Good afternoon ladies and gentlemen,

On behalf of the Board of Directors, I have pleasure in welcoming you to the 31st Annual General Meeting of your Company. I would like to spend a few minutes on some key issues that I believe are important and also give you an idea of some major highlights of the year gone by.

The global industry has been through a remarkable period of growth since 2003 and apparent consumption of steel has increased at an average 7% yearly growth to touch a level of over 1.1 billion tonnes last year. Aided by buoyant economic growth, especially in infrastructure and construction activities in the developing economies, steel production has also kept pace with demand.

Even as raw material prices rose sharply, steel companies were able to strengthen profitability levels due to the robust demand. The year 2006 - 07 was also marked by two very significant events for the industry - The acquisition of Arcelor by Mittal Steel and Corus by Tata Steel. We believe that this is good for the industry as it brings advantages of scale, consolidation, synergies and R & D to help steel gain its pre-eminent position as the material of choice.

In India, with GDP growth rates of 8 to 9%over the last few years, the potential for the steel industry is significant, as the Government has committed heavy investments in the development of roads, ports, airports, and railways. In addition, the growth in the construction and allied sectors augurs well for the industry. India's automobile and white goods industries are also growing at double digit rates and this is good news for high value added steel producers like your Company.

Challenges for the industry

As the Indian steel industry integrates more and more with the global industry, it will have to tackle some key issues for retaining its competitive edge and increasing its international presence.

We need to keep a close watch on rising costs of raw materials, especially iron ore and other critical capital and consumable material. Rising energy costs will be another major source of concern.

Technology up-gradation in existing steel mills and investments in new capacities will need to take into consideration environmental challenges and new emission control standards.

The availability of skilled workforce both at the management and operational levels will be a huge challenge for us as the industry needs to wean away talent from the seemingly more attractive consumer and IT industries. Training and development issues will also be major issues.

The year behind and the road ahead

The Annual Report and Accounts give you an idea of the year gone by. To re-iterate, your Company completed its capacity expansion programme to 4.6 million tonnes in the third quarter of FY 07. The Company's thrust in three key areas - exports, value addition and retail sales - was rewarded with great success. Exports for FY 07 at Rs.3000 crore, accounted for 30% of total turnover.

Value added products accounted for 60% of sales and the retail foray of the Company succeeded beyond our expectations. Our retail network is now well established and the company has 65 retail outlets across the country, all of which are close to medium and small consumers. We believe that this pioneering effort will set a trend for steel marketing in the country as more and more customers are able to access the products of the Company directly, resulting in transparency, quick deliveries and a price mechanism that is favourable. We are proud of the fact that the Essar Steel Hypermart is the only retail chain of its size and scale in India.

The tremendous advances in IT enabled manufacturing have benefited your company by bringing in automation in manufacturing, inventory and distribution management and sales planning processes. Your Company is in the process of implementation of i2 projects in production planning and expects to have the SAP- ECC 6.0 version running at its plant in Hazira by the end of the current fiscal.

I mentioned earlier three major challenges that the industry needs to face as it readies for increases in capacity and modernisation of technology. I am pleased to state that we have taken some steps to address these challenges.

The completion of our integration programme ensures that we have been able to alleviate to some extent the increase in raw material prices by managing inventories better, increase productivity levels and moving up the value chain to ensure better contribution.

Environmental issues may actually be an opportunity for steel manufacturers such as your Company to avail of carbon credits, as we are a highly environmentally conscious producer. We have begun the process of applying for carbon credits and expect to see benefits in the coming years.

We are addressing issues of shortage of skilled manpower well in advance by creating learning academies that will focus on practical competence and advanced software management technologies.

I am pleased to state that the first quarter of the current year saw your Company posting a record EBIDTA of Rs. 641 crore. In August 2007, we recorded our highest monthly production of 294,000 tonnes of Hot Rolled Coils.

All these achievements are the result of one critical resource that we have nurtured over the years. Our employees have shown exemplary dedication and perseverance in the pursuit of seemingly impossible tasks. These extrapreneurs, as I call them, are spread across all functions in the company - manufacturing, marketing, R & D, finance, human resources, logistics and technology. As we move forward, I am sure that the future is not only well protected, but may in fact be defined by these assets. I wish to acknowledge my gratitude to them.

I would also like to thank our bankers, financial institutions, Government authorities and you our shareholders for your support during the year.

Chairman

Note: This does not purport to be the proceedings of the 31th Annual General Meeting held on September 28, 2007