Good afternoon Ladies and Gentlemen,
I am pleased to welcome you to the 30th Annual General Meeting of your Company. The Annual Report has been with you for sometime and I believe you must have gone through it in some detail and gathered information on your Company's performance during last year. I would like to share with you some perspectives on how your Company is geared to meet the challenges in an industry that is cyclical and tends to exhibit volatility in demand and supply.

Industry Outlook
Industry consolidation is gathering pace as companies devise new strategies to tackle fragmentation in the industry. China has emerged as the world's largest producer and consumer and exercises considerable influence over the industry, especially in Asian markets. China now produces over 35% of the world output which touched 1.1 billion tonnes last year and it wields considerable influence on the swings in the market place.

Many companies in developed economies are looking at setting up manufacturing facilities in emerging economies that have natural resources, both in terms of raw material and energy. Consolidation has become a major growth strategy, with the highlight of the year being Mittal's successful bid and acquisition of Arcelor. This has given the new entity control over 10% of the world's output. Talks of other acquisitions and mergers are doing the rounds.

India is emerging as a major destination for new facilities in steel making. Global majors like Arcelor and Posco have already made progress in their plans for 'Destination India'. Several State Governments have signed Memorandum of Understanding with a large number of companies wishing to take advantage of the abundance of natural resources and a growing demand for steel. India's per capita consumption of steel will go up substantially as India's GDP is expected to grow at an average of 7.5% annually over the next few years and demand for industrial and consumer goods keep pace.

While the internationalisation of India's steel industry is welcome, the Indian Government needs to address certain critical issues if its goal of 60 million tonnes of steel production by 2012 and 100 million tonnes by 2020 is to be achieved. The Government needs to encourage investments in upstream sectors such as iron ore, coking coal and other vital raw material inputs.

The development of infrastructure support like power, ports and roads should gain momentum so that seamless integration between supplies and markets both in India and abroad can take place. There is also a need to address policy issues in relation to export of iron ore and allocation of iron ore mines to the private sector.
Essar Steel a defining year
In a difficult year for the steel industry, your company put through several measures to ensure its continued growth and place it among a select few international companies that operate in the premium segment of the value chain. The acquisition of Hy-Grade Pellets and Steel Corporation of Gujarat and the integration of our manufacturing facilities are major milestones in this journey. The Company's planned capacity expansion to 4.6 million tonnes per annum is fast nearing completion as also a number of new facilities in the downstream Cold Rolling Complex.

We have invested over Rs.2000 crore in these expansions and modernisation projects and expect that we will realise the full benefits of these investments in the coming years.

Another significant development during the year was our exit from the Corporate Debt Restructuring (CDR) programme. This will not only reduce the average cost of funds but will afford the Company more flexibility in key financial decisions. Your Company's research and development team has made significant progress in developing new products for high end applications. More importantly, the team's ability to bring to market these products quickly and successfully has enabled the marketing team to gain a competitive edge in user segments like automotive, ship building, construction and oil industries.

The expansion of steel making capacity to 4.6 million tonnes is progressing fast and we expect this to be completed by the third quarter of the fiscal year. The expansion combined with additional facilities that we have installed in the downstream complex will ensure that the Company continues to remain ahead in value added products. During the year, we doubled capacity in the galvanizing and pickling lines, installed a Hot Skin Pass Mill and Batch Annealing Furnace. These additions will give your Company a high degree of flexibility as well as quality in its finished products.

Marketing
Two significant achievements of the marketing team have been the winning of its largest ever single order of US Dollar 186 million for the supply of API grade steel and the successful contesting of anti - dumping action in the United States of America. Your Company is the only Indian company to have succeeded in this action. Your Company continues to remain India's largest producer and exporter of flat steel and has won the "Highest Exporter" award from the Engineering Export Promotion Council for yet another year.

Your Company developed grades for high end applications in the automobile and white good sectors which are the most demanding sectors in terms of application and quality. The introduction of Drawing, deep drawing, extra deep drawing and interstitial free steel in the Hot and Cold rolled steel for the passenger car and commercial vehicle segments of the Auto industry has gained us high recognition and helped us win new customers. We have supplied these grades to Hyundai Motors, Maruti Suzuki, Tata Motors, Force Motors, Ashok Leyland, Mahindra & Mahindra, Eicher Motors and Swaraj Mazda. We are in the process of developing higher strength steel grades to offer better strength-to-weight ratio for higher fuel efficiency in the auto segment. Over 45% of your Company's products now fall into the high value segment

We have also penetrated new markets in the segments of furniture making, drums and barrels, elevators industry, electrical industries and panel manufacturers.

Essar Steel is a clear market leader in the large scale infrastructure development sector in the construction industry and is a preferred supplier to EPC companies like L & T, HCC, IVRCL, NCCL etc. Your Company also supplies to Caterpillar and JCB and pre engineered building majors like Kirby, Interarch, Era Metal, Tiger Steel etc, who rely on Essar's 24 Carat Steel. Steel floor decks made of Essar Steel will be introduced in the coming year and we expect that this will further consolidate our position in this segment.

Essar Steel has in a sense, out-paced the Indian Steel Industry in its quest for globalisation by fine tuning its manufacturing processes and product portfolio. We are today poised to take the next big leap in our goal to become one of India's premium producers and exporters of steel. We are confident that our actions of the last two years pave the way for bright and prosperous year ahead.

Conclusion
I must gratefully acknowledge the contribution made by our teams at Bailadilla, Visakhapatnam, Hazira and the marketing and finance teams in Mumbai who have come together to deliver value to the Company and its consumers. The results you see are due to their tireless efforts. I would also be failing in my duty if I do not mention the strong support we receive from our Group companies Essar Power and Essar Constructions who work as an extended family of our company, I also wish to thank our bankers, customers, suppliers, Government authorities and colleagues on the Board for their support.

Thank you for being with us here today and I wish you all a wonderful afternoon.

Chairman

Note: This does not purport to be the proceedings of the 30th Annual General Meeting held on September 30, 2006