MIRA INFORM REPORT

 

 

Report Date :

30.08.2012

 

 

 

 

 

 

Web Site :

www.widma.com

 

 

IDENTIFICATION DETAILS

 

Name :

KENNAMETAL INDIA LIMITED (31.01.2006)

 

 

Formerly Known As :

KENNAMETAL WIDIA INDIA LIMITED

 

 

Registered Office :

8/9th Mile, Tumkur Road, Post Bag 7300, Bangalore – 560 073, Karnataka

 

 

Country :

India

 

 

Financials (as on) :

30.06.2011

 

 

Date of Incorporation :

21.09.1964

 

 

Com. Reg. No.:

08-001546

 

 

Capital Investment/ Paid-up Capital:

Rs.219.782 Millions

 

 

CIN No.:

[Company Identification No.]

L27109KA1964PLC001546

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

BLRK05838A

 

 

PAN No.:

[Permanent Account No.]

AACCK4472B

 

 

Legal Form :

A Public Limited Liability company. The company’s Share are Listed on the Stock Exchange.

 

 

Line of Business :

Manufacture of Hard Metal Products and Machine Tools

 

 

No. of Employees:

Not Available

 

 

RATING & COMMENTS

 

MIRA’s Rating :

A (62)

 

RATING

STATUS

PROPOSED CREDIT LINE

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

Fairly Large

 

Maximum Credit Limit :

USD  11900000      

 

 

Status :

Good

 

 

Payment Behaviour :

Regular

 

 

Litigation :

Clear

 

 

Comments :

Subject is a well –established and reputed Multi National Company having good track record. There appears slight dip in the profitability. However networth of the company appears to be strong. Trade relations are reported to be fair.  Business is active. Payment are reported to be regular and as per commitment.

 

The company can be considered for normal business dealings at usual trade terms and conditions.

 

 

NOTES:

 

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

 

 

ECGC Country Risk Classification List – June 30, 2012

 

Country Name

Previous Rating

(31.03.2012)

Current Rating

(30.06.2012)

India

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

INDIAN ECONOMIC OVERVIEW

 

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country's growth, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the work force is in agriculture, but services are the major source of economic growth, accounting for more than half of India's output, with only one-third of its labor force. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services and software workers. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - and growth exceeded 8% year-on-year in real terms. However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms. High international crude prices have exacerbated the government's fuel subsidy expenditures contributing to a higher fiscal deficit, and a worsening current account deficit. Little economic reform took place in 2011 largely due to corruption scandals that have slowed legislative work. India's medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. India has many long-term challenges that it has not yet fully addressed, including widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, scarce access to quality basic and higher education, and accommodating rural-to-urban migration.

Source : CIA

 

EXTERNAL AGENCY RATING

 

Rating Agency Name

CRISIL

Rating

A1+ (Short Term Debt)

Rating Explanation

Having very strong degree of safety regarding timely payment of financial obligation it carry lowest credit risk

Date

February 2011

 

RBI DEFAULTERS’ LIST STATUS

 

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

 

EPF (Employee Provident Fund) DEFAULTERS’’ LIST STATUS

 

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2012.

 

LOCATIONS

 

Registered Office/Factory 1  :

8 / 9th Mile, Tumkur Road, Post Bag 7300, Bangalore – 560 073, Karnataka, India

Tel. No.:

91-80-2219 8444/43281444/28394709/28391300/28394321

Fax No.:

91-80-23997572

E-Mail :

kundan.lal@kennametal.com

bangalore.information@kennametal.com

 

 

Factory 2 :

No. 30, “Ramana Residency”, 4th Cross, Sampige Road, Malleswaram, Bangalore - 560 003, Karnataka, India

Tel. No.:

080 - 23460815 to 818

Fax No.:

080 - 23460819.

E-Mail :

alfint@vsnl.com

 

 

DIRECTORS

 

As on 30.06.2011

 

Name :

Mr. M.N. Bhagwat

Designation :

Chairman

Date of Birth/Age :

04.06.1932

Qualification :

B.E. (Mechanical & Electrical)

M.S. (Mechanical) (University of Illinois, USA)

Experience :

Significant experience in manufacturing industry including as Managing Director of Tata Honeywell Limited till 1997. Presently Mr. Bhagwat is serving as Member, Executive Committee, TQMS , a division of Tata Sons. He is also the Chairman of Honeywell Automation India Limited

Expertise in specific functional area:

Manufacturing

List of outside Directorships and Memberships of Board Committees in India:

Directorships in other companies

1. Honeywell Automation India Limited

2. Technopolis Knowledge Park Limited

3. Walchand People First Limited

 

Memberships/ Chairmanships of Committee of Directors Walchand People First Limited

1. Audit Committee – Chairman

2. Remuneration Committee – Member

 

Honeywell Automation India Limited

 

1. Remuneration Committee – Chairman

2. Audit Committee – Member

3. Shareholders’ Grievance Committee –Chairman

 

 

 

Name :

Mr. Santanoo Medhi

Designation :

Managing Director

 

 

Name :

Mr. John Chang

Designation :

Director

Date of Birth/Age :

15.05.1961

Qualification :

M.Sc. – Mechanical

Engineering, University of California at Berkeley, USA.

