Sterlite Industries (India) Limited
Calculation of Registration Fee
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Proposed maximum
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Proposed maximum
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Amount to be
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offering price
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aggregate
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Amount of
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Title of each class of securities to be registered
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registered
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per unit
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offering price
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registration fee(1)
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4.00% Convertible Senior Notes due 2014
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$
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500,000,000
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100
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%
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$
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500,000,000
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$
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27,900.00
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American depositary shares, each representing one equity share,
par value Rs.2 per share
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(2)
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(2)
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(2)
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(2)
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(1)
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Calculated in accordance with Rule 457(o) and
Rule 457(r) of the Securities Act of 1933, as amended, and
relates to the registration statement on Form F-3 (File
No. 333-160580), as amended, filed by the Registrant.
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(2)
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There is also registered hereby an indeterminate number of
American depositary shares into which the 4.00% Convertible
Senior Notes due 2014 may be converted. Pursuant to
Rule 457(i), no separate registration fee is payable where
securities and securities into which conversion is offered are
registered at the same time and no additional consideration is
payable upon conversion.
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American depositary shares evidenced by American depositary
receipts issuable upon conversion of the convertible notes
registered hereby are being registered pursuant to a separate
registration statement on Form F-6 (File
No. 333-139102), as amended, filed by the Registrant on
June 15, 2007.
Filed pursuant to Rule 424(b)(5)
of the Securities Act of 1933,
as amended, and relating to
Registration Number 333-160580
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 15, 2009)
$500,000,000
Sterlite Industries (India)
Limited
4.00% CONVERTIBLE SENIOR
NOTES DUE 2014
Interest
payable on April 30 and October 30
Holders may convert their notes into American depositary shares
(ADSs) (as of the date of this prospectus
supplement, each ADS represents one of our equity shares, par
value Rs. 2 per share) at any time prior to 5:00 p.m.,
New York City time, on the business day immediately preceding
the maturity date for the notes. The conversion rate will
initially be 42.8688 ADSs per $1,000 principal amount of notes
(representing a conversion price of approximately $23.33 per
ADS). The conversion rate will be subject to adjustment in
certain events. In addition, in the event of a change of control
transaction, we will increase the conversion rate by a number of
additional ADSs under certain circumstances described herein for
holders who convert their notes in connection with such change
of control transaction. Any such conversion shall not be at a
price less than that permitted under applicable Indian law.
If we experience a fundamental change, holders may require us to
repurchase all or a portion of the notes, at a price equal to
100% of the principal amount of the notes, plus accrued
interest. Subject to certain exceptions, at any time after
November 4, 2012, we may redeem all or part of the notes at
a price equal to 100% of the principal amount of the notes to be
redeemed plus accrued and unpaid interest, including additional
interest, if any, on such notes to, but excluding the redemption
date, if the closing price of our ADSs has been at least 130% of
the conversion price then in effect for at least 20 trading days
during any 30 consecutive trading day period prior to the date
on which we provide notice of such redemption. We may also elect
to redeem all of the notes in connection with certain
tax-related events. Holders may elect not to participate in such
a
tax-related
redemption. Under current Indian law, redemption of the notes
prior to maturity requires the prior approval of the Reserve
Bank of India and this approval may not be forthcoming.
The notes will be our senior unsecured obligations and will rank
equally in right of payment with all of our existing unsecured
indebtedness and future senior unsecured indebtedness. The notes
will be senior in right of payment to all of our future
subordinated unsecured indebtedness that by its terms is
expressly subordinated in right of payment to the notes. The
notes will be effectively junior to any of our secured
indebtedness to the extent of the value of the related
collateral, and structurally subordinated to the existing and
future indebtedness and other liabilities (including trade
payables) of our subsidiaries.
For a more detailed description of the notes, see
Description of Notes beginning on
page S-31.
We do not intend to apply for a listing of the notes on any
securities exchange or for inclusion in any automated quotation
system. Our ADSs are listed on the New York Stock Exchange, or
NYSE, under the symbol SLT. On October 15,
2009, the closing sale price of the ADSs on the NYSE was $16.62
per ADS. Our equity shares are listed and traded in India on the
National Stock Exchange of India Limited, or the NSE, and the
Bombay Stock Exchange Limited, or the BSE. On October 14,
2009, the closing sale price per equity share was Rs. 855.75
($17.97) on the NSE and Rs. 852.40 ($17.90) on the BSE.
Investing in the notes involves risks. See Risk
Factors beginning on page S-17.
PRICE 100% AND ACCRUED INTEREST, IF ANY
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Underwriting
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Price to
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Discounts and
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Proceeds to
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Public
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Commissions
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Company
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Per note
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$
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1,000
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$
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7.50
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$
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992.50
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Total
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$
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500,000,000
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$
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3,750,000
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$
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496,250,000
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The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or
determined if this prospectus supplement or the accompanying
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Deutsche Bank Securities Inc. and Morgan Stanley &
Co. Incorporated expect to deliver the notes to purchasers in
book-entry form only through the facilities of The Depository
Trust Company against payment in New York, New York on a
delayed basis. The date of delivery is expected to be
October 29, 2009. Any change in the date of delivery will
be notified to investors through a press release which will be
posted on our website at www.sterlite-industries.com.
Such notification may not occur until two or three business days
before the earlier of October 29, 2009 or the new date of
delivery.
(listed in alphabetical order)
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Deutsche
Bank Securities
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October 15, 2009
TABLE OF
CONTENTS
Prospectus Supplement
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Page
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S-1
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S-2
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S-10
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S-17
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S-27
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S-28
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S-29
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S-30
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S-31
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S-60
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S-70
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S-76
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Prospectus
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3
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3
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22
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31
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42
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49
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52
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You should rely only on the information contained in,
incorporated or deemed incorporated by reference into this
prospectus supplement and the accompanying prospectus. Neither
we nor the underwriters have authorized anyone to provide
information different from that contained in, incorporated or
deemed incorporated by reference into this prospectus supplement
or the accompanying prospectus. You should not assume that the
information contained in this prospectus supplement and the
accompanying prospectus to which it relates or the documents
incorporated or deemed incorporated herein or therein is
accurate as of any date other than the date of this prospectus
supplement, the accompanying prospectus or such documents.
ABOUT
THIS PROSPECTUS SUPPLEMENT
Unless otherwise stated in this prospectus supplement and the
accompanying prospectus or unless the context otherwise
requires, references in this prospectus supplement to
we, our, us, the
Company and Sterlite are to Sterlite
Industries (India) Limited, its consolidated subsidiaries and
its predecessors, collectively, including Monte Cello BV, or
Monte Cello, Copper Mines of Tasmania Pty Ltd, or CMT, Thalanga
Copper Mines Pty Ltd, or TCM, Bharat Aluminium Company Limited,
or BALCO, Sterlite Energy Limited, or Sterlite Energy, Sterlite
Opportunities and Ventures Limited, or SOVL, Hindustan Zinc
Limited, or HZL, Fujairah Gold FZE, Sterlite (USA), Inc., or
Sterlite (USA), and Talwandi Sabo Power Limited, or TSPL.
References to the Vedanta group are to Vedanta
Resources plc, or Vedanta and its subsidiaries. References to
US or United States are to the United
States of America, its territories and its possessions.
References to India are to the Republic of India.
References to $ or US$ or
dollars or US dollars are to the legal
currency of the United States and references to Rs.
or rupees or Indian Rupees are to the
legal currency of India. References to a particular
fiscal year are to our fiscal year ended March 31 of
such year. References in this prospectus supplement to
shares or equity shares refers to our
equity shares, ADSs refers to our American
depositary shares, each of which represents one equity share,
and ADRs refers to the American depositary receipts
that evidence our ADSs. BSE and NSE are collectively referred to
in this prospectus supplement as the Indian Stock Exchanges.
References to our Annual Report on
Form 20-F
are to our Annual Report on
Form 20-F
for the fiscal year ended March 31, 2009 filed with the US
Securities and Exchange Commission, or the SEC, on July 10,
2009, as amended by our
Form 20-F/A
filed with the SEC on July 14, 2009.
Substantially all of our revenue is denominated or paid with
reference to US dollars and most of our expenses are incurred
and paid in Indian Rupees or Australian dollars. We report our
financial results in Indian Rupees. Unless otherwise stated
herein, all translations in this prospectus supplement from
Indian Rupees to US dollars are based on the noon buying rate in
New York City for cable transfers in Indian Rupees as certified
by the Federal Reserve Bank of New York on October 2, 2009,
which was Rs. 47.61 per $1.00. No representation is made
that the Indian Rupee amounts have been, could have been or
could be converted into US dollars at such a rate or any other
rate. Any discrepancies in any table between totals and sums of
the amounts listed are due to rounding.
This document is in two parts. The first part is this prospectus
supplement, which describes the offering of the securities
offered hereby. This first part also adds to and updates
information contained in the accompanying prospectus and the
documents incorporated by reference into the accompanying
prospectus. The second part, the accompanying prospectus,
provides more general information about us and securities we may
offer from time to time, some of which may not apply to this
offering of securities. If the information varies between this
prospectus supplement and the accompanying prospectus, or any
document incorporated by reference therein, you should rely on
the information contained in this prospectus supplement.
You should rely only on the information contained in,
incorporated or deemed incorporated by reference into this
prospectus supplement and the accompanying prospectus. Neither
we nor the underwriters have authorized anyone to provide
information different from that contained in, incorporated or
deemed incorporated by reference into this prospectus supplement
or the accompanying prospectus. You should not assume that the
information contained in this prospectus supplement and the
accompanying prospectus to which it relates or the documents
incorporated or deemed incorporated herein or therein is
accurate as of any date other than the date of this prospectus
supplement, the accompanying prospectus or such documents.
This prospectus supplement and the accompanying prospectus are
not an offer to sell any security other than the securities
offered hereby and are not soliciting an offer to buy any
security other than the securities offered hereby. This
prospectus supplement and the accompanying prospectus are not an
offer to sell our notes to any person, and they are not
soliciting an offer from any person to buy these securities, in
any jurisdiction where the offer or sale to that person is not
permitted.
S-1
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights selected information contained
elsewhere or incorporated by reference into this prospectus
supplement and the accompanying prospectus. This summary does
not contain all the information that you should consider before
investing in the notes. You should read the entire prospectus
supplement and the accompanying prospectus carefully, including
the risk factors, the financial statements and the information
included or incorporated by reference in this prospectus
supplement and the accompanying prospectus.
Overview
We are one of Indias largest non-ferrous metals and mining
companies. We are one of the two custom copper smelters in
India, with a 45.7% primary market share by production volume in
India in fiscal 2009, according to the International Copper
Promotion Council India, the leading and only integrated zinc
producer with a 79.0% market share by production volume of the
Indian zinc market in fiscal 2009, according to the India Lead
Zinc Development Association, or ILZDA, and one of the five
primary producers of aluminum with a 28.0% primary market share
by production volume in India in fiscal 2009, according to the
Aluminum Association of India, or AAI. In addition to our three
primary businesses of copper, zinc and aluminum, we are also
developing a commercial power generation business in India that
leverages our experience in building and managing captive power
plants used to support our primary businesses. We believe our
experience in operating and expanding our business in India will
allow us to continue to capitalize on attractive growth
opportunities arising from Indias large mineral reserves,
relatively low cost of operations and large and inexpensive
labor and talent pools. We believe we are also well positioned
to take advantage of the growth in industrial production and
investments in infrastructure in India, China, Southeast Asia
and the Middle East, which we expect will continue to create
strong demand for metals.
Our copper business is principally one of custom smelting. We
were one of the top fifteen custom copper smelters worldwide in
2008 and one of the largest in India by production volume in
fiscal 2008, according to Brook Hunt & Associates Ltd,
or Brook Hunt. We own the Mt. Lyell copper mine in Tasmania,
Australia, which provides a small percentage of our copper
concentrate requirements. Our operations also include a copper
smelter, two copper refineries, three copper rod plants, a
doré anode plant, sulphuric and phosphoric acid plants, and
captive power plants at our facilities in Silvassa and Tuticorin
in India, as well as a precious metal refinery at Fujairah in
the United Arab Emirates, or UAE. In addition, on March 6,
2009, we and ASARCO LLC, or Asarco, a US-based copper mining,
smelting and refining company, signed an agreement for us to
acquire substantially all of the operating assets of Asarco for
$1.7 billion. We have revised the purchase consideration a
few times since then. The agreement was subject to approval by
the US Bankruptcy Court for the Southern District of Texas,
Corpus Christi Division, before which Asarco has been in
reorganization proceedings under Chapter 11 of the US
Bankruptcy Code. On August 31, 2009, the US Bankruptcy
Court made its recommendation to the US District Court for the
Southern District of Texas to confirm the plan jointly proposed
by Asarco Incorporated and Americas Mining Corporation,
subsidiaries of Grupo México, and to reject the plan
proposed by Asarco and sponsored by our wholly owned subsidiary,
Sterlite USA. The US District Court will make the final decision
on which plan proponent will be selected as the winning plan
proponent for Asarco. The final decision is expected in the last
quarter of 2009. There can be no assurance that the US District
Court will select us as the winning plan proponent for Asarco.
If we were to be the winning plan proponent and this acquisition
is completed, we will acquire ownership of Asarcos three
open-pit copper mines, which had estimated reserves of
5.2 million tons of contained copper as of January 2008,
associated mills, solvent extraction and electrowinning, or
SX-EW, plant and a copper smelter in the State of Arizona,
United States and a copper refinery, rod plant, cake plant and
precious metals plant in the State of Texas, United States. See
Item 5. Operating and Financial Review and
Prospects Recent Developments of our Annual
Report on
Form 20-F.
On September 10, 2009, we further revised our offer to
$2.6 billion payable fully in cash. In the revised offer,
we would be the beneficiary of 100% of the proceeds from the
creditors interest in the Brownsville Judgment, though our
recovery would be limited to the amounts which we paid creditors
for their interest in the Brownsville Judgment (the total value
of which would be approximately $904 million). The offer
was revised to provide a cash only settlement to all creditor
groups including asbestos creditors, allowed late filed claims
and allowed subordinated claims (which earlier were
S-2
provided a share of creditors interest in the Brownsville
judgment) and to provide for surplus cash after closing for the
continued operations of acquired assets.
Our fully-integrated zinc business is owned and operated by HZL,
in which we have a 64.9% ownership interest. HZL is Indias
leading zinc producer with a 79.0% market share by production
volume of the Indian zinc market in fiscal 2009, according to
the ILZDA. HZL was the worlds third largest zinc mining
company in 2008 based on zinc mine production and is also one of
the top ten lead mining companies by production volume
worldwide, according to Brook Hunt. HZLs Rampura Agucha
mine was the largest lead-zinc mine in the world in terms of
contained zinc deposits on a production basis and the fourth
largest on a reserve basis, according to Brook Hunt. HZL was in
the lowest cost quartile in terms of all zinc mining operations
worldwide in 2008, the fourth largest producer of zinc worldwide
and the largest integrated producer of zinc worldwide based on
production volumes in 2008, according to Brook Hunt. In
addition, HZLs new Chanderiya hydrometallurgical zinc
smelter was the third largest smelter on a production basis
worldwide in 2008, according to Brook Hunt. We have a 64.9%
ownership interest in HZL, with the remainder owned by the
Government of India (29.5%) and institutional and public
shareholders (5.6%). It is our current intention to exercise our
call option to acquire the Government of Indias remaining
ownership interest in HZL. HZLs operations include four
lead-zinc mines, three zinc smelters, one lead smelter, one
lead-zinc smelter, three sulphuric acid plants, one silver
refinery, and captive power plants at our Chanderiya and Debari
facilities in Northwest India, one zinc smelter and a sulphuric
acid plant at our Vizag facility in Southeast India and one zinc
ingot melting and casting plant at Haridwar in North India.
Our aluminum business is primarily owned and operated by BALCO,
in which we have a 51.0% ownership interest. BALCO is one of the
five primary producers of aluminum in India and had a 28.0%
primary market share by production volume in India in fiscal
2009, according to AAI. We have exercised our option to acquire
the Government of Indias remaining 49.0% ownership
interest, although the exercise is currently subject to dispute.
Further, the Government of India has the right and has expressed
an intention to sell 5.0% of BALCO to BALCO employees.
BALCOs partially integrated operations include two bauxite
mines, captive power plants and refining, smelting and
fabrication facilities at our Korba facility in Central India.
BALCOs 245,000 tons per annum, or tpa, Korba aluminum
smelter was in the lowest cost quartile in terms of all aluminum
smelter operations worldwide in 2007, according to Brook Hunt.
BALCOs operations benefit from relatively cost effective
access to power, the most significant cost component in aluminum
smelting due to the power-intensive nature of the process. This
is to a considerable extent due to BALCO being an
energy-integrated aluminum producer. BALCO received a coal block
allocation of 211.0 million tons for use in its captive
power plants in November 2007. In addition, BALCO is seeking to
build a thermal coal-based 1,200 MW captive power facility,
along with an integrated coal mine, in the State of Chhattisgarh.
In addition, we are expanding our aluminum business through
Vedanta Aluminium Limited, or Vedanta Aluminium. We hold a 29.5%
minority interest in Vedanta Aluminium, a 70.5%-owned subsidiary
of Vedanta. Vedanta Aluminium is intended to be a fully
integrated alumina and aluminum producer with a 1.0 million
tpa, expandable to 1.4 million tpa subject to governmental
approvals, alumina refinery at Lanjigarh in the State of Orissa
in Eastern India, with an associated 75 MW captive power
plant, expandable to 90 MW. In March 2007, Vedanta
Aluminium began the progressive commissioning of the
1.0 million tpa greenfield alumina refinery. The Lanjigarh
alumina refinery started production from a single stream
operation and produced 585,597 tons of alumina in fiscal 2009.
The second production stream of the Lanjigarh alumina refinery
was commissioned in April 2009. Further, Vedanta Aluminium is
expanding its alumina refining capacity at the Lanjigarh
refinery from 1.4 million tpa to 2.0 million tpa
through debottlenecking, which is expected to be completed by
March 2010, and from 2.0 million tpa to 5.0 million
tpa by constructing a second 3.0 million tpa refinery with
an associated 210 MW coal-based captive power plant, which
are expected to be commissioned by mid-2011. Vedanta Aluminium
is in the process of obtaining all governmental approvals for
these expansion projects. In addition, Vedanta Aluminium is
building a greenfield 500,000 tpa aluminum smelter, together
with an associated 1,215 MW coal-based captive power plant,
in Jharsuguda in the State of Orissa. The project will be
implemented in two phases of 250,000 tpa each. Commissioning of
the first phase commenced in May 2008, six months ahead of
schedule, and was fully commissioned in May 2009. The second
phase is expected to be progressively commissioned from June
2009 through the end of fiscal 2010,
S-3
subject to governmental approvals. The commissioning of the
captive power plant units is scheduled to meet the power
requirements of the new Jharsuguda smelter and all other power
requirements of the facility. Vedanta Aluminium is also setting
up another 1,250,000 tpa aluminum smelter in Jharsuguda which is
expected to be progressively commissioned from March 2010 and to
be completed by September 2012.
We have been building and managing captive power plants since
1997. As of May 31, 2009, the total power generating
capacity of our captive power plants and wind power plants was
2,078.7 MW, including six thermal coal-based captive power
plants with a total power generation capacity of 1,604 MW
that we built within the last five years. In August 2006, our
shareholders approved a new strategy for us to enter into the
commercial power generation business in India. Our wholly owned
subsidiary Sterlite Energy is investing approximately
Rs. 82,000 million ($1,722.3 million) to build a
2,400 MW thermal coal-based power facility (comprising four
units of 600 MW each) in Jharsuguda in the State of Orissa.
The project is expected to be progressively commissioned
starting in the third quarter of fiscal 2010, with full
completion anticipated by the second quarter of fiscal 2011.
Sterlite Energy is building this power facility in the State of
Orissa, which has abundant coal resources estimated at
65.3 billion tons as of April 1, 2008, according to
the Geological Survey of India 2008. In addition, in July 2008,
Sterlite Energy was awarded the tender for a project to build a
1,980 MW thermal coal-based commercial power plant at
Talwandi Sabo, in the State of Punjab, India, by the Government
of Punjab. The project is expected to be completed in April 2013.
Competitive
Strengths
We believe that we have the following competitive strengths:
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High quality assets and resources making us a low-cost producer;
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Leading non-ferrous metals and mining company in India with a
diversified product portfolio;
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Ideally positioned to capitalize on Indias growth and
resource potential;
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Strong pipeline of growth projects;
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Experience for entry into commercial power generation business
in India;
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Experienced and entrepreneurial management team with outstanding
track record; and
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Ability and capacity to finance world-class projects.
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Strategy
Our goal is to generate strong financial returns and create a
world-class metals and mining company. Our strategy is to
continue to grow our business by completing our existing
expansion projects as well as setting up new greenfield and
brownfield projects. We intend to take advantage of our low-cost
base, expand our position in India as a supplier of copper, zinc
and aluminum products and further develop our exports of these
products. We are also leveraging our experience in building and
managing captive power plants to develop a commercial power
generation business in India and will continue to closely
monitor the Indian resource markets in our existing lines of
business as well as new opportunities such as iron ore and coal.
Key elements of our strategy include:
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Continuing focus on asset optimization and reducing the cost of
production;
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Increasing our capacities through greenfield and brownfield
projects;
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Leveraging our project execution and operating skills and
experience in building and managing captive power plants to
develop a commercial power generation business;
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Seeking further growth and acquisition opportunities that
leverage our transactional, project execution and operational
skills and experience; and
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Consolidating our corporate structure and increasing our direct
ownership of our underlying businesses to derive additional
synergies as an integrated group.
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S-4
One or more of our subsidiaries may raise capital from time to
time, including through initial public offering.
Recent
Developments
Our Board of Directors has approved an increase in the existing
capacity of our 400,000 tpa copper smelter at Tuticorin to
800,000 tpa by building a 400,000 tpa copper smelter, captive
power plant of 160 MW and associated facilities. We propose
to set up the project at an initial estimated cost of
Rs. 23,000 million ($483.1 million) in a special
economic zone that benefits from certain tax exemptions.
Our subsidiary, Sterlite Energy Limited, entered into an
on-shore and offshore engineering, procurement and construction
contract with SEPCO Electric Power Construction Corporation, or
SEPCO, for our Talwandi Sabo thermal power project for
Rs. 69,500 million ($1,459.8 million).
SEPCOs obligations under the contract include testing and
delivery of plant and equipment, system design and engineering
of plant and equipment as per technical specifications,
supervision of civil, structure and manufacturing work, custom
clearance, port clearance, inland transportation of offshore as
well as onshore plant and equipment, unloading, storage and
preservation for all equipment and material required, ash
disposal among others within the period specified in the
contracts. The fixed contract price is payable in multiple
instalments according to a fixed payment schedule. SEPCO has
provided performance guarantees with respect to various
parameters, for instance, net unit heat rate of 2,222.80
kwph/kcal and net unit electric output of 650 MW. If there
is a delay in completion or failure to meet performance
guarantees, liquidated damages may be imposed on SEPCO in
accordance with the terms of the contract.
Our Board of Directors has approved a loan of
Rs. 10,000 million to Sterlite Energy Limited for use
in the development of its power projects. The loan is for one
year from the date of first drawdown and will accrue interest at
the rate of 8% per annum payable quarterly.
Construction at our 1,200 MW captive power plant at Korba
was disrupted following a tragic collapse of a chimney under
construction in September 2009 during heavy rains and lightning
at Korba. There were 45 fatalities in the accident and
SEPCO, our engineering, procurement and construction contractor,
and Gamon Dunkerley and Company Ltd, the sub-contractor, are the
subjects of an investigation by the Chhattisgarh government. We
have instituted an enquiry by IIT Rourkee, an expert in the
civil engineering field in India.
HZL has signed a mining lease for the Kayar mine in the State of
Rajasthan which expires on February 27, 2018. In January
2009, HZL obtained environmental clearance for an annual
production of 350,000 tons. The Kayar mine is currently in the
post-exploration but pre-development stage. HZL is in the
process of obtaining surface land rights over the mine area.
Once HZL has obtained the surface land rights, it will commence
mine development activities.
We pay royalties to the State Governments of Chhattisgarh and
Rajasthan based on our extraction of bauxite and lead-zinc ore,
respectively, and to the State Government of Tasmania in
Australia based on our extraction of copper ore. The most
significant of these is the royalty that HZL is required to pay
to the State Government of Rajasthan, where all of HZLs
mines are located. With effect from August 13, 2009, the
royalty rate increased from 6.6% to 8.0% of the LME zinc metal
price payable on the zinc metal contained in the ore produced
and from 5.0% to 7.0% of the LME lead metal price payable on the
lead metal contained in the ore produced. The royalties we pay
are subject to change. See Risk Factors Risks
Relating to Our Industry Changes in tariffs,
royalties, customs duties and government assistance may reduce
our Indian market domestic premium, which would adversely affect
our profitability and results of operation in our
Form 20-F
for the year ended March 31, 2009.
A U.K. government agency, part of the Department for Business
Innovation and Skills that promotes voluntary guidelines for
multinational companies adopted by the Organization for Economic
Cooperation and Development, recently stated in a report that
our parent, Vedanta Resources PLC, violated best practice
standards when it allegedly failed to put in place an adequate
and timely consultation mechanism for the environmental and
health and safety impact on an indigenous community of its
plans, through our associate
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company Vedanta Aluminium Limited, to construct a bauxite mine
in Niyamgiri Hills, Orissa. Our parent has issued a press
release denying these allegations and has publicly stated that
it has complied in all respects with the required Indian
regulations including consultations with the local community.
We have received comments from the Staff of the Division of
Corporate Finance of the SEC, or the Staff, to our Annual Report
on
Form 20-F
and
Form 20-F/A
for the year ended March 31, 2009. We are in the process of
responding to such comments, and intend to propose to the Staff
that we add certain disclosure to our periodic reports filed in
the future with the SEC. As we correspond with the Staff
regarding its comments, additional changes to our disclosure may
be required. We cannot assure you that such changes will not be
material.
In our
Form 6-K
for the quarter ended June 30, 2009 submitted to the SEC on
September 22, 2009 and incorporated herein by reference,
there were certain errors that are corrected as set forth below:
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We previously reported in the
Form 6-K
that our operating margin in the three-month period ended
June 30, 2009 was 18.2% The correct number is 16.9%.
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We previously reported in the
Form 6-K
that our profit attributable to minority interest decreased in
the three-month period ended June 30, 2009 from the
three-month period ended June 30, 2008 by 27.6% The correct
number is 26.9%.
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We previously reported that our minority interest as a
percentage of profit in the three-month period ended
June 30, 2009 was 31.1%. The correct number is 28.4%;
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We previously reported that for the three-month period ended
June 30, 2009, our net proceeds from fixed deposits was
Rs. 9,605 million. The correct number is
Rs. 9,426 million.
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We previously reported that for the three-month period ended
June 30, 2009, we advanced to related parties
$325.6 million. The correct number is $343.9 million.
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Legal
Proceedings
Petitions
have been filed in the Supreme Court of India and the High Court
of Orissa to seek the cessation of construction of Vedanta
Aluminiums refinery in Lanjigarh and related mining
operations in Niyamgiri Hills.
In 2004, a writ petition was filed against us, Vedanta
Aluminium, the State of Orissa, the Republic of India, OMC,
Orissa Industrial Development Corporation, and others by a
private individual before the High Court of Orissa. The petition
alleges that the proposed grant of the mining lease by the OMC
to Vedanta Aluminium and us to mine bauxite in the Niyamgiri
Hills at Lanjigarh in the State of Orissa would violate the
provisions of the Forest Act. The petition further alleges that
the felling of trees and construction of the alumina refinery by
us and Vedanta Aluminium and the development of the mine is in
violation of the Forest Act and would have an adverse impact on
the environment. The petition sought, among other things, to
restrain the grant of the mining lease to mine bauxite in the
Niyamgiri Hills at Lanjigarh in the State of Orissa by the OMC
to Vedanta Aluminium and us, to declare the memorandum of
understanding entered into between the OMC and Vedanta Aluminium
void, a court direction for the immediate cessation of
construction of the alumina refinery by Vedanta Aluminium and an
unspecified amount of compensation from us and Vedanta Aluminium
for damage caused to the environment. The court has not yet
admitted this matter for hearing.
Certain non-governmental organizations and individuals filed
interlocutory applications in 2004 alleging violations of forest
conservation laws by Vedanta Aluminiums refinery project
at Lanjigarh and the related mining operations in the Niyamgiri
Hills. These interlocutory applications were filed in an
environment-related public interest litigation brought before
the Supreme Court of India. A Central Empowered Committee, or
CEC, set up by the Supreme Court of India, issued a report dated
September 21, 2005 which expressed the view that the MoEF
should not have permitted the alumina refinery project to
commence construction before undertaking an in-depth study about
the ecological effects of the proposed bauxite mine on the
ecology surrounding the Niyamgiri Hills and that the project
would result in the displacement of indigenous tribals.
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The CEC further stated that Vedanta Aluminium was in violation
of certain environmental clearances granted by the MoEF to
Vedanta Aluminium for the construction of the alumina refinery
and recommended that the Supreme Court of India revoke such
clearances and prohibit further work on the project. The Supreme
Court of India directed that an in-depth report be prepared on
the matter by the MoEF.
The Supreme Court, after obtaining a detailed a report on the
impact of flora, fauna and tribal habitation due to bauxite
mining from the MoEF and the State of Orissa, passed an order in
November 2007, rejecting Vedanta Aluminiums application to
commence operations. The order of the Supreme Court provided
that if the State of Orissa, OMC and we jointly agree to the
rehabilitation package proposed by the court, and we notify the
court that we are agreeable to the package, the court may
consider granting clearance to the project. All parties have
filed affidavits confirming their commitment to the
rehabilitation package. Pursuant to the rehabilitation package,
we have set up a joint venture company, the Lanjigarh Scheduled
Area Development Foundation, in which it is proposed that the
State Government of Orissa and OMC will have a 51% ownership
interest, to operate the mines. On August 8, 2008, the
Supreme Court of India granted us clearance for our forest
diversion proposal for the conversion of 660,749 hectares of
forest land from forestry use to mining use, allowing us to
source bauxite which has been mined on Niyamgiri Hills in
Lanjigarh. Pursuant to the Supreme Court order, we were required
to pay the higher of 5% of annual profits before tax and
interest from the Lanjigarh project and Rs.100 million per
annum (commencing April 2007), as a contribution for scheduled
area development, as well as Rs.122 million towards tribal
development and Rs.1,055.3 million plus expenses towards a
wildlife management plan for conservation and the management of
wildlife around the Lanjigarh bauxite mine. As of March 23,
2009, an amount of Rs.1,211.8 million has been remitted to
Compensatory Afforestation Fund and Rs.200 million has been
deposited with OMC. in compliance with the Supreme Court order.
On December 11, 2008, the MoEF granted in-principal
approval under the Forest Act and we are currently in the
process of complying with the conditions specified in the
MoEFs approval. On April 28, 2009, the MoEF granted
us environmental clearance for the mining of bauxite and the
final forest clearance is pending.
BALCO
is involved in various litigations in relation to the alleged
encroachment of land on which the Korba facility is situated and
the State Government of Chhattisgarh has issued notices to BALCO
alleging that BALCO had encroached on state-owned
land.
BALCO has occupied certain land on which the Korba facility is
situated since its establishment, which is the subject matter of
a dispute for alleged encroachment by BALCO on government-owned
land, among others.
BALCO petitioned the High Court of Chhattisgarh in 1996 to
direct the State Government of Chhattisgarh to execute a lease
deed in respect of this land in BALCOs favor. The High
Court of Chhattisgarh passed an interim order in 2004 directing
that the State Government of Chhattisgarh take no action against
BALCO.
In 2005, in response to several show cause notices issued
against BALCO alleging encroachment of government land, BALCO
filed an amendment petition with the High Court of Chhattisgarh
seeking to quash these show cause notices. The High Court of
Chhattisgarh directed that the status quo be maintained and that
BALCO should not engage in any deforestation activities on the
land until the next hearing date, which has not yet been
determined. By clarificatory order dated July 2, 2007, the
High Court of Chhattisgarh directed that BALCO may continue
construction and engage in deforestation activities after
receipt of the requisite environmental approvals. The petition
has been adjourned until the disposal of the public interest
writ petition filed by an organization known as
Sarthak before the Supreme Court.
BALCO has no formal lease deed in relation to this land. BALCO
is currently engaged in a dispute with the State Government of
Chhattisgarh regarding alleged encroachment on state-owned land
at its Korba facility. On February 6, 2009, a single bench
of the Chhattisgarh High Court held that BALCO is in legal
possession of the land and is required to pay premium and rent
on the land according to the rates offered by the Government of
Chhattisgarh in 1968. The State Government of Chhattisgarh has
challenged this order in
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an appeal before the division bench of the Chhattisgarh High
Court. The matter is listed for final hearing on
October 26, 2009.
A public interest writ petition has also been filed by Sarthak
before the Supreme Court of India alleging encroachment by BALCO
over the land on which the Korba facility is situated. It
alleges that the land is classified as forest land and belongs
to the State Government of Chhattisgarh and that BALCO has
engaged in illegal felling of trees on that land. The Supreme
Court of India has directed the petition to be listed before the
Forest Bench of the Supreme Court of India. The Forest Bench has
directed the CEC to submit a report on the petition. The CEC
submitted a report on the petition to the Supreme Court of India
on October 17, 2007, recommending that BALCO be directed to
seek ex-post facto approval under the Forest Act for the
allotment and non forestry use of the land in possession. The
matter is listed to be heard in the third week of November 2009
for an interim application by BALCO for clearing the expansion
on the land area limited to its proposed expansion.
BALCO
is involved in arbitration proceedings relating to a power
purchase agreement with the CSEB and has initiated arbitration
proceedings against the CSEB.
BALCO had entered into a power purchase agreement dated
May 25, 2006 with the CSEB for the sale of electricity by
BALCO to the CSEB. The CSEB had on November 14, 2006 issued
a letter stating that it had overpaid BALCO a sum of
Rs.529 million ($13.2 million) due to the quantum of
load factor pursuant to which payment had been made having been
incorrectly calculated, and that the definition that should have
been applied is as provided in the Chhattisgarh Electricity
Supply Code. BALCO in its reply dated November 24, 2006 had
contested such position and stated that as no fixed quantum of
electricity was to be supplied, the definition as laid down in
the Chhattisgarh Electricity Supply Code should not be
applicable, and further that such definition would be applicable
only in those instances where the supply of electricity is
between the consumer and the distribution licensee.
Subsequently, on August 2, 2007, BALCO filed an arbitration
petition against the CSEB reiterating its position and further
stating that the power purchase agreement was entered into
between the parties on the basis of the stipulations of the
Chhattisgarh State Electricity Regulatory Commission. The
arbitrator granted an order in favor of BALCO. However in view
of a Supreme Court judgement mandating that all disputes between
a power generator and distributor be subject to arbitration or
adjudication by the State Electricity Commission under
Section 86 of the Indian Electricity Act, 2003, the matter
has been referred to the Chhattisgarh State Electricity
Regulatory Commission which has decided to adjudicate the
matter. The hearing was held on June 25, 2009 pursuant to
which the Chhattisgarh State Electricity Regulatory Commission
granted an order in favor of BALCO. CSEB has filed for an
application for review of the order and the review hearing is
scheduled for October 16, 2009.
Demands
against HZL by Department of Mines and Geology
The Department of Mines and Geology of the State of Rajasthan
issued several show cause notices in August, September and
October 2006, aggregating Rs.3,339 million
($65.6 million) in demand, to HZL in relation to alleged
unlawful occupation and unauthorized mining of associated
minerals other than zinc and lead at its Rampura Agucha, Rajpura
Dariba and Zawar mines in Rajasthan, during the period from July
1968 to March 2006. In addition, the department has also
demanded an aggregate of Rs.48 million ($0.9 million)
by way of alleged arrears in royalty payments at such mines on
the grounds that the royalty payments had been incorrectly
computed by HZL during the period from April 1971 to March 2000.
HZL has filed writ petitions in the High Court of Rajasthan in
Jodhpur and obtained a stay in respect of these demands in
October and November 2006. HZL has filed application for early
hearing of the matter. The High Court of Rajasthan accepted
HZLs request for early hearing and the date for hearing
will be communicated in October 2009.
Additionally, a writ petition was filed by HZL in October 2006
against the State Government of Rajasthan and the Union of India
through the Department of Mines and Geology and others before
the High Court of Rajasthan at Jodhpur with regards to a demand
notice dated October 20, 2006 issued by the Mining Engineer
of Rajasthan to HZL. As per the terms of the notice, the
Department of Mines and Geology stated that the mining lease
granted to HZL was for the extraction of zinc and lead but that
HZL was also extracting cadmium and silver and was thus in
violation of the terms of the lease for the Rampura Agucha mine.
The
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Department of Mines and Geology has claimed
Rs.2,435.9 million ($47.9 million) as the price to be
recovered from HZL for the extraction of cadmium and silver. HZL
asserted in its writ petition that the lease was granted for
lead, zinc and associated minerals and that cadmium and silver
are associated minerals. Further, it has stated that the
contested minerals are found alongside lead and silver in an
inseparable form and cannot be extracted separately. It has also
submitted that it has been paying the royalty on cadmium and
silver, which has been duly accepted by the Department of Mines
and Geology without objection. The High Court issued an order in
October 2006 granting a stay and restrained the Department of
Mines and Geology from undertaking any coercive measures to
recover the penalty. In January 2007, the High Court issued
another order granting the Department of Mines and Geology more
time to file their reply and the High Court also directed the
Department of Mines and Geology not to issue any orders
canceling the lease. The High Court has accepted HZLs
request for early hearing but no date has been set yet.
Information
on the Company
We were incorporated on September 8, 1975 under the laws of
India and maintain a registered office at SIPCOT Industrial
Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin, State
of Tamil Nadu 628 002, India. Our principal executive office is
located at Vedanta, 75 Nehru Road, Vile Parle (East), Mumbai,
Maharashtra 400 099, India and the telephone number for this
office is
+(91-22)
6646-1000.
Our website address is www.sterlite-industries.com. Information
contained on our website, or the website of any of our
subsidiaries or affiliates, including Vedanta and other members
of the Vedanta group, is not a part of this prospectus
supplement or the accompanying prospectus.
We have appointed CT Corporation System, 111 Eighth Avenue, New
York, New York 10011, as our agent to receive service of process
with respect to any action brought against us in the US District
Court for the Southern District of New York under the federal
securities laws of the United States or of any state in the
United States or any action brought against us in the Supreme
Court of the State of New York in the County of New York under
the securities laws of the State of New York.
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THE
OFFERING
The following contains basic information about our notes
being offered and is not intended to be complete. It does not
contain all the information that is important to you. For a more
complete understanding of our notes, please refer to
Description of Notes included in this prospectus
supplement and Description of Share Capital and
Description of American Depositary Shares in the
accompanying prospectus.
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Issuer
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Sterlite Industries (India) Limited, a limited liability company
incorporated under the laws of India. |
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Notes
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We are offering $500,000,000 aggregate principal amount of 4.00%
convertible senior notes due 2014 (the notes). |
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Maturity Date
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The notes will mature on October 30, 2014, unless earlier
repurchased or redeemed by us or converted. |
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Interest rate and interest payment dates
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The notes will bear interest at a rate of 4.00% per year.
Interest will accrue from and including the issuance date or the
last date in respect of which interest has been paid or provided
for, as the case may be. Subject to certain exceptions, interest
will be payable semiannually in arrears on April 30 and on
October 30 of each year, beginning on April 30, 2010,
to the holders of record at 5:00 p.m., New York City time,
on the preceding April 15 and October 15, respectively. |
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All references to interest in this summary of the offering and
the Description of Notes are deemed to include
additional interest, if any, that accrues in connection with our
failure to comply with our reporting obligations under the
indenture, if applicable (as described under Description
of Notes Events of Default and Acceleration)
and additional amounts, as described under Description of
Notes Additional Amounts and additional
payments as described under Description of
Notes Conversion Rights Conversion Rate
Adjustments. |
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Ranking
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The notes: |
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will be our unsecured senior obligations and will
rank equally in right of payment with all of our existing
unsecured indebtedness and future unsecured senior indebtedness;
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will be senior in right of payment to our future
unsecured subordinated indebtedness expressly subordinated in
right of payment to the notes; and
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will be structurally subordinated in right of
payment to any existing and future debt and other liabilities,
including trade payables, of our subsidiaries.
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In addition, the notes will be effectively junior to any of our
secured indebtedness to the extent of the value of the related
collateral. As of June 30, 2009, after giving effect to the
offering of these notes, the Issuer would have had approximately
$810.4 million of senior indebtedness including the notes
(approximately $20.9 million of which was secured
indebtedness). As of June 30, 2009, our subsidiaries had
total indebtedness and |
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other liabilities, including trade payables but excluding
intercompany liabilities, of $1,680.4 million. |
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The terms of the indenture under which the notes are issued do
not limit our ability to incur additional indebtedness,
including additional senior indebtedness. |
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Conversion rights
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Subject to certain exceptions, the notes are convertible, at the
option of the holder, at any time prior to 5:00 p.m., New
York City time, on the business day immediately preceding the
maturity date into ADSs at a conversion rate of 42.8688 ADSs per
$1,000 principal amount of notes, which is equal to a conversion
price of approximately $23.33 per ADS. |
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Delivery of our ADSs will occur as promptly as practicable
following the conversion date, but in no event later than
45 days (in the case of any conversion date occurring prior
to the last record date before a redemption date or the maturity
date) or 10 days (in the case of any conversion date
occurring on or after the last record date before the redemption
date or the maturity date) after such conversion date. It is
expected that any newly issued ADSs will be accepted into the
book-entry system maintained by DTC, and no person receiving
ADSs shall receive or be entitled to receive physical delivery
of ADSs, except in the limited circumstances set forth in the
deposit agreement. |
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The conversion rate is subject to adjustment, as described
herein. In addition, holders who convert their notes in
connection with a change of control transaction may be entitled
to an increase in the conversion rate. See Description of
Notes Adjustment to Conversion Rate Upon a Change of
Control. |
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Notwithstanding the foregoing, in no event shall (i) the
conversion rate as adjusted on account of a change of control
transaction in the manner set forth in Description of
Notes Adjustment to Conversion Rate Upon a Change of
Control exceed 58.9445 ADSs per $1,000 principal amount of
notes, subject to adjustment as described under
Description of Notes Conversion
Rights Conversion Rate Adjustments; (ii) the
conversion rate as adjusted exceed the conversion rate limit of
57.1428 ADSs per $1,000 principal amount of notes, which is
equivalent to a conversion price of $17.50 per ADS, the minimum
conversion price per ADS as determined pursuant to the
regulations prescribed by the Ministry of Finance of India, or
the Ministry of Finance, and has been determined based on the
minimum conversion price of Rs.803.29 and the Reserve Bank of
India, or RBI, exchange rate of Rs.45.91 to $1.00; or
(iii) the conversion rate be adjusted to a rate that would
render conversion of the notes into ADSs at such adjusted
conversion rate to be in contravention of any applicable law or
subject to approval of the Ministry of Finance, the RBI or any
other regulatory or governmental authority in India. |
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Upon any conversion, subject to certain exceptions, you will not
receive any cash payment representing accrued and unpaid
interest. See Description of Notes Conversion
Rights. |
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Upon conversion, you must pay applicable fees and expenses of
the depositary for the issuance of the ADSs as described in the
deposit agreement. See Description of American Depositary
Shares Fees and Charges in the accompanying
prospectus. |
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Adjustment to conversion rate upon change of control
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If and only to the extent a holder elects to convert its notes
in connection with a change of control as described under
Description of Notes Fundamental Change
Permits Purchase of Notes By Us at the Option of the
Holder pursuant to which 10% or more of the consideration
for our equity shares
and/or ADSs
(other than cash payments for fractional equity shares and cash
payments made in respect of dissenters appraisal rights)
in such change of control transaction consists of cash or
securities (or other property) that are not ordinary shares,
shares of common stock, depositary receipts or other
certificates representing common equity interests traded or
scheduled to be traded immediately following such change of
control transaction on a U.S. national securities exchange, the
conversion rate will be increased by an additional number of
ADSs, to the extent described in this prospectus supplement. |
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The number of additional ADSs, if any, by which the conversion
rate is increased will be based on the price paid for our equity
shares in the transaction constituting the change of control and
the effective date of the change of control. A description of
how the increase in the applicable conversion rate will be
determined and a table showing the increase that would apply at
various prices paid and change of control effective dates are
set forth under Description of Notes
Adjustment to Conversion Rate Upon a Change of Control. |
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Notwithstanding the foregoing, in no event shall (i) the
conversion rate as adjusted on account of a change of control
transaction in the manner set forth in Description of
Notes Adjustment to Conversion Rate Upon a Change of
Control exceed 58.9445 ADSs per $1,000 principal amount of
notes, subject to adjustment as described under
Description of Notes Conversion
Rights Conversion Rate Adjustments; (ii) the
conversion rate as adjusted exceed the conversion rate limit of
57.1428 ADSs per $1,000 principal amount of notes, which is
equivalent to a conversion price of $17.50 per ADS, the minimum
conversion price per ADS as determined pursuant to the
regulations prescribed by the Ministry of Finance and has been
determined based on the minimum conversion price of Rs.803.29
and the RBI exchange rate of Rs.45.91 to $1.00; or
(iii) the conversion rate be adjusted to a rate that would
render conversion of the notes into ADSs at such adjusted
conversion rate to be in contravention of any applicable law or
subject to approval of the Ministry of Finance, the RBI or any
other regulatory or governmental authority in India. |
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Purchase at holders option upon fundamental change
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If a fundamental change (as defined herein) occurs, a holder
will have the right, subject to RBI approval and the terms and
conditions of the indenture, to require us to repurchase in |
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compliance with applicable law all or any portion of its notes
that is equal to $1,000 or an integral multiple of $1,000. The
fundamental change purchase price will be 100% of the principal
amount of the notes to be repurchased plus accrued and unpaid
interest, if any, up to, but excluding, the repurchase date.
