NOTES

forming part of the financial statements as at and for the year ended March 31, 2016

1 Company overview :

Vedanta Limited [formerly known as Sesa Sterlite Limited] ("Vedanta" or " the Company") is engaged in the business of iron ore mining, non-ferrous metals (copper and aluminium production) and commercial power generation. Vedanta's equity shares are listed on National Stock Exchange and Bombay Stock Exchange in India and its American depository shares (''ADS") are listed on New York Stock Exchange in United States of America. Each ADS rebrsents four equity shares. Vedanta is majority-owned and controlled subsidiary of Vedanta Resources Plc, the London listed diversified natural resource company.

The Company's iron ore business (Iron ore) consist of iron ore exploration, mining, beneficiation and exports. Vedanta has iron ore mining operations in the States of Goa and Karnataka. Vedanta is also in the business of manufacturing pig iron and metallurgical coke.

The Company's copper business (Copper India) principally consists of custom smelting and includes a copper smelter, a refinery, a phosphoric acid plant and power plants at Tuticorin, Tamilnadu and a refinery and two copper rod plants at Silvassa in the Union Territory of Dadra and Nagar Haveli.

The Company's power business (Jharsuguda 2,400 MW power plant) comprise of 2,400 MW (four units of 600 MW each) thermal coal based power facility in the State of Odisha.

The Company's aluminium business (Jharsuguda aluminium) principally consists of production of 1.0 mtpa alumina at Lanjigarh, Odisha, production of 0.5 mtpa aluminium at Jharsuguda, Odisha and captive power plants situated at Jharsuguda & Lanjigarh. The Company is also setting up a 1.25 mtpa aluminium smelter at Jharsuguda, 4.0 mtpa of alumina refinery at Lanjigarh and 210 MW power plant at Lanjigarh.

During the brvious year, pursuant to the approval of the members of the Company and the receipt of fresh certificate of incorporation from the Ministry of Corporate Affairs dated April 21, 2015, name of the Company has been changed to Vedanta Limited.

2 Statement of significant accounting policies :

(a) Basis of brparation

The financial statements of the Company have been brpared on an accrual basis under historical cost convention except for certain fixed assets carried at revalued amounts, and in accordance with Generally Accepted Accounting Principles in India ('Indian

GAAP') to comply with the Accounting Standards brscribed under Section 133 of the Companies Act, 2013, and the relevant provisions of the Companies Act 2013 ("the 2013 Act"), as applicable. The accounting policies adopted in the brsentation of the financial statements are consistent with those followed in the brvious year except for change in the accounting policy on revaluation of certain fixed assets as described in note no. 12(g)(i).

(b) Use of estimates

The brparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities (including contingent liabilities) on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialise.

(c) Inventories

Inventories are stated at the lower of cost and net realisable value, less any provision for obsolescence. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on the following basis:

(i) purchased copper concentrate is recorded at cost on a First In First Out ("FIFO") basis; all other raw materials including stores and spares are valued on a weighted average basis,

(ii) finished products and work-in-progress are valued at raw material cost plus costs of conversion, comprising labour costs and an attributable proportion of manufacturing overheads based on normal levels of activity and are moved out of inventory on a weighted average basis except in case of copper finished products and work-in-progress which is determined on FIFO basis;

(iii) Immaterial by-products and scrap are valued at net realisable value.

Net realisable value is determined based on estimated selling price, less further costs expected to be incurred to completion and disposal.

(d) Debrciation and amortization

Debrciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Debrciation on tangible fixed assets has been provided on straight line method (SLM) as per the useful life brscribed in Schedule II to the Companies Act, 2013 except that:

(i) Mining leases are amortised in proportion to actual quantity of ore extracted there from.

(ii) Amounts paid as stamp duties and other statutory levies for renewal of owned mining leases are amortised over the operating period of lease.

(iii) Individual items of assets costing upto Rs.5,000 are fully debrciated in the year of acquisition.

