Copper Business

Our major sales are in the domestic market, the demand for copper based products is owing to the growth in the cement, steel, crude oil, electricity, and coal and petroleum refinery sectors. The domestic market is fiercely competitive for cathode and copper rod products; we have managed to retain our customer base by offering them consistent quality products and enhancing our production capacity to support the rising demand. Copper cathodes which are converted into rods are supplied to both the domestic and export markets. Sectors catered to within our domestic market are;

For Cathode - Alloying and Rod Manufactures
For CC Rods - Power cables, Telecom cables/Data cables/House wires, Magnetic wires, Transformers

We export copper cathodes to markets in China, Korea and other South-East Asian countries. We are a reputed global supplier for markets in Middle East and several parts of Asia. The graph below shows the amount of copper products (in Metric Tonnes) sold across South East Asia, China and Middle East Asia in past 6 years. China continues to be our main focus with respect to our exports. In 2010, China was the world's largest consumer of metals, accounting for approximately 40% of refined copper consumption alone.

Acid Business

Our Acid Business is driven from Tuticorin, the location of this division plays a huge role in helping us capitalise our scale of production. We are well-placed in the market in the vicinity of major fertiliser producers such as Fertilisers and Chemicals Travancore (FACT), Coromandel International Limited (CIL), Mangalore Chemicals and Fertilisers (MCF) & Indian Farmers Fertiliser Cooperative Limited (IFFCO) and cement companies like India Cements, Madura Cements, Dalmia Cements etc.

The Sulphuric acid sales increased by 7.51% to 520813 MT in the reporting year from 484453 MT in the previous year. Sterlite Copper has a reputation of being the only domestic seller of Phosphoric acid in India and this works as an added advantage to our business as it rules out competition and gives us the dominant status in the domestic market.

The presence of an integrated Phosphoric acid plant, which consumes almost 50% of our Sulphuric acid production, gives us a strategic advantage in the otherwise dynamic sulphur market. The management keeps a regular track of the fertiliser market and decides the sale mix (Sulphuric acid/Phosphoric acid) based on market inputs to maximise the overall margin from the business.

Hindustan Zinc (HZL)

Zinc

Urbanisation and industrialisation, especially in the developing economies of China and India has contributed to increase in the world zinc consumption by 14% to 11.6 MT. At the same time, world smelter production increased by 13% to 12.8 MT, leaving the Zinc market with a surplus of over 1 MT of refined Zinc metal. During the year 2011, the average Zinc LME price per tonne increased to $ 2,185, compared to $ 1,936 in the previous year. Asia (excluding China), which is our key exports market, is poised to grow at around 7% in the next year.

Indian demand for refined Zinc was around 501 kt in the year . The Indian Zinc demand is expected to grow in the coming years, based on a positive GDP forecast. The key components for growth are ongoing and upcoming infrastructure projects, telecom and power projects and automobile sector that are estimated at Rs. 70,000 Crores. In the long-term, we see a promising future for Zinc demand in India, given the low per capita Zinc consumption of 0.41 kg per capita in 2011, as compared to the world average of 1.7 kg per capita Zinc consumption. HZL has 82% share in Indian Zinc market.

Zinc is used widely in Zinc Galvanising, vulcanisation of rubber, die castings of hardware & automotive equipments, making alloys, zinc sheets. Galvanising accounts for around 48% of global Zinc usage. 17% of Zinc used in the world is through die castings. 10% of global Zinc usage is for vulcanisation of rubber, as well as in ceramics, paints, animal feed, pharmaceuticals, and several other products and processes. Alloy accounts for around 11% of global Zinc usage.

Lead

The demand for refined Lead increased by 9% to 9.18 MT in 2011, as compared to 8.43 MT in 2010. Replacement battery demand, mainstay of Lead consumption with the recovery in automobiles OEMs production, was able to push Lead on the path of recovery to a 9% growth. At the same time, the global Lead smelter production was 9.44 MT. This left the refined Lead market in surplus, barely by 260 kt for the year. During the year 2010-11, the average Lead LME price per tonne increased to $ 2,244, as compared to $ 1,990 in the previous year. Indian Lead market grew by 7% to 380,000 tonnes in 2011, as compared to the previous year. Asia has become the new growth centre of the world, with China and India leading the way.

The Replacement market demand is growing year after year with an increased number of vehicles on the road. Power deficit in the country is resulting in an increased need of power backup and inverter battery. The demand of the Indian Battery industry is estimated to be around 90% of the Indian Lead demand. Our share in the domestic market is around 15% in the total Lead market (including alloys), and 25% in the pure Lead market (excluding alloys).

