Communication on Progress (COP) – 2010

BHARAT ALUMINIUM COMPANY LIMITED

(BALCO)

Registered Office:

Bharat Aluminium Company LimitedAluminium SadanCore - 6, Scope Office Complex, Lodi Road, New Delhi - 110

www.vedantaresources.com

Tel. Works 07759-242015

Fax. works 07759-241633

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Communication on Progress ( COP ) – 2010

From the Desk of Chief Executing Officer & Whole Time Director : Global Compact Commitment Statement

Dear Friends

Global compact is the largest and the most important CSR alliance in the world and works in support of a more sustainable and more inclusive global economy.As a multi-stake holder initiative, it seeks to align business operations and strategies with ten universally accepted principles in the areas of human rights,labor, environment and anti corruption in order to catalyze actions in support of broader UN goals.

Balco signed up with the UNGC in 2001and has continuously aligned its business strategy and operations to the principles of UNGC and corporate Social Responsibility .Post its disinvestment by GOI in 2001 the company has moved ahead and has adopted greener environment friendly technologies for aluminium production. It has decommissioned the VSS soderberg technology based smelter in 2010 as apart of its effort to curb emissions. Balco maintains the health and safety of its employees and contributes to sustainable development, as its key values. Balco achieves its financial and business objectives while continuously contributing to social causes, displaying an overall responsible corporate behaviour in all the three areas of business viz.social,environmental and financial

I take this opportunity to present COP 2010 and reiterate our company’s commitment to the ten principles of UNGC and resolve to perform our business with greater responsibility and transparency.

Gunjan Gupta

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1) OUR VISION: “To achieve global standards of excellence in productivity with environmental stewardship and customer satisfaction”

OUR MISSION: “To create a world-Class Aluminium company and generate strong financial results”

OUR VALUESEntrepreneurshipWe foster an entrepreneurial spirit throughout our businesses and value the ability to foresee business opportunities early in the cycle and act on them swiftly. Whether it be developing organic growth projects, or creating entrepreneurs from within, we ensure that sustainability issues are addressed and are key drivers to development.

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GrowthWe continue to deliver growth and generate significant value for our shareholders. Moreover, our organic growth pipeline is strong as we venture into the future. We have pursued growth across all our businesses and into new areas,always on the belief that value must be delivered.

Excellence

Achieving excellence in all that we do is our way of life. We strive to consistently deliver projects ahead of time at industry-leading costs of construction and within budget. We are constantly focused on achieving a top deciles cost of production in each of our businesses. To achieve this, we follow a culture of benchmarking of business results and practices

Trust

The trust that our stakeholders place in us is the key to our success. We recognise that we must deliver on the promises we make in order to earn that trust. We constantly strive to meet the stakeholder expectations and endeavour to deliver ahead of expectations.

Sustainability

We practice sustainability within the framework of well defined governance structures and policies and with the demonstrated commitment of our management and employees. We aim to minimise impact on local cultures and traditions, sharing the benefits arising from the project and creating opportunities for the economic development of local community .

ORGANIZATION’S PURPOSE: “Harnessing natural resources in harmony with nature to enhance economic well-being and quality of life”.

HUMAN RESOURCE PHILOSOPHY: People are our vital assets and we are committed to good quality of life and well-being of our employees. We will continue to work towards building an organization having world class capabilities and high performance culture by attracting, developing and retaining talented people.

Respect for the individual, valuing diversity, fostering entrepreneurship, ensuring an enabling environment and developing a “can do” attitude .

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Principle 1:

Business should support and respect the protection of internationally proclaimed Human Rights

We strongly believe that sustainability plays an important role in growth of businesses. Guided by our organizational purpose, values and human resource philosophy we are committed to nurturing people, health and safety, environmental stewardship and empowering communities. We firmly support universal human rights not only for our employees but also in the communities where we operate.

Being a responsible corporate citizen, Bharat Aluminium Company Ltd. (BALCO) has always strived to safeguard human rights, its protection and promotion. All our actions are in congruence with fundamental rights like right to equality, right to freedom, right against exploitation, cultural and educational rights.

In line with our Human Resources Philosophy, we are an equal opportunity employer. Composition of the organization reflects the cosmopolitan image of the group. Suitably qualified people from local community are preferred for appropriate roles at our manufacturing locations.

The organization strictly prohibits child labour and applies zero tolerance to any form of discrimination on grounds of sex; religion, place of origin etc and all employees are treated equally at the work place. We duly appreciate the right to freedom of association and collective bargaining.

