MIRA INFORM REPORT

Report No. :	320441
Report Date :	04.05.2015

IDENTIFICATION DETAILS

Name :	KENNAMETAL INDIA LIMITED
Registered Office :	8/9 Mile, Tumkur Road, Bangalore - 560073, Karnataka
Tel No. :	91-80-28394321
Country :	India
Financials (as on) :	30.06.2014
Date of Incorporation :	21.09.1964
Com. Reg. No.:	08-001546
Capital Investment / Paid-up Capital :	Rs. 219.800 Million
CIN No.: [Company Identification No.]	L27109KA1964PLC001546
IEC No.:	Not Available
TAN No.: [Tax Deduction & Collection Account No.]	BLRK05838A
PAN No.: [Permanent Account No.]	AACCK4472B
Legal Form :	A Public Limited Liability Company. The Company’s Shares are Listed on the Stock Exchanges.
Line of Business :	Manufacturer of hard metal products and machine tools
No. of Employees :	841 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

Ba (54)

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a subsidiary of “METURIT A.G. ZUG”, Switzerland. It is a well –established company having fine track record. The rating reflects company’s established market position as the largest player in the carbide tools industry in India supported by healthy financial base and sound profitability margins of the company. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitment. The company can be considered good 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 – December 31, 2014

Country Name	Previous Rating (30.09.2014)	Current Rating (31.12.2014)
India	A1	A1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

EXTERNAL AGENCY RATING

Rating Agency Name	CRISIL
Rating	Short term Debt = “A1+”
Rating Explanation	Very Strong degree of safety and carry lowest credit risk.
Date	05.09.2014

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 31-03-2014.

INFORMATION DENIED BY

Name :	Mr. RAvindra Nayak
Designation :	Accounts Department
Contact No.:	91-80-28394321
Date :	30.04.2015

LOCATIONS

Registered Office/ Factory :	8/9 Mile, Tumkur Road, Bangalore - 560073, Karnataka, India
Tel. No. :	91-80-28394321
Fax No. :	91--80-23997572
E-Mail :	kundan.lal@kennametal.com
Website :	www.kennametal.com
Factory 2 :	No. 30, “Ramana Residency”, 4th Cross, Sampige Road, Malleswaram, Bangalore - 560 003, Karnataka, India
Tel. No. :	91-80 - 23460815 to 818
Fax No. :	91-80 - 23460819.
E-Mail :	alfint@vsnl.com

DIRECTORS

As on 30.06.2014

Name :	Mr. M.N. Bhagwat
Designation :	Chairman
Name :	Mr. Bhagya Chandra Rao
Designation :	Managing Director
Name :	Mr. Vinayak K. Deshpande
Designation :	Directors
Date of Birth/Age :	21.07.1957
Qualification :	Chemical Engineer, IIT Kharagpur
Name :	Mr. Gerald Goubau
Designation :	Director
Name :	Mr. John Henry Jacko Jr
Designation :	Director
Name :	Mr. Michelle R. Keating
Designation :	Dorector
Name :	Mr. B. Anjani Kumar
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Bhagya Chandra Rao
Designation :	Managing Director and CEO
Name :	Mr. D. Parameswara Reddy
Designation :	Vice President and CFO
Name :	Mr. Kundan Kumar Lal
Designation :	General Manager Legal and Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2015

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(2) Foreign
Bodies Corporate	16483680	75.00
Sub Total	16483680	75.00
Total shareholding of Promoter and Promoter Group (A)	16483680	75.00
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	3262386	14.84
Financial Institutions / Banks	180	0.00
Sub Total	3262566	14.85
(2) Non-Institutions
Bodies Corporate	225212	1.03
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 Million	1208235	6.54
Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	441052	2.26
Any Others (Specify)	69544	0.32
Non Resident Indians	59125	0.27
Clearing Members	10419	0.05
Sub Total	1944043	10.15
Total Public shareholding (B)	5206609	25.00
Total (A)+(B)	21690289	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	0	0.00
(1) Promoter and Promoter Group	0	0.00
(2) Public	0	0.00
Sub Total	0	0.00
Total (A)+(B)+(C)	21690289	100.00

BUSINESS DETAILS

Line of Business :	Manufacturer of hard metal products and machine tools
Products :	Not Available
Brand Names :	Not Available
Agencies Held :	Not Available
Exports :	Not Divulged
Imports :	Not Divulged
Terms :	Not Divulged

