The correct option is C S is a powerful reducing agent
Lithium being a group 1 element reacts with H2 to form a hydride. So, P is LiH which reacts violently with water to give lithium hydroxide (basic in nature) and hydrogen gas. LiH reacts with AlCl3 to form a reducing agent LiAlH4 which is the product S.
Al in AlCl3 is in the same oxidation state with that of Al in LiAlH4.