(iv) Additions on account of insurance spares, additions/extensions forming an integral part of existing plants and the revised carrying amount of the assets identified as impaired, are debrciated over residual life of the respective fixed assets.

(v) Lease hold lands and buildings are amortised over the duration of lease.

(vi) Railway wagons procured under Wagon Investment Scheme (WIS) are debrciated at the rate of 10% per annum on straight line method basis.

In respect of Plant and equipment and certain assets, the life of the assets have been assessed based on management's assessment of independent technical evaluation/ advice, taking into account, inter-alia, the nature of the assets, the estimated usage of the assets, the operating condition of the assets, past history of replacement and maintenance support.

Intangible assets are amortised over their estimated useful life. Software is amortised on straight line method over the useful life of the asset or 5 years whichever is shorter. Amounts paid for securing mining rights are amortised over the period of the mining lease. The estimated useful life of the intangible assets and the  amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.

(e) Revenue recognition

(i) Sale of goods :

Revenue is recognised when significant risks and rewards of ownership of the goods sold are transferred to the customer and the commodity has been delivered to the shipping agent/ customer and it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations comprises of sale of goods, services, scrap, export incentives and includes excise duty and are net of sales tax/ value added tax and rebates and discounts.

Revenue from sale of power is recognised when delivered and measured based on rates as per bilateral contractual agreements with buyers / at rate arrived at based on the principles laid down under the relevant Tariff Regulations as notified by the regulatory bodies, as applicable.

(ii) Export incentives:

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

(iii) Income from services:

Revenue in respect of contracts for services is recognised when the services are rendered and related costs are incurred.

(iv) Other income:

- Interest income is recognised on a time proportion basis by reference to the principal outstanding and at the interest rate applicable.

- Dividend income is recognised when the right to receive dividend is established.

(f) Import of copper concentrate and sale of copper and slime

In accordance with the brvailing international market practice, purchase of copper concentrate and sale of copper and slime are accounted for on provisional invoice basis pending final invoice in terms of purchase contract / sales contract respectively. The cases where quotational period prices are not finalised as at the year end are restated at forward LME / LBMA rates as at the year end and adjustments are made based on the metal contents as per laboratory assessments done by the Company pending final invoice.

g) Tangible fixed assets

Fixed assets except for freehold land and plant and equipment are carried at historical cost (net of MODVAT / CENVAT / VAT) less accumulated debrciation / amortization and impairment losses, if any. Costs include non refundable taxes and duties, borrowing costs and other expenses incidental to the acquisition and installation upto the date the asset is ready for intended use.

The Company revalued all its 'freehold land' and 'plant and equipment' that existed on April 1, 2015. The revalued assets are carried at the revalued amounts less accumulated debrciation and impairment losses, if any. Increase in the net book value on such revaluation is credited to 'Revaluation reserve' except to the extent such increase is related to and not greater than a decrease arising from a revaluation / impairment that was brviously recognised in the Statement of Profit and Loss, in which case such amount is credited to the Statement of Profit and Loss. Decrease in book value on revaluation is charged to the Statement of Profit and Loss except where such decrease relates to a brviously recognised increase that was credited to the Revaluation reserve, in which case the decrease is charged to the Revaluation reserve to the extent the reserve has not been subsequently reversed / utilised.

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost less impairment losses if any. Cost comprises direct cost, related incidental expenses and attributable interest till the commissioning of the project.

The Company has adopted para 46/46A of AS 11-The Effects of Changes in Foreign Exchange Rates and accordingly the cost of acquisition is adjusted for exchange differences relating to long-term foreign currency monetary liabilities attributable to the acquisition of fixed assets and the adjusted cost of respective fixed assets are debrciated over the remaining useful life of such assets.

The Company's mining leases having ore reserves are not valued, however, amounts paid to government authorities towards renewal of owned mining leases are capitalised as a part of mining rights.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately under "Other current assets"

Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and debrciated over the useful life of the principal item of the relevant assets.

Expenditure during construction period :

All costs attributable to the construction of project or incurred in relation to the project under construction, net of income, during the construction / br-production period, are aggregated under expenditure during construction period to be allocated to individual identified assets on completion.

