Good Morning Ladies and Gentlemen,

On behalf of the Board of Directors, I have pleasure in welcoming you to the 17th Annual General Meeting of your Company. I will take a few minutes of your time to take you through the most eventful year in the history of your Company. But before that let me give you a quick overview of the global scenario in an industry which is critical to the growth of any economy, especially developing nations such as ours.

The See-Saw continues

When we met at this time last year, crude oil prices had settled down in the low USD 60s per barrel after a year of high volatility. The see-saw continued during last year and as we speak today, crude is trading around USD 80 per barrel. Demand however seems robust and it is expected that by the year 2030, demand for oil will reach 118 million barrels per day from the current levels of approximately 85 million barrels per day. Over 70% of this growth will come from developing nations like China, India and other rising new economies. The relative insensitivity of demand to price increases, leads us to believe that if we are able to plan and execute our technology and capacity enhancements in a strategic manner, we could be at the top end of Gross Refinery Margins (GRM). This is precisely what our managers are working on as we seek to enhance capacity in two phases - to 16 million tonnes per annum in the second phase and then to 34 million tonnes per annum in the third.

A Milestone Year

The Annual Report gives details of the most significant event in your Company's history i.e. Commissioning of the CDU/VDU, the primary units of the Refinery Project in November 2006. This makes your Company one of India's select few technologically contemporary refiners accounting for close to 10% of the country's refining capacity. The commissioning of the primary refinery units marks the first link in the chain making us a fully integrated 360o oil and gas major.

It is not just the refinery project which contributed to this milestone year. In the E&P Division, we were awarded two blocks in Assam, under NELP VI, for which we bid in a consortium. Your Company commenced production of crude oil in the Mehsana fields and we expect to quicken the pace of commercial production during the current year. We have completed seismic surveys in our Myanmar blocks and drilling activities are currently in progress. Your Company has undertaken drilling of core wells in Raniganj and multi lateral drilling is expected to begin shortly.

The Company took a three week planned shut down of the primary Refinery units in order to stream line operations and integrate new units required to complete the refinery and the process of technology up gradation. This has been successfully done and the primary refinery units are back on stream. The commissioning process of several secondary units such as the FCCU, DHDS, ARU, SRU and three new treating units is well under way. Meanwhile, the primary units as part of the trial run, continued to produce several intermediate and final products meeting international standards. Given the lack of a proper retail pricing mechanism, the Company has relied on export markets to ensure adequate contribution and profitability.

The second and third phases of capacity expansion will equip the Refinery to manage high levels of complexity and technology and bring it on par with the most modern refineries currently in operation. We believe that this will put your Refinery in the top echelon of producers as only upcoming complex new refineries will have this capability.

Inspite of our competitive disadvantage due to subsidies being provided by the Government to the PSU marketing companies on retail prices of motor spirit, diesel and other domestic fuels, we have been able to retain a meaningful presence in our retail network. In fact, we have been successful in strengthening our retail network to over 1000 outlets and have managed to retain our franchisees who have also undergone some amount of stress due to administrative price controls. Private oil companies like Reliance, Shell and your Company who have in the last few years built a retail network are jointly representing to Government to remove price distortions between the public sector and private producers or allow greater market driven pricing.

Conclusion

Finally, I must express our deep felt gratitude and thanks to our employees for their tremendous efforts in completing the commissioning of the refinery.

I would also like to thank our colleagues at Essar Construction, Essar Shipping & Logistics and Essar Power for their contribution to the project.

I express my thanks to our project management consultants, business associates, suppliers, and franchisees for their support through the year. We are grateful to our bankers and financial institutions as well as the Central Government and the Government of Gujarat for their support and guidance.

Finally, I sincerely acknowledge the support from you, our shareholders and my colleagues on the Board for your support and continued faith in Essar Oil.

Thank you,

Chairman

Note: This does not purport to be the proceedings of the 17th Annual General Meeting held on September 29, 2007