The battery sector is the single largest consumer of Lead, accounting for around three-quarters of the demand. SLI (Starting-Lighting-Ignition) batteries, which currently account for around half of the total Lead demand are mainly used in cars and light vehicles, but are also found in other applications such as golf carts and boats. Industrial batteries, which currently consume around a quarter of the total Lead produced. Stationary batteries are principally used in back up power supply systems; traction batteries are used for motive power in equipment such as forklift trucks and motorised wheelchairs. The second largest current end use of Lead for non-battery applications, accounting for around 8% of Lead consumption, is the chemical industry, in the form of Lead-based pigments and other compounds. Principal markets are for cathode ray tubes used in television screens and computer monitors, and for Poly Vinyl Chloride (PVC) stabilisers.

Silver

In 2011, the demand for Silver remained buoyant at around 980 million ounces, a 10% growth as compared to the previous year. The demand by fabrication has seen a growth of 10% this year, as a recovery in industrial uses and a robust growth in coins, investment and a modest rise in jewellery; but a decline in Silverware was witnessed due to losses in India on account of the price. Mine production rose by 5% and supply side (supported by higher Scrap supply) by 10% this year. Due to the higher investment demand and modest industrial growth, the Silver demand is expected to further rise in the next year. Average annual price for Silver in 2011 was $ 23.84 per ounce, up by 60% year on year.

The Indian demand for Silver was higher by 8% at around 3,120 tonnes in 2011, as compared to the previous year. Indian Silver demand is expected to grow on the back of prospective growth in electrical and other industrial segments, and Silver becoming a preferred investment asset along with Gold.

Industrial applications of Silver are mainly for brazing alloys, electrical contacts, high capacity Silver-Zinc or Silver-Cadmium batteries, printed circuits and other electronic applications. Other applications are jewellery, Silver plating, Silverware, photography, Dental alloys and more.

BALCO The global aluminium industry recorded a 12.8% growth in production and 16.7% growth in consumption during the year after a turbulent period. Globally the industry is facing the challenge of rise in costs and other input costs. This is also reflected in the increase in aluminium LME prices. Our major operations are located in Korba in the Indian state of Chattisgarh, where there are abundant bauxite and coal deposits. This underscores India's unique advantage of being rich in natural resources required to produce aluminium at a competitive cost.

The Indian aluminium market is dominated by growing demand from the power sector. Over time, the relative share of aluminium applications in other segments is expected to pick up with rapid urbanisation and construction sector growth.

Our focus is on value added products like wire rods, rolled product and billets to capitalise on market growth and optimise returns. We cater to key markets around the globe including the domestic market of India. We serve key markets located in South East Asia, South Asia, Middle East, and Europe.

Copper Mines of Tasmania (CMT) All the ore mined, is shipped to Sterlite Copper processes for preparation of its copper based products.

Customer Satisfaction SurveysTo gauge the overall satisfaction from our services offered to the customers, we periodically conduct customer satisfaction surveys. Customer satisfaction survey conducted at regular interval to understand customer feedback and corrective actions are made to address the requirements of customers. Surveys are also conducted by employing third party to remove bias in the feedback. This helps us in improving our delivery and standards in catering to our customer base.

Sterlite Copper The export market customer satisfaction survey is conducted once every two years. The company is in the process to obtain feedback from our export market customer base by September 2011, which will be reported in the next sustainable development report. Acid business customer satisfaction survey was conducted in June 2011 and will be covered in the next year's report.

In the reporting year, the survey was conducted in the domestic market amongst 142 customers as per their region. The overall Customer Satisfaction Index (CSI) came to 77.7 % favouring our performance. The rating criteria based on the enlisted parameters for assessment yielded the following results based on the average taken from the views/customer ratings collected from 142 customers. Each of the eight assessed parameters was rated out on 10 points.

HZL Customer satisfaction surveys are conducted at company level every 2 years at HZL. Senior executives make frequent visits to customers to get direct feedback on our products and services and other related issues. In terms of customer satisfaction, the marketing team maintains a forward looking approach in tandem with the global commodity pricing trends and customer demand assessment. Subsequently, the ISO 9000 guideline based Feedback schedule is followed for obtaining regular feedback in a periodic basis. This feedback is accumulated for sharing in management review based on which response is generated. Annual vendor and Customer Meet is organized for creating a platform for dialogue and grievance redressal which is mentored at the CEO level. The last two years information can be summarized in the form of 100% retention of customers.