Bachelor of Science in Mechanical Engineering,

San Jose State University, USA.

Experience :

With Kennametal Inc: 06 years

With others: 20 years

Expertise in specific functional area:

Manufacturing & Operations,

Sales & Marketing and General Management

 

 

Name :

Mr. Vinayak K. Deshpande

Designation :

Director

 

 

Name :

Mr. B. Anjani Kumar

Designation :

Director

 

 

Name :

Mr. Bernard North

Designation :

Director

 

 

KEY EXECUTIVES

 

India Leadership Council (ILC)

Mr. Santanoo Medhi

Mr. Vikram Chopra

Mr. Dibesh Singh Deo

Mr. Kundan K. Lal

Mr. Vivek Maheshwari

Mr. Anil Kumar Murthy

Mr. Gururaj D Patil

Mr. Calvin Printer

Mr. D Parameswara Reddy

Mr. D Sarathy

Mr. K Chandrashekar Sharma

 

 

Name :

Mr. Kundan K. Lal

Designation :

Company Secretary

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

As on 30.06.2012

 

Category of Shareholder

No. of Shares

Percentage of Holding

 

 

 

(A) Shareholding of Promoter and Promoter Group

 

 

(1) Indian

 

 

Bodies Corporate

19376013

88.16

Sub Total

19376013

88.16

(2) Foreign

 

 

Total shareholding of Promoter and Promoter Group (A)

19376013

88.16

(B) Public Shareholding

 

 

(1) Institutions

 

 

Mutual Funds / UTI

206274

0.94

Financial Institutions / Banks

1040

0.000

Foreign Institutional Investors

134811

0.61

Sub Total

342125

1.56

(2) Non-Institutions

 

 

Bodies Corporate

184284

0.84

Individuals

 

 

Individual shareholders holding nominal share capital up to Rs. 0.100 Million

1526085

6.94

Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million

480552

2.19

Any Others (Specify)

69181

0.31

Non Resident Indians  

54390

0.25

Clearing Members

14791

0.07

Sub Total

2260102

10.28

Total Public shareholding (B)

2602227

11.84

Total (A)+(B)

21978240

100.00

(C) Shares held by Custodians and against which Depository Receipts have been issued

 

 

Total (A)+(B)+(C)

21978240

0.00

 

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacture of Hard Metal Products and Machine Tools

 

 

Products :

Item Code No. (ITC Code)

Product Description

 

 

82  09

Tungsten Carbide Tips / Inserts

82  07

Interchangeable Tools

84  59

Machine Tools

 

 

 

 

PRODUCTION STATUS As on 30.06.2011

 

Particulars

Unit

Licensed Capacity

Installed Capacity

Actual Production

Hard metal and hard metal products

MT

240

210

-

Mining tools

 

 

 

 

a)Special purpose machines including accessories

Nos.

200

150

63

b)Jigs and fixtures

Rs. 000’s

10.000

250000

47019

 

Notes:

(i) The capacities specified under 'Licensed Capacity' are the capacities as per the carry on business

 

GENERAL INFORMATION

 

 

 

No. of Employees :

Not Available

 

 

Bankers :

·         Corporation Bank Limited

·         HDFC Bank Limited

·         ICICI Bank Limited

·         The Hong Kong and Shangai Banking Corporation Limited

 

 

Facilities :

-

 

 

 

Banking Relations :

--

 

 

Auditors :

 

Name :

M/s. Price Waterhouse

Chartered Accountants

Address :

5th Floor, Tower “D”, The Millenia 1 & 2 Murphy Road, Ulsoor Bangalore – 560008, India

 

 

Holding Company:

Meturit A.G. Zug, Switzerland

 

 

Ultimate Holding Company:

Kennametal Inc, USA

 

 

(iii) Enterprises holding, directly or indirectly substantial interest in Meturit A.G. Zug

·         Kennametal Widia GmbH Company. KG, Germany *

·         substantial interest in Meturit A.G. Zug (Formerly Widia GmbH, Germany)

·         Kennametal Europe Holding GmbH, Germany *

·         Kennametal Hertel Europe Holding GmbH, Germany*

·         Kennametal Holding GmbH, Germany *

·         Kennametal Europe GmbH , Germany

·         Kennametal Europe L.P., Bermuda *

·         Kennametal Holdings Europe Inc, USA *

·         Kennametal Widia Produktions GmbH and Company. KG*

Fellow Subsidiaries:

·         Kennametal Australia Pty Limited

·         Kennametal Produktions GmbH and Company. KG

·         Kennametal (Singapore) Pte. Limited.

