Financial Performance

Essar Steel Limited (ESTL) registered a growth of 17.23% in total income at Rs.3242.19 crore for the half year ended September 30, 2005 compared to Rs.2765.68 crore in the corresponding period of the previous year. The growth in net profit was 158.24% at Rs. 309.45 crore (Rs.119.83 crore) after providing for finance costs at Rs.227.43 crore (Rs273.84 crore), Depreciation at Rs. 199.21 crore (Rs. 195.10 crore), Provision for Fringe Benefit Tax at Rs.1.62 crore (nil), Deferred Tax at Rs. 149.52 crore, (Rs.17.08), Provision for Tax at Rs. 20.91 crore (Nil).

Manufacturing

ESTL's steel production during the period grew by 12%, ending the half year with a total production of 12.27Lakh tonnes (10.94 Lakh tonnes). The production would have been higher but for a major planned shutdown of the plant for a fortnight for up-gradation of the mill as part of increasing the capacity from 3 MTPA to 4.6 MTPA. The input costs of gas, iron ore and iron ore fines went up during the period under review.

Marketing

Total sales registered a growth of 12% at 11.88 Lakh tonnes for the half year ended on September 30, 2005 as compared to 10.58 Lakh tonnes in the corresponding period of the last year. While Domestic sales grew 24% at 8.52 Lkh Tonnes (6.89 Lakh Tonnes), Exports were lower by 9% at 3.36 Lakh tonnes (3.69 Lakh tonnes).

During the period, the company increased its penetration in the domestic market and reduced its exports due to volatile global market conditions. API grade and structural grade steel led domestic growth. The Company introduced CRCA products in the domestic market. Value added grades of HR coils were approved by new customers in power and engineering
segment. 54% of the HR exports was of specialty grades like Line Pipe API, Hi tensile grades and plates. Demand is stable from all sectors of the economy.

Total Integration

The 1.2 million tonne cold rolling complex was inaugurated during the period. The slurry pipeline and the iron ore beneficiation projects were completed and are due for commissioning. With this, Essar Steel has completed the integration, the benefits of which are expected in the coming years.

About Essar Steel

Essar Steel is the flagship company of the Essar Group and has a capacity of 3 million being increased to 4.6 million tonnes of steel per annum at its modern steel plant at Hazira, Gujarat, India. The Company is one of India's largest fully integrated steel manufacturers - from iron ore to ready-to-market products. Essar Steel is India's largest exporter of flat steel products and focuses on value added products and a high degree of customization.

Unaudited Financial Results for the Quarter from 1st July, 2005 to 30th September, 2005