(h) Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses. The cost of intangible assets comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates.

(i) Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets upto the date when such assets are ready for their intended use. Other borrowing costs are charged as expense in the year in which they are incurred. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during the extended periods when active development on the qualifying assets is interrupted.

(j) Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate brvailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Foreign currency monetary items outstanding at the balance sheet date are restated at year end rates. In case of monetary items which are hedged by derivative instruments, the valuation is done in accordance with accounting policy (n) on "Derivative instruments".

Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss except that in respect of long term foreign currency monetary items relatable to acquisition of debrciable fixed assets, such difference is adjusted to the carrying cost of the debrciable fixed assets. In respect of other long term foreign currency monetary items, the same is transferred to "Foreign Currency Monetary Translation Difference Account" and amortised over the balance period of such long term foreign currency monetary items but not beyond March 31, 2020.

Non monetary foreign currency items are carried at cost.

(k) Employee benefits

(i) Short-term :

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

(ii) Long-term:

(a) Provident fund and family pension:

The employees of the Company are entitled to receive benefits in the form of provident fund and family pension, a defined benefit plan and a defined contribution plan, in which both employees and the Company make monthly/ annual contributions equal to specified percentage of employee's salary. The contributions, as specified under law, are made to the provident fund set up as irrevocable trust by the Company or to respective Regional Provident Fund commissioner. The Company is liable for monthly/ annual contributions and shortfall, if any, in the fund assets based on the specified rates of return. Such contributions and shortfall, if any is recognised as expenses in the year incurred.

(b) Superannuation/ Annuity fund:

The Company provides for a superannuation/ annuity fund, a defined contribution plan, for certain categories of employees. The contributions are made annually at a br-determined proportion of employee's salary to insurance companies which administer the fund. The Company recognises such contributions as expense over the period of services rendered.

(c) Gratuity:

The Company accounts for the net brsent value of its obligations for gratuity benefits, a defined benefit plan, based on an independent actuarial valuation carried out at each Balance Sheet date using the projected unit credit method. Annual contributions are made by the Company to gratuity funds established as trusts or managed by insurance companies. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

(l) Investments

(i) Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of investments.

(ii) Current investments are carried individually, at lower of cost and fair value.

Cost of investments include acquisition charges such as brokerage, fees and duties.

(m) Issue expenses

Expenses of debenture / bond / floating rate note issued are charged to Statement of Profit and Loss over the tenor of the instrument. Expenses related to equity and equity related instruments are adjusted against the securities brmium account.

(n) Derivative instruments

The Company enters into forwards, options, swaps contract and other derivative financial instruments, in order to hedge its exposure to foreign exchange, interest rate and commodity price risks. The Company neither holds nor issues any derivative financial instruments for speculative purposes.

The brmium and discount arising at inception of forward contracts is amortised as expense or income over the life of the contract.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. The hedged item is recorded at fair value. Gain or loss if any, is recorded in the Statement of Profit and Loss and is offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and are determined to be an effective hedge are recorded in hedging reserve account. Any cumulative gain  or loss on the hedging instrument recognised in hedging reserve is retained in hedging reserve until the forecast transaction occurs. Amounts deferred to hedging reserve are recycled in the Statement of Profit and Loss in the periods when the hedged item is recognised in the Statement of Profit and Loss or when the portion of the gain or loss is determined to be an ineffective hedge.

If a hedge of a forecast transaction subsequently results in the recognition of a non-financial assets or a non-financial liability, or a forecast transaction for a non-financial asset or non-financial liability becomes a firm commitment for which cash flow hedge accounting is applied, the associated gains and losses that were recognized in hedging reserve are included in the initial cost or other carrying amount of the asset and liability.

Derivative financial instruments that do not qualify for hedge accounting and are outstanding at the balance sheet date are marked to market and gains or losses are recognised in the Statement of Profit and Loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in hedging reserve is transferred to Statement of Profit and Loss for the year.