·         Kennametal Korea Company., Limited.

·         Kennametal Japan Limited.

·         Kennametal Limited.

·         Kennametal South Africa (Pty) Limited.

·         Kennametal Engineered Products B.V.

·         Kennametal (Thailand) Company Limited.*

·         Kennametal (Malaysia) SDN. Bhd.

·         Kennametal DO Brasil LTDA

·         Kennametal Hard Point (Shanghai) Limited

·         Kmt Distribution Services Asia Pte. Limited

·         Kennametal Shared Services Private Limited. (KSSPL)

·         Kennametal (China) Company Limited

·         Kennametal AMSG GmbH

·         Hanita Metal Works Limited.

·         Kennametal Shared Services GmbH

·         Hanita - I P G*

·         Kennametal Extrude Hone Corporation

 

* No transaction during the year

Note: The above information has been determined to the extent such parties have been identified on the basis of information provided by the company. The above does not include related party transactions with retiral funds, as management personnel who are trustees of funds cannot individually exercise significant influence on the retiral funds transactions.

 

CAPITAL STRUCTURE

 

As on 30.06.2011

Authorised Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

21,978,240

Equity Shares

Rs.10/- each

Rs. 219.782 Millions

 

 

 

 

 

Issued, Subscribed & Paid-up Capital :

No. of Shares

Type

Value

Amount

 

 

 

 

21,978,240

Equity Shares

Rs.10/- each

Rs. 219.782 Millions

 

 

 

 

 

Notes:

1. Of the above shares, 250,560 (2010: 250,560) Equity Shares are allotted as fully paid-up pursuant to contracts

without payments being received in cash.

2. Of the above shares, 21,520,360 (2010: 21,520,360) Equity Shares are allotted as fully paid-up by way of bonus shares by capitalisation of reserves.

3. Of the above shares, 11,208,840 (2010: 11,208,840) Equity Shares are held by Meturit A.G. Zug, Switzerland, the holding company.

 

 

FINANCIAL DATA

[all figures are in Rupees Millions]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

30.06.2011

30.06.2010

30.06.2009

SHAREHOLDERS FUNDS

 

 

 

1] Share Capital

219.782

219.782

219.782

2] Share Application Money

0.000

0.000

0.000

3] Reserves & Surplus

2749.638

2758.157

2571.641

4] (Accumulated Losses)

0.000

0.000

0.000

NETWORTH

2969.420

2977.939

2791.423

LOAN FUNDS

 

 

 

1] Secured Loans

0.000

0.000

0.000

2] Unsecured Loans

0.000

0.000

0.000

TOTAL BORROWING

0.000

0.000

0.000

DEFERRED TAX LIABILITIES

0.000

0.000

0.000

 

 

 

 

TOTAL

2969.420

2977.939

2791.423

 

 

 

 

APPLICATION OF FUNDS

 

 

 

 

 

 

 

FIXED ASSETS [Net Block]

1066.588

1041.607

1203.068

Capital work-in-progress

159.016

62.688

11.423

 

 

 

 

INVESTMENT

681.753

1200.288

1085.237

DEFERREX TAX ASSETS

9.733

9.169

17.955

 

 

 

 

CURRENT ASSETS, LOANS & ADVANCES

 

 

 

 

Inventories
742.275

448.867

350.477

 

Sundry Debtors
1084.162

732.002

514.025

 

Cash & Bank Balances
199.931

156.491

109.789

 

Other Current Assets
4.892

4.420

7.353

 

Loans & Advances
139.978

79.764

87.251

Total Current Assets
2171.238

1421.544

1068.895

Less : CURRENT LIABILITIES & PROVISIONS
 

 

 

 

Sundry Creditors
564.749

346.979

273.013

 

Other Current Liabilities
393.563

250.380

139.450

 

Provisions
160.596

159.998

182.692

Total Current Liabilities
1118.908

757.357

595.155

Net Current Assets
1052.330

664.187

473.740

 

 

 

 

MISCELLANEOUS EXPENSES

0.000

0.000

0.000

 

 

 

 

TOTAL

2969.420

2977.939

2791.423

 

 