Under current laws in India, any repurchase prior to maturity
requires prior RBI approval. See Description of
Notes Fundamental Change Permits Purchase of Notes
By Us at the Option of the Holder. |
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Optional Redemption
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Subject to certain exceptions, at any time after
November 4, 2012, we may redeem all or part of the notes at
a price equal to 100% of the principal amount of the notes to be
redeemed plus accrued and unpaid interest, including additional
interest, if any, on such notes to, but excluding the redemption
date, if the closing price of our ADSs has been at least 130% of
the conversion price then in effect for at least 20 trading days
during any 30 consecutive trading day period prior to the date
on which we provide notice of such redemption. |
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Tax Redemption
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In the event of certain changes or amendments to the laws or
regulations governing India or other relevant taxing
jurisdiction, we will have the option to redeem all, but not
less than all, of the notes at 100% of their principal amount
together with accrued but unpaid interest (calculated up to but
excluding the date fixed for redemption) and any additional
amounts. See Description of Notes Tax
Redemption. Upon our giving notice of redemption, a holder
may elect not to have its notes redeemed, in which case such
holder would not be entitled to receive payment of such
additional amounts in excess of the rate of additional amounts
payable on the issue date of the notes. See Description of
Notes Tax Redemption. |
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RBI Approval Required for early redemption of repurchase
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Under current RBI regulations applicable to convertible notes,
we are required to obtain prior approval of the RBI before
effecting any repurchase or redemption of the notes prior to the
maturity date in a manner other than as prescribed under
applicable law. |
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The ADSs
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Each ADS represents the right to receive one equity share. The
ADSs will be issued and delivered by Citibank, N.A., as
Depositary. Upon conversion of the notes, you will receive ADSs. |
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The Depositary will deliver equity shares only upon surrender of
ADSs to the extent the number of equity shares at that time
deposited with Citibank, N.A., Mumbai Branch, as Custodian, have
been listed for trading on the NSE and the BSE, and
dematerialized. The Depositary will process requests for
withdrawal of the equity shares represented by ADSs surrendered
to it on a first come, first served basis. |
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You should carefully read Description of American
Depositary Shares in the accompanying prospectus to better
understand the terms of the ADSs. You should also read the
deposit agreement which is an exhibit to the registration
statement filed with the |
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US Securities and Exchange Commission, or the Commission,
on
Form F-6
(Registration
No. 333-139102)
to register the ADSs. |
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Additional amounts
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To the extent any withholding or deductions is required in
certain jurisdictions by law or by regulation or governmental
policy having the force of law, we will pay such additional
amounts as may be necessary. See Description of
Notes Additional Amounts. |
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Events of default
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Except with respect to any failure to comply with our reporting
obligations under the indenture, if an event of default on the
notes occurs, the principal amount of the notes plus accrued and
unpaid interest may be declared immediately due and payable,
subject to certain conditions set forth in the indenture. These
amounts automatically become due and payable in the case of
certain types of bankruptcy or insolvency events of default
involving us. Under current laws in India, any early redemption
prior to maturity requires prior RBI approval. |
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Should we fail to comply with the reporting obligations in the
indenture, the holders remedy upon the occurrence of such
event of default will for the 180 calendar days after the
occurrence of such event consist exclusively of the right to
receive additional interest on the notes at an annual rate equal
to 0.25% of the principal amount of the notes. See
Description of Notes Events of Default and
Acceleration. |
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Governing law
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The indenture and the notes will be governed by, and construed
in accordance with, the laws of the State of New York. |
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Use of proceeds
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Our net proceeds from the sale of notes in this offering will
total approximately $495.1 million after deducting the
underwriting discounts and commissions and estimated offering
expenses which are payable by us. We currently intend to use the
net proceeds from this offering for expansion of our copper
business, acquisition of complementary businesses outside of
India and any other permissible purpose under, and in compliance
with, applicable laws and regulations in India, including the
external commercial borrowing regulations specified by the RBI.
See Use of Proceeds. |
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Risk factors
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An investment in our notes involves risks. You should carefully
consider the information set forth in the sections of this
prospectus supplement and the accompanying prospectus entitled
Risk Factors, as well as other information included
in or incorporated by reference into this prospectus supplement
and the accompanying prospectus before deciding whether to
invest in the notes. |
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Form and denomination
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The notes will be issued in minimum denominations of $1,000 and
any integral multiple of $1,000. |
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DTC eligibility
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The notes will be issued in book-entry-only form and will be
represented by one or more global notes. Global notes will be
deposited with a custodian and registered in the name of a
nominee of The Depository Trust Company, or DTC, in New
York, New York. Beneficial interests in global notes will be
shown on, and transfers thereof will be effected only through,
records maintained by DTC and its direct and indirect
participants, and your interest in any global note may not be
exchanged for certificated notes, except |
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in limited circumstances described herein. See Description
of Notes Global Notes; Book Entry; Form. |
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Trading of the notes and absence of a public market
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We do not intend to apply for the listing of the notes on any
securities exchange or for inclusion in any automated quotation
system. The notes will be new securities for which there is
currently no public market. |
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Listing and trading
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Our ADSs are listed on the New York Stock Exchange, or NYSE. Our
outstanding equity shares are listed and traded in India on the
NSE and the BSE. |
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Delivery and settlement
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It is expected that delivery of the notes to the underwriters
will be made against payment on a delayed basis. The date of
delivery is expected to be October 29, 2009. Any change in
the date of delivery will be notified to investors through a
press release which will be posted on our website at
www.sterlite-industries.com. Such notification may not
occur until two or three business days before the earlier of
October 29, 2009 or the new date of delivery.
Rule 15c6-1
under the Securities Exchange Act of 1934, as amended, generally
requires that securities trades in the secondary market settle
in three business days, unless the parties to the trade
expressly agree otherwise. Accordingly, purchasers who wish to
trade notes on any day prior to the third business day before
the delivery of the notes will be required, by virtue of the
fact that the notes initially will settle on a delayed basis, to
specify an alternate settlement cycle at the time of any such
trade, or to make any necessary arrangements to ensure that
notes are available on the third business day after trading for
settlement, to prevent a failed settlement. Purchasers of notes
who wish to make such trades should consult their own advisors.
Purchasers who are not able to make any necessary
arrangements to prevent a failed settlement may not be able to
make any trades of notes prior to the third business day before
the delivery of the notes to the underwriters. |
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We are required to obtain a Loan Registration Number, or LRN,
from the RBI prior to receiving payments against the notes. |
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NYSE symbol for the ADSs
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SLT |
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Depositary for the ADSs
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Citibank, N.A. |
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Lock-up
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We, our principal shareholders, Twin Star and MALCO, Vedanta and
our directors and executive officers have agreed not to, during
the period commencing on the date of this prospectus supplement
and ending on the day after the date 60 days after the date
of this prospectus supplement, offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant or exercise any option, right or warrant to purchase, lend
or otherwise transfer or dispose of, directly or indirectly, or
file or cause to be filed a registration statement, or exercise
any registration right, in respect of, any of our ADSs or equity
shares or any securities convertible into or exchangeable or
exercisable for any ADSs or equity shares, |
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or any similar securities, or enter into any swap or other
agreement that transfers, in whole or in part, any of the
economic consequences of ownership of our ADSs or equity shares,
subject to certain exceptions. See Underwriting. |
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Restrictions on ADSs relating to the Indian Stock Exchanges
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ADS holders may not surrender their ADSs to the Depositary for
the purpose of withdrawing the deposited shares until we have
confirmed to the Depositary that we have received confirmation
from the Indian Stock Exchanges that the underlying equity
shares have been listed for trading thereon and have therefore
become listed shares and such equity shares have been
dematerialized. We expect (i) to receive the confirmation
from the Indian Stock Exchanges of the listing of the equity
shares underlying the ADSs approximately 45 days after the
issuance of the equity shares underlying the ADSs (in the case
of any conversion date occurring prior to the last record date
before a redemption date or the maturity date) or 10 days
after the issuance of the equity shares underlying the ADSs (in
the case of any conversion date occurring on or after the last
record date before the redemption date or the maturity date) and
(ii) the equity shares underlying the ADSs to be
dematerialized in the account of the Custodian approximately 10
Indian business days following receipt by the Depositary of
confirmation of listing of the equity shares for trading on the
Indian Stock Exchanges. The Depositary will process applications
for withdrawal of ADSs for cancellation on a first come, first
served basis and only to the extent of the number of listed
shares deposited at that time with the Custodian. |
On October 15, 2009, the closing sale price of our ADSs on
the NYSE was $16.62 per ADS. On October 14, 2009, the
closing sale price of our equity shares on the BSE was Rs.
852.40 per equity share and on the NSE was Rs. 855.75 per equity
share.
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RISK
FACTORS
An investment in the notes or our ADSs issuable upon the
conversion of the notes involves material risks. You should
carefully consider the risks set forth below and in our Annual
Report on
Form 20-F,
as well as all of the other information contained or
incorporated by reference in this prospectus supplement and the
accompanying prospectus, before deciding to invest in the notes.
The occurrence of any of the following risks could materially
and adversely affect our business, financial condition, results
of operations and prospects. In such case, the trading prices of
the notes or our ADSs could decline and you could lose all or
part of your investment. In addition, please read Special
Note Regarding Forward-Looking Statements in the
accompanying prospectus where we describe additional
uncertainties associated with our business and the
forward-looking statements included or incorporated by reference
in this prospectus supplement.
Risks
Relating to Our Business
We are
transitioning to financial reporting under International
Financial Reporting Standards, or IFRS, during our current
fiscal year which differs in certain significant respects from
US generally accepted accounting standards, or US GAAP, under
which we have historically reported.
Our financial statements have historically been reported under
US GAAP. Beginning fiscal 2010, we will commence financial
reporting under IFRS, including our interim financial statements
such as the financial statements for the quarter ended
June 30, 2009 which are incorporated by reference in this
prospectus. However, there are certain significant differences
between US GAAP and IFRS. As a result, our financial information
and reported earnings for periods within and the full year
fiscal 2010 and future periods could be significantly different
if they were prepared in accordance with US GAAP. Consequently,
you may not be able to meaningfully compare our financial
statements under IFRS with our historical financial statements
under US GAAP.
This prospectus supplement and the accompanying prospectus does
not contain a reconciliation of our historical financial
information to US GAAP and we cannot assure you that such a
reconciliation would not reveal material differences. Potential
investors should consult their own professional advisors for an
understanding of the differences between IFRS and US GAAP
and how these differences might affect the financial information
in and incorporated by reference into this prospectus supplement
and the accompanying prospectus.
Risks
Relating to this Offering, the Notes and the ADSs
Reserve
Bank of India approval is required for repayment of the notes
prior to maturity, including upon an event of default, a
redemption or a repurchase upon a fundamental
change.
Under the guidelines on policies and procedures for External
Commercial Borrowings issued by the RBI, any prepayment of
external commercial borrowing prior to its stated maturity
requires the prior approval of RBI. Therefore, any prepayment of
the notes prior to maturity as a result of early redemption,
repurchase or acceleration of the notes, including upon an event
of default would require the prior approval of the RBI. There
can be no assurance that such approval would be obtained at all.
The
notes are structurally subordinated to the liabilities of our
existing subsidiaries and any of our future
subsidiaries.
The notes will be obligations of Sterlite Industries (India)
Limited and will not be guaranteed by our existing subsidiaries
or any future subsidiaries and, accordingly, the notes will be
structurally subordinated to the existing and future
indebtedness and other liabilities, including trade payables, of
our subsidiaries. Therefore, our rights and the rights of our
creditors, including the holders of the notes, to participate in
the assets of any subsidiary upon that subsidiarys
liquidation or reorganization will be subject to the prior
claims of the subsidiarys creditors, except to the extent
that we may ourselves be a creditor with recognized claims
against the subsidiaries. However, even if we are a creditor of
one of our subsidiaries, our claims would still be effectively
subordinated to any security interests in, or mortgages or other
liens on the assets of that
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subsidiary and would be subordinated to any indebtedness of the
subsidiary senior to that held by us. As of June 30, 2009,
our subsidiaries had total liabilities, including trade payables
but excluding intercompany liabilities, of $1,680.4 million.
Substantial
future sales of our equity shares or ADSs in the public market,
or the perception of such sales, could cause the market prices
of our ADSs and of the notes to fall.
If our existing shareholders sell a substantial number of our
equity shares or ADSs in the open market, or if there is a
perception that such sale or distribution could occur, the
market price of our equity shares, ADSs and the notes could be
adversely affected. While we, our principal shareholders, Twin
Star and MALCO, Vedanta and our directors and executive officers
have agreed not to, during the period commencing on the date of
this prospectus supplement and ending on the day after the date
60 days after the date of this prospectus supplement,
offer, pledge, announce the intention to sell, sell, contract to
sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant or exercise any option, right
or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, or file or cause to be filed a
registration statement, or exercise any registration right, in
respect of, any of our ADSs or equity shares or any securities
convertible into or exchangeable or exercisable for any of our
ADSs or equity shares, or any similar securities, or enter into
any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of our ADSs or
equity shares, subject to certain exceptions, no assurance can
be given that such ADSs or equity shares will not be sold as
soon as the restrictions are lifted, which sales, or the
perception that such sales may occur, could materially and
adversely affect the value of our ADSs, equity shares and the
notes. The underwriters may release such
locked-up
shares in their sole discretion at any time and without prior
public announcement.
Assuming conversion of all notes at the initial conversion rate
of 42.8688 ADSs per $1,000 principal amount of the notes, we
will have 861,834,822 equity shares outstanding. Of these equity
shares, the equity shares represented by ADSs will be freely
tradable without restriction in the public markets. In addition,
assuming conversion of all notes at the initial conversion rate
of 42.8688 ADSs per $1,000 principal amount of the notes,
Vedanta, through Twin Star and MALCO, will continue to have
effective control over 478,291,746 of our outstanding equity
shares, which will represent 55.5% of our outstanding share
capital assuming such conversion, which equity shares will be
subject to a
60-day
lock-up
period.
The
market price for our ADSs may be volatile. Fluctuations in the
price of our ADSs may impact the price of the notes and make
them more difficult to resell.
The market price of our ADSs has been and may continue to be
volatile. The high and low closing sale prices of our ADSs on
the NYSE were $28.97 and $11.12, respectively, for fiscal 2008
and $23.00 and $3.12, respectively, for fiscal 2009. Numerous
factors, including many over which we have no control, may have
a significant impact on the market price of our ADSs, including,
among other things:
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a decline or volatility in the prices of or demand for copper,
zinc or aluminum;
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regulatory developments in our target markets affecting us, our
customers or our competitors;
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actual or anticipated fluctuations in our quarterly operating
results;
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changes in financial estimates or other material comments by
securities analysts relating to us, our competitors or our
industry in general;
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announcements by other companies in our industry relating to
their operations, strategic initiatives, financial condition or
financial performance or to our industry in general;
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announcements of acquisitions or consolidations involving
industry competitors or industry suppliers;
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sales or perceived sales of additional equity shares or ADSs by
us or our significant shareholders;
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impact and development of any lawsuit, currently pending or
threatened, or that may be instituted in the future; and
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fluctuations in the exchange rate between the Indian Rupee and
the US dollar.
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In addition, the stock market in recent years and particularly
since mid-2008 has experienced extreme price and trading volume
fluctuations that often have been unrelated or disproportionate
to the operating performance of individual companies. These
broad market fluctuations may adversely affect the price of our
ADSs, regardless of our operating performance. These factors,
among others, could depress the trading price of our ADSs.
Because the notes are convertible into our ADSs, depressed
prices for our ADSs could have a negative effect on the trading
price of the notes. Holders who receive ADSs upon conversion of
the notes will also be subject to the risk of depressed prices
of our ADSs. In addition, any sales in the public market of ADSs
issued upon conversion could adversely affect prevailing market
prices of our ADSs. Any decrease in the price volatility of our
ADSs could adversely impact the value of your notes.
Recent
developments in the convertible debt markets may adversely
affect the market value of the notes.
Governmental actions that interfere with the ability of
convertible debt investors to effect short sales of the
underlying ADSs could significantly affect the market value of
the notes. Such government actions would make the convertible
arbitrage strategy that many convertible debt investors employ
difficult to execute for outstanding convertible debt of any
company whose common stock, common shares or ADSs are subject to
such actions. The convertible debt markets recently experienced
unprecedented disruptions resulting from, among other things,
the recent instability in the credit and capital markets and the
emergency orders issued by the SEC on September 17 and 18, 2008
(and extended on October 1, 2008). These orders were issued
as a stop-gap measure while Congress worked to provide a
comprehensive legislative plan to stabilize the credit and
capital markets. Among other things, these orders temporarily
imposed a prohibition on effecting short sales of common stock
of certain financial companies. As a result, the SEC orders made
the convertible arbitrage strategy that many convertible debt
investors employ difficult to execute for outstanding
convertible debt of those companies whose common stock was
subject to the short sale prohibition. Although the SEC orders
expired on October 8, 2008, the SEC is currently
considering instituting other limitations on effecting short
sales (such as the up-tick rule) and other regulatory
organizations may do the same. On April 8, 2009, the SEC
voted unanimously to seek public comment on whether short sale
price restrictions or circuit breaker restrictions should be
imposed. The SEC voted to propose two approaches to restrictions
on short selling. One approach would apply on a market wide and
permanent basis, including adoption of a new uptick rule, while
the other would apply only to a particular security during
severe market declines in that security, and would involve,
among other limitations, bans on short selling in a particular
security during a day if there is a severe decline in price in
that security. If such limitations are instituted by the SEC or
any other regulatory agencies, the market value of the notes
could be adversely affected.
There
are Ministry of Finance regulations that affect the conversion
price of the notes.
The Ministry of Finance, through a notification dated
November 27, 2008, amended the Issue of Foreign Currency
Convertible Bonds and Ordinary Shares (Through Depository
Receipt Mechanism) Scheme, 1933, as amended from time to time
(the FCCB/ADR Scheme) and prescribed certain pricing
guidelines in relation to the conversion of Foreign Currency
Convertible Bonds (FCCBs). The FCCB/ADR Scheme
applies to the issue and offering of the notes and provides,
among other things, that the conversion price of a convertible
bond should not be lower than a floor price which
has been calculated with reference to the average of the weekly
high and low of the closing prices of the underlying shares
quoted on the stock exchange during the two weeks preceding the
date of the meeting in which our Board of Directors (or a duly
authorized committee thereof) decided to open the proposed issue
of the notes. There can be no assurance that the potential
adjustments to the conversion price which are provided for in
Description of Notes Conversion
Rights Conversion Rate Adjustments and
Description of Notes Adjustment to Conversion
Rate Upon a Change of Control would be permitted by the
Ministry of Finance if an adjustment resulted in the conversion
price
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falling below the floor price referred to above.
There can also be no assurance (i) as to how the Ministry
of Finance will apply or interpret the FCCB/ADR Scheme or
whether the restrictions set forth in the FCCB/ADR Scheme would
prevent us from undertaking certain corporate actions, or
(ii) that the Ministry of Finance will not prescribe any
further pricing guidelines which would deem any adjustments by
way of certain corporate actions (including the declaration of
dividends, issuance of equity shares by way of capitalization of
profits or reserves and division of outstanding equity shares)
to be in contravention of the FCCB/ADR Scheme.
There
are no restrictive covenants in the indenture governing the
notes relating to our ability to incur future indebtedness or
complete other transactions. If we incur substantial additional
indebtedness, these higher levels of indebtedness may affect our
ability to meet our payment obligations on the
notes.
The indenture governing the notes does not contain any financial
or operating covenants that would protect you from transactions
that may adversely affect you. In particular, the indenture does
not contain restrictions on the payment of dividends, the
incurrence of indebtedness, transactions with affiliates,
incurrence of liens or the issuance or repurchase of securities
by us or any of our subsidiaries. We therefore may incur
additional debt, including secured indebtedness or indebtedness
at the subsidiary level to which the notes would be structurally
subordinated. We may not be able to generate sufficient cash
flow to pay the interest on our debt, including the notes
offered hereby and secured indebtedness or indebtedness at the
subsidiary level that is senior in right of payment to the notes
offered hereby, or that future working capital, borrowings or
equity financing will be available to pay or refinance any such
debt.
Any additional debt could have significant consequences on our
future operations, including:
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making it more difficult for us to meet payment and other
obligations that arise in the course of our business;
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increasing our exposure to additional charges, including
interest expenses caused by factors such as market volatility
and fluctuation in exchange rates;
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limiting our flexibility in planning for or reacting to, and
increasing our vulnerability to, changes in our business, the
industry in which we operate and the general economy; and
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placing us at a competitive disadvantage compared to our
competitors who have less debt or are less leveraged.
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Furthermore, the indenture for the notes contains only limited
protections in the event of a change in control. We could engage
in many types of transactions, such as acquisitions,
refinancings or recapitalizations, which could substantially
affect our capital structure and the value of the notes, our
equity shares and our ADSs but may not constitute a
fundamental change that permits holders to require
us to repurchase their notes. Similarly, the circumstances under
which we are required to increase the conversion rate upon the
occurrence of certain types of fundamental changes are limited
to circumstances where a note is converted in connection with
such a transaction as set forth under Description of
Notes Adjustment to Conversion Rate Upon a Change of
Control.
Because
the definition of fundamental change is limited to
certain transactions and events, we may have no obligation to
repurchase the notes upon a entering a significant restructuring
transaction.
The definition of fundamental change is limited and
may not include every event that might cause the market price of
the notes to decline. Therefore, the fundamental change
provisions of the indenture may not protect you from
transactions that adversely affect the value of the notes. For
example, highly leveraged transactions, reorganizations, mergers
or similar transactions may not constitute fundamental changes
but could adversely affect our capital structure, increase our
indebtedness, or otherwise adversely affect the market value of
the notes.
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We may
be unable to raise the funds to purchase the notes upon a
fundamental change.
If a fundamental change occurs, holders of the notes may require
us to repurchase, subject to RBI approval and the terms and
conditions of the indenture, all or a portion of their notes. We
may not have sufficient funds for any required repurchase of the
notes, and we may have to refinance our credit facilities in
order to make payments under the notes. In addition, the terms
of any borrowing agreements which we may enter into from time to
time may require early repayment of borrowings under
circumstances similar to those constituting a fundamental
change. These agreements may also make our repurchase of notes
an event of default under such agreements. If we fail to
repurchase the notes when required, we will be in default under
the indenture governing the notes.
The
increase in the conversion rate applicable to notes that holders
convert in connection with certain changes of control may not
adequately compensate you for any lost value of your notes
resulting from such transactions.
If a change of control occurs pursuant to which 10%
or more of the consideration for our equity shares (subject to
certain exceptions) in such change of control transaction
consists of cash or securities or other property that are not
ordinary shares, shares of common stock, depositary receipts or
other certificates representing common equity interests traded
or scheduled to be traded immediately following such change of
control transaction on a U.S. national securities exchange,
under certain circumstances, we will increase the conversion
rate applicable to holders who convert their notes within a
specified time frame. The amount of the increase in the
conversion rate depends on the date when such change of control
becomes effective and the price paid per equity share in such
change of control, as described in this prospectus supplement.
See Description of Notes Adjustment to
Conversion Rate Upon a Change of Control. Although the
increase in the conversion rate is designed to compensate you
for the lost option value of your notes as a result of such a
transaction, the increase in the conversion rate may not
adequately compensate you for such loss. In addition, if the ADS
price in the transaction is greater than $80.00 per ADS or less
than $16.97 per ADS (in each case, subject to adjustment), the
conversion rate will not be increased. Moreover, in no event
will the total number of ADSs issuable upon conversion as a
result of this adjustment exceed 58.9445 ADSs per $1,000
principal amount of the notes, subject to adjustment in the same
manner as the conversion rate as set forth under
Description of Notes Conversion
Rights Conversion Rate Adjustments, or any
conversion rate limit under Indian law. As of the date of this
prospectus supplement, under Ministry of Finance Regulations,
the conversion rate, as adjusted, may not exceed 57.1428 ADSs
per $1,000 principal amount of the notes. Furthermore, our
obligation to increase the conversion rate as described above
could also be considered a penalty, in which case its
enforceability would be subject to general principles of
reasonableness of economic remedies.
There
is currently no public market for the notes, and an active
trading market may not develop for the notes. If an active and
liquid trading market for the notes does not develop, the market
price of the notes may decline and you may be unable to sell
your notes.
The notes are a new issue of securities, and there is no
existing market for the notes. If the notes are traded after
their initial issuance, they may trade at a discount from their
initial offering price, depending on prevailing interest rates,
the market for similar securities, the exchange rate between the
US dollar and the rupee, the price and volatility in the price
of our ADSs and underlying equity shares, our performance and
other factors. In addition, we do not know whether an active
trading market will develop for the notes. To the extent that an
active trading market does not develop, the liquidity and
trading prices for the notes may be harmed.
We do not intend to apply for listing of the notes on any
securities exchange or for inclusion in any automated quotation
system. We have been advised by the underwriters that they
presently intend to make a market in the notes. However, the
underwriters are not obligated to do so. Any market-making
activity, if initiated, may be discontinued at any time, for any
reason or for no reason, without notice. If the underwriters
cease to act as the market makers for the notes, we cannot
assure you another firm or person will make a market in the
notes.
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The liquidity of any market for the notes will depend upon the
number of holders of the notes, our results of operations and
financial condition, the market for similar securities, the
interest of securities dealers in making a market in the notes
and other factors. An active or liquid trading market for the
notes may not develop and you may be unable to resell your notes
or may only be able to sell them at a substantial discount. In
addition, the market for debt securities in emerging markets has
been subject to disruptions that have caused substantial
volatility in the prices of securities similar to the notes.
There can be no assurance that the markets for the notes, if
any, will not be subject to similar disruptions. Any disruptions
in these markets may have an adverse effect on the market price
of the notes.
An
active or liquid trading market for our ADSs is not
assured.
While conversion of the notes into ADSs would increase the
number of our ADSs publicly trading on the NYSE, an active,
liquid trading market for our ADSs may not be maintained in the
long term and we cannot be certain that any trading market for
our ADSs will be sustained, or that the present price will
correspond to the future price at which our ADSs will trade in
the public market. Loss of liquidity could increase the price
volatility of our ADSs. Indian legal restrictions may also limit
the supply of ADSs. Any additional issuance of ADSs would dilute
the positions of existing investors in the equity shares and
ADSs and could adversely affect the market price of our equity
shares and ADSs. As a result, you may be unable to resell your
ADSs at a price that is attractive to you after converting your
notes.
There
are restrictions on daily movements in the price of our equity
shares, which may adversely affect the ability of a holder of
the notes, once it has converted the notes into ADSs and further
converted the ADSs into our equity shares to sell, or the price
at which it can sell, our equity shares at a particular point in
time.
We are subject to a daily circuit breaker imposed by all stock
exchanges in India which does not allow transactions beyond a
certain level of volatility in the price of the equity shares.
This circuit breaker operates independently of the index-based
market-wide circuit breakers generally imposed by the SEBI on
Indian stock exchanges. The percentage limit on our circuit
breaker is set by the stock exchanges based on the historical
volatility in the price and trading volume of our equity shares.
The stock exchanges do not inform us of the percentage limit of
the circuit breaker from time to time, and may change it without
our knowledge. This circuit breaker effectively limits upward
and downward movements in the price of our equity shares. As a
result of this circuit breaker, there can be no assurance
regarding the ability of holders of the notes to sell our equity
shares once they have converted the notes held by them into ADSs
and further converted the ADSs into our equity shares, or the
price at which the holders of the notes may be able to sell our
equity shares at a particular point in time.
Fluctuations
in the exchange rate between the rupee and the US dollar may
have a material adverse effect on the value of the notes, the
ADSs deliverable upon conversion of the notes and the equity
shares underlying such ADSs, independent of our operating
results.
The price of the notes will be quoted in US dollars. The equity
shares are quoted in rupees on the BSE and the NSE. The ADSs are
quoted in US dollars. Any dividends in respect of the equity
shares will be paid in rupees and subsequently converted into US
dollars for distribution to ADS holders. Market prices for the
ADSs may fall if the value of the rupee declines against the US
dollar. In addition, the dollar amount of any cash dividends or
other cash payments to holders of the ADSs would decline if the
value of the rupee declines against the US dollar. ADS holders
who seek to sell in India any equity shares represented by ADSs
issued upon conversion of the notes or any equity shares
withdrawn upon surrender of any such ADSs, and to convert the
rupee proceeds of such sale into foreign currency and remit such
foreign currency from India, will require the approval of the
RBI for each such transaction (unless such equity shares are
sold on a stock exchange in India on which such equity shares
are listed). A delay in obtaining such approval might adversely
affect the rate of exchange available for such conversion. The
exchange rate between the rupee and the US dollar has changed
substantially in the last two decades and may substantially
fluctuate in the future. On an annual average basis, the rupee
declined against the US dollar since 1980. The rupee lost
approximately 15% of its
S-22
value relative to the dollar in the three year period ended
March 31, 2002 but generally appreciated in value against
the dollar during fiscal 2003 and fiscal 2004. The rupee,
however, depreciated in value during fiscal 2005 and 2006 and
ended at an exchange rate of Rs.43.62 = $1.00 on March 31,
2005 and Rs.44.48 = $1.00 on March 31, 2006, respectively.
During fiscal 2007 and 2008, the rupee once again appreciated
against the US dollar, ending at an exchange rate of Rs.40.02 =
$1.00 on March 31, 2008. During fiscal 2009, the rupee
depreciated against the US dollar, ending at an exchange rate of
Rs.50.87 = $1.00 on March 31, 2009. The value of the rupee
against the US dollar was Rs.47.61 = $1.00 as of October 2,
2009.
The
issuance of the notes will dilute the ownership interest of
existing ADS holders and equity shareholders, which may
adversely affect the market price of our ADSs.
For the purposes of calculating our earnings per equity share
and per ADS, the notes will be accounted for under the if
converted method in accordance with Statement of Financial
Accounting Standards No. 128. Under this method, the
maximum number of our ADSs then issuable upon conversion of the
notes will be included in our diluted earnings per ADS to the
extent the effect of such inclusion is dilutive. Upon conversion
of the notes, the ADSs issued will be included in our basic
earnings per ADS. Any sales in the public market of the ADSs
issuable upon such conversion could adversely affect prevailing
market prices of our ADSs and of any notes not yet converted. In
addition, the existence of the notes may encourage short selling
by market participants.
The
conversion rate of the notes may not be adjusted for all
dilutive events that may adversely affect the trading price of
the notes or the ADSs issuable upon conversion of the
notes.
The conversion rate of the notes is subject to adjustment upon
certain events, including certain dividends of equity shares on
our equity shares, subdivisions or combinations of our equity
shares, the issuance to holders of our equity shares of rights
or warrants to purchase our equity shares, distributions to
holders of our equity shares of capital stock, indebtedness or
assets, cash dividends on our equity shares and issuer tender
offers or exchange offers for our equity shares (directly or in
the form of ADSs) as described under Description of
Notes Conversion Rights Conversion Rate
Adjustments. The conversion rate will not be adjusted for
certain other events, such as a third party tender offer or
exchange offer for our equity shares (directly or in the form of
ADSs) or an issuance of our equity shares or ADSs for cash, that
may adversely affect the trading price of the notes or the ADSs
issuable upon conversion of the notes.
In addition, the conversion rate of the notes is subject to a
cap based on a minimum conversion price determined under
regulations prescribed by the Ministry of Finance. We also will
not adjust the conversion rate to a rate that would render the
conversion of the notes to be in contravention of applicable law
or subject to the approval of certain governmental or regulatory
authorities. In each such case, holders of the notes will not
receive the benefit of the adjustment that they would otherwise
have received. See Description of Notes
Conversion Rights.
If you
hold notes, you are not entitled to any rights with respect to
our ADSs, but you will be subject to all changes made with
respect to our ADSs and underlying equity shares.
If you hold notes, you are not entitled to any rights with
respect to our ADSs or equity shares, but you are subject to all
changes affecting our ADSs and underlying equity shares. You
will only be entitled to rights with respect to our ADSs, which
are fewer than holders of equity shares as discussed below, if
and when we deliver ADSs to you upon conversion of your notes
and in limited cases under the adjustments of the conversion
rate. For example, in the event that an amendment is proposed to
our articles of association or bylaws requiring approval of
holders of our equity shares and the record date for determining
the equity shareholders of record entitled to vote on the
amendment occurs prior to delivery of our ADSs, you will not be
entitled to act through the depositary to vote on the amendment,
although you will nevertheless be subject to any changes in the
powers, preferences or special rights of our equity shares.
S-23
Upon
conversion of your notes into ADSs, you will have fewer rights
than holders of equity shares and must act through the
depositary to exercise those rights.
Upon conversion of your notes into ADSs, you will not have the
same rights as holders of our equity shares, and you may
exercise the voting rights with respect to the underlying equity
shares only in accordance with the provisions of the deposit
agreement. Under the deposit agreement, if the vote is by show
of hands, the depositary will vote the deposited securities in
accordance with the voting instructions received from a majority
of holders of ADSs that provided timely voting instructions. If
the vote is by poll, the depositary will vote the deposited
securities in accordance with the voting instructions it timely
receives from ADS holders. In the event of poll voting,
deposited securities for which no instructions are received will
not be voted. Under our articles of association, the minimum
notice period required to convene a general meeting is seven
days. When a general meeting is convened, you may not receive
sufficient notice of a shareholders meeting to permit you
to withdraw your equity shares to allow you to cast your vote
with respect to any specific matter. In addition, the depositary
and its agents may not be able to send voting instructions to
you or carry out your voting instructions in a timely manner. We
will make all reasonable efforts to cause the depositary to
extend voting rights to you in a timely manner, but we cannot
assure you that you will receive the voting materials in time to
ensure that you can instruct the depositary to vote your shares.
Furthermore, the depositary and its agents will not be
responsible for any failure to carry out any instructions to
vote, for the manner in which any vote is cast or for the effect
of any such vote. As a result, you may not be able to exercise
your right to vote and you may lack recourse if your ADSs are
not voted as you requested. In addition, in your capacity as an
ADS holder, you will not be able to call a shareholder meeting.
Upon
conversion of your notes into ADSs, you may be subject to
limitations on transfers of your ADSs.
Upon conversion of your notes into ADSs, your ADSs are
transferable on the books of the depositary. However, the
depositary may close its transfer books at any time or from time
to time when it deems expedient in connection with the
performance of its duties. In addition, the depositary may
refuse to deliver, transfer or register transfers of ADSs
generally when our books or the books of the depositary are
closed, or at any time if we or the depositary deem it advisable
to do so because of any requirement of law or of any government
or governmental body, or under any provision of the deposit
agreement, or for any other reason.
Upon
conversion of your notes into ADSs, you may not receive
dividends or distributions if it is impractical to make them
available to you.
Upon conversion of your notes into ADSs, the depositary of our
ADSs has agreed to pay to you the cash dividends or other
distributions it or the custodian receives on our equity shares
or other deposited securities after deducting its fees and
expenses. You will receive these distributions in proportion to
the number of equity shares your ADSs represent. However, the
depositary may, at its discretion, decide that it is inequitable
or impractical to make a distribution available to any holders
of ADSs. For example, the depositary may determine that it is
not practicable to distribute certain property through the mail,
or that the value of certain distributions may be less than the
cost of mailing them. In these cases, the depositary may decide
not to distribute such property, in which event you would not
receive such distribution.
Upon
conversion of your notes into ADSs, your right to participate in
any future rights offerings may be limited, which may cause
dilution to your holdings.
We may from time to time distribute rights to our shareholders,
including rights to acquire our securities. However, we cannot
make rights available to holders of our ADSs in the United
States unless we register the rights and the securities to which
the rights relate under the Securities Act of 1933, as amended,
or the Securities Act, or an exemption from the registration
requirements is available. Also, under the deposit agreement,
the depositary will not make rights available to holders of our
ADSs unless the distribution to ADS holders of both the rights
and any related securities are either registered under the
Securities Act or exempted from registration under the
Securities Act. We are under no obligation to file a
registration statement with respect to any such rights or
securities or to endeavor to cause such a registration statement
to be declared effective. Moreover, we may not be able to
establish an exemption from registration under the Securities
Act.
S-24
Accordingly, you may be unable to participate in our rights
offerings and may experience dilution in your holdings of ADSs
issued to you upon conversion of your notes.
Certain
provisions of the notes could discourage an acquisition of us by
a third party.
Certain provisions of the notes could make it more difficult or
more expensive for a third party to acquire us, or may even
prevent a third party from acquiring us. For example, upon the
occurrence of certain transactions constituting a fundamental
change, holders of the notes will have the right, at their
option, to require us to repurchase all of their notes or any
portion of the principal amount of such notes in integral
multiples of $1,000. We may also be required to increase the
conversion rate for conversions in connection with certain
changes of control. By discouraging an acquisition of us by a
third party, these provisions could have the effect of depriving
the holders of our equity shares and holders of our ADSs of an
opportunity to sell their equity shares and ADSs, as applicable,
at a premium over prevailing market prices.
We
will have broad discretion in how we use the proceeds of this
offering and we may not use these proceeds effectively. This
could affect our profitability and cause the prices of our
notes, equity shares and ADSs to decline.
Our management will have considerable discretion in the
application of the net proceeds of this offering, and you will
not have the opportunity, as part of your investment decision,
to assess whether we are using the proceeds appropriately. We
currently intend to use the net proceeds of this offering for
expansion of our copper business, acquisition of complementary
businesses outside of India and any other permissible purpose
under, and in compliance with, applicable laws and regulations
in India, including the external commercial borrowing
regulations specified by the RBI. We have not yet finalized the
amount of net proceeds that we will use specifically for each of
these purposes. We may use the net proceeds for corporate
purposes that do not improve our profitability or increase our
market value, which could cause the prices of our Notes, equity
shares and ADSs to decline.
We retain broad discretion in our use of proceeds from this
offering and may not be able to use such proceeds in the manner
we have indicated in this prospectus supplement. As a result, we
may use such proceeds in a different manner, which may have a
material adverse effect upon our business, results of operations
or financial condition.
We may
be classified as a passive foreign investment company, which
could result in adverse United States federal income tax
consequences to US holders.
A non-United
States corporation will be considered a passive foreign
investment company, or PFIC, for any taxable year if either
(1) at least 75% of its gross income is passive income or
(2) at least 50% of the total value of its assets (based on
an average of the quarterly values of the assets during a
taxable year) is attributable to assets, including cash, that
produce or are held for the production of passive income, or
passive assets. For this purpose, the total value of our assets
generally will be determined by reference to the market price of
our equity shares and ADSs. Based on the market prices of our
equity shares and ADSs and the composition of our income and
assets, we do not expect to be a PFIC for the current taxable
year ending March 31, 2010. However, we generally will not
be able to make a determination of our PFIC status for any
specific taxable year until the close of that taxable year and
we must make a separate determination each taxable year as to
whether we are a PFIC. In addition, a decrease in the market
value of our equity shares and ADSs
and/or an
increase in cash or other passive assets would increase the
relative percentage of our passive assets. Accordingly, we
cannot assure you that we will not be a PFIC for the current or
any future taxable year. If we are a PFIC for any taxable year
during which a US holder holds notes or the ADSs, certain
adverse United States federal income tax consequences could
apply to the US holder. See Taxation Certain
United States Federal Income Tax Considerations
Passive Foreign Investment Company for more details.
S-25
US
holders may have taxable dividend income if we adjust (or fail
to adjust) the conversion rate of the notes in certain
circumstances, even though the holders would not receive any
cash.
We will adjust the conversion rate of the notes for stock splits
and equity share combinations, stock dividends, certain cash
dividends and certain other events that affect our capital
structure. Upon certain adjustments (or certain failures to make
adjustments) to the conversion rate, US holders may be treated
as having received a constructive distribution from us,
resulting in taxable income to such US holders for United States
federal income tax purposes, even though the holders would not
receive any cash in connection with the adjustment to (or
failure to adjust) the conversion rate. See
Taxation Certain United States Federal Income
Tax Considerations Constructive Distributions
for more details.
S-26
USE OF
PROCEEDS
We estimate that the net proceeds from the sale of the notes
will be approximately $495.1 million after deducting the
underwriters discounts and commissions (excluding any
discretionary fee that we may in our sole discretion determine
to pay to the underwriters) and estimated offering expenses.
We intend to use the net proceeds from this offering for
expansion of our copper business, acquisition of complementary
businesses outside of India and any other permissible purpose
under, and in compliance with, applicable laws and regulations
in India, including the external commercial borrowing
regulations specified by the RBI.
The amounts that we actually expend for these and other purposes
will vary significantly depending on a number of factors,
including the timing and size of capital expenditures, our
ability to successfully consummate strategic acquisitions,
future revenue growth, if any, and the amount of cash that we
generate from operations. As a result, we will retain broad
discretion over the allocation of the net proceeds of the notes
offering. See Risk Factors Risks Relating to
this Offering, the Notes and the ADSs We will have
broad discretion in how we use the proceeds of this offering and
we may not use these proceeds effectively. This could affect our
profitability and cause the prices of our notes, equity shares
and ADSs to decline. Pending their use, we intend to
invest our net proceeds in high quality interest-bearing
investments.
S-27
MARKET
PRICE INFORMATION AND
OTHER INFORMATION CONCERNING THE SHARES
Our ADSs evidenced by American Depositary Receipts, or ADRs,
commenced trading on the NYSE, on June 20, 2007 at an
initial offering price of $13.44 per ADS. The ADRs evidencing
ADSs were issued by our depositary, Citibank, N.A., pursuant to
a deposit agreement. As of October 10, 2009, 840,400,422 of
our equity shares were outstanding (including the 145,148,584
equity shares underlying our 145,148,584 ADSs outstanding as of
such date). All our equity shares are registered shares. Our
outstanding equity shares are currently listed and traded on the
NSE and BSE.
The following table shows:
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the reported high and low trading prices for our ADSs on the
NYSE;
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the imputed high and low trading prices for our equity shares,
translated into US dollars, based on the Indian Rupee prices for
such equity shares as quoted in the official list of each of the
NSE and BSE and the noon buying rate of the Federal Reserve Bank
of New York on the last business day of each period
presented; and
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the average of the aggregate trading volume of our ADSs on the
NYSE and our equity shares on the NSE and BSE.
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Average
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Average
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Average NSE
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BSE Daily
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NYSE Daily
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NSE Price
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Daily Equity
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BSE Price
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Equity Share
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NYSE Price Per ADS
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ADS Trading
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Per Equity Share
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Share Trading
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Per Equity Share
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Trading
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Fiscal Quarter 2010
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High
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Low
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Volume
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High
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Low
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Volume
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High
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Low
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Volume
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2nd Quarter
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16.15
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10.75
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2,756,615
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16.14
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11.32
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4,087,396
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16.12
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11.35
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924,496
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Last Three
Months
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July 2009
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13.40
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10.75
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4,762,283
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13.72
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11.37
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5,352,796
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13.73
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11.40
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1,170,277
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August 2009
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14.34
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12.38
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1,947,190
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14.30
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12.50
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3,423,935
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14.26
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12.51
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910,342
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September 2009
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16.15
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12.85
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1,464,863
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16.14
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13.18
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3,328,822
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16.12
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13.20
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656,707
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October 2009 (through October 2)
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18.57
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15.64
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1,889,550
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17.98
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15.75
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2,719,697
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17.91
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15.76
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631,625
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On October 15, 2009, the closing sale price of our ADSs on
the NYSE was $17.21 per ADS. On October 14, 2009, the
closing sale price of our equity shares on the BSE was
Rs. 852.40 per equity share and on the NSE was
Rs. 855.75 per equity share.
S-28
CAPITALIZATION
AND INDEBTEDNESS
The following table sets forth our indebtedness and
capitalization as of June 30, 2009:
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on an actual basis; and
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as adjusted to give effect to the issuance of $500,000,000 in
aggregate principal amount of the notes offered in this offering.
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The table excludes (as of June 30, 2009) (i) the
21,434,400 equity shares reserved for issuance upon conversion
of the notes and (ii) the 131,906,011 equity shares
underlying the ADSs issued by the Company in July 2009.
You should read this information in conjunction with our audited
consolidated financial statements and the related notes
incorporated by reference in this prospectus supplement and the
accompanying prospectus. The table has been prepared in
accordance with International Financial Reporting Standards.
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As of June 30, 2009
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Actual
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As Adjusted
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(in millions)
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Long-term borrowing, net of current
portion(1)
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$
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598.9
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$
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598.9
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Notes offered hereby
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500.0
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Total long-term borrowing, net of current portion
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598.9
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1,098.9
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Shareholders
equity(2):
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Equity shares of par value Rs. 2,
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Authorized: 925,000,000
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Issued and outstanding as of June 30, 2009: 708,494,411
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29.7
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29.7
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Security premium
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2,231.5
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2,231.5
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Other components of equity
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40.7
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40.7
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Retained earnings
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3,147.8
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3,147.8
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Equity attributable to equity holders of the parent
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5,449.7
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5,449.7
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Minority interest
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1,536.2
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1,536.2
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Total equity
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6,985.9
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6,985.9
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Total capitalization
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$
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7,584.8
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$
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8,084.8
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(1) |
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Includes $176.0 million of secured borrowing and
$422.9 million of unsecured borrowing . None of our
borrowing is guaranteed by Vedanta or by any third party. |
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(2) |
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In July 2009, we issued a total of 131,906,011 equity shares
underlying 131,906,011 ADSs in an underwritten public offering,
or the ADS Offering. Giving effect to the ADS Offering, as of
June 30, 2009, our (i) shareholders equity would
have been $35.2 million representing 840,400,422 issued and
outstanding equity shares, (ii) security premium would have
been $3,846.2 million (excluding expenses of the ADS
Offering in the amount of $5.0 million), (iii) total
equity would have been $8,606.1 million and (iv) total
capitalization would have been $9,205.0 million (or
$9,705.0 million after giving effect to the ADS Offering
and this offering). |
The US dollar amounts in this section have been translated from
Indian Rupees to US dollars based on the noon buying rate in New
York City for cable transfers in Indian Rupees as certified by
the Federal Reserve Bank of New York on June 30, 2009,
which was Rs. 47.74 per $1.00. No representation is made
that the Indian Rupee amounts have been, could have been or
could be converted into US dollars at such a rate or any other
rate.
S-29
EXCHANGE
RATES
Substantially all of our revenue is denominated or paid with
reference to US dollars and most of our expenses are incurred
and paid in Indian Rupees or Australian dollars. We report our
financial results in Indian Rupees.