(o) Taxation

Tax expenses for the year, comprising of current and deferred tax are included in the determination of net profit or loss of the year. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the brvailing tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset, if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date.

Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation, carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.

(p) Impairment of assets

The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment, if any indication of impairment exists

If the carrying amount of the assets exceed the estimated recoverable amount, impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the revalued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.

The recoverable amount is the greater of the net selling price and their value in use. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal. Net selling price is determined as the brsent value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal, using assumptions that an independent market participant may take into account. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor.

When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was brviously charged to the Statement of Profit and Loss. In case of revalued

assets such reversal is treated as revaluation increase and credited directly to equity under the heading "Revaluation Reserve" unless it reverses the impairment loss brviously recognized as an expense in the statement of profit and loss.

(q) Provisions, contingent liabilities and contingent assets

A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(r) Segment reporting

The Company identifies primary segments based on the nature of risks and returns, the organization structure and the internal reporting system. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Board of Directors in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment results, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relates to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / results / assets liabilities"

(s) Cash flow statement

Cash flows are reported using indirect method as set out in Accounting Standard (AS) -3 "Cash Flow Statement", whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

Cash and cash equivalents

Cash comprises cash at bank and in hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

(t) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss after tax (including the post tax effect of extraordinary items, if any) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss after tax (including the post tax effect of extraordinary items, if any) for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, if any.

(u) Operating cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

F. Other disclosures

(1) The Company has one class of equity shares having a par value of Rs. 1 per share. Each shareholder is eligible for one vote per share held and dividend as and when declared by the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend which is paid as and when declared by the Board of Directors. In the event of  liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all brferential amounts, in proportion to their shareholding.

(2) ADS shareholders do not have right to attend General meetings in person and also do not have right to vote. They are rebrsented by depository, CITI Bank N.A. New York. As on March 31, 2016,

Terms and conditions of Long-term borrowings

Secured

a) Redeemable Non Convertible Debentures (NCD's) includes ;

(i) 9.10% NCDs issued by the Company for an aggregate amount of <: 2,500.00 Crore. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Tuticorin in the State of Tamilnadu and also by way of first ranking pari passu charge over the tangible and intangible movable fixed assets, both brsent and future of Jharsuguda 2,400 MW power plant with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenor of the NCDs. These NCDs are redeemable on April 5, 2023. The debenture holders of these NCDs and the Company have put and call option at the end of the 5 years from the respective date of the allotment of the NCDs.

(ii) NCDs issued by the Company for an aggregate amount of <: 2,000.00 Crore. Out of these, <: 1,000.00 Crore NCDs are issued at a coupon rate of 9.40% per annum, while another <: 1,000.00 Crore NCDs are issued at a coupon rate of 9.24% per annum. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Sanaswadi in the State of Maharashtra and also by way of hypothecation on the movable fixed assets of Jharsuguda 2,400 MW Power plant with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the currency of NCDs. These NCDs are redeemable in tranches of <: 500.00 Crore each on December 20, 2022, December 6, 2022, November 27, 2022 and October 25, 2022. In respect of all the four tranches of NCDs, the debenture holders and the Company have put and call option respectively at the end of the 5 years from the respective date of the allotment of the NCDs.

(iii) NCDs issued by the Company of <: 1,200.00 Crore in two tranches of <: 750.00 Crore and <: 450.00 Crore, with an interest rate of 9.17% per annum. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Tuticorin in the State of Tamilnadu and also by way of first pari passu charge over the movable fixed assets of Lanjigarh refinery expansion project including 210 MW power plant project, with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenor of the NCD. These NCDs are redeemable on July 4, 2023 for <: 750.00 Crore and on July 5, 2023 for <: 450.00 Crore. The debenture holders of these NCDs and the Company have put and call option at the end of the 5 years from the respective date of the allotment of the NCDs.

