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Vedanta Resources (VED)

  Print      Mail a friend       Annual reports

Thursday 02 June, 2005

Vedanta Resources

Final Results

Vedanta Resources PLC
02 June 2005

                             Vedanta Resources plc

              Preliminary results for the year ended 31 March 2005


• Delivery on growth projects - 2 out of 4 projects complete

      -    Tuticorin copper smelter now fully operational

      -    Chanderiya zinc smelter and Rampura Agucha mine expansions delivered
           on time and ahead of budget

      -    Aluminium expansion project at Korba remains on target for March 2006

      -    Further progress with 1 mtpa(1) alumina refinery at Orissa

• Strong financial results

      -    Group Operating Profit up 40% to $332 million and Group EBITDA(1) up
           41% to $455 million driven by production growth and strong pricing

      -    Well capitalised balance sheet with Group Gearing(1) at 4% and gross
           cash of $1.4 billion

      -    Strong ROCE(1) at 32%

      -    5% final dividend increase reflects the confidence of the Board in
           continued successful delivery

• Increased share of earnings - minorities reduced to 45% in the second
  half (from 63% at Listing)

      -    Economic Interest(1) in Sterlite, the largest subsidiary, increased 
           to 80% (from 69% at Listing)

      -    Attributable Profit(1) up 66% to $120 million, benefiting from 
           reduction in minority interests

• Successful investment in Konkola Copper Mines with opportunities to
improve output, reduce costs and pursue future growth

                                   Full Year 2005   Full Year 2004    % Change
Group Turnover ($ million)               1,884.2          1,289.5        + 46%
Group EBITDA ($ million)                   455.0            322.7        + 41%
Group EBITDA margin(1)                      24.1%            25.0%
Group Operating Profit ($million)          331.8            237.1        + 40%
Attributable Profit ($ million)            120.0             72.3        + 66%
ROCE(1) (excluding project                
capital work in progress)                   32.0%            24.1%
Final Dividend (2) (US cents per share)    11.55             11.0            5%

Vedanta's Chairman Anil Agarwal commented:

'Vedanta is a unique growth story and our profile of organic growth is
unrivalled in the metals and mining industry. This has been an exciting year for
Vedanta. We have made strong progress and have delivered on several of our
development projects. We continue to focus on our growth strategy and have moved
forward in all areas. We remain confident of continuing to deliver this growth
in the year ahead.'

    (1)   Refer to glossary and definitions

    (2)   The dividend for the full year 2004 of US 5.5 cents per share was
          based on the four month period following Vedanta's Listing, equivalent 
          to a final dividend of US 11.0 cents


Vedanta is a unique growth story and our profile of organic growth is unrivalled
in the metals and mining industry. This has been an exciting year for Vedanta.
We have made strong progress and have delivered on several of our development
projects. We continue to focus on our growth strategy and have moved forward in
all areas. We remain confident of continuing to deliver this growth in the year

At the time of our Listing we set out a four part strategy. The first pillar of
our strategy is to optimise the performance of our existing assets, which
included the expansions in our copper and zinc operations. In April 2005 we
started commissioning our copper smelter at Tuticorin and the new 300,000 tpa(1)
facility is producing metal. On 31 May 2005 we announced the commissioning of
the new facilities at Chanderiya, supported by the expanded output at Rampura
Agucha mine. This was completed around 15% below the forecast budget of $425
million and well below the benchmark costs for comparable international
projects. We will continue to look for opportunities to optimise performance and
lower costs in all aspects of our operations.

The second part of our strategy is to complete the two greenfield projects; the
250,000 tpa aluminium complex, at BALCO, and the new 1 million tpa alumina plant
at Orissa. The facilities at BALCO are proceeding on schedule, we are carrying
out technology trials on some of the pots and are producing metal. The alumina
refinery at Orissa is also on track and budget. As mentioned in our recent
production report, public interest submissions regarding environmental clearance
are currently being addressed within a timetable set by the Supreme Court.

The third pillar of our strategy is the consolidation of our Group structure and
further good progress has been made over the year. The most significant change
came from the $434 million rights issue in Sterlite which allowed us to increase
our Economic Interest in Sterlite to 80% and to inject funds into Sterlite, for
use in our expansion programme. The exercise of the option in BALCO continues to
proceed with independent valuers having been appointed by the Government. We
will continue to pursue opportunities to simplify the structure of the Group
where possible.

In November 2004 we completed our acquisition of Konkola Copper Mines, at a
gross cost of $49.2 million. This formed the fourth pillar of our strategy;
leveraging our existing skills through investment opportunities. At current high
copper prices Konkola is profitable, but the aim is to place the operations in a
position where they are more profitable through the commodity cycle and to give
KCM a more solid long term outlook. Our immediate focus is to improve processes
and stabilise production levels. There are considerable opportunities for future
development at KCM, including the world class Konkola Ore Body with resources of
210 million tonnes containing copper at 3.8%.

During the year the Company received its first credit rating, Baa3/BB, since
upgraded to BB+. This placed us at the Indian sovereign limit, which given the
dominance of Indian assets was as high as could be expected. We raised $600
million in a bond issue and the Board believes that we have a well balanced mix
of funding in place for our current expansion projects. Over the year we have
spent $735 million on our $2.2 billion project pipeline. This brings total
spending to date to $1,029 million. We remain confident of remaining within our
gearing target of under 45% of Capital Employed(1) throughout our current 
spending programme.

We believe that there are several opportunities that will allow us to develop
our growth strategy further and extend the expansion pipeline. This will take
advantage of the strong cashflow that will be produced as the current projects
come into production and reflects the many options that we have to continue to
achieve volume growth in the long term.

We are reviewing further aluminium smelting capacity, to take advantage of the
production from VAL, with the possibility over time of an additional 500,000
tonnes of finished aluminium per annum. We also signed a memorandum of
understanding with the State Government of Orissa regarding an iron ore project
with related steel facilities. These are both at an early stage and any projects
will be pursued on the basis of maintaining positive financial returns. There
are opportunities for expansions elsewhere in our existing operations, and we
are evaluating projects at both zinc and copper.

This has been an exceptional period for metal prices driven by strong demand
from China. This has also had an impact on several input prices, particularly
energy related costs such as oil and coal. There has been much talk of a super
cycle and the potential for a prolonged period of above average commodity
prices. Our policy is to remain focused on delivering our new projects and
lowering our costs, which will allow us to take advantage of the significant
growth opportunities offered within India and to stay profitable regardless of
the commodity market cycles.

A new Government, led by the Congress party, was elected in India in May 2004.
The new Government has maintained a policy of growth and liberalisation. Metal
use in India continues to grow above global levels and the long term attractions
of the Indian economy remain considerable. India has been much talked about as
an attractive investment destination, attracting growing levels of foreign
investment and the potential to become a major regional manufacturing hub. I
believe we are well placed both to take advantage of this growth and also to
contribute to the future development of India by providing vital basic

In March 2005 I took over as Chairman of the Board and KK Kaura became Chief
Executive. I would like to thank Michael Fowle, my predecessor as Chairman, and
Jean-Pierre Rodier for their guidance and input during the past year. Sir David
Gore-Booth sadly died during the year and his counsel will be greatly missed. I
am pleased that we have appointed three new Non-executive Directors with
complementary experience and we intend to appoint a further senior independent
Non-executive Director in due course.

The Board is proposing a final dividend for the year of 11.55 US cents per
Ordinary Share, an increase of 5% on last year's implied final dividend of 11.0
US cents. Last year we paid a single dividend of 5.5 US cents per Ordinary
Share, for the four months for which we were listed, equivalent to an annual
payment of 16.5 US cents per Ordinary Share. The total dividend for the year is
17.05 US cents per Ordinary Share. The increase in dividend at this early stage
reflects the Board's confidence in continued successful delivery and we remain
committed to a progressive dividend policy.

The delivery of our projects and the growth of our business could not have been
achieved without the efforts of the Board, management and employees of Vedanta,
who have shown great commitment to building this success.

The success in all areas of our strategy over the past year has been encouraging
and in the next twelve months we will see progressive benefit from the recently
commissioned facilities at Chanderiya and Tuticorin and a full year's
contribution from KCM. We remain focused on completing Korba and Orissa as well
as evaluating opportunities, to extend our unique growth pipeline. We are
confident of showing good progress over the next twelve months and delivering
value to all stakeholders.