PROFIT & LOSS ACCOUNT

 

 

PARTICULARS

30.06.2011

30.06.2010

30.06.2009

 

SALES

 

 

 

 

 

Income

5069.468

3722.486

3054.704

 

 

Other Income

121.005

106.108

128.129

 

 

TOTAL                                     (A)

5190.473

3828.594

3182.833

 

 

 

 

 

Less

EXPENSES

 

 

 

 

 

Materials

1970.772

1363.804

1263.675

 

 

Manufacturing and Other Expenses

1718.305

1494.988

1319.679

 

 

TOTAL                                     (B)

3689.077

2858.792

2583.354

 

 

 

 

 

Less

PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B)      (C)

1501.396

969.802

599.479

 

 

 

 

 

Less

FINANCIAL EXPENSES                         (D)

0.242

0.382

0.153

 

 

 

 

 

 

PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D)                                       (E)

1501.154

969.420

599.326

 

 

 

 

 

Less/ Add

DEPRECIATION/ AMORTISATION                     (F)

225.784

202.947

188.127

 

 

 

 

 

 

PROFIT BEFORE TAX (E-F)                               (G)

1275.370

766.473

411.199

 

 

 

 

 

Less

TAX                                                                  (H)

389.860

246.786

131.062

 

 

 

 

 

 

PROFIT AFTER TAX (G-H)                                (I)

885.510

519.687

280.137

 

 

 

 

 

Add

PREVIOUS YEARS’ BALANCE BROUGHT FORWARD

1425.864

1291.348

1011.211

 

 

 

 

 

Less

APPROPRIATIONS

 

 

 

 

 

Transfer to General Reserve

88.600

52.000

0.000

 

 

Dividend

769.239

285.717

0.000

 

 

Tax on Dividend

124.790

47.454

0.000

 

BALANCE CARRIED TO THE B/S

1328.745

1425.864

1291.348

 

 

 

 

 

 

EARNINGS IN FOREIGN CURRENCY

 

 

 

 

 

Export of goods calculated on F.O.B. basis

332.492

290.147

320.830

 

 

Other Earnings

10.204

19.762

17.810

 

TOTAL EARNINGS

 342.696

309.909

338.640

 

 

 

 

 

 

IMPORTS

 

 

 

 

 

Raw Materials

1564.595

1174.674

984.347

 

 

Stores & Spares

203.544

48.088

56.461

 

 

Capital Goods

132.678

43.620

241.583

 

TOTAL IMPORTS

1900.817

1266.382

1282.391

 

 

 

 

 

 

Earnings Per Share (Rs.)

40.29

23.65

12.75

 

QUARTERLY / SUMMARISED RESULTS

 

PARTICULARS

 

30.09.2011

31.12.2011

31.03.2012

30.06.2012

 

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Net sales

1394.000

1379.900

1415.000

1434.400

Total Expenditure

1000.700

1105.200

1228.700

1176.900

PBIDT (Excl OI)

393.300

274.700

186.300

257.500

Other Income

35.600

22.000

21.200

25.700

Operating Profit

428.900

296.700

207.500

283.200

Interest

0.000

0.200

0.000

0.000

Exceptional terms

0.000

0.000

0.000

0.000

PBDT

428.900

296.500

207.500

283.200

Depreciation

52.300

53.100

57.200

64.100

PROFIT BEFORE TAX

376.600

243.400

150.300

219.100

Tax

118.400

75.200

43.700

68.200

Provision and contingencies

0.000

0.000

0.000

0.000

Profit After Tax

258.200

168.200

106.600

150.900

Extra ordinary items

0.000

0.000

0.000

0.000

Prior Period Expense

0.000

0.000

0.000

0.000

Net Adjustments

0.000

0.000

0.000

0.000

Net Profit

258.200

168.200

106.600

150.900

 

KEY RATIOS

 

PARTICULARS

 

 

30.06.2011

30.06.2010

30.06.2009

PAT / Total Income

(%)

17.06

13.57

8.80

 

 

 

 

 

Net Profit Margin

(PBT/Sales)

(%)

25.16

20.59

13.46

 

 

 

 

 

Return on Total Assets

(PBT/Total Assets}

(%)

39.39

31.12

18.10

 

 

 

 

 

Return on Investment (ROI)

(PBT/Networth)

 

0.43

0.26

0.15

 

 

 

 

 

Debt Equity Ratio

(Total Liability/Networth)

 

0.38

0.25

0.21

 

 

 

 

 

Current Ratio

(Current Asset/Current Liability)

 

1.95

1.88

1.80

 

 

 

LOCAL AGENCY FURTHER INFORMATION

 

 

