COMPANY REVIEW SESSION

STERLITE INDUSTRIES (INDIA) Ltd. (Copper Unit)

Presented By Deepshikha Nighat Fatima Hussain Hemant Kumar Kabra Subrat Kumar Mohanty

COMPANY PROFILE
 SIIL is the principal subsidiary of Vedanta Resources Plc, a diversified & integrated FTSE 100 metals & mining company, located in India & Australia.  Indias largest non-ferrous metals & mining company and are one of the fastest growing private sector companies.  Listed on BSE & NSE in India and 1st Indian metals company listed in NYSE .  Sterlite develops & manages a diverse portfolio of mining & metals businesses to provide returns to its shareholders and creating value for the communities where it operates.

GROUP STRUCTURE

MANAGEMENT
Chairman: Mr. Anil Agarwal

Executive Vice-Chairman: Mr. Navin Agarwal

Non Executive Director: Mr. Berjis Minoo Doshi Mr. Gautam Bhailal Doshi Mr. Sandeep H. Junnarkar

Chief Executive Officer: Mr. Mahendra Singh Mehta

HISTORY OF THE COMPANY

Incorporated on September 08, 1975 as Rainbow Investments Limited in Calcutta (now know as Kolkata). Registered Office shifted from Calcutta to Bombay (Mumbai) in the year 1979 1986: Sterlite Cables Limited, acquires the Shamsher Sterling Corporation, changes the name to Sterlite Industries ( India) Limited. 1988: Sterlite Industries makes an initial public offering of its shares on the Indian stock exchange 1991: Sterlite Industries establishes Indias first continuous copper rod plant 1997: Commissions first privately developed copper smelter in India at Tuticorin in Tamil Nadu. 1999: Acquires Copper Mines of Tasmania Pty Ltd. & Thalanga Copper Mines Pty Ltd. 2005: Expansion of Tuticorin Smelter to 300,000 TPA 2006: Expansion on Tuticorin smelter to 400 KTPA through innovative debottlenecking. 2007: Sterlite Industries primary listing on NYSE in June 2007

VISION & MISSION

To be the worlds largest leading copper producer delivering sustainable value to all stakeholders by leveraging technology and best practices by 2015.

 To build a knowledge and process driven organization through TPM  To create sustainable value through safe, clean and green processes  To sustain leadership position in domestic and global market through market development and customer delight.  To be the best and most respectable corporate citizen  To leverage technology to its full potential across the business cycle  To harness the profitable and growing CCR/value added product from 240KMT to 600 KMT per annum

PRODUCTS PROFILE:
Main productions are : Copper cathode Continuous cast rods (CCR)

BY PRODUCTS :
 Sulphuric Acid  Phosphoric Acid  Hydrofluoro silici  Gypsum  Ferro sand  Slime

AWARDS AND RECOGNITIONS

2005  British Safety Councils Safety Award.  Sterlite Featured in "Best Companies to work for in India": Business Today Survey 2006  Greentech Environment Excellence Award.  CII National Award for Excellence in Energy Management. 2007  CII National Award for Excellence in Energy Mgmt for both Tuticorin & Silvassa operations  Greentech Environment Excellence Award 2007  CII HR Excellence Award, Commendation Certificate. 2008  CII, Energy Efficient Unit, 2008  CII Water Efficient Unit Award, Excellent Water Efficient unit, 2008  CII-ITC Sustainability Award, Certificate of Commendation for Strong Commitment to excel, 2009  IT Department of Sterlite achieves ISO 27001 certification.

CORPORATE SOCIAL RESPONSIBILITY

 Sterlite Industries Red Ribbon Club, in association with Government Blood Bank, organized a Blood Donation Camp. Camp.

 Constructed underground drinking water sump in a village at a cost of 2.10 lakhs with water holding capacity of 30,000 liters. 30, liters.

 Sterlite initiatives have helped the women to have access to working capital and training. training.

 Sterlite Industries Ltd. launched the Coastal Livelihood Project to promote Ltd. technical skills among coastal youth in Tuticorin. Tuticorin.

 Activities like tree plantation, health camps, sponsoring child birthday are some of the events where employees have actively participated, etc. etc .

HR Strategy
 Get Nurture and Grow

 Skill & Development  Knowledge management  Leadership Development

GEOGRAPHICAL SEGMENTATION:
STERLITE INDUSTRIES (INDIA) LTD

REFINERIES IN FUJAIRAH UAE

COPPER MINE IN TASMANIA AUSTRALIA

REFINERY IN
SILVASSA UNION TERRITORY OF DADRA WESTERN INDIA

PLANTS IN
TUTICORIN TAMILNADU SOUTH INDIA

STRATEGIC MANAGEMENT
 Double the copper smelting capacity to meet growing regional demand

 Continue to retain and further sharpen cost efficiency  Commission captive power plant and continue to drive operational excellence initiatives

 Increasing

capacities

through

Greenfield

and

Brownfield projects. projects.

 Leveraging our project execution and operating skills and experience in building and operating captive power plants to develop a commercial power generation business. business.

 Continuing to focus on asset optimization and reducing the cost of production. production.

 Seeking further growth and acquisition opportunities that leverage transactional, project execution and operational skills. skills.

