Impact of Vedanta Acquisition

Impact of Vedanta Acquisition

In 2008 Vedanta Resources Plc agreed to buy Mitsui & Co.'s entire stake in Indian iron-ore exporter Sesa Goa Ltd. for $981 million, beating rivals including Arcelor Mittal to secure supplies of the steel-making raw material.

Vedanta is the biggest producer of copper and zinc in India and paid Rs. 2,036 ($49) per share for a 51% stake, the London-based company said today. Vedanta offered to buy a further 20% for at least the same price.

Chairman Anil Agarwal beat two fellow Indian billionaires, Lakshmi Mittal and Kumar Mangalam Birla, to secure supplies of iron ore China needs to fuel its economic boom.

Competition for Sesa Goa drove its shares to a record Rs. 2,000 on 29 January, valuing the miner at $1.8 billion. Vedanta has most of its operations in India, where steel demand is forecast to rise 7.7% a year from 2010 to 2015, faster than the 4.2 % growth globally, according to the International Iron and Steel Institute.

Vedanta believes this acquisition will create significant long term value for all stakeholders through:

• The creation of India's largest diversified mining group, with leading market positions in aluminium, copper, zinc and iron ore together with an industry leading pipeline of expansion projects.

• An ideal position to capitalise on India's huge iron ore reserves, the world's third largest.

• Access to long life, low cost, cash generative assets.

• Excellent debottlenecking/expansion opportunities at a low cost to significantly increase production of iron ore and pig iron by leveraging Vedanta's proven mining and project management skills.

• Longer term organic growth opportunities to increase production and resources by utilising existing and accessing additional prospecting and mining licences.

• Optionality to participate in industry consolidation in India's highly fragmented iron ore industry.

Vedanta Crain Deal

On 16 August 2010, Vedanta announced its proposal to acquire 51 per cent. to 60 per cent. of the fullydiluted share capital of Cairn India for a total consideration of up to US$9.6 billion. Cairn India is asubsidiary of Cairn Energy PLC (‘‘Cairn Energy'') and is the fourth largest oil and gas company in India asat 1 January 2010. The Board believes that the Acquisition will further establish Vedanta's position as an Indian national resources champion and give Vedanta a comprehensive footprint across India's resourcessector.As described in more detail in paragraph 3 of this letter, the Acquisition comprises three separate transactions, namely the purchase from the Cairn Energy Group of Cairn India Shares pursuant

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