PRODUCTION STATUS = NOT AVAILABLE

GENERAL INFORMATION

Suppliers :

Reference :	Not Divulged
Name of the Person :	Not Divulged
Contact No.:	Not Divulged
Since How Long Known :	Not Divulged
Experience :	Not Divulged
Maximum Limit Dealt :	Not Divulged

Customers :

Reference :	Not Divulged
Name of the Person :	Not Divulged
Contact No.:	Not Divulged
Since How Long Known :	Not Divulged
Experience :	Not Divulged
Maximum Limit Dealt :	Not Divulged

No. of Employees :

841 (Approximately)

Bankers :

• Bank of America
• Corporation Bank Limited
• HDFC Bank Limited
• HSBC Limited
• ICICI Bank Limited

Facilities :

Not Available

Auditors :
Name :	Price Waterhouse and Company Chartered Accountants
Address :	5th floor, Tower “D”, The Millenia, 1 & 2 Murphy Road, Ulsoor, Bangalore – 560008, Karnataka, India
Memberships :	Not Available
Collaborators :	Not Available
Ultimate Holding Company:	Kennametal Inc, USA
Immediate Holding Company:	Meturit A.G. Zug, Switzerland
Enterprises holding, directly or indirectly substantial interest in Meturit A.G. Zug :	Kennametal Widia GmbH Company. KG, Germany (Formerly Widia GmbH, Germany) Kennametal Holding GmbH, Germany Kennametal Europe GmbH, Switzerland
Fellow Subsidiaries:	Kennametal Australia Pty Ltd, Australia Kennametal Produktions GmbH and Co. KG, Germany Kennametal Widia Produktions GmbH and Company. KG, Germany Kennametal (Singapore) PTE. Ltd., Singapore Kennametal Korea Company, Limited, Korea Kennametal Japan Limited, Japan Kennametal South Africa (Pty) Limited, South Africa Kennametal (Thailand) Company, Limited, Thailand Kennametal Do Brasil LTDA, Brazil Kennametal Hard Point (Shanghai) Limited, China Kennametal Distribution Services Asia PTE. Limited, Singapore Kennametal Shared Services Private Limited, India Kennametal (China) Company Limited, China Hanita Metal Works Limited. (P), Israel Kennametal Shared Services, GmbH, Germany Kennametal Extrude Hone Corporation, USA Kennametal Extrude Hone Ltd., England Kennametal Extrude Hone Limited, Ireland Kennametal Extrude Hone GmbH, Germany Extrude Hone Shangai Company Limited, China Kennametal (Xuzhou) Company Limited, China Kennametal (Malaysia) Sdn. Bhd., Malaysia Kennametal Logistics GmbH, Germany Kennametal Stellram, USA Kennametal Stellram SARL, Switzerland Kennametal Stellite GmbH, Germany Kennametal Stellite India Private Limited., India

CAPITAL STRUCTURE

As on 30.06.2014

Authorised Capital :

No. of Shares	Type	Value	Amount
21,978,240	Equity Shares	Rs.10/- each	Rs. 219.800 Million

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
21,978,240	Equity Shares	Rs.10/- each	Rs. 219.800 Million

(a) Reconciliation of number of shares outstanding:

Equity Shares	No. of Shares	Amount
Share outstanding at the beginning of the year	21978240	219.800
Shares outstanding at the end of the year	21978240	219.800

(b) Rights, preferences and restrictions attached to shares

The Company has only one class of equity shares having a par value of `10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, if any, in proportion to their shareholding.

(c) Shares held by ultimate holding company and holding company

Equity Shares	No. of Shares	Amount
Kennametal Inc. USA, the ultimate holding company	5274840	52.700
Meturit AG., Zug, Switzerland, the holding company	11208840	112.100

(d) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company

Equity Shares	No. of Shares	%
Kennametal Inc. USA, the ultimate holding company	5274840	24.00%
Meturit AG., Zug, Switzerland, the holding company	11208840	51.00%
Reliance Capital Trustee Company Limited	2023837	9.21%

Note:

(i) 1,520,450 (2013: 1,350,850) shares are held by Reliance Equity Opportunity Fund comprising 6.92% (2013:

6.15%) of the shareholding and 503,387 (2013: 495,841) shares are held by Reliance Tax Saver (ELSS) Fund comprising 2.29% (2013: 2.25%) of the shareholding.