In collaboration with several NGOs and also with the local government authorities, we have undertaken large scale social development projects with clear focus on Livelihood, Health, Education and Infrastructure near our operations. With an aim to gain & nurture our social licence to operate in the host communities, we work closely with the local communities to enhance their quality of life, empower women, provide self-employment opportunities, basic amenities, health care facilities ,free medical check-ups, education and nutritious food avenues for the poor children, awareness campaigns and medical camps to fight against diseases like AIDS and Cancer.

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Community Development projects taken up by BALCO are as under:

Nutritious and Hygienic Food to 40000 children through centralized Mid Day Meal Kitchen

Mother and Child care through 837 Anganbadi Centres touching lives of around 4 lakh people which resulted in reduced Infant and Mother Mortality rate in the operational villages

Under Natural Resource management 1399 hectares of land in watershed Development project in association with NABARD ,200 Ha of land treated under interim phase during the year .

Under sustainable livelihood program in tribal belt of Kawardha development of orchard on 500 acres of land for 500 families under project ‘WADI’has been undertaken as a sustainable farm activity

Establishment of Cancer Hospital at Raipur under the aegis of Vedanta Medical Research Foundation. Primary cancer detection initiated in rural areas .During the year population of 71090 covered through 26 camps ,90 patients with cancer registered and .21 cases operated in Balco Hospital.

For. rendering Primary Health Services in remote tribal area, Vedanta Rural Health Post established at village Chuiya. During the year the center extended the coverage to 30 more villages increasing the facility for 62 villages.at Korba

Under Specialized Camps – Jaipur Foot provided to 91 needy cases , cataract eye surgery for 1664 patients during the year.

UTKARSH Scholarship – for economically deprived students seeking admission in IITs, NITs & BITS-Pilani This year 8 students benefited

Aiming for Social and Economic empowerment of women, 126 Self Help Groups formed in association with NABARD.

Drinking Water Project – 7 units of Community Drinking Water facilities installed during the year in our mines and Korba villages. Farm irrigation facility provided to progressive vegetable cultivators in Maipat mines

Bio Gas Plants – Promoting renewable energy, this year we added 35 units in collaboration with CREDA.making a cummulative figure of 304 units in neighboring villages

Moving ahead , we have started Vedanta Skill School,in November 2010, a vocational training center for unemployed youth in collaboration with ILFS and aim to train around 1700 children every year from economically weaker sections of the society to facilitate opportunities and job linked livelihoods in trades like sewing machine operators (SMOs) for apparel industry, welding, retail chain management and hospitality services. During the year 259 youth were skilled and employed

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We have also Promoted Vedanta Rehabilitation (Physiotherapy) Centre for differently abled children .in association with Inner wheel Society. We also have a provision to link disability sector with the skill school to provide them an opportunity to live their lives in a more dignified way. We also supported Ankur, a school for Autistic Children by giving them Machines for file/envelope making and a forward linkage to buy their products.

Principle 2 :

Make sure that the organisation is not complicit in human rights abuses.

Bharat Aluminium Company Ltd. ensures strict compliance to the labour laws enacted by the Government of India, to protect the interests and welfare of all its regular workforce as well as outsourced workers.

The organization ensures prompt handling of grievances of employees and customers to uphold basic human rights.

BALCO, in principle and in action emphasizes highest importance towards human rights and ensures that at no point of time these rights are abused.

At all our workplaces, including outsourced activities, it is ensured that appropriate steps are taken by the contractors for safety and welfare of the workers including insurance. A regular monitoring for ensuring the effectiveness of the system is through a periodic structured review of contractor / vendor scorecard.

There is a dedicated Employee Welfare and Industrial Relations department which takes care of employee well being, apart from the welfare officers, safety officers are deputed at various business units.

For prevention of sexual harassment, a complaints committee, is headed by a woman officer, to deal with cases of sexual harassment, if any.

There is a robust review mechanism to monitor all statutory compliances through internal as well as external agencies. Statutory compliances are reviewed on monthly basis at plant and business level, apart from quarterly audits through an external audit firm.

Principle 3: Business should uphold the Freedom of Association and effective recognition of the right to collective bargaining.

There are seven registered unions, having affiliation with their respective national unions. With the representative union, the management, through a structured collective bargaining process enters into a “Wage Agreement” for a period of 5 years. The Long Term Settlement-VIII is operative effective from 01.04.2009 to 31.03.2014, whereby the wage structure, benefits and allowances are decided

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This also includes productivity and work culture interventions.The Management maintains cordial relations with its workers and resolves all disputes and differences, through structured bipartite forums. The management strives to maintain a balanced and cordial industrial relations atmosphere through a transparent sharing of information across all unions.

