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1 inum Banking Cement Commercial Vehicle Cotton & Cotton Ya omponent Business Process Management (BPM) Construction Educat arel Industry Chlor-Alkali CRAMS Industry Crude Oil Gems & J oal Natural Gas Pesticides Power Generation Steel Pa anganese Ore Pharmaceutical Refining & Marketing eight Transport Chlor-Alkali Shipping Wheeler Tyre ewable Energy Sources n Made Fibre Banking Housing Finance Passenger Vehicl Hospital Industry Roads & Highways Zinc & L Shipbuilding Aluminum nking Express Service Steel Two TheWheeler Gems & Jewellery Aluminium Express Service Cr Passenger Vehicle CRAMS Industry otel ads Freight Transport ed Industry May 2014 Sugar Tractor Aluminium Telecom-Wireless Reta Telecom Tower Gems & Jeweller Seed Industry Cotton & Cotton Yarn Tracto Industry Pesticide Natural Gas

2 CARE Research is of the opinion that incremental growth for aluminium demand will be supported by economic recovery in the developed world along with steady demand from China and India. However, in developed economies much of the impetus to growth would remain uneven and concentrated in select countries such as USA, Canada, France, UK and Germany. Recovery in advanced economies to support aluminium demand growth Global Demand-Supply balance to be in sustainable deficit CARE Research expects global demand for primary aluminium to grow at a CAGR of about 5.4 percent outpacing a 5 percent CAGR increase in production. Consumption is expected to increase, largely due to steady demand from the developing economies such as China and India, and gaining further support from the United States. On the other hand, cuts in production levels by top producers will move the market into a marginal deficit zone from the end of CY14. Realizing the potential of white metal which recorded a CAGR growth of 10.7 percent during FY03 to FY12, domestic aluminium producers are in process of expanding their alumina and aluminium capacities for meeting the domestic demand as well as tapping the international market. CARE Research expects that the domestic alumina capacities will expand at a CAGR of 9 percent whereas smelter capacities to increase at a CAGR of 8.2 percent during FY14 to FY18. Output from these additional capacities is likely to turn India into a net exporter of the metal going ahead. Domestic Capacity expansion leading to surplus position in the long run Structural oversupply of white metal to keep global price weak Continued capacity expansion by China, India and other low cost producing regions such as the Middle East, has virtually kept the global aluminium industry in the oversupply zone. Also, Inventory levels of the white metal at London Metal Exchange (LME) certified warehouses have increased since CY08. In this context, the average price of aluminium has declined from an average of US$ 2,226 per tonne in CY08, to an average of US$ 1,846 per tonne in CY13, its lowest level since the impact of the financial crisis in CY09. CARE Research expects the struggle of aluminium prices to continue in the coming year and hover around US$ per tonne during CY14.

3 SECTION I CARE Research Outlook Global Outlook Global demand growth to maintain its pace Recovery in advanced economies to support aluminium demand growth China to grow at a slower rate on a higher base while US shows signs of recovery Global Supply: No significant improvement in operating rates Global Demand-Supply balance to be in sustainable deficit Structural oversupply of white metal to keep global price weak Domestic Outlook Stable rise in domestic demand Power Transmission & Distribution, drive to electrify rural India Automobiles demand to improve in the medium to long term period Packaging sector Building and construction activity to increase at a moderate pace Increasing disposable income to drive domestic demand for consumer durables Capacity expansion leading to surplus position in the long run Both alumina and aluminium production to exceed domestic consumption levels Industrial Profitability Average industry margins on a downward journey Profitability to marginally improve in FY15 SECTION II Industry Section Global demand & supply Global demand-supply scenario CY13: The year in numbers & statistics End-user consumption pattern globally Country-wise consumption break-up of primary aluminium Chinese dominance continues European Union: Dark clouds continue to hover over Euro skies Domestic demand & supply Domestic demand scenario Phases

4 o o FY02- FY08: The Growth phase FY08-FY13: Moderation phase Domestic end-use consumption Domestic Supply Raw material scenario Cost of conversion of bauxite into alumina Alumina Bauxite Caustic Soda Cost of conversion of alumina into aluminium Industry Overview Introduction Aluminium Product life cycle History of the metal Classification of the industry o Primary Producers o Secondary Producers Characteristics of the Industry Bauxite Reserves (Geographical distribution) Global smelter capacities Government Regulations SECTION III Company Section Hindalco industries Ltd National Aluminium Company Ltd (NALCO)