Over the past twelve months we have shown good operational delivery on our
existing assets and made excellent progress on our expansion pipeline. The year
was again weighted towards the second half with production, turnover and
profitability rising through the year in all areas. Zinc and aluminium both
enjoyed significant increases in profitability in comparison to the previous
year. The acquisition of KCM, in November 2004, also contributed to our turnover
and margin. Strong metals prices were a consistent factor, which more than
offset high energy costs and the impact of tariff cuts.

Group turnover has increased 46% to $1,884 million, compared to last year, and
EBITDA has increased by 41% to $455 million, of which $295 million was in the
second half of the year, including $76 million from KCM. Operating profit has
increased by 40% to $332 million Strong metals prices have more than offset
rises in some input costs, such as energy, and reductions in import tariffs by
the Government. EBITDA margin has remained consistent at 24%. Underlying Profit
(1) has increased by 82% to $138 million from $76 million, and EPS(1) by 82% to
48.1 US cents per Ordinary Share. This reflects the benefit of the successful
changes in the Group structure, which has increased the proportion of earnings
retained within the Group.

The expansions at the Tuticorin copper plant and Chanderiya zinc plant were
completed shortly after the year end and the aluminium expansion at BALCO is in
its final phase before commissioning. There are many opportunities to develop
KCM and we have a clear strategy on how to take these assets forward. These
expansions should result in steadily building production over the coming year,
with the ramp-ups of copper, zinc and aluminium contributing towards a rise in
production in the second half of the current year.

Tariffs on metal imports into India were cut twice during the year, at a special
post-election budget in July 2004 and at the annual budget in February 2005.
Tariffs now stand at 10% on each of our major metals, around the level
recommended in the report produced by the Kelkar Committee, for the Government.

Growth in India has continued at a good pace and this has been reflected in
demand for metals. The new Government has continued with policies to promote
growth and development in India. Industrial production in India has risen by
around 8% during 2004 and official Government forecasts anticipate similar
levels for this financial year. Metals' demand should also benefit from a
targeted rise of 14% in infrastructure spend by the Government. India is well
placed to play a growing role in the global metals and minerals markets, both
from domestic demand and the development of resources and facilities.

Our organisation continues to develop and grow. The use of programmes such as
TPM and Six Sigma, along with the assistance of external consultants and
reviews, help to deliver operational improvements, utilise our assets better,
develop and retain our staff and, importantly, to improve service to our


The existing assets performed well over the year and the results benefited from
the strong increase in the metal price. The expansion project at Korba is on
track for commissioning in March 2006, taking our aluminium capacity to around
400,000 tpa and the new 1 mtpa alumina refinery at Orissa is making good

The total production of finished aluminium in the financial year was 135,926
tonnes, an increase of 5% on last year, and in line with capacity. The
introduction of a fifth boiler at BALCO allowed more stable power output with
fewer interruptions in power supply and better control of management processes
at both companies also helped to increase output. We sold around 35,000 tonnes
of rolled products from BALCO over the year.

Turnover in the Aluminium Business increased by 26% to $282 million, with EBITDA
increasing 41% to $76 million. The increase in turnover and profitability was
principally due to the strength of the price for aluminium, with aluminium
prices, as quoted on the LME, averaging $1779 per tonne over the year, an
increase of 24% over the previous year. Tariffs on the import of aluminium were
reduced in February 2005 from 15% to 10% and thus the impact from tariff changes
in the financial year was limited.

Unit costs rose to $1378 per tonne, an increase of 12.5% from the previous
financial year. This was primarily caused by the increase in all key input
prices, notably petroleum products, coal and caustic soda. The expansion planned
at BALCO will introduce more modern 320 KA pre-baked technology, giving the
potential for a significant reduction in unit costs, mainly through lower power
consumption and better heat rate from the new power plant.

We estimate that demand for aluminium in India increased by around 10% over the
year, driven by strong demand from the power, construction, automotive and
packaging industries. Power transmission and electrical applications continue to
be the single largest domestic user of aluminium.

The domestic market will see significant capacity expansion over the next three
years. Consumption in the country is still less than 1 kilogram per capita and
we believe that consumption growth over the next three years should average over
9 to 10% per annum with demand being driven by the construction, automotive and
power industries.

The expansion project at Korba has made excellent progress over the past year.
We have invested a further $431 million over the period, to bring our total
spend to $562 million, against a budget $900 million. The captive power plant is
at an advanced stage and we anticipate being able to use the first of the four
power units in June 2005. The pot rooms are complete and technology testing on
the pots has been successfully undertaken. We will start bringing pots into
production on a progressive basis as the power plants are introduced.

We should, therefore, see some increase in output towards the end of the year
from these first pots and remain on track for our commissioning date of March
2006. I look forward to reporting next year on this expansion, which will
transform the size, dynamics and cost of production of this Business.


At our major alumina project in Orissa, we have made substantial progress on the
alumina refinery with all of the civil works and construction well in hand and
around halfway to completion. To date, approximately $101 million has been
invested. There have been some public interest submissions to a Supreme Court of
India sub-committee, regarding the environmental clearances for the bauxite
mining and these are currently being addressed. As mentioned in last year's
annual report, we have investigated the possibility of introducing a partner in
this project and this option remains under consideration.


The assets in India made limited headway over the year, given flat TC/RCs(1) and
the impact of tariffs. The new smelter received permission to operate in April
2005 and will take our capacity to 300,000 tpa. In November 2004 we acquired
KCM, making Vedanta one of the top five global copper producers.

Copper - India/Australia

Production of copper cathode in India declined by 4% from the previous year to
171,992 tonnes. Production was lower in the first quarter as a result of a
planned shutdown of 20 days at the smelter, after a long campaign life of 24
months. In the second half of the year this was almost fully recovered, with the
plant running above capacity through both the third and fourth quarters.

Turnover increased 29% to $766 million, though EBITDA declined by 10% to $85
million. The rise in turnover reflects the significant increase in the copper
price over the period. The average price on the LME over the financial year was
136 US cents per pound, an increase of 68% on the previous year. Around 20% of
our copper concentrate was supplied by our own mines in Australia and these
operations benefited from this rise.

The average TC/RC we received in the year was 8.6 US cents per pound, similar to
the levels of 2003/4. TC/RC's in the first half were 6.6 US cents per pound and
were improving towards the end of the year. We anticipate that our TC/RC's
should increase significantly in the current year. We have made good progress
towards our strategy of obtaining around two-thirds of our concentrate on long
term contract, having signed some frame contracts over the year.

The impact of tariffs was most significant in the Copper Business. Over the
course of the year, tariffs on imports of finished copper were reduced from 20%
to 10%. Duty assistance on exports of copper was also reduced during the year.
On current prices of copper cathodes this export assistance broadly offsets the
tariff of 5% paid on copper concentrate imports.

Cash costs were improved from 7.8 US cents per pound to 7.1 US cents per pound.
This was driven by better recovery of metal and improved by product management,
notably sulphuric and phosphoric acids. Our copper operations in India are
already in the first quartile of cash costs for copper producers globally,
however we believe we can improve this further and are targeting a cost of 6 US
cents per pound.

During the year, further drilling was undertaken at CMT and a further 13.2
million tonnes of ore has been added to reserves, reflecting an extension to the
mine life of around five years. CMT produced around 27,600 tonnes of copper in
concentrate over the year and the operation gained substantially from the
increase in the copper price. Production at TCM was around 12,300 tpa. The
operation is likely to be closed in the first quarter of the 2005/06 financial
year and closure costs, as estimated, have been fully provided.

We estimate that growth in demand for copper in India has grown at around 7% per
annum, over the past two years. This growth rate should benefit from growing
power sector demand, construction, air conditioning and the automotive sector.
At the end of 2002, India had power generation facilities of 105,000 mw(1); this
is planned to double by 2012.

Shortly after the year end we started commissioning the new copper smelter at
Tuticorin. This will take our capacity to around 300,000 tpa of copper anode. A
new refinery of 120,000 tpa and rod plant of 100,000 tpa has also been built at
Tuticorin, so that the additional anode will be processed at Tuticorin. This
will allow production of around 300,000 tpa of cathode and 240,000 tpa of rod.
The expansion also included a new 22.5 mw power plant, and new acid and oxygen
plants. The smelter is producing metal and we are moving through the ramp-up
phase, towards full production in the second half of the year.

Copper - Zambia

In November 2004 we acquired a 51% holding in Konkola Copper Mines. KCM is the
largest mining company in Zambia, contributing significantly to the nation's
economy and export earnings. Over the five months from the date of acquisition
KCM produced 67,547 tonnes of copper cathode and contributed $76 million of
EBITDA to the Group. The cash cost of production was 106 US cents per pound.