The following table sets forth, for the periods indicated,
information concerning the exchange rates between Indian Rupees
and US dollars based on the noon buying rate in New York City
for cable transfers in Indian Rupees as certified by the Federal
Reserve Bank of New York:
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Period
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Months
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Period End(1)
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Average(1)(2)
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High
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Low
|
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July 2009
|
|
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47.9
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|
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48.4
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49.2
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47.8
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August 2009
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48.8
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48.3
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|
48.9
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|
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|
47.3
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September 2009
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48.1
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48.3
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49.1
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47.8
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October 2009 (through October 2)
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47.6
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|
47.7
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|
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47.7
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47.6
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(1) |
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The exchange rate at each period end and the average rate for
each period may have differed from the exchange rates used in
the preparation of our financial statements incorporated by
reference in this prospectus supplement. |
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(2) |
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Represents the average of the exchange rates for all days during
the period for all months presented. |
The following table sets forth, for the periods indicated,
information concerning the exchange rates between the Australian
dollar and US dollars based on the noon buying rate in New York
City for cable transfers in Australian dollars as certified by
the Federal Reserve Bank of New York:
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Period
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Months
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Period End(1)
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Average(1)(2)
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High
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Low
|
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July 2009
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1.1992
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|
|
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1.2419
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1.1992
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|
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1.2902
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August 2009
|
|
|
1.1850
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|
|
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1.1972
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|
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1.1850
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|
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1.2194
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September 2009
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|
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1.1333
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|
|
|
1.1598
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|
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1.1333
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1.2039
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October 2009 (through October 2)
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1.1553
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1.1504
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1.1455
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1.1553
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(1) |
|
The exchange rate at each period end and the average rate for
each period may have differed from the exchange rates used in
the preparation of our financial statements incorporated by
reference in this prospectus supplement. |
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(2) |
|
Represents the average of the exchange rates for all days during
the period for all months presented. |
S-30
DESCRIPTION
OF NOTES
We will issue the notes under an indenture to be dated as of the
date that is on or prior to the closing date for the offering of
the notes, as supplemented by the first supplemental indenture
to be dated as of the closing date for the offering of the
notes, which is expected to be October 29, 2009 (as
supplemented, the Indenture), between us and
Wilmington Trust Company, as trustee. The terms of the
notes include those expressly set forth in the notes and the
Indenture and those made part of the Indenture by reference to
the U.S. Trust Indenture Act of 1939, as amended (the
Trust Indenture Act).
The following description is a summary of the material
provisions of the notes and the Indenture. It does not purport
to be complete and is subject to, and qualified by reference to,
all of the provisions of the Indenture and the notes, portions
of which are described in this prospectus supplement and the
accompanying prospectus. We urge you to read these documents
because they, and not this description, define your rights as a
holder of notes. You may request copies of these documents from
us upon written request at our address, which is listed in this
prospectus supplement under Where You Can Find Additional
Information.
For purposes of this description of notes, references to
our company, we, us,
our or Sterlite refer only to Sterlite
Industries (India) Limited and do not include any of our current
or future subsidiaries, and references to holders
refer to the holders of notes.
General
The notes:
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will be limited to an aggregate principal amount of $500,000,000;
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will be our unsecured senior obligations and will rank equally
in right of payment with all of our existing unsecured
indebtedness and future unsecured senior indebtedness;
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will be senior in right of payment to all of our future
unsecured subordinated indebtedness expressly subordinated in
right of payment to the notes;
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will be effectively junior to any secured indebtedness to the
extent of the value of the related collateral and will be
structurally subordinated to the existing and future
indebtedness and other liabilities (including trade payables) of
our subsidiaries;
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will mature on October 30, 2014, unless earlier converted,
redeemed or repurchased in compliance with applicable law;
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will bear cash interest at the rate of 4.00% per year on the
principal amount, payable semiannually in arrears on
April 30 and October 30 of each year, beginning on
April 30, 2010, to holders of record at 5:00 p.m., New
York City time, on the April 15 or the October 15
immediately preceding such interest payment date;
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will be convertible by a holder at any time prior to
5:00 p.m., New York City time, on the business day
immediately preceding the maturity date into ADSs (other than
cash in lieu of fractional ADSs) as described below under
Conversion Rights at an initial
conversion rate of 42.8688 ADSs per $1,000 principal amount of
notes (equivalent to a conversion price of approximately $23.33
per ADS), subject to adjustment as described below;
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will, subject to the receipt of appropriate approvals, if any,
under applicable law and the fulfillment of certain conditions
and during the periods described below, be redeemable, in whole
or in part, by us at any time after November 4, 2012, at a
redemption price equal to 100% of the principal amount of the
notes we redeem, plus accrued and unpaid interest to, but
excluding, the redemption date, as described below under
Optional Redemption;
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will be subject to repurchase by us, in whole or in part, for
cash at the option of the holder upon the occurrence of a
fundamental change (as defined under
Fundamental Change Permits Purchase of Notes
By Us at the Option of the Holder) at a price equal to
100% of the principal amount of the
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S-31
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notes being repurchased, plus accrued and unpaid interest, if
any, to, but excluding, the repurchase date as described under
Fundamental Change Permits Purchase of Notes
By Us at the Option of the Holder;
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will be redeemable by us or our successor upon the occurrence of
certain tax-related events as described under
Tax Redemption;
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will not be guaranteed by any of our subsidiaries, will not be
subject to defeasance and will not provide for a sinking fund;
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will be payable at the principal corporate trust office of the
paying agent;
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will be issued in denominations of $1,000 or in integral
multiples of $1,000; and
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will be represented by one or more notes in global form, but in
certain limited circumstances may be represented by notes in
definitive form. See Global Notes; Book-Entry
Form.
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Neither we nor any of our subsidiaries will be subject to any
financial covenants under the Indenture. In addition, neither we
nor any of our subsidiaries will be subject to any restrictions
on the payment of dividends, the issuance or repurchase of our
securities or the incurrence of senior indebtedness, as
described below under Ranking, or any
other indebtedness. The Indenture also does not contain any
covenants or other provisions to afford protection to holders of
the notes in the event of a highly leveraged transaction or a
change of control of Sterlite except to the extent described
under Fundamental Change Permits Purchase of
Notes By Us at the Option of the Holder, and
Adjustment to Conversion Rate Upon a Change of
Control or Consolidation, Merger or Sale
of Assets.
Ranking
The notes will be our unsecured senior obligations and will rank
equally in right of payment with all of our existing unsecured
indebtedness and future unsecured senior indebtedness. The notes
will be senior in right of payment to all of our future
unsecured subordinated indebtedness expressly subordinated in
right of payment to the notes.
In addition, the notes will be effectively junior to any secured
indebtedness to the extent of the value of the related
collateral and will be structurally subordinated to the existing
and future indebtedness and other liabilities (including trade
payables) of our subsidiaries, as described below.
The notes are our obligations. A significant portion of our
operations and sales are conducted through subsidiaries. As a
result, our cash flow and our ability to service our debt,
including the notes, depends upon the earnings of our
subsidiaries. In addition, we are dependent on the distribution
of earnings, loans or other payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our
subsidiaries will not guarantee the notes or have any
obligation, contingent or otherwise, to pay any amounts due on
the notes or to provide us with funds for our payment
obligations, whether by dividends, distributions, loans or other
payments. In addition, any payment of dividends, distributions,
loans or advances by our subsidiaries to us could be subject to
statutory or contractual restrictions. Payments to us by our
subsidiaries will also be contingent upon our subsidiaries
earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon
its liquidation or reorganization, and therefore, our right to
participate in its assets, will be structurally subordinated to
the claims of that subsidiarys creditors, including trade
creditors. In addition, even if we were a creditor of any of our
subsidiaries, our rights as a creditor would be subordinate to
any security interest in the assets of our subsidiaries and any
indebtedness of our subsidiaries senior to that held by us.
Neither we nor our subsidiaries are limited from incurring
additional indebtedness under the Indenture. If we incur
additional indebtedness, our ability to pay our obligations on
the notes could be affected. We expect from time to time to
incur additional indebtedness and other liabilities.
S-32
As of June 30, 2009, after giving effect to the offering of
these notes, we would have had approximately $810.4 million
of senior indebtedness including the notes (approximately
$20.9 million of which was secured indebtedness). As of
June 30, 2009, our subsidiaries had total indebtedness and
other liabilities, including trade payables but excluding
intercompany liabilities, of $1,680.4 million.
We are obligated to pay reasonable compensation to the trustee.
We will indemnify the trustee against any losses, liabilities or
expenses incurred by it in connection with its duties. The
trustees claims for such payments will be senior to the
claims of the note holders.
Payment
at Maturity
On the maturity date, each holder will be entitled to receive
$1,000 in cash for each $1,000 in principal amount of notes,
together with accrued and unpaid interest to, but not including,
the maturity date, unless earlier converted, redeemed or
repurchased. With respect to global notes, principal and
interest will be paid to DTC in immediately available funds.
With respect to any certificated notes, principal and interest
will be payable at our office or agency, which initially will be
the office or agency of the trustee.
Interest
The notes will bear interest at a rate of 4.00% per year from
the date of issuance, or from the most recent date to which
interest has been paid or duly provided for. Interest on the
notes will be computed on the basis of a
360-day year
composed of twelve
30-day
months. The amount of interest payable for any period shorter
than a full semiannual period for which interest is computed
will be computed on the basis of a
30-day month
and, for any period less than a month, on the basis of the
actual number of days elapsed per
30-day month.
Interest will be payable semiannually in arrears on
April 30 and October 30 of each year, beginning
April 30, 2010. Interest on a note will be paid to the
person in whose name such note is registered at 5:00 p.m.,
New York City time, on the April 15 and October 15, as
the case may be, immediately preceding the relevant interest
payment date. However, there are three exceptions to the
preceding sentence:
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we will not pay accrued interest on any notes when they are
converted, except as described under
Conversion Rights;
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if we redeem any notes on a redemption date or a tax redemption
date after a regular record date for the payment of interest but
before the corresponding interest payment date, we will pay
accrued and unpaid interest on such notes only to the persons to
whom we pay such notes principal, unless such note was
earlier converted (if such note was converted after the last
record date before such redemption date or tax redemption date,
as applicable, interest on the note will be paid to its holders
as of such last record date); and
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on the maturity date, we will pay accrued and unpaid interest
only to the person to whom we pay the principal amount of such
note (which may or may not be the holder of record on the
relevant record date), unless such note was earlier converted,
redeemed or repurchased (if such note was converted after the
last record date before the maturity date, interest on the note
will be paid to its holder as of the last record date).
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We will pay interest on:
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global notes to DTC in immediately available funds;
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any certificated notes having a principal amount of less than
$2,000,000, by check mailed to the holders of those notes;
provided, however, at the maturity date, interest will be
payable as described under Payment at
Maturity; and
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any certificated notes having a principal amount of $2,000,000
or more, by wire transfer in immediately available funds at the
election of the holders of these notes, provided such election
is duly delivered to the trustee or paying agent at least 10
business days prior to the relevant interest payment
|
S-33
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date; provided, however, that at the maturity date, interest
will be payable as described under Payment at
Maturity.
|
Any payment required to be made on any day that is not a
business day will be made on the next succeeding business day
and no additional interest will accrue thereon. A business
day is any weekday that is not a day on which banking
institutions in The City of New York or Mumbai, India are
authorized or obligated to close.
All references to interest in this prospectus
supplement are deemed to include additional interest, if any,
that accrues in connection with our failure to comply with our
reporting obligations under the Indenture, if applicable, as
described under Events of Default and
Acceleration and additional amounts, as described under
Additional Amounts and additional
payments as described under Conversion
Rights Conversion Rate Adjustments.
Optional
Redemption
No sinking fund is provided for the notes. Except as described
below in Tax Redemption, the notes will
not be redeemable until after November 4, 2012. At any time
after November 4, 2012, subject to receipt of appropriate
approvals, if any, required under applicable Indian law, we may
redeem all or part of the notes if the closing sale price per
share of our ADSs has been at least 130% of the conversion price
then in effect for at least 20 trading days during any 30
consecutive trading day period prior to the date on which we
provide notice of redemption. The redemption price will equal
100% of the principal amount of the notes being redeemed plus
accrued and unpaid interest, including additional interest, if
any, to, but excluding, the redemption date. Notwithstanding the
foregoing, we shall not redeem any of the notes during any
Closed Period (as defined below).
We will give notice of redemption not less than 30 nor more than
60 days before the redemption date by mail to the trustee,
the paying agent and each holder of the notes.
If the notes are redeemed on a date that is after a regular
record date for the payment of interest and prior to the
corresponding interest payment date, we will pay accrued and
unpaid interest (as part of the redemption price) to the same
person to whom we pay the principal of the notes being redeemed
rather than to the holder of record on that regular record date.
We may not redeem any notes unless all accrued and unpaid
interest thereon, including additional interest, if any, has
been or is simultaneously paid for all semi-annual periods or
portions thereof terminating prior to the redemption date.
If we decide to redeem fewer than all of the outstanding notes,
the trustee will select the notes to be redeemed (in principal
amounts of $1,000 or multiples of $1,000 in excess thereof,
provided that the portion not so redeemed is in a minimum
principal amount of $1,000) by lot, or on a pro rata basis or by
another method the trustee considers fair and appropriate.
If the trustee selects a portion of your notes for partial
redemption and you convert a portion of your notes, the
converted portion will be deemed to be from the portion selected
for redemption.
In the event of any redemption in part, we shall not be required
to (i) issue, register the transfer of or exchange any
notes during a period beginning at the opening of business
15 days before any selection for redemption of notes and
ending at the close of business on the earliest date on which
the relevant notice of redemption is deemed to have been given
to all holders of notes to be redeemed or (ii) register the
transfer of or exchange any notes so selected for redemption, in
whole or in part, except the unredeemed portion of any notes
being redeemed in part. No notes of a principal amount of $1,000
or less shall be redeemed in part.
No notes may be redeemed if the principal amount of the notes
has been accelerated, and such acceleration has not been
rescinded, on or prior to the redemption date.
Under current RBI regulations applicable to convertible notes,
we are required to obtain prior approval of the RBI before
providing notice for or effecting any repurchase or redemption
of the notes prior to the maturity date; such approval may not
be forthcoming. As a result, we will not give notice of
redemption of the notes prior to obtaining approval of the RBI
if such approval is required.
S-34
Tax
Redemption
Subject to the conditions in the second following paragraph, at
any time we or any successor to us, as applicable, may, having
given not less than 30 nor more than 60 days notice
to the holders (which notice shall be irrevocable), redeem all,
and not some only, of the notes at 100% of their principal
amount together with accrued interest (calculated up to but
excluding the date of redemption) on the date fixed for
redemption (the Tax Redemption Date), if
(i) we or any successor to us, as applicable, has or will
become obliged to pay Excess Additional Amounts (as defined
below) in respect of payments of interest on the notes such that
the combined rate of Additional Amounts and Excess Additional
Amounts payable equals or exceeds 11% as a result of any change
in, or amendment to, the laws or regulations of India or other
Relevant Jurisdiction (as defined below) or any political
subdivision or any authority thereof or therein having power to
tax, or any change in the general application or official
interpretation of such laws or regulations, which change or
amendment becomes effective (a) with respect to us, on or
after the date of this prospectus supplement or (b) with
respect to any successor to us, on or after the date such
successor became our successor and (ii) such obligation
cannot be avoided by us or our successor, as applicable (taking
reasonable measures available to us or it, as applicable),
provided that no such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which we
or our successor, as applicable, would be obliged to pay such
Excess Additional Amounts were a payment in respect of the notes
then due; provided further, for the avoidance of doubt, that
where any such requirement to pay Excess Additional Amounts is
due to taxes of India or other Relevant Jurisdiction or any
political subdivision or any authority thereof or therein, we or
a successor to us shall be permitted to redeem notes in
accordance with the provisions above only if the rate of
withholding or deduction so required is in excess of 11%. Prior
to the publication of any notice of redemption pursuant to this
paragraph, we or our successor, as applicable, shall deliver to
the trustee (a) a certificate signed by two directors of us
or our successor, as applicable, stating that the obligation
referred to in (i) above cannot be avoided by us or our
successor, as applicable (taking reasonable measures available
to us or it, as applicable), and (b) an opinion of
independent legal or tax advisors of recognized international
standing to the effect that such change or amendment has
occurred (irrespective of whether such amendment or change is
then effective) and the trustee shall accept such certificate
and opinion as sufficient evidence thereof in which event it
shall be conclusive and binding on the holders.
Upon the expiry of any such notice, we or our successor, as
applicable, will be bound to redeem the notes at 100% of their
principal amount together with accrued interest up to (but
excluding) such date, on the Tax Redemption Date.
If we or our successor, as applicable, give a notice of
redemption pursuant to this Tax Redemption section, each holder
will have the right to elect that his note(s) shall not be
redeemed and that the payment of Excess Additional Amounts shall
not apply in respect of any payment of principal or interest to
be made in respect of such notes(s) which falls due after the
relevant Tax Redemption Date whereupon no Excess Additional
Amounts shall be payable in respect thereof and payment of all
amounts shall be made subject to the deduction or withholding of
the taxation required to be withheld or deducted by the
government of India or other Relevant Jurisdiction or any
authority thereof or therein having power to tax. For the
avoidance of doubt, any Additional Amounts which had been
payable in respect of the notes at the Base Rate (as defined
below) as a result of the laws or regulations of the government
of India or any authority thereof or therein having power to tax
as of the issue date of the notes will continue to be payable to
such holders. To exercise such right, the holder of the relevant
note must complete, sign and deposit at the specified office of
the trustee or paying agent a duly completed and signed notice
(Tax Election Notice), in the form for the time
being current, obtainable from the specified office of the
trustee or paying agent together with the certificate evidencing
the notes (if the notes are certificated) on or before the day
falling 15 days prior to the Tax Redemption Date.
RBI regulations at the time of redemption may require us or our
successor, as applicable, to obtain the prior approval of the
RBI before providing notice for or effecting such a redemption
prior to the maturity date; such approval may or may not be
forthcoming.
S-35
Conversion
Rights
General
The holders of notes may, at any time until 5:00 p.m., New
York City time, on the business day immediately preceding the
maturity date of the notes, convert all or a portion of their
notes into ADSs, at an initial conversion rate of 42.8688 ADSs
per $1,000 principal amount of notes (equivalent to an initial
conversion price of approximately $23.33 per ADS). As of the
date of this prospectus supplement, each ADS represents one of
our equity shares, par value Rs. 2 per share. See
Description of Share Capital and Description
of American Depositary Shares in the accompanying
prospectus. Holders may convert notes only in denominations of
$1,000 and integral multiples of $1,000. If we call notes for
redemption, notes will be convertible at the option of the
holder only until the close of business on the business day
prior to the redemption date unless we fail to pay the
redemption price. Holders may not convert notes in respect to
which they have delivered and not validly withdrawn a
fundamental change purchase notice. Except as described below,
no adjustment will be made on conversion of any notes for
interest accrued thereon or dividends paid on any of our ADSs.
Notwithstanding the above paragraph, the conversion right shall
be suspended during any Closed Period (as defined below) and
holders shall not have the right to convert their notes during
any such Closed Period. Closed Period means the
following periods: (i) the 21 days immediately
prior to the date of our annual general shareholders
meeting, (ii) the 30 days immediately prior to an
extraordinary shareholders meeting, (iii) from the
date that we notify the Indian Stock Exchanges of the record
date for determination of shareholders entitled to receipt of
dividends, subscription of shares due to capital increase or
other benefits, to the record date for the distribution or
allocation of the relevant dividends, rights and benefits,
(iv) such other periods determined by Indian law applicable
from time to time that we are required to close our stock
transfer books, and (v) during any period commencing on a
record date (other than the last record date before maturity)
and ending on the corresponding interest payment date. We will
procure that holders (and other applicable parties) are given
notice of any Closed Period at the beginning of each Closed
Period in accordance with the provisions of the Indenture.
The conversion rate will be subject to adjustment as described
below. In addition, upon conversion in connection with a
transaction that constitutes a change of control pursuant to
which 10% or more of the consideration for our common equity
shares
and/or ADSs
(other than cash payments for fractional equity shares and cash
payments made in respect of dissenters appraisal rights)
in such change of control transaction consists of cash or
securities (or other property) that are not ordinary shares,
shares of common stock, depositary receipts or other
certificates representing common equity interests traded or
scheduled to be traded immediately following such change of
control transaction on a U.S. national securities exchange,
we will increase the conversion rate, to the extent described
under Adjustment to Conversion Rate Upon a
Change of Control. A note for which a holder has delivered
a fundamental change purchase notice requiring us to purchase
the note (as described below) may be surrendered for conversion
only if such notice is withdrawn in accordance with the
Indenture. The ability to surrender notes for conversion will
expire at 5:00 p.m., New York City time, on the business
day immediately preceding the maturity date.
If a holder converts its notes, it shall be required to pay any
documentary, stamp or similar issue or transfer tax or fee or
tax on capital gains due upon the issuance and delivery of ADSs
upon the conversion. If a holder converts its notes, it shall be
required to pay, prior to the issuance of ADSs, the applicable
fees and expenses of the depositary for the issuance of ADSs as
described in the deposit agreement.
Delivery of our ADSs will occur as promptly as practicable
following the conversion date, but in no event later than
45 days (in the case of any conversion date occurring prior
to the last record date before a redemption date or the maturity
date) or 10 days (in the case of any conversion date
occurring on or after the last record date before the redemption
date or the maturity date) after the conversion date. It is
expected that any newly issued ADSs will be accepted into the
book-entry system maintained by DTC, and no person receiving
ADSs shall receive or be entitled to receive physical delivery
of ADSs, except in the limited circumstances set forth in the
deposit agreement. ADS holders may not surrender their ADSs to
the depositary for the purpose of withdrawing the deposited
shares until we have confirmed to the depositary that we have
S-36
received confirmation from the Indian Stock Exchanges that the
underlying equity shares have been listed for trading thereon
and have therefore become listed shares and such equity shares
have been dematerialized. We expect (i) to receive the
confirmation from the Indian Stock Exchanges of the listing of
the equity shares underlying the ADSs approximately 45 days
after the issuance of the equity shares underlying the ADSs (in
the case of any conversion date occurring prior to the last
record date before a redemption date or the maturity date) or
10 days after the issuance of the equity shares underlying
the ADSs (in the case of any conversion date occurring on or
after the last record date before the redemption date or the
maturity date) and (ii) the equity shares underlying the
ADSs to be dematerialized in the account of the custodian
approximately 10 business days following receipt by the
depositary of confirmation of listing of the equity shares for
trading on the Indian Stock Exchanges. The depositary will
process applications for withdrawal of ADSs for cancellation on
a first come, first served basis and only to the extent of the
number of listed shares deposited at that time with the
custodian.
We will agree to take all such actions and obtain all such
approvals and registrations with respect to the conversion of
the notes into ADSs and the issuance of such ADSs representing
equity shares upon deposit of such equity shares in the ADS
facility.
If our ADS facility maintained with the depositary is terminated
for any reason, but such event does not constitute a
termination of trading (as defined below under
Fundamental Change Permits Purchase of Notes
By Us at the Option of the Holder) because our equity
shares or ADSs substantially identical to the current ADSs are
then listed for trading on the NYSE or another
U.S. national securities exchange, the notes will become
convertible into our equity shares or such substantially
identical ADSs. In such case, all references to our ADSs will be
deemed to refer to our equity shares or such substantially
identical ADSs, all references to the closing sale
price of our ADSs will be deemed to refer to the
closing sale price of our equity shares or such
substantially identical ADSs, and other appropriate adjustments
will be made to reflect such change.
No fractional ADSs or securities representing fractional ADSs
will be issued upon conversion. Any fractional interest in an
ADS resulting from conversion will be paid in cash, on the
settlement date, based on the closing sale price of our ADSs on
the trading day immediately preceding the conversion date. The
number of full ADSs that will be issuable upon conversion will
be computed on the basis of the aggregate principal amount of
the notes surrendered for conversion.
The term trading day means, with respect to the
ADSs, a day during which trading in securities generally occurs
on the NYSE or, if our ADSs are not listed on the NYSE, such
other principal United States national securities exchange on
which our ADSs are listed, provided a trading day shall only
include those days that have a scheduled closing time of
4:00 p.m., New York City time, or the then standard closing
time for regular trading on the relevant exchange or trading
system. If our ADSs are not listed on a United States national
securities exchange, trading day will mean business
day.
The closing sale price of our ADSs on any date means
the closing sale price of our ADSs (or if no closing sale price
is reported, the average of the closing bid price and the
closing ask price or, if more than one, in either case, the
average of the average of the closing bid prices and the average
of the closing ask prices) on such date as reported on the NYSE
or, if our ADSs are not listed on the NYSE, on the principal
other United States national securities exchange on which such
ADSs are traded or, if such ADSs are not listed on a United
States national securities exchange, as reported by the
principal other market on which our ADSs are then traded. In the
absence of the foregoing, the closing sale price will be an
amount determined in good faith by our board of directors to be
the fair value of such ADSs, and such determination shall be
conclusive.
Conversion
Procedures
To convert interests in a global note, a holder must comply with
the applicable procedures of DTC and pay (i) if required,
funds equal to interest payable on the next interest payment
date, (ii) any documentary, stamp or similar issue or
transfer tax or fee upon the issuance and delivery of ADSs upon
conversion and
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(iii) the applicable fees and expenses of the depositary
for the issuance of ADSs as described under the deposit
agreement.
To convert a certificated note, a holder must:
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complete and manually sign a conversion notice, a form of which
is on the back of the note, and deliver a copy of the conversion
notice by facsimile with an original to follow to the conversion
agent;
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surrender the note to the conversion agent at its principal
corporate office;
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if required, pay interest as provided in the third succeeding
paragraph;
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if required by the conversion agent, furnish appropriate
endorsements, signature guarantees and transfer documents;
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if required, furnish written acknowledgements, certifications
and agreements in connection with the issuance of ADSs by the
depositary upon deposit of our equity shares;
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if required, pay any documentary, stamp or similar issue or
transfer tax or fee or tax on capital gain due upon the issuance
and delivery of ADSs upon conversion; and
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prior to the issuance of ADSs, pay the applicable fees and
expenses of the depositary for the issuance of ADSs as described
under the deposit agreement.
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The conversion date with respect to a note means the
date on which the holder of the note has complied with all
requirements under the Indenture to convert such note unless
such date occurs during a Closed Period or after the holder has
submitted, but not validly withdrawn, a fundamental change
purchase notice with respect to such note. Any holder who
deposits a conversion notice during a Closed Period
(i) will not be permitted to convert the notes into ADSs
(as specified in the conversion notice) until the next business
day after the end of that Closed Period (even if such business
day occurs after the redemption date or the maturity date),
which (if all other conditions to conversion have been
fulfilled) will be the conversion date for such notes; and
(ii) will be permitted to withdraw such conversion notice
prior to the conversion date for such notes.
On conversion of a note, a holder will not receive, except as
described below, any cash payment representing any accrued
interest. Instead, accrued interest will be deemed paid in full
by the ADSs received by the holder on conversion. Our delivery
of equity shares to the depositary for the issuance to the
holder of the full number of ADSs into which the note is
convertible, together with any cash payment of such
holders fractional shares, will thus be deemed:
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to satisfy our obligation to pay the principal amount of a
note; and
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to satisfy our obligation to pay accrued and unpaid interest.
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As a result, accrued interest is deemed paid in full rather than
cancelled, extinguished or forfeited.
Holders of notes at 5:00 p.m., New York City time, on a
regular record date will receive payment of interest payable on
the corresponding interest payment date notwithstanding the
conversion of such notes at any time after 5:00 p.m., New
York City time, on such regular record date. However, notes
surrendered for conversion by a holder during the period
subsequent to 5:00 p.m., New York City time, on any regular
record date and prior to 9:00 a.m., New York City time, on
the corresponding interest payment date must be accompanied by
payment of an amount equal to the interest that has accrued and
will be paid on the notes being converted (whether or not the
converting holder was the holder of record on the relevant
regular record date); provided, however, that no such payment
need be made:
(1) if we have specified a fundamental change purchase date
that falls on or after a regular record date and on or prior to
the corresponding interest payment date;
(2) if we have specified a redemption date or a tax
redemption date that is after a regular record date and on or
prior to the corresponding interest payment date;
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(3) if notes have been surrendered for conversion following
the regular record date immediately preceding the maturity
date; or
(4) to the extent of overdue interest, if any overdue
interest exists at the time of conversion with respect to such
note.
For the avoidance of doubt, interest paid on the redemption
date, tax redemption date or the maturity date will be paid to
the holder of record on the regular record date if such note has
been surrendered for conversion following the regular record
date immediately preceding the redemption date, the tax
redemption date or the maturity date, as the case may be.
For a discussion of the tax treatment of a conversion of the
notes, see Taxation Certain United States
Federal Income Tax Considerations Conversion of
Notes.
In accordance with the deposit agreement, dated June 18,
2007, by and among Sterlite, Citibank, N.A., as depositary, and
the holders and beneficial owners of ADSs previously issued
thereunder, we will undertake to deliver to the custodian
thereunder, subject to any limitations then imposed by Indian
laws and regulations, such equity shares required for issuance
of the ADSs by the depositary upon conversion of the notes, plus
delivery instructions for ADSs representing the applicable
equity shares, a letter of consent in connection with any such
deposit of equity shares and any other documentation required by
the custodian and the depositary in connection with each deposit
of equity shares and issuance of ADSs. The delivery of ADSs by
the depositary to converting holders or their designees will be
governed by the terms of the deposit agreement.
Conversion
Rate Adjustments
As of the date of this prospectus supplement, each ADS
represents one equity share. If the number of our equity shares
represented by ADSs is changed, we will make appropriate
adjustments to the conversion rate such that the number of
equity shares represented by ADSs upon which conversion of the
notes is based remains the same. For the avoidance of doubt, if
any event described below results in a change to the number of
our equity shares represented by ADSs, then such a change shall
be deemed to satisfy our obligation to effect the relevant
conversion rate adjustment on account of such an event to the
extent to which such change reflects what a corresponding change
to the conversion rate would have been on account of such an
event.
We will adjust the conversion rate for the events described
below, except that we will not make any adjustments to the
conversion rate if holders of the notes participate (other than
in the case of a share split or share combination), at the same
time and upon the same terms as holders of ADSs and solely as a
result of holding the notes, in any of the transactions
described below without having to convert their notes as if they
held a number of ADSs equal to the applicable conversion rate,
multiplied by the principal amount (expressed in thousands) of
notes held by such holder.
(1) If we issue our equity shares to all or substantially
all holders of our equity shares as a dividend or distribution
on equity shares, the conversion rate will be adjusted based on
the following formula:
CR1
=
CR0
×
OS1
/
OS0
where,
CR0
= the conversion rate in effect immediately prior to
9:00 a.m., New York City time, on the record date for such
dividend or distribution;
CR1
= the conversion rate in effect immediately after
9:00 a.m., New York City time, on the record date for such
dividend or distribution;
OS0
= the number of equity shares outstanding immediately prior to
9:00 a.m., New York City time, on the record date for such
dividend or distribution; and
OS1
= the number of equity shares outstanding immediately after
giving effect to such dividend and solely as a result of such
dividend or distribution.
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Any adjustment made pursuant to this clause (1) will become
effective immediately prior to 9:00 a.m., New York City
time, on the record date. If any dividend or distribution of the
type described in this clause (1) is declared but not so
paid or made, the conversion rate will again be adjusted,
effective as of the date our board of directors publicly
announces its decision not to make such dividend or
distribution, to the conversion rate that would then be in
effect if such dividend or distribution had not been declared.
(2) If we effect an equity share split or equity share
combination, the conversion rate will be adjusted based on the
following formula:
CR1
=
CR0
×
OS1/
OS0
where,
CR0
= the conversion rate in effect immediately prior to
9:00 a.m., New York City time, on the effective date of
such equity share split or equity share combination;
CR1
= the conversion rate in effect immediately after
9:00 a.m., New York City time, on the effective date of
such equity share split or equity share combination;
OS0
= the number of equity shares outstanding immediately prior to
9:00 a.m., New York City time, on the effective date of
such equity share split or equity share combination; and
OS1
= the number of equity shares outstanding immediately after and
solely as a result of such equity share split or equity share
combination.
Any adjustment made pursuant to this clause (2) will become
effective immediately prior to 9:00 a.m., New York City
time, on the effective date of such equity share split or equity
share combination.
(3) If we issue rights (other than rights issued pursuant
to a shareholders rights plan) or warrants to all or
substantially all holders of our equity shares entitling them
(for a period expiring within 45 days after such issuance)
to subscribe for or purchase equity shares (or securities
convertible into equity shares) at a price per equity share (or
having a conversion price per equity share) less than the
average closing sale price of our ADSs divided by the number of
equity shares then represented by one ADS for the 10 consecutive
trading day period ending on the trading day immediately
preceding the first public announcement of the issuance of such
rights or warrants, the conversion rate will be adjusted based
on the following formula:
CR1
=
CR0
×
(OS0
+
X)/(OS0
+ Y)
where,
CR0
= the conversion rate in effect immediately prior to
9:00 a.m., New York City time, on the record date for such
issuance;
CR1
= the conversion rate in effect immediately after
9:00 a.m., New York City time, on the record date for such
issuance;
OS0
= the number of equity shares outstanding immediately prior to
9:00 a.m., New York City time, on the record date for such
issuance;
X = the total number of equity shares issuable pursuant to such
rights or warrants; and
Y = the number of equity shares equal to the quotient of
(x) the aggregate price payable to exercise such rights or
warrants (expressed in US dollars based on the spot exchange
rate determined by our board of directors) divided by
(y) the quotient of (A) the average of the closing
sale prices of our ADSs over the 10 consecutive trading day
period ending on the trading day immediately preceding the first
announcement of the issuance, divided by (B) the number of
equity shares then represented by one ADS.
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Any adjustment made pursuant to this clause (3) will become
effective immediately prior to 9:00 a.m., New York City
time, on the record date for such issuance. If such rights or
warrants described in this clause (3) are not so issued,
the conversion rate will again be adjusted, effective as of the
date our board of directors publicly announces its decision not
to issue such rights or warrants, to be the conversion rate that
would then be in effect if such issuance had not been declared.
To the extent that such rights or warrants are not exercised
prior to their expiration or equity shares (or securities
convertible into equity shares) are not delivered pursuant to
such rights or warrants upon the exercise of such rights or
warrants, the conversion rate shall be readjusted to the
conversion rate that would then be in effect had the adjustments
made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of equity shares (or
securities convertible into equity shares) actually delivered.
In determining the aggregate price payable to exercise such
rights or warrants, there shall be taken into account any
consideration received for such rights or warrants and the value
of such consideration if other than cash shall be determined by
our board of directors.
(4) If we make a dividend or other distribution to all or
substantially all holders of our equity shares of our capital
stock, evidences of indebtedness or other assets of ours,
including securities but excluding:
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any dividends or distributions referred to in clause (1)
above;
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any rights and warrants referred to in clause (3) above;
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any dividends or distributions referred to in clause (5)
below;
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any dividends and distributions in connection with a
reorganization event (as defined herein); or
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any spin-offs to which the provisions set forth below in this
clause (4) shall apply,
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(the distributed securities), then in each such case
the conversion rate will be adjusted based the following formula:
CR1
=
CR0
×
SP0
/
(SP0
− FMV)
where,
CR0
= the conversion rate in effect immediately prior to
9:00 a.m., New York City time, on the record date for such
distribution;
CR1
= the conversion rate in effect immediately after
9:00 a.m., New York City time, on the record date for such
distribution;
SP0
= the average of the closing sale prices of our ADSs over the 10
consecutive trading day period ending on the trading day
immediately preceding the ex-dividend date for such
distribution, divided by the number of equity shares then
represented by one ADS; and
FMV = the fair market value (as determined in US dollars by our
board of directors) on the record date for such distribution of
the shares of capital stock, evidences of indebtedness or other
assets distributed with respect to each outstanding equity share.
Any such adjustment made pursuant to this clause (4) will
become effective immediately prior to 9:00 a.m., New York
City time, on the record date for such distribution. In the
event that such dividend or distribution described in this
clause (4) is not so paid or made, the conversion rate will
again be adjusted, effective as of the date our board of
directors publicly announces its decision not to make such
dividend or distribution, to be the conversion rate that would
then be in effect if such dividend or distribution had not been
declared.
With respect to any rights or warrants (the rights)
that may be issued or distributed pursuant to any rights plan of
ours currently in effect or that we implement after the date of
the Indenture (a rights plan), in lieu of any
adjustment required upon conversion of the notes into ADSs, to
the extent that such rights plan is in effect upon such
conversion, the holders of notes will receive, with respect to
the ADSs (or the equity shares represented thereby) issued upon
conversion, the rights described therein (whether or not the
rights have separated from the ADSs (or the equity shares
represented thereby) at the time of
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conversion), subject to the limitations set forth in and in
accordance with any such rights plan; provided that, in the case
of our current rights plan or a future rights plan to the extent
applicable, if, at the time of conversion, however, the rights
have separated from the ADSs (or the equity shares represented
thereby) in accordance with the provisions of the rights plan so
that holders would not be entitled to receive any rights in
respect of the ADSs issuable upon conversion of the notes as a
result of the timing of the conversion date, the conversion rate
will be adjusted as if we distributed to all holders of ADSs
distributed securities, subject to appropriate readjustment in
the event of the expiration, termination, repurchase or
redemption of the rights. Any distribution of rights or warrants
pursuant to a rights plan complying with the requirements set
forth in the immediately preceding sentence of this paragraph
will not constitute a distribution of rights or warrants. Other
than as specified in this clause (4), there will not be any
adjustment to the conversion rate as the result of the issuance
of any rights, the distribution of separate certificates
representing such rights, the exercise or redemption of such
rights in accordance with any rights plan or the termination or
invalidation of any rights.
If the transaction that gives rise to an adjustment pursuant to
this clause (4) is, however, one pursuant to which the
payment of a dividend or other distribution on our equity shares
consists of shares of capital stock of any class or series of,
or similar equity interest in, a subsidiary or other business
unit of ours (a spin-off) that are, or, when issued
will be, traded or listed on the Nasdaq Global Select Market,
the Nasdaq Global Market, the New York Stock Exchange or any
other U.S. national securities exchange or market, the
conversion rate will be adjusted based on the following formula:
CR1
=
CR0
×
(FMV0
+
MP0)
/
MP0
where,
CR0
= the conversion rate in effect at 5:00 p.m., New York City
time, on the last trading day of the valuation period (as
defined below);
CR1
= the conversion rate in effect immediately after
5:00 p.m., New York City time, on the last trading day of
the valuation period;
FMV0
= the average of the closing sale prices of the capital stock or
similar equity interest distributed to holders of our equity
shares applicable to one equity share over the first 10
consecutive
trading-day
period beginning on and including the fifth trading day after
the effective date of the spin-off (the valuation
period); and
MP0
= the average of the closing sale prices of our ADSs over the
valuation period, divided by the then applicable number of
equity shares then represented by one ADS.
Any such adjustment made pursuant to this clause (4) will
occur on the fifteenth trading day from, and including, the
effective date of the spin-off. As a result, any conversion
within the 15 trading days following the effective date of any
spin-off will be deemed not to have occurred until the end of
such 15
trading-day
period.
(5) If we, by dividend or otherwise, at any time distribute
to all or substantially all holders of our equity shares a
payment consisting exclusively of cash (excluding any dividend
or distribution upon a reorganization event) (a triggering
distribution), the conversion rate will be increased based
on the following formula:
CR1
=
CR0
×
(SP0
−
T)/(SP0
− C)
where
CR0
= the conversion rate in effect immediately prior to
9:00 a.m., New York City time, on the record date for such
triggering distribution;
CR1
= the conversion rate in effect immediately after
9:00 a.m., New York City time, on the record date for such
triggering distribution;
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SP0
= the average of the closing sale prices of our ADSs over the 10
consecutive trading day period ending on the trading day
immediately preceding the ex-dividend date for such triggering
distribution, divided by the number of equity shares then
represented by one ADS;
T = the dividend threshold amount, which shall initially be
$0.09 per year and which amount shall be appropriately adjusted
from time to time for any share dividends on, or subdivisions or
combinations of, our equity shares; provided, that if a
conversion rate adjustment is required to be made as a result of
a distribution that is not a yearly dividend either in whole or
in part, the dividend threshold amount shall be deemed to be
zero; and
C = the amount of such triggering distribution per equity share
that we distribute to holders of our equity shares (expressed in
US dollars based on the spot exchange rate determined by our
board of directors).
Any increase made pursuant to this clause (5) will become
effective immediately prior to 9:00 a.m., New York City
time, on the record date for such triggering distribution. In
the event that such triggering distribution described in this
clause (5) is not so paid or made, the conversion rate will
again be adjusted effective as of the date our board of
directors publicly announces its decision not to make such
triggering distribution to be the conversion rate that would
then be in effect if such triggering distribution had not been
declared.
(6) If we, any of our subsidiaries, or Vedanta Resources
plc or its subsidiaries, makes a payment in respect of a tender
offer or exchange offer for our equity shares, if (a) the
cash and value of any other consideration included in the
payment per equity share (expressed in US dollars based on the
spot exchange rate determined by our board of directors) exceeds
(b) the closing sale price of our ADSs on the trading day
immediately following the last date on which tenders or
exchanges may be made pursuant to such tender offer or exchange
offer divided by the number of equity shares then represented by
one ADS, the conversion rate will be adjusted based on the
following formula:
CR1
=
CR0
× (AC +
(SP1
×
OS1))
/
(SP1
×
OS0)
where,
CR0
= the conversion rate in effect on the day immediately prior to
9:00 a.m., New York City time, on the effective date of the
adjustment;
CR1
= the conversion rate in effect immediately following
9:00 a.m., New York City time, on the effective date of the
adjustment;
AC = the aggregate value of all cash and any other consideration
(as determined by our board of directors) paid or payable for
equity shares purchased in such tender offer or exchange offer;
OS0
= the number of equity shares outstanding immediately prior to
the date such tender offer or exchange offer expires;
OS1
= the number of equity shares outstanding immediately after the
date such tender offer or exchange offer expires (after giving
effect to the purchase or exchange of equity shares pursuant to
such tender or exchange offer) ; and
SP1
= the average of the closing sale prices of our ADSs over the 10
consecutive trading day period commencing on the trading day
immediately following the date such tender offer or exchange
offer expires (the offer valuation period) divided
by the number of equity shares then represented by one ADS.
Any adjustment made pursuant to this clause (6) will become
effective immediately after 5:00 p.m., New York City time,
on the last trading day of the relevant offer valuation period.
As a result, any conversion within an offer valuation period
will be deemed not to have occurred until the end of such offer
period. In the event that we or one of our subsidiaries are
obligated to purchase equity shares pursuant to any such tender
offer, but we are, or such subsidiary is, permanently prevented
by applicable
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law from effecting any or all such purchases or any or all such
purchases are rescinded, the conversion rate will again be
adjusted to be the conversion rate which would have been in
effect based upon the number of shares actually purchased, if
any. Except as provided in the immediately preceding sentence,
if the application of this clause (6) to any tender offer
would result in a decrease in the conversion rate, no adjustment
shall be made for such tender offer under this clause (6).
Ex-dividend date means the first date on which our
ADSs trade on the applicable exchange or in the applicable
market, regular way, without the right to receive the relevant
dividend, distribution or issuance.
Record date means the date on which holders of
record of ADSs become entitled to receive the relevant dividend,
distribution or issuance; provided that the deposit agreement
relating to the ADS facility then outstanding shall specify that
reasonable efforts will be made to establish such a date as
closely as possible to the applicable date on which holders of
the equity shares underlying the ADSs become entitled to receive
such dividend, distribution or issuance. For the avoidance of
doubt, none of the adjustments contemplated in clauses (1)
through (5) above shall become effective unless there is
set a record date or an effective date for the holders of ADSs
with respect to the underlying event.
Except with respect to a spin-off, in cases where the fair
market value of assets (including cash), debt securities or
certain rights, warrants or options to purchase our securities,
as to which clauses (3) or (4) above apply, applicable
to one equity share, distributed to holders of our equity shares:
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equals or exceeds the average of the closing sale price of our
ADSs, divided by the number of equity shares then represented by
each ADS, during the 10 consecutive trading day period ending on
the trading day immediately preceding the record date for such
distribution; or
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such average of the closing sale prices exceeds the fair market
value of such assets, debt securities or rights, warrants or
options so distributed by less than $1.00,
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rather than being entitled to an adjustment in the conversion
rate, the holders of notes will be entitled to receive upon
conversion, in addition to the ADSs, the kind and amount of
assets, debt securities or rights, warrants or options
comprising the distribution that such holder would have received
if such holder had converted such notes immediately prior to the
record date for determining the shareholders entitled to receive
the distribution.
For United States federal income tax purposes, adjustments to
the conversion rate (or failures to make such adjustments) that
have the effect of increasing the holders proportionate
interests in our assets or earnings may in some circumstances
result in a taxable deemed distribution to the holders. See
Taxation Certain United States Federal Income
Tax Considerations.
Notwithstanding any of the foregoing, the applicable conversion
rate will not be adjusted:
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upon the issuance of our equity shares or options or rights to
purchase those shares pursuant to any present or future
employee, director or consultant benefit plan or program of or
assumed by us or any of our subsidiaries;
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upon the issuance of our equity shares pursuant to any option,
warrant, right or exercisable, exchangeable or convertible
security not described in the preceding bullet and outstanding
as of the date the notes were first issued;
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for a change in the par value of our equity shares; or
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for accrued and unpaid interest, if any.
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We will not be required to adjust the conversion rate unless the
adjustment would result in a change of at least 1% of the
conversion rate in effect at such time, provided, however, that
we will carry forward any adjustments that are less than 1% of
the conversion rate and take them into account when determining
subsequent adjustments. Notwithstanding the foregoing sentence,
all adjustments not previously made will be made, regardless of
whether the aggregate adjustment is less than 1%,
(i) annually, upon each anniversary of
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the date of first issuance of the notes, (ii) upon
conversion on the conversion date, (iii) upon redemption on
the redemption date, and (iii) upon maturity on the
maturity date, as applicable.
