1. Due Diligence of Hindustan Zinc PSU Disinvestment through Stratergic sale

2. Overview of the presentation Brief Snapshot of Hindustan Zinc Limited (HZL) Analysis of mines/smelters, assets, employees Past Financials Zinc Industry Investment Perspective Valuation Time table for future Transaction Details Transaction Documents

3. Brief Snapshot of HZL Only integrated primary producer of zinc & lead in the country Accounts for almost 80% of the country’s zinc production Headquartered in Udaipur Owns 6 mines (operates 4) and 4 smelters

4. Capacities & Production 11 mths12 mths (est) Zn Ingots161,300 MT180,000 MT PRODUCTCAPACITYPRODN. 2000-01PRODN. 2001-02 (9 mths) Zn Ingots169,000 MT148,092 MT132,542 MT Lead Ingots43,000 MT34,840 MT28,993 MT Silver86,000 kg35,127 kg36,946 kg Sulphuric Acid338,000 MT271,714 MT239,162 MT Cadmium Ingots740 MT277 MT298 MT Copper Cathode2,100 MT213 MT128 MT

5. Financial Highlights (Rs. mn.) as on31.03.200131.12.2001 Share Capital4,225.3 Net Worth11,602.611,867.4 PAT1,692.2323.4 Net Fixed Assets6,642.46,484.6 Net Current Assets4,186.44,036.6

6. Mines & Smelters

7. Mines - Details MINERAMPURA AGUCHA RAJPURA DARIBA ZAWARAGNIGUNDALA Ore with GradeLead-Zinc Zn 13.70% Pb 1.90% Lead-Zinc Zn 8.00% Pb 2.10% Lead-Zinc Zn 4.63% Pb 2.40% Lead Pb 2.10% Capacity4500 tpd2400 tpd4000 tpd240 tpd TypeOpen PitUnderground Estimated Life23 yrs15 yrs10 yrs (750,000 tpa) +8 yrs (300,000 tpa) 11 yrs Lease renewed upto March 13, 2020May 29, 2010March 29, 2010November 21, 2013 Nearest CityBhilwara – 80 kmUdaipur – 80 kmUdaipur – 44 kmGuntur – 25 km Cost of Production (2001-02) Rs. 5,691 / MTRs. 17,326 / MTRs. 16,863 / MTRs. 16,425 / MT

8. Global Mining Cost Comparison MINERAMPURA AGUCHA RAJPURA DARIBA ZAWAR Cost of Production (Rs./T of concentrate) 5,691 17,326 16,863 Concentrate Grade54%51%55% Cost of Production ($/T of metal) 216697629 Breakeven cost at LME of $800/MT and related TC/RC 321 Breakeven cost at LME of $900/MT and related TC/RC 380 Breakeven cost at LME of $1000/MT and related TC/RC 439 Scope for improvement ($/MT of metal) -376 / 317 / 258308 / 249 / 190

9. Smelters - Details SMELTERCHANDERIYADEBARIVIZAGTUNDOO MetalZinc & LeadZinc Lead CapacityZinc – 70,000 tpa Lead – 35,000 tpa 59,000 tpa40,000 tpa8,000 tpa ProcessZinc – ISP Lead – Pyro Electrowinning Pot Sintering Recovery (2000-01) Zinc – 90.67% Lead – 89.86% 95%87%87.15% Nearest CityBhilwara – 45 kmUdaipur – 15 kmVizagDhanbad – 36 km Cost of Production (2001-02) Zn - Rs. 35,379 / MT Pb – Rs. 30,802 / MT Rs. 53,150 / MTRs. 53,344 / MTRs. 59,848 / MT

10. Global TC/RC Comparison SMELTERCHANDERIYADEBARIVIZAG Cost of Zn Production (Rs./MT) 21,78232,86332,244 Cost of Zn Production ($/MT) 447674661 TC/RC ($/MT of metal) at LME of $800/MT 479 TC/RC ($/MT of metal) at LME of $900/MT 520 TC/RC ($/MT of metal) at LME of $1000/MT 561 Scope for improvement ($/MT of metal) -195 / 254 / 213182 / 141 / 100

11. Employees

12. WORKMENEXECUTIVESTOTALCONTRACT as on 30.6.01 As on 30.9.20009,4821,33910,8213,254 As on 24.10.20018,6251,3069,931 VRS Accepted & Paid 1,3482281,576 As on 1/3/027,2771,0788,3553,254

