Third Quarter

Essar Steel's revenues for the quarter ended December 31, 2005 stood at Rs. 1441.57 crore as compared to Rs. 1428.95 crore in the corresponding period of the previous year.

The rising costs of inputs like iron ore, gas, iron ore fines and other raw material, coupled with falling prices of finished steel in domestic and international markets had an impact on the profitability. The Company ended the quarter with a net profit of Rs.138.44 crore (Rs.197.54 cr.) after provision for depreciation at Rs.104.04 cr.(Rs.100.73 cr.), exceptional items, charges pertaining to earlier years and taxation(Net Credit) Rs.66.43 cr.(Rs.65.79 cr.(Net Debit).

The completion of the total integration programme, including the commissioning of the Cold Rolling Complex at Hazira, the beneficiation plant at Bailadilla and the slurry pipeline from Bailadilla to Visakhapatnam are expected to safeguard the Company's profitability and growth in the long term.

Nine Month Period ended December 31, 2005

The Company registered a growth of 11.66% in total income at Rs.4683.76 crore for the nine-month period ended December 31, 2005 compared to Rs.4194.63 crore in the corresponding period of the previous year. EBIDTA for the period stood at Rs.1259.93 cr. (Rs.1504.76 crore.). Net Profit at 447.89 crore(317.37) registered a growth 41.13% after providing for Finance Costs at Rs.352.05 crore (Rs.403 crore), Depreciation at Rs. 303.25 crore (Rs. 295.83 crore), Provision for exceptional items, write offs and Tax at Rs.156.74 crore (Rs.488.56 crore.),

Marketing

Total sales registered a growth of 13.65% at 1.8 million tonnes during the nine-month period ended December 31, 2005 as compared to 1.58 million tonnes in the corresponding period of the last year. While domestic sales grew 26% to 1.32 million tonnes (1.05 million tonnes), exports were lower by 10.70% at 0.48 million tonnes (0 53 milliontonnes).

Total sales for quarter stood at 0.610 million tonnes as compared to 0.615 million tonnes during the same period of last year. While Domestic sales stood at 0.47 million tonnes (0.47), exports sales stood at 0.140 million tonnes (0.145million tonnes).

While the Company recorded substantial increase in sales volumes, the softening of prices in both international and domestic markets had an impact on revenues and profits. Prices in international markets came down from USD 600 per tonne to USD 400 per tonne. Prices in India also followed a similar trend reaching a level of Rs. 20,000 per tonne from the earlier levels of Rs. 28, 000 per tonne.

During the period, the company intensified its efforts in the domestic market and found increased acceptance of its value added products in industries like automobiles, construction and shipbuilding. This also enabled the company to protect its margins in the face of high volatility in international markets

Manufacturing

Essar Steel produced 0.66 million tonnes of steel in the quarter ended December 31, 2005, as against 0.58 million tonnes in the same period last year. The Company's production for the nine-month period ended December 31, 2005 grew by 15.6%, with a total production of 1.89 million tonnes (1.64 million tonnes). The Company's plans to increase production capacity to 4.6 million tonnes per annum by the third quarter of this year are on track

About Essar Steel

Essar Steel is the flagship company of the Essar Group and has a capacity of 3 million, which is being increased to 4.6 million tonnes of steel per annum. Its Hazira steel plant is the largest integrated steel plant on the West coast of India. Essar Steel is also India's largest exporter of flat steel products and focuses on value added products and a high degree of customization.

About the Essar Group

The Essar Group is one of India's largest corporate houses with interests spanning the manufacturing and service sectors like Steel, Shipping, Power, Oil & Gas, Telecom and Constructions. The Group has an asset base of over Rs.23,000 crore.

Unaudited Financial Results for the Period from 1st April, 2005 to 31st December, 2005