5 LIST OF GRAPHS SECTION I CARE Research Outlook Global Outlook CAGR growth in demand during CY08 to CY13 and forecasted for CY14 to CY18 Select country-wise GDP Growth (CY14-CY18) Aluminium consumption growth (CY14-CY18) Construction of new housing units in USA (CY06-CY13) Automobile production trend in USA (CY06-CY13) Aluminium end-use consumption pattern in USA (CY03 & CY13) Upcoming capacities and global operating rates (CY14- CY18) Global demand-supply scenario (CY05-CY18) Global aluminium price forecast (CY14-CY15) LME aluminium Inventory (CY08-CY13) Domestic Outlook End-use consumption pattern for the domestic aluminium industry (FY13-FY18) 11th Plan target and achievement 12th Plan focus remains on 765KV & 500kv HVDC lines Category-wise automobile sector demand (FY12, FY13 & FY18) Indian: Rural-Urban mix (FY1951, FY11) Q-o-Q performance of Real Estate companies (June-2010 December 2013) Per capita income at constant prices (Rs.) (FY08-FY13) Surplus/deficit scenario in the domestic market (FY09-FY18) Industrial Profitability Increase\decrease in cost of production and realizations (FY09-FY13) Y-o-Y Percentage increase in key raw material cost (FY09-FY13) Cost of production and expected change in PBIT Margins (percent) (FY09-FY15) SECTION II Industry Section Global demand & supply Global primary aluminium surplus/deficit scenario (CY00-CY13) Country-wise share in global primary aluminium consumption (CY13)

6 Aluminium end-use consumption pattern in developed countries Change in USA end-use consumption pattern US automobile production trend (CY06-CY13) Industrial value added China (CY04-CY13) Investments in fixed assets China (CY04-CY13) China-Value added of construction industry (CY04-CY13) China- Consumer goods sales (CY04-CY13) EU automobile production trend (CY04-CY13) EU Construction Index (CY04-CY13) Domestic demand & supply Domestic aluminium apparent consumption trend and availability (FY02-FY14) Industry-wise aluminium usage Aluminium properties and major usage Aluminium wire & extrusions production (FY06-FY13) Growth of transmission lines at the end of each plan (6-12 th plan) Index of Industrial Production growth (Y-o-Y) (FY06-FY13) Growth in GDP and construction activity at factor cost (FY06-FY13) India: Per capita Income at constant prices (FY08-FY13) Domestic aluminium production and capacities (FY04-FY14) Raw material scenario Global bauxite reserves and production (CY00-CY13) State-wise percentage share of proven reserves in India (As on April 1, 2010) Bauxite production trend in India (FY08-FY13) Caustic soda domestic demand-supply in India (FY08-FY14) Company wise capacity and production FY13 Caustic Soda: Domestic & International prices Domestic alumina production and capacities Domestic alumina surplus/deficit situation (FY04-FY14) Industry Overview Aluminium life cycle World Bauxite Production (CY13) World Bauxite Reserves (CY13)

7 Country-wise key global bauxite reserves (CY13) Country-wise total primary aluminium smelting capacities (CY13) Top 10 world primary aluminium producing companies (CY13) SECTION III Company Section Cost component as % of net sales (FY13) Raw material consumption break-up (FY13) Aluminium smelter capacity trend (FY08-FY13) Primary aluminium production trend (FY08-FY13) Sales and PBIDT Margin (%) (FY08-FY13) Share holding pattern (As on March 31, 2014) LIST OF TABLES SECTION I CARE Research Outlook Global Outlook Demand drivers for the Chinese aluminium industry (CY13-CY18) Expected demand growth in China and USA (CY03,CY13 & CY18) Country-wise share in global aluminium consumption (CY13-CY18) Major countries share in world smelter capacities (percent) (CY13,CY16 & CY18) Domestic Outlook Demand drivers and growth rates (FY13-FY18) Inter Regional Transmission Capacity - plan wise (MW) Domestic Aluminium smelter capacities (FY13-FY18) Domestic alumina capacities (FY13-FY18) Aluminium: Company wise production (FY07-FY12) Alumina: Company wise production (FY07-FY12)

8 SECTION II Industry Section Global demand supply situation Country-wise consumption pattern of primary aluminium (in percentage terms) Domestic demand & supply India: aluminium share in 2-wheeler segment Capacity for aluminium semis during SECTION III Company Section Segmental Analysis Company Background Performance Matrix

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