Aluminium Industries Ltd Management Discussions

A. Economy and Business Outlook

The Indian economy grew at a moderate pace through the stimulus package of the Indian Government to counter the global recession.The private sector remained cautious about the new investments resulting in postponement of big projects.

Power Generation is one of the key drivers of the Transformer and distribution industry. As per the latest estimates, the Country is expected to add huge power generation capacity during the next few years. However, the country is also plagued byhigh power shortage during peak period. One of the key reasons of the power shortage is inadequate T&D network. The state utilities are also suffering from T&D losses as high as 40% which has put heavy burden onthem.

The Government through Rural electrification program is striving to increase the distribution reach of the utilities. This will result into growing demand of products of the T&D industry.

B. Industry Structure and Development, Opportunities andThreats

Your Company is engaged in manufacturing of equipments for power sector and railways.The brand and products of the Company are well established and acceptedby the customers.

With a view to bring down the maintenance cost and improve the reliability of power supply system, Railway Electrification has gone in for state-for-the-art technology as prevalent in the international arena viz., dry cast resin transformers, long creepage solid core insulators and PTFE neutral section. Action has also been initiated for reducing the maintenance cost.

Signaling and telecommunication systems are also upgraded by adopting state-of-the-art technology. Besides speedier movement of traffic, these up-gradation measures contribute towards increase insafely.

As a result of the above, your Company expects a substantial increase in qualitative demand for all the products and the services. We are hopeful these opportunities can be translated for the benefit of the Company and thereby making the Companys operations viable.