13. Employees (as on 1/3/02) – Break-up EXECUTIVESWORKMENTOTALCONTRACT (as on 30.6.01) Smelters: 1. Chanderiya184 631815652 2. Debari100 1,0221,122456 3. Vizag117 8981,015531 4. Tundoo 33 51454745 Mines: 1. Rampura Agucha110 606716490 2. Rajpura Dariba113 1,2011,314422 3. Zawar Mines180 1,8222,002375 4. Agnigundala 19 170189130 5. Sargipalli 32 1330 6. Maton 16 23393 Others174 389563150 TOTAL STAFF1,0787,2778,3553,254

14. Other Assets

15. CityLocationNos.NatureArea (sq.ft) JaipurBani Park (Flat)2Owned 1050 x 2 Bani Park (Flat)1Owned 1,650 BangaloreM. G. Road (Office)1Rented 1,139 Vijaynagar (Flat)1Owned 1,075 Vijaynagar (Flat)1Owned 1,278 Vijaynagar (Garage)1Owned 203 DelhiNehru Place (Office)1Rented 1,290 Nehru Place (Office)1Rented 645 SCOPE-Lodi Road1Rented 1,079 SCOPE-Laxmi Nagar1Rented 6,000 Asiad Village (Flat)1Rented 1,241 Ring Rd. Lajpat Nagar Guest House 1Rented 6,600 GhaziabadDevika Apartments4Owned 1020 x 4 HyderabadSaifabad (Office)1Owned 3,613 Saifabad (Garage)1Owned 200 Saifabad (Flat)1Owned 1,714

16. Other Assets CityLocationNos.NatureArea (sq.ft) MumbaiNariman Pt. (Office)1Rented 1,650 Santacruz (East) - Flat1Owned 580 Santacruz (East) - Flat1Owned 566 Santacruz (East) - Flat1Owned 910 Borivili (East) - Flat1Owned 1,100 Borivili (East) - Flat1Owned 1,100 KolkataA. J. C. Bose Rd., Tollygunge2Owned 1159 x 2 Car park1Owned CIC Bldg, (Flats)2Owned 2324 x 2 (Car Park)1Owned 200 UdaipurH O – Yashad BhawanOwnedapprox. 30,000

17. Past Financials

18. Summary P&L Accounts – Past Rs. mn. 1998-991999-20002000-01 2001-02 (9 mths) Net Sales11,25813,14414,4369,179 Other Income368499198237 Total Income11,62513,64314,6349,415 Total Expenditure9,36211,04211,2008,006 PBDIT2,2632,6013,4341,409 Depreciation572670577459 Interest15210525168 VRS amortised290 PBT1,5391,8262,832494 PAT7639041,692218 Cash profit excluding extraordinary items 1,417

19. Summary Balance Sheet - Past Particulars (Rs. mn.) 31.3.199931.3.200031.3.200131.12.2001 (provisional) Share Capital4,225 Reserves & Surplus5,5726,2187,3777,642 Loans94015057642 Net Fixed Assets6,5576,4826,6426,485 Investments––830 Current Assets7,1638,6767,6497,045 Current Liabilities2,9834,5643,4623,008 Net Current Assets4,1804,1124,1864,037

20. Cashflow Statement - Past (Rs. mn.)1999-20002000-20012001-02 Q1-3 Opening Cash Balance 12571658695 Sources Net Cash Accruals 15742319265 Increase in Loan Funds - -600 Sale of Fixed Assets --158 Total 157423191023 Uses Decrease in Loan Funds 78994 15 Inc./(Dec.) in Net Working Capital -46910381433 Purchase of Fixed Assets 595738- Purchase of Investments -8300 Dividend paid 258582 - Total 117332821448 Surplus/(Deficit) 401 (963) (435) Closing Cash Balance 1658695260

21. Key Ratios Ratio1998-991999-20002000-01 Current Ratio2.181.532.14 Debt:Equity0.090.010.00 RONW (%)7.798.6614.58 ROCE (%)14.9720.0126.33 BVPS (Rs.) 23.19 24.72 27.46 EPS (Rs.)1.812.144.00 Dividend (%)4.255.512.5

22. Realisations – 2000-01 Tonnage of Zn-Pb182,932 Rs. mn.Rs./MT% Realisation (incl. Other income)14,63479,998100.00% Variable CostsRaw Materials2,27812,45115.56% Power & fuel2,62814,36817.96% Other factory expenses1095970.75% Total5,01527,41634.27% Contribution9,61952,58265.73% Fixed CostsSalaries & Wages2,79015,25419.07% Other fixed expenses3,39418,55523.19% Total6,18533,80942.26% Total Expenditure11,20061,22576.53% PBDIT3,43418,77323.47% Depreciation5773,1563.95% Interest251350.17% PBT2,83215,48119.35% Tax provision1,1306,1777.72% PAT (incl. Prior items)1,6929,25011.56% Net Cash Accruals2,27912,46015.58%

