Financial Performance
Essar Steel Limited (ESTL) registered a growth of 30.97% in total income at Rs.2081.58 crore for the quarter ended September 30, 2006 compared to Rs.1589.30 crore in the corresponding period of the previous year. The growth in net profit was 51.70% at Rs. 154.34 crore (Rs.101.74 crore) after providing for Finance Cost at Rs.136.86 crore (Rs.119.13 crore), depreciation at Rs. 149.01 crore (Rs. 101.04 crore), Provision for Fringe Benefit Tax at
Rs.1.13 crore (0.92 cr.), Deferred Tax at Rs. 78.81 crore, (Rs.33.91 cr.), Provision for current Tax at Rs. 7.06 crore (Credit) (Rs.12.54 cr.).

Manufacturing
The capacity expansion programme from 3 million tonnes to 4.6 million tonnes par annum is progressing rapidly and as part of this activity, the Company had to plan a major shut down for up-gradation of its steel mill and allied facilities. This, coupled with the unprecedented floods in Surat impacted the production of steel at Hazira. In spite of this, steel output increased by 18% to 6.86 lakh tonnes (5.81 lakh tonnes) for the quarter ended September 30, 2006.

During the period under review, input costs continued to rise, especially those of critical raw materials such as iron ore. The Company also incurred much higher costs on energy due to rising prices of LNG.

Marketing
Total sales registered a growth of 12.53% at 6,92,476 tonnes for the quarter ended September 30, 2006 as compared to 6,15,391 tonnes in the corresponding period of last year. During the period, the company increased its penetration in the European and NAFTA regions along all product categories. It also has initiated business in Africa. The Company developed grades for high-end applications in the highly demanding sectors of automobiles and white goods. The introduction of drawing, deep drawing, extra deep drawing and interstitial free steel in Hot and Cold rolled steels for the passenger car and commercial vehicle segments of the Auto industry has gained us high recognition and helped us win new customers. The Company has also penetrated new markets in the segments of furniture making, drums and barrels, elevators, electrical industries and panel manufacturers. It has emerged as a market leader in the large-scale infrastructure development sector in the construction industry and is a preferred supplier to EPC companies and Pre Engineered Building majors. The company continued with its long term goal of shifting the sales-mix towards niche segments by focusing on API and structural grade steels. Currently, over 45% of company's products fall in the value added segment. Galvanised products performed well in the export market with notable achievements in NAFTA and Middle East regions.

About Essar Steel
Essar Steel is the largest integrated producer of steel in Western India and also India's largest exporter of flat steel products. Its capacity of 3 million tonnes is currently being enhanced to 4.6 million tonnes per annum.

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).