environment and the

excellence in the area o GreenBusinesses.

Won the runners up trophyor the Best Corporate SocialResponsibility Award or itsAlternate Livelihood Projectby Bombay Stock Exchange atits Sixth Social and CorporateGovernance Awards 2010, on16th December, 2010 at Mumbai.

Cautionary Statement

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Sesa Goa AR FY 2011