23. Realisations – 31.12.2001 Tonnage of Zn-Pb161,535 Rs. mn.Rs./MT% Realisation (incl. Other income)9,882 61,172.55100.00% Variable Costs4,243 26,266.3242.94% Contribution5,639 34,906.2357.06% Salaries & Wages2,265 14,020.2422.92% Other fixed expenses1,964 12,161.3219.88% Fixed Costs4,229 26,181.5642.80% Total Expenditure8,472 52,447.8885.74% PBDIT1,409 8,724.6714.26% Depreciation459 2,840.874.64% Interest168 1,038.171.70% PBT289 1,789.332.93% Tax provision494 3,056.305.00% PAT211 1,308.082.14% Net Cash Accruals959 5,938.289.71%

24. Unit-wise Profitability MINESSMELTERS ZawarRDRADebariVizagChanderiya Employees Workmen 182212016061022898631 Executives 180113110100117184 Base Production (T) Zn ConcentrateZn Metal 43,45736,091306,05257,00037,00086,000 Cash profit (Rs. mn.) -127.78-170.061,014.02210.01189.521,027.58 Pb ConcentratePb Metal 17,6057,79918,32533,000 Cash profit (Rs. mn.) 73.2422.96164.12220.92 Total Cash Profit (Rs. mn.) -54.53-147.111,178.14210.01189.521,248.50

25. Unit-wise Profitability MINESSMELTERS ZawarRDRADebariVizagChanderiya Production with capex (T) Zn ConcentrateZn Metal 54,32257,745306,05257,00037,00086,000 Cash profit (Rs. mn.) -103.26-179.931,014.02210.01189.521,027.58 Pb ConcentratePb Metal 22,00712,47818,32533,000 Cash profit (Rs. mn.) 101.3636.73164.12220.92 Total Cash Profit (Rs. mn.) -1.90-143.201,178.14210.01189.521,248.50 VRS Cost (Rs. mn.) 1,591.51,042.0 Production of RD & Zawar mines can be substituted by increasing RA production from 18 lakh tonnes to 23 lakh tonnes

26. Zinc Industry

27. Major World Capacities – Refined Zinc COMPANYCAPACITY (MT)% Pasminco 656,00012.59% Korea Zinc 628,00012.06% Union Miniere 476,0009.14% Cominco 391,0007.51% Asturiana (now with Xstrata) 335,0006.43% Glencore 307,0005.89% Falconbridge 245,0004.70% Noranda 244,0004.68% Mitsui 239,0004.59% Outokumpu 225,0004.32% Metaleurope 224,0004.30% Industrias Penoles 220,0004.22% MIM 174,0003.34% Hindustan Zinc 169,0003.24% Zinc Corp America 148,0002.84% Norzink 143,0002.75% Grupo Mexico 105,0002.02% MG 100,0001.92% Padaeng 95,0001.82% Anglo American 85,0001.63% 5,209,000100.00%

28. Consumption Pattern

29. Current Global Scenario USA is the single largest consumer of Zinc (  1.6 mn. tonnes) Europe is the single largest continent which consumes Zinc (  2.3 mn. tonnes) World Production has grown by 6.4% in 2000 and 2.4% (in 2001) World Zinc Consumption which grew by 6.3% in 2000 has reduced by 1.1% in 2001 Zinc prices continue to slide. In real terms, the lowest level since the early 1940s

30. LME Price Progression - Zn

31. LME Prices (Current Levels) Cash= $ 813 / MT 18 mth Forward= $ 883 / MT 27 mth Forward= $ 913 / MT

32. Current Indian Scenario Zinc consumption in India higher compared to production 70% met internally, rest imported Lower per capita consumption implies potential for growth (0.24 kg compared to 0.8 kg in Brazil and 4 kg in USA) HZL & Binani Zinc, the only domestic producers, with HZL being around 6 times the size of Binani

33. Zinc - Production in India

34. Expected Global Scenario Demand for Zinc is expected to remain stagnant LME price to remain depressed in the short-term due to surplus production and stocks Future Outlook bright 2002200320042005 Consumption (tonnes)9,025,0009,408,0009,663,0009,927,000 Supply (tonnes)9,400,0009,625,0009,770,0009,943,000 Supply/Demand Balance (tonnes)375,000217,000107,00016,000 LME Cash ($/tonne)900105011001150 Source: Barclays Capital

