Financial Performance

Essar Steel Limited (ESTL) registered a growth of 47% in total income (net) at Rs.2115.49 crore for the quarter ended December 31, 2006 compared to Rs.1441.57 crore in the corresponding quarter of the previous year. EBIDTA for the quarter stood at Rs. 529.44 crore (Rs. 300.67 crore in the corresponding period of the previous year), registering a growth of 76%. Net profit at Rs. 179.56 crore (Rs. 138.44 crore) was higher by 30% after providing for Finance Costs at Rs. 123.17 crore (Rs.124.62 crore), Depreciation at Rs. 148.91crore (Rs. 104.04 crore), Provision for Fringe Benefit Tax at Rs.2.23 crore (Rs. 1.26 crore), Deferred Tax Credit & MAT at Rs. 75.57 crore (Rs.69.38 crore).

Capacity expansion to 4.6 million tonnes completed

During the quarter, Essar Steel completed the expansion of steel manufacturing capacity to 4.6 million tonnes at its Hazira Complex in Gujarat, India. The expansion project was completed in 18 months at an investment of Rs. 1975 crore, which ranks among the lowest for a brown field expansion of comparable scale.

The production of flat products for the quarter under review registered a growth of 14% at 7.55 lakh tonnes as compared to 6.64 lakh tonnes in the corresponding quarter of the last year.

Marketing

Total sales registered a growth of 22% at 7.43 lakh tones with exports showing a growth of 107% at 2.90 lakh tonnes tonnes(1.40 lakh tonnes). Domestic sales were marginally lower at 4.53 lakh tones (4.70 lakh tonnes). The Company's focus on construction, auto and oil & gas segments resulted in a growth of 44% in sales to this segment.

De-listing of equity shares

The Board of Directors has decided to obtain the consent of shareholders to de-list the equity shares of the company from The Bombay Stock Exchange and National Stock Exchange in terms of SEBI (Delisting of Securities) Guidelines, 2003.

Change in Directorships

Shri Rewant Ruia has been appointed as a Director of the Company. Shri Robin Bannerjee has been appointed as Director (Finance) with effect from February 1, 2007 in place of Shri V G Raghavan who stepped down as Director (Finance). However, Shri Raghavan will continue as a Director on the Board.

About Essar Steel

Essar Steel is the largest integrated producer of steel in Western India, with a capacity of 4.6 million tonnes per annum. Its seamless integration ensures total control at every stage of manufacture - from iron ore to finished products. It is also India's largest exporter of flat steel products. Essar Steel has manufacturing locations in Hazira, Visakhapatnam and Bailadilla in India.

About Essar

The Essar Group is one of India's largest corporate houses, with interests spanning the core and infrastructure sectors of industry - steel, oil & gas, power, telecom & BPO, shipping & logistics and construction. It has an asset base in excess of US $ 6 billion (Rs. 27,000 crore). It employs 15,000 people and has offices in over 50 locations world-wide.

Unaudited Financial Results for the Period from 1st April, 2006 to 31st December, 2006