Essar Oil

The Directors have pleasure in presenting the Eighteenth Annual Report
 together with the audited accounts of the Company for the financial
 year ended March 31, 2008.
 
 FINANCIAL RESULTS
 
                                                         Rs. in Crore
                                           2007-2008        2006-2007
 
 Total Income                                 576.78           484.37
 
 Profit / (Loss) before Depreciation and Tax  (41.54)          (50.04)
 
 Less: Depreciation/Amortisation                2.53             4.51
 
 Profit / (Loss) before Taxes                 (44.07)          (54.55)
 
 Less: Provision for Income 
 Tax / Foreign Tax/                            (2.89)           12.94 
 Deferred Tax
 
 Liability / Fringe Benefit Tax
 
 Net Profit/(Loss) after tax                  (41.18),         (67.49)
 
 Add: Balance brought forward 
 from previous year                           (20.27)            7.71
 
 Add: Transfer from Foreign Project Reserve    10.00            39.51
 
 Total amount available for appropriations    (51.45)          (20.27) 
 
 Less: Appropriations
 
 (a) Foreign Projects Reserve                    -                -
 
 (b) Debenture Redemption Reserve                -                -
 
 (c) Transfer to General Reserve                 -                -
 
 (d) Proposed Dividend                           -                - 
 
 Balance to be carried to Balance Sheet       (51.45)          (20.27) 
 
 
 REFINERY COMMERCIAL PRODUCTION
 
 It is indeed a pleasure to inform you that your Companys Refinery at
 Jamnagar has commenced commercial production effective 1st May, 2008.
 Information on operational and financial performance, etc. of the
 Company for the financial year is given in the Management Discussion
 and Analysis which is setout as Annexure B to the Directors Report
 and- has been prepared in compliance with the terms of clause 49 of the
 listing agreement with Stock Exchanges.
 
 SHARE CAPITAL
 
 During the year, the Company allotted 34,227,018 equity shares of
 Rs.10/- each to the overseas depository for Global Depository Shares
 (GDSs) on allotment of GDSs aggregating to US0,787 million to
 Promoters on preferential issue basis.
 
 Post Balance Sheet date, the Company further allotted 27,771,948 equity
 shares of Rs.10/- each on allotment of second tranche of GDSs
 aggregating to US9,418 million to Promoters on preferential issue
 basis.
 
 The funds have been raised pursuant to approval granted by the
 shareholders at the Extraordinary General Meeting held on 18th
 December, 2007 for expansion of oil refining capacity at Vadinar,
 District Jamnagar.
 
 DIRECTORS
 
 Shri Naresh K Nayyar was appointed as Managing Director effective 15th
 October, 2007. Shri Prashant S Ruia, Shri Anshuman S Ruia and Shri K N
 Venkatasubramanian retire by rotation at the ensuing Annual General
 Meeting and offer themselves for re-appointment. Brief resume of the
 directors seeking reappointment, together with the nature of their
 expertise in specific functional areas and the names of the companies
 in which they hold directorships and membership of committees of the
 Board, as stipulated under clause 49 of the listing agreement with the
 Stock Exchanges are given in Notice convening the ensuing 18th Annual
 General Meeting, forming part of the Annual Report.
 
 Shri Awadesh N Sinha, resigned from the Board on 31st July, 2008. The
 Board wishes to place on record its appreciation for the guidance and
 valuable services rendered by Shri Awadesh N Sinha during his tenure as
 member of the Board.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of section 217(2AA) of the Companies Act,
 1956, it is hereby confirmed:
 
 (i) that in the preparation of the accounts for the financial year
 ended 31 March, 2008, the applicable accounting standards have been
 followed along with proper explanation relating to material departures;
 
 (ii) that the Directors have selected such accounting policies and
 applied them consistently and made judgements and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for that period;
 
 (iii) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 (iv) that the Directors have prepared the accounts for the financial
 year ended 31st March, 2008 on a going concern basis.
 
 CORPORATE GOVERNANCE
 
 In terms of clause 49 of Listing Agreement with the Stock Exchanges, a
 certificate from Auditors of the Company on compliance of conditions of
 Corporate Governance is annexed to the Directors Report as Annexure C.
 A report on Corporate Governance as provided in clause 49 of the
 Listing Agreement is included in the Annual Report.
 
 PARTICULARS OF EMPLOYEES
 
 Information as per section 217(2A)of the Companies Act, 1956 read with
 the Companies (Particulars of Employees) Rules, 1975, as amended, is
 given in the Annexure forming part of this Report. However, as per the
 provisions of section 219(1 )(b)(iv) of the said Act, the Report and
 Accounts are being sent to all shareholders of the Company excluding
 the statement of particulars of employees u/s 217(2A) of the said Act.
 Any shareholder interested in obtaining a copy of this statement may
 write to the Company Secretary, for the same, at the Registered Office
 of the Company.
 
 ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 
 The particulars as prescribed under section 217(1)(e) of the Act read
 with the Companies (Disclosures of Particulars in the Report of Board
 of Directors) Rules, 1988 are setout in Annexure A to this Report.
 
 FIXED DEPOSITS AND DEBENTURES
 
 Your Company has not accepted any deposits from public under section
 58Aof the Companies Act, 1956 during the financial year under report.
 
 During the financial year the Company repaid Rs.63.06 crore to the
 debenture holders as per the terms of repayment under schemes of
 arrangement / compromise with the debenture holders.
 
 SUBSIDIARY COMPANIES
 
 During the financial year, Essar Oil Vadinar Limited and Essar Energy
 Overseas Limited have become subsidiaries of the Company apart from the
 existing subsidiary, Vadinar Power Company Limited.
 
 The Central Government has granted exemption from attaching the Balance
 Sheet, etc. of the subsidiaries to the Annual Report of the Company
 pursuant to section 212, of the Companies Act, 1956.  Accordingly, the
 said documents of the subsidiary companies are not being attached to
 the Annual Report. Financial information of the subsidiary companies,
 as required by the order, is disclosed in the Annual Report. The Annual
 Accounts of the subsidiary companies will be made available upon
 request by any of the investors. These documents will also be available
 for inspection during business hours at the Registered Office of the
 Company and that of the subsidiary companies.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 The Consolidated Financial Statements of the Company and its
 subsidiaries, prepared in accordance with Accounting Standard AS-21 on
 Consolidated Financial Statements form part of the Annual Report.
 
 AUDITORS AND AUDITORS REPORT
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, Auditors
 of the Company hold office until the conclusion of the ensuing Annual
 General Meeting.
 
 M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, have
 informed the Company that, if appointed, their appointment will be
 within the limits prescribed under section 224(1 B) of the Companies
 Act, 1956.  Accordingly, the members approval is being sought to their
 appointment as the Auditors of the Company at the ensuing Annual
 General Meeting.
 
 The observations of the Auditors in the Audit Report are explained
 wherever necessary in the appropriate notes to accounts and are self
 explanatory.
 
 ACKNOWLEDGEMENT
 
 The Board wishes to express appreciation and place on record its
 gratitude for the faith reposed in and co-operation extended to the
 Company by the Government of India, State Governments, various
 Government Agencies / Departments, Financial Institutions, Banks,
 Customers, Suppliers and Investors of the Company. Your Directors place
 on record their appreciation of the dedicated and sincere services
 rendered by the employees of the Company.
 
                           For and on behalf of the Board of Directors
  
 Mumbai                                      S N RUIA
 31st July, 2008                             Chairman