35. Expected Indian Scenario Indian Zinc demand expected to remain in line with the economy though in the future it is expected to increase due to infrastructural projects taking shape. Supply-demand scenario unlikely to affect production unless domestic prices continue to fall, in line with LME price

36. Overall Assessment of Investment

37. Investment Perspective Strengths Track record of profit making Ore grade in Rajpura Dariba and Rampura Agucha mines fairly high compared to grades available internationally The Company has sites where preliminary exploration work has commenced and indicates quality reserves The Rampura Agucha mine has substantial reserves of high quality and the cost of mining is also low Debt-free company

38. Investment Perspective Strengths Has net working capital exceeding Rs. 4000 mn. Assets are available when Zinc LME at historical low Reasonably professional management with fair commercial orientation Conservative accounting practices maintained Unforeseen liability unlikely – write-backs possible Huge other properties in terms of offices, residential premises/housing colonies The staff members have not exhibited any overt signs of hostility towards the process of privatisation

39. Investment Perspective Concern Areas Zinc industry highly dependent on steel industry Demand forecast for Zn not encouraging Scattered locations of mines and smelters Analysis of cost structures reveals that only RA mine is viable at current LME levels Profitability of the company sensitive to changes in import duty structure (reduction) or fall in world prices Quality of rock at the RD mine The availability of water in Rajasthan dependent on annual rainfall.

40. Investment Perspective Concern Areas Power costs are high Salaries and wages is a large component of the total costs Sargipalli and Maton mines are being closed. The non- VRS costs of the closure, if any, would need to be examined in detail. Agnigundala mine and Tundoo smelter are also in the process of being closed. The closure costs of these have to be examined. Company produces significant amount of PW grade zinc which has low demand and lower margins Company ’ s equity base is very high

41. Assumptions Underlying Future Projections and Valuation

42. Assumptions Production – Based on capacity Pricing LME-based, landed cost Insurance & Freight etc is assumed at USD 30/t Import Duty Structure as below 2001-022002-032003-042004-052005-062006-072007-08 Rate (%)3525 20 Clearance and domestic costs have been assumed at Rs. 1500/t CVD and SADD assumed at flat 16% and 4% respectively in the calculation of effective duty INR to depreciate at 5% p.a. against the USD

43. Assumptions Costs – Projections based on historical reference. Reductions assumed where applicable Interest at 11% p.a. in case of any loan in future Balance Sheet items linked to P&L, Actuals or Levels of previous year as appropriate Projections over a 7-year period with cash flows to perpetuity from the 8 th year at 2% growth rate

44. Valuation

45. Book Value Discounted Cash Flows Comparable multiples Market Price Other qualitative factors Intangibles Contingent and hidden liabilities

46. DCF Valuation DCF Valuation Parameters Risk free rate = 8.00% Market rate of return = 14.39% Stock Beta = 1.2 (or 120%) Growth rate to perpetuity = 2.00% Cost of Equity = 15.67%

47. Transaction Details

48. Shareholding on offer GoI disinvestment in HZL – 26% Open offer to be made subsequent to acquisition of GoI stake – Minimum 20% Buyer’s Call Option: 6 months from Closing Date for a period of 1 year - Upto 18.92% GoI’s Put Option: 30 months from Closing Date for a period of 1 year – Upto GoI stake of 26% Buyer’s Second Call Option: 5 years from Closing Date – All remaining GoI shares

49. Share Purchase Agreement 1.Non-disposal Undertaking of 3 years 2.Lock-in of shares for 3 years 3.Subsequent to successful bid, Open Offer for a minimum of 20% stake mandatory 4.Buyer’s Call Option - 6 months after closing date upto 18 months (Upto 18.92%). {at higher of Bid Price or Market Value} 5.GoI’s Put Option - 30 months after closing date upto 42 months (GOI retaining stake of 26 % to 31%). {at the higher of Bid Price or Market Value}

50. Critical clauses in the Agreements… 6.SP Second Call Option – 5 years after closing date – all remaining shares of GoI {Fair Market Value as determined by independent valuer} 7.“Right of First Refusal” continues between SP & GoI for 18 months from closing date 8.No Tag-along or Drag-along clause 9.Post Closing adjustment removed. (Existing in BALCO) 10.GoI’s right to inspect accounts removed