(iv) 9.36% NCDs of <: 1,500.00 Crore issued by Iron ore division in two tranches of <: 975.00 Crore and  <: 525.00 Crore. These NCDs are redeemable in two instalments of <: 975.00 Crore and <: 525.00 Crore payable on October 30, 2017 and December 30, 2017 respectively. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Tuticorin in the State of Tamilnadu and also by way of first ranking pari passu charge over "movable fixed assets" in relation to the Company's Iron Ore business (Pig Iron and Met Coke assets) and Power Plant assets located in Goa and the Copper plant assets located at Tuticorin with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenor of the NCDs.

(v) 9.70% NCDs of <: 2,000.00 Crore issued by Aluminium division during the current year. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Tuticorin in the State of Tamilnadu and also by way of first ranking pari passu charge over the tangible  and intangible movable fixed assets of Aluminium division, with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenor of the NCDs. These NCDs are redeemable on August 17, 2020.

b) Term loans from banks includes :

(i) Loan from a bank taken by Aluminium division during the current year amounting to Rs.  1,250.00 Crore. The loan is secured by aggregate of the net fixed assets of Aluminium division and the Lanjigarh expansion project reduced by the outstanding amount of other borrowings having first pari passu charge on the fixed assets of Aluminium Division and the Lanjigarh expansion project. The loan is repayable from FY 2017-18, as Rs.  12.50 Crore in March 2018, Rs.  50.00 Crore within FY 2018-19,

Rs. 62.50 Crore, each in FY 2019-20 and FY 2020-21 and Rs.  1,062.50 Crore after FY 2020-21.

(ii) Loan from a bank taken by Aluminium division amounting to Rs.  4,750.00 Crore [including current maturity of long term borrowings Rs.  250.00 Crore (Refer note no. 10)]. The loan is secured by (i) first pari passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs.  250.00 Crore within one year,

Rs.  250.00 Crore within second year, Rs.  500.00 Crore within third year, and Rs.  1,250.00 Crore each within fourth to sixth year.

(iii) Loan from a bank taken by Aluminium division amounting to Rs. 995.00 Crore [including current maturity of long term borrowings Rs. 20.00 Crore (Refer note no. 10)]. The loan is secured by (i) first pari passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired

for the Aluminium division. The loan is repayable as Rs.  20.00 Crore within one year, Rs.  25.00 Crore within second year, and Rs.  40.00 Crore each in third and fourth year and balance Rs.  870.00 Crore in eleven various installments from fifth to fifteenth year.

(iv) Loan from a bank amounting to Rs.  497.50 Crore [including current maturity of long term borrowings

Rs.  10.00 Crore (Refer note no. 10)] taken by Aluminium division. The loan is secured by (i) first pari passu

charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs.  10.00 Crore within one year, Rs.  12.50 Crore within second year and Rs.  20.00 Crore each within third and fourth year and balance Rs.  435.00 Crore in eleven various installments from fifth to fifteenth year.

(v) Loan from a bank of Rs. 199.00 Crore [including current maturity of long term borrowings Rs.  4.00 Crore (Refer note no. 10)] taken by Aluminium division. The loan is secured by (i) first pari passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division and (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired

for the Aluminium division. The loan is repayable as Rs. 4.00 Crore within one year, Rs.  5.00 Crore within second year and Rs.  8.00 Crore each within third and fourth year and balance Rs.  174.00 Crore in eleven various installments from fifth to fifteenth year.

(vi) Loan from a bank of Rs.  298.50 Crore [including current maturity of long term borrowings Rs.  6.00 Crore (Refer note no. 10)] taken by Aluminium division. The loan is secured by (i) first pari passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable

as Rs.  6.00 Crore within one year, Rs.  7.50 Crore within second year and Rs.  12.00 Crore each within third and fourth year and balance Rs.  261.00 Crore in eleven various installments from fifth to fifteenth year.

(vii) Loan of Rs.  912.25 Crore taken by Aluminium division from a bank [including current maturity of long term borrowings Rs.  143.50 Crore (Refer note no. 10)]. The loan is secured by (i) first pari passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs.  143.50 Crore in FY 2016-17, Rs.  184.50 Crore in FY 2017-18 and  Rs.  246.00 Crore each in FY 2018-19 and FY 2019-20 and balance Rs.  92.25 Crore in FY 2020-21.