Besides, there are monthly “Shop Council Meetings” and “Safety Council Meetings” at all our plants with equal representation from the management and the workers.There are several training programs conducted for the workmen, through “Central Board of Worker’s Education” every year. Equal Participation of employees is encouraged in all staff welfare activities.

Principle 4 :

The elimination of all forms of forced and compulsory labour.

Bharat Aluminium Company Limited does not have any forced or compulsory labour as all workers; both regular as well as outsourced are governed by the rules for duty hours as per Factories Act, 1948 and Mines Act.1952.Besides, till date, there has been no incidence of forced or compulsory labour reported in BALCO.In activities that have been outsourced, it is strictly ensured that the labours are paid the appropriate wages, provident fund, and all other statutory requirements are complied with.

There are dedicated Contract Labour Management (CLM) cells in all the plants to monitor the adherence and compliance under various labour laws. There is a robust review mechanism to monitor all statutory compliances through internal as well as external agencies, and a monthly certification towards compliance of all statutes is ensured.

Principle 5:

The effective abolition of child labour.

BALCO ensures strict adherence to the Child Labour (Prohibition & Regulation) Act,1986, which prohibits the engagement of children in certain employments and to regulate the conditions of work of children in certain other employments.

BALCO ensures that no person under the age of 18 years is employed on regular rolls thereby ensuring that child labour is not employed. This is also ensured by obtaining a birth certificate / medical certificate for confirming the age.

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All our outsourced agencies and vendors are required to strictly follow the laws/rules and regulations with respect to Child Labour (Prohibition & Regulation) Act,1986. For this purpose, all contracts awarded by our commercial / purchase departments for various outsourced activities requires the outsourced agencies and vendors to agree towards complying with all statutory requirements under various laws laid down by the

central and the state governments. Zero tolerance is applied to any violation in this regard.

Principle 6:

Eliminate discrimination in respect of employment and occupation.

In line with our Human Resources Philosophy, we are an Equal Opportunity Employer. Composition of the organization reflects the cosmopolitan image of the group. We strongly believe in cultural diversity and are strictly against any form of discrimination in recruitment, place of posting, nature of work, duty hours, compensation and benefits, opportunities for training, promotions etc in the company.

The organization applies zero tolerance to any form of discrimination on grounds of gender; caste, colour, religion, place of origin etc and all employees are treated equally at the work place.

However in congruence to our Human Resource Philosophy we do give preference to suitably qualified people from local community for appropriate roles at manufacturing locations.

The composition of workforce at BALCO is as under:

Total Employee Strength

Executives & Officers (E&O)

Males (E&O)

Females (E&O)

Workmen (W)

Males (W)

Females (W)

SC/ST Community

Other Backward Community (OBC)

General & Others

No. 4644 1529 1354 175 3115 2975 140 871 895 2878% 100 33 89 11 67 96 4 19 19 62

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a) Staff Breakup b) Community Breakup

c) Gender Breakup (E&O) d) Gender Breakup (W)

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e) Region Wise Breakup

BALCO firmly believes in ethical conduct and all employees are required to demonstrate highest ethical standards in their day to day conduct .The company does not allow any kind of behaviour that is perceived as indiscipline, abusive, corrupt, discriminatory or sexually coercive at the workplace. A robust system is in place to tackle with such situations, through a very well defined and laid out process in our Standing Orders for workmen and in Code of Conduct for the management cadre

Principle 7:

Business should support a pre-cautionary approach to environmental challenges.

BALCO, as a responsible corporate citizen, believes in protecting and preserving the environment. To achieve this objective, BALCO has a full fledged environment management team to plan, implement and monitor environment management programmes. All environment management programmes are extensively monitored and effectively implemented.

BALCO has integrated its EMS ISO: 14001 2004, QMS ISO: 9001 2008 and OHSAS: 18001 2007 management systems. BALCO has a policy on Environment, Occupational Health, Safety and Quality.

BALCO continues to give top priority to maintenance and performance improvements of all pollution abatement facilities like air emission and waste disposal facilities at its operating units. Environment impact assessment and risk analysis have been performed for all green field and brown field projects. Carrying capacity study of Korba region to assess the assimilative capacity of pollutants within a radius of 25 Km . All environmental parameters are monitored on regular basis and the emission norms are strictly adhered to.

The newly installed Aluminium smelters of BALCO are based on environment friendly PFPB technology and the old smelter based on VSS technology has been de commissioned.