51. Critical clauses in the Agreements… 11.Embargo on further Capitalization for 2 years* 12.Only the items requiring 75% majority are listed as veto rights under the SHA 13.GoI has reserved the right to offer 5% of the Shares to HZL employees directly * (except with the consent of the GoI)

52. Future Projections

53. Profitability Projections Rs. mn.2001-022002-032003-042004-05 LME Price of Zn SHG ($/t) H1 – 880 H2 – 765 800850900 Tonnage of Pb-Zn218,000 219,000 Net Sales12,61911,96113,51115,170 Other Income292150 Total Income12,91112,11113,66115,320 Total Expenditure11,08211,43911,99612,802 EBITDA1,8296721,6652,518 Depreciation687717758771 Interest28000 Other Liabilities139000 VRS Amortised289405 PBT685-4495021,342 PAT508-449464825

54. Profitability Projections Rs. mn.2001-022002-032003-042004-05 PBDIT / Sales14.16%5.55%12.19%16.44% PAT / Sales3.94%-3.71%3.39%5.39% EPS (Rs.)1.20-1.061.101.95 Net Cash Accruals (Rs. mn.)1,4846721,6272,001 RONW4.36%-3.85%3.82%6.37% ROCE5.58%-3.85%3.82%6.37%

55. Balance Sheet Projections Particulars (Rs. mn.) 31.3.200231.3.200331.3.200431.3.2005 Share Capital4,225 Reserves & Surplus7,8867,4367,9008,725 Loans0000 Gross Fixed Assets14,88715,54716,20716,407 Net Fixed Assets6,3956,3396,2405,669 Current Assets6,7376,1067,1349,023 Current Liabilities3,0082,9433,0043,092 D:E Ratio0000 Current Ratio2.452.522.362.65

56. Cashflow Projections Particulars (Rs. mn.)2001-022002-032004-052005-06 Opening Balance69556331,557 Sources of Funds Funds from operations1,8296721,6652,518 Inc. in term loans0000 Dec. in NWC40965800 Total2,2381,3301,6652,518 Use of Funds Inc. in Fixed Assets440660 200 Inc. in NWC00144179 Dec. in term loans57000 VRS Payments1,44557800 Other Payments92603939517 Total2,8681,238843896 Surplus/(Deficit)(630)928221,622 Closing Balance65.00157.00979.002,601.00

57. Cost Structures

58. RD Mines – Cost Structure

59. Zawar Mines – Cost Structure

60. RA Mines – Cost Structure

61. Debari Smelter – Cost Structure

62. Vizag Smelter – Cost Structure

63. Chanderiya Smelter – Zn Cost Structure

64. Chanderiya Smelter – Pb Cost Structure

65. Tundoo Smelter – Cost Structure

66. Comparable Multiples COMPANYEV / EBITDAPRICE / BV 2002 Pasminco1.600.10 Falconbridge5.401.00 Penoles4.200.50 Teck Cominco5.100.70 Noranda4.400.80 Xstrata6.501.00 MIM5.100.70 Grupo Mexico10.700.50 Average5.380.66 HZL Value (Rs. / Share)16.5318.61

67. Share Values Book Value (31.3.2001) – Rs. 25.46 Book Value (30.9.2001) – Rs. 27.06 Market Price as per SEBI Guidelines – Rs. 18.39 (Rs. / Share) Full Equity (@ 15.47%) D:E = 1 WACC = 12.94% D:E = 1.5 WACC = 13.26% Fully Levered 11% 1) LME plateau at $900/t 18.0719.7320.1822.69 2) LME plateau at $1000/t 27.4130.1030.8334.91 3) LME constant at $765/t 2.132.292.332.59 4) 1 + VRS for 2118 people 19.7821.6622.1825.02 5) 1 + closure of condemned units 19.0520.8321.3224.02 6) RA Mine + 3 Smelters 21.7023.7224.2727.31 7) RA Mine+Chanderiya&Debari Smelters 20.9022.8423.3726.30 8) RA Mine+Chanderiya&Vizag Smelters 20.7522.6923.2226.15 9) RA Mine + Chanderiya only 20.5122.4422.9625.88 10) LME at $750/t, Rupee dep. @ 3%, import duty 35/25/20/15/10, COP/t to reduce to Rs. 50,000/Rs. 45,000 15.6117.0817.4819.70

68. Past Financial Analysis

69. Strategic Perspective Sterlite’s presence in non-ferrous metals Copper – Originally present Aluminium – Acquisition of BALCO Gold – Prospecting in Armenia Zinc – Natural extension of presence in the non-ferrous area Zinc industry less volatile than those of Copper and Aluminium