Check List by Info Agents

Available in Report [Yes/No]

Year of Establishment

Yes

Locality of the Firm

Yes

Constitution of the firm

Yes

Premises details

No

Type of Business

Yes

Line of Business

Yes

Promoters background

Yes

No. of Employees

No

Name of Person Contacted

No

Designation of contact person

No

Turnover of firm for last three years

Yes

Profitability for last three years

Yes

Reasons for variation <> 20%

-

Estimation for coming financial year

No

Capital the business

Yes

Details of sister concerns

Yes

Major Suppliers

No

Major Customers

No

Payment Terms

No

Export / Import Details [If Applicable]

No

Market Information

-

Litigations that the firm / promoter involved in

-

Banking Details

Yes

Banking Facility Details

No

Conduct of the banking account

-

Buyer visit details

-

Financials, if provided

Yes

Incorporation details, if applicable

Yes

Last accounts filed at ROC

Yes

Major Shareholders, if applicable

No

Date of Birth of Proprietor/Partner/Director, if available

Yes

PAN of Proprietor/Partner/Director, if available

No

Voter ID No of Proprietor/Partner/Director, if available

No

External Agency Rating, if available

Yes

 

 

OPERATING RESULTS

 

The Company continued to improve its operating results during FY11 with Sales and Other Income increasing by 36% to Rs. 5190.470 Million compared with Rs. 3828.590 Million in the previous year. Profit after Tax was Rs. 885.510 Million as compared to Rs. 519.680 Million in the previous year, an increase of 70% over the previous year. The Growth in Sales and Profit for the year was driven by strong demand of products and growth initiatives taken by the Company during the year under review.

 

MANAGEMENT DISCUSSION and ANALYSIS REPORT

 

Industry Structure and Developments / Opportunities And Threats

 

The Company is a manufacturer of hard metal products and machine tools which cater to the needs of a wide variety of manufacturing and other industries such as Transportation, General Engineering, Aerospace and Defense, Energy, and Earthworks. It seeks to provide a competitive edge to its customers through a wide variety of standard high quality products as well as items customized to their requirements such as special purpose  machines, tools, customized tooling solutions and engineered products.

 

The Company’s mission is “to deliver productivity to customers seeking peak performance in demanding environments by providing innovative custom and standard wear-resistant solutions, enabled through its  advanced material sciences, application knowledge and commitment to a sustainable environment”. The growth story of Indian economy continued in FY11 after a remarkable turnaround in FY10 from the global economic recession which began in late 2008. The Indian economy maintained the momentum from the prior year and witnessed a growth of 8.5% in 2010-11.

 

This growth rate has been contributed by manufacturing as well as services sectors. While the fiscal stimulus measures pulled the economy out of recession in FY10, strong demand has strengthened the economy in FY11.

 

The rapid recovery in the economy has also brought forth higher inflation, which has been in double digits for quite some time now. The Reserve Bank of India (RBI) has been taking all monetary measures to curb inflation, which in a way, has been detrimental to the business. Significant surge in demand has led to challenges on the supply chain capacity of vendors. Thrust on Green and efficient transportation has led the Original Equipment Manufacturers to migrate towards usage of newer, lighter and advanced materials. As in the past, the management of the Company is continuously and closely watching these developments and taking appropriate steps to exploit new opportunities and overcome the challenges to retain its market leadership.

 

OPERATIONS:

 

During the recent global recession, the Company made some key decisions and even many strategic investments in their business to reinvent ourselves as a true Customer-Facing Company. This meant leaning out and standardizing their processes; embracing standard SAP; and implementing a market sector approach to their structure. To their customers, this new structure means better service and partnership, and leverages their ability to provide Enterprise-wide solutions for their needs.

 

During FY11, the Company also pursued a Strategy of focusing customers clustered around common themes so as to bring relevant proven solutions to these customers in a strategic manner. The customers were grouped around the themes of Transportation, Aerospace and Defense, Energy, Earthwork and General Engineering. Special task forces with dedicated resources were created to pursue opportunity created by this focus.

 

In FY11, the Company rolled out a dual brand strategy to harness the full potential of both “KENNAMETAL” and “WIDIA” brands. Both the brands have grown in double digits in the year. The Company intends to further leverage this strategy in coming years to serve the customers better by providing quality and innovative products under both the brands. As part of this strategy there have been numerous new launches in FY11 in both the brands which have helped the Company to consolidate its position in the market.

 

One of the key initiatives during the year was to start setting up of regional service centers strategically located across India to better serve their customers. One such center has already been started in Jamshedpur and few more would be put up in other industrial zones in the country.

