Vedanta Regulatory News (VED)

                                                                                                                                                                                                                                                                                                                                                                                                                                            31 May 2012

                                VEDANTA GROUP CONSOLIDATION AND SIMPLIFICATION UPDATE

A circular (the "Circular") in connection with the proposed consolidation and simplification of its group (the "Group") by Vedanta Resources plc ("Vedanta" or the "Company") (the "Proposed Consolidation") as previously announced on 25 February 2012 was posted to Vedanta's shareholders yesterday. The Proposed Consolidation remains on track for completion in calendar year 2012.

The Circular contains a notice convening a General Meeting of Vedanta shareholders. The General Meeting will be held at 11.00 a.m. on 15 June 2012 at Ashurst LLP, Broadgate West, 9 Appold Street, London EC2A 2AP. Shareholders may appoint a proxy by completing the form of proxy enclosed with the Circular. Alternatively, shareholders may register their proxy appointment electronically. The procedures and timings for the appointment of a proxy are set out in the notes to the notice of the General Meeting at the back of the Circular.

The Circular will shortly be available for viewing on the investor relations section of Vedanta's website at www.vedantaresources.com. A copy of the Circular will also be submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.

BACKGROUND TO THE PROPOSED CONSOLIDATION

On 25 February 2012, Vedanta announced an all share merger of Sesa Goa Limited ("Sesa Goa") and Sterlite Industries (India) Limited ("Sterlite") to create Sesa Sterlite and a consolidation of the Vedanta Group under which the following steps are proposed to be undertaken:

•           Vedanta's 70.5 per cent. shareholding in Vedanta Aluminium Limited ("VAL") will be consolidated into Sesa Goa through the issue of approximately 72.3 million Sesa Goa shares to Vedanta;

•            Sterlite will merge into Sesa Goa (which it is intended will be renamed Sesa Sterlite) through the issue of Sesa Goa shares to shareholders of Sterlite on a three for five basis, resulting in the issue of approximately 1,945 million Sesa Goa shares to Sterlite shareholders except The Madras Aluminium Company Limited ("MALCO").  As a result of these two steps VAL will be wholly owned by Sesa Goa;

•            MALCO's power business will be hived off to VAL for cash consideration of INR 1,500 million (US$27 million);

•            MALCO will be merged into Sesa Goa through the issue of Sesa Goa shares to shareholders of MALCO on a seven for ten basis, resulting in the issue of approximately 78.7 million Sesa Goa shares to MALCO shareholders and MALCO's holding in Sterlite will be cancelled;

•            Sterlite Energy Limited and VAL's aluminium business will be merged into Sesa Goa for no consideration; and

•            Vedanta's 38.7 per cent. shareholding in Cairn India will be transferred to Sesa Goa for nominal consideration and Sesa Goa will assume debt of approximately US$5.9 billion.

Sesa Goa, Sterlite and MALCO court convened meetings are scheduled for June.

The above transactions (the "Transactions") will result in further consolidation and simplification of the Group structure in line with the Group's stated strategy.  The Transactions will also improve cash fungibility in the Group and will result in operational cash flows and financing cash flows being better matched.  The Directors believe that this will result in greater financial efficiency and create a superior capital structure, providing increased flexibility to allocate capital, broader access to capital markets and enhanced visibility of earnings and cash flows.

The consolidation arising from the Transactions is expected to create one of the world's largest global diversified natural resources majors by EBITDA. Sesa Sterlite will have a world-class, low cost asset base in close proximity to high growth markets. Increased diversification resulting from amalgamating the business into one legal entity is expected to reduce volatility of earnings through commodity cycles, lower the cost of capital and enhance value. 

The Sesa Sterlite merger is expected to give rise to cost savings on account of operational, capital and corporate synergies, including tax efficiencies, economies of scale, leveraging of technical expertise, more efficient movement of Group cash and improved allocation of capital.  Management expects that, for the first four fiscal years, such synergies will have an earnings impact of over US$200 million per annum. The consolidation is expected to be earnings accretive to Sesa Goa, Sterlite and Vedanta shareholders immediately following completion of the Transactions.

Additional Information

Gross assets and profit before tax ("PBT") as of 31 March 2012: Cairn India gross assets $10.5 billion and PBT $1.8 billion, Sesa Goa gross assets $4.0 billion and PBT $655 million, Sterlite gross assets $16.5 billion and PBT $1.6 billion, VAL gross assets $6.2 billion and PBT $(620) million; and MALCO gross assets $0.2 billion and PBT $10 million.

The Group currently has equity interests in Bharat Aluminium Company Limited ("BALCO") and Hindustan Zinc Limited ("HZL") of 51 per cent. and 64.9 per cent. respectively. The Government of India ("GOI") has equity interests in BALCO and HZL of 49 per cent. and 29.5 per cent. respectively. The Group had previously exercised call options to acquire the GOI's remaining interests in BALCO and HZL at fair market value, subject in the case of HZL to the option of the GOI to transfer up to a 3.5 per cent. interest to HZL employees. The GOI has contested the exercise of the options and the ongoing dispute is currently set to be referred to arbitration proceedings.

Separate from the contested exercise of the call options, on 9 January 2012, Vedanta made a written offer, together with verbal representations that such offer was subject to necessary approvals and financing, to acquire the GOI's remaining interests in BALCO and HZL. As part of this offer, Vedanta proposed to withdraw the ongoing litigation in relation to the contested exercise of the options should the offer be accepted. The GOI has not yet responded to the offer and therefore there is no certainty that either acquisition will proceed. The Company has sought to continue to engage with the GOI to pursue the acquisition of the GOI's interest in HZL.

Such acquisitions would constitute related party transactions for the purposes of the Listing Rules by virtue of the GOI having substantial equity interests in HZL and BALCO. In addition, it is likely that the acquisition of the interest in HZL would require approval as a class 1 transaction for the purposes of the Listing Rules. Therefore, shareholder approval for either acquisition would be required, shareholder approval being one of the necessary approvals referred to above to effect the acquisition. If and when terms are agreed with the GOI in relation to either acquisition a further announcement will be made.

Enquiries

Investors:

Ashwin Bajaj

Senior Vice President - Investor Relations

Vedanta Resources plc

ir@vedanta.co.in

Tel: +44 20 7659 4732 / +91 22 6646 1531

Media:

Gordon Simpson

Faeth Birch

Finsbury

Tel: +44 20 7251 3801

Disclaimer

Forward-looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "prepares", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. Except as required by the Financial Services Authority, the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules, the London Stock Exchange, applicable law or relevant regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About Vedanta Resources plc

Vedanta Resources plc ("Vedanta") is a London listed FTSE-100 diversified global resources major. The group produces Aluminium, Copper, Zinc, Lead, Silver, Iron ore, Power, and Oil and Gas. Vedanta has world-class assets in India, Zambia, South Africa, Namibia, Ireland, Liberia, Australia and Sri Lanka and a strong organic growth pipeline of projects. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness and growth. For more information, please visit: www.vedantaresources.com.