(viii) Loan from a bank taken by Aluminium division amounting to Rs. 885.00 Crore [including current maturity of long-term borrowings Rs. 140.00 Crore (Refer note no 10)]. The loan is secured by (i) first pan passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as

Rs. 140.00 Crore within one year, Rs. 180.00 Crore within second year, Rs. 240.00 Crore each within third and fourth year and Rs. 85.00 Crore within fifth year.

(ix) Loan from a bank taken by Aluminium division amounting to Rs. 1,705.00 Crore [including current maturity of long-term borrowings Rs. 280.00 Crore (Refer note no 10)]. The loan is secured by (i) first pan passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 280.00 Crore within one year, Rs. 360.00 Crore within second year, Rs. 480.00 Crore each within third and fourth year and Rs. 105.00 Crore within fifth year.

(x) Loan from a bank taken by Aluminium division amounting to Rs. 1,780.00 Crore [including current maturity of long-term borrowings Rs. 280.00 Crore (Refer note no 10)]. The loan is secured by (i) first pari passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 280.00 Crore within one year, Rs. 360.00 Crore within second year, Rs. 480.00 Crore each within third and fourth year and Rs. 180.00 Crore within fifth year.

(xi) Loan from a bank taken by Aluminium division amounting to Rs. 445.00 Crore [including current maturity of long-term borrowings Rs. 70.00 Crore (Refer note no 10)]. The loan is secured by (i) first pan passu charge by way of hypothecation of all brsent and future movable fixed asset of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed asset (including  leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 70.00 Crore within one year, Rs. 90.00 Crore within second year, Rs. 120.00 Crore each within third and fourth year and Rs. 45.00 Crore within fifth year.

(xii) Loan of Rs. 687.50 Crore [including Rs. 250.00 Crore of current maturity of long-term borrowings (Refer note no 10)] taken during the year by Jharsuguda 2,400 MW power plant. The loan is secured by way of second pari passu charge on specific fixed assets of Jharsuguda 2,400 MW power plant except agricultural land. The loan is repayable in eleven equal quarterly installments of Rs. 62.50 Crore each.

(xiii) Loan of Rs. 445.00 Crore [including Rs.70.00 Crore of current maturity of long-term borrowings (Refer note no. 10)] taken during the year by Iron ore division. The loan is secured by (i) first pari passu charge by way  of hypothecation of all brsent and future movable fixed assets of Aluminium division (ii) first pari passu charge by way of mortgage on all brsent and future immovable fixed assets (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable in equal quarterly installments of Rs. 17.50 Crore in FY 2016-17, Rs. 22.50 Crore in FY 2017-18, Rs. 30.00 Crore each in FY 2018­19 and FY 2019-20, and balance Rs. 45.00 Crore in 3 installments of Rs. 15.00 Crore each in FY 2020-21.

Interest rate on the above term loans ranges from 9.50% to 9.85%.

c) Foreign currency loans from banks includes :

External Commercial Borrowings ("ECB") of Aluminium division aggregating Rs. 1,990.00 Crore (US$ 300.00 million) [including current maturity of long-term borrowings Rs. 1,326.66 Crore (Refer note no. 10)] at an interest rate of LIBOR plus 170 basis points. The ECB is repayable in two annual instalments on April 21, 2016 for US$ 200 million and on April 21, 2017 for US$ 100 million. The ECB is secured by all brsent and future movable asset including its movable plant and machinery, equipment, machinery, spare tools and accessories and other moveable whether installed or not and all replacements thereof and additions thereof whether by way of substitution, addition, replacement, conversion or otherwise howsoever together with all benefits, rights and incidental attached thereto which are now owned or to be owned in the future by the borrower.