 

The Company believes that mind share of a Customer is critical to market share. As part of this initiative the Company participated in many important events and seminars such as IMTEX ’11, Bauma India Show, and Wire India Show to name a few. The Company also launched a dedicated website for the WIDMA Machine Tool brand to show case their capabilities in special purpose machine tools.

 

It has always been the endeavor of the Company to remain focused on improving operating efficiencies. Many Lean manufacturing initiatives were taken last year to strengthen the ability to meet customer’s expectation of better quality at lower cost. Lean initiatives are also being carried out in non-manufacturing functions like Finance,

HR, etc. to reduce all forms of waste. These initiatives have ensured lower costs and coupled with Increased Sales have enabled the Company to achieve better margins during FY11.

 

During the year the Company has received KVBS global Lean Awards both in manufacturing and non- manufacturing categories. Both these awards demonstrate the commitment of the management to improve upon the operating efficiency and provide better customer service. The Company is also committed to green initiatives and has been awarded 3 awards at national level for energy savings during the year.

 

COMPANY’S OUTLOOK

 

While the macro economic outlook for the country remains positive, many factors such as high inflation in the country, weakening of the Rupee and potential financial crisis in Western world may impact respective economies. High oil prices pose a big threat to growth and inflation. Consequently, the business growth expectations require moderation since the growth levels witnessed in prior year may not be sustainable. Though the monsoon is on time and will impact the economy positively, rising commodity prices will throw challenges in terms of maintaining the profitability across the manufacturing sector. Operating margins may come under  pressure due to higher input and operating costs.

 

The macro economic outlook is thus not so favorable and may impact demand and in turn likely to impact the growth rate for the Company. The focus of the Company would continue to be on improving productivity to customers by providing innovative customized and standard wear resistant solutions. With strong emphasis on new products they expect to maintain the leadership position in the marketplace

 

FINANCIAL PERFORMANCE

 

The Company had a record financial performance in FY11. The total Income for FY 11 has grown by 36% as against 20% growth in the previous year. There has been a sharp increase in profitability of the Company with Profit after Tax at Rs.885.000 Million is 17% of Total Income as against 13.5% in the prior year and with the higher Total Income in FY 11, the Company has achieved an increase of 70% in Net Profit over the previous year. The increase in profitability has been a result of volume growth coupled with efficient cost management. Productivity improvement, relentless cost control, active deployment of lean processes and price increases on a selective basis have significantly offset the unprecedented increase in raw material prices. The Sales per Employee has also gone up from Rs.4.000 Million in FY10 to Rs.5.800 Million in FY11 resulting in 45% improvement over the previous year.

 

All the segments lead by Transportation and General Engineering have achieved double digit growths over the prior year. The Machine Tool Business has grown by 29% in terms of Sales and witnessed a record order intake of Rs. 870.000 Million. The Company continues to leverage the world class manufacturing facilities to ship more and more products to new Kennametal locations, primarily Asia and Brazil in addition to USA, Israel and Germany.

 

As in the past, Working Capital control has been one of the most focused areas in the Company. With improved working capital and profitability, Return on Invested Capital (RoIC) has significantly improved to 43% in FY11 as against 26% in FY10. The Balance sheet of the Company remains most healthy and the Company continues to be fully debt-free.

 

HIGHLIGHTS OF FY11:

 

·         Human Capital Management Project was implemented where SAP HR got upgraded from 4.6c to 6.0.

·         Project Next roll out was successfully completed where standardization of position titles was achieved. Employee Self Service functionality was introduced.

·         Enterprise Compensation Management System was implemented along with the concept of Salary Bands and Market Reference Rates.

·         Reward and Recognition Scheme was introduced for enhancing Employee Engagement.

·         Talent acquisition process was enhanced by the introduction of the E-recruit portal. The employee strength of the Company as on June 30, 2011 was 923.

·         Training and Learning Activities for Employees, Dealer Personnel and Customers continued to be an area of Focus through the Kennametal Knowledge Center.

·         Industrial relations remained generally cordial and harmonious throughout the year. Wage settlement Agreement expired on June 30, 2011 and a new wage settlement is under process

 

 

CONTINGENT LIABILITIES

 

(Rs. In Millions )

Nature of Contingent Liability (Claims against Company not Acknowledged as Debts)

31.03.2011

31.03.2010

Income Tax

65.392

0.000

Excise Duty / Service Tax

7.021

2.319

Sales Tax

2.428

0.157

Total

74.841

2.476

 

 

STATEMENT OF STANDALONE AUDITED RESULTS FOR THE YEAR ENDED 30.06.2012

Rs.in Millions

Particulars

3 Months Ended

 

Preceding 3 Months Ended

Year to date figures for the current period ended

 