A new chief executive, Mr CV Krishnan, has been appointed to KCM. He has
extensive experience in the Copper Business, having worked previously with the
Group at Tuticorin. The immediate aim is for a substantial improvement in
operations and processes. We are seeking to raise plant availability and deliver
better process management. Training for staff is taking place along with the
transfer of around 15 specialists from elsewhere in the Group.

There are several projects underway at KCM, all with the aim of enhancing
production and reducing costs. A new 500 tonne per day acid plant is being built
to improve the availability of sulphuric acid and reduce costs for the leaching
plant. We are also moving to de-bottleneck the smelter and improve recovery in
the smelters and concentrators.

The most significant project at Konkola is the Konkola Ore Body Extension
Project. This involves mining the ore below the current depth at Konkola
underground mine and expanding production from 2 million tonnes per annum to 6
million tonnes per annum. Our intention is to make full use of the existing
infrastructure and thereby deliver the project at a lower cost and shorter
timescale than had previously been thought possible. The project should also
have several economic and environmental benefits for the surrounding area. It is
intended that the additional production of concentrates from Konkola will be
treated in the smelter at Nkana, producing copper cathodes for export.


The Zinc Division performed exceptionally well over the period, assisted by
strong sales and a firm zinc price. Our expansion at Chanderiya was completed
and trial production commenced in May 2005 and this will increase our refined
zinc output close to 400,000 tpa of finished metal.

Mine output has improved considerably and all the mines have performed well.
Rampura Agucha in particular did better than the previous year due to
de-bottlenecking. This is reflected in an increase in mined metal content of 7%
over the year to 354,641 tonnes. Production of refined zinc declined by 4% to
212,445 tonnes, due to inconsistent qualities of met coke, caused by short
supply, which impacted the production process.

Sales of zinc metal at about 289,000 mt are about 12% higher than the prior
year, using our own production of 212,445 mt(1) along with additional tonnage
from tolling activities and stocks.

Turnover rose 21% to $486 million and EBITDA rose 22% to $219 million. Both
turnover and profitability were driven by the increase in finished metal sales
and the strong rise in the zinc price. The average price for zinc over the
period, quoted on the LME, rose 34% to $1,108 per tonne. This has more than
offset rising costs and tariff reductions. Cash costs of production rose 22% to
$695 per tonne. These were impacted by rising energy prices and the costs of met
coke. Import tariffs on zinc were reduced in 5% stages, from 20% to 10% in July
2004 and February 2005.

Zinc demand in India grew at around 10% over the year. The growth is driven by
galvanising, which protects steel from corrosion, and the end users of
galvanised materials in construction, the automotive sector, housing and power
transmission. About 50% of zinc demand is driven by sheet galvanising.

There have been focused efforts on expanding new zinc applications, notably
galvanised reinforcement bars and structures used in construction. These should
benefit from Government infrastructure spend.

Shortly after the year end we commissioned the new facilities at Chanderiya zinc
smelter. The final cost of the expansion is around 15% below the budget of $425
million, set out at the time of Listing. First metal was poured in May 2005, and
we will build up towards full capacity in the second half of the financial year,
which will take our total zinc capacity close to 400,000 tpa. The new facilities
should assist in reducing unit costs in the future towards our target of $500
per tonne, subject to variations in energy and coal prices. The operations are
already in the first quartile of global costs and reaching our target will make
them one of the lowest cost zinc producers in the world.

The lead smelting facilities are currently being increased by 50,000 tpa to take
total output to 85,000 tpa. These new facilities should be commissioned by the
end of the financial year. The cost of this will be around $35 million.


The replacement and growth of our resource base is fundamental to our
Businesses. During the year, we appointed a Head of Exploration, who will lead a
team responsible for exploration across the Group. The team is tasked with
developing our competence in this area and producing a meaningful exploration

The importance of exploration has already been demonstrated at our zinc
operations. The reserves at Rampura Agucha have been increased to 50.1 million
tonnes from 40.1 million tonnes. These contain zinc at 12.8% and lead at 1.9%.
The life of the mine has increased to well over 15 years, even at the increased
levels of production required by the expansion at the smelter. We will continue
with further exploration work around the mines.

New Projects

The four projects set out at Listing are around 50% complete in terms of budget,
with two already commissioned, zinc and copper, and the third, aluminium, on
track for the end of the 2005/06 financial year. Costs are within budget, in
spite of input cost pressures, such as steel, through a combination of the
timing of the initial contracts and sound project management.

We believe that there are some significant further opportunities to expand our
production in the future and this coincides with a unique period in India's
economic growth and development. There is also the potential to move our Zambian
assets forward considerably. This will extend our pipeline of growth into the
future and retain our profile of growth led through projects. We are undertaking
a detailed feasibility study for the development of aluminium production in the
state of Orissa. We are at a preliminary stage in evaluating the potential for
iron development in the same state. We believe that there is potential for
further additions in other areas, particularly aluminium and zinc, and these
possibilities should develop over the year ahead.

Sustainable Development

We believe in sustainable development and are committed to effective management
of health, safety, environment and community development as an integral part of
our business.

The acquisition of KCM brings our total workforce to around 22,450 and as the
Group has grown, so have our responsibilities to our employees and the
communities around us. We have made considerable progress over the past year
with many initiatives undertaken. We have appointed Group managers for both HSE
and CSR, who will further develop tasks and performance indicators across the

We seek to meet needs in the community by providing assistance in the three key
areas of primary health, education and distress relief. It is our wish to assist
those around us, far beyond their minimum needs. Across the Group we undertake
considerable work ranging from funding schools and school meals, to skill
training programmes for adults and the sponsorship of sports. There is a wide
range of activity in health care, from providing centres and medicine to
extensive treatment programmes. KCM has a strong track record in malaria and HIV
programmes, the learning from which we can spread around the Group.

Over the year we have undertaken several initiatives to ensure that we meet
environmental requirements and the use of third party audits by international
specialists, has validated our belief in our practices. The selection of the new
technology being introduced in our expansion programmes will assist our efforts
by improving on energy efficiency and waste recycling. Investment has taken
place to improve air quality well within current permissible standards, in
anticipation of more stringent legislation that will inevitably be introduced in
the future.


This year will see further significant delivery of the tasks we set out at
Listing, as new production ramps up from our copper and zinc expansions and our
aluminium project is fully commissioned. I also anticipate improvements in 
production and costs at KCM. The delivery of our strategy will reduce our unit 
costs, through the increase in volumes, new technology and greater productivity 
and take us towards our goal of being in the top decile of cost of production 
in all of our Businesses. Our growth strategy combined with growing demand 
for metals in India gives a positive outlook and I look forward to reporting on 
this over the year.


EBITDA increased 41.0% to $455.0 million, including a $76.0 million contribution
from KCM. Depreciation rose to $101.7 million split between $77.5 million from
our existing Businesses and $24.2 million from KCM. Depreciation is forecast to
rise next year with the commissioning of new plant in our Aluminium, Zinc and
Copper Businesses and a full year of depreciation from KCM.

During the year, foreign exchange losses of $11.2 million in the first half were
largely reversed in the second half resulting in a net foreign exchange loss of
$1.6 million in the year. This compared to the $14.0 million gain arising during
the prior year.

Group operating profit after exceptional items increased to $331.8 million, a
39.9% increase. Operating exceptional items were $21.9 million; these related to
a $4.1 million charge arising from voluntary retirement schemes (2004: $13.3
million) and a $17.8 million impairment charge recognised against certain
non-core assets identified in last year's annual report. Whilst these non-core
assets have been substantially written down, we are pursuing a number of
opportunities to maximise realisation over and above their net carrying value of
$52 million (2004: $65 million).

Foreign Exchange and Net Interest

Net interest income was $3.6 million compared with a $1.3 million net interest
charge in the prior year. This included a net foreign exchange loss of $7.6
million (2004 $14.1 million gain) arising on foreign currency funds and
borrowings within the Group. Investment income totalled $41.3 million (2004:
$39.7 million) and interest payable $37.7 million (2004: $41.0 million); this
excludes net interest capitalised on our growth projects of $24.2 million (2004
$4.6 million).