Except as stated above, the conversion rate will not be adjusted
for the issuance of our equity shares or any securities
convertible into or exchangeable for our equity shares or
carrying the right to purchase our equity shares or any such
security.
Whenever any provision of the Indenture will require us to
calculate closing sale prices over a span of multiple days, we
will make appropriate adjustments to account for any adjustment
to the conversion rate that becomes effective, or any event
requiring an adjustment to the conversion rate where the
ex-dividend date of the event occurs, at any time during the
period from which such prices are to be calculated.
The Indenture permits us to increase the conversion rate, to the
extent permitted by law, for any period of at least 20 business
days. In that case we will give at least 15 calendar days
notice of such increase. We may also make such increase in the
conversion rate, in addition to those set forth above, as our
board of directors deems advisable to avoid or diminish any
income tax to holders of our equity shares resulting from any
dividend or distribution of stock (or rights to acquire stock)
or from any event treated as such for income tax purposes.
Notwithstanding the foregoing, in no event shall (i) the
conversion rate as adjusted on account of a change of control
transaction in the manner set forth in
Adjustment to Conversion Rate Upon a Change of
Control exceed 58.9445 ADSs per $1,000 principal amount of
notes, subject to adjustment as described under
Conversion Rate Adjustments; (ii) the conversion rate
as adjusted exceed the conversion rate limit of 57.1428 ADSs per
$1,000 principal amount of notes, which is equivalent to a
conversion price of $17.50 per ADS, the minimum conversion price
per ADS as determined pursuant to the regulations prescribed by
the Ministry of Finance and has been determined based on the
minimum conversion price of Rs.803.29 and the RBI exchange rate
of Rs.45.91 to $1.00; or (iii) the conversion rate be
adjusted to a rate that would render conversion of the notes
into ADSs at such adjusted conversion rate to be in
contravention of any applicable law or subject to approval of
the Ministry of Finance, the RBI or any other regulatory or
governmental authority in India. For the avoidance of doubt, the
foregoing limitations apply equally to any adjustment that we
may effect through a change to a number of equity shares
represented by ADSs (except for stock splits).
To the extent any adjustment to the conversion rate (or the ADS
to the underlying share ratio) to be made as a result of the
occurrence of a transaction described above in clauses (1)
through (6) above (the occurrence of each such adjustment,
an adjustment event) is limited by clause (ii)
or (iii) of the immediately preceding paragraph, we will
make an additional cash interest payment per $1,000 principal
amount of notes in US dollars to each holder of the notes,
within five business days of the occurrence of such adjustment
event, in an amount equal to the product of (1) the
difference between (i) the conversion rate per $1,000
principal amount of notes that would have been obtained as a
result of the occurrence of an adjustment event (but without
giving effect to the limitation under clause (ii) or
(iii) of the immediately preceding paragraph) and
(ii) the conversion rate per $1,000 principal amount of
notes that was obtained as a result of the occurrence of an
adjustment event (after giving effect to the limitation under
clause (ii) or (iii) of the immediately preceding
paragraph) and (2) the average of the closing sale prices
of our ADSs over the 10 consecutive trading day period ending on
date on which such conversion rate adjustment is required to be
made; provided that in no event shall such additional
interest be paid if the payment of the additional interest
together with the regular interest payments (including any
Additional Amounts and additional amounts payable under
Events of Default) on the notes would cause the
effective interest rate per annum on the notes to exceed the
prescribed ceiling on all-in cost prescribed by the
RBI for external commercial borrowings with an average maturity
period of more than five years; and provided further in
the event the payment of such additional interest is prohibited
by applicable law, we will not declare the adjustment event that
could have caused us to adjust the conversion rate.
S-45
Reorganization
Events
In the case of the following events (each, a
reorganization event):
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any recapitalization, reclassification or change of our equity
shares, other than changes resulting from a subdivision or
combination;
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a consolidation, merger or combination involving us;
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a sale, conveyance or lease to another corporation of all or
substantially all of our property and assets, other than to one
or more of our subsidiaries; or
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a statutory share exchange,
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in each case as a result of which holders of our equity shares
(including equity shares represented by ADSs) are entitled to
receive stock, other securities, other property or assets
(including cash or any combination thereof) with respect to or
in exchange for our equity shares (including equity shares
represented by ADSs), from and after the effective date of such
transaction, the holders of the notes then outstanding will be
entitled thereafter to convert those notes into the kind and
amount of shares of stock, other securities or other property or
assets (including cash or any combination thereof) which they
would have owned or been entitled to receive upon such
reorganization event had such notes been converted into our ADSs
immediately prior to such reorganization event, except that if
such transaction constitutes a change of control, such holders
will not convert at an increased conversion rate if such holder
does not convert its notes in connection with the
relevant change of control. In the event holders of our ADSs
have the opportunity to elect the form of consideration to be
received in such reorganization event, the notes will be
convertible into the weighted average of the kind and amount of
consideration received by the holders of our ADSs that
affirmatively make such an election or, if no holders of our
ADSs actually make such election, the types and amount of
consideration actually received by such holders. We may not
become a party to any such transaction unless its terms are
materially consistent with the preceding. None of the foregoing
provisions shall affect the right of a holder to convert its
notes prior to the effective date of such transaction.
Fundamental
Change Permits Purchase of Notes By Us at the Option of the
Holder
If a fundamental change (as defined below) occurs, each holder
of notes will have the right, subject to RBI approval and to the
terms and conditions of the Indenture, to require us to
repurchase for cash all or any portion of that holders
notes that is equal to $1,000 or an integral multiple of $1,000,
on the date fixed by us, which we refer to as the fundamental
change purchase date, that is not less than 30 nor more than 45
business days after the date we give notice of the fundamental
change, at a fundamental change purchase price equal to 100% of
the principal amount of the notes to be repurchased, together
with interest accrued and unpaid to, but excluding, the
fundamental change purchase date. If such fundamental change
purchase date is after a record date but on or prior to an
interest payment date, however, then the interest payable on
such date will be paid to the holder of record of the notes on
the relevant record date, and the fundamental change purchase
price will be reduced by such interest amount.
As soon as practicable following the announcement of such
transaction, but in no event later than 15 business days after
the occurrence of a fundamental change, we are required to give
notice to all holders of notes, as provided in the Indenture, of
the fundamental change and of their resulting repurchase right.
We must also deliver a copy of our notice to the trustee.
Such notice shall state, among other things:
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the events causing a fundamental change;
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the date of the fundamental change;
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the last date on which a holder may exercise the purchase right;
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the fundamental change purchase price;
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the fundamental change purchase date;
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S-46
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the name and address of the paying agent and the conversion
agent, if applicable;
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if applicable, the applicable conversion rate and any
adjustments to the applicable conversion rate;
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if applicable, that the notes with respect to which a
fundamental change purchase notice has been delivered by a
holder may be converted only if the holder withdraws the
fundamental change purchase notice in accordance with the terms
of the Indenture; and
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the procedures that holders must follow to require us to
purchase their notes.
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Simultaneously with providing such notice, we will publish a
notice containing this information in a newspaper of general
circulation in The City of New York or publish the information
on our website or through such other public medium as we may use
at that time.
In order to exercise the repurchase right upon a fundamental
change, a holder must deliver prior to the fundamental change
purchase date a fundamental change purchase notice stating among
other things:
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if certificated notes have been issued, the certificate numbers
of the notes to be delivered for purchase;
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the portion of the principal amount of notes to be purchased, in
integral multiples of $1,000; and
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that the notes are to be purchased by us pursuant to the
applicable provisions of the notes and the Indenture.
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If the notes are not in certificated form, a holders
fundamental change purchase notice must comply with appropriate
DTC procedures.
A holder may withdraw any fundamental change purchase notice by
a written notice of withdrawal delivered to the paying agent
prior to 5:00 p.m., New York City time, on the business day
immediately preceding the fundamental change purchase date. The
notice of withdrawal must state:
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the principal amount of the withdrawn notes;
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if certificated notes have been issued, the certificate numbers
of the withdrawn notes; and
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the principal amount, if any, of the notes which remain subject
to the fundamental change purchase notice.
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In connection with any purchase offer in the event of a
fundamental change, we will, if required:
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comply with the provisions of
Rule 13e-4,
Rule 14e-l,
and any other tender offer rules under the Securities Exchange
Act of 1934, or the Exchange Act, which may then be
applicable; and
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file a Schedule TO or any other required schedule under the
Exchange Act.
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Rule 13e-4
under the Exchange Act requires the dissemination of certain
information to security holders if an issuer tender offer occurs
and may apply if the repurchase option becomes available to
holders of the notes.
Payment of the fundamental change purchase price for a note for
which a fundamental change purchase notice has been delivered
and not validly withdrawn is conditioned upon delivery of the
note either in certificated form or book-entry transfer,
together with necessary endorsements, to the paying agent at any
time after delivery of such fundamental change purchase notice.
Payment of the fundamental change purchase price for the note
will be made promptly following the later of the fundamental
change purchase date or the time of delivery of the note.
If the paying agent holds cash sufficient to pay the fundamental
change purchase price of the note on the fundamental change
purchase date in accordance with the terms of the Indenture,
then, immediately after the fundamental change purchase date,
the note will cease to be outstanding and interest on such note
will cease to accrue, whether or not the note is delivered to
the paying agent. Thereafter, all other rights of the holder
will terminate, other than the right to receive the fundamental
change purchase price upon delivery of the note.
A fundamental change will be deemed to have occurred
upon a change of control or a termination of
trading, each as defined below.
S-47
A change of control will be deemed to have occurred
at such time after the original issuance of the notes when the
following has occurred:
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the acquisition by any person (other than Vedanta Resources plc)
of beneficial ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction or series of
transactions of our shares entitling that person to exercise
more than 50% of the total voting power of all of our shares
entitled to vote generally in elections of directors, other than
any acquisition by us, any of our subsidiaries or any of our
employee benefit plans; or the acquisition by Vedanta Resources
plc of beneficial ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction or series of
transactions of our shares entitling Vedanta Resources plc to
exercise 90% or more of the total voting power of all of our
shares entitled to vote generally in elections of
directors; or
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our consolidation or merger with or into any other person, any
merger of another person into us, or any conveyance, transfer,
sale, lease or other disposition of all or substantially all of
our properties and assets to another person other than to one or
more of our wholly-owned subsidiaries, other than:
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that does not result in any reclassification, conversion,
exchange or cancellation of our outstanding equity shares (other
than any sale, lease, or other transfer in one transaction or in
a series of transactions of all or substantially all of the
consolidated assets of us and our subsidiaries, taken as a
whole), or
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pursuant to which holders of our equity shares immediately prior
to the transaction have the entitlement to exercise, directly or
indirectly, more than 50% of the total voting power of all our
equity shares entitled to vote generally in the election of
directors of the continuing or surviving person or transferee or
the parent thereof immediately after the transaction; or
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any merger primarily for the purpose of changing our
jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding equity
shares into shares of common stock of the surviving entity.
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Notwithstanding the foregoing, it will not constitute a change
of control if more than 90% of the consideration for our equity
shares (excluding cash payments for fractional shares and cash
payments made in respect of dissenters appraisal rights)
in the transaction or transactions constituting the change of
control consists of securities traded on a U.S. national
securities exchange, including the NYSE, or which will be so
traded when issued or exchanged in connection with the change of
control, and as a result of such transaction or transactions the
notes become convertible solely into such securities.
A termination of trading will be deemed to have
occurred if our ADSs (or substantially identical ADSs) are not
listed or approved for trading on the NYSE or another
U.S. national securities exchange or market and our equity
shares are not so listed or approved for trading.
For purposes of the foregoing, beneficial ownership shall be
determined in accordance with
Rule 13d-3
promulgated by the Securities and Exchange Commission, or the
SEC, under the Exchange Act. The term person
includes any syndicate or group which would be deemed to be a
person under Section 13(d)(3) of the Exchange
Act.
The definition of change of control includes a
phrase relating to the conveyance, transfer, sale, lease or
other disposition of all or substantially all of our properties
and assets. Although there is a developing body of case law
interpreting the phrase substantially all, there is
no precise established definition of the phrase under New York
law, which governs the Indenture and the notes, or under the
laws of India, Sterlites jurisdiction of organization.
Accordingly, the ability of a holder to require us to repurchase
the notes as a result of a conveyance, transfer, sale, lease or
other disposition of less than all of our properties and assets
to another person may be uncertain.
S-48
No notes may be purchased by us at the option of holders upon
the occurrence of a fundamental change if there has occurred and
is continuing an event of default with respect to the notes,
other than a default in the payment of the fundamental change
purchase price with respect to the notes.
The preceding provisions would not necessarily protect holders
of the notes if highly leveraged or other transactions involving
us occur that may adversely affect holders. We also could, in
the future, enter into certain transactions, including certain
recapitalizations, that would not constitute a fundamental
change but would increase the amount of our (or our
subsidiaries) outstanding indebtedness. The incurrence of
significant amounts of additional indebtedness could adversely
affect our ability to service our then existing indebtedness,
including the notes.
Our ability to repurchase notes upon the occurrence of a
fundamental change is subject to important limitations. The
occurrence of a fundamental change could cause an event of
default under, or be prohibited or limited by, the terms of
future indebtedness. Further, we may not have the financial
resources, or be able to arrange financing, to pay the
repurchase price for all the notes that might be delivered by
holders of notes seeking to exercise the repurchase right. Any
failure by us to repurchase the notes when required following a
fundamental change would result in an event of default under the
Indenture. Any such default may, in turn, cause a default under
future indebtedness.
Under current RBI regulations applicable to convertible notes,
we are required to obtain prior approval of the RBI before
providing notice for or effecting any repurchase or redemption
of the notes prior to the maturity date; such approval may not
be forthcoming.
Adjustment
to Conversion Rate Upon a Change of Control
If, and only to the extent you elect to convert your notes in
connection with a change of control, as defined above under
section titled Fundamental Change Permits
Repurchase of Notes By Us at the Option of the Holder,
pursuant to which 10% or more of the consideration for our
equity shares
and/or ADSs
(other than cash payments for fractional equity shares and cash
payments made in respect of dissenters appraisal rights)
in such change of control transaction consists of cash or
securities (or other property) that are not ordinary shares,
shares of common stock, depositary receipts or other
certificates representing common equity interests traded or
scheduled to be traded immediately following such change of
control transaction on a U.S. national securities exchange,
the conversion rate will be increased by an additional number of
ADSs as described below. A conversion of the notes by a holder
will be deemed for these purposes to be in connection
with a change of control if the conversion notice is
received by the conversion agent during the period from the
effective date of such change of control to 5:00 p.m., New
York City time, on the business day immediately preceding the
related fundamental change purchase date.
The number of additional ADSs by which the conversion rate is
increased (the additional ADSs) will be determined
by reference to the table below and is based on the date on
which the change of control becomes effective, which we refer to
as the effective date, and the price (converted into
US dollars at an exchange rate selected by our board of
directors), which we refer to as the ADS price, paid
per equity share in the transaction constituting the change of
control, multiplied by the number of equity shares then
represented by each ADS, subject to adjustment as described
below. If holders of our equity shares receive only cash in the
change of control, the ADS price shall be the cash amount paid
per equity share, multiplied by the number of equity shares then
represented by each ADS. In all other cases, the ADS price shall
be equal to the average of the closing prices of our ADSs for
the 10 trading day period ending on the trading day immediately
preceding the effective date.
S-49
The following table sets forth the number of additional ADSs by
which the conversion rate for the notes shall be increased:
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Effective Date
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October 15,
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October 30,
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October 30,
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October 30,
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October 30,
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October 30,
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ADS Price
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2009
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2010
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2011
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2012
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2013
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2014
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$16.97
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16.0757
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16.0757
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16.0757
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16.0757
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16.0757
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16.0757
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$17.50
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15.0756
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14.9830
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14.9472
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15.0445
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14.6610
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14.274
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$18.00
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14.2137
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14.0393
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13.8944
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13.8881
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13.3855
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12.6868
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$19.00
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12.6782
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12.3610
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12.0167
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11.8200
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11.1337
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9.7628
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$20.00
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11.3564
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10.9208
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10.4045
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10.0307
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9.2300
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7.1312
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$22.50
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8.7743
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8.1311
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7.2893
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6.4836
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5.6482
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1.5756
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$25.00
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6.9336
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6.1781
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5.1459
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3.8627
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3.2331
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0.0000
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$30.00
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4.5939
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3.7883
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2.6618
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0.2392
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0.1585
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0.0000
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$35.00
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3.2548
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2.5103
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1.4996
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0.0000
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0.0000
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0.0000
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$40.00
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2.4344
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1.7872
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0.9516
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0.0000
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0.0000
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0.0000
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$45.00
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1.9000
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1.3510
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0.6776
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0.0000
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0.0000
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0.0000
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$50.00
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1.5326
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1.0699
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0.5294
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0.0000
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0.0000
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0.0000
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$60.00
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1.0669
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0.7383
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0.3729
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0.0000
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0.0000
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0.0000
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$80.00
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0.5946
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0.4176
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0.2212
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0.0000
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0.0000
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0.0000
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The actual ADS price and effective date may not be set forth on
the table, in which case, if the actual ADS price on the
effective date is between two ADS prices on the table or the
actual effective date is between two effective dates on the
table, the number of additional ADSs will be determined by a
straight-line interpolation between the number of additional
ADSs set forth for the two ADS prices and the two effective
dates, as applicable, based on a
365-day
year. If the ADS price:
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exceeds $80.00 per ADS, subject to adjustment as described
below, the conversion rate will not be increased; and
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is less than $16.97 per ADS, subject to adjustment as described
below, the conversion rate will not be increased.
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The ADS prices set forth in the first column of the table above
will be adjusted as of any date on which the conversion rate of
the notes is adjusted as described above under
Conversion Rights Conversion Rate
Adjustments. The adjusted ADS prices will equal the ADS
prices applicable immediately prior to such adjustment
multiplied by a fraction, the numerator of which is the
conversion rate immediately prior to the adjustment giving rise
to the ADS price adjustment and the denominator of which is the
conversion rate as so adjusted. The number of additional ADSs
set forth in the table above will be adjusted in the same manner
as and as of any date on which the conversion rate is adjusted
as described above under Conversion
Rights Conversion Rate Adjustments.
Our obligation to increase the conversion rate as described
above could be considered a penalty, in which case the
enforceability thereof would be subject to general principles of
reasonableness of economic remedies.
Notwithstanding the foregoing, in no event shall (i) the
conversion rate as adjusted on account of a change of control
transaction in the manner set forth above exceed 58.9445 ADSs
per $1,000 principal amount of notes, subject to adjustment as
described under Conversion Rights
Conversion Rate Adjustments; (ii) the conversion rate
as adjusted exceed the conversion rate limit of 57.1428 ADSs per
$1,000 principal amount of notes, which is equivalent to a
conversion price of $17.50 per ADS, the minimum conversion price
per ADS as determined pursuant to the regulations prescribed by
the Ministry of Finance and has been determined based on the
minimum conversion price of Rs. 803.29 and the RBI exchange
rate of Rs. 45.91 to $1.00; or (iii) the conversion
rate be adjusted to a rate that would render conversion of the
notes into ADSs at such adjusted conversion rate to be in
contravention of any applicable law or subject to approval of
the Ministry of Finance, the RBI or any other regulatory or
governmental authority in India. For the avoidance of
S-50
doubt, the foregoing limitations apply equally to any adjustment
that we may effect through a change to a number of equity shares
represented by ADSs (except for stock splits).
Events of
Default and Acceleration
The following are events of default under the Indenture:
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default in the payment of any principal amount, redemption price
or fundamental change purchase price due with respect to the
notes, when the same becomes due and payable;
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default in payment of any interest (including additional
interest, if any) under the notes, which default continues for
30 days after the date when due;
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default in the delivery when due of ADSs deliverable upon
conversion with respect to the notes, which default continues
for three days after such scheduled delivery date;
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our failure to give a fundamental change notice as described
under Fundamental Change Permits Holders to Require
Us to Purchase Notes when due;
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our failure to comply with any of our other agreements in the
notes or the Indenture upon our receipt of notice of such
default from the trustee or from holders of not less than 25% in
aggregate principal amount of the notes, and the failure to cure
(or obtain a waiver of) such default within 60 days after
receipt of such notice;
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default in the payment of principal by the end of any applicable
grace period resulting in acceleration of other indebtedness of
Sterlite for borrowed money where the aggregate principal amount
with respect to which the default or acceleration has occurred
exceeds $25 million and such acceleration has not been
rescinded or annulled or such indebtedness repaid within a
period of 30 days after written notice to us by the trustee
or to us and the trustee by the holders of at least 25% in
aggregate principal amount of the notes, provided that if any
such default is cured, waived, rescinded or annulled, then the
event of default by reason thereof would be deemed not to have
occurred; and
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certain events of bankruptcy, insolvency or reorganization
affecting us or our significant subsidiaries (as defined in
Article 1,
Rule 1-02
of
Regulation S-X).
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If an event of default shall have happened and be continuing,
the trustee may, and at the request of holders of not less than
25% in aggregate principal amount of the notes then outstanding
shall, declare the principal of the notes and any accrued and
unpaid interest through the date of such declaration immediately
due and payable. In the case of certain events of bankruptcy or
insolvency with respect to us, the principal amount of the notes
together with any accrued interest through the occurrence of
such event shall automatically become and be immediately due and
payable.
Notwithstanding the foregoing, the Indenture will provide that
the sole remedy for an event of default relating to the failure
to comply with the reporting obligations under the Indenture,
which are described below under Reports,
and for any failure to comply with the requirements under
Section 314(a)(1) of the Trust Indenture Act which
also relate to provision of reports, will for the 180 calendar
days after the occurrence of such an event of default consist
exclusively of the right to receive additional interest on the
notes at an annual rate equal to 0.25% of the principal amount
of the notes. This additional interest will be payable in the
same manner and on the same dates as the stated interest payable
on the notes. Any additional interest is subject to the
effective interest rate per annum on the notes not exceeding the
ceiling on all-in-cost prescribed by the RBI for
external commercial borrowings with an average maturity period
of more than five years. The additional interest will accrue on
all outstanding notes from and including the date on which an
event of default relating to a failure to comply with the
reporting obligations in the Indenture first occurs to, but not
including, the 180th calendar day thereafter (or such
earlier date on which the event of default relating to the
reporting obligations shall have been cured or waived). On such
180th calendar day (or earlier, if the event of default
relating to the reporting obligations is cured or waived prior
to such 180th calendar day), such additional interest will
cease to accrue and on such 180th calendar day the notes
will be subject to acceleration as provided above if the event
of default is continuing. The provisions of the Indenture
described
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in this paragraph will not affect the rights of holders of notes
in the event of the occurrence of any other event of default.
For the avoidance of doubt, the additional interest shall not
begin accruing until we fail to perform the reporting covenant
for a period of 60 calendar days after written notice of such
failure is given to us by the trustee or to us and the trustee
by the holders of at least 25% in aggregate principal amount of
notes then outstanding.
The holders of a majority in aggregate principal amount of the
outstanding notes may waive all past defaults (except with
respect to nonpayment of principal or interest) and rescind any
such acceleration with respect to the notes and its consequences
if (1) rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (2) all
existing events of default, other than the nonpayment of the
principal of and interest on the notes that have become due
solely by such declaration of acceleration, have been cured or
waived.
No holder of notes may pursue any remedy under the Indenture,
except in the case of a default due to the non-payment of
principal of, or interest on, such notes, unless:
(1) such holder has previously given the trustee written
notice that an event of default is continuing;
(2) holders of at least 25% of the principal amount of the
outstanding notes have requested the trustee to pursue the
remedy;
(3) such holders have offered the trustee security or
indemnity satisfactory to it against any costs, expenses and
liabilities; and
(4) the trustee fails to comply with such request within
60 days after the receipt of the request and the offer of
security or indemnity.
Subject to certain restrictions, the holders of a majority in
principal amount of the outstanding notes are given the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or of exercising any
trust or power conferred on the trustee. The Indenture provides
that in the event an event of default has occurred and is
continuing, the trustee will be required in the exercise of its
powers to use the degree of care that a prudent person would use
in the conduct of its own affairs. The trustee, however, may
refuse to follow any direction that conflicts with law or the
Indenture or that the trustee determines is unduly prejudicial
to the rights of any other holder or that would involve the
trustee in personal liability. Prior to taking any action under
the Indenture, the trustee will be entitled to indemnification
satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
The Indenture provides that if a default occurs and is
continuing and is known to the trustee, the trustee must mail to
each holder notice of the default within 90 days after it
occurs. Except in the case of a default in the payment of
principal of, or interest on, any note, the trustee may withhold
notice if and so long as a responsible officer of the trustee in
good faith determines that withholding notice is in the
interests of the holders. In addition, we are required to
deliver to the trustee, within 120 days after the end of
each fiscal year, a certificate indicating whether the signers
thereof know of any default that occurred during the previous
year. We are also required to deliver to the trustee, within
30 days after the occurrence thereof, written notice of any
events that would constitute a default, the status of those
events and what action we are taking or propose to take in
respect thereof.
If an Event of Default upon the notes were to occur and a
judgment subsequently was obtained in favor of the holders of
notes in an action brought in the United States, enforcement in
India of such a judgment or of the noteholders rights
under the notes may be subject to significant delays. Indian
judicial processes (including those required to obtain judgment
on debt obligations, to seek judicial enforcement of such
judgments and to compel the winding up of companies) can be very
lengthy, often requiring many years to resolve. Subject to
certain conditions, Indian companies facing significant
financial difficulties can seek rehabilitation, and protection
from creditors, under the Sick Industrial Companies (Special
Provisions) Act, 1985 (or any successor thereto, including the
Companies Act, 1956).
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Consolidation,
Merger or Sale of Assets
The Indenture provides that we may not consolidate with or merge
into any person or convey, transfer or lease our properties and
assets substantially as an entirety to another person, other
than to one or more of our wholly-owned subsidiaries, unless:
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Sterlite is the continuing corporation or the resulting,
surviving or transferee person is a corporation, limited
liability company, partnership, trust or other business entity
organized and existing under the laws of India or the United
States or any state thereof or the District of Columbia, and
such person assumes all our obligations under the notes and the
Indenture;
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after giving effect to the transaction, no event of default, and
no event that, after notice or passage of time, would become an
event of default, has occurred and is continuing; and
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other conditions described in the Indenture are met.
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Upon the assumption of our obligations by such person in such
circumstances, subject to certain exceptions, we shall be
discharged from all obligations under the notes and the
Indenture. This covenant includes a phrase relating to the
conveyance, transfer or lease of our properties and assets
substantially as an entirety. There is no precise, established
definition of the phrase substantially as an
entirety under New York law, which governs the Indenture
and the notes, or under the laws of India, Sterlites
jurisdiction of organization.
Although such transactions are permitted under the Indenture,
certain of the foregoing transactions occurring could constitute
a fundamental change of our company, permitting each holder to
require us to purchase the notes of such holder as described
above.
An assumption of our obligations under the notes and the
Indenture by such person might be deemed for United States
federal income tax purposes to be an exchange of the notes for
new notes by the holders thereof, resulting in recognition of
gain or loss for such purposes and possibly other adverse tax
consequences to the holders. Holders should consult their own
tax advisors regarding the tax consequences of such an
assumption.
Additional
Amounts
All payments made by us or any successor to us under or with
respect to the notes, including delivery of ADSs upon
conversion, will be made net of a withholding tax rate of
10.5575% (the Base Rate). Accordingly, we
will pay to the holder of each note such additional amounts
(Additional Amounts) on all payments made by us or
any successor to us under or with respect to the notes,
including delivery of ADSs, to ensure that the net amount
received by the holder (after deducting any taxes on the
Additional Amounts) shall equal the amount which would have been
received by such holder had withholding or deduction of tax at
the Base Rate not been required. In addition, if withholding or
deduction for, or on account of, any other present or future
taxes, duties, assessments or governmental charges of whatever
nature imposed or levied by or within India or any other
jurisdiction in which we or any successor are organized or
resident for tax purposes or through which payment is made by or
on behalf of Sterlite or by or within any jurisdiction as a
result of our or our successors becoming a fiscally
transparent entity with respect to any holder (through merger,
consolidation or otherwise) (or any political subdivision or
taxing authority of or in any of the foregoing) (each, as
applicable, a Relevant Jurisdiction) is required by
law or by regulation or governmental policy having the force of
law on any payments made by us or any successor to us under or
with respect to the notes, including payments upon redemption of
the notes or on delivery of ADSs upon conversion, we will pay to
the holder of each note such excess additional amounts
(Excess Additional Amounts) as may be necessary to
ensure that the net amount received by the holder after such
additional withholding or deduction (and after deducting any
taxes on the Excess Additional Amounts) shall equal the amounts
which would have been
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received by such holder had no such additional withholding or
deduction been required, except that no Excess Additional
Amounts shall be payable:
(1) for or on account of:
(a) any tax, duty, assessment or other governmental charge
that would not have been imposed but for:
(i) the existence of any present or former connection
between the holder or beneficial owner of such note, and the
Relevant Jurisdiction other than merely holding such note or the
receipt of payments or the exercise of rights and obligations
thereunder, including, without limitation, such holder or
beneficial owner being or having been a national, domiciliary or
resident of such Relevant Jurisdiction or treated as a resident
thereof or being or having been physically present or engaged in
a trade or business therein or having or having had a permanent
establishment therein;
(ii) the presentation of such note (in cases in which
presentation is required) more than 30 days after the later
of the date on which the payment of the principal of, premium,
if any, and interest on, such note became due and payable
pursuant to the terms thereof or was made or duly provided
for; or
(iii) the failure of the holder or beneficial owner to
comply with a timely request from us or any successor, addressed
to the holder or beneficial owner, as the case may be, to
provide information concerning such holders or beneficial
owners nationality, residence, identity or connection with
the Relevant Jurisdiction, if and to the extent that due and
timely compliance with such request is required by law,
regulation or administrative practice of the Relevant
Jurisdiction to reduce or eliminate any withholding or deduction
as to which Excess Additional Amounts would have otherwise been
payable to such holder;
(b) any estate, inheritance, gift, sale, transfer, capital
gains, excise, personal property or similar tax, assessment or
other governmental charge;
(c) any tax, duty, assessment or other governmental charges
that is payable otherwise than by withholding from payments
under or with respect to the notes; or
(d) any combination of taxes, duties, assessments or other
governmental charges referred to in the preceding clauses (a),
(b) or (c);
(2) with respect to any payment of the principal of, or
interest on, such note to a holder, if the holder is a
fiduciary, partnership or person other than the sole beneficial
owner of any payment to the extent that such payment would be
required to be included in the income under the laws of the
Relevant Jurisdiction, for tax purposes, of a beneficiary or
settlor with respect to the fiduciary, a member of that
partnership or a beneficial owner who would not have been
entitled to such Excess Additional Amounts had that beneficiary,
settlor, partner or beneficial owner been the holder thereof.
Whenever there is mentioned in any context the payment of
principal of, and any premium or interest on, any note, such
mention shall be deemed to include payment of Additional Amounts
and Excess Additional Amounts provided for in the Indenture to
the extent that, in such context, Additional Amounts and Excess
Additional Amounts are, were or would be payable in respect
thereof.
Any such Additional Amount shall be subject to the ceiling on
all-in-cost prescribed by the RBI for external
commercial borrowings with an average maturity period of more
than five years. As per the Master Circular on External
Commercial Borrowings and Trade Credits (No. 07/2009-10)
dated July 1, 2009 issued by the RBI, payment of
withholding tax in Indian Rupees is presently excluded for
calculating the all-in-cost.
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Modification
The trustee and we may amend the Indenture or the notes with the
written consent or affirmative vote of the holders of not less
than a majority in aggregate principal amount of the notes then
outstanding. However, the written consent or affirmative vote of
the holder of each outstanding note affected by such change is
required to:
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alter the manner of calculation of interest (including
additional interest) on the note or reduce the rate of accrual
of interest (including additional interest) on the note or
change the date of payment;
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change the maturity date of the note;
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reduce the principal amount, redemption price or fundamental
change purchase price with respect to the note;
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make any change that adversely affects the right to require us
to purchase the note upon a fundamental change;
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impair the right to institute suit for the enforcement of any
payment with respect to the note or with respect to conversion
of the note;
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change the currency of payment of principal of, or interest on,
the note;
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except as otherwise permitted by the Indenture, adversely affect
the conversion rights of any holder of notes; or
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change the provisions in the Indenture that relate to modifying
or amending the Indenture.
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For the avoidance of doubt, the only written consent or
affirmative vote required to approve any of the foregoing
changes is the written consent or affirmative vote of the
holders of each note affected by such change; the written
consent or affirmative vote of the holders of a majority in
aggregate principal amount of the outstanding notes is not
additionally required.
Notwithstanding the foregoing, without the consent of any holder
of notes, we and the trustee may amend the Indenture to:
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provide for conversion rights of holders of notes in the event
of any reorganization event;
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evidence a successor to us and provide for the assumption by
that successor of our obligations under the Indenture and the
notes;
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add to our covenants for the benefit of the holders of the
notes, including adding one or more additional put rights in
favor of the holders of notes, or to surrender any right or
power conferred upon us;
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secure our obligations or add guarantees in respect of the notes
and the Indenture;
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increase the conversion rate;
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evidence and provide the acceptance of the appointment of a
successor trustee under the Indenture;
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make any change to comply with the requirements of the SEC in
order to effect or maintain qualification of the Indenture under
the Trust Indenture Act, as contemplated by the Indenture
or otherwise;
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provide for uncertificated notes in addition to or in place of
certificated notes, provided, however, that the
uncertificated notes are issued in registered form for purposes
of Section 163(f) of the U.S. Internal Revenue Code of
1986, as amended (the Code);
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cure any ambiguity, omission, defect or inconsistency in the
Indenture;
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make any changes of a formal, minor or technical nature or
necessary to correct a manifest error or to comply with
mandatory provisions of applicable law as evidenced by an
opinion of counsel so long as
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such change does not adversely affect the rights of the holders
of the notes in any material respect; provided, that any
amendment made solely to conform the provisions of the Indenture
to the description of the notes contained in this prospectus
supplement will be deemed not to adversely affect the interests
of the holders of the notes; or
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conform the provisions of the Indenture to the Description
of Notes section in this prospectus supplement.
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The consent of the holders of notes is not necessary under the
Indenture to approve the particular form of any proposed
modification or amendment. It is sufficient if such consent
approves the substance of the proposed modification or
amendment. After a modification or amendment under the Indenture
becomes effective, we are required to mail to the holders a
notice briefly describing such modification or amendment.
However, the failure to give such notice to all holders, or any
defect in the notice, will not impair or affect the validity of
the modification or amendment.
The holders of a majority in aggregate principal amount of the
outstanding notes may, on behalf of the holders of all notes:
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waive compliance by us with restrictive provisions of the
Indenture, as detailed in the Indenture; or
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waive any past default under the Indenture and its consequences,
except a default in the payment of any amount due, or in the
obligation to deliver ADSs, with respect to any note or in
respect of any provision which under the Indenture cannot be
modified or amended without the consent of the holder of each
outstanding note affected.
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Repurchase
and Cancellation
We may, to the extent permitted by law, and subject to relevant
Indian laws and regulations, repurchase any notes on the open
market or by tender offer at any price or by private agreement
without prior notice to holders. Any notes repurchased by us
may, at our option, be surrendered to the trustee for
cancellation, but may not be reissued or resold by us. Any notes
surrendered for cancellation may not be reissued or resold and
will be promptly cancelled.
Under current RBI regulations applicable to convertible notes,
we are required to obtain prior approval of the RBI before
providing notice for or effecting any repurchase or redemption
of the notes prior to the maturity date; such approval may not
be forthcoming.
Discharge
of the Indenture
We may satisfy and discharge our obligations under the Indenture
by delivering to the trustee for cancellation all outstanding
notes or by depositing with the trustee, the paying agent or the
conversion agent, if applicable, after the notes have become due
and payable, whether at the maturity date, any redemption date
(including a tax redemption date), a fundamental change purchase
date, upon conversion or otherwise, cash or ADSs (as applicable
under the terms of the Indenture) sufficient to pay all of the
outstanding notes and paying all other sums payable under the
Indenture.
Reports
We shall deliver to the trustee, within 15 calendar days after
we would have been required to file with the SEC, copies of the
annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as
the SEC may by rules and regulations prescribe) that we are
required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act. We also shall comply with the other
provisions of Section 314(a) of the Trust Indenture
Act.
No
Shareholder Rights for Holders of Notes
Holders of the notes, as such, will not have any rights as
shareholders of Sterlite (including, without limitation, voting
rights and rights to receive any dividends or other
distributions on our ADSs).
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In addition, upon conversion of the notes, you will receive our
ADSs. As a holder of ADSs, you will not be treated as a
shareholder of Sterlite. For information about your rights as a
holder of ADSs, see Description of American Depositary
Shares in the accompanying prospectus.
Currency
Indemnity
The US dollar is the sole currency of account and payment for
all sums payable by us under the Indenture. Any amount received
or recovered in a currency other than US dollars in respect of
the notes (whether as a result of, or the enforcement of, a
judgment or order of a court of any jurisdiction, in our
winding-up
or dissolution or otherwise) by the holder in respect of any sum
expressed to be due to it from us will constitute a discharge of
us only to the extent of the US dollar amount which the
recipient is able to purchase with the amount so received or
recovered in that other currency on the date of that receipt or
recovery (or, if it is not possible to make that purchase on
that date, on the first date on which it is possible to do so).
If that US dollar amount is less than the US dollar amount
expressed to be due to the recipient under any note, we will
indemnify the recipient against any loss sustained by it as a
result. In any event we will indemnify the recipient against the
cost of making any such purchase.
For the purposes of this indemnity, it will be sufficient for
the holder to certify that it would have suffered a loss had an
actual purchase of US dollars been made with the amount so
received in that other currency on the date of receipt or
recovery (or, if a purchase of US dollars on such date had not
been practicable, on the first date on which it would have been
practicable). These indemnities constitute a separate and
independent obligation from our other obligations, will give
rise to a separate and independent cause of action, will apply
irrespective of any waiver granted by any holder and will
continue in full force and effect despite any other judgment,
order, claim or proof for a liquidated amount in respect of any
sum due under any note or any other judgment or order.
No
Personal Liability of Directors, Officers, Employees and
Shareholders
No director, officer, employee, incorporator, shareholder or
partner of ours, as such, shall have any liability for any of
our obligations under the notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations
or their creation. Each holder by accepting a note waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the notes. Such waiver and
release may not be effective to waive liabilities under the
U.S. federal securities laws and it is the view of the SEC
that such a waiver is against public policy. In addition, such
waiver and release may not be effective under the laws of India.
Calculations
in Respect of Notes
We or our calculation agents are responsible for making all
calculations called for under the Indenture and the notes. These
calculations include, but are not limited to, determination of
the closing sale price of our ADSs, accrued interest payable on
the notes and the conversion rate of the notes. We or our
calculation agents will make all these calculations in good
faith and, absent manifest error, our calculations are final and
binding on holders of notes. We or our calculation agents will
provide a schedule of our calculations to the trustee,
conversion agent, registrar and paying agent, and the trustee,
conversion agent, registrar and paying agent are entitled to
conclusively rely upon the accuracy of our calculations without
independent verification and none of the trustee, conversion
agent, registrar or paying agent will have any responsibility
for making any such calculation.
Governing
Law
The Indenture provides that it and the notes will be governed
by, and construed in accordance with, the law of the State of
New York.
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Transfer
and Exchange
Notes may be presented for conversion at the office of the
conversion agent and for exchange or registration of transfer at
the office of the registrar. The conversion agent and the
registrar shall initially be the trustee. No service charge will
be made for any registration of transfer or exchange of notes.
However, we may require the holder to pay any tax, assessment or
other governmental charge payable as a result of such transfer
or exchange.
Information
Concerning the Trustee, Paying Agent, Registrar and Conversion
Agent
Wilmington Trust Company will be the trustee and Citibank,
N.A., will be the registrar, paying agent and conversion agent
under the Indenture for the notes.
Global
Notes; Book-Entry Form
We will initially issue the notes in the form of one or more
global securities. The global security will be deposited with
the trustee as custodian for DTC and registered in the name of a
nominee of DTC. Except as set forth below, the global security
may be transferred, in whole and not in part, only to DTC or
another nominee of DTC. You will hold your beneficial interests
in the global security directly through DTC, if you have an
account with DTC or indirectly through organizations that have
accounts with DTC. Notes in definitive certificated form (called
certificated securities) will be issued only in
certain limited circumstances described below.
DTC has advised us that it is:
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a limited purpose trust company organized under the laws of the
State of New York;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the New
York Uniform Commercial Code; and
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a clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act.
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DTC was created to hold securities of institutions that have
accounts with DTC (called participants) and to
facilitate the clearance and settlement of securities
transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities
certificates. DTCs participants include securities brokers
and dealers, which may include the underwriters, banks, trust
companies, clearing corporations and certain other
organizations. Access to DTCs book-entry system is also
available to others such as banks, brokers, dealers and trust
companies (called the indirect participants) that
clear through or maintain a custodial relationship with a
participant, whether directly or indirectly.
We expect that pursuant to procedures established by DTC upon
the deposit of the global security with DTC, DTC will credit on
its book-entry registration and transfer system the principal
amount of notes represented by such global security to the
accounts of participants. The accounts to be credited shall be
designated by the underwriters. Ownership of beneficial
interests in the global security will be limited to participants
or persons that may hold interests through participants.
Ownership of beneficial interests in the global security will be
shown on, and the transfer of those beneficial interests will be
effected only through, records maintained by DTC (with respect
to participants interests), the participants and the
indirect participants.
The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such
securities in definitive form. These limits and laws may impair
the ability to transfer or pledge beneficial interests in the
global security.
Owners of beneficial interests in global securities who desire
to convert their interests into ADSs should contact their
brokers or other participants or indirect participants through
whom they hold such beneficial interests to obtain information
on procedures, including proper forms and cut-off times, for
submitting requests for conversion. So long as DTC, or its
nominee, is the registered owner or holder of a global security,
DTC or
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its nominee, as the case may be, will be considered the sole
owner or holder of the notes represented by the global security
for all purposes under the Indenture and the notes. In addition,
no owner of a beneficial interest in a global security will be
able to transfer that interest except in accordance with the
applicable procedures of DTC.
Except as set forth below, as an owner of a beneficial interest
in the global security, you will not be entitled to have the
notes represented by the global security registered in your
name, will not receive or be entitled to receive physical
delivery of certificated securities and will not be considered
to be the owner or holder of any notes under the global
security. We understand that under existing industry practice,
if an owner of a beneficial interest in the global security
desires to take any action that DTC, as the holder of the global
security, is entitled to take, DTC would authorize the
participants to take such action. Additionally, in such case,
the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise
act upon the instructions of beneficial owners owning through
them.
We will make payments of principal and interest on the notes
represented by the global security registered in the name of and
held by DTC or its nominee to DTC or its nominee, as the case
may be, as the registered owner and holder of the global
security. Neither we, the trustee nor any paying agent will have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests
in the global security or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
We expect that DTC or its nominee, upon receipt of any payment
of principal or interest on the global security, will credit
participants accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of the global security as shown on the records
of DTC or its nominee. We also expect that payments by
participants or indirect participants to owners of beneficial
interests in the global security held through such participants
or indirect participants will be governed by standing
instructions and customary practices and will be the
responsibility of such participants or indirect participants. We
will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of,
beneficial interests in the global security for any note or for
maintaining, supervising or reviewing any records relating to
such beneficial interests or for any other aspect of the
relationship between DTC and its participants or indirect
participants or the relationship between such participants or
indirect participants and the owners of beneficial interests in
the global security owning through such participants.
Transfers between participants in DTC will be effected in the
ordinary way in accordance with DTC rules and will be settled in
same-day
funds.
DTC has advised us that it will take any action permitted to be
taken by a holder of notes only at the direction of one or more
participants to whose account the DTC interests in the global
security is credited and only in respect of such portion of the
aggregate principal amount of notes as to which such participant
or participants has or have given such direction. However, if
DTC notifies us that it is unwilling to be a depositary for the
global security or ceases to be a clearing agency or there is an
event of default under the notes, DTC will exchange the global
security for certificated securities which it will distribute to
its participants. Although DTC is expected to follow the
foregoing procedures in order to facilitate transfers of
interests in the global security among participants of DTC, it
is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time.
Neither we nor the trustee will have any responsibility, or
liability for the performance by DTC or the participants or
indirect participants of their respective obligations under the
rules and procedures governing their respective operations.
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TAXATION
Certain
United States Federal Income Tax Considerations
The following describes certain material United States federal
income tax consequences to US Holders (defined below) under
present law of the purchase, ownership and disposition of notes
and ADSs into which the notes may be converted. This summary
applies only to notes held as capital assets by US Holders who
purchased notes on original issuance at their issue
price (the first price at which a substantial portion of
the notes is sold to persons other than bond houses, brokers, or
similar persons or organization acting in the capacity of
underwriters, placement agents or wholesalers) and with ADSs
received by such US Holders upon conversion of such notes and
held as capital assets. This discussion is based on the United
States Internal Revenue Code of 1986, as amended, as in effect
on the date of this prospectus supplement and on United States
Treasury regulations in effect or, in some cases, proposed, as
of the date of this prospectus supplement, as well as judicial
and administrative interpretations thereof available on or
before such date. All of the foregoing authorities are subject
to change, which change could apply retroactively and could
affect the tax consequences described below.
The following discussion does not address all aspects of United
States federal income taxes and does not deal with all tax
consequences that may be relevant to any particular investor or
to persons in special tax situations such as:
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banks;
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certain financial institutions;
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insurance companies;
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dealers in securities;
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United States expatriates;
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traders that elect to mark-to-market;
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tax-exempt entities;
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persons liable for the alternative minimum tax;
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persons holding notes or ADSs as part of a straddle, hedging,
conversion or integrated transaction;
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persons that actually or constructively own 10.0% or more of our
voting stock;
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persons holding notes or ADSs through partnership or other
pass-through entities; and
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persons whose functional currency is not the
U.S. dollar.
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INVESTORS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE
APPLICATION OF THE UNITED STATES FEDERAL TAX RULES TO THEIR
PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL,
NON-UNITED
STATES AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF NOTES AND ADSs.
