Dear Shareholders,
 
 It gives me immense pleasure to present our annual report for the
 financial year ended March, 2012.  The year gone by will be known as
 stepping stone in the history of Essar Oil, which transforms our dream
 to build a highly complex world-class refinery into reality. We did
 encounter several challenges in our journey, but, our resilience has
 paid off and we have emerged successful despite the odds and have
 delivered on promises made to our shareholders. I wish to reassure you
 that we are committed to delivering long-term sustainable value for our
 shareholders. I am deeply indebted to each one of you for your patience
 and faith in your Company.
 
 Business Outlook We are optimistic and look forward to a positive
 business scenario. One of the reasons for our optimism is the outlook
 for the
 
 Indian economy. Notwithstanding the recent policy impasse and adverse
 macroeconomic factors, over the last five years, the Indian economy has
 grown around 35% pulling many people out of poverty and increasing the
 wealth of the middle-class. As more and more people in India see roads
 opening up to a better way of life, they want to improve their living
 conditions.  Fundamental to these needs is the provision of energy; be
 that electricity or petroleum products for cars and other
 transportation.  Demand for energy is rising rapidly and our
 world-class Vadinar refinery is fully-geared to cater to the
 requirement of petroleum products to the Indian as well as
 international markets.
 
 In the long-term, India is very well placed since it has a young
 population, not only in comparison to advanced economies, but also in
 relation to the larger developing countries in Asia and Latin America.
 As a result, the working population is expected to increase by around
 30% and the urban population is expected to increase from around 31%
 today to over 40%, over the next 20 years. If India is to meet its 12th
 Five Year Plan target of 9% GDP growth each year from 2012 to 2017,
 then according to India''s Planning Commission, this will require
 energy supplies to grow at a rate of between 6.5% and 7% per year,
 which is above the rates of the last five years.
 
 Strategy
 
 Our strategy is to create a world- class, low-cost, integrated energy
 company focused on India and positioned to capitalise on India''s
 growing energy demand. Our focus has now shifted from being a
 project-focused company to an operating company. As an operating
 company, we would like to focus on operational excellence and implement
 innovative practices in our business to set new benchmarks for the
 industry. The completion of the Vadinar refinery expansion and
 optimisation projects brings the major capital expenditure cycle in our
 refining business to an end. The focus will now move to ensuring that
 all assets operate in line with the expectations, and we start to
 deliver the promised cash flows and profitability which will be
 utilised to de-leverage our balance sheet and maximise the
 shareholder''s value.
 
 People
 
 An organisation breathes through the lungs of its people and flies on
 the strength of their dreams. No asset can be built, operated and
 managed without people. I am grateful to our employees and their family
 for their commitment to support the vision to convert the Vadinar
 refinery into a leading refinery in the country today.
 
 There are regulatory issues like approvals of pricing for CBM, complete
 deregulation of petroleum retail marketing etc.  which are affecting
 the growth potential. During last few months, we have observed a big
 push from the Central Government on various reform agenda which we
 believe, will bring our country''s GDP back on 8%-9% growth
 trajectory.
 
 These hurdles, however, will not deter us from our ambitions to become
 a world-class integrated energy player. We are committed and determined
 to create enduring and long-lasting value for all our stakeholders.
 
 Best wishes,
 
 Shashi Ruia 
 
 Chairman