The tax rate in the year was 29.4% (2004: 32.6%) split between current tax of
19.7% (being the cash rate for the Group) and deferred tax of 9.7%. The tax rate
for the current year benefited from several factors including the acquisition of
KCM with significant tax losses, a 3% reduction in Indian income tax rates and
fiscal breaks arising from the extensive capital expenditure programme. These
mostly occurred in the second half of the financial year reducing the full year
tax rate compared to that estimated in the interim accounts. The tax rate is
expected to be moderately higher in the future although the capital expenditure
fiscal breaks will continue.

Minority Interests

Minority interests have been restated to reflect a new accounting policy,
required by UITF Abstract 38 'Accounting for ESOP Trusts'. The SEWT's holding of
3.2% in the issued share capital of Sterlite is reclassified from other
investments and instead, recorded as a reduction in shareholders' funds. From a
Group perspective, the shares are effectively treated as cancelled, which
increases Vedanta's Economic Interest in Sterlite. As a consequence of this
change in accounting policy, the minority interest reflected in the profit and
loss account decreased from 57.7% to 54.1% for the year ended 31 March 2004.

After reflecting the change in accounting policy, our share of post-tax profit
absorbed by minority interests decreased from the restated 54.1% for the prior
year to 48.9% in the current year, split as to 50.6% in the first half of the
year and then reduced further to 48.0% in the second half of the year, or 44.5%
when excluding operating exceptional items. This reduction reflects the success
in implementing our strategy to increase ownership in subsidiaries, principally
arising from Sterlite's rights issue concluded in September 2004. Further
details are discussed below.

Profit for the Year

The profit for the year was $120.0 million against $72.3 million in the previous
year, an increase of 66.0%. This increase was due to a combination of the
improved results reported across our Businesses and the reduction in minority

The Underlying Profit was $137.7 million, an improvement of 80.7% against the
prior year. Underlying Profit excludes the effects of exceptional items, their
tax and minority interest impact, and is a more informed measure of the
recurring performance of the Group.

Earnings per Share and Dividends

EPS based on profit for the year rose by 65.6% to 41.9 US cents per Ordinary
Share whilst EPS based on Underlying Profit rose by 80.8% to 48.1 US cents per
Ordinary Share. There was no material difference between basic EPS and diluted
EPS as the only effects on profit after dilutive adjustments are shares to be
issued under the Vedanta Resources LTIP totalling $0.2 million, and an
adjustment in respect of the convertible bond in Sterlite totalling $1.9

The Board has proposed a final dividend of 11.55 US cents per Ordinary Share in
respect of the year ended 31 March 2005 which, together with the interim
dividend of 5.5 US cents per share paid in January 2005, gives a total for the
year of 17.05 US cents per share. The final dividend is increased by an
equivalent of 5% on the previous year when a final dividend of 5.5 US cent per
share was paid for the four month period to 31 March 2004 following the
Company's Listing in December 2003. The Company has a progressive dividend
policy but recognises that in the year there was no benefit from the $2.2
billion growth projects.

Cash Flow

During the year, there was a decrease in net cash of $496.6 million reflected in
a net cash position of $422.3 million as at 31 March 2004 moving to a net debt
position of $74.3 million as at 31 March 2005. This movement arose from
significant Expansion Capital Expenditure which more than offset free cash flow.

The Free Cash Flow in the year of $204.4 million is lower than last year's
figure of $335.4 million, which had benefited from extended trade credit
received of over $200 million included within the working capital movement. This
year there was a significant working capital outflow of $180.2 million due to a
combination of a higher level of copper concentrate inventory compared to the
previous year's unusually low level and increased trade debtors arising from
strong fourth quarter sales volumes and selling prices. Sustaining Capital
Expenditure was again tightly controlled, this year including KCM, increasing
modestly to $67.1 million against $64.5 million in the previous year.

Tax paid was limited to $65.8 million, equivalent to 19.8% of profit before tax,
benefiting from the advantageous fiscal breaks noted earlier and tax losses
including five months of KCM ownership. After the Group's expansion projects are
commissioned it is anticipated that the cash tax rate will remain at these
levels in future years.

The main feature of the year was progress with the $2.2 billion expansion
projects with $734.6 million spent in the year bringing the total spent at 31
March 2005 to $1.03 billion, approximately 47% of the planned $2.2 billion
programme. A further $1.2 billion was outstanding at the year end of which 40%
has been committed.

The most significant acquisition expenditure in the year related to the purchase
of a 51% equity interest in KCM on 5 November 2004 for $28.2 million.

This acquisition, at a total gross cost of $49.2 million, was implemented
through a $25.0 million subscription to newly issued shares by KCM which has
been retained in the enlarged group and agreement to pay $23.2 million to ZCI, a
minority shareholder in KCM, comprising an initial payment of $2.3 million at
the date of acquisition, with the remaining $20.9 million payable in equal
instalments over four years from 31 December 2005.

Minority Interests and Simplification of Ownership

A major element of the Group's strategy at the time of Listing was to
consolidate the ownership interests in subsidiary companies where significant
minority interests were present. During the last year the Group's Economic
Interests in Sterlite, BALCO, HZL and VAL all showed significant increases as
set out below.


During the year, substantial progress has been achieved against this strategic
objective for Sterlite as shown below:

   •in April 2004, 2.4% of Sterlite's issued share capital was purchased from
    the SEWT for $21.4 million. As the SEWT is consolidated, this transaction
    had no cash impact at a consolidated level, although cash within the SEWT is
    restricted. This purchase was in addition to the acquisition of 4.98% of
    Sterlite's issued share capital from the SEWT in January 2004 for $58.0
    million; and

   •in September 2004 , the Group completed the Sterlite rights issue, which
    raised $434 million in aggregate. Of this, only $1 million was funded by
    minority shareholders with the balance of $433 million being funded by the
    Company through the investment of proceeds raised from the Listing.
    Subscribing to the rights issue in this way was a highly tax efficient
    manner of remitting funds to our projects in India, and also ensured the
    Company's Economic Interest in Sterlite increased substantially.

However, towards the end of the year, $25.8 million of Sterlite's convertible
bond issued with a face value of $50 million was converted into 2.13 million
Sterlite ordinary shares, thereby reducing debt by $25.8 million, but diluting
the Group's Economic Interest in Sterlite by 1.4%. Conversions in the period
from 31 March 2005 to 1 June 2005 were minimal at $1.5 million.

These changes resulted in the Group's Economic Interest in Sterlite increasing
by 9.1% from 1 April 2004 to 31 March 2005.

If the outstanding convertible bonds were converted into Sterlite's ordinary
shares, the conversion would result in dilution of the Group's Economic Interest
by a further 1.4%.


Progress on the exercise of the option to acquire all or substantially most of
the shares in BALCO held by the Government of India continues. The Group has
confirmed to the Government that it wishes to exercise its option and
consequently a valuation of the shares by an independent valuer, in accordance
with the shareholder agreement, is in process. Discussions with the Government
continue on the matter of offering shares not exceeding 5% of the total to the


Whilst we were unsuccessful in our attempt to acquire the 20% interest in MALCO
held by minority interests, market conditions will be continuously reviewed to
ensure our options are kept open.

Balance Sheet

Capital Employed increased in the year to $1.80 billion from $0.99 billion last
year mostly due to $734.6 million of capital expenditure incurred for the major
growth projects. For the year ended 31 March 2005, ROCE was 13.7% (2004: 16.9%)
although $1.03 billion was attributable to the major projects on which no return
was made during the year. Excluding this project capital work in progress, ROCE
increased in the year to 32.0% (2004: 24.1%).

Working capital movements have also had an upwards effect on capital employed as
did the acquisition of KCM where net assets acquired of $201.4 million was
offset in part by negative goodwill on acquisition of $56.6 million.

The balance sheet is funded by equity shareholders' funds totalling $1.05
billion (2004: $990.9 million), minority interests of $681.6 million (2004:
$423.2 million) and net debt of $74.3 million (2004: net cash of $422.3
million). It is expected that based on current investment plans net debt will
peak during the next two years after which it should decrease as the major
projects become operational.