The discussion below of the United States federal income tax
consequences to US Holders will apply to you if you
are, for United States federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation)
organized under the laws of the United States, any State thereof
or the District of Columbia;
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an estate whose income is subject to United States federal
income taxation regardless of its source; or
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a trust that (1) is subject to the primary supervision of a
court within the United States and the control of one or more
United States persons for all substantial decisions of the trust
or (2) has a valid election in effect under the applicable
United States Treasury regulations to be treated as a domestic
trust.
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If a partnership (or other entity treated as a partnership for
United States federal income tax purposes) holds notes or ADSs,
the tax treatment of a partner will generally depend on the
status of the partner and the activities of the partnership.
Partners in a partnership or other entity taxable as a
partnership that holds notes or ADSs should consult their own
tax advisors regarding the tax treatment of the ownership and
disposition of notes or ADSs.
The discussion below assumes that the representations contained
in the deposit agreement are true and that the obligations in
the deposit agreement and any related agreement will be complied
with in accordance with their terms. A US Holder of ADSs should
be treated as the holder of the underlying equity shares
represented by those ADSs for United States federal income tax
purposes.
The United States Treasury has expressed concerns that parties
to whom ADSs are pre-released may be taking actions that are
inconsistent with the claiming, by US Holders of ADSs, of
foreign tax credits for United States federal income tax
purposes. Such actions would also be inconsistent with the
claiming of the reduced rate of tax applicable to dividends
received by certain non-corporate US Holders, as described
below. Accordingly, the availability of foreign tax credits or
the reduced tax rate for dividends received by certain
non-corporate US Holders could be affected by future actions
that may be taken by the United States Treasury or parties to
whom ADSs are pre-released.
Payment
of Interest
It is anticipated, and this discussion assumes, that the notes
will be issued for an amount equal to the principal amount. In
such case, subject to discussions under
Potential Application of Contingent Payment
Debt Instrument Rules, the gross amount of interest on a
note, including Additional Amounts and Excess Additional Amounts
paid on such interest, will generally be taxable to a US Holder
as ordinary income at the time it is paid or accrued in
accordance with the US Holders method of accounting for
tax purposes. Interest income on a note generally will
constitute foreign source income and generally will constitute
passive category income or, in the case of certain
US Holders, general category income, for United
States foreign tax credit purposes.
A US Holder should be able to claim a foreign tax credit (or, in
lieu of such credit, deduction) with respect to Indian tax
withheld from the payment of interest at the rate applicable to
such US Holder, subject to applicable limitations. To the extent
there is any excess withholding, however, a US Holder would not
be able to claim such credit. A US Holder should be aware that
the actual Indian withholding (as well as the corresponding
Additional Amount) in respect of interest paid to such US Holder
may be applied at a rate in excess of the rate applicable to
such US Holder under the relevant law, potentially resulting in
excess withholding. US tax rules governing the foreign tax
credit are complex. US Holders should consult their advisor
regarding the availability of the foreign tax credit and
relevant limitations.
Potential
Application of Contingent Payment Debt Instrument
Rules
We are required to pay additional interest in certain
circumstances described above under the heading
Description of Notes Additional Amounts.
We are also required to pay additional cash interest to the
extent any conversion rate adjustment exceeds a certain limit.
See Description of Notes Conversion Rate
Adjustments. We believe (and the rest of this discussion
assumes) that the amount of Additional Amounts we will be
required to pay on the notes would generally be constant
throughout the term of the notes and that there is only a remote
possibility that we will be obligated to make any additional
cash payments on the notes in connection with any adjustment in
the conversion rate (or if any such additional cash payments are
made that they will be considered incidental).
Accordingly, we believe that the notes will not be treated as
contingent payment debt instruments under applicable
United States Treasury regulations. Assuming our position is
respected, any such additional interest would generally be
taxable to a US Holder at the time such payments are received or
accrued, in accordance with the US Holders usual method of
accounting for tax purposes, as discussed above.
Our determination that the notes are not contingent payment debt
instruments is not binding on the United States Internal Revenue
Service (the IRS). If the IRS were to successfully
challenge our
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determination and the notes were treated as contingent payment
debt instruments, a US Holder would be required, among other
things, to accrue interest income, regardless of the US
Holders method of accounting, at a rate substantially
higher than the stated interest rate on the notes and to treat
as taxable ordinary income, rather than capital gain, any gain
recognized on a sale, exchange or redemption of a note and the
entire amount of realized gain upon a conversion of a note. Our
determination that the notes are not contingent payment debt
instruments is binding on US Holders unless they disclose their
contrary positions to the IRS in the manner that is required by
applicable United States Treasury regulations.
Disposition
of Notes
Subject to the discussions under Potential
Application of Contingent Payment Debt Instrument Rules
above and Passive Foreign Investment
Company below, and except as provided below under
Conversion of Notes, a US Holder will
recognize gain or loss on the sale, exchange, redemption,
retirement or other taxable disposition of a note equal to the
difference between the amount realized upon the disposition
(less any amount attributable to accrued but unpaid interest not
previously included in income, which will be taxable as such)
and the US Holders tax basis in the note. A US
Holders tax basis in a note generally will be the US
Holders cost therefor, less any principal payments
received by such holder. Such gain or loss generally will be
United States source capital gain or loss and will be long-term
capital gain or loss if at the time of the sale, exchange,
redemption or other disposition such note has been held by such
US Holder for more than one year. Long-term capital gain
realized by a non-corporate US Holder will generally be subject
to taxation at a reduced rate. The deductibility of capital
losses is subject to limitations.
In the event we are a passive foreign investment company, a US
Holder generally may be taxed upon the sale, exchange,
redemption or other taxable disposition of a note in the same
manner that such US Holder would be taxed upon the sale,
exchange, redemption or other taxable disposition of equity
shares in a passive foreign investment company, except that the
notes will not be eligible for the mark-to-market
election. See the discussion under Passive
Foreign Investment Company, below.
Because capital gains generally will be treated as United States
source gain, as a result of the United States foreign tax credit
limitation, Indian income tax, if any, imposed upon capital
gains in respect of the notes may not be currently creditable
unless a US Holder has other foreign source income for the year
in the appropriate United States foreign tax credit limitation
basket. US Holders should consult their tax advisors regarding
the application of Indian taxes to a redemption or other
disposition of the notes and their ability to credit an Indian
tax against their United States federal income tax liability.
Conversion
of Notes
Subject to the discussions under Potential
Application of Contingent Payment Debt Instrument Rules
above, a US Holder generally will not recognize any income, gain
or loss upon conversion of a note into ADSs except with respect
to ADSs received that are attributable to accrued interest
(which will be taxable as ordinary interest income) and except
with respect to cash received in lieu of a fractional ADS. Such
US Holders tax basis in the ADSs received on conversion of
a note will be the same as such US Holders adjusted tax
basis in the note at the time of conversion (reduced by any
basis allocable to a fractional interest in an ADS), and the
holding period for the ADS received on conversion will generally
include the holding period of the note converted. However, a US
holders tax basis in ADSs treated as attributable to
accrued interest generally will equal the amount of such accrued
interest included in income, and the holding period for such
ADSs will begin on the day after the date the notes are
converted.
Cash received in lieu of a fractional ADS upon conversion will
be treated as a payment in exchange for the fractional ADS.
Accordingly, a US Holder will generally recognize capital gain
(measured by the difference between the cash received for the
fractional ADS and such US Holders adjusted basis
allocated to such fractional ADS) upon the receipt of cash in
lieu of a fractional ADS. Any gain or loss recognized upon
conversion or upon the receipt of cash in lieu of a fractional
ADS generally will be long-term capital gain or loss if, at the
time of conversion, the note had been held for more than one
year. However, in the event we are a passive foreign investment
company, a US Holder may be subject to tax on such gain in the
same manner as
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if such gain were recognized on the sale of equity shares in a
passive foreign investment company. See the discussion under
Passive Foreign Investment Company,
below.
Constructive
Distributions
We will adjust the conversion rate of the notes for stock splits
and equity share combinations, stock dividends, certain cash
dividends and certain other events that affect our capital
structure. Adjustments (or failures to make adjustments) that
have the effect of increasing a US Holders proportionate
interest in our assets or earnings may in some circumstances
result in a deemed distribution to a US Holder for United States
federal income tax purposes. Adjustments to the conversion rate
made pursuant to a bona fide reasonable adjustment
formula that has the effect of preventing the dilution of the
interest of the holders of the notes, however, will generally
not be considered to result in a deemed distribution to a US
Holder. Certain of the possible conversion rate adjustments
provided in the notes (including, without limitation,
adjustments in respect of taxable dividends to holders of our
equity shares) will not qualify as being pursuant to a bona
fide reasonable adjustment formula. If such adjustments are
made, a US Holder will be deemed to have received a distribution
even though the US Holder has not received any cash or property
as a result of such adjustments. Any deemed distributions will
be taxable as a dividend, return of capital, or capital gain as
described in Dividends and Other Distributions on the
ADSs below. It is not clear whether a constructive
dividend deemed paid to a non-corporate US Holder could be
qualified dividend income as discussed below under
Dividends and Other Distributions on the ADSs.
If any cash payment is made on the note in lieu of an adjustment
in the conversion rate (or a portion thereof), such payment
would generally be treated as additional interest on the note
and be taxable to a US Holder at the time it is paid or accrued
in accordance with the US Holders method of accounting for
tax purposes.
Dividends
and Other Distributions on the ADSs
Subject to the rules discussed below under
Passive Foreign Investment Company, the
gross amount of all our distributions to a US Holder with
respect to the ADSs generally will be included in a US
Holders gross income as foreign source dividend income on
the date of receipt by the depositary, but only to the extent
that the distribution is paid out of our current or accumulated
earnings and profits (as determined under United States federal
income tax principles). To the extent that the amount of the
distribution exceeds our current and accumulated earnings and
profits, it will be treated first as a tax-free return of a US
Holders tax basis in its ADSs, and to the extent the
amount of the distribution exceeds the US Holders tax
basis, the excess will be taxed as capital gain. However, we do
not intend to calculate our earnings and profits under United
States federal income tax principles. Therefore, a US Holder
should expect that a distribution will generally be treated as a
dividend even if that distribution would otherwise be treated as
a non-taxable return of capital or as capital gain under the
rules described above. The dividends will not be eligible for
the dividends-received deduction allowed to corporations in
respect of dividends received from other United States
corporations.
With respect to non-corporate US Holders (including individual
US Holders) for taxable years beginning before January 1,
2011, dividends may constitute qualified dividend
income that is taxed at the lower applicable capital gains
rate provided that (1) the ADSs are readily tradable on an
established securities market in the United States or we are
eligible for the benefits of the United States-India income tax
treaty, (2) we are not a passive foreign investment company
(as discussed below) for either our taxable year in which the
dividend is paid or the preceding taxable year, (3) certain
holding period requirements are met, and (4) the US Holder
is not under an obligation to make related payments with respect
to positions in substantially similar or related property. Under
IRS authority, ADSs representing our equity shares are
considered for purposes of clause (1) above to be readily
tradable on an established securities market in the United
States if they are listed on the NYSE, as our ADSs currently
are. US Holders should consult their tax advisors regarding the
availability of the lower rate for dividends paid with respect
to our ADSs.
The amount of any distribution paid in Indian Rupees will be
equal to the US dollar value of such Indian Rupees on the date
such distribution is received by the depositary regardless of
whether the payment is in fact
S-63
converted into US dollars at that time. Gain or loss, if any,
realized on the sale or other disposition of such Indian Rupees
will generally be United States source ordinary income or loss.
The amount of any distribution of property other than cash will
be the fair market value of such property on the date of
distribution.
For United States foreign tax credit purposes, dividends
distributed with respect to ADSs will generally constitute
passive category income but could, in the case of
certain US Holders, constitute general category
income. A US Holder may not be able to claim a United
States foreign tax credit for any Indian taxes imposed with
respect to distributions on ADSs. The rules relating to the
determination of the United States foreign tax credit are
complex and US Holders should consult their tax advisors to
determine whether and to what extent a credit would be available
in their particular circumstances.
Disposition
of ADSs
Subject to the rules discussed below under Passive Foreign
Investment Company, a US Holder will recognize taxable
gain or loss on any sale or other taxable disposition of an ADS
equal to the difference between the amount realized for the ADS
and the US Holders tax basis in the ADS. A US
Holders basis in the ADS will generally be determined in
the manner described above under Conversion of
Notes. The gain or loss will generally be capital gain or
loss. For a non-corporate US Holder (including an individual US
Holder) who has held the ADS for more than one year, the gain on
a disposition of the ADS will be long-term capital gain eligible
for reduced tax rates. The deductibility of capital losses is
subject to limitations. Any gain or loss recognized by a US
Holder generally will be treated as United States source income
or loss for foreign tax credit limitation purposes.
Because capital gains generally will be treated as United States
source gain, as a result of the United States foreign tax credit
limitation, any Indian income tax imposed upon capital gains in
respect of ADSs may not be currently creditable unless a US
Holder has other foreign source income for the year in the
appropriate United States foreign tax credit limitation basket.
US Holders should consult their tax advisors regarding the
application of Indian taxes to a disposition of an ADS and their
ability to credit an Indian tax against their United States
federal income tax liability.
Passive
Foreign Investment Company
We do not expect to be a passive foreign investment company
(PFIC) for United States federal income tax purposes
for our current taxable year ending March 31, 2010.
However, our actual PFIC status for 2010 will not be
determinable until after the close of our 2010 taxable year, and
there can be no assurance that we will not be a PFIC for our
2010 taxable year or any future taxable year. A
non-United
States corporation is considered to be a PFIC for any taxable
year if either:
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at least 75% of its gross income is passive income, or
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at least 50% of the total value of its assets (based on an
average of the quarterly values of the assets during a taxable
year) is attributable to assets, including cash, that produce or
are held for the production of passive income (the asset
test).
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For this purpose, we will be treated as owning our proportionate
share of the assets and earning our proportionate share of the
income of any other corporation in which we own, directly or
indirectly, 25% or more (by value) of the stock. The total value
of our assets generally will be determined by reference to the
market price of our equity shares and ADSs. We must make a
separate determination each taxable year as to whether we are a
PFIC (after the close of each taxable year). A decrease in the
market value of our equity shares and ADSs
and/or an
increase in cash or other passive assets would increase the
relative percentage of our passive assets. Accordingly,
fluctuations in the market price of our equity shares and ADSs
may result in our being a PFIC for any year.
If we are a PFIC for any taxable year during which a US Holder
holds ADSs, a US Holder will be subject to special tax rules
with respect to any excess distribution received and
any gain realized from a sale or other disposition (including a
pledge) of the ADSs, unless such US Holder makes a
mark-to-market election as discussed below.
Distributions received by a US Holder in a taxable year that are
greater than
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125% of the average annual distributions such US Holder received
during the shorter of the three preceding taxable years or the
US Holders holding period for the ADSs will be treated as
an excess distribution. Under these special tax rules:
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the excess distribution or gain will be allocated ratably over a
US Holders holding period for the ADSs;
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the amount allocated to the current taxable year, and any
taxable year prior to the first taxable year in which we became
a PFIC, will be treated as ordinary income; and
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the amount allocated to each other year will be subject to the
highest tax rate in effect for that year and the interest charge
generally applicable to underpayments of tax will be imposed on
the resulting tax attributable to each such year.
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The tax liability for amounts allocated to years prior to the
year of disposition or excess distribution cannot be
offset by any net operating losses for such years, and gains
(but not losses) realized on the sale of the ADSs cannot be
treated as capital, even if you hold the ADSs as capital assets.
A US Holders holding period in its ADSs generally will
include its holding period in the note exchanged for such ADSs,
except with respect to ADSs received with respect to accrued
interest, the holding period of which began on the day after the
date the notes were converted.
If we are a PFIC for any year during which a US Holder holds
ADSs, we generally will continue to be treated as a PFIC for all
succeeding years during which such US Holder holds ADSs.
However, if we cease to be a PFIC, a US Holder may avoid some of
the adverse effects of the PFIC regime by making a deemed sale
election with respect to the ADSs. We do not intend to prepare
or provide the information that would enable a US Holder to make
a qualified electing fund election.
If we are a PFIC, to the extent any of our subsidiaries are also
PFICs, a US Holder will be deemed to own a pro rata portion of
the shares of such subsidiary PFICs and be subject to the PFIC
rules discussed above with respect to our PFIC subsidiaries.
A US Holder of marketable stock (as defined below)
in a PFIC may make a mark-to-market election with respect to
such stock to elect out of the tax treatment discussed above. If
a US Holder makes a valid mark-to-market election for the ADSs
or equity shares, the US Holder will include in income each year
an amount equal to the excess, if any, of the fair market value
of the ADSs or equity shares as of the close of the US
Holders taxable year over the US Holders adjusted
basis in such ADSs or equity shares. A US Holder is allowed a
deduction for the excess, if any, of the adjusted basis of the
ADSs or equity shares over their fair market value as of the
close of the taxable year. However, deductions are allowable
only to the extent of any net mark-to-market gains on the ADSs
or equity shares included in the US Holders income for
prior taxable years. Amounts included in the US Holders
income under a mark-to-market election, as well as gain on the
actual sale or other disposition of the ADSs or equity shares,
are treated as ordinary income. Ordinary loss treatment also
applies to the deductible portion of any mark-to-market loss on
the ADSs or equity shares, as well as to any loss realized on
the actual sale or disposition of the ADSs or equity shares, to
the extent that the amount of such loss does not exceed the net
mark-to-market gains previously included for such ADSs or equity
shares. A US Holders basis in the ADSs or equity shares
will be adjusted to reflect any such income or loss amounts. If
a US Holder makes such an election, the tax rules that apply to
distributions by corporations that are not PFICs would apply to
distributions by us, except that the lower applicable capital
gains rate with respect to qualified dividend income (discussed
above) would not apply.
The mark-to-market election is available only for
marketable stock, which is stock that is traded in
other than de minimis quantities on at least 15 days
during each calendar quarter (regularly traded) on a
qualified exchange or other market, as defined in the applicable
United States Treasury regulations. The NYSE is a qualified
exchange. Our ADSs are listed on the NYSE and, consequently, if
the ADSs are regularly traded, the mark-to-market election would
be available to a US Holder if we become a PFIC. However, such
mark-to-market election would not be available with respect to
any ADSs of our PFIC subsidiaries that a US Holder may be deemed
to own.
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If a US Holder holds ADSs in any year in which we are a PFIC,
such US Holder will be required to file US Internal Revenue
Service Form 8621 regarding distributions received on the
ADSs and any gain realized on the disposition of the ADSs. US
Holders are urged to consult their tax advisors regarding the
application of the PFIC rules to their investment in ADSs.
Information
Reporting and Backup Withholding
Payment of interest on the notes, dividend payments with respect
to ADSs, and proceeds from the sale, exchange, redemption or
other disposition of notes or ADSs made within the United States
or through certain United States-related financial
intermediaries may be subject to information reporting to the
IRS and possible United States backup withholding at a current
rate of 28%. Backup withholding will not apply, however, to a US
Holder who furnishes a correct taxpayer identification number
and makes any other required certification or who is otherwise
exempt from backup withholding. US Holders who are required to
establish their exempt status generally must provide such
certification on IRS
Form W-9.
US Holders should consult their tax advisors regarding the
application of the United States information reporting and
backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as
backup withholding may be credited against a US Holders
United States federal income tax liability, and a US Holder may
obtain a refund of any excess amounts withheld under the backup
withholding rules by timely filing the appropriate claim for
refund with the IRS and furnishing any required information.
Certain
Indian Tax Considerations
The following is a general description of certain Indian tax
considerations for non resident investors in the notes and the
ADSs issuable on conversion of notes (ADSs). It does
not purport to be a complete analysis of all tax considerations
relating to the notes and the ADSs whether in India or elsewhere
and relates only to persons who are the absolute beneficial
owners of their notes and their ADSs and does not deal with
special situations, such as those of dealers in securities or
where the interest payable on the notes is, for tax purposes,
deemed to be income of any person other than the beneficial
owners. Further, the below analysis does not deal with tax
implications upon conversion of such ADS into ordinary equity
shares of Sterlite and tax implications thereafter in relation
to such ordinary equity shares. Prospective purchasers of notes
should consult their own tax advisers as to the consequences
under the tax laws of the country of which they are resident for
tax purposes and the tax laws of India of acquiring, holding and
disposing of notes and the ADSs and receiving payments of
interest, principal
and/or other
amounts under the notes and the ADSs or in respect of an
exercise of conversion rights. The following is based upon the
law and our understanding of published revenue authority
practice as in effect on the date of this prospectus supplement
and is subject to any change in law that may take effect after
such date (possibly with retrospective effect). The information
below is a summary only and may not apply to certain categories
of holders. The following description does not provide for
taxation of persons resident outside of India becoming residents
of India during the term of the notes.
The Indian Income Tax Act, 1961 (The Indian Income Tax
Act) is the law relating to taxes on income in India. The
Indian Income Tax Act provides for the taxation of persons not
resident in India on income received, accruing or arising in
India or deemed to have been received, accrued or arisen in
India. Sections 4, 5, 6 and 9 of The Indian Income Tax Act
set forth the circumstances under which persons not resident in
India are subject to income tax in India.
The following discussion describes the material Indian income
tax, stamp duty and wealth tax/gift tax/estate duty consequences
of the purchase, ownership and disposal of the notes and ADSs.
The summary is based on the special tax regime contained in laws
and practices of The Indian Income Tax Act, including
Section 115AC, and other significant applicable provisions
of The Indian Income Tax Act, and The Issue of Foreign Currency
Convertible notes and Ordinary ADSs (through Depository Receipt
Mechanism) Scheme, 1993 promulgated by the Government of India
(the Depository Receipt Mechanism Scheme), as
amended from time to time, promulgated by the Government of
India (together the Section 115AC Regime). The
offering is in accordance with the Section 115AC Regime,
and non-resident investors of the notes as well as ADSs will
therefore have the benefit of tax concessions available under
the
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Section 115AC Regime subject to the fulfillment of
conditions of that section. Such tax concessions include
taxation of interest and long-term capital gains at a reduced
income tax rate of 10%, which is then subject to the applicable
rate of surcharge on income tax (payable only by a foreign
company whose total income exceeds Rs. 10 million at a
rate of 2.5% of income tax thereon and could vary from year to
year) and further, an education cess on income tax including
surcharge at the rate of 3%. The premium on redemption would
also be taxed at the rate of 10%, plus applicable rate of
surcharge on income tax and education cess at the rate of 3% on
income tax including surcharge if the notes are held for a
period exceeding 36 months and in the case of notes held
for a period less than or equal to 36 months, would be
subject to tax at the applicable rates, with a maximum rate of
40% at present, plus applicable rate of surcharge on income tax
and education cess at the rate of 3% on income tax including
surcharge. In the case of some specific types of transfers
(including transfer through gift, will, succession, inheritance,
devolution, transfer to a revocable or an irrevocable trust,
transfer between a holding company to a subsidiary or a
subsidiary company to a holding company if the recipient is an
Indian company, transfer under the scheme of
amalgamation/demerger if the successor is an Indian company),
the period of holding by the previous owner may also be
considered to determine the period of holding in the hands of
the transferor. This summary is not intended to constitute a
complete analysis of the tax consequences or a legal opinion
under Indian law of the acquisition, ownership and sale of the
notes or ADSs by non-resident investors. Potential investors
should, therefore, consult their own tax advisors on the
consequences of such acquisition, ownership and sale including
specifically tax consequences under Indian law, the laws of the
jurisdiction of their residence and any tax treaty between India
and their country of residence or the country of residence of
the Overseas Depository Bank (the Depository) as
applicable and, in particular, the application of the provisions
of The Indian Income Tax Act and the Section 115AC Regime.
Residence
for the Purpose of The Indian Income Tax Act
For the purpose of The Indian Income Tax Act, an individual is
said to be resident in India if, in any Fiscal Year the
individual: (i) is in India for 182 days or more, or
(ii) having been in India for 365 days or more during
the four years preceding that Fiscal Year is in India for
60 days or more in that Fiscal Year. However, in the case
of an Indian citizen or a person of Indian origin who is not
resident in India and visits India during the Fiscal Year or an
Indian citizen who leaves India as a member of a crew of an
Indian ship or for the purpose of employment outside India
during the Fiscal Year the
60-day
period in (ii) above is extended to 182 days.
A company is resident in India in any Fiscal Year if it is an
Indian company or if during that year the control and management
of its affairs is situated wholly in India. An Indian company
means a company incorporated and registered under the Companies
Act and includes a company incorporated and registered under any
law relating to companies formerly in force in India or a
corporation established by or under a central, state or
provincial Act of India or an institution, association or a body
declared by the Central Board of Direct Taxes of India to be a
company for the purpose of The Indian Income Tax Act; provided
that the registered office or, as the case may be, the principal
office of the company, corporation, institution, association or
body is in India.
A firm or other association of persons, and every other person
is regarded as resident in India except where, during the Fiscal
Year the control and the management of its affairs is situated
wholly outside India.
Taxation
of Interest, Premium and Distributions and Provision of Tax
Treaties
The Section 115AC Regime provides that payment of interest,
if any, on the notes paid to non-resident holders of the notes
will be subject to withholding tax at the rate of 10%, plus
applicable rate of surcharge on the income tax (payable only by
a foreign company whose total income exceeds
Rs. 10 million at a rate of 2.5% of income tax payable
thereon and could vary from year to year), including education
cess on income tax including surcharge at the rate of 3% (or at
any more favourable rate available under tax treaties entered
into by India with the country of residence of the relevant
Depository). The Indian Income Tax Act requires such tax to be
withheld at the source. Where the tax is required to be deducted
or withheld, the Company will gross up the taxable amount and
will be required to account separately to the Indian tax
authorities for any withholding taxes applicable on such amounts.
S-67
The premium payable by the Company on redemption of the notes
will be taxed at the concessional rate of 10% (plus a surcharge
at the applicable rate on income tax payable thereon and
education cess on income tax including surcharge at the rate of
3%), if the note is a long-term capital asset, i.e. it is held
for more than 36 months, subject to any more favourable
rate under the tax treaties entered into between India and the
country of residence of the noteholder / Depositary.
If it is held for less than or equal to 36 months, the
premium will be taxed at the applicable rate (plus a surcharge
at the applicable rate on income tax payable thereon and
education cess on income tax including surcharge at the rate of
3%). The Company will be under an obligation to deduct tax at
source from the premium amount at the applicable rate.
Dividends paid on the ADSs to non-resident holders are not
presently liable to tax. The Company is liable to pay a
dividend distribution tax currently at the rate of
16.995% (i.e. 15% plus a surcharge at 10% and education cess at
the rate of 3%) on the total amount distributed as dividend and
dividends are not taxable in India in the hands of the recipient.
However, if and when dividend is taxable in India, the
Depository Receipt Mechanism Scheme prescribed under
Section 115AC stipulates that, during the period of
fiduciary ownership of ADSs in the hands of the Depository, the
provisions of the tax treaty between India and the country of
residence of the Depository will be applicable in the matter of
taxation of dividends on ADS. However there is no corresponding
provision in The Indian Income Tax Act specifying the treaties
to be applied.
Taxation
of Distributions
Distribution to non-residents of additional ADSs without any
consideration (Bonus ADSs) is not liable to Indian
tax at the time of issuance. Similarly a right to subscribe for
additional ADS (Rights) offered with respect to
existing ADS is not subject to Indian tax at the time of
subscription by the holder.
Taxation
on Acquisition of ADSs upon Conversion of Notes
The acquisition of ADSs by a non-resident holder on conversion
of notes may constitute a taxable event for Indian income tax
purposes and appropriate withholding provisions would apply.
Taxation
of Capital Gains
Under the Section 115AC Regime, a transfer of notes by a
non-resident holder to another non-resident holder outside India
is not regarded as a transfer for the purpose of capital gains
tax and accordingly the gain, if any, realised on the transfer
of notes is not subject to Indian capital gains tax. Capital
losses, if any, arising from such transfer will not be available
for set off or carry forward against other capital gains or any
other income received, accrued or deemed to have received or
accrued in India.
Similarly, under the Section 115AC Regime, a transfer of
ADS by a non-resident holder to another non-resident holder
outside India may not be regarded as a transfer for the purpose
of capital gains tax and accordingly the gain, if any, realised
on the transfer of ADS may not be subject to Indian capital
gains tax. Capital losses, if any, arising from such transfer
will not be available for set off or carry forward against other
capital gains or any other income received, accrued or deemed to
have received or accrued in India.
Taxation
of Gifts
The Indian Income Tax has been amended with effect from
1st October 2009 to provide that any
gift-in-kind
by any person, being an immovable property or any other
property, the fair market value of which exceeds Rs.50,000, will
become taxable in the hands of the donee, being an individual or
a Hindu Undivided Family (HUF), as income from other sources
under clause (vii) of sub-section 2 of section 56
of The Indian Income Tax Act. Therefore, any such person who
receives a gift of any such property on or after
1st October 2009 must pay the income tax due on the value
of the gift plus applicable rate of surcharge on income tax
payable thereon and education cess at the rate of 3% on income
tax including surcharge.
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For the purpose of the above, fair market value of a property,
other than immovable property, means the value determined in
accordance with the method as may be prescribed. However,
certain exceptions have been provided when the gift may not be
taxable, including gifts received from relatives.
Tax
Treaties
The provisions of the Agreement for Avoidance of Double Taxation
entered into by the Government of India with the country of
residence of the non-resident investor will be applicable to the
extent they are more beneficial to the non-resident investor.
This will be applicable to all the existing provisions of The
Indian Income Tax Act set out in this Section. A tax credit in
respect of any withholding tax paid by the Company on interest
payments may be available to the non-resident investor subject
to the relevant tax treaty and the domestic laws of the country
of residence of the non-resident investor.
Currently, dividend income is not subject to tax in India in the
hands of the holder of the ADSs. However, if and when dividend
is taxable in India, the Depository Receipt Mechanism Scheme
prescribed under Section 115AC stipulates that, during the
period of fiduciary ownership of ADSs in the hands of the
Depository, the provisions of the tax treaty between India and
the country of residence of the Depository will be applicable in
the matter of taxation of dividends on ADS. However, there is no
corresponding provision in The Indian Income Tax Act specifying
the treaties to be applied.
Dividend
Dividend income is not subject to tax in India in the hands of
the holder of the ADSs. However, under the existing provisions
of The Indian Income Tax Act, in addition to the income tax
chargeable in respect of a domestic company for any assessment
year, any amount declared, distributed or paid by such company
by way of dividends (whether interim or otherwise), whether out
of current or accumulated profits, shall be charged to
additional income tax referred to as tax on distributed profits
at the rate of 15% plus applicable surcharge at the rate of 10%
of the dividend distribution tax and education cess at the rate
of 3% on aggregate of dividend distribution tax and surcharge.
Additionally, dividends declared or paid or distributed by the
subsidiary company to the holding company shall be reduced from
the dividends declared or paid or distributed by the holding
company in that year, if following conditions are satisfied:
(a) such amount of dividend is received from its subsidiary;
(b) the subsidiary has paid dividend distribution tax under
this section on such dividend; and
(c) the domestic holding company is not a subsidiary of any
other company.
Further, it has been provided that the same amount of dividend
shall not be reduced more than once. A company shall be a
subsidiary of another company, if such other company holds more
than half of the nominal value of the equity share capital of
the company.
Stamp
Duty
Under Indian Stamp law as applicable to the Company the issue
and transfer of ADSs upon conversion of the notes will not be
liable to Indian stamp duty, as they are issued outside India.
There is no stamp duty liability on sale or transfer of notes
outside India.
Wealth
Tax/Gift Tax/Estate Duty
At present there are no taxes on wealth, gifts and inheritances,
which apply to the notes and the ADSs issuable upon conversion
of the notes.
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UNDERWRITING
Under the terms and subject to the conditions in an underwriting
agreement dated the date of this prospectus supplement, each of
Deutsche Bank Securities Inc. and Morgan Stanley & Co.
Incorporated has severally agreed to purchase, and we have
agreed to sell, the principal amount of the notes listed next to
its name in the following table:
|
|
|
|
|
Name
|
|
Principal Amount of Notes
|
|
|
Deutsche Bank Securities Inc.
|
|
$
|
250,000,000
|
|
Morgan Stanley & Co. Incorporated
|
|
$
|
250,000,000
|
|
|
|
|
|
|
Total
|
|
$
|
500,000,000
|
|
|
|
|
|
|
The underwriters are offering the notes subject to their
acceptance of the notes from us and subject to prior sale. The
underwriting agreement provides that the obligations of the
underwriters to pay for and accept delivery of the notes offered
by this prospectus supplement and the accompanying prospectus
are subject to certain conditions precedent, including the
absence of any material adverse change in our business and the
receipt of certain certificates, opinions and letters from us,
our counsel and the independent auditors. The underwriters are
obligated to take and pay for all of the notes offered by this
prospectus supplement and the accompanying prospectus if any
such notes are taken. The underwriting agreement also provides
that if an underwriter defaults, the purchase commitments of
non-defaulting underwriters may be increased or the offering may
be terminated.
The underwriters propose to offer the notes directly to the
public at the initial public offering price set forth on the
cover page of this prospectus and part to certain dealers. After
the initial offering of the notes, the offering price and other
selling terms may from time to time be varied by the
underwriters.
In addition, we may pay to the underwriters a discretionary
performance fee of 0.25% of the aggregate principal amount of
notes that the underwriters are purchasing. The payment of such
fee is to be determined in our sole discretion prior to the
settlement date of this offering. If we decide to pay this
discretionary fee, the underwriters will receive additional
commissions of $1,250,000 and we will receive net proceeds of
$495,000,000.
It is expected that delivery of the notes to the underwriters
will be made against payment on a delayed basis. Deutsche Bank
Securities Inc. and Morgan Stanley & Co. Incorporated
expect to deliver the notes to purchasers in book-entry form
only through the facilities of The Depository Trust Company
against payment in New York, New York on a delayed basis. The
date of delivery is expected to be October 29, 2009. Any
change in the date of delivery will be notified to investors
through a press release which will be posted on our website at
www.sterlite-industries.com. Such notification may not
occur until two or three business days before the earlier of
October 29, 2009 or the new date of delivery.
Rule 15c6-1
under the Securities Exchange Act of 1934, as amended, generally
requires that securities trades in the secondary market settle
in three business days, unless the parties to the trade
expressly agree otherwise. Accordingly, purchasers who wish to
trade notes on any day prior to the third business day before
the delivery of the notes will be required, by virtue of the
fact that the notes initially will settle on a delayed basis, to
specify an alternate settlement cycle at the time of any such
trade, or to make any necessary arrangements to ensure that
notes are available on the third business day after trading for
settlement, to prevent a failed settlement. Purchasers of notes
who wish to make such trades should consult their own advisors.
Purchasers who are not able to make any necessary
arrangements to prevent a failed settlement may not be able to
make any trades of notes prior to the third business day before
the delivery of the notes to the underwriters.
|
|
|
|
|
|
|
|
|
|
|
Per Note
|
|
Total
|
|
Public offering price
|
|
$
|
1,000
|
|
|
$
|
500,000,000
|
|
Underwriting discounts and commissions to be paid by us
|
|
$
|
7.50
|
|
|
$
|
3,750,000
|
|
Proceeds to us
|
|
$
|
992.50
|
|
|
$
|
496,250,000
|
|
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The notes are a new issue of securities with no established
trading market. One or more of the underwriters intends to make
a secondary market for the notes. However, they are not
obligated to do so and may discontinue making a secondary market
for the notes at any time without notice. No assurance can be
given as to how liquid the trading market for the notes will be.
Our ADSs are listed on the New York Stock Exchange under the
symbol SLT.
We estimate that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately
$1.2 million in total including registration fees of
$27,900, estimated printing fees of $150,000, estimated legal
fees and expenses of approximately $600,000, estimated
accounting fees and expenses of approximately $200,000 and
miscellaneous expenses of approximately $270,000.
We are paying all the expenses of the offering, including
underwriting discounts and commissions.
We, our principal shareholders, Twin Star and MALCO, Vedanta and
our directors and executive officers have agreed that, without
the prior written consent of the underwriters, we will not,
during the period ending 60 days after the date of this
prospectus supplement:
|
|
|
|
|
offer, pledge, announce the intention to sell, sell, contract to
sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant or exercise any option, right
or warrant to purchase, lend or otherwise transfer or dispose
of, directly or indirectly, or file or cause to be filed a
registration statement, or exercise any registration right, in
respect of, any of our ADSs or equity shares or any securities
convertible into or exchangeable or exercisable for any ADSs or
equity shares, or any similar securities; or
|
|
|
|
enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of our
ADSs or equity shares,
|
whether any transaction described above is to be settled by
delivery of ADSs or such other securities, in cash or otherwise.
The 60 day restricted period described in the preceding
paragraph will be extended if:
|
|
|
|
|
during the last 17 days of the 60 day restricted
period we issue an earnings release or material news event
relating to us occurs, or
|
|
|
|
prior to the expiration of the 60 day restricted period, we
announce that we will release earnings results during the
16 day period beginning on the last day of the 60 day
period,
|
in which case the restrictions described in the preceding
paragraph will continue to apply until the expiration of the
18 day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
The underwriters do not have any agreements or understandings,
tacit or explicit, or any present intent to release the
lock-ups
early.
A prospectus in electronic format may be made available on the
website maintained by the underwriters or securities dealers.
The underwriters may agree to allocate notes for sale to its
online brokerage account holders. Notes to be sold pursuant to
an internet distribution will be allocated by the underwriters
that may make internet distributions on the same basis as other
allocations. In addition, notes may be sold by the underwriters
to securities dealers who resell notes to online brokerage
account holders.
The underwriters reserve the right to withdraw, cancel or modify
the offering and to completely or partially reject any orders.
In order to facilitate the offering of notes, the underwriters
may engage in transactions that stabilize, maintain or otherwise
affect the price of the notes. These transactions may include
short sales, stabilizing transactions and purchases to cover
positions created by short sales. Short sales involve the sale
by the underwriters of a greater amount of notes than they are
required to purchase in the offering. The underwriters may also
reclaim selling concessions allowed to a dealer for distributing
the notes in the offering, if the
S-71
underwriters repurchase previously distributed notes in
transactions to cover the underwriters short positions, in
stabilization transactions or otherwise. The underwriters are
not required to engage in these activities, and may end any of
these activities at any time.
From time to time, the underwriters and their affiliates have
provided, and continue to provide, commercial banking, financial
advisory, investment banking and other services to us and our
affiliates n the ordinary course of their business, for which
they have received and may continue to receive customary fees
and commissions. In addition, from time to time, certain of the
underwriters and their affiliates may effect transactions for
their own account or the account of customers, and hold on
behalf of themselves or their customers, long or short positions
in our debt or equity securities or loans, and may do so in the
future. As of October 12, 2009, affiliates of the
underwriters owned approximately 4,889,335 of our equity shares.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act and
to contribute to payments the underwriters may be required to
make in respect of any of these liabilities.
We have been advised that Deutsche Bank Securities Inc. and
Morgan Stanley & Co. Incorporated expect to make
offers and sales in the United States.
The underwriters may be contacted at the following addresses:
Deutsche Bank Securities Inc., 60 Wall Street, New York, New
York 10005 and Morgan Stanley & Co. Incorporated,
1585 Broadway, New York, New York 10036.
No action has been taken in any jurisdiction (except in the
United States) that would permit a public offering of the notes,
or the possession, circulation or distribution of this
prospectus supplement and the accompanying prospectus or any
other material relating to us or the notes in any jurisdiction
where action for that purpose is required. Accordingly, the
notes may not be offered or sold, directly or indirectly, and
neither this prospectus supplement, the accompanying prospectus
nor any other offering material or advertisements in connection
with the notes may be distributed or published, in or from any
jurisdiction except in compliance with any applicable rules and
regulations of any such country or jurisdiction.
Australia
This prospectus supplement is not a formal disclosure document
and has not been lodged with the Australian Securities and
Investments Commission. It does not purport to contain all
information that an investor or their professional advisers
would expect to find in a product disclosure statement for the
purposes of Part 7.9 of the Corporations Act 2001
(Australia) in relation to the notes.
The notes are not being offered in Australia to retail
clients as defined in section 761G of the
Corporations Act 2001 (Australia). This offering is being made
in Australia solely to wholesale clients as defined
in section 761G of the Corporations Act 2001 (Australia)
and as such no product disclosure statement in relation to the
ADSs has been prepared.
This prospectus supplement does not constitute an offer in
Australia other than to wholesale clients. By submitting an
application for our notes, you represent and warrant to us that
you are a wholesale client. If any recipient is not a wholesale
client, no applications for our notes will be accepted from such
recipient. Any offer to a recipient in Australia, and any
agreement arising from acceptance of such offer, is personal and
may only be accepted by the recipient. In addition, by applying
for our notes you undertake to us that, for a period of
12 months from the date of issue of the notes, you will not
transfer any interest in the notes to any person in Australia
other than a wholesale client.
European
Economic Area
In relation to each Member State of the European Economic Area,
or EEA, which has implemented the Prospectus Directive, each a
Relevant Member State, with effect from, and including, the date
on which the Prospectus Directive is implemented in that
Relevant Member State, or the Relevant Implementation Date, the
notes may not be offered to the public in that Relevant Member
State prior to the publication of a prospectus
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in relation to the notes which has been approved by the
competent authority in that Relevant Member State or, where
appropriate, approved in another Relevant Member State and
notified to the competent authority in that Relevant Member
State, all in accordance with the Prospectus Directive, except
that the notes may, with effect from and including the Relevant
Implementation Date, be offered to the public in that Relevant
Member State at any time:
(a) to legal entities which are authorized or regulated to
operate in the financial markets, or, if not so authorized or
regulated, whose corporate purpose is solely to invest in our
securities;
(b) to any legal entity which has two or more of
(1) an average of at least 250 employees during the last
financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts;
(c) to fewer than 100 natural or legal persons (other than
qualified investors as defined in the Prospectus Directive)
subject to obtaining the prior consent of the representatives
for any such offer; or
(d) in any other circumstances falling within Article 3(2)
of the Prospectus Directive;
As used above, the expression offered to the public
in relation to any of our notes in any Relevant Member State
means the communication in any form and by any means of
sufficient information on the terms of the offer and our notes
to be offered so as to enable an investor to decide to purchase
or subscribe for our notes, as the same may be varied in that
Member State by any measure implementing the Prospectus
Directive in that Member State and the expression
Prospectus Directive means Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant
Member State.
The EEA selling restriction is in addition to any other selling
restrictions set out in this prospectus supplement.
Hong
Kong
Our notes may not be offered or sold in Hong Kong, by means of
this prospectus supplement or any document other than to
professional investors as defined in the Securities
and Futures Ordinance (Cap. 571, Laws of Hong Kong)(the
SFO) and any rules made thereunder, or in
circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap.32, Laws of
Hong Kong). No advertisement, invitation or document relating to
our notes may be issued or may be in the possession of any
person other than with respect to the securities which are or
are intended to be disposed of only to persons outside Hong Kong
or only to professional investors within the meaning
of the SFO.
India
No prospectus or prospectus supplement relating to the notes
offering may be distributed directly or indirectly in India or
to or for the account or benefit of, residents of India and the
Underwriters may not offer or sell, directly or indirectly, any
notes in India to, or for the account or benefit of, any
resident in India. Neither the prospectus nor the prospectus
supplement in relation to the notes offering have been reviewed
or approved by any statutory or regulatory authority in India
and do not constitute an offer or invitation for any investment
or subscription for shares in India.
Erstwhile overseas corporate bodies as defined under the Foreign
Exchange Management (Withdrawal of General Permission to
Overseas Corporate Bodies) Regulations 2003, which are not
eligible to invest in India through the portfolio investment
route and entities prohibited by the Securities and Exchange
Board of India from buying, selling or dealing in securities of
Indian companies, are not eligible to subscribe to the notes
offering.
Malaysia
No prospectus supplement and the accompanying prospectus or
other offering material or document in connection with the offer
and sale of the notes has been or will be registered with the
Securities Commission of Malaysia pursuant to the Securities
Commission Act, 1993, as the offer for purchase of, or
invitation to
S-73
purchase, the notes is meant to qualify as an excluded
offer or excluded invitation within the meaning of
Section 38 of the Securities Commission Act, 1993. The
notes will not be offered, sold, transferred or otherwise
disposed, directly or indirectly, nor any document or other
material in connection therewith distributed, in Malaysia, other
than to persons falling within any one of the categories or
persons specified in Schedule 2
and/or
Schedule 3 of the Securities Commission Act, 1993, who are
also persons to whom any offer or invitation to purchase or sell
would be an excluded offer or invitation within the meaning of
Section 38 of the Securities Commission Act, 1993.
Singapore
This prospectus supplement has not been registered as a
prospectus with the Monetary Authority of Singapore.
Accordingly, this prospectus supplement and any other document
or material in connection with the offer or sale, or invitation
for subscription or purchase, of our notes may not be circulated
or distributed, nor may our notes be offered or sold, or be made
the subject of an invitation for subscription or purchase,
whether directly or indirectly, to persons in Singapore other
than (i) to an institutional investor under
Section 274 of the Securities and Futures Act,
Chapter 289 of Singapore, or SFA, (ii) to a relevant
person or any person pursuant to Section 275(1A), and in
accordance with the conditions specified in Section 275 of
the SFA, or (iii) otherwise pursuant to, and in accordance
with the conditions of, any other applicable provision of the
SFA, in each case subject to compliance with conditions set
forth in the SFA.
Where our notes are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor as defined in
Section 4A of the SFA) the sole business of which is to
hold investments and the entire share capital of which is owned
by one or more individuals, each of whom is an accredited
investor; or (b) a trust (where the trustee is not an
accredited investor) whose sole purpose is to hold investments
and each beneficiary of the trust is an individual who is an
accredited investor; shares, debentures and units of shares and
debentures of that corporation or the beneficiaries rights
and interest (howsoever described) in that trust shall not
transferred within six months after that corporation or that
trust has acquired the notes under Section 275 of the SFA,
except: (1) to an institutional investor (for corporations
under Section 274 of the SFA) or to a relevant person
defined in Section 275(2) of the SFA, or to any person
pursuant to an offer that is made on terms that such shares,
debentures and units of shares and debentures of that
corporation or such rights and interest in that trust are
acquired at a consideration of not less than S$200,000 (or its
equivalent in a foreign currency) for each transaction, whether
such amount is to be paid for in cash or by exchange of
securities or other assets, and further for corporations, in
accordance with the conditions, specified in Section 275 of
the SFA; (2) where no consideration is or will be given for
the transfer; or (3) where the transfer is by operation of
law.