1 Amalgamation schemes

a) The Board of Directors of the Company at their meeting held on June 14, 2015 had approved the Scheme of Arrangement with effect from April 1, 2015 or such date as may be approved by the High Court (the "Scheme") between the Company and Cairn India Limited and their respective shareholders and creditors, subject to regulatory and other approvals. On September 10, 2015, BSE Limited and the National Stock Exchange of

India Limited has issued the 'No adverse observation' letter to the Scheme. The Company will approach the High Court for fixing the date of shareholders and creditors meeting in due course.

The Board of Directors in its meeting held on April 29, 2014, had approved the merger of Goa Energy Limited and Sterlite Infra Limited with the Company with effect from the appointed date of April 1, 2014. The Schemes of Amalgamation amongst Goa Energy Limited (GEL), Sterlite Infra Limited (SIL) (fully

owned subsidiary companies) and Vedanta Limited were sanctioned by the High Court of Judicature of Bombay at Goa vide its order dated March 12, 2015 and High Court of Madras vide its order dated March 25, 2015 respectively. The Schemes became effective from March 24, 2015 for Vedanta and GEL and from April 8, 2015 for Vedanta and SIL, being the date of filing the respective orders with the Registrar of Companies. The above Schemes were given effect to in the financial statements for the year ended March 31, 2015.

2 Employee benefits

The obligation for short term compensated absences is recognised on an undiscounted basis for the portion of accumulated leave which an employee can encash.

The provident fund of the Iron Ore division is exempted under section 17 of Employees Provident Fund Act, 1952. Conditions for grant of exemption stipulates that the employer shall make good deficiency, if any, between the return guaranteed by the statute and actual earning of the Fund. Based on the Guidance Note from The Institute of Actuaries- Valuation of Interest Guarantees on Exempt Provident Funds under AS 15 (Revised 2005)- for actuarially ascertaining such interest liability, there is no interest shortfall that is required to be met by the Company as of March 31, 2016. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeble future.

Defined benefit plan:

The disclosures regarding the Company's gratuity plan (funded) is as follows:

The employees' gratuity fund scheme (a defined benefit plan) is managed by Life Insurance Corporation of India (LIC) and ICICI Prudential Life Insurance Company Limited. The brsent value of obligation is determined based on actuarial valuation using projected unit credit method, which recognize each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation

3 The Scheme of Amalgamation and Arrangement amongst Sterlite Energy Limited ('SEL'), Sterlite Industries (India) Limited ('Sterlite'), Vedanta Aluminium Limited ('VAL'), Ekaterina Limited ('Ekaterina'), Madras Aluminium Company Limited ('Malco') and the Company (the "Scheme") had been sanctioned by the Honorable High Court of Madras and the Honorable High Court of Judicature of Bombay at Goa. The Scheme had been given effect to in the year ended March 31, 2014.

Subsequent to, the effectiveness of the Scheme, the Commissioner of income tax, Goa and the Ministry of Corporate Affairs have challenged the order of the High Court of Judicature of Bombay at Goa by way of a Special Leave Petition before the Subrme Court. Further, a creditor and a shareholder have challenged the order of the High Court of Madras. The said petitions are pending for hearing and admission

4 a) Lanjigarh project

The Company has signed a Memorandum of Understanding (MoU) with the Government of Odisha for the supply of bauxite for the alumina plant at Lanjigarh. The Company has also entered into a separate MOU and Joint Venture (JV) Agreement with Orissa Mining Corporation (OMC) for supply of bauxite. During the year, OMC has, by a separate action, terminated the JV Agreement for which the Company is pursuing the appropriate course of action.

The Company is brsently sourcing bauxite from alternate sources including imports. The Company is also looking at bauxite mines which may come up for auction and at other alternatives.

b) Expansion of Alumina Refinery

During the year, the Company has received the necessary approvals for expansion of the Lanjigarh refinery to 4 million tonnes per annum (MTPA). Approval for expansion from 4 MTPA to 6 MTPA is dependent upon certain conditions. Accordingly, second stream operation has commenced in Alumina refinery from April 2016 thus, taking it to the debottlenecked capacity of 1.7 - 2.0 MTPA (contingent on bauxite quality). Further ramp up to 4 MTPA will be considered after tying up the local bauxite sources.