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Rainwater harvesting and treated effluent recycling is being carried out in all our units to replenish the ground water. Concept of Zero water discharge has been adopted in our Smelter , 540 MW captive power plant and upcoming power and smelter projects.

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Principle 8:

Business should undertake initiatives to promote greater environmental responsibility.

In its pursuit of excellence towards sustainable development and to go beyond compliance, BALCO has taken many initiatives aligned to the Company's policy of Conserving natural resources, raw materials, water and energy by process improvements, recycling and reducing waste.

Learning and development and awareness creation among all concerned have been always at the forefront of BALCO's journey towards becoming world class in environmental performance. All operating units celebrated the World Environment Day, Earth Day, Ozone Day, etc and created environmental awareness among employees and students of neighbouring schools and surrounding communities.

Trained and qualified internal auditors perform internal environmental audits of the environment management system at regular intervals. Third party environment audits like ISO-14001:2004 ,audits by accreditation agency IRQS, and audits by Other competent agencies are carried out on regular basis

BALCO has inculcated a habit of nurturing the environment and in this context, afforestation, maintenance of green belts, gardens, reuse of treated water in horticulture activities have been adopted .

BALCO continued to give top priority to all environmental regulatory compliances at its smelter and mines and tried for optimum water consumption and reuse of treated waste water. Sewage Treatment Plant of 2.5MLD capacity is being installed at Balco township and the water will be reused from November 2011 onwords

BALCO has developed green belt in and around its operating units with a cumulative plantation of around 3.35 lac saplings in FY 2010-‘11.

BALCO in association with the Forest department, has implemented a Wild Life Management plan for a 10 KM radius at its Kawardha and Mainpat Mines.

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Around 30 to 35 percent of the Fly ash generated is utilized in Cement Plants and in Brick manufacturing. Used oil and waste oil are reused by disposing to registered recyclers . Spent pot lining is stored in secured land fill and trials are being carried out in various cement industries for co processing .

Principle 9:

Business should encourage the development and diffusion of environ-mentally friendly technologies.

BALCO stands committed towards encouraging the development and diffusion of environment-friendly technologies.

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The 1 LTPA Aluminium smelter of BALCO based on VSS technology has been decommissioned and is being converted to environment friendly PFPB technology. This technological change will trigger off reduction of Perfluro carbons (GHG), reduction in specific power consumption, there by reducing the CO2 emission

This project has been taken up as Clean Development Mechanism project under Kyoto Protocol, and annual estimated reductions in tonnes of CO2e is 7,98,347. The project is under registration with UNFCCC.

BALCO developed an on line cut off and online power on technology, with which it was possible to cut off and power on pots, with out reducing the line current to 0 KA.

This innovation was critical in reducing PFC emission. This is also a CDM project with an annual reduction of 3,82,661 TCO2 e .

High Concentration Slurry Disposal System has been adopted for Fly Ash disposal in our 540 MW captive power plant.

Hybrid bag filter which is a combination of ESP and bagfilter has been installed in one of the units of 540 MW captive power plant for reduction in emission levels which is first of its kind in India for an existing plant. The same is planned in other Units also.

Principle10:

Businesses should work against all forms of corruption, including extortion and bribery.

BALCO firmly believes that the organization’s reputation is its most valuable asset.

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There is a well defined Code of Business conduct and Ethics in place for conducting the business of the Company consistent with the highest standards of business ethics.

All Financial and commercial transactions are fully automated and conducted transparently through SAP, an Enterprise Resource Planning (ERP) package and are thus least susceptible to fraud.The Company is committed to the elimination of fraud, to the rigorous investigation of any suspected cases of fraud . wherever fraud or criminal act is proven, it is ensured that wrongdoers are appropriately dealt with..

There is a well defined Whistle Blowing Policy in place. Robust procedures have been adopted by the Audit Committee of Bharat Aluminium Company Limited to govern the receipt, retention, and treatment of Complaints and to protect the confidentiality and anonymity of the stakeholders / employees / cases reported.

BALCO also follows a preventive approach by educating the employees through mandatory training and awareness sessions on “Code of Conduct and Whistle Blowing Policy” that are conducted once in every

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financial year. As per Sarbanes-Oxley (SOX) requirement on corporate governance, the employees in the management cadre are also required to submit a declaration to abide by the code.

BALCO has also circulated and placed on company intranet, its Standing Orders and Code of Conduct for awareness of all employees.

Moving ahead, Bharat Aluminium Company Ltd will continue to strive through its values and commitment to uphold the United Nations Global Compact principles by ensuring good corporate governance and corporate social responsibility.

Amit Joshi

Head HR

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