(30.06.2012)

(31.03.2012)

(30.06.2012)

 

(UnAudited)

(UnAudited)

(Audited)

Net Sales/ Income from Operations

1423.900

1414.200

5618.300

1. (b) Other Operating Income

1.500

0.800

5.000

Total Income From operations

1425.400

1415.000

5623.300

2. Expenditure

 

 

 

a. Cost of Raw Materials consumed

484.200

407.000

1632.600

b. Purchases of stock in trade

340.700

336.700

1277.200

c. Changes in inventories of finished goods , work in progress and stock in trade

(137.200)

21.000

(252.100)

d. Employee benefit expenses  

218.700

211.400

845.600

e. Depreciation and amortisation expense

64.100

57.200

226.700

f. Other Expenditure

270.500

252.600

1008.400

Total Expenditure

1241.000

1285.900

4738.400

3. Profit from Operations before Other Income, Interest and Exceptional Items  (1-2)

193.400

129.100

884.900

4. Other Income

25.700

21.200

104.500

5. Profit before Interest and Tax  

219.100

150.300

989.400

6. Interest

-

-

-

7. Profit from Ordinary Activities before Tax  and exceptional items

219.100

150.300

989.400

8. Exceptional items

-

-

-

9. Profit from Ordinary Activities before Tax  but before exceptional items

219.100

150.300

989.400

10. Tax Expenses

68.200

43.700

305.500

11. Net profit/(loss) for the period

150.900

106.600

683.900

12. Paid-up Equity Share Capital (face value Rs.2 per share)

219.800

219.800

219.800

13. Reserves excluding revaluation reserve as per balance sheet of previous accounting year  

-

-

-

14. Earning Per Share

 

 

 

a. Basic and b. Diluted

6.9

4.8

31.1

15. Public shareholding

 

 

 

- No. of shares

2602227

2602227

2602227

- % of holding (to total shareholding)

11.84

11.84

11.84

Promoters And Promoter Group Shareholding

a) Pledged/ Encumbered

 

 

 

-Number of Shares

-

-

-

-% of Shares (As a % of the total Shareholding of Promoter and Promoter Group)

-

-

-

-% of Shares (as a % of the total share capital of the Company)

-

-

-

b) Non Encumbered

 

 

 

- Number of Shares

19376013

19376013

19376013

-% of Shares (As a % of the total Shareholding of Promoter and Promoter Group)

100.00

100.00

100.00

-% of Shares (as a % of the total share capital of the Company)

89.16

89.16

89.16

 

 

INVESTOR COMPLAINTS

3 Months Ended

 

30.06.2012

Pending at the beginning of the quarter

Nil

Received during the quarter 

2

Disposed if during the quarter

2

Remaining unresolved the end of the quarter

Nil

 

 

Particulars

3 Months Ended

 

Preceding 3 Months Ended

Year to date figures for the current period ended

 

(30.06.2012)

(31.03.2012)

(30.06.2012)

 

(UnAudited)

(UnAudited)

(Audited)

SEGMENT REVENUE (SALES/INCOME)

 

 

 

Net Sales

 

 

 

Machine Tools

184.600

212.000

813.700

Hard Metal and Hard Metal Products

1249.800

1203.00

4809.600

Net Sales/ Income form Operations

1433.400

1415.000

5623.300

 

 

 

 

Segment Results

 

 

 

Machine Tools

35.900

18.700

115.800

Hard Metal and Hard Metal  Products 

212.800

173.00

1026.800

Total

248.700

191.700

1142.600

Interest Paid

-

-

-

Un allocable expenditure

29.600

41.400

153.200

Total Profit before Tax

219.100

150.300

989.400

 

 

 

 

Capital Employed (Segment Assets loss Segment Liabilities

 

 

 

Machine Tools

69.200

(117.900)

69.200

Hard Metal and Hard Metal  Products 

2283.800

2304.000

2283.800

Un allocable

661.800

1316.300

661.800

Total

3014.800

3502.400

3014.800

 

 

1.       The audited financial results for the quarter and year ended june 30 2012, and the statement of assets and liabilities as on the said date were reviewed  by the Audit Committee and approved  by the Board of Directors as its meeting held on August 13, 2012

2.       The Standalone Statement of assets and liabilities as required under clause 41(V)(h) of the Listing is as under

 

STATEMENT OF ASSETS AND LIABILITIES

 

Particular

30.06.2012

EQUITY AND LIABILITIES

 

Shareholders’ funds

 

(a) Share capital

219.800

(b) Reserves and surplus

2795.00

Sub-total - Shareholders' funds

3014.800

 

 

Non-current liabilities

 