 Consolidating corporate structure and increasing direct ownership of underlying businesses to derive additional synergies as an

integrated group

STUDY BASED ON MICHAEL PORTER MODEL:

SUPPLIER POWER

THREAT OF NEW ENTRANTS

THREAT OF SUBSTITUTES

BUYER POWER

DEGREE OF RIVALRY

THREAT OF NEW ENTRANTS:

 Capital requirement is high  Issues relating to the setup of mining industry are more  Stringent rules by GOVT has been setup in case of mining industry

SUPPLIER POWER:
 11% of raw material is from its mining activity and the remaining is imported

 It mostly deals with the forward contract  Spot market is reduced thus eventually reducing per unit Cost.

BUYER POWER:
 Major supplier in terms of copper supply in India  Spreading globally by developing mines out side home country

 76% of power sector is included in the customer list of the company

 Global presence

THREAT OF SUBSTITUTES:
 Import of electrical goods is to an large extent substituting the
copper supply.  In case of increasing cost, aluminum might be taken as substitute to switch the cost.

DEGREE OF RIVALRY:
Main competitors Hindustan copper Hindalco copper  Major supplier for power sector & telecom industry  Brand image  Cost determination  Capacity

(RS. IN CRORE) 18,000.00 15,292.57 16,000.00 14,000.00 11,822.41 Sales in crore 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 2007 2008 2009 Years 2010 2011 12,673.58 13,114.88 11,548.38

(RS. IN CRORE)
1600 1,419.71 1400 1,236.43

Profit after tax in crore

1200 1000 784.03 800 600 400 200 0

2007 2008 2009 2010 2011

951.63 831.5

Years

10.71 12.00 9.28 10.00 7.51 8.00 6.63 6.34

Margins in %

6.00 4.00 2.00 0.00 2007 2008 2009 2010 2011

Years

10 9 8.98 6.45 5.94 5.16

Inventory Turnover Ratio

8 7 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 7.02

Years

30 25 20 15 10 5 0 2007 2008 2009

2010

2011

Series1

2007 15.87

2008 14.52

2009 17

2010 28.76

2011 25.85

Total Assets Turnover Ratio

2 1.5 1 0.5 0 2007 2008 2009

2010

2011

Series1

2007 1.63

2008 0.77

2009 0.65

2010 0.48

2011 0.53

2.77 1.96 1.53 1.67 1.11

2007

2008

2009

2010

2011

0.7

0.63

Debt equity Ratio

0.6 0.5 0.4 0.3 0.2 0.1 0 2007 2008 2009 2010 2011 0.25 0.27 0.24 0.25

Years

Interest Coverage Ratio

8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00

7.63 5.96

7.54

7.84

4.68

2007

2008

2009

2010

2011

18 16 14 12 10 8 6 4 2 0 2007 2008 2009

2010

2011

Series1

2007 17.59

2008 7.23

2009 8.8

2010 3.73

2011 6.11

SHARE HOLDING PATTERN

Foreign Bodies DR, 0.33% NRIs / OCBs, Trusts, 2.14 % 0.16 % Indian Promoters, 3.08 Clearing Member, 0.08 % % Shares held by Indian Public, 3.91 % custodians, 8.08 % Private Corporate Bodies, 5.72 % Mutual Funds (including UTI), 3.5 % Foreign Institutional Investors (FIIs), 13.23 %

Foreign Promoters, 54.64 %

Banks, FI, Insurance Companies , 5.14 %

EPS
20 18

17.45

Earning per Share in Rs.

16 14 12 10 8 6 4 2 0

14.04

13.43

9.89

4.22

2006-07

2007-08

2008-09

2009-10

2010-11

Years

INDEX

Dividend Paid

Splitting of shares

Bonus

Right Issue

PEER ANALYSIS
Sterlite
LTP (17/8/2011) % change 52-week High/Low Results (in cr.) As on Mar 11 Sales PAT Market Cap. Ratios Operating profit Margin% Net operating margin% EPS Bonus and Dividends
15,310.29 1,419.71 44956.15 1,146.52 224.1 21622.34 23,859.21 2,136.92 27328.34

Hind Copper
225.25 -5.25 (-2.28%)
485.40 / 230.00

Hindalco
142.75 -1.60 (-1.11%)
251.90 / 140.60

134.35 1.95 (1.47%)

195.90 / 130.00

15.05 9.27 4.22

31.27 19.55 2.42

14.68 8.96 11.17

2011 2010 2009 2008 2007

1.1 3.75 / BONUS 1:1 3.5 4 --

0.5 0.5 ----

1.50 1.35 1.35 1.85 1.70

FUTURE OUTLOOK
 Strong demand of copper in the world and in India. India.
Telecommun Transportati ication on 9% 12% Industries Machinary 9%

Use of Copper

Power Sector 42%

Construction 28%

 76 % of total sales is to power sector only. only.  By-products are also helpful in increasing EBITDA By Increasing capacity of both smelter and mining activity. activity.  Expanding the capacity of Tuticorin plan  Construction of 160 MW captive power plant. plant.

Various legal issues faced by the company: 1. Environmental & pollution related issues. 2. Forest Clearance issues. 3. Tax related cases pending in court.