Provision for liabilities and charges increased to $424.2 million from $162.9
million from the prior year, which is largely attributable to the KCM

Transition to International Financial Reporting Standards

All companies listed in the European Union are required to present consolidated
financial statements for accounting periods commencing from 1 January 2005 that
comply with IFRS. Vedanta's first set of IFRS-compliant results will be the
first quarter results to be announced in July 2005, followed by its interim
results for the six months ending 30 September 2005 to be announced in November
2005. Vedanta will prepare its first full year IFRS-compliant consolidated
financial statements for the year ending 31 March 2006. The IFRS transition
project is well advanced and the Group is on course to meet its reporting


                                                31 March 2005    31 March 2004
Group turnover ($ million)                            1,884.2          1,289.5
Group EBITDA ($ million)                                455.0            322.7
EBITDA margin                                            24.1%            25.0%
Group operating profit ($ million)                      331.8            237.1
Group operating profit margin                            17.6%            18.4%
Group operating profit before exceptional               353.7            250.4
items ($ million)
Group operating profit before exceptional                18.8%            19.4%
items margin
Group operating exceptional items ($ million)           (21.9)           (13.3)

Net interest ($ million)                                  3.6             (1.3)
Effective tax rate                                       29.4%            32.6%
Equity minority interests                                48.9%            54.1%
Profit for the year ($ million)                         120.0             72.3
Underlying Profit ($ million)                           137.7             76.2
Return on capital employed                               13.7%            16.9%
Average $/INR exchange rate                             44.96            45.92


Copper                                          31 March 2005    31 March 2004
Production cathode- Sterlite (MT)                     171,992          178,654
Production cathode- KCM (MT)                           67,547                -
Production copper rods (MT)                           125,406          122,713
Unit cost- Sterlite (US cents per lb)                     7.1              7.8
Unit cost- KCM (US cents per lb)                        106.2                -
Turnover ($ million)                                   1014.7            592.8
EBITDA ($ million)                                      161.2             94.1
Net assets before net (debt)/cash ($ million)           484.1            160.2

Aluminium                                       31 March 2005    31 March 2004
Production MALCO (MT)                                  35,649           32,226
Unit cost MALCO (US cents per lb)                        66.5             53.8
Production BALCO (MT)                                 100,277           96,829
Unit cost BALCO (US cents per lb)                        61.1             56.2
Turnover ($ million)                                    281.7            223.4
EBITDA combined ($ million)                              75.6             53.6
Net assets before net (debt)/cash ($ million)           752.9            353.9

Zinc                                            31 March 2005    31 March 2004
Production (MT)                                       212,445          220,664
Unit cost (US cents per lb)                              31.5             25.9
Turnover ($ million)                                    486.4            401.1
EBITDA ($ million)                                      218.8            179.3
Net assets before net (debt)/cash ($ million)           589.6            391.4


                                                                    Continuing                           Year 
                                                  Acquisition       operations         Total            ended
                                                   Year ended       Year ended    Year ended         31 March
                                                     31 March         31 March      31 March             2004
                                                         2005             2005          2005       (restated)
                                                    $ million        $ million     $ million        $ million           
Group and share of associate's turnover                 249.2          1,645.8       1,895.0          1,300.6
Less: associate's turnover                                  -            (10.8)        (10.8)           (11.1)
Group turnover                           3              249.2          1,635.0       1,884.2          1,289.5
Cost of sales                                          (161.3)        (1,253.5)     (1,414.8)          (973.9)
Gross profit                                             87.9            381.5         469.4            315.6
Selling and distribution costs                           (8.0)           (43.5)        (51.5)           (35.6)
Administration expenses                                 (27.7)           (84.3)       (112.0)           (60.1)
-normal                                                 (27.7)           (62.4)        (90.1)           (46.8)
-exceptional                                                -            (21.9)        (21.9)           (13.3)
Other operating income                                    0.5             25.4          25.9             17.2
Group operating profit                   3               52.7            279.1         331.8            237.1
Operating profit before                                  52.7            301.0         353.7            250.4
operating exceptional items
Operating exceptional items                                 -            (21.9)        (21.9)           (13.3)
Share of operating loss in associate                        -             (2.7)         (2.7)            (1.2)
Loss on disposal of fixed assets                            -             (0.4)         (0.4)            (1.2)
Profit on ordinary activities before 
interest and taxation                    3               52.7            276.0         328.7            234.7
Investment income                                                                       41.3             39.7
Interest payable and similar charges                                                   (37.7)           (41.0)
Profit on ordinary activities        
before taxation                                                                        332.3            233.4
Tax on profit on ordinary activities     4                                             (97.6)           (76.0)
Profit on ordinary activities                           
after taxation                                                                         234.7            157.4
Equity minority interests                                                             (114.7)           (85.1)
Profit for the financial year                                                          120.0             72.3
Dividends                                6                                             (48.9)           (15.8)
Retained profit for the financial year                                                  71.1             56.5
Basic earnings per share (US cents/share)
Profit for the financial year            5                                              41.9             25.3
Underlying Profit for the financial year 5                                              48.1             26.6
Diluted earnings per share (US cents/share)
Profit for the financial year            5                                              41.0             24.9
Underlying Profit for the financial year 5                                              47.2             26.2

There is no material difference between the profit on ordinary activities before
taxation and the profit for the year stated above, and their historical cost


                                                                 31 March 2004
                                                31 March 2005       (restated)
                                                    $ million        $ million
Fixed assets
Intangible assets                                       (52.6)             3.6
Positive goodwill                                        10.8             12.2
Negative goodwill                                       (63.4)            (8.6)
Tangible fixed assets                                 2,275.0          1,268.4
Investment in associate                                   3.3              2.7
Other investments                                        24.8             27.5
                                                      2,250.5          1,302.2
Current assets
Stocks                                                  336.3            199.9
Debtors                                                 464.2            245.5
Current asset investments                             1,386.0          1,188.5
Cash at bank and in hand                                 61.6             52.7
                                                      2,248.1          1,686.6
Creditors: amounts falling due within 
one year
Short-term borrowings                                  (218.4)          (295.3)
Loans                                                  (194.7)          (245.8)
Convertible bonds                                       (23.7)           (49.5)
Other current liabilities                              (723.2)          (586.5)
                                                       (941.6)          (881.8)
Net current assets                                    1,306.5            804.8
Total assets less current liabilities                 3,557.0          2,107.0
Creditors: amounts falling due after 
more than one year                                   (1,344.7)          (529.9)
Provisions for liabilities and charges                 (424.2)          (162.9)
Non equity minority interests                           (59.4)               -
Equity minority interests                              (681.6)          (423.3)
Net assets                                  3          1,047.1            990.9
Capital and reserves
Called up equity share capital                           28.7             28.6
Shares to be issued                                       0.9                -
Share premium account                                    18.6             18.6
Merger reserve                                            4.4              4.4
Other reserves                                           26.9              8.3
Profit and loss account                                 967.6            931.0
Equity shareholders' funds                 8          1,047.1            990.9


                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                         Note       $ million        $ million
Net cash inflow from operating    
activities                                  9            303.2            496.3
Returns on investments and servicing
of finance
Interest received and other income                       57.8             34.6
Interest paid                                           (64.1)           (42.0)
Dividend received from fixed asset                 
investments                                               2.8              0.8
Dividend paid to equity shareholders                    (15.8)               -
Dividend paid to minority shareholders                   (7.7)           (10.1)
                                                        (27.0)           (16.7)

Taxation                                                (65.8)           (57.5)

Capital expenditure and financial investment
Payments to acquire tangible fixed assets              (535.3)          (349.0)
Proceeds from the sale of tangible fixed assets          14.1              2.8
Purchase of fixed asset investments                         -             (9.2)
Proceeds from sale of fixed asset investments               -              1.8
                                                       (521.2)          (353.6)

Purchase of interest in subsidiary undertakings         (28.3)           (81.1)
Net cash acquired with subsidiaries                      41.2                -
Investment in associate                                  (6.2)               -
Buyback of shares from minorities                        (2.3)               -
                                                          4.4            (81.1)

Cash outflow before use of liquid resources and
financing                                              (306.4)           (12.6)

Management of liquid resources
Purchase of current asset investments                  (193.4)        (1,065.0)
                                                       (193.4)        (1,065.0)

Issue of ordinary shares (net of share issue expenses)    0.1            825.3
Repayment of share application money pending allotment      -            (26.2)
(Decrease)/Increase in short term borrowings            (96.6)           141.7
Increase in long term borrowings                        607.0            120.8

Issue of shares of subsidiary undertakings to 
minority interest                                         1.7                -
                                                        512.2          1,061.6
Increase/(decrease) in cash in the year   10             12.4            (16.0)