Switzerland
This prospectus supplement and the accompanying prospectus does
not constitute a prospectus within the meaning of
Article 652a or 1156 of the Swiss Code of Obligations
(Schweizerisches Obligationenrecht), and none of this offering
and the notes has been or will be approved by any Swiss
regulatory authority.
United
Arab Emirates
This prospectus supplement and the accompanying prospectus is
not intended to constitute an offer, sale or delivery of notes
or other securities under the laws of the United Arab Emirates,
or UAE. The notes have not been and will not be registered under
Federal Law No. 4 of 2000 Concerning the Emirates
Securities and Commodities Authority and the Emirates Security
and Commodity Exchange, or with the UAE Central Bank, the Dubai
Financial Market, the Abu Dhabi Securities Market or with any
other UAE exchange.
This offering, the notes and interests therein have not been
approved or licensed by the UAE Central Bank or any other
relevant licensing authorities in the UAE, and do not constitute
a public offer of securities in the UAE in accordance with the
Commercial Companies Law, Federal Law No. 8 of 1984 (as
amended) or otherwise.
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In relation to its use in the UAE, this prospectus supplement
and the accompanying prospectus is strictly private and
confidential and is being distributed to a limited number of
investors and must not be provided to any person other than the
original recipient, and may not be reproduced or used for any
other purpose. The interests in the notes may not be offered or
sold directly or indirectly to the public in the UAE.
United
Kingdom
This prospectus supplement is only being distributed to and is
only directed at (1) persons who are outside the United
Kingdom, (2) investment professionals falling within
Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005, or Order; or
(3) high net worth companies, and other persons to who it
may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order, all such persons
together being referred to as relevant persons. The
notes are only available to, and any invitation, offer or
agreement to subscribe, purchase or otherwise acquire such
securities will be engaged in only with, relevant persons. Any
person who is not a relevant person should not act or rely on
this prospectus supplement or any of its contents.
S-75
LEGAL
MATTERS
Certain legal matters relating to US law in connection with this
offering will be passed upon for us by Latham &
Watkins LLP, our US counsel. Certain legal matters relating to
Indian law in connection with this offering will be passed upon
for us by S&R Associates, our Indian counsel.
Latham & Watkins LLP may rely upon S&R Associates
with respect to certain matters governed by Indian law. Certain
matters relating to US law in connection with this offering will
be passed upon on behalf of the underwriters by
Shearman & Sterling LLP, US counsel for the
underwriters. Certain legal matters relating to Indian law in
connection with this offering will be passed upon on behalf of
the underwriters by Luthra & Luthra Law Offices,
Indian counsel for the underwriters. Shearman &
Sterling LLP may rely upon Luthra & Luthra Law Offices
with respect to certain matters governed by Indian law.
S-76
PROSPECTUS
Sterlite Industries (India)
Limited
American Depositary Shares
Representing Equity Shares
Debt Securities
We may offer and sell the securities from time to time in one or
more offerings, at prices and on terms described in one or more
supplements to this prospectus. In addition, this prospectus may
be used to offer securities for the account of persons other
than us. This prospectus provides you with a general description
of the securities we may offer. The debt securities may consist
of debentures, notes, bonds or other types of indebtedness. The
debt securities may be convertible into or exercisable or
exchangeable for our equity shares, our ADS, or our other
securities. Our American Depositary Shares, or ADSs, are listed
on the New York Stock Exchange under the symbol SLT.
Each ADS represents one equity share, par value Rs. 2 per
share. Our equity shares are listed and traded in India on the
National Stock Exchange of India Limited, or the NSE, and the
Bombay Stock Exchange Limited, or the BSE.
Each time we or any security holder sell the securities, we will
provide a supplement to this prospectus that contains specific
information about the offering and the terms of the securities.
The supplement may also add, update or change information
contained in this prospectus. We may also authorize one or more
free writing prospectuses to be provided in connection with a
specific offering. You should carefully read this prospectus,
the applicable prospectus supplement and any related free
writing prospectuses, as well as any documents incorporated by
reference in this prospectus or any prospectus supplement,
before you invest in any of our securities.
The securities may be offered directly by us or by any selling
security holder, through agents designated from time to time by
us or to or through underwriters or dealers. The names of any
underwriters will be included in the applicable prospectus
supplement.
Investing in our securities involves risks. See the
Risk Factors section contained in this prospectus,
the applicable prospectus supplement, any related free writing
prospectuses and in the documents we incorporate by reference in
this prospectus, the applicable prospectus supplement and any
related free writing prospectuses to read about factors you
should consider before investing in our securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or completeness of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is October 15, 2009.
TABLE OF
CONTENTS
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1
EXPLANATORY
NOTE
This Post-Effective Amendment No. 1 to the Registration
Statement on Form F-3 (File No.
333-160580)
(the Original Registration Statement) is being filed
for the purpose of registering debt securities as an additional
class of the Registrants securities that may be offered
and sold pursuant to the Registration Statement. Equity shares,
ADSs and debt securities may be issued in primary offerings or
upon conversion of debt securities registered hereby. This
Post-Effective
Amendment No. 1 is also being filed to add as exhibits the
Indenture pursuant to which the debt securities are to be issued
and the Statement of Eligibility and Qualification by the
trustee. This
Post-Effective
Amendment No. 1 contains a prospectus which updates the
prospectus included in the Original Registration Statement by
adding a description of the debt securities and by making
certain changes related to the passage of time. In accordance
with Rule 462(e) under the Securities Act, this
Post-Effective
Amendment No. 1 shall become effective immediately upon
filing with the Securities and Exchange Commission.
2
ABOUT
THIS PROSPECTUS
This document is called a prospectus and is part of a
registration statement that we filed with the United States
Securities and Exchange Commission, or the SEC, using an
automatic shelf registration process as a well-known
seasoned issuer as defined in Rule 405 under the
Securities Act of 1933, as amended, or the Securities Act. By
using a shelf registration statement, we or any selling security
holder may sell securities from time to time and in one or more
offerings. This prospectus provides you with a summary
description of our securities. Each time we or any selling
security holder sells the securities, we will provide a
supplement to this prospectus that contains specific information
about the securities being offered and the specific terms of
that offering. The supplement may also add, update or change
information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the prospectus
supplement. Before purchasing any of the securities, you should
carefully read both this prospectus and any supplement, together
with the additional information described under the heading
Where You Can Find More Information About Us and
Incorporation of Documents by Reference.
You should rely only on the information contained or
incorporated by reference in this prospectus, in any applicable
prospectus supplement or any related free writing prospectus. We
have not authorized any other person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We will not
make an offer to sell these securities in any jurisdiction where
the offer or sale is not permitted. You should assume that the
information appearing in this prospectus, the applicable
supplement to this prospectus or in any related free writing
prospectus is accurate as of the date on its respective cover,
and that any information incorporated by reference is accurate
only as of the date of the document incorporated by reference,
unless we indicate otherwise. Our business, financial condition,
results of operations and prospects may have changed since those
dates.
You should read this prospectus, the applicable prospectus
supplement and any related free writing prospectuses together
with the additional information described under the heading
Where You Can Find More Information About Us and
Incorporation of Documents by Reference.
Unless otherwise stated in this prospectus or unless the context
otherwise requires, references in this prospectus to
we, our, us, the
Company and Sterlite are to Sterlite
Industries (India) Limited, Limited, its consolidated
subsidiaries and its predecessors, collectively, including Monte
Cello BV, or Monte Cello, Copper Mines of Tasmania Pty Ltd, or
CMT, Thalanga Copper Mines Pty Ltd, or TCM, Bharat Aluminium
Company Limited, or BALCO, Sterlite Energy Limited, or Sterlite
Energy, Sterlite Opportunities and Ventures Limited, or SOVL,
Hindustan Zinc Limited, or HZL, Fujairah Gold FZE, Sterlite
(USA), Inc., or Sterlite USA, and Talwandi Sabo Power Limited,
or TSPL. References to the Vedanta group are to
Vedanta Resources plc, or Vedanta, and its subsidiaries. In this
prospectus, references to US or United
States are to the United States of America, its
territories and its possessions. References to India
are to the Republic of India. References to $ or
US$ or dollars or US dollars
are to the legal currency of the United States and references to
Rs. or rupees or Indian
rupees are to the legal currency of India. References to a
particular fiscal year are to our fiscal year ended
March 31 of such year.
WHERE YOU
CAN FIND MORE INFORMATION ABOUT US
We file reports and other information with the SEC. Information
filed with the SEC by us can be inspected and copied at the
Public Reference Room maintained by the SEC at
100 F Street N.E., Washington, D.C. 20549. You
may also obtain copies of this information by mail from the
Public Reference Section of the SEC at prescribed rates. Further
information on the operation of the SECs Public Reference
Room in Washington, D.C. can be obtained by calling the SEC
at
1-800-SEC-0330.
The SEC also maintains a web site that contains reports, proxy
and information statements and other information about issuers,
such as us, who file electronically with the SEC. The address of
that site is
http://www.sec.gov.
3
Our website address is
http://www.sterlite-industries.com.
The information on our website, or the website of any of our
subsidiaries or affiliates, including Vedanta and other members
of the Vedanta group, is not, and should not be deemed to be, a
part of this prospectus.
This prospectus and any prospectus supplement are part of a
registration statement that we filed with the SEC and do not
contain all of the information in the registration statement.
The full registration statement may be obtained from the SEC or
us, as indicated below. Forms of the ADS deposit agreement, the
Indenture and other documents establishing the terms of the
offered securities are filed as exhibits to the registration
statement. Statements in this prospectus or any prospectus
supplement about these documents are summaries and each
statement is qualified in all respects by reference to the
document to which it refers. You should refer to the actual
documents for a more complete description of the relevant
matters. You may inspect a copy of the registration statement at
the SECs Public Reference Room in Washington, D.C.,
as well as through the SECs website.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference
information we file with them in this prospectus. This means
that we can disclose important information to you by referring
you to those documents. Each document incorporated by reference
is current only as of the date of such document, and the
incorporation by reference of such documents shall not create
any implication that there has been no change in our affairs
since the date thereof or that the information contained therein
is current as of any time subsequent to its date. The
information incorporated by reference is considered to be a part
of this prospectus and should be read with the same care. When
we update the information contained in documents that have been
incorporated by reference by making future filings with the SEC,
the information incorporated by reference in this prospectus is
considered to be automatically updated and superseded. In other
words, in the case of a conflict or inconsistency between
information contained in this prospectus and information
incorporated by reference into this prospectus, you should rely
on the information contained in the document that was filed
later.
We incorporate by reference the documents listed below:
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Our registration statement on
Form 8-A
filed with the SEC on November 30, 2006;
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Our Annual Report on
Form 20-F
for the fiscal year ended March 31, 2009 filed with the SEC
on July 10, 2009 as amended by our Form 20-F/A filed
with the SEC on July 14, 2009, collectively referred to in
this prospectus as our Annual Report on Form 20-F;
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Reports on Form 6-K submitted by us to the SEC on each of
August 12, 2009, August 24, 2009, September 14,
2009, September 22, 2009 and September 30, 2009; and
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With respect to each offering of the securities under this
prospectus, all reports on
Form 20-F
and any report on
Form 6-K
that indicates it is being incorporated by reference, in each
case, that we file with or submit to the SEC on or after the
date on which the registration statement is first filed with the
SEC and until the termination or completion of that offering
under this prospectus.
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Unless expressly incorporated by reference, nothing in this
prospectus shall be deemed to incorporate by reference
information furnished to, but not filed with, the SEC. Copies of
all documents incorporated by reference in this prospectus,
other than exhibits to those documents unless such exhibits are
specially incorporated by reference in this prospectus, will be
provided at no cost to each person, including any beneficial
owner, who receives a copy of this prospectus on the written or
oral request of that person made to:
Sterlite Industries (India) Limited
Vedanta, 75 Nehru Road,
Vile Parle (East),
Mumbai, Maharashtra
400-099,
India
Tel. No.:
+(91-22)
6646-1000.
4
You should rely only on the information that we incorporate by
reference or provide in this prospectus or any prospectus
supplement. We have not authorized anyone to provide you with
different information. We are not making any offer of these
securities in any jurisdiction where the offer is not permitted.
You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than
the date on the front of those documents.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the
information incorporated herein and therein by reference may
contain forward-looking statements as defined in the
safe harbor provisions of the US Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based
on our current expectations, assumptions, estimates and
projections about our company and our industry. These
forward-looking statements are subject to various risks and
uncertainties and other factors, including those listed under
Risk Factors.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as
anticipate, believe,
estimate, expect, intend,
will, project, seek,
should and similar expressions. We caution you that
reliance on any forward-looking statement involves risks and
uncertainties, and that, although we believe that the
assumptions on which our forward-looking statements are based
are reasonable, any of those assumptions could prove to be
inaccurate and, as a result, the forward-looking statements
based on those assumptions could be materially incorrect.
Factors which could cause these assumptions to be incorrect
include but are not limited to:
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a decline or volatility in the prices of or demand for copper,
zinc or aluminum;
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events that could cause a decrease in our production of copper,
zinc or aluminum;
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unavailability or increased costs of raw materials for our
products;
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our actual economically recoverable copper ore, lead-zinc ore or
bauxite reserves being lower than we have estimated;
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our ability to expand our business, effectively manage our
growth or implement our strategy, including our planned entry
into the commercial power business;
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our ability to retain our senior management team and hire and
retain sufficiently skilled labor to support our operations;
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regulatory, legislative and judicial developments and future
regulatory actions and conditions in our operating areas;
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increasing competition in the copper, zinc or aluminum industry;
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political or economic instability in India or around the region;
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worldwide economic and business conditions;
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our ability to successfully consummate strategic acquisitions,
including our proposed acquisition of substantially all of the
operating assets of ASARCO LLC, or Asarco, a copper mining,
smelting and refining company based in Tucson, Arizona, United
States;
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the outcome of outstanding litigation in which we are involved;
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our ability to maintain good relations with our trade unions and
avoid strikes and lock-outs;
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any actions of our controlling shareholder, Vedanta;
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our business future capital requirements and the
availability of financing on favorable terms;
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the continuation of tax holidays, exemptions and deferred tax
schemes we enjoy;
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changes in tariffs, royalties, customs duties and government
assistance; and
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terrorist attacks and other acts of violence, natural disasters
and other environmental conditions and outbreaks of infectious
diseases and other public health concerns in India, Asia and
elsewhere.
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In light of these and other uncertainties, you should not
conclude that we will necessarily achieve any plans, objectives
or projected financial results referred to in any of the
forward-looking statements. Except as required by law, we do not
undertake to release revisions of any of these forward-looking
statements to reflect future events or circumstances.
6
OUR
COMPANY
We are one of Indias largest non-ferrous metals and mining
companies. We are one of the two custom copper smelters in
India, the leading and only integrated zinc producer, and one of
the five primary producers of aluminum. In addition to our three
primary businesses of copper, zinc and aluminum, we are also
developing a commercial power generation business in India that
leverages our experience in building and managing captive power
plants used to support our primary businesses. We believe our
experience in operating and expanding our business in India will
allow us to continue to capitalize on attractive growth
opportunities arising from Indias large mineral reserves,
relatively low cost of operations and large and inexpensive
labor and talent pools. We believe we are also well positioned
to take advantage of the significant growth in industrial
production and investments in infrastructure in India, China,
Southeast Asia and the Middle East, which we expect will
continue to create strong demand for metals.
We were incorporated on September 8, 1975 under the laws of
India and maintain a registered office at SIPCOT Industrial
Complex, Madurai Bypass Road, T.V. Puram P.O., Tuticorin, State
of Tamil Nadu 628 002, India. Our principal executive office is
located at Vedanta, 75 Nehru Road, Vile Parle (East), Mumbai,
Maharashtra
400-099,
India and the telephone number for this office is
+(91-22)
6646-1000.
Our website address is
http://www.sterlite-industries.com.
Information contained on our website, or the website of any of
our subsidiaries or affiliates, including Vedanta and other
members of the Vedanta group, is not a part of this prospectus.
We have appointed CT Corporation System, 111 Eighth Avenue, New
York, New York 10011, as our agent to receive service of process
with respect to any action brought against us in the US District
Court for the Southern District of New York under the federal
securities laws of the United States or of any state in the
United States or any action brought against us in the Supreme
Court of the State of New York in the County of New York under
the securities laws of the State of New York.
7
RISK
FACTORS
Please see the factors set forth under the heading Risk
Factors in the applicable prospectus supplement and in our
most recently filed Annual Report on
Form 20-F,
as amended, and in our updates, if any, to those Risk Factors in
our reports on Form 6-K, together with all other
information appearing in this prospectus or incorporated by
reference into this prospectus and, if applicable, in any
accompanying prospectus supplement before investing in any of
the securities that may be offered pursuant to this prospectus.
8
USE OF
PROCEEDS
We intend to use the net proceeds from the sale of the
securities as set forth in the applicable prospectus supplement.
We will not receive proceeds from sales of securities by persons
other than us except as may otherwise be stated in any
applicable prospectus supplement. We intend to use the net
proceeds in compliance with applicable laws and regulations in
India, including applicable external commercial borrowing
regulations and foreign investment regulations.
RATIO OF
EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated
are as follows:
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Three Months
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Ended June 30,
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Year Ended March 31,
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2009
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2009
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2008
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2007
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2006
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2005
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Ratio of earnings to fixed charges(1)(2)
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5.7
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5.8
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x
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19.8
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x
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17.3
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x
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6.5
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3.8
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(1) |
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The ratio of earnings to fixed charges is computed by dividing
(i) income before income taxes, minority interest and
cumulative effect of accounting change, plus fixed charges and
the amortization of capitalized interest, less minority interest
in pre-tax income of subsidiaries that have not incurred fixed
charges, and capitalized interest, by (ii) fixed charges.
Our fixed charges consist of interest expense on all
indebtedness (including amortization of deferred financing
costs) and the portion of operating lease rental expense that is
representative of the interest factor. |
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The above ratios for the years ended March 31, 2009, 2008,
2007, 2006 and 2005 have been prepared in accordance with US
generally accepted accounting principles. The above ratio for
the three months ended June 30, 2009 has been prepared in
accordance with International Financial Reporting Standards. As
a result, the ratio presented above for the three months ended
June 30, 2009 may not be directly comparable to the ratios
presented for the prior periods. |
9
ENFORCEABILITY
OF CIVIL LIABILITIES
We are a limited liability company incorporated in India. A
majority of our directors and executive officers are not
residents of the United States and substantially all of our
assets and the assets of those persons are located outside the
United States. As a result, it may not be possible for you to
effect service of process within the United States upon those
persons or us. In addition, you may be unable to enforce
judgments obtained in courts of the United States against those
persons outside the jurisdiction of their residence, including
judgments predicated solely upon US securities laws. Moreover,
it is unlikely that a court in India would award damages on the
same basis as a foreign court if an action were brought in India
or that an Indian court would enforce foreign judgments if it
viewed the amount of damages as excessive or inconsistent with
Indian practice.
Section 44A of the Indian Code of Civil
Procedure, 1908, as amended, or the Civil Code, provides that
where a foreign judgment has been rendered by a superior court
in any country or territory outside of India which the
Government of India has by notification declared to be a
reciprocating territory, such foreign judgment may be enforced
in India by proceedings in execution as if the judgment had been
rendered by an appropriate court in India. However, the
enforceability of such judgments is subject to the exceptions
set forth in Section 13 of the Civil Code. This section,
which is the statutory basis for the recognition of foreign
judgments, states that a foreign judgment is conclusive as to
any matter directly adjudicated upon except:
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where the judgment has not been pronounced by a court of
competent jurisdiction;
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where the judgment has not been given on the merits of the case;
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where the judgment appears on the face of the proceedings to be
founded on an incorrect view of international law or a refusal
to recognize the law of India in cases where such law is
applicable;
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where the proceedings in which the judgment was obtained were
opposed to natural justice;
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where the judgment has been obtained by fraud; or
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where the judgment sustains a claim founded on a breach of any
law in force in India.
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Section 44A of the Civil Code is applicable only to
monetary decrees not being in the nature of amounts payable in
respect of taxes or other charges of a similar nature or in
respect of fines or other penalties and does not include
arbitration awards.
If a judgment of a foreign court is not enforceable under
Section 44A of the Civil Code as described above, it may be
enforced in India only by a suit filed upon the judgment,
subject to Section 13 of the Civil Code and not by
proceedings in execution. Accordingly, as the United States has
not been declared by the Government of India to be a
reciprocating territory for the purposes of Section 44A, a
judgment rendered by a court in the United States may not be
enforced in India except by way of a suit filed upon the
judgment.
The suit must be brought in India within three years from the
date of the judgment in the same manner as any other suit filed
to enforce a civil liability in India. Generally, there are
considerable delays in the disposition of suits by Indian courts.
A party seeking to enforce a foreign judgment in India is
required to obtain prior approval from the Reserve Bank of
India, or the RBI, under the Indian Foreign Exchange Management
Act, 1999, as amended, or FEMA, to repatriate any amount
recovered pursuant to such enforcement. Any judgment in a
foreign currency would be converted into Indian Rupees on the
date of judgment and not on the date of payment.
10
DESCRIPTION
OF THE SECURITIES
The following is a description of the terms and provisions of
the equity shares (including the ADSs representing equity
shares) and debt securities we may offer and sell by this
prospectus. These summaries are not meant to be a complete
description of each security. This prospectus and any
accompanying prospectus supplement will contain the material
terms and conditions for each security. The accompanying
prospectus supplement may add, update or change the terms and
conditions of the securities as described in this prospectus.
You should carefully read this prospectus and any accompanying
prospectus supplement before you invest in any of our securities.
DESCRIPTION
OF DEBT SECURITIES
A description of any debt securities we may offer and sell by
this prospectus will be contained in any accompanying prospectus
supplement.
DESCRIPTION
OF SHARE CAPITAL
Set forth below is certain information relating to our share
capital, including brief summaries of certain provisions of our
Memorandum and Articles of Association, the Indian Companies
Act, 1956, or the Indian Companies Act, the Securities Contracts
(Regulation) Act, 1956, as amended, or the SCRA, and certain
related legislation of India, all as currently in effect.
The following description of share capital is subject in its
entirety to our Memorandum and Articles of Association, the
provisions of the Indian Companies Act and other applicable
provisions of Indian law.
The rights of shareholders described in this section are
available only to our shareholders. For the purposes of this
prospectus, a shareholder means a person who holds
our certificated shares or is recorded as a beneficial owner of
our shares with a depository pursuant to the Depositories Act,
1996, as amended, or the Depositories Act. Investors who
purchase the ADSs will not be our shareholders and therefore
will not be directly entitled to the rights conferred on our
shareholders by our Articles of Association or the rights
conferred on shareholders of an Indian company by Indian law.
Our equity shares are in registered physical form as well as non
physical or book-entry form. Investors are entitled to receive
dividends and to exercise the right to vote in accordance with
the deposit agreement. For additional information on the ADS,
see Description of American Depositary Shares.
INVESTORS WHO PURCHASE THE ADSs IN ANY OFFERING MUST LOOK SOLELY
TO THE DEPOSITARY BANK FOR THE PAYMENT OF DIVIDENDS, FOR THE
EXERCISE OF VOTING RIGHTS ATTACHING TO THE EQUITY SHARES
REPRESENTED BY THEIR ADSs AND FOR ALL OTHER RIGHTS ARISING IN
RESPECT OF THE EQUITY SHARES.
General
We were incorporated in Kolkata, the State of West Bengal,
India, as a public company on September 8, 1975 as
Rainbow Investment Limited. Our name was
subsequently changed to Sterlite Cables Limited on
October 19, 1976 and finally to Sterlite Industries
(India) Limited on February 28, 1986. Our company
identification number is L65990TN1975PLC062634. Our registered
office is presently situated in the State of Tamil Nadu at
SIPCOT Industrial Complex, Madurai Bypass Road, T.V. Puram P.O.,
Tuticorin, State of Tamil Nadu 628 002, India.
Our register of members is maintained at our registered office.
Our activities are regulated by our Memorandum and Articles of
Association. Our current Memorandum and Articles of Association
were amended by a special resolution of our shareholders passed
in December 2007. In addition to our Memorandum and Articles of
Association, our activities are regulated by certain
legislation, including the Indian Companies Act, the SCRA and
the Securities Contracts (Regulation) Rules, 1957, as amended,
or the SCR Rules.
11
Our Memorandum of Association permits us to engage in a wide
variety of activities, including all of the activities that we
are currently engaged in or intend to be engaged in, as well as
other activities that we currently have no intention of engaging
in. Our objects are set out at clause 3 of our Memorandum
of Association.
Share
Capital
Our authorized share capital is Rs. 1,850 million,
divided into 925 million equity shares of par value
Rs. 2 per equity share. As of March 31, 2009 and
June 30, 2009, our issued share capital was
Rs. 1,417.0 million, divided into
708,494,411 equity shares of par value Rs. 2 per
equity share.
Changes
in Capital or our Memorandum of Association and Articles of
Association
Subject to the Indian Companies Act and our Articles of
Association, we may, by passing an ordinary resolution or a
special resolution, as applicable, at a general meeting or
through postal ballot:
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increase our authorized or paid up share capital;
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consolidate all or any part of our shares into a smaller number
of shares each with a larger par value;
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split all or any part of our shares into a larger number of
shares each with a smaller par value;
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convert any of our
paid-up
shares into stock, and reconvert any stock into any number of
paid-up
shares of any denomination;
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cancel shares which, at the date of passing of the resolution,
have not been taken or agreed to be taken by any person, and
diminish the amount of the authorized share capital by the
amount of the shares so cancelled;
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reduce our issued share capital; or
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alter our Memorandum of Association or Articles of Association.
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Directors
Under our Articles of Association, a director is not required to
hold any qualification shares. There is no age limit requirement
for the retirement of the directors.
Any director who is directly or indirectly interested in a
contract or arrangement or proposed contract or arrangement
entered into or to be entered into by us or on our behalf is
required to disclose the nature of his interest at a meeting of
the board of directors and such interested director shall not
participate in any discussion of, or vote on, any contract,
arrangement or proposal in which he is interested. In addition,
we are prohibited from making loans, directly or indirectly, or
providing any guarantee or security, directly or indirectly, in
connection with any loans made by a third party, to our
directors without the prior approval of the Central Government.
General
Meetings of Shareholders
There are two types of general meetings of shareholders, an
annual general meeting and an extraordinary general meeting. We
must convene our annual general meeting within six months of the
end of each financial year and must ensure that the intervening
period between two annual general meetings does not exceed
15 months. The Registrar of Companies may extend this
period in special circumstances at our request. Extraordinary
general meetings may be convened at any time by our directors at
their discretion or at the request of our shareholders holding
in the aggregate not less than 10% of our
paid-up
capital. A notice in writing to convene a general meeting must
set out the date, time, place and agenda of the meeting and must
be provided to shareholders at least 21 days prior to the
date of the proposed meeting. The requirement of the
21 days notice in writing may be waived if consent to
shorter notice is received from all shareholders entitled to
vote at the annual general meeting or, in the case of an
extraordinary general meeting, from shareholders holding not
less than 95% of our
paid-up
capital. General meetings are generally held at our registered
office.
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Business may be transacted at a general meeting only when a
quorum of shareholders is present. Five persons entitled to
attend and to vote on the business to be transacted, each being
a member or a proxy for a member or a duly authorized
representative of a corporation which is a member, will
constitute a quorum.
The annual general meetings deal with and dispose of all matters
prescribed by our Articles of Association and by the Indian
Companies Act, including the following:
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the consideration of our annual financial statements and report
of our directors and auditors;
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the election of directors;
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the appointment of auditors and the fixing of their remuneration;
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the authorization of dividends; and
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the transaction of any other business of which notice has been
given.
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Division
of Shares
The Indian Companies Act provides that a company may sub-divide
its share capital if its Articles of Association authorize the
company to do so by adopting an ordinary resolution in its
general meeting.
Our Articles of Association allow us in a general meeting to
alter our Memorandum of Association and subdivide all or any of
our equity shares into a larger number of shares with a smaller
par value than originally fixed by the Memorandum of Association.
Voting
Rights
Subject to any special terms as to voting on which any shares
may have been issued, every shareholder entitled to vote who is
present in person (including any corporation present by its duly
authorized representative) shall on a show of hands have one
vote and every shareholder present in person or by proxy shall
on a poll have one vote for each share of which he is the
holder. In the case of joint holders, only one of them may vote
and in the absence of election as to who is to vote, the vote of
the senior of the joint holders who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders. Seniority is determined by the
order in which the names appear in the register of members.
Voting is by show of hands unless a poll is ordered by the
chairman of the meeting, who is generally the chairman of our
board of directors but may be another director or other person
selected by our board or the shareholders present at the meeting
in the absence of the chairman, or demanded by a shareholder or
shareholders holding at least 10% of the voting rights or
holding
paid-up
capital of at least Rs. 50,000 (i.e. 25,000 shares of
Rs. 2 each). Upon a poll, the voting rights of each
shareholder entitled to vote and present in person or by proxy
shall be proportionate to the capital
paid-up on
each share against our total
paid-up
capital. In the case of a tie vote, the chairman of the meeting,
who is generally the chairman of our board of directors, has the
right to cast a tie-breaking vote.
A shareholder may appoint any person (whether or not a
shareholder) to act as his proxy to vote on a poll at any
meeting of shareholders (or of any class of shareholders) in
respect of all or a particular number of the shares held by him.
A shareholder may appoint more than one person to act as his
proxy and each such person shall act as proxy for the
shareholder for the number of shares specified in the instrument
appointing the person a proxy. The instrument appointing a proxy
must be delivered to our registered office at least
48 hours prior to the meeting or in case of a poll, not
less than 24 hours before the time appointed for taking of
the poll. If a shareholder appoints more than one person to act
as his proxy, each instrument appointing a proxy shall specify
the number of shares held by the shareholder for which the
relevant person is appointed as his proxy. A proxy does not have
a right to speak at meetings. A corporate shareholder is also
entitled to nominate a representative to attend and vote on its
behalf at general meetings. Such a representative is not
considered a proxy and he has the same rights as the shareholder
by which he was appointed to speak at a meeting and vote at a
meeting in respect of the number of shares held by the
shareholder, including on a show of hands and a poll.
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Subject to the Articles of Association and the Companies (Issue
of Share Capital with Differential Voting Rights) Rules, 2001,
as amended, the Indian Companies Act allows a public company to
issue shares with different rights as to dividend, voting or
otherwise, provided that it has distributable profits as
specified under the Indian Companies Act for a period of three
financial years immediately preceding the issue of such shares
and has filed its annual accounts and annual returns for the
immediately preceding three years.
Quorum
Our Articles of Association provide that a quorum for a general
meeting is at least five shareholders entitled to vote and
present in person.
Shareholder
Resolutions
An ordinary resolution requires the affirmative vote of a
majority of our shareholders entitled to vote in person or by
proxy at a general meeting.
A special resolution requires the affirmative vote of not less
than three-fourths of our shareholders entitled to vote in
person or by proxy at a general meeting and casting a vote. The
Indian Companies Act provides that to amend the Articles of
Association, a special resolution approving such an amendment
must be passed in a general meeting. Certain amendments,
including a change in the name of the company, reduction of
share capital, approval of variation of rights of special
classes of shares and dissolution of the company require a
special resolution.
Further, the Indian Companies Act requires certain resolutions
such as those listed below to be voted on only by a postal
ballot:
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amendments of the memorandum of association to alter the objects
of the company and to change the registered office of the
company under Section 146 of the Indian Companies Act;
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alteration of the articles of association in relation to
insertion of provisions defining private company;
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the issue of shares with differential rights with respect to
voting, dividend or otherwise;
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the sale of the whole or substantially the whole of an
undertaking of the company;
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providing loans, extending guarantees or providing a security in
excess of the limits prescribed under Section 372A of the
Indian Companies Act;
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varying the rights of the holders of any class of shares or
debentures or other securities;
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the election of a director by minority shareholders; and
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the buy-back of shares.
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Dividends
Under the Indian Companies Act, unless the board of directors
recommends the payment of a dividend, the shareholders at a
general meeting have no power to declare any dividend. The board
of directors may also declare interim dividends that do not need
to be approved by the shareholders. A company pays dividends
recommended by the board of directors and approved by a majority
of the shareholders at the annual general meeting of
shareholders held within six months of the end of each fiscal
year. The shareholders have the right to decrease but not
increase the dividend amount recommended by the board of
directors. Pursuant to a recent amendment to the listing
agreement, listed companies are required to declare and disclose
their dividends on per share basis only. The dividend
recommended by the Board of Directors and approved by the
shareholders at the general meeting is distributed and paid to
shareholders in proportion to the paid up value of their equity
shares. The Indian Companies Act provides that shares of a
company of the same class must receive equal dividend treatment.
Dividends can only be paid in cash to the registered shareholder
at a record date fixed on or prior to the annual general meeting
or to his order or his bankers order. No shareholder is
entitled to a dividend while any lien in respect of unpaid calls
on any of such shareholders shares is outstanding.
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These distributions and payments are required to be paid to
shareholders within 30 days of the annual general meeting
where the resolution for declaration of dividends is approved.
The dividend so declared is required to be deposited in a
separate bank account within a period of five days from the date
of declaration of such dividend. All dividends unpaid or
unclaimed within a period of 30 days from the date of
declaration of such dividend must be transferred within seven
days of the end of such period to a special unpaid dividend
account held at a scheduled bank. Any dividend which remains
unpaid or unclaimed for a period of seven years from the date of
the transfer to a scheduled bank must be transferred to the
Investor Education and Protection Fund established by the
Government of India and following such transfer, no claim shall
lie against the Company or the Investor Education and Protection
Fund. Under the Indian Companies Act, dividends in respect of a
fiscal year may be paid out of the profits of a company in that
fiscal year or out of the undistributed profits of previous
fiscal years or both, after providing for depreciation in a
manner provided for in the Indian Companies Act.
Under the Indian Companies Act, we are only allowed to pay
dividends in excess of 10% of our
paid-up
capital in respect of any fiscal year from our profits for that
year after we have transferred to our reserves a percentage of
our profits for that year ranging between 2.5% to 10% depending
on the rate of dividend proposed to be declared in that year in
accordance with the Companies (Transfer of Profits to Reserves)
Rules, 1975. Reserves are defined in the Guidance
Note on Terms Used in Financial Statements issued by the
Institute of Chartered Accountants of India as the portion of
earnings, receipts or other surpluses of an enterprise (whether
capital or revenue) appropriated by the management for a general
or specific purpose other than a provision for depreciation or
diminution in the value of assets or for a known liability. The
Indian Companies Act and the Companies (Declaration of Dividend
out of Reserves) Rules, 1975 provide that if profits for that
year are insufficient to declare dividends, the dividends for
that year may be declared and paid out from our accumulated
profits transferred by us to our reserves, subject to the
following conditions:
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the rate of dividend to be declared shall not exceed the lesser
of 10% of our
paid-up
capital or the average of the rates at which dividends were
declared in the five years immediately preceding that year;
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the total amount to be drawn from the accumulated profits may
not exceed 10% of the sum of our
paid-up
capital and free reserves and any amount so drawn shall first be
used to set off any losses incurred in that financial
year; and
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the balance of our reserves following such withdrawal shall not
fall below 15% of our
paid-up
capital.
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Distribution
of Assets on a
Winding-up
In accordance with the Indian Companies Act, all surplus assets
remaining after payments are made to employees, statutory
creditors, tax and revenue authorities, secured and unsecured
creditors and the holders of any preference shares (though not
in that order), shall be distributed among our equity
shareholders in proportion to the amount paid up or credited as
paid-up on
such shares at the commencement of the
winding-up.
Transfer
of Shares
Under the Indian Companies Act, the shares of a public company
are freely transferable, unless such a transfer contravenes
applicable law or the regulations issued by the Securities and
Exchange Board of India, or the SEBI, or the Sick Industrial
Companies (Special Provisions) Act, 1985, as amended and
including any successor thereto, or the SICA. The transferor is
deemed to remain the holder until the transferees name is
entered in the register of members.
In the case of shares held in physical form, we will register
any transfers of equity shares in the register of members upon
lodgment of the duly completed share transfer form, the relevant
share certificate, or if there is no certificate, the letter of
allotment, in respect of shares to be transferred together with
duly stamped share transfer forms. In respect of electronic
transfers, the depository transfers shares by entering the name
of the purchaser in its register as the beneficial owner of the
shares. In turn, we then enter the name of the depository in our
records as the registered owner of the shares. The beneficial
owner is entitled to all the
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rights and benefits and is subject to the liabilities attached
to the shares held by the depository on his or her or its behalf.
Equity shares held through depositories are transferred in the
form of book entries or in electronic form in accordance with
the regulations laid down by SEBI. These regulations provide the
regime for the functioning of the depositories and the
participants and set out the manner in which the records are to
be kept and maintained and the safeguards to be followed in this
system.
SEBI requires that our equity shares for trading and settlement
purposes be in book-entry form for all investors, except for
transactions that are not made on a stock exchange and
transactions that are not required to be reported to the stock
exchange. Transfers of equity shares in book-entry form require
both the seller and the purchaser of the equity shares to
establish accounts with depository participants appointed by
depositories established under the Depositories Act. Charges for
opening an account with a depository participant, transaction
charges for each trade and custodian charges for securities held
in each account vary depending upon the practice of each
depository participant.
The depository transfers equity shares by entering the name of
the purchaser in its books as the beneficial owner of the equity
shares. In turn, we will enter the name of the depository in our
records as the registered owner of the equity shares. The
beneficial owner is entitled to all the rights and benefits as
well as the liabilities with respect to the equity shares that
are held by the depository. The register and index of beneficial
owners maintained by our depository is deemed to be a register
and index of our members and debenture holders under the
Depositories Act. Transfers of beneficial ownership held through
a depository are exempt from stamp duty. For this purpose, we
have entered into an agreement for depository services with the
National Securities Depository Limited and the Central
Depository Services India Limited.
The requirement to hold the equity shares in book-entry form
will apply to the ADS holders when the equity shares are
withdrawn from the depositary facility upon surrender of the
ADSs. In order to trade the equity shares in the Indian market,
the withdrawing ADS holder will be required to comply with the
procedures described above.
Our Articles of Association provide for certain restrictions on
the transfer of equity shares, including granting power to the
board of directors in certain circumstances, to refuse to
register or acknowledge a transfer of equity shares or other
securities issued by us. Under the listing agreements with the
NSE and the BSE, which are collectively referred to as the
Indian Stock Exchanges, on which our equity shares are listed,
in the event we have not effected the transfer of shares within
one month or where we have failed to communicate to the
transferee any valid objection to the transfer within the
stipulated time period of one month, we are required to
compensate the aggrieved party for the opportunity loss caused
during the period of delay.
If a company without sufficient cause refuses to register a
transfer of equity shares within two months from the date on
which the instrument of transfer is delivered to the company,
the transferee may appeal to the Company Law Board, or the CLB,
seeking to register the transfer of equity shares. The CLB may,
in its discretion, issue an interim order suspending the voting
rights attached to the relevant equity shares before completing
its investigation of the alleged contravention.
In addition, the Indian Companies Act provides that the CLB may
direct a rectification of the register of members for a transfer
of equity shares which is in contravention of the SEBI
regulations or the SICA or any similar law, upon an application
by the company, a participant, a depository incorporated in
India, an investor or the SEBI.
Under the Companies (Second Amendment) Act 2002, the CLB is
proposed to be replaced with the National Law Tribunal with
effect from a date that is yet to be notified.
Disclosure
of Ownership Interest
Section 187C of the Indian Companies Act requires that
beneficial owners of shares of companies who are not registered
as holders of those shares must make a declaration to the
company specifying the nature of
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his or her or its interest, particulars of the registered holder
of such shares and such other particulars as may be prescribed.
Any lien, charge, promissory note or other collateral agreement
created, executed or entered into with respect to any equity
share by its registered owner, or any hypothecation by the
registered owner of any equity share, shall not be enforceable
by the beneficial owner or any person claiming through the
beneficial owner if such declaration is not made. Failure by a
person to comply with Section 187C will not affect the
companys obligation to register a transfer of shares or to
pay any dividends to the registered holder of any shares in
respect of which the declaration has not been made.
Any investor who fails to comply with these requirements may be
liable for a fine of up to Rs. 1,000 for each day such
failure continues. Additionally, if the company fails to comply
with the provisions of Section 187C, then the company and
every defaulting officer may be liable for a fine of up to
Rs. 100 for each day the default continues.
Alteration
of Shareholder Rights
Under the Indian Companies Act, and subject to the provisions of
the articles of association of a company and the relevant rules
as issued by the Ministry of Corporate Affairs, where the share
capital of a company is divided into different classes of
shares, the rights of any class of shareholders can only be
altered or varied with the consent in writing of the holders of
not less than three-fourths of the issued shares of that class
by a special resolution passed at a general meeting of the
holders of the issued shares of that class, or pursuant to a
judicial order sanctioning a compromise or arrangement between
the company and such class of shareholders.
Share
Register and Record Dates
We maintain our register of members at our registered office and
all transfers of shares should be notified to us at such
address. Our register of members is open to inspection during
business hours by shareholders without charge and by other
persons upon payment of a fee prescribed under the applicable
law.
The register and index of beneficial owners maintained by a
depository under the Depositories Act is deemed to be an index
of members and register and index of debenture holders. We
recognize as shareholders only those persons who appear on our
register of members and we do not recognize any person holding
any equity share or part thereof on trust, whether express,
implied or constructive, except as permitted by law.
To determine which shareholders are entitled to specified
shareholder rights, we may close the register of members. For
the purpose of determining who our shareholders are, our
register of members may be closed for periods not exceeding
45 days in any one year or 30 days at any one time. In
order to determine our shareholders entitlement to
dividends, it is our general practice to close the register of
members for approximately ten to 20 days before the annual
general meeting. The date on which this period begins is the
record date. Under the listing agreements with each of the stock
exchanges on which our equity shares are listed, we may, upon
giving at least seven working days advance notice to the
stock exchange, set a record date
and/or close
the register of members. The trading of our equity shares and
the delivery of shares certificates may continue while the
register of members is closed.
Annual
Report
At least 21 days before an annual general meeting, we must
circulate our annual report, which comprises of either a
detailed or abridged version of our audited financial accounts,
our directors report, our corporate governance report, and
our auditors report, to the shareholders along with a
notice convening the annual general meeting. In addition, we
must furnish to the exchanges quarterly unaudited or audited
results within 30 days after the end of each accounting
quarter. In respect of results for the fourth quarter of that
financial year, we can opt to publish audited results for the
entire year within three months, and thus will not be required
to publish unaudited results for the last quarter within
30 days. We are also required to send copies of our annual
report to the NSE and BSE and to publish our financial results
in at least one English language daily newspaper circulating in
the whole or substantially the whole of India and also in a
daily newspaper published in the language of the region where
our registered office is situated. We are also required under
the
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Indian Companies Act to make available upon the request of any
shareholder our complete balance sheet and profit and loss
account.
Under the Indian Companies Act, we must file with the Registrar
of Companies our balance sheet and profit and loss account
within 30 days of the date on which the balance sheet and
profit and loss account were laid before the annual general
meeting and our annual return within 60 days of the
conclusion of that meeting.
Borrowing
Powers
Our directors may raise, borrow or secure the payment of any
sums of money for our purposes as they deem appropriate without
the consent of a majority of the shareholders in a general
meeting, provided that, the aggregate of the monies to be
borrowed and the principal amount outstanding in respect of
monies raised, borrowed or secured by us does not exceed the
aggregate of our paid up share capital plus free reserves.
Issue of
Equity Shares and Pre-emptive Rights
Subject to the provisions of the Indian Companies Act and our
Articles of Association and to any special rights attaching to
any of our equity shares, we may increase our share capital by
the allotment or issue of new equity shares with preferred,
deferred or other special rights or restrictions regarding
dividends, voting, return of capital or other matters as we may
from time to time determine by special resolution. We may issue
preference shares that are redeemable or are liable to be
redeemed at our option or the option of the holder in accordance
with our Articles of Association.
Under the Indian Companies Act, new equity shares shall first be
offered to existing shareholders in proportion to the amount
they have paid up on their equity shares on the record date. The
offer shall be made by written notice specifying:
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the right, exercisable by the shareholders of record, to
renounce the equity shares offered in favor of any other person;
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the number of equity shares offered; and
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the period of the offer, which may not be less than 15 days
from the date of the offer. If the offer is not accepted, it is
deemed to have been declined.
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The offer is deemed to include a right exercisable by the person
concerned to renounce the shares offered to him in favor of any
other person. Our board of directors is permitted to distribute
equity shares not accepted by existing shareholders in the
manner it deems beneficial for us in accordance with our
Articles of Association. Holders of ADSs may not be able to
participate in any such offer.
However, under the provisions of the Indian Companies Act, new
equity shares may be offered to non-shareholders, if this has
been approved by a special resolution or by an ordinary
resolution with the Government of Indias permission.
Capitalization
of Profits and Reserves
Our Articles of Association allow our directors, with the
approval of our shareholders by an ordinary resolution, to
capitalize any part of the amount standing to the credit of our
reserve accounts or to the credit of our profit and loss account
or otherwise available for distribution. Any sum which is
capitalized shall be appropriated among our shareholders in the
same proportion as if such sum had been distributed by way of
dividend. This sum shall not be paid out in cash and shall be
applied in the following manner:
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paying up any amount remaining unpaid on the shares held by our
shareholders; or
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issuing to our shareholders, fully paid bonus equity shares
(issued either at par or a premium).
