Good afternoon ladies and gentlemen,

On behalf of the Board of Directors, I take immense pleasure in welcoming you to the 32nd Annual General Meeting of your Company. Today I would like to dwell on recent developments that have a clear and certain bearing on steel as a business.

Global Economy & Steel Outlook
These are challenging times for the industry. The US-led sub-prime crisis is now on expected lines snowballing into a bigger and deeper financial catastrophe, threatening to destabilize the global economy altogether. Tumbling retail sales, bursting property bubble, sinking stock markets, weakening currencies and declining earnings growth have not only pushed the advanced countries to a likely recession but also seriously undermined the resilience of emerging economies like China and India. Global economy is expected to lose 100-150 basis points of growth this year. High inflation and the liquidity crunch have put the financial system on a risk-aversion mode and this has a downward draft on consumer and capital spending significantly. While we hope the Central Banks and Governments who are actively pursuing damage control measures will finally succeed but the adjustment process for the return to normalcy could be prolonged and painful. As risks spreads are rising and demand is falling, commodity business has now become more vulnerable to cyclical downturn.

After seeing some real good times, steel is for now witnessing signs of some reversal. Though steel prices went up to historical highs in H1/2008, the skyrocketing raw material prices took the sheen off the gains in a major way. Since July steel market is in heavy correction mode on slackening demand and stock liquidation. Chinese steel consumption dropped significantly in last two months. With renewed financial crisis, downsides to the global steel will remain for some time.

Indian Scenario
The Indian economy is witnessing a slowdown, albeit at a moderate pace. Monetary tightening to contain inflation has already taken a toll on property markets and automotive and other consumer-oriented industries. Shrunk liquidity and rising interest rate spreads have significantly affected the business confidence. While the long-term growth story is still intact, the next 2-3 years are testing times for Indian corporates.

In the Indian context, I think the downside to growth story is mainly emanating from supply side constraints. Steel is a burning example. Despite India being bestowed with quality iron ore, technology, skilled manpower and entrepreneurship, major Greenfield projects are not taking off. Most of the projects are derailed due to the problems related to land acquisition, and non-allocation of mines. India therefore had to depend on imported steel. With steel demand quite buoyant, growing at 8-9% per annum, India needs to create more capacity. Moreover that much of urbanization and industrialization still have to play out, Essar believes in the strength of the underlying growth story. Our dreams, ambitions, plans and commitments for the future are a true testimony for that.

Essar Steel
Essar Steel with its cumulative knowledge and learning is now better prepared for downturns if any. Not only have we embarked on scale radar, both in India and abroad, we have also intensified our efforts to cut costs by improving productivity and innovate our production methods. In order to protect us from skyrocketing raw material costs we are actively looking out for captive mines, the efforts of which are yielding positive results of late. To shield ourselves from fall in realization, we are moving up the value chain, producing auto grade steel, ship building plates, steel for the hydrocarbons industry and so on. We also continue our focus on organized steel retailing through more hypermarts, a concept we had pioneered, to cater to the both the SMEs and consumers in semi-urban areas. We have also embarked on customer focus initiatives through setting up of service centers for de-risking our business better. We will continue to pursue the dual strategy of creating critical global size and globally competitive quality facilities and operations.

The year gone by has been a good one for Essar in terms of business performance. The Annual Report and Accounts provide you an idea of the year gone by. Sales volume and revenues have grown by 20 percent and 32 percent respectively. Retail sales through hypermart have registered a growth of 245 percent. With doubling of capacity at Hazira the company has become the largest flat steel manufacturer in the private sector. Given our overall performance and future growth prospects, World Steel Dynamics, the New York-based steel consulting firm has rated Essar as one of the world class steel makers.

I would like to thank profusely all the stakeholders, including our shareholders bankers and financial institutions, Government authorities, employees for their abiding faith and support they have provided.

Chairman

Note: This does not purport to be the proceedings of the 32nd Annual General Meeting held on September 29, 2008