                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                         Note       $ million        $ million
(Decrease)/increase in cash in the year                  12.4            (16.0)
Increase in debt                                       (510.4)          (262.5)
Cash inflow from management of liquid 
resources                                               193.4          1,065.0
Increase/(decrease) in net cash 
resulting from cash flows                              (304.6)           786.5
Non-cash movements in debt                             (138.5)               -
Current asset investments, loans and            
finance leases acquired with subsidiary                 (43.6)               -
Foreign exchange differences                             (9.9)           (33.1)
(Decrease)/increase in net cash for                 
the year                                               (496.6)           753.4
Net cash/(debt) at the beginning of         
the year                                                422.3           (331.1)
Net (debt)/cash at the end of 
the year                                  10            (74.3)           422.3


                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                                    $ million       (restated)
                                                                     $ million
Profit/(loss) for the financial year
Group                                                   125.6             75.6
Associate                                                (5.6)            (3.3)
                                                        120.0             72.3
(Loss)/gain on change in minority interests in
subsidiary shareholdings                                (27.7)             3.1
Repayment of share application funds in
Sterlite Opportunities and Ventures Ltd
pending allotment                                           -            (26.2)

Foreign exchange differences on foreign
currency net investments                                 12.7             13.8
Total recognised gains relating to the year             105.0             63.0
Prior year adjustment                                     4.8
Total gains recognised since last Annual Report         109.8


1. Prior Year Adjustment

The accounting policies applied in preparing the financial information are
consistent with those adopted and disclosed in the Group's statutory accounts
for the year ended 31 March 2004, with the exception of the Group's accounting
policy in respect of employee trusts. The Group has reviewed its accounting
policy for employee trusts in light of UITF abstract 38 'Accounting for ESOP
trusts', which has been adopted for the first time this year. As required by
this abstract, own shares held by employee trusts have been reclassified from
other investments and are now recorded as a reduction in shareholders' funds.
This has the effect of increasing the Group's interest in Sterlite by virtue of
the change in treatment for the Sterlite shares held by the SEWT. This change
has been accounted for as a prior year adjustment and previously reported
figures have been restated accordingly.

The effect on the profit and loss account of adopting this policy is as follows:

                                   New treatment       treatment    Difference
Year ended 31 March 2004               $ million       $ million     $ million

Profit after tax                           157.4           157.4             -
Equity minority interests                  (85.1)          (90.8)          5.7
Profit for the financial year               72.3            66.6           5.7
Dividends                                  (15.8)          (15.8)            -
Retained profit for the
financial year                              56.5            50.8           5.7

                                   New treatment       treatment    Difference
Year ended 31 March 2005               $ million       $ million     $ million

Profit after tax                           234.7           234.7             -
Equity minority interests                 (114.7)         (119.5)          4.8
Profit for the financial year              120.0           115.2           4.8
Dividends                                  (48.9)          (48.9)            -
Retained profit for the financial year      71.1            66.3           4.8

The adoption of this policy led to an increase in the net assets of the Group of
$4.8 million at 31 March 2004 (1 April 2003: $8.4 million).

2. Basis of Preparation

The consolidated financial information for the Group has been prepared under the
historical cost convention and in accordance with applicable United Kingdom
accounting standards.

To provide information which is meaningful to the Company's shareholders, the
Directors believe that it is necessary to prepare the accounts on the basis that
the Group had existed throughout the period from 1 April 2003. The Directors
believe that this information reflects the ongoing operations of the Group more
clearly. Vedanta and VRHL's combination with the Twin Star Holdings Group has
been accounted for as a group reconstruction under the provisions of FRS 6
('Mergers and Acquisitions') and is presented as if the Company and VRHL had
been the holding company and intermediate holding company, respectively, of the
Twin Star Holdings Group for each year.

3. Segmental Analysis

(a) By Class of Business

The segmental analyses by class of business set out below include a category
called 'Other' which comprises the results and balance sheet items for Vedanta,
other holding companies within the Group and the aluminium conductor business of

All figures under the heading 'Zambia' represent the acquisition of KCM during
the year which completed on 5 November 2004.

Group turnover
                                              Year ended            Year ended
                                           31 March 2005         31 March 2004
Class of business                              $ million             $ million

Aluminium                                          281.7                 223.4
Copper                                           1,014.7                 592.8
India/Australia                                    765.5                 592.8
Zambia                                             249.2                     -
Zinc                                               486.4                 401.1
Other                                              101.4                  72.2

                                                 1,884.2               1,289.5

Group operating profit
                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
Class of business                                   $ million        $ million

Aluminium                                                57.4             35.4
Copper                                                  108.1             65.6
India/Australia                                          55.4             65.6
Zambia                                                   52.7                -
Zinc                                                    190.0            155.7
Other                                                    (1.8)            (6.3)
Group operating profit before operating
exceptional items                                       353.7            250.4

Operating exceptional items                             (21.9)           (13.3)

Group operating profit                                  331.8            237.1
Aluminium                                                57.4             22.1
Copper                                                  105.0             65.6
India/Australia                                          52.3             65.6
Zambia                                                   52.7                -
Zinc                                                    189.5            155.7
Other                                                   (20.1)            (6.3)

Earnings before interest, tax, depreciation, goodwill amortisation and
exceptional items ('EBITDA')
                                              Year ended            Year ended
                                           31 March 2005         31 March 2004
Class of business                              $ million             $ million

Aluminium                                           75.6                  53.6
Copper                                             161.2                  94.1
India/Australia                                     85.2                  94.1
Zambia                                              76.0                     -
Zinc                                               218.8                 179.3
Other                                               (0.6)                 (4.3)
Group EBITDA                                       455.0                 322.7

Goodwill amortisation                                0.4                  (0.5)
Depreciation                                      (101.7)                (71.8)
Operating exceptional items                        (21.9)                (13.3)

Group operating profit                             331.8                 237.1

                                              Year ended            Year ended
                                           31 March 2005         31 March 2004
Class of business                              $ million             $ million

Aluminium                                           18.2                  18.1
Copper                                              54.0                  28.5
India/Australia                                     29.8                  28.5
Zambia                                              24.2                     -
Zinc                                                28.8                  23.6
Other                                                0.7                   1.6

                                                   101.7                  71.8

Profit on ordinary activities before taxation
                                                  Year ended       Year ended
                                               31 March 2005    31 March 2004
Class of business                                  $ million        $ million

Aluminium                                               55.6             22.8
Copper                                                  75.3             37.9
India/Australia                                         22.6             37.9
Zambia                                                  52.7                -
Zinc                                                   197.3            163.9
Other                                                    9.7             12.1
                                                       337.9            236.7
Share of loss in associate before taxation              (5.6)            (3.3)

                                                       332.3            233.4

Net assets
                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                                    $ million       (restated)
Class of business                                                    $ million

Aluminium                                               752.9            353.9
Copper                                                  484.1            160.2
India/Australia                                         225.6            160.2
Zambia                                                  258.5                -
Zinc                                                    589.6            391.4
Other                                                    88.4             82.8
Net assets before goodwill, net (debt)/cash    
and minority interests                                1,915.0            988.3
Intangible assets                                       (52.6)             3.6
Net (debt)/cash                                         (74.3)           422.3
Non equity minority interest                            (59.4)               -
Equity minority interests                              (681.6)          (423.3)

Net assets                                            1,047.1            990.9

Other includes $138.9 million of net assets before net debt attributable to the
alumina project in VAL.

Net debt/(cash)
                                           31 March 2005         31 March 2004
Class of business                              $ million             $ million

Aluminium                                         (441.7)                (75.8)
Copper                                             127.6                (318.0)

India/Australia                                     84.7                (318.0)
Zambia                                              42.9                     -

Zinc                                                26.6                  43.9
Other                                              213.2                 772.2

                                                   (74.3)                422.3

(b) By Location

Turnover by destination
                                              Year ended            Year ended
                                           31 March 2005         31 March 2004
Location                                       $ million             $ million

Far East                                           487.1                 200.3
India                                            1,130.6                 980.9
Africa                                              19.0                     -
Other                                              247.5                 108.3

                                                 1,884.2               1,289.5

Net assets/(liabilities)
                                                31 March 2005    31 March 2004
                                                    $ million       (restated)
Location                                                             $ million

Australia                                                67.8             11.9
India                                                 1,526.2            999.7
Zambia                                                  258.5                -
Other                                                    62.5            (23.3)

Net assets before net (debt)/cash and         
minority interests                                    1,915.0            988.3

Intangible assets                                       (52.6)             3.6
Net (debt)/cash                                         (74.3)           422.3
Non equity minority interests                           (59.4)               -
Equity minority interests                              (681.6)          (423.3)
Net assets                                            1,047.1            990.9