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Any issue of bonus equity shares would be subject to the SEBI
(Issue of Capital and Disclosure Requirements) Regulations,
2009, as amended, or SEBI Regulations, which provide that:
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no company shall, pending the conversion of convertible
securities, issue any bonus equity shares unless a similar
benefit is extended to the holders of such convertible
securities through a reservation of equity shares in proportion
to such conversion;
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the bonus issue shall be made out of free reserves built out of
genuine profits or share premium collected in cash only;
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bonus equity shares cannot be issued unless all the partly paid
up equity shares have been fully
paid-up;
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the company has not defaulted in the payment of interest or
principal in respect of fixed deposits and interest on existing
debentures or principal on redemption of such debentures;
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a declaration of bonus equity shares in lieu of dividend cannot
be made;
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the company shall have sufficient reason to believe that it has
not defaulted in the payment of statutory dues of the employees
such as contribution to provident fund, gratuity and bonus;
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any reserves created by a revaluation of fixed assets shall not
be capitalized;
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the articles of association of the company must contain
provisions for the capitalization of reserves; and
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the bonus issue must be implemented within two months from the
date of approval by the board of directors.
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Purchase
of Own Equity Shares
A company may reduce its capital in accordance with the Indian
Companies Act and the regulations issued by SEBI by way of a
share buy-back out of its free reserves or securities premium
account or the proceeds of any shares or other specified
securities (other than the kind of shares or other specified
securities proposed to be bought back) subject to certain
conditions, including:
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the buy-back must be authorized by the companys Articles
of Association;
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a special resolution authorizing the buy-back must be passed in
a general meeting;
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the buy-back is limited to 25% of the companys total paid
up capital and free reserves in a fiscal year;
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the ratio of debt owed is not more than twice the capital and
free reserves after such buy-back;
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the shares or other specified securities for share buy back are
fully paid up; and
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the buy-back is in accordance with the SEBI (Buy-Back of
Securities) Regulation, 1998, as amended.
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The first two conditions mentioned above would not be applicable
if the number of equity shares bought back is less than 10% of
our total paid up equity capital and free reserves and if such
buy-back is authorized by the board of directors, provided that
no buy-back shall be made within 365 days from the date of
any previous buy-back. If such buy-back constitutes more than
10% of the total
paid-up
equity capital and free reserves of the company, it must be
authorized by a special resolution of the company in general
meeting. Our Articles of Association permit us to buy-back our
equity shares.
Any equity shares which have been bought back by us must be
extinguished within seven days. Further, we will not be
permitted to buy-back any securities for a period of one year or
to issue new securities of the same kind for six months except
by way of a bonus issue or in discharge of our existing
obligations such as conversion of warrants, stock option
schemes, sweat equity or conversion of preference shares or
debentures into equity. A company is also prohibited from
purchasing its own shares or specified securities through any
subsidiary company including its own subsidiary companies or in
the event of non-compliance with certain other provisions of the
Indian Companies Act.
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ADS holders will be eligible to participate in a share buy-back
in certain cases. An ADS holder may acquire equity shares by
withdrawing them from the depositary facility and then selling
those equity shares back to us in accordance with the provisions
of applicable law as discussed above. ADS holders should note
that equity shares withdrawn from the depositary facility may
only be redeposited into the depositary facility under certain
limited circumstances as specified under guidelines issued by
the Government of India and the RBI, relating to a sponsored ADS
facility and fungibility of ADSs. See Item 10.
Additional Information D. Exchange Controls in
our Annual Report on
Form 20-F.
There can be no assurance that the equity shares offered by an
ADS investor in any buy-back of equity shares by us will be
accepted by us. The position regarding regulatory approvals
required for ADS holders to participate in a buy-back is not
clear. ADS investors are advised to consult their Indian legal
advisers prior to participating in any buy-back by us, including
in relation to any regulatory approvals and tax issues relating
to the share buy-back.
Rights of
Minority Shareholders
The Indian Companies Act provides mechanisms for the protection
of the rights of the minority shareholder. Where the share
capital of a company is divided into different classes of shares
and there has been variation in the rights attached to the
shares of any class, the holders of not less than 10% of the
issued shares of that class, who did not vote in favor of a
resolution for the variation, have the right to apply to the CLB
to have the variation cancelled and such variation shall not
have any effect unless confirmed by the CLB.
Further, under the Indian Companies Act, shareholders holding
not less than 10% of the issued share capital or shareholders
representing not less than 10% of the total number of members or
100 members, whichever is lesser, provided that they have paid
all calls and other sums due on their shares, have the right to
apply to the CLB for an order to bring an end to the matter
complained of, on the following grounds of oppression or
mismanagement:
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that the companys affairs are being conducted in a manner
prejudicial to public interest or in a manner oppressive to any
member or members or in a manner prejudicial to the interests of
the company; or
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that a material change has taken place in the management or
control of the company, whether by a change in its board of
directors or management or in the ownership of the
companys shares and by reason of such change, it is likely
that the affairs of the company will be conducted in a manner
prejudicial to public interest or in a manner prejudicial to the
interests of the company.
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Provisions
on Squeeze Out of Minority Shareholders
Under the Indian Companies Act, where an arrangement or contract
involving a transfer of shares or any class of shares of a
company to another company has been approved by holders holding
not less than 90% in value of such class of shares, the
transferee company has the right to give notice to any
dissenting shareholder, within a specified time and in a
prescribed manner, that it desires to acquire its shares.
Unless the CLB, upon an application made by a dissenting
shareholder within a month of the aforementioned notice, orders
otherwise, the transferee company has the right to acquire the
shares of the dissenting shareholder on the same terms as those
offered to the other shares to be transferred under the
arrangement or contract.
Where, in pursuance of any such arrangement or contract, shares
in a company are transferred to another company, and those
shares, together with any other shares held by the transferee
company (or its nominee or subsidiary company) in the transferor
company, constitute not less than 90% in value of the shares,
the transferee company is required to give notice of such fact
to any remaining shareholders within a month of such transfer.
Any such remaining shareholder may within three months of the
notice from the transferee company, require the transferee
company to acquire its shares. Where such notice is given by
such remaining shareholder, the transferee company is bound to
acquire those shares on the same terms as provided for under the
arrangement or contract for the transfer of the other shares of
the transferor company or on such terms as
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may be agreed or on terms that the CLB (upon an application of
either the transferee company or the shareholder) thinks fit to
order.
Book-Entry
Shares and Liquidity
Our equity shares are compulsorily traded in book-entry form and
are available for trading under both depository systems in
India, namely, the National Securities Depository Limited and
Central Depository Services (India) Limited. The International
Securities Identification Number (ISIN) for our equity shares is
INE 268A01031.
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DESCRIPTION
OF AMERICAN DEPOSITARY SHARES
Citibank, N.A. is the depositary bank for the American
Depositary Shares. Citibanks depositary offices are
located at 388 Greenwich Street, New York, New York 10013, USA.
American Depositary Shares are frequently referred to as
ADSs and represent ownership interests in securities
that are on deposit with the depositary bank. ADSs may be
represented by certificates that are commonly known as American
Depositary Receipts, or ADRs. The depositary bank typically
appoints a custodian to safekeep the securities on deposit. In
this case, the custodian is Citibank, N.A., Mumbai Branch,
located at Ramnord House, 77 Dr. Annie Besant Road, Worli,
Mumbai, India 400 018.
We have appointed Citibank, N.A. as depositary bank pursuant to
a deposit agreement. A draft copy of the deposit agreement is on
file with the SEC under cover of a registration statement on
Form F-6
(Registration
No. 333-139102).
You may obtain a copy of the deposit agreement from the
SECs Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549 and under our name through the
SECs website, http://www.sec.gov.
We are providing you with a summary description of the ADSs and
your rights as an owner of ADSs. Please remember that summaries
by their nature lack the precision of the information summarized
and that a holders rights and obligations as an owner of
ADSs will be determined by the deposit agreement and not by this
summary. We urge you to review the deposit agreement in its
entirety as well as the form of ADR attached to the deposit
agreement. Statements in italics in this section are provided
for your information but may not be contained in the deposit
agreement.
Each ADS represents one equity share on deposit with the
custodian bank. An ADS will also represent any other property
received by the depositary bank or the custodian on behalf of
the owner of the ADS but that has not been distributed to the
owners of ADSs because of legal restrictions or practical
considerations.
If you become an owner of ADSs, you will become a party to the
deposit agreement and therefore will be bound to its terms and,
if applicable, to the terms of the ADR that represents your
ADSs. The deposit agreement and the ADR specify our rights and
obligations as well as your rights and obligations as owner of
ADSs and those of the depositary bank. As an ADS holder you
appoint the depositary bank to act on your behalf in certain
circumstances. The deposit agreement is governed by New York
law. However, our obligations to the holders of equity shares
will continue to be governed by the laws of India, which may be
different from the laws in the United States.
As an owner of ADSs, you may hold your ADSs by means of an ADR
registered in your name, through a brokerage or safekeeping
account or through an account established by the depositary bank
in your name reflecting the registration of uncertificated ADSs
directly on the books of the depositary bank (commonly referred
to as the direct registration system or
DRS). The direct registration system reflects the
uncertificated (book-entry) registration of ownership of ADSs by
the depositary bank. Under the direct registration system,
ownership of ADSs is evidenced by periodic statements issued by
the depositary bank to the holders of the ADSs. The direct
registration system includes automated transfers between the
depositary bank and The Depository Trust Company, or DTC,
the central book-entry clearing and settlement system for equity
securities in the United States. If you decide to hold your ADSs
through your brokerage or safekeeping account, you must rely on
the procedures of your broker or bank to assert your rights as
an ADS owner. Please consult with your broker or bank to
determine what those procedures are. This summary description
assumes you have opted to own the ADSs directly by means of an
ADR registered in your name and, as such, we will refer to you
as the holder. When we refer to you, we
assume the reader owns ADSs and will own ADSs at the relevant
time.
Dividends
and Distributions
As an ADS holder, you generally have the right to receive the
distributions we make on the securities deposited with the
custodian bank. Your receipt of these distributions may be
limited, however, by practical considerations and legal
limitations. ADS holders will receive such distributions under
the terms of the deposit agreement in proportion to the number
of ADSs held as of a specified record date.
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Distributions
of Cash
Whenever we make a cash distribution for the securities on
deposit with the custodian, we will notify the depositary bank.
Upon receipt of confirmation from the custodian bank that such
cash distribution has been received, the depositary bank will
arrange for the funds to be converted into US dollars and for
the distribution of the US dollars to the ADS holders.
The conversion into dollars will take place only if practicable
and if the dollars are transferable to the United States.
The amounts distributed to holders will be net of the fees,
expenses, taxes and governmental charges payable by holders
under the terms of the deposit agreement. The depositary will
apply the same method for distributing the proceeds of the sale
of any property (such as undistributed rights) held by the
custodian in respect of securities on deposit.
Distributions
of Equity Shares
Whenever we make a free distribution of equity shares for the
securities on deposit with the custodian, we will notify the
depositary bank and deposit the applicable number of equity
shares with the custodian. Upon receipt of confirmation of such
deposit from the custodian bank, the depositary bank will either
distribute to holders new ADSs representing the equity shares
deposited or modify the
ADS-to-equity
shares ratio, in which case each ADS you hold will represent
rights and interests in the additional equity shares so
deposited. Only whole new ADSs will be distributed. Fractional
entitlements will be sold and the proceeds of such sale will be
distributed as in the case of a cash distribution.
The distribution of new ADSs or the modification of the
ADS-to-equity
shares ratio upon a distribution of equity shares will be made
net of the fees, expenses, taxes and governmental charges
payable by holders under the terms of the deposit agreement. In
order to pay such taxes or governmental charges, the depositary
bank may sell all or a portion of the new equity shares so
distributed.
No such distribution of new ADSs will be made if it would
violate a law (for example, the US securities laws) or if it is
not operationally practicable. If the depositary bank does not
distribute new ADSs as described above, it may sell the equity
shares received and will distribute the proceeds of the sale as
in the case of a distribution of cash.
Elective
Distributions
If permitted by applicable law, whenever we intend to distribute
a dividend payable at the election of shareholders either in
cash or in additional equity shares, we will give prior notice
thereof to the depositary bank and will indicate whether we wish
the elective distribution to be made available to you. In such
case, we will assist the depositary bank in determining whether
such distribution is lawful and reasonably practicable.
The depositary bank will make the election available to you only
if it is reasonably practicable and if we have provided all of
the documentation contemplated in the deposit agreement. In such
case, the depositary bank will establish procedures to enable
you to elect to receive either cash or additional ADSs, in each
case as described in the deposit agreement.
If the election is not made available to you, you will receive
either cash or additional ADSs, depending on what a shareholder
in India would receive upon failing to make an election, as more
fully described in the deposit agreement.
Distributions
of Rights
Whenever we intend to distribute rights to purchase additional
equity shares, we will give prior notice to the depositary bank
and will indicate whether we wish such rights to be made
available to you. In such case, we will assist the depositary
bank in determining whether it is lawful and reasonably
practicable to distribute rights to purchase additional ADSs to
holders.
The depositary bank will establish procedures to distribute
rights to purchase additional ADSs to holders and to enable such
holders to exercise such rights if it is lawful and reasonably
practicable to make the rights
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available to holders of ADSs, and if we provide all of the
documentation contemplated in the deposit agreement (such as
opinions to address the lawfulness of the transaction). You will
have to pay the subscription price, fees, expenses, taxes and
other governmental charges to subscribe for the new ADSs upon
the exercise of your rights. The depositary bank is not
obligated to establish procedures to facilitate the distribution
and exercise by holders of rights to purchase new equity shares
directly rather than new ADSs.
The depositary bank will not distribute the rights to you if:
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we do not timely request that the rights be distributed to you
or we request that the rights not be distributed to you;
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we fail to deliver satisfactory documents to the depositary
bank; or
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it is not reasonably practicable to distribute the rights.
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The depositary bank will sell the rights that are not exercised
or not distributed if such sale is lawful and reasonably
practicable. The proceeds of such sale will be distributed to
holders as in the case of a cash distribution.
If the depositary bank is unable to sell the rights, it will
allow the rights to lapse.
Other
Distributions
If permitted by applicable law, whenever we intend to distribute
property other than cash, equity shares or rights to purchase
additional equity shares, we will notify the depositary bank in
advance and will indicate whether we wish such distribution to
be made to you. If so, we will assist the depositary bank in
determining whether such distribution to holders is lawful and
reasonably practicable.
If it is reasonably practicable to distribute such property to
you and if we provide all of the documentation contemplated in
the deposit agreement, the depositary bank will distribute the
property to the holders in a manner it deems practicable.
The distribution will be made net of fees, expenses, taxes and
governmental charges payable by holders under the terms of the
deposit agreement. In order to pay such taxes and governmental
charges, the depositary bank may sell all or a portion of the
property received.
The depositary bank will not distribute the property to you and
will sell the property if:
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we do not request that the property be distributed to you or if
we ask that the property not be distributed to you;
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we do not deliver satisfactory documents to the depositary
bank; or
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the depositary bank determines that all or a portion of the
distribution to you is not reasonably practicable.
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The proceeds of such a sale will be distributed to holders as in
the case of a cash distribution. If the depositary bank is
unable to sell the property, it may dispose of the property for
the account of the holders in any manner it deems reasonably
practicable.
Redemption
Whenever we decide to redeem any of the equity shares on deposit
with the custodian, we will notify the depositary bank. If it is
reasonably practicable and if we provide all of the
documentation contemplated in the deposit agreement, the
depositary bank will mail notice of the redemption to the
holders.
The custodian will be instructed to surrender the shares being
redeemed against payment of the applicable redemption price. The
depositary bank will convert the redemption funds received into
dollars upon the terms of the deposit agreement and will
establish procedures to enable holders to receive the net
proceeds from the redemption upon surrender of their ADSs to the
depositary bank. You may have to pay fees, expenses, taxes and
other governmental charges upon the redemption of your ADSs. If
less than all ADSs are
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being redeemed, the ADSs to be retired will be selected by lot
or on a pro rata basis, as the depositary bank may determine.
Changes
Affecting Equity Shares
The equity shares held on deposit for your ADSs may change from
time to time. For example, there may be a change in nominal or
par value, a
split-up,
cancellation, consolidation or classification of such equity
shares or a recapitalization, reorganization, merger,
consolidation or sale of assets.
If any such change were to occur, your ADSs would, to the extent
permitted by law, represent the right to receive the property
received or exchanged in respect of the equity shares held on
deposit. The depositary bank may in such circumstances deliver
additional ADSs to you or call for the exchange of your existing
ADSs for new ADSs. If the depositary bank may not lawfully
distribute such property to you, the depositary bank may sell
such property and distribute the net proceeds to you as in the
case of a cash distribution.
Issuance
of ADSs Upon Deposit of Equity Shares
If permitted under applicable law, the depositary bank may
create ADSs on your behalf if you or your broker deposit equity
shares with the custodian. The depositary bank will deliver
these ADSs to the person you indicate only after you obtain all
necessary government approvals and pay any applicable issuance
fees and any charges and taxes payable for the transfer of the
equity shares to the custodian. Your ability to deposit equity
shares and receive ADSs may be limited by US and Indian legal
considerations applicable at the time of deposit. In particular,
in accordance with applicable regulations of the RBI and the
Ministry of Finance, the depositary bank will only be able to
accept additional equity shares for deposit into the ADS
facility to the extent that there have previously been
withdrawals of equity shares.
The issuance of ADSs may be delayed until the depositary bank or
the custodian receives confirmation that all required approvals
have been given and that the equity shares have been duly
transferred to the custodian. The depositary bank will only
issue ADSs in whole numbers.
If you are permitted to make a deposit of equity shares, you
will be responsible for transferring good and valid title to the
depositary bank. As such, you will be deemed to represent and
warrant that:
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the equity shares are duly authorized, validly issued, fully
paid, non-assessable and legally obtained;
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all preemptive (and similar) rights, if any, with respect to
such equity shares have been validly waived or exercised;
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you are duly authorized to deposit the equity shares;
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the equity shares presented for deposit are free and clear of
any lien, encumbrance, security interest, charge, mortgage or
adverse claim, and are not, and the ADSs issuable upon such
deposit will not be, restricted securities (as
defined in the deposit agreement); and
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the equity shares presented for deposit have not been stripped
of any rights or entitlements.
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If any of the representations or warranties are incorrect in any
way, we and the depositary bank may, at your cost and expense,
take any and all actions necessary to correct the consequences
of the misrepresentations.
Transfer,
Combination and Split Up of ADRs
As an ADR holder, you will be entitled to transfer, combine or
split up your ADRs and the ADSs evidenced thereby. For transfers
of ADRs, you will have to surrender the ADRs to be transferred
to the depositary bank and also must:
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ensure that the surrendered ADR is properly endorsed or
otherwise in proper form for transfer;
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provide such proof of identity and genuineness of signatures as
the depositary bank deems appropriate;
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provide any transfer stamps required by the State of New York or
the United States; and
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pay all applicable fees, charges, expenses, taxes and other
government charges payable by ADR holders pursuant to the terms
of the deposit agreement, upon the transfer of ADRs.
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To have your ADRs either combined or split up, you must
surrender the ADRs in question to the depositary bank with your
request to have them combined or split up, and you must pay all
applicable fees, taxes, charges and expenses payable by ADR
holders, pursuant to the terms of the deposit agreement, upon a
combination or split up of ADRs.
Withdrawal
of Equity Shares Upon Cancellation of ADSs
As a holder, you will be entitled to present your ADSs to the
depositary bank for cancellation and then the depositary bank
will have the obligation to transfer to you the corresponding
number of underlying equity shares at the custodians
offices, subject to the laws of India. In order to withdraw the
equity shares represented by your ADSs, you will be required to
pay to the depositary the fees for cancellation of ADSs and any
charges and taxes payable upon the transfer of the equity shares
being withdrawn. You assume the risk for delivery of all funds
and securities upon withdrawal. Once canceled, the ADSs will not
have any rights under the deposit agreement.
If you hold an ADR registered in your name, the depositary bank
may ask you to provide proof of identity and genuineness of any
signature and certain other documents as the depositary bank may
deem appropriate before it will cancel your ADSs. The withdrawal
of the equity shares represented by your ADSs may be delayed
until the depositary bank receives satisfactory evidence of
compliance with all applicable laws and regulations. Please keep
in mind that the depositary bank will only accept ADSs for
cancellation that represent a whole number of securities on
deposit.
You will have the right to withdraw the securities represented
by your ADSs at any time except for:
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Temporary delays that may arise because (i) the transfer
books for the equity shares or ADSs are closed, or
(ii) equity shares are immobilized on account of a
shareholders meeting or a payment of dividends.
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Obligations to pay fees, taxes and similar charges.
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Restrictions imposed because of laws or regulations applicable
to ADSs or the withdrawal of securities on deposit.
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Any other circumstances specifically contemplated in the
regulations promulgated by the SECs staff from time to
time.
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The depositary bank will only deliver equity shares upon
surrender of ADSs to the extent the number of equity shares at
that time deposited with the custodian have been listed for
trading on the Indian Stock Exchanges and dematerialized. The
depositary bank will process requests for withdrawal of the
equity shares represented by ADSs surrendered to it on a first
come, first served basis.
We expect the equity shares to be represented by the ADSs to be
(i) listed for trading on the Indian Stock Exchanges
approximately 45 days after the closing of any offering of
ADSs and (ii) dematerialized in the account of the
Custodian approximately 10 Indian business days following
receipt by the depositary bank of confirmation of listing on the
Indian Stock Exchanges. We expect the equity shares to be
represented by the ADSs issuable upon exercise of any
over-allotment option to be (i) listed for trading on the
Indian Stock Exchange approximately 45 days after the
closing of the over-allotment option and
(ii) dematerialized in the account of the Custodian
approximately 10 Indian business days following receipt by the
depositary bank of confirmation of listing of the equity shares
for trading on the Indian Stock Exchanges.
The deposit agreement may not be modified to impair your right
to withdraw the securities represented by your ADSs except to
comply with mandatory provisions of law.
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Voting
Rights
As an ADS holder, you generally have the right under the deposit
agreement to instruct the depositary bank to exercise the voting
rights for the equity shares represented by your ADSs. You will
have no right to attend our general meetings in person. A holder
of ADSs may withdraw the underlying equity shares from the ADS
facility and vote as a direct shareholder, but there may not be
sufficient time to do so after the announcement of an upcoming
shareholders meeting. The voting rights of holders of
equity shares are described in Description of Share
Capital.
At our request, the depositary bank will mail to you any notice
of shareholders meeting received from us together with
information explaining how to instruct the depositary bank to
exercise the voting rights of the securities represented by ADSs.
If the depositary bank timely receives voting instructions from
a holder of ADSs, it will endeavor to vote the shares
represented by the holders ADSs in accordance with such
voting instructions.
Please note that the ability of the depositary bank to carry out
voting instructions may be limited by practical and legal
limitations and the terms of the securities on deposit. We
cannot assure you that you will receive voting materials in time
to enable you to return voting instructions to the depositary
bank in a timely manner. Securities for which no voting
instructions have been received will not be voted.
Fees and
Charges
As an ADS holder, you will be required to pay the following
service fees to the depositary bank:
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Services
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Fees
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Issuance of ADSs upon deposit of equity shares
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Up to 5¢ per ADS issued
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Surrender of ADSs for withdrawal of equity shares
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Up to 5¢ per ADS surrendered
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Distribution of cash dividends or other cash distribution
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Up to 2¢ per ADS held
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Exercise of rights to purchase additional ADSs
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Up to 5¢ per ADS issued
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Distribution of ADSs pursuant to stock dividend or other free
stock distributions
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Up to 5¢ per ADS issued
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Distributions of cash proceeds (i.e., upon sale of rights or
other entitlements)
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Up to 2¢ per ADS held
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Distribution of securities other than ADSs or rights to purchase
additional ADSs
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Up to 5¢ per ADS held
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Depositary services fee
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Up to 2¢ per ADS held
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Transfer of ADRs
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Up to $1.50 per certificate presented for transfer
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As an ADS holder you will also be responsible to pay certain
fees and expenses incurred by the depositary bank and certain
taxes and governmental charges such as:
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fees for the transfer and registration of equity shares (i.e.,
upon deposit and withdrawal of equity shares);
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expenses incurred for converting foreign currency into US
dollars;
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expenses for cable, telex and fax transmissions and for delivery
of securities;
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fees and expenses incurred in connection with compliance with
exchange control regulations and other applicable regulatory
requirements;
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fees and expenses incurred in connection with the delivery or
servicing of equity shares on deposit; and
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taxes and duties upon the transfer of securities (i.e., when
equity shares are deposited or withdrawn from deposit).
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Depositary fees payable upon the issuance and cancellation of
ADSs are typically paid to the depositary bank by the brokers
(on behalf of their clients) receiving the newly issued ADSs
from the depositary bank and
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by the brokers (on behalf of their clients) delivering the ADSs
to the depositary bank for cancellation. The brokers in turn
charge these fees to their clients. Depositary fees payable in
connection with distributions of cash or securities to ADS
holders and the depositary services fee are charged by the
depositary bank to the holders of record of ADSs as of the
applicable ADS record date.
The depositary fees payable for cash distributions are generally
deducted from the cash being distributed. In the case of
distributions other than cash (i.e., stock dividends, rights),
the depositary bank charges the applicable fee to the ADS record
date holders concurrent with the distribution. In the case of
ADSs registered in the name of the investor (whether
certificated or uncertificated in direct registration), the
depositary bank sends invoices to the applicable record date ADS
holders. In the case of ADSs held in brokerage and custodian
account (via DTC), the depositary bank generally collects its
fees through the systems provided by DTC (whose nominee is the
registered holder of the ADSs held in DTC) from the brokers and
custodians holdings ADSs in their DTC accounts. The brokers and
custodians who hold their clients ADSs in DTC accounts in
turn charge their clients accounts the amount of the fees
paid to the depositary banks.
In the event of refusal to pay the depositary fees, the
depositary bank may, under the terms of the deposit agreement,
refuse the requested service until payment is received or may
set off the amount of the depositary fees from any distribution
to be made to the ADS holder.
Note that the fees and charges you may be required to pay may
vary over time and may be changed by us and by the depositary
bank. The depositary bank will provide, without charge, a copy
of its latest fee schedule to anyone upon request.
The depositary bank has separately agreed to make available to
us a portion of the net fees (after deduction of custody fees
for the shares on deposit) it collects from ADS holders. These
amounts will be available to cover certain expenses related to
the establishment and maintenance of the ADR program, including:
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legal fees and expenses;
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ADS listing fees;
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investor relations fees and expenses;
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mailing and printing fees (i.e., for annual reports and proxy
materials); and
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website and web casting expenses.
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Neither the depositary bank nor we can determine the exact
amount of reimbursements the depositary bank will make available
to us because the number of ADSs that will be issued and
outstanding, the level of fees to be charged to holders of ADSs
and our reimbursable expenses related to the ADR program are not
known at this time.
Amendments
and Termination
We may agree with the depositary bank to modify the deposit
agreement at any time without your prior consent. We undertake
to give holders not less than 30 days prior notice of
any modifications that would prejudice any of their substantial
rights under the deposit agreement (except in very limited
circumstances enumerated in the deposit agreement).
You will be bound by the modifications to the deposit agreement
if you continue to hold your ADSs after the modifications to the
deposit agreement become effective. The deposit agreement cannot
be amended to prevent you from withdrawing the equity shares
represented by your ADSs (except as permitted by law).
We have the right to direct the depositary bank to terminate the
deposit agreement. Similarly, the depositary bank may in certain
circumstances on its own initiative terminate the deposit
agreement. In either case, the depositary bank must give notice
to the holders at least 30 days before termination.
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Upon termination, the following will occur under the deposit
agreement:
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For a period of one month after termination, you will be able to
request the cancellation of your ADSs and the withdrawal of the
equity shares represented by your ADSs and the delivery of all
other property held by the depositary bank in respect of those
equity shares on the same terms as prior to the termination.
During such one month period the depositary bank will continue
to collect all distributions received on the equity shares on
deposit (i.e., dividends) but will not distribute any such
property to you until you request the cancellation of your ADSs.
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After the expiration of such one month period, the depositary
bank may sell the securities held on deposit. The depositary
bank will hold the proceeds from such sale and any other funds
then held for the holders of ADSs in a non-interest bearing
account. At that point, the depositary bank will have no further
obligations to holders other than to account for the funds then
held for the holders of ADSs still outstanding.
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Books of
Depositary
The depositary bank will maintain ADS holder records at its
depositary office. You may inspect such records at such office
during regular business hours but solely for the purpose of
communicating with other holders in the interest of business
matters relating to the ADSs and the deposit agreement.
The depositary bank will maintain facilities in New York to
record and process the issuance, cancellation, combination,
split-up and
transfer of ADSs and, if applicable, ADRs.
These facilities may be closed from time to time, to the extent
not prohibited by law.
Limitations
on Obligations and Liabilities
The deposit agreement limits our obligations and the depositary
banks obligations to you. Please note the following:
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We and the depositary bank are obligated only to take the
actions specifically stated in the deposit agreement without
negligence or bad faith.
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The depositary bank disclaims any liability for any failure to
carry out voting instructions, for any manner in which a vote is
cast or for the effect of any vote, provided it acts in good
faith and in accordance with the terms of the deposit agreement.
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The depositary bank disclaims any liability for any failure to
determine the lawfulness or practicality of any action, for the
content of any document forwarded to you on our behalf or for
the accuracy of any translation of such a document, for the
investment risks associated with investing in equity shares, for
the validity or worth of the equity shares, for any tax
consequences that result from the ownership of ADSs, for the
credit worthiness of any third party, for allowing any rights to
lapse under the terms of the deposit agreement, for the
timeliness of any of our notices or for our failure to give
notice.
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We and the depositary bank will not be obligated to perform any
act that is inconsistent with the terms of the deposit agreement.
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We and the depositary bank disclaim any liability if we are
prevented or forbidden from acting on account of any law or
regulation, any provision of our Articles of Association or
Memorandum of Association, any provision of any securities on
deposit or by reason of any act of God or war or terrorism or
other circumstances beyond our control.
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We and the depositary bank disclaim any liability by reason of
any exercise of, or failure to exercise, any discretion provided
for the deposit agreement or in our Articles of Association or
Memorandum of Association or in any provisions of securities on
deposit.
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We and the depositary bank further disclaim any liability for
any action or inaction in reliance on the advice or information
received from legal counsel, accountants, any person presenting
equity shares for
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deposit, any holder of ADSs or authorized representative
thereof, or any other person believed by either of us in good
faith to be competent to give such advice or information.
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We and the depositary bank also disclaim liability for the
inability by a holder to benefit from any distribution,
offering, right or other benefit which is made available to
holders of equity shares but is not, under the terms of the
deposit agreement, made available to you.
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We and the depositary bank may rely without any liability upon
any written notice, request or other document believed to be
genuine and to have been signed or presented by the proper
parties.
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Pre-Release
Transactions
The depositary bank may, in certain circumstances, issue ADSs
before receiving a deposit of equity shares or release equity
shares before receiving ADSs. These transactions are commonly
referred to as pre-release transactions. The deposit
agreement limits the aggregate size of pre-release transactions
and imposes a number of conditions on such transactions (i.e.,
the need to receive collateral, the type of collateral required,
the representations required from brokers, etc.). The depositary
bank may retain the compensation received from the pre-release
transactions.
Taxes
You will be responsible for the taxes and other governmental
charges payable on the ADSs and the securities represented by
the ADSs. We, the depositary bank and the custodian may deduct
from any distribution the taxes and governmental charges payable
by holders and may sell any and all property on deposit to pay
the taxes and governmental charges payable by holders. You will
be liable for any deficiency if the sale proceeds do not cover
the taxes that are due.
The depositary bank may refuse to issue ADSs, to deliver
transfer, split and combine ADRs or to release securities on
deposit until all taxes and charges are paid by the applicable
holder. The depositary bank and the custodian may take
reasonable administrative actions to obtain tax refunds and
reduced tax withholding for any distributions on your behalf.
However, you may be required to provide to the depositary bank
and to the custodian proof of taxpayer status and residence and
such other information as the depositary bank and the custodian
may require to fulfill legal obligations. You are required to
indemnify us, the depositary bank and the custodian for any
claims with respect to taxes based on any tax benefit obtained
for you.
Foreign
Currency Conversion
The depositary bank will arrange for the conversion of all
foreign currency received into US dollars if such conversion is
practicable, and it will distribute the US dollars in accordance
with the terms of the deposit agreement. You may have to pay
fees and expenses incurred in converting foreign currency, such
as fees and expenses incurred in complying with currency
exchange controls and other governmental requirements.
If the conversion of foreign currency is not practicable or
lawful, or if any required approvals are denied or not
obtainable at a reasonable cost or within a reasonable period,
the depositary bank may take the following actions in its
discretion:
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convert the foreign currency to the extent practicable and
lawful and distribute the US dollars to the holders for whom the
conversion and distribution is lawful and practicable;
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distribute the foreign currency to holders for whom the
distribution is lawful and practicable; and
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hold the foreign currency (without liability for interest) for
the applicable holders.
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30
THE
INDIAN SECURITIES MARKET
The information in this section has been extracted from
publicly available documents from various sources, including
officially prepared materials from the Securities and Exchange
Board of India, or SEBI, the BSE and the NSE and has not been
prepared or independently verified by us or any of our
affiliates or advisors.
The
Indian Securities Market and Stock Exchange
Regulations
India has a long history of organized securities trading. In
1875, the first stock exchange was established in Mumbai.
Indias stock exchanges are regulated primarily by SEBI, as
well as by the Government of India acting through the Ministry
of Finance, Capital Markets Division, under the SCRA and the
Securities Contracts (Regulation) Rules, 1957, as amended, or
the SCR Rules. The SCR Rules, along with the rules, bylaws and
regulations of the respective stock exchanges, regulate the
recognition of stock exchanges, the qualifications for
membership thereof and the manner in which contracts are entered
into and enforced between members.
The Securities and Exchange Board of India Act 1992, as amended,
or the SEBI Act, provided for the establishment of SEBI to
protect the interests of investors in securities and to promote
the development of, and to regulate, the securities market and
matters connected or incidental to the securities market. The
SEBI Act granted powers to SEBI to, among other things, regulate
the Indian securities market, including stock exchanges and
other intermediaries in the securities market, to promote and
monitor self-regulatory organizations, to prohibit fraudulent
and unfair trade practices and insider trading, to regulate
substantial acquisitions of shares and takeovers of companies,
to call for information, to undertake inspections and to conduct
inquiries and audits of stock exchanges, self regulatory
organizations, intermediaries and other persons associated with
the securities market.
SEBI has also issued guidelines concerning minimum disclosure
requirements for public companies, rules and regulations
concerning investor protection, insider trading, substantial
acquisition of shares and takeovers of companies, buy-backs of
securities, delisting of securities, employees stock option
plans, stock brokers, merchant bankers, underwriters, mutual
funds, foreign institutional investors, credit rating agencies
and other securities market participants.
Listing
and Delisting
The listing of securities on recognized Indian stock exchanges
is regulated by the SCRA, the SCR Rules and the listing
agreements of the respective stock exchanges. Under the SCR
Rules, the governing body of each stock exchange is empowered to
suspend trading of or dealing in a listed security for breach by
a listed company of its obligations under such stock
exchanges listing agreement, subject to such company
receiving prior notice of such intent of the stock exchange.
In order to ensure availability of floating stock of listed
companies, the SEBI has notified amendments to the listing
agreement. All listed companies are required to ensure that
their minimum level of public shareholding remains at or above
25%. This requirement does not apply to those companies who at
the time of their initial listing had offered at least 10% of
the issue size to the public pursuant to Rule 19(2)(b) of
the SCR Rules read with Regulation 41(1) of the SEBI (Issue
of Capital and Disclosure Requirements) Regulations, 2009, and
which fulfil certain other conditions provided in the SCR Rules
or to companies that have reached a size of 20 million or
more in terms of the number of outstanding listed shares and
Rs. 10 billion or more in terms of market
capitalization. However, such listed companies are required to
maintain the minimum level of public shareholding at 10% of the
total number of issued ordinary shares of a class or kind for
the purposes of listing. Failure to comply with this clause in
the listing agreement requires the listed company to delist its
shares pursuant to the terms of the delisting guidelines issued
by SEBI and may result in penal action being taken against the
listed company.
The provisions of the SEBI (Delisting of Equity Shares)
Regulations, 2009, as amended, or the Delisting Regulations, and
the SCR Rules govern voluntary and compulsory delisting of
equity shares of listed Indian
31
companies from any of the recognized stock exchanges. A company
may voluntarily delist from a stock exchange provided that the
securities of the company have been listed for a minimum period
of three years on any recognized stock exchange, the delisting
has been approved by two-thirds of the public shareholders, and
the company, the promoter
and/or the
directors of the company provide an exit opportunity and
purchase the outstanding securities from those holders who wish
to sell them at a price determined in accordance with the
Delisting Regulations (an exemption from this last condition on
providing an exit opportunity and purchasing the outstanding
shares may be granted by SEBI if the securities remain listed on
the NSE or the BSE).
In the event a company seeks to voluntarily delist from a stock
exchange, it is required to provide an exit opportunity to the
other shareholders and seek the in-principle approval of the
stock exchange. This exit opportunity involves a price discovery
process known as the book building process. A
delisting offer can be launched by any promoter seeking to
delist the securities of the company. The delisting offer needs
to be supported by a resolution approved by the board of
directors and a resolution approved by three-fourths of the
shareholders of the listed company through a postal ballot. In
addition, the special resolution of the shareholders can be
acted upon if, and only if, the votes cast by public
shareholders in favour of the proposal amount are at least two
times the number of votes cast by public shareholders against it
(non-promoters and holders of depository receipts are considered
non-public shareholders). Following the approval of the
shareholders, the promoter is required to issue a public
announcement relating to the delisting offer. The offer price
shall be at or above a floor price determined in accordance with
the provisions of the Delisting Regulations.
The Delisting Regulations and the SCR Rules also provide the
stock exchanges the power to delist the securities of companies
on certain grounds, including: if a company is incurring losses
during the preceding three consecutive years and has negative
net worth; the trading in the securities of the company has
remained suspended for a minimum period of six months; the
securities of a company have remained infrequently traded during
the preceding three years; the company or any of its promoters
or directors have been convicted for failure to comply with any
provisions of the SEBI Act or the Depositories Act, or rules and
regulations made thereunder and given a sentence of not less
than three years; or there has been failure to raise the public
shareholdings within a specified time to the minimum level
applicable to the company under its listing agreement. Any order
for compulsory delisting can be made only after considering
representations received from aggrieved persons. In the event
that the securities of a company are delisted by a stock
exchange, the fair value of the securities shall be determined
by an independent valuer appointed by the stock exchange from a
panel of experts selected by the stock exchange. If a listed
company is delisted by the stock exchange, the listed company
can file an appeal before the Securities Appellate Tribunal. The
Delisting Regulations do not permit the relisting of equity
shares following a delisting for a period of five years (in a
voluntary delisting) and ten years (if the stock exchanges
initiate the delisting).
We have entered into listing agreements with the BSE and the
NSE. These agreements require us to adhere to certain corporate
governance requirements, including ensuring that we have a
minimum number of independent directors on our board of
directors, specify the required composition of various
committees, such as our audit committee and remuneration
committee, and subject us to continuing disclosure requirements.
Disclosures
under the Indian Companies Act and Securities
Regulations
All companies, including public limited companies, are required
under the Indian Companies Act to prepare and file with the
Registrar of Companies and circulate to their shareholders
audited annual accounts that comply with the disclosure
requirements under the Indian Companies Act. In addition, a
listed company is subject to continuing disclosure requirements
pursuant to the terms of its listing agreement with the relevant
stock exchange and SEBI regulatory requirements. Companies are
also required to publish unaudited financial statements (though
subject to a limited review by the companys auditors), on
a quarterly basis and are required to inform the related stock
exchanges immediately regarding any sensitive information that
would be likely to affect the stock price.
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Indian
Stock Exchanges
There are currently 23 recognized stock exchanges in India, most
of which have a governing board for self-regulation. A number of
these exchanges have been directed by SEBI to file schemes for
demutualization as part of the move towards greater investor
protection. The BSE and the NSE hold prominent positions among
the stock exchanges in terms of the number of listed companies,
market capitalization and trading activity.
With effect from April 1, 2003, the stock exchanges in
India operate on a trading day plus two, or T+2, rolling
settlement system. At the end of the T+2 period, obligations are
settled with buyers of securities paying for and receiving
securities, while sellers transfer and receive payment for
securities. For example, trades executed on a Monday would
typically be settled on a Wednesday. In order to contain the
risk arising out of the transactions entered into by the members
of various stock exchanges either on their own account or on
behalf of their clients, the stock exchanges have designed risk
management procedures, which include compulsory prescribed
margins on the individual broker members, based on their
outstanding exposure in the market, as well as stock-specific
margins from the members.
To restrict abnormal price volatility, SEBI has instructed stock
exchanges to apply the following price bands calculated at the
previous days closing price (there are no restrictions on
price movements of index stocks):
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Market Wide Circuit Breakers. In order to
restrict abnormal price volatility in any particular stock, SEBI
has instructed stock exchanges to apply daily circuit breakers,
which do not allow transactions beyond certain price volatility.
An index based market-wide (equity and equity derivatives)
circuit breaker system has been implemented and the circuit
breakers are applied to the market for movement by 10%, 15% and
20% for two prescribed market indices: the BSE Sensitive Index,
or Sensex, for the BSE and the Nifty for the NSE, or the NSE
Nifty, whichever is breached earlier. If any of these circuit
breaker thresholds are reached, trading in all equity and equity
derivatives markets nationwide is halted.
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Price Bands. Price bands are circuit filters
of 20% movements either up or down, and are applied to most
securities traded in the markets, excluding securities included
in the BSE Sensex and the NSE Nifty and derivatives products. In
addition to the market-wide index based circuit breakers, there
are currently in place varying individual scrip wise bands
(except for scrips on which derivative products are available or
scrips included in indices on which derivative products are
available) of 20% either way for all other scrips.
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BSE
The BSE is one of the stock exchanges in India on which our
equity shares are listed. Established in 1875, it is the first
stock exchange in India to have obtained permanent recognition
in 1956 from the Government of India under the SCRA and has
evolved over the years into its present status as the largest
stock exchange in India. Pursuant to the BSE (Corporatization
and Demutualization) Scheme 2005 of SEBI, with effect from
August 20, 2005, the BSE has been incorporated and is
now a company under the Indian Companies Act.
The BSE switched over to online trading from May 1995. Only
members of the BSE have the right to trade in the stocks listed
on the BSE. As of August 2009, the BSE had 1,001 members
comprising 173 individual members, 805 Indian companies and 23
foreign institutional investors. As of August 31, 2009,
there were 4,942 companies trading on the BSE and the
estimated market capitalization of stocks trading on the BSE was
Rs.52,857 billion. The average daily turnover on the BSE as
of August 31, 2009 was Rs.58.25 billion. The BSE has
obtained SEBI approval to expand its BSE on line trading network
to more than 400 cities. (Source: BSE) Derivatives trading
commenced on the BSE in 2000. The BSE has also wholesale and
retail debt trading segments. The retail trading in government
securities commenced in January 2003.
Derivatives trading commenced on the BSE in 2000. The BSE has
also wholesale and retail debt trading segments. Retail trading
in government securities commenced on the BSE in January 2003.
The following two indices are generally used in tracking the
aggregate price movements on the BSE. The BSE Sensex consists of
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listed shares of 30 large market capitalization companies. The
companies are selected on the basis of market capitalization,
liquidity and industry representation. The Sensex was first
compiled in 1986 with the fiscal year ended March 31, 1979
as its base year. The BSE 100 Index (formerly the BSE National
Index) contains listed shares of 100 companies including
the 30 in Sensex with fiscal 1984 as the base year. The BSE 100
Index was introduced in January 1989.
NSE
Our equity shares are also listed in India on the NSE. The NSE
was established by financial institutions and banks to provide
nationwide, online, satellite-linked, screen-based trading
facilities for market-makers and electronic clearing and
settlement for securities including government securities,
debentures, public sector bonds and units. The NSE was
recognised as a stock exchange under the SCRA in April 1993 and
commenced operations in the wholesale debt market segment in
June 1994. The capital market (equities) segment commenced
operations in November 1994 and operations in the derivatives
segment commenced in June 2000. In March 2009, the average daily
traded value of the capital market segment was Rs. 101,400
million. As of August 31, 2009, there were
1,431 companies trading on the NSE and the estimated market
capitalisation of stocks trading on the NSE was
Rs.49,758 billion. The average daily turnover on the NSE as
of August 31, 2009 was Rs.173.79 billion. The NSE
launched the NSE 50 Index, now known as S&P CNX NIFTY, on
April 22, 1996 and the Mid-cap index on January 1,
1996. The securities in the NSE 50 Index are highly liquid.
(Source: NSE) Derivatives trading commenced on the NSE in June
2000. The NSE also has wholesale and retail debt trading
segments.
Trading
Hours
Trading on both the BSE and the NSE normally occurs Monday
through Friday, between 9:55 a.m. and
3:30 p.m. The BSE and the NSE are closed on public
holidays.
Trading
Procedure
In order to facilitate smooth transactions, in 1995 BSE replaced
its open outcry system with the BSE On-line Trading, or BOLT,
facility in 1995. This totally automated screen based trading in
securities was put into practice nation-wide. This has enhanced
transparency in dealings and has assisted considerably in
smoothing settlement cycles and improving efficiency in
back-office work.
The NSE has introduced a fully automated trading system called
National Exchange for Automated Trading, or NEAT, which operates
on a strict price / time priority. This system enables
efficient trade. NEAT has lent considerable depth in the market
by enabling large number of members all over India to trade
simultaneously, narrowing the spreads significantly.
Stock
Market Indices
S&P CNX Nifty is a diversified 50 stock index
accounting for 21 sectors of the economy. It is used for a
variety of purposes such as benchmarking fund portfolios, index
based derivatives and index funds. S&P CNX Nifty is owned
and managed by India Index Services and Products Limited (IISL),
which is a joint venture between the NSE and CRISIL.
The following two indices are generally used in tracking the
aggregate price movements on the BSE. The BSE Sensex consists of
listed shares of 30 large market capitalization companies. The
companies are selected on the basis of market capitalization,
liquidity and industry representation. Sensex was first compiled
in 1986 with the fiscal year ended March 31, 1979 as its
base year. The BSE 100 Index (formerly the BSE National Index)
contains listed shares of 100 companies including the 30 in
Sensex with fiscal 1984 as the base year. The BSE 100 Index was
introduced in January 1989.