(a) Long-term borrowings

-

(b) Differed Tax liabilities

-

(c) Other long-term liabilities

0.200

(d) Long-term provisions

93.600

Sub-total - Non-current liabilities

93.800

 

 

Current liabilities

 

(a) Short-term borrowings

-

(b) Trade payables

641.800

(c) Other current liabilities

515.100

(d) Short-term provision

57.300

Sub-total - Current liabilities

1214.200

TOTAL - EQUITY AND LIABILITIES

4322.800

 

 

ASSETS

 

Non-current assets

 

(a) Fixed assets

1411.800

(b) Non-current investments

6.500

(c) Long-term loans and advances

192.100

(d) Deferred tax assets (net)

18.700

(f) Other non –current assets

6.600

Sub-total - Non-current assets Current assets

1635.700

Current assets

 

(a) Inventories

1033.600

(b) Trade receivables

1026.900

© Cash and cash equivalents

448.300

(d) Short-term loans and advances

173.700

(e) Other current assets

2.600

Sub-total - Current assets

2687.100

TOTAL - ASSETS

4322.800

 

 

3.       Segment has been identified in line accounting standard Reporting (As -17, taking in to account the originations structure as well as the deferential risks and returns of these segments

4.       Segment revenue, results and capital employed figures include amounts identifiable to each of these segments. Other unallocable expenditure include expense incurred on a common service provide to these segment which are not directly identifiable to the individual segment as well as expense incurred at a corporate level which relate to the company as whole

5.       The figures for the 3 months ended 30.06.2012 and corresponding 3 months ended 30.06.2011 have been arrived at by deducting the published figures up to the third quarter ending 31.03.2012 and 31.03.2011 form the audited figures of respective financial years.

6.       Pursuant to the revision in format of disclosure under Schedule Vi of the Companies Act 1956 and the consequential change in the format of disclosure  of financial results under the Clause 41 of the listing Agreement, the figures  for the pervious period/year have been recast as necessary to confirm period/year of classification  

 

Press Release

09.12.2010

 

Kennametal India will now seek necessary consent for the delisting from the Company's shareholders by way of postal ballot.

 

Shares of Kennametal India Limited jumped on Thursday after the Company said that its Board of Directors has approved the proposal from its promoters - Kennametal Inc. and Meturit AG - to seek voluntary delisting of the Equity Shares of me Company presently traded on the BSE.

 

The proposed delisting will be done by purchasing the publicly held shares of the Company, constituting 11.84% of the paid up capital of the Company.

 

Kennametal India will now seek necessary consent for the delisting from the Companies shareholders by way of postal ballot.

 

At 12:28 PM (IST), Kennametal lndia was trading at Rs.586 up Rs. 79.35 or15.7% over the previous close. It had earlier touched a 52-week high of Rs. 1337.95 and a day's low of Rs. 565 after opening at Rs. 598.90.

 

Less than one lakh shares traded on me counter on the BSE.

 

CMT REPORT (Corruption, Money Laundering & Terrorism]

 

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

 

1]         INFORMATION ON DESIGNATED PARTY

No exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

 

2]         Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

 

3]         Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

 

4]         Record on Financial Crime :

            Charges or conviction registered against subject:                                                  None

 

5]         Records on Violation of Anti-Corruption Laws :

            Charges or investigation registered against subject:                                                          None

 

6]         Records on Int’l Anti-Money Laundering Laws/Standards :

            Charges or investigation registered against subject:                                                          None

 

7]         Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

 

8]         Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

 

9]         Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

 

10]        Press Report :

            No press reports / filings exists on the subject.

 

CORPORATE GOVERNANCE

 

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

 

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

 

CONTRAVENTION

 

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.55.67

UK Pound

1

Rs.88.05

Euro

1

Rs.69.92

 

 

INFORMATION DETAILS

 

 

Report Prepared by :

BYI

 

 

SCORE & RATING EXPLANATIONS

 

SCORE FACTORS

 

RANGE

POINTS

HISTORY

1~10

7

PAID-UP CAPITAL

1~10

7

OPERATING SCALE

1~10

7

FINANCIAL CONDITION

 

 

--BUSINESS SCALE

1~10

7

--PROFITABILIRY

1~10

7

--LIQUIDITY

1~10

7

--LEVERAGE

1~10

7

--RESERVES

1~10

7

--CREDIT LINES

1~10

6

--MARGINS

-5~5

-

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

NO

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

NO

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

TOTAL

 

62

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                 Payment record (10%)

Credit history (10%)                    Market trend (10%)                                Operational size (10%)

 

 

RATING EXPLANATIONS

 

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

-

NB

                                       New Business

-

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.