Performance Highlights

Essar Steel Limited (ESTL) reported total income of Rs.1720.23 crore (net of excise) for the quarter ended June 30, 2006 compared to Rs.1652.89 crore in the corresponding period of the previous year, a growth of 4%. EBIDTA for the quarter stood at Rs. 396.49 crore (Rs. 538.86 crore in the corresponding period of previous year). Net profit for the quarter was Rs. 41.13 crore (Rs. 207.71 crore), after providing for finance costs of Rs.180.68 crore (Rs.108.30 crore), depreciation of Rs. 149.19 crore (Rs. 98.17 crore) and Provision for Deferred Tax , MAT and FBT of Rs.21.75 crore (Rs.124.68 crores)

The Company has accounted for the additional interest and depreciation costs arising out of capacity expansion (4.6 million tones per annum) and the merger of pellet and down stream companies. The Company expects the benefits arising out of these initiatives to accrue in the balance part of the year.

Operational Highlights

The production for the quarter ended June 30, 2006 grew by over 9% to 7.06 lakh tonnes (6.46 Lakh tonnes). Total sales during the quarter registered a growth of 7% at 6.11 lakh tonnes compared to 5.73 lakh tonnes in the corresponding period last year. Domestic sales stood at 4.37 lakh tonnes (3.83 lakh tonnes) and the Company's exports stood at 1.74 lakh tonnes (1.90 lakh tonnes) in the quarter. A noteworthy feature of the company's performance was that the share of value added products accounted for over 45 % of total sales during the quarter.

Essar Steel's product portfolio now addresses the high value, discerning customer profile in the automotive, white goods, construction, general engineering and ship building industries. The Company has been able to move up the value chain and add an enviable portfolio of leading Indian and international customers.

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. It is also India's largest exporter of flat steel products.

About Essar Group

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 and construction. It has an asset base in excess of US $ 6 billion (Rs. 27,000 crore).

Unaudited Financial Results for the Period from 1st April, 2006 to 30th June, 2006