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Internet-Based
Securities Trading and Services
SEBI approved internet trading in January 2000. Internet trading
takes place through order routing systems, which route client
orders to exchange trading systems for execution. This permits
clients throughout the country to trade using brokers
Internet trading systems. Stock brokers interested in providing
this service are required to apply for permission to the
relevant stock exchange and also have to comply with certain
minimum conditions stipulated by SEBI.
Takeover
Code
The SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997, as amended, or the Takeover Code, prescribes
certain thresholds of securities ownership or trigger points
that give rise to certain obligations. The Takeover Code
requires disclosure of the aggregate shareholding or voting
rights in a listed company by any acquiror who acquires shares
or voting rights which (taken together with shares or voting
rights, if any, already held by such acquiror) entitle such
acquiror to more than 5%, 10%, 14%, 54% or 74% of the shares or
voting rights in that company. There are additional disclosure
requirements at certain thresholds if there is any purchase or
sale of 2% of shares or voting rights. Also, SEBI has amended
the Takeover Code to make it mandatory for the promoters and
promoter group of listed companies to disclose the creation and
enforcement of a pledge on the equity shares held by such
persons.
The Takeover Code also requires (unless specifically exempted)
the making of an open offer to acquire an additional 20% of the
voting capital of a company in the following circumstances:
(a) any acquiror, who together with persons acting in
concert with such acquiror, acquires or agrees to acquire 15% or
more of the equity shares or voting rights in the company;
(b) any acquiror who, together with persons acting in
concert with such acquiror, has acquired 15% or more, but less
than 55%, of the equity shares or voting rights in the shares of
the company and who acquires additional shares or voting rights
entitling such acquiror to exercise more than 5% of the voting
rights in any financial year ending March 31;
(c) any acquiror who, together with persons acting in
concert with such acquiror, has acquired 55% or more, but less
than 75%, of the shares or voting rights in the shares of the
company (or, where the company concerned had obtained the
initial listing of its shares by making an offer of at least 10%
of the issue size to the public pursuant to Rule 19(2)(b)
of the SCR Rules, less than 90% of the shares or voting rights
in the company) and who acquires any additional shares entitling
the acquiror to exercise voting rights or voting rights;
provided that an acquiror together with persons acting in
concert with such acquirer, may acquire additional shares or
voting rights that entitle such acquiror to up to 5% of the
voting rights in a company without making a public announcement
if the acquisition is made through open market purchases on the
stock exchanges, but not through bulk deal/block deal/negotiated
deal/preferential allotment; or if the increase in shareholding
or voting rights of the acquirer is pursuant to a buyback of
shares by the company, and the post acquisition
shareholding of the acquiror and persons acting in concert does
not exceed 75%;
(d) any acquiror who, together with persons acting in
concert with such acquiror, holds 55% or more, but less than
75%, of the shares or voting rights of the company (or, where
the company concerned had obtained the initial listing of its
shares by making an offer of at least 10% of the issue size to
the public pursuant to Rule 19(2)(b) of the SCR Rules, less than
90% of the shares or voting rights in the company), intends to
consolidate its holdings while ensuring that the public
shareholding in the target company does not fall below the
minimum level permitted by the listing agreement with the stock
exchanges; or
(e) any acquiror who acquires control over the company
(directly or indirectly), irrespective of whether there has been
any acquisition of shares or voting rights in the company.
However, in the event a public offer is made pursuant to item
(d) above (an acquiror who holds 55% or more but less than 75%),
the minimum size of the public offer to acquire the voting
capital of the target
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company is required to be the lesser of 20% of the voting
capital of the company or such other lesser percentage of the
voting capital of the company as would, assuming full
subscription of the offer, enable the acquiror, together with
persons acting in concert with him, to increase his holding to
the maximum level possible, which is consistent with the target
company meeting the requirements of minimum public shareholding
as set forth in the listing agreement.
The Takeover Code introduces the chain principle by
which the acquisition of a holding company will obligate the
acquiror to make a public offer to the shareholders of each
subsidiary company which is listed.
Further, if the acquisition of voting capital of a target
company made by an acquiror pursuant to a public offer results
in the public shareholding in the target company being reduced
below the minimum level required in the listing agreements with
the stock exchanges for the purpose of continuous listing, the
acquiror is required to take necessary steps to facilitate
compliance of the target company with the relevant provisions of
the listing agreement within the time period stated in the
listing agreements.
The Takeover Code sets out the contents of the required public
announcements as well as the minimum offer price. The minimum
offer price depends on whether the shares of the company are
frequently or infrequently traded (as
defined in the Takeover Code). In case the shares of the company
are frequently traded, the minimum offer price shall be the
higher of:
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the negotiated price under the agreement for the acquisition of
shares in the company;
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the highest price paid by the acquiror or persons acting in
concert with such acquiror for any acquisitions, including
through an allotment in a public, preferential or rights issue,
during the 26-week period prior to the date of public
announcement; and
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the average of the weekly high and low of the closing prices of
the shares of the company quoted on the stock exchange where the
shares of the company are most frequently traded during the
26-week period prior to the date of public announcement, or the
average of the daily high and low of the prices of the shares as
quoted on the stock exchange where the shares of the company are
most frequently traded during the two weeks preceding the date
of public announcement, whichever is higher.
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Specific obligations of the acquiror and the board of directors
of the target company in the offer process have also been
specified. Acquirors making a public offer also must deposit in
an escrow account a percentage of the total consideration
payable under the public offer, which will be forfeited in the
event that the acquiror does not fulfill its obligations.
The Takeover Code, subject to certain conditions specified in
the Takeover Code, exempts certain specified acquisitions from
the requirement of making a public offer, including, among
others, the acquisition of shares:
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by allotment in a public issue or a rights issue;
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by underwriters pursuant to an underwriting agreement;
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by registered stockbrokers in the ordinary course of business on
behalf of clients;
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in unlisted companies;
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pursuant to a scheme of reconstruction or amalgamation approved
by a court in India or abroad;
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pursuant to a scheme under Section 18 of the Sick
Industries Companies (Special Provisions) Act, 1985;
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resulting from transfers between companies belonging to the same
group of companies, as defined in the Monopolies and Restrictive
Trade Practices Act, 1969, as amended, or between relatives or
between qualifying promoters of a publicly listed
company or between qualifying Indian promoters and foreign
collaborators who are shareholders;
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by way of transmission through inheritance or succession;
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resulting from transfers by Indian venture capital funds or
foreign venture capital investors registered with SEBI, to
promoters of a venture capital undertaking or venture capital
undertaking pursuant to an agreement between such venture
capital funds or foreign venture capital investors with such
promoters or venture capital undertaking;
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by government controlled companies, unless such acquisition is
made pursuant to a disinvestment process undertaken by the
Government of India or a state government;
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pursuant to a change in control by takeover/restoration of the
management of the borrower company by the secured creditor in
terms of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002;
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acquisition of shares by a person in exchange for equity shares
received under a public offer made under the Takeover
Code; and
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in accordance with guidelines and regulations relating to
delisting of securities as specified by SEBI.
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The Takeover Code does not apply to acquisitions in the ordinary
course of business by public financial institutions either on
their own account or as a pledgee. An application may also be
filed with the takeover panel seeking an exemption from the open
offer requirements of the Takeover Code. Pursuant to a recent
amendment, a listed company can apply to SEBI to waive
requirements under the Takeover Code in relation to an
acquisition of a listed company in circumstances where the board
of directors of the listed company has been taken over by the
Government of India and there is a plan for a transparent and
competitive process for the operations of the listed company.
In addition, although the provisions of the Takeover Code
relating to the making of a public offer currently do not apply
to the acquisition of ADRs or global depository receipts so long
as they are not converted into equity shares carrying voting
rights, the SEBI, at a recent meeting, decided to amend the
Takeover Code to provide that where the ADR holders are entitled
to exercise voting rights on the shares underlying ADRs by
virtue of clauses in the depositary agreement or otherwise, open
offer obligations shall be triggered upon crossing the threshold
limits set out under the Takeover Code. No amendments have been
made to the Takeover Code as yet pursuant to the above mentioned
meeting.
Insider
Trading Regulations
The SEBI (Prohibition of Insider Trading) Regulations 1992, as
amended, or the Insider Trading Regulations, have been
established by SEBI to prohibit and penalize insider trading in
India. The Insider Trading Regulations prohibit an
insider from dealing, either on his own behalf or on
behalf of any other person, in the securities of a company
listed on any stock exchanges when in possession of unpublished
price-sensitive information. The terms insider,
unpublished and price-sensitive
information are defined in the Insider Trading Regulations.
Insider means any person who (i) is or was
connected with the company or is deemed to have been connected
with the company and who is reasonably expected to have access
to unpublished price-sensitive information in respect of the
securities of a company or (ii) has received or has had
access to such unpublished price-sensitive information.
Unpublished means information which is not published
by the Company or its agents and is not specific in nature. The
Insider Trading Regulations clarify that speculative reports in
print or electronic media are not considered published
information. Price-sensitive information means any
information which relates directly or indirectly to a company
and which if published is likely to materially affect the price
of securities of the company, such as the periodic financial
results of the company, intended declaration of dividends (both
interim and final), issue of securities or buy-back of
securities.
The insider is also prohibited from communicating, counselling
or procuring, directly or indirectly, any unpublished
price-sensitive information to any other person who while in
possession of such unpublished
37
price-sensitive information is prohibited from dealing in
securities. The prohibition under the Insider Trading
Regulations extends to all persons, including a company dealing
in the securities of a company listed on any stock exchange or
associate of that other company, while in possession of
unpublished price-sensitive information.
Any person who holds more than 5% of the shares or voting rights
in any listed company is required to disclose to the company on
a continuous basis the number of shares or voting rights held by
such person and any change in such holding since the last
disclosure made (even if such change results in the shareholding
falling below 5%), where such change exceeds 2% of the total
shareholding or voting rights in the company. Such disclosure is
required to be made within two working days of either:
(i) the receipt of intimation of allotment of shares; or
(ii) the acquisition or sale of shares or voting rights, as
the case may be.
Further, all directors and officers of a listed company are
required to disclose to the company the number of shares or
voting rights held and derivatives positions taken by such
person within two working days of becoming a director or officer
of such company. All directors and officers of a listed company
are also required to make periodic disclosures of their
shareholding in the company.
The Insider Trading Regulations make it compulsory for listed
companies and certain other entities associated with the
securities market to establish an internal code of conduct to
prevent insider trading deals and also to regulate disclosure of
unpublished price-sensitive information within such entities so
as to minimize misuse of such information. To this end, the
Insider Trading Regulations provide a model code of conduct.
Amendments to the Insider Trading Regulations require that the
model code of conduct should not be diluted in any manner and
shall be complied with.
The model code of conduct has also been amended to prohibit all
directors, officers and designated employees who buy or sell any
number of shares of the company from entering into opposite
transactions during the next six months following the prior
transaction. All directors and designated employees have also
been prohibited from taking positions in derivative transactions
involving shares of the company at any time. Further, certain
provisions pertaining to, inter alia, reporting
requirements have also been extended to dependants of directors,
officers and designated employees of the company.
Depositories
In August 1996, the Indian Parliament enacted the Depositories
Act which provides a legal framework for the establishment of
depositories to record ownership details and effectuate
transfers in book-entry form. SEBI established the Securities
and Exchange Board of India (Depositories and Participants)
Regulations 1996, as amended, which provide for, among other
things, the registration of depositories and participants, the
rights and obligations of the depositories, participants, the
issuer companies and the beneficial owners, pledge of securities
held in book-entry form, and procedure for the conversion to
book-entry form of shares held in physical form.
Trading of securities in book-entry form commenced in December
1996. In January 1998, SEBI notified scrips of various companies
for compulsory book-entry trading by certain categories of
investors. Subsequently, SEBI has significantly increased the
number of scrips in which book-entry form trading is mandatory
for all investors. The SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2009, as amended, provide that no
company may make a public or rights issue or an offer for sale
of securities unless the company enters into an agreement with a
depository for book-entry of securities already issued or
proposed to be issued to the public or existing shareholders and
the company gives an option to subscribers, shareholders or
investors to receive the security certificates or hold
securities in book-entry form with a depository.
SEBI has also provided that the issue and allotment of shares in
initial public offerings
and/or the
trading of shares shall only be in electronic form, and the
company gives an option to subscribers, shareholders or
investors either to receive the security certificates or to hold
the securities in book-entry form with a depository.
38
Under the Depositories Act, every person subscribing to
securities offered by an issuer has an option to either receive
the security certificates or hold the securities with a
depository. The Indian Companies Act provides that Indian
companies making any initial public offerings of securities for
or in excess of Rs. 100 million ($2.05 million)
should issue the securities in book-entry form.
However, even in case of scrips notified for compulsory
dematerialized trading, investors, other than institutional
investors, are permitted to trade in physical shares on
transactions outside the stock exchange where there are no
requirements of reporting such transactions to the stock
exchange, and on transactions on the stock exchange involving
lots of less than 500 securities.
Transfers of shares in book-entry form require both the seller
and the purchaser of the equity shares to establish accounts
with depositary participants registered with the depositaries
established under the Depositories Act, 1996. Charges for
opening an account with a depositary participant, transaction
charges for each trade and custodian charges for securities held
in each account vary depending upon the practice of each
depositary participant and have to be borne by the account
holder. Upon delivery, the shares shall be registered in the
name of the relevant depositary on the companys books and
this depositary shall enter the name of the investor in its
records as the beneficial owner. The transfer of beneficial
ownership shall be effected through the records of the
depositary. The beneficial owner shall be entitled to all rights
and benefits and subject to all liabilities in respect of his
securities held by a depositary.
Derivatives
(Futures and Options)
Trading in derivatives is governed by the SCRA and the SEBI Act.
Trading in derivatives in India takes place either on separate
and independent derivatives exchanges or on a separate segment
of an existing stock exchange. The derivative exchange or a
derivative segment of a stock exchange functions as a
self-regulatory organization under the supervision of SEBI.
Derivatives products have been introduced in a phased manner in
India.
Foreign
Investment in India
General
Foreign investment in Indian securities is regulated by the
Foreign Exchange Management Act, 1999, or FEMA, and the rules,
regulations and notifications issued by the RBI under FEMA. A
person resident outside India can transfer any security of an
Indian company or any other security to an Indian resident only
in accordance with the terms and conditions specified in FEMA
and the rules and regulations made thereunder or as permitted by
the RBI or the Indian Government through the Foreign Investment
Promotion Board, or FIPB. The Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000, as amended, or the FEMA FDI
Regulations govern the issue of certain Indian securities to
persons resident outside India and the transfer of Indian
securities by or to persons resident outside India. Under the
FEMA FDI Regulations, these securities include equity shares and
compulsorily and mandatorily convertible preference shares and
debentures.
Foreign
Direct Investment
The Indian Government, pursuant to its liberalization policy,
set up the FIPB to regulate, together with the RBI, all foreign
direct investment into India. Foreign direct investment, or FDI,
means investment by way of subscription for securities issued by
an Indian company by persons resident outside India. The
following investments require the prior permission of the FIPB:
(i) investments in excess of specified sectoral caps or in
sectors in which FDI is not permitted or in sectors which
specifically require the prior approval of the FIPB;
(ii) investments by any foreign investor who, on January
12, 2005, had an existing joint venture or a technology
transfer/trade mark agreement in the same field as the Indian
company in which the FDI is proposed. However, no prior approval
is required: (a) if the investor is a venture capital fund
registered with SEBI or a multinational financial institution,
or (b) if in the existing joint venture, investment by the
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foreign investor is less than 3% of the equity share capital of
the existing joint venture, or (c) if the existing joint
venture or collaboration is now defunct or sick, or (d) for
the transfer of shares of an Indian company engaged in the
information technology sector or in the mining sector for the
same area or mineral;
(iii) investments in excess of 24% of the equity capital of
units manufacturing items reserved for small scale industries;
and
(iv) all proposals relating to the acquisition of shares of
an Indian company by a foreign investor (including an individual
of Indian nationality or origin residing outside India and
corporations established and incorporated outside India) which
are not under the automatic route.
The Government of India amended the method of calculating
foreign investment in an Indian company pursuant to Press Note
No. 2 (2009 Series) dated February 13, 2009, or Press
Note No. 2 and Press Note No. 4 (2009 Series) dated
February 25, 2009 or Press Note No. 4.
Foreign investment is defined broadly and includes investment by
foreign institutional investors and non-resident Indians, and
foreign investment in the form of American depositary receipts,
global depositary receipts, foreign currency convertible bonds,
convertible preference shares and convertible debentures.
Press Note No. 2 specifies that all investments made
directly by a non-resident entity in an Indian company will be
considered to be foreign investment. Further, in relation to an
investment by an Indian company in another Indian company, if
(i) the investing Indian company is owned and controlled by
resident Indian entities (i.e., resident Indian citizens and/or
resident Indian companies that are ultimately owned and
controlled by resident Indian citizens), and (ii) foreign
entities do not own or control the investing Indian company,
then the foreign investment in the investing Indian company will
not be considered while determining the foreign investment in
the second Indian company. However, if the requirements under
(i) and (ii) above are not satisfied, then the entire
investment of the investing Indian company in the investee
Indian company will be considered to be foreign investment.
Pursuant to Press Note No. 2, an investing company will be
considered (i) owned by resident Indian
entities or foreign entities if more than 50% of its equity
interest is beneficially owned by resident Indian entities or
foreign entities, as the case may be, and
(ii) controlled by resident Indian entities or
foreign entities if the resident Indian entities or foreign
entities, as the case may be, have the power to appoint a
majority of its directors.
Press Note No. 4 provides guidelines relating to downstream
investments by Indian companies that are owned and controlled by
foreign entities. These guidelines are based on the principle
that indirect foreign investment through downstream investments
by Indian companies owned or controlled by foreign entities
should follow the same rules as those applicable to direct
foreign investment. In respect of downstream investments by
Indian companies that are not owned or controlled by foreign
entities, there will not be any foreign investment restrictions.
For the purpose of downstream investments, Press Note No. 4
classifies Indian companies into (i) operating companies,
(ii) operating-and-investing companies and
(iii) investing companies. In connection with foreign
investment in these categories of Indian companies, Press Note
No. 4 provides that:
1. Operating company: Foreign investment
in an operating company will need to comply with the terms and
conditions for foreign investment in the relevant sector(s) in
which such company operates;
2. Operating-and-investing
company: Foreign investment in such a company
will need to comply with the terms and conditions for foreign
investment in the relevant sector(s) in which such company
operates and such company will need to notify the Secretariat
for Industrial Assistance, the DIPP and the FIPB of its
downstream investment within 30 days of such investment.
Further, the investee Indian company in which downstream
investments are made by such company will need to comply with
the terms and conditions for foreign investment in the relevant
sectors in which the investee Indian company operates; and
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3. Investing company: An investing
company has been defined under Press Note No. 4 as an
Indian company holding only direct or indirect investments in
other Indian companies other than for trading of such holdings.
Any foreign investment in such company will require the prior
approval of the FIPB. Further the investee Indian company in
which downstream investments are made by such company will need
to comply with the terms and conditions for foreign investment
in the relevant sectors in which the investee Indian company
operates.
Press Note No. 4 further provides that foreign investment
in an Indian company that does not have any operations, and does
not have any downstream investments, will require the prior
approval of the FIPB.
A person residing outside India (other than a citizen of
Pakistan or Bangladesh) or any entity incorporated outside India
(other than an entity incorporated in Pakistan or Bangladesh)
may purchase shares, convertible debentures or preference shares
of an Indian company, subject to certain terms and conditions.
Generally, FDI is prohibited in the following sectors, among
others:
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retail trading (except single brand product retailing);
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atomic energy;
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lottery business; and
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gambling and betting.
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In other cases, investments can be made either with the specific
prior approval of the Indian Government (i.e. the Secretariat
for Industrial Assistance/FIPB) or under the automatic
route. Foreign investment in preference shares (other than
fully convertible preference shares), such as non-convertible,
optionally convertible or partially convertible, (for which
funds have been received on or after May 1, 2007) are
categorized as debt and must conform with the ECB Guidelines.
All fully convertible preference shares are treated as FDI and
would therefore be included in calculating the FDI in a company
for the purpose of sectoral caps.
Subject to certain exceptions and to prescribed sectoral caps,
FDI in Indian companies does not require the prior approval of
the FIPB or the RBI. A declaration in a prescribed form, setting
out the foreign investment, must be filed with the RBI within a
specified period of the foreign investment being made in the
Indian company. The foregoing description applies only to an
issuance of shares by, and not to a transfer of shares of,
Indian companies. The Indian Government has indicated that in
all cases where Foreign Direct Investment is allowed on an
automatic basis without FIPB approval, the RBI would continue to
be the primary agency for the purposes of monitoring and
regulating foreign investment.
41
GOVERNMENT
OF INDIA APPROVALS
ADSs
Legal
Regime
The issue of ADSs by an Indian company is primarily regulated by
the Foreign Exchange Management (Transfer or Issue of any
Foreign Security) Regulations, 2004, as amended, read with the
Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depository Receipt Mechanism) Scheme, 1993, as amended,
or the ADR and FCCB Scheme, and the Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2000, as amended, or the Regulations, read
with Circular F.
No. 15/7/1999-NRI
dated January 19, 2000, or the Circular, issued by the
Ministry of Finance, Department of Economic Affairs, Government
of India, which permit Indian companies to issue ADSs in
accordance with the procedure laid down thereunder without
obtaining any regulatory approvals except in certain cases.
An Indian company can issue ADRs if it is eligible to issue
shares to persons resident outside India under the foreign
direct investment scheme. However, an Indian listed company
which is not eligible to raise funds from the Indian capital
markets, including a company which has been restricted from
accessing the securities market by the SEBI, is not eligible to
issue ADRs.
Automatic
Route
Foreign direct investment in our company is permitted under the
automatic route and non-resident investors are permitted to hold
up to 100% of our equity share capital. Erstwhile overseas
corporate bodies, or OCBs, as defined under applicable RBI
regulations, who are not eligible to invest in India and
entities prohibited to buy, sell or deal in securities by the
SEBI are not eligible to subscribe to ADSs issued by Indian
companies. In the event that the issue related expenses
(including fixed expenses such as underwriting commissions, lead
managers charges, legal expenses and other reimbursable
expenses) exceed the prescribed ceiling of 7% of the issue, we
would be required to obtain the approval of the RBI.
Pricing
of an ADS Issue
Pursuant to a circular dated November 27, 2008, the pricing
guidelines set forth under the ADR and FCCB Scheme in relation
to ADS issues have been amended.
The issue price should be not less than the average of the
weekly high and low of the closing prices of the related shares
quoted on the stock exchange during the two weeks preceding the
relevant date, where the relevant date
means the date of the meeting in which our Board of Directors or
the Committee of Directors duly authorized by the Board of
Directors decides to open the proposed issue.
Regulatory
Filings
We are required to make the following filings in connection with
the issue of ADSs:
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full details of the ADS issue including details of our equity
capital structure, the number of ADSs issued, the ratio of ADSs
to the underlying shares, amount raised by this issue and amount
repatriated with the RBI in the form specified in Annexure C of
the Regulations, within 30 days from the date of closing of
the ADS issue;
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a quarterly return with the RBI in the form specified in
Annexure D of the Regulations within 15 days of the close
of the calendar quarter; and
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a return of allotment with the Registrar of Companies, at the
time of issuance of the new equity shares.
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Declaration
for Equity Shares Beneficially Owned
Section 187C of the Indian Companies Act requires the
holder of record of an equity share to declare details of the
beneficial owner and vice versa within the prescribed periods.
Any person who defaults in making the said declaration within
such period is liable to pay a fine of up to Rs. 1,000 for
each day of such continuing default. However, the failure to
comply with Section 187C would not affect the obligation of
the company to register a transfer of shares or pay any
dividends to the registered holder of any shares, in respect of
which such a declaration has not been made.
Approvals
Received by the Company
We are required to obtain the in-principle and final listing and
trading approvals from the BSE and NSE for the listing and
trading of the equity shares, underlying the ADSs. We expect the
equity shares to be represented by ADSs to be (i) listed
for trading on the Indian Stock Exchanges approximately
45 days after the closing of any offering of ADSs and
(ii) dematerialized in the account of the Custodian
approximately 10 Indian business days following receipt by
the depositary bank of confirmation of listing on the Indian
Stock Exchanges.
ECBs
The Master Circular No.
07/2009-10
dated July 1, 2009 issued by the RBI on External Commercial
Borrowings and Trade Credits, or the ECB Guidelines, consolidate
all existing the norms applicable to external commercial
borrowings, or ECB. The ECB Guidelines state that ECB refer to
commercial loans in the form of bank loans, buyers credit,
suppliers credit and securitized instruments (e.g.,
floating rate notes and fixed rate bonds) availed from
non-resident lenders with a minimum average maturity of three
years.
Funds received by an Indian company from the issue of preference
shares, whether non-convertible, optionally convertible or
partially convertible, or the issue of debentures that are not
mandatorily and compulsorily convertible into equity shares are
considered debt, and accordingly, all norms applicable to ECBs
(including those relating to eligible borrowers, recognised
lenders, amount and maturity and
end-use
stipulations) apply to such issues.
The ECB Guidelines are subject to amendment from time to time.
Investors are urged to consult their own advisors in connection
with the applicability of any Indian laws or regulations.
Recognized
Lenders
Eligible borrowers can raise ECB from internationally recognized
sources such as (i) international banks,
(ii) international capital markets, (iii) multilateral
financial institutions, (iv) export credit agencies,
(v) suppliers of equipment, (vi) foreign collaborators
and (vii) foreign equity holders (other than erstwhile
Overseas Corporate Bodies). A foreign equity holder
is eligible as a recognized lender under the approval route if
the minimum paid up equity held directly by the foreign equity
lender is 25% but ECB equity ratio exceeds 4:1 (i.e. the amount
of the proposed ECB exceeds four times the direct foreign equity
holding). In order for a foreign equity holder to be
eligible as a recognized lender under the automatic
route, it would require a minimum holding of paid up equity in
the borrower company as set out below:
(i) For ECB up to US$5 million minimum
paid up equity of 25% held directly by the lender; and
(ii) For ECB more than US$5 million
minimum paid up equity of 25% held directly by the lender and
debt-equity
ratio not exceeding 4:1 (i.e. the proposed ECB not exceeding
four times the direct foreign equity holding).
Amount
and Maturity; Prepayment
An Indian company may raise funds up to US$500 million in
any one financial year under the automatic approval route and,
with the approval of the RBI, up to US$750 million.
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ECB up to US$20 million are required to have a minimum
average maturity period of three years and ECB above
US$20 million and up to US$500 million are required to
have a minimum average maturity of five years. Under current RBI
regulations, prior RBI approval is required for redemption of
ECB prior to their stated maturity date.
Prepayment of ECB up to US$500 million is permitted without
prior approval of the RBI, subject to compliance with the
minimum average maturity period.
The all in cost ceiling for the issue of ECB under
the automatic route with an average maturity period of three
years up to five years should not exceed
six-month
LIBOR plus 300 basis points and, in the case of ECB with an
average maturity period of more than five years, should not
exceed
six-month
LIBOR plus 500 basis points.
Use of
Proceeds
ECB proceeds may be used for investment purposes such as the
import of capital goods, new projects or the
modernization/expansion of existing production units in
(a) the industrial sector (which includes small and medium
enterprises), (b) the infrastructure sector (which includes
power, mining, refining and exploration) and (c) specific
service sectors, in India and may also be used in the first
stage acquisition of shares in a disinvestment process or in the
mandatory second stage offer to the public under the Indian
Government disinvestment programme for shares of a public sector
undertaking, or in overseas direct investment in joint ventures
or
wholly-owned
subsidiaries.
ECB proceeds are specifically not permitted to be used for
on-lending,
investment in stock markets and real estate (other than
permitted development of integrated townships), or acquiring a
company (or part thereof) in India by a corporate, or for
working capital purposes, general corporate purposes or for the
repayment of existing Rupee loans.
ECB proceeds may be parked abroad, or remitted to India,
permitting utilization for permitted
end-uses. In
the event that the ECB proceeds are parked abroad, they may be
invested in certain specified liquid assets until required by
the borrower in India. ECB proceeds may also be remitted to
India for credit to the borrowers Rupee account with an
Authorized Dealer Category I Bank, or an AD
Category I bank, pending utilization for
permitted end-uses.
Security
The choice of security to be provided to the overseas lender is
left to the borrower. However, creation of charge over
immoveable assets and financial securities, such as shares, in
favour of the overseas lender is subject to Regulation 8 of
Notification No. FEMA 21/RB-2000 dated May 3, 2000 and
Regulation 3 of Notification No. FEMA 20/RB-2000 dated
May 3, 2000, respectively, as amended from time to time. AD
Category I banks have been delegated powers to
convey a no objection under the FEMA for creation of
charge on immovable assets, financial securities and issue of
corporate or personal guarantees in favour of overseas lender /
security trustee, to secure the ECB to be raised by the borrower.
Under both the automatic route and the approval route, the
designated AD Category I bank has the general
permission to make remittances of the principal, interest and
other amounts in conformity with ECB guidelines issued by the
Government of India or the RBI from time to time.
Under the automatic route, borrowers may enter into a loan
agreement with a recognised lender to raise an ECB by complying
with the ECB Guidelines. In such cases, the borrower must obtain
a Loan Registration Number, or LRN, from the RBI before drawing
down the ECB. Under the approval route, however, applicants are
required to submit an application in Form ECB through the
designated AD Category I bank to the Chief General Manager-in-
Charge, Foreign Exchange Department, Reserve Bank of India,
Central Office, External Commercial Borrowings Division,
Mumbai 400 001, along with necessary documents as
specified.
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FCCBs
Eligibility
Foreign Currency Convertible Bonds, or FCCBs, are convertible
bonds issued by an Indian company expressed in foreign currency
(such as US dollar), the principal and interest in respect of
which is payable in foreign currency. FCCBs are required to be
issued in accordance with the ADR and FCCB Scheme and subscribed
by a non-resident in foreign currency and are convertible into
equity shares of the issuing Indian company. The ECB Guidelines
apply to FCCBs. The provisions of the Foreign Exchange
Management (Transfer or Issue of any Foreign Security)
Regulations 2000, as amended, are also applicable to FCCBs and
the issue of FCCBs must adhere to such provisions.
Automatic
Route
In terms of the ADR and FCCB Scheme and the Foreign Exchange
Management (Transfer or Issue of any Foreign Security)
Regulations 2000, as amended, read together with the ECB
Guidelines, Indian companies are permitted to issue FCCBs under
the automatic route in the manner set forth therein, subject to
certain conditions specified therein, including that:
(i) the issue of FCCBs are subject to the FDI sectoral caps
prescribed by the Ministry of Finance;
(ii) a public issue of FCCBs is to be made through
reputable lead managers;
(iii) FCCBs cannot be issued with attached warrants;
(iv) issue-related expenses shall not exceed 4% of issue
size for public issues and 2% for private placements; and
(v) FCCBs issued under the automatic approval route to meet
Rupee expenditure are required to be hedged unless there is a
natural hedge in the form of uncovered foreign exchange
receivables.
The equity shares issued on conversion of FCCBs are to be listed
on the principal Indian stock exchanges on which our equity
shares are now listed. We intend to obtain in-principle
approvals for the issue and allotment of the equity shares
underlying the FCCBs from the BSE and the NSE respectively,
prior to the allotment of the FCCBs. We are also required to
apply for and obtain the approval for listing and trading of the
equity shares underlying the FCCBs after the completion of the
allotment of the equity shares. Upon receipt of listing and
trading approvals, the equity shares issued on conversion are
expected to be listed on the NSE and the BSE and will be
tradable on such stock exchanges once listed thereon, which is
expected to occur within 45 days after the relevant conversion
date unless we state otherwise.
Pricing
of an FCCB Issue
Pursuant to a circular dated November 27, 2008 issued by
the Ministry of Finance, the pricing guidelines set forth in the
ADR and FCCB Scheme have been amended.
Pursuant to the circular, the issue price should be not less
than the average of the weekly high and low of the closing
prices of the related shares quoted on the stock exchange during
the two weeks preceding the relevant date, where the
relevant date means the date of the meeting in which
our Board of Directors or the Committee of Directors duly
authorized by the Board of Directors decides to open the
proposed issue.
Regulatory
Filings
We are required to make the following filings in connection with
issuance of FCCBs and upon conversion of the FCCBs into equity
shares:
(i) Filing Form No. 83 with RBI through an authorised
dealer;
(ii) Filing of information with RBI subsequent to the
issuance of FCCBs which would include: the total amount of FCCBs
issued, the names of the investors resident outside India and
the number of
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FCCBs issued to each of them, and the amount repatriated to
India through normal banking channels duly supported by Foreign
Inward Remittance Certificates;
(iii) Filing of the return of allotment with the Registrar
of Companies, Goa, Daman and Diu, at the time of conversion of
the FCCBs into equity shares;
(iv) On conversion of the FCCBs into equity shares, filing
of information with the Regional Office of the RBI in the
prescribed Form FC-GPR, and to the Department of Statistics and
Information Management, RBI within 7 days of the month to
which it relates, in Form No. ECB-2; and
(v) Monthly filing of Form No. ECB-2 with RBI through an
authorised dealer.
Buy-Back
of FCCBs
The RBI considers proposals from Indian companies for buyback of
FCCBs up to $100 million of the redemption value per
company under the approval route, subject to compliance with the
following conditions:
(i) minimum discount of 25% of book value for redemption
value up to $50 million;
(ii) minimum discount of 35% of book value for the
redemption value over $50 million and up to
$75 million;
(iii) minimum discount of 50% of book value for the
redemption value of over $75 million and up to
$100 million; and
(iv) the funds used for the buyback shall be out of
internal accruals, to be evidenced by statutory auditor of the
company and designated AD Category I banks
certificate.
In addition to the conditions set out above, the following
additional conditions shall be applicable:
(i) The FCCB should have been issued in compliance with the
extant guidelines;
(ii) The FCCB should have been registered with the RBI; the
Loan Registration number should have been obtained
and ECB-2 returns submitted should be up to date;
(iii) No proceedings for contravention of FEMA are pending
against the company;
(iv) The right for buyback is vested with the issuer of
FCCBs. However, the actual buyback is subject to the consent of
the bond holders;
(v) The FCCBs bought back/repurchased from the holders must
be cancelled and should not be re-issued or re-sold;
(vi) The buyback will not have any effect on the bond
holders not opting for the buyback or on the non-participating
bond holders of companies opting for the buyback;
(vii) The company shall open an escrow account with the
branch or subsidiary of an Indian bank overseas or an
international bank for buying back the FCCBs to ensure that the
funds are used only for the buyback; and
(viii) On completion of the buyback, a report giving
details of buyback, such as, the outstanding amount of FCCBs,
book value of FCCBs bought back, rate at which FCCBs bought
back, amount involved, and source/s of funds may be submitted,
through the designated AD Category I bank, to the
Chief General Manager-in-Charge, RBI.
FCEB
Eligibility
Foreign Currency Exchangeable Bond, or FCEB, means an
exchangeable bond expressed in foreign currency, the principal
and interest in respect of which is payable in foreign currency,
issued by an issuing
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company and subscribed for by a person who is resident outside
India, and exchangeable into equity shares of another company,
called the offered company. FCEBs are required to comply with
the provisions of the Issue of Foreign Currency Exchangeable
Bonds Scheme, 2008, as amended, or the FCEB Scheme, notified by
the Government of India, Ministry of Finance, Department of
Economic Affairs pursuant to notification G.S.R. 89(E)
dated February 15, 2008. The ECB Guidelines also apply to
FCEBs.
The issuing company must be a part of the promoter group of the
offered company and must hold the equity shares being offered at
the time of issuance of the FCEB.
The offered company must be a listed company which is engaged in
a sector eligible to receive FDI and must be eligible to issue
or avail of FCCBs or ECB.
Entities that are in compliance with the FDI policy and are in
adherence with the applicable sectoral caps at the time of
issuance of the FCEB can subscribe to the FCEB.
The issuance of FCEBs requires the prior approval of the RBI
under the approval route set out under the ECB Guidelines.
Use of
Proceeds
The issuing company may use the FCEB proceeds to invest outside
India by way of direct investment or it may invest the FCEB
proceeds in the promoter group companies. In the event that the
issuing company invests the FCEB proceeds in its promoter group
companies, such promoter group companies can only utilize the
FCEB proceeds in accordance with the permitted end-uses under
the ECB Guidelines. A promoter group company receiving such
funds is not permitted to use the funds for investment in the
capital markets or in real estate in India.
FCEB proceeds are required to be retained and/or deployed
overseas by the issuing company or the promoter group companies
in accordance with the ECB Guidelines.
All-in
Cost; Pricing
The all-in cost ceilings under the ECB Guidelines apply to the
rate of interest and other issue expenses payable in relation to
FCEBs.
The exchange price of the listed equity shares underlying the
FCEB shall not be less than the higher of:
(i) the average weekly high and low of the closing prices
of the shares of the Offered Company quoted on the stock
exchange during the six months preceding the relevant
date; and
(ii) the average of the weekly high and low of the closing
price of the shares of the Offered Company quoted on a stock
exchange during the two weeks preceding the relevant date.
For the purpose of the FCEB Scheme, relevant date
means the date on which the Board of Directors of the issuing
company passes a resolution authorizing the issue of the FCEB.
Maturity
The minimum maturity period of an FCEB is five years. The
exchange option may be exercised at any time prior to redemption
of the FCEB, and upon exercise of the exchange option, the
holder of the FCEB shall take delivery of the underlying equity
shares.
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Ministry
of Finance notification dated August 31, 2005
The Ministry of Finance issued a notification dated
August 31, 2005 amending the ADR and FCCB Scheme (as
notified by the RBI pursuant to its Circular dated
September 11, 2005). Under the circular:
(i) The issuer must be eligible to raise funds from Indian
capital markets and should not have been restrained from
accessing the securities market by SEBI; and
(ii) Overseas Corporate Bodies who are not eligible to
invest in India through the portfolio route and entities that
are prohibited from buying, selling or dealing in securities by
SEBI are not eligible to subscribe to the ADRs or FCCBs.
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PLAN OF
DISTRIBUTION
We or any selling security holder may sell or distribute the
securities offered by this prospectus, from time to time, in one
or more offerings, as follows:
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through agents;
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to dealers or underwriters for resale;
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directly to purchasers; or
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through a combination of any of these methods of sale.
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The prospectus supplement with respect to the securities will
state the terms of the offering of the securities.
In addition, we may issue the securities as a dividend or
distribution or in a rights offering to our existing security
holders. In some cases, we or dealers acting for us or on our
behalf may also repurchase securities and reoffer them to the
public by one or more of the methods described above. This
prospectus may be used in connection with any offering of our
securities through any of these methods or other methods
described in the applicable prospectus supplement.
In the case of a rights offering, if all of the underlying
securities are not subscribed for, we may then sell the
unsubscribed securities directly to third parties or may engage
the services of one or more underwriters, dealers or agents,
including standby underwriters, to sell the unsubscribed
securities to third parties. If we enter into a standby
underwriting agreement, we may pay the standby underwriters a
commitment fee for the securities they commit to purchase on a
standby basis. If we do not enter into a standby underwriting
agreement, we may retain a dealer-manager to manage a rights
offering for us. Any rights offering by us will need to be in
compliance with applicable Indian laws and regulations. Equity
shares (directly or in the form of ADSs) subscribed by the
selling shareholder or, where the rights offering involves
standby underwriters, subscribed by the standby underwriters may
be resold by them by one or more of the methods described above.
Our securities distributed by any of these methods may be sold
to the public, in one or more transactions, either:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to prevailing market prices; or
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at negotiated prices.
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Sale
through Underwriters or Dealers
If underwriters are used in the sale of securities offered
through this prospectus, the underwriters will acquire the
securities for their own account, including through
underwriting, purchase, security lending or repurchase
agreements with us and the names of the underwriters and the
terms of the transaction will be set forth in the accompanying
prospectus supplement, which will be used by the underwriters to
make resales of the securities in respect of which this
prospectus is delivered to the public. The underwriters may
resell the securities from time to time in one or more
transactions, including negotiated transactions. The
underwriters may sell the securities in order to facilitate
transactions in any of our other securities (described in this
prospectus or otherwise), including other public or private
transactions and short sales. The underwriters may offer the
securities to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by
one or more firms acting as underwriters. Unless otherwise
indicated in the applicable prospectus supplement, the
obligations of the underwriters to purchase the securities will
be subject to certain conditions, and the underwriters will be
obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to
time any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers.
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If dealers are used in the sale of securities offered through
this prospectus, we will sell the securities to them as
principals. They may then resell those securities to the public
at varying prices determined by the dealers at the time of
resale. The applicable prospectus supplement will include the
names of the dealers and the terms of the transaction.
The maximum compensation to be received by any participating
FINRA member will not be greater than 8% for the sale of any
securities being registered pursuant to SEC Rule 415 under this
prospectus.
Direct
Sales and Sales through Agents
We may sell the securities offered through this prospectus
directly, subject to compliance with any applicable Indian law
and regulation. In this case, no underwriters or agents would be
involved. Such securities may also be sold through agents
designated from time to time. The applicable prospectus
supplement will name any agent involved in the offer or sale of
the offered securities and will describe any commissions payable
to the agent. Unless otherwise indicated in the applicable
prospectus supplement, any agent will agree to use its commonly
reasonable efforts to solicit purchases for the period of its
appointment.
We may sell the securities directly to institutional investors
or others who may be deemed to be underwriters within the
meaning of the Securities Act with respect to any sale of those
securities. The terms of any such sales will be described in the
applicable prospectus supplement.
Delayed
Delivery Contracts
If the applicable prospectus supplement indicates, we may
authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase securities at the
public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those
conditions described in the prospectus supplement. The
applicable prospectus supplement will describe the commission
payable for solicitation of those contracts.
Market
Making, Stabilization and Other Transactions
Any underwriter may engage in stabilizing transactions,
syndicate covering transactions and penalty bids in accordance
with Rule 104 under the Securities Exchange Act of 1934, as
amended. Stabilizing transactions involve bids to purchase the
underlying security in the open market for the purpose of
pegging, fixing or maintaining the price of the securities.
Syndicate covering transactions involve purchases of the
securities in the open market after the distribution has been
completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim a selling
concession from a syndicate member when the securities
originally sold by the syndicate member are purchased in a
syndicate covering transaction to cover syndicate short
positions. Stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the
securities to be higher than it would be in the absence of the
transactions. The underwriters may, if they commence these
transactions, discontinue them at any time.
Derivative
Transactions and Hedging
We, any selling security holder and the underwriters may engage
in derivative transactions involving the securities subject to
compliance with any applicable Indian law and regulation. These
derivatives may consist of short sale transactions and other
hedging activities. The underwriters or other third parties may
acquire a long or short position in the securities, hold or
resell securities acquired and purchase options or futures on
the securities and other derivative instruments with returns
linked to or related to changes in the price of the securities.
In order to facilitate these derivative transactions, we may
enter into security lending or repurchase agreements with the
underwriters or other third parties. The underwriters or other
third parties may effect the derivative transactions through
sales of the securities to the public, including short sales, or
by lending the securities in order to facilitate short sale
transactions by others. The underwriters or other third parties
may also use the securities purchased or borrowed from us or
others (or, in the case of derivatives, securities
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received from us in settlement of those derivatives) to directly
or indirectly settle sales of the securities or close out any
related open borrowings of the securities.
Loans of
Securities
We or a selling security holder may loan or pledge securities to
a financial institution or other third party that in turn may
sell the securities using this prospectus and an applicable
prospectus supplement, subject to compliance with any applicable
Indian law and regulation.
General
Information
Agents, underwriters, and dealers may be entitled, under
agreements entered into with us, to indemnification by us,
against certain liabilities, including liabilities under the
Securities Act. Our agents, underwriters, and dealers, or their
affiliates, may be customers of, engage in transactions with or
perform services for us or our affiliates in the ordinary course
of business, for which they may receive customary compensation.
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LEGAL
MATTERS
The validity of the equity shares offered by this prospectus
will be passed upon for us by S&R Associates, our Indian
counsel. The validity of the debt securities offered by this
prospectus will be passed upon for us by Latham & Watkins
LLP, our US counsel. Certain matters relating to US federal
securities law in connection with any offering pursuant to this
prospectus will be passed upon by Latham & Watkins
LLP, our US counsel. Latham & Watkins LLP may rely
upon S&R Associates with respect to certain matters
governed by Indian law.
EXPERTS
The consolidated financial statements and related financial
statement schedule included in Schedule II of Sterlite
Industries (India) Limited incorporated in this prospectus by
reference from the Companys Annual Report on
Form 20-F
for the year ended March 31, 2009, and the financial
statements from which the Selected Consolidated Financial Data
appearing under the heading Item 3. Key
Information A. Selected Consolidated Financial
Data in the Annual Report on Form 20-F of the Company
for the year ended March 31, 2009 have been derived, and
the effectiveness of Sterlite Industries (India) Limiteds
internal control over financial reporting have been audited by
Deloitte Haskins & Sells, Mumbai, India, an
independent registered public accounting firm, as stated in
their reports appearing herein by reference (which reports
(1) express an unqualified opinion on the consolidated
financial statements and the related financial statement
schedule and includes an explanatory paragraph referring to the
convenience translation of the Indian Rupee amounts into US
dollar amounts and (2) express an unqualified opinion on
the effectiveness of internal control over financial reporting).
Such financial statements, financial statement schedule, and
Selected Consolidated Financial Data have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing. The offices of
Deloitte Haskins & Sells are located at 12,
Dr. Annie Besant Road, Opposite Shiv Sagar Estate, Worli,
Mumbai 400018, India.
The information included in this prospectus regarding the ore
reserves is based on estimates determined by Sterlite and in
respect of BALCOs Mainpat and Bodai-Daldali bauxite mines
and HZLs Rampura Agucha, Zawar and Rajpura Dariba zinc
mines, have been reviewed and confirmed as being reported in
compliance with Industry Guide 7 of the SEC by SRK Consulting
(UK) Limited in reliance upon the authority of such firm as
experts in geology, mine planning, metallurgy, mineral
evaluation and mineral reserve estimation and the consent of
such firms to its inclusion.
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