5 The Company had entered into an EPC contract with SEPCO Electric Power Construction Corporation (SEPCO) for setting up 1,980 MW Independent Power Plant at Talwandi, Punjab. The said contract has been novated in the name of Talwandi Sabo Power Limited (TSPL) by virtue of a novation agreement dated November 17, 2009 between the Company, TSPL and SEPCO and all rights and obligations of the Company have been assigned to TSPL by virtue of the novation  agreement. The Company has guaranteed to SEPCO to discharge TSPL's obligation, including right of recourse to the Company under the guarantee, in case of failure of TSPL to perform its obligations under the EPC contract.

6 The Company has subscribed to the memorandum of association of M/s Rampia Coal Mines and Energy Private Limited, a joint venture company incorporated in India under the Companies Act for the purpose of development of coal block. The Company had invested in 2.43 Crore equity shares of <: 1 each amounting to Rs. 2.43 Crore rebrsenting 17.39% of the total equity shares. During the brvious year provision of Rs. 2.43 Crore was recognised in respect of such investment due to cancellation of coal blocks by the Subrme Court of India.

7 Goa mining:

a) The Honourable Subrme Court (Subrme Court) vide its judgment dated April 21, 2014 had lifted the ban on mining in the State of Goa, subject to certain conditions. It has also directed that out of the sale proceeds of the e-auction of excavated ore, leaseholders to be paid average cost of excavation of iron ore as determined by the State Government, and the balance amounts are to be allocated amongst various affected stakeholders and unallocated amounts to be appropriated by the State Government. In pursuance of the said judgement, the State Government of Goa has on October 1, 2014 announced the Goa Grant of Mining Leases Policy, 2014 and has renewed the mining leases. The Government of Goa has vide its order dated January 15, 2015 revoked its earlier order on temporary suspension of mining operations in the State of Goa. The Company has obtained consent to operate from Goa State Pollution Control Board and mining plan approvals from Indian Bureau of Mines for all its leases. Accordingly, the Company has commenced mining operations in Goa.

In view of the Subrme Court judgment designating the State Government as owners of the ore and mine lessees entitled to reimbursement of the average cost of excavation and based on rules framed for auction of such ore, during the brvious year inventories of carrying value of Rs. 295.25 Crore had been reclassified from 'Inventories' to "Claims and other receivables" under the head "Short term loans and advances" as at March 31, 2015.

b) Pursuant to the judgment of the Subrme Court dated April 21, 2014, in determining the average cost of excavation as referred above, the Directorate of Mines and Geology (DMG) of the State of Goa has on September 2, 2015, notified Rs. 250 per ton (aggregating Rs. 44.53 Crore recorded as "Claims and other receivables" under "Short term loans and advances" in note 20) as the average cost of excavation payable to the respective lease holders, sister concerns or traders. Based on a legal opinion, the management of the Company is exploring future course of action and considering the merits of the case, no provision is considered necessary against the balance amount of Rs. 178.53 Crore recorded as "Claims and other receivables" under "Long term loans and advances" in note 14.

8 The Company considers its investment in and loans to subsidiaries as strategic and long term in nature and accordingly, in the view of the management, any decline in the value of such long term investments in subsidiaries is considered as temporary in nature and hence no provision for dimunition in value is considered necessary, except as accounted and disclosed in note 30.

9.Previous year's figures have been regrouped/reclassified wherever necessary to conform with the current year's classification / disclosure.

For and on behalf of Board of Directors

Navin Agarwal

Executive Chairman

DIN 00006303

Thomas Albanese

Whole-Time Director & Chief Executive Officer

DIN 06853915

D. D. Jalan

Whole-Time Director & Chief Financial Officer

DIN 00006882

Rajiv Choubey

Company Secretary

ICSI Membership No. A13063

Place : Gurgaon

Date : April 28, 2016