4. Tax on Profit on Ordinary Activities

(a) Analysis of Charge for the Year

                                                31 March 2005    31 March 2004
                                                    $ million        $ million

Tax charge/(credit) for the year
UK corporation tax (2005:30%, 2004:30%)                  (0.6)             4.6
Indian corporation tax (2005:36.59%, 2004: 35.88%)       63.1             69.6
Zambian corporation tax (2005:25%)                        0.2                -
Adjustments in respect of prior years                     0.1             (4.9)
Minimum alternate tax                                     1.1              0.7
Dividend distribution tax                                 3.0                -
Current tax on exceptional items                         (1.5)            (1.2)
Total current tax                                        65.4             68.8
Deferred tax                                             32.3             11.2
Deferred tax on exceptional items                        (0.1)            (4.0)
Total deferred tax                                       32.2              7.2
Total tax charge                                         97.6             76.0

Effective tax rate                                       29.4%            32.6%

(b) Factors Affecting Current Tax Charge for the Year

                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                                    $ million        $ million

Profit on ordinary activities before taxation           332.3            233.4

Tax on profit on ordinary activites at 36.59% (2004:    121.6             83.7

Effect of timing differences:
Accelerated capital allowances                          (29.1)            (2.2)
Utilisation of tax losses                               (10.6)            (3.9)
Other short term timing differences                     (12.2)            (1.0)

Permanent differences:
Disallowable expenses                                    23.0             18.0
Non-taxable income                                       (6.5)            (0.7)
Tax holiday and similar exemptions                      (17.3)           (18.0)
Impact of tax rate differences                           (7.7)            (2.9)
Dividend distribution tax                                 3.0                -
Minimum Alternate Tax                                     1.1              0.7
Adjustments in respect of prior years                     0.1             (4.9)
Current tax charge for the year                          65.4             68.8

The majority of the Group's profits are earned and taxed in India and in Zambia.
During the period the effective tax rate has been significantly less than the
applicable Indian corporate rate of income tax. This is primarily as a result of
the significant tax exemptions (industrial undertakings and tax holidays) which
have been available to shelter profits of Sterlite and HZL from regular income
tax. The statutory tax rate in Zambia applicable to KCM is 25%, which also has a
reducing impact on the effective tax rate. A further reduction in the corporate
tax rate from the financial tax year 2005-06 has reduced the overall effective
tax rate due to its impact on deferred tax.

5. Earnings Per Ordinary Share

Earnings Per Share based on Profit for the Year

Basic earnings per share on the profit for the                      Year ended
year                                               Year ended    31 March 2004    
                                                31 March 2005       (restated)

Profit for the financial year ($ million)               120.0             72.3

Weighted average number of shares of the      
Company in issue (millions)                             286.4            286.0
Earnings per share on profit for the year                                 
(US cents per share)                                     41.9             25.3


Diluted earnings per share on the profit for                        Year ended
the year                                           Year ended    31 March 2004
                                                31 March 2005       (restated)

Profit for the financial year ($ million)               120.0             72.3
Adjustment in respect of convertible bonds in     
Sterlite                                                 (1.9)            (1.3)
Profit for the financial year after dilutive        
adjustment ($ million)                                  118.1             71.0
Weighted average number of shares in the                
Company in issue after dilutive adjustments (millions)  287.9            286.2

Diluted earnings per share on profit for the       
year (US cents per share)                                41.0             24.9

The only issues of shares during the year ended 31 March 2005 were 303,000 on 18
March 2005 and 85,000 on 31 March 2005 pursuant to the exercise of the second
tranche of awards under the Reward Plan. The issue of these shares has been used
in determining the 2005 weighted average number of shares.

Profit for the year would be diluted if holders of the convertible bonds in
Sterlite exercised their right to convert these bond holdings into Sterlite
equity. The impact on profit for the year of this conversion would be the
difference between interest payable on the convertible bond and the higher
charge attributable to minority interests if conversion was to occur.

The outstanding awards under the LTIP are reflected in the diluted EPS figure
through an increased number of weighted average shares.

Earnings Per Share based on Underlying Profit for the Year

The Group's Underlying Profit is the profit for the financial year after adding
back the operating and non-operating exceptional items and their resultant tax
and minority interest effects, as shown in the table below:

                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                                    $ million       (restated)
                                                                     $ million

Profit for the financial year                           120.0             72.3

Operating exceptional items                              21.9             13.3
Tax effect of operating exceptional items                (1.5)            (4.8)
Minority interest effect of operating                    (3.1)            (5.4)
exceptional items

Non-operating exceptional items                           0.4              1.2
Tax effect of non-operating exceptional                  (0.1)            (0.4)
Minority interest effect of non-operating           
exceptional items                                         0.1                -
Underlying Profit for the year                          137.7             76.2


Basic earnings per share on Underlying             
Profit                                             Year ended       Year ended
                                                31 March 2005    31 March 2004

Underlying Profit for the financial year            
($million)                                              137.7             76.2
Weighted average number of shares in the              
company in issue (millions)                             286.4            286.0

Earnings per share on Underlying Profit for                               
the year (US cents per share)                            48.1             26.6

Diluted earnings per share on Underlying       
Profit for the year                                Year ended       Year ended
                                                31 March 2005    31 March 2004

Underlying Profit for the financial year               
($million)                                              137.7             76.2

Adjustment in respect of convertible bond in            
respect of Sterlite                                      (1.9)            (1.3)

Underlying profit for the financial year after        
dilutive adjustments ($ million)                        135.8             74.9
Weighted average number of shares of the              
Company in issue after dilutive adjustments 
(million)                                               287.9            286.2

Diluted earnings per share on Underlying               
Profit (US cents per share)                              47.2             26.2

6. Dividends

                                                   Year ended 31 Year ended 31
                                                      March 2005    March 2004
                                                       $ million     $ million
Interim dividend (2005: 5.5 US cents per Ordinary
Share; 2004: nil)                                           15.8             -

Final dividend (2005: 11.55 US cents per Ordinary
Share; 2004: 5.5 US Cents per Ordinary Share)               33.1          15.8
                                                            48.9          15.8

7. Called up Equity Share Capital

                             31 March 2005                  31 March 2004

                         Number of        Value of      Number of        Value of 
                            shares          shares         shares          shares
                                         $ million     (restated)       $ million

Ordinary Shares of 10  
US cents each          400,000,000            40.0    400,000,000            40.0
Deferred shares of £1      
each                        50,000             0.1         50,000             0.1

                       400,050,000            40.1    400,050,000            40.1

Called up and fully paid                     
Ordinary Shares of 10  
US cents each          286,776,000            28.7    286,388,000            28.6
Deferred shares of £1    
each                        50,000               -         50,000               -

                       286,826,000            28.7    286,438,000            28.6

Shares to be issued
Ordinary Shares of 10  
US cents each            1,527,500             0.9      2,021,500               -

                         1,527,500             0.9      2,021,500               -

At general meetings, each member present or by proxy has one vote on a show of
hands, and on a poll every member who is present in person or by proxy has one
vote for every Ordinary Share.

The holders of deferred shares shall not have the right to receive notice of any
general meeting of the Company nor the right to attend, speak or vote at any
such general meeting. The deferred shares have no rights to dividends and, on a
winding-up or other return of capital entitle the holder only to the payment of
the amounts paid on such shares after repayment to the holders of Ordinary
Shares of the nominal amount paid up on the Ordinary Shares and the payment of
£100,000 per Ordinary Share. Of the 50,000 deferred shares, one deferred share
was issued at par and has been fully paid, and 49,999 deferred shares were each
paid up as to one-quarter of their nominal value.

The Reward Plan

On 26 February 2004, awards of 776,000 Ordinary Shares were granted to 43
employees pursuant to the Reward Plan. The exercise price of these awards was 10
US cents per share. The first tranche of awards vested immediately, and upon
exercise, 388,000 Ordinary Shares were issued and credited as fully paid on 31
March 2004.

The second tranche of awards vested on 26 February 2005 and upon exercise
303,000 Ordinary Shares and 85,000 Ordinary Shares were issued and credited as
fully paid on 18 March 2005 and 31 March 2005, respectively.

The full cost of the Reward Plan was $5.0 million and was recorded in the prior
year profit and loss account.

7. Called up Equity Share Capital (continued)


Initial awards under the LTIP were granted on 26 February 2004 with further
awards made on 11 June 2004 and 23 November 2004. The exercise price of the
awards is 10 US cents per share and the performance period of each award is
three years, with no re-testing being allowed. The exercise period is six months
from the date of vesting. The number of awards outstanding as at 1 April 2004
was 1,633,500. 226,000 and 120,000 awards lapsed and were awarded respectively,
during the year ended 31 March 2005 such that 1,527,500 awards were outstanding
as at 31 March 2005.

8. Consolidated Reconciliation of Movement in Equity Shareholders' Funds

                 Share capital Shares to be Share premium   Merger reserve   Other reserves Profit and loss      Total
                                     issued       account                                           account
                     $ million    $ million     $ million        $ million        $ million       $ million   $ million
Equity shareholders'   
funds at 1 April                                
2004                      28.6            -          18.6              4.4              8.3           926.2       986.1 
Prior year adjustment      
(note 1)                     -            -             -                -                -             4.8         4.8 
Equity shareholders'      
funds at 1 April
2004 (restated)           28.6            -          18.6              4.4              8.3           931.0       990.9 
Retained profit          
for the year                 -            -             -                -                -            71.1        71.1 
Transfers                    -            -             -                -             18.0           (18.0)          -

Loss on change             
in minority
interests in
shareholdings                -             -            -                -                -           (27.7)      (27.7)
Shares issued under        
the Reward Plan            0.1             -            -                -                -               -         0.1

Shares to be                
issued under LTIP            -           0.9            -                -                -            (0.9)          - 
Foreign exchange
differences                  -            -             -                -              0.6            12.1        12.7
funds at 31         
March 2005                28.7          0.9          18.6              4.4             26.9           967.6     1,047.1

As at 31 March 2005, other reserves comprise the general reserves established in
the statutory accounts of the Group's Indian subsidiaries. Under Indian law, a
general reserve is created through a year on year transfer from the profit and
loss account. The amount transferred is 5% of the profits for the year for each
Indian company as stated in Indian GAAP. 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.

9. Reconciliation of Operating Profit from to Net Cash Inflow from Operating

                                                   Year ended       Year ended
                                                31 March 2005    31 March 2004
                                                    $ million        $ million

Operating profit                                        331.8            237.1
Depreciation                                            101.7             71.8
Impairment change                                        17.8                -
Goodwill amortisation                                    (0.4)             0.5
Increase in stocks                                      (61.0)           (16.1)
Increase in debtors                                     (79.1)           (77.2)
Decrease in provisions                                   (5.1)               -
(Decrease)/increase in creditors                        (35.0)           263.1
Increase/(decrease) in other long term creditors         22.0             (6.6)
Other non cash items                                     10.5             23.7

Net cash inflow from operating activities               303.2            496.3

Net cash inflow from operating activities is stated after cash outflows relating
to operating exceptional items of $4.1 million in the year ended 31 March 2005
and $13.3 million in the year ended 31 March 2004 relating to VRS expenses.

10. Analysis of Net (Debt)/Cash

             At 1 April 2004   Cash flow  Acquisition and       Other       Foreign  At 31 March
                                                disposals                  exchange         2005
                                           excluding cash               differences
                                            and overdraft
                  $ million    $ million        $ million   $ million      $ million   $ million

Cash at bank
and in hand            52.7         12.4                -           -           (3.5)       61.6

Debt due within
one year             (295.3)        96.6             (6.8)      (17.2)           4.3      (218.4)

Debt due after
one year             (523.6)      (607.0)           (47.0)     (121.3)          (4.6)   (1,303.5)
                     (766.2)      (498.0)           (53.8)     (138.5)          (3.8)   (1,460.3)

Current asset
investments         1,188.5        193.4             10.2           -           (6.1)    1,386.0

Net cash/(debt)       422.3       (304.6)           (43.6)     (138.5)          (9.9)      (74.3)

11. Announcement based on Audited Accounts

The financial information set out herein does not constitute the Company's
statutory accounts for the years ended 31 March 2005 or 2004 but is derived from
these accounts. The statutory accounts for the year ended 31 March 2004 have
been delivered to the Registrar of Companies and those for 2005 will be
delivered following the Company's AGM. The auditors have reported on those
accounts and their reports were unqualified and did not contain statements under
Sections 237(2) or (3) Companies Act 1985.

12. Glossary and Definitions

Aluminium Business

The aluminium business of the Group comprising its fully integrated bauxite
mining, alumina refining and aluminium smelting in India


The Annual General Meeting of the Company which is scheduled to be held on
Wednesday 3 August 2005 at 3.00 pm at the City Presentation Centre, 4 Chiswell
Street, London EC1Y 4UP

Attributable Profit

Profit for the financial period/year before dividends to the shareholders of
Vedanta Resources plc


Bharat Aluminium Company Limited, a company incorporated in India


The board of directors of the Company


The Aluminium Business, the Copper Business and the Zinc Business together

Capital Employed

Net assets before net cash/(debt) and equity minority interests

Cash Tax Rate

Current taxation as a percentage of profit on ordinary activities before


Copper Mines of Tasmania Pty Ltd, a company incorporated in Australia

Company or Vedanta

Vedanta Resources plc

Copper Business

The copper business of the Group comprising a copper smelter, a refinery and two
copper rod plants in India, two copper mines in Australia and an integrated
operation in Zambia consisting of three mines, a leaching plant and a smelter.


Corporate social responsibility

Dollar or $

United States Dollars, the currency of the United States of America


Profit before interest, taxation, depreciation, goodwill amortisation and
exceptional items (see note 3)


EBIDTA as a percentage of turnover

Effective Holding and Economic Interest

The Group's Economic Interest in operating companies is different from its
Effective Holdings as a consequence of the Sterlite shares owned by the SEWT.
The Effective Holdings are derived by combining the Group's direct and indirect
shareholdings in the operating companies. The SEWT is treated as an ESOP trust,
its shares held in Sterlite are recorded as a reduction in shareholders' funds,
as if the shares were cancelled. This has the effect of the Group's Economic
Interest being higher compared to its Effective Holdings. The Group's Economic
Interest is the basis on which the Attributable Profit and net assets are
determined in the consolidated accounts.


Earnings per share

Expansion Capital Expenditure

Capital expenditure that increases the Group's operating capicity

Free Cash Flow

Cash flow arising from EBITDA after net interest, taxation, Sustaining Capital
Expenditure and working capital movements


Generally Accepted Accounting Principles


Net debt as a percentage of Capital Employed


The Government of the Republic of India


The Company and its subsidiary undertakings and, where appropriate, its
associated undertaking


Health, safety and environment


Hindustan Zinc Limited, a company incorporated in India


International Financial Reporting Standards


Konkola Copper Mines PLC, a company incorporated in Zambia


The Listing of the Company's Ordinary Shares on the London Stock Exchange on 10
December 2003


London Metal Exchange


The Vedanta Resources Long Term Incentive Plan


The Madras Aluminium Company Limited, a company incorporated in India


Metric Tonnes


Million tonnes per annum


Megawatts of electrical power

Non-executive directors

The non-executive directors of the Company

Ordinary Shares

Ordinary shares of $0.10 each in the Company

Return on Capital Employed or ROCE

Profit before interest, taxation, exceptional items, tax effected at the Group's
effective tax rate as a percentage of Capital Employed

Reward Plan

The Vedanta Resources Share Reward Plan


The Sterlite Employee Welfare Trust, a long term investment plan for Sterlite
senior management


Sterlite Industries (India) Limited, a company incorporated in India

Sustaining Capital Expenditure

Capital expenditure to maintain the Group's operating capacity


Treatment charge/refining charge being the terms used to set the smelting and
refining costs


Thalanga Copper Mines Pty Limited, a company incorporated in Australia


Metric tonnes per annum

Twin Star Holdings Group

Twin Star and its subsidiaries and associated undertaking

Underlying Profit

Profit for the year after adding back exceptional items and their resultant tax
and minority interest effects


Vedanta Alumina Limited, a company incorporated in India


Vedanta Resources Holdings Limited, a company incorporated in the United Kingdom


Zambia Copper Investments Limited, a company incorporated in Bermuda

Zinc Business

The zinc-lead business of the Group comprising its fully integrated zinc-lead
mining and smelting operations in India

-ends -

For further information, please contact:

John Smelt, Head of Investor Relations
Peter Sydney-Smith, Finance Director
Vedanta Resources plc                             Tel: +44 20 7499 5900

Faeth Birch

Robin Walker
Finsbury                                          Tel:  +44 20 7251 3801

                      This information is provided by RNS
            The company news service from the London Stock Exchange