FINANCIAL DATA

[all figures are in Rupees Million]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS	30.06.2014	30.06.2013	30.06.2012
I.              EQUITY AND LIABILITIES
(1)Shareholders' Funds
(a) Share Capital	219.800	219.800	219.800
(b) Reserves & Surplus	3114.200	2943.500	2795.000
(c) Money received against share warrants	0.000	0.000	0.000
(2) Share Application money pending allotment	0.000	0.000	0.000
Total Shareholders’ Funds (1) + (2)	3334.000	3163.300	3014.800
(3) Non-Current Liabilities
(a) long-term borrowings	88.800	93.500	0.000
(b) Deferred tax liabilities (Net)	0.000	0.000	0.000
(c) Other long term liabilities	0.000	0.000	0.000
(d) long-term provisions	0.000	0.000	93.600
Total Non-current Liabilities (3)	88.800	93.500	93.600
(4) Current Liabilities
(a) Short term borrowings	0.000	0.000	0.000
(b) Trade payables	472.100	587.800	641.800
(c) Other current liabilities	343.700	307.200	515.300
(d) Short-term provisions	57.300	52.800	57.300
Total Current Liabilities (4)	873.100	947.800	1214.400
TOTAL	4295.900	4204.600	4322.800
II.          ASSETS
(1) Non-current assets
(a) Fixed Assets
(i) Tangible assets	1138.700	1245.900	1290.800
(ii) Intangible Assets	3.300	9.600	14.500
(iii) Capital work-in-progress	52.200	126.100	106.500
(iv) Intangible assets under development	0.000	0.000	0.000
(b) Non-current Investments	0.000	0.000	6.500
(c) Deferred tax assets (net)	64.400	16.200	18.700
(d) Long-term Loan and Advances	311.300	293.000	210.000
(e) Other Non-current assets	6.300	6.900	6.600
Total Non-Current Assets	1576.200	1697.700	1653.600
(2) Current assets
(a) Current investments	0.000	6.500	0.000
(b) Inventories	956.300	950.200	1033.600
(c) Trade receivables	1078.300	886.800	1028.900
(d) Cash and cash equivalents	566.000	537.100	448.300
(e) Short-term loans and advances	114.600	116.600	155.800
(f) Other current assets	4.500	9.700	2.600
Total Current Assets	2719.700	2506.900	2669.200
TOTAL	4295.900	4204.600	4322.800

PROFIT & LOSS ACCOUNT

	PARTICULARS	30.06.2014	30.06.2013	30.06.2012
	SALES
	Income	5451.300	4897.700	5623.300
	Other Income	63.800	76.800	104.500
	TOTAL (A)	5515.100	4974.500	5727.800
Less	EXPENSES
	Cost of Materials Consumed	1718.800	1451.800	1595.000
	Purchases of Stock-in-Trade	1190.200	1131.200	1277.200
	Changes in inventories of finished goods, work-in-progress and Stock-in-Trade	(0.600)	(1.500)	(214.500)
	Employees benefits expense	983.700	892.700	837.600
	Other expenses	1059.300	1037.600	1016.400
		102.000	0.000	0.000
	TOTAL (B)	5053.400	4511.800	4511.700
	PROFIT / (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)	461.700	462.700	1216.100
Less/ Add	DEPRECIATION/ AMORTISATION (F)	265.900	266.900	226.700
	PROFIT/ (LOSS) BEFORE TAX (E-F) (G)	195.800	195.800	989.400
Less	TAX (I)	25.100	47.300	305.500
	PROFIT/ (LOSS) AFTER TAX (G-I) (J)	170.700	148.500	683.900
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD (K)	1305.700	1328.800	1425.864
Less	APPROPRIATIONS
	Transfer to General Reserve	0.000	68.400	88.600
	Dividend	0.000	549.500	769.200
	Tax on Dividend	0.000	89.100	124.800
	Total (M)	0.000	707.000	982.600
	Balance Carried to the B/S (J+K+L-M)	1624.900	1454.200	1305.700
	EARNINGS IN FOREIGN CURRENCY	466.300	536.800	418.300
	IMPORTS
	Raw Materials	1220.700	952.600	1151.800
	Components and Stores parts	199.000	135.000	131.700
	Capital Goods	39.900	135.600	282.400
	TOTAL IMPORTS	1459.600	1223.200	1565.900
	Earnings / (Loss) Per Share (Rs.)	7.77	6.76	31.12

QUARTERLY / SUMMARISED RESULTS

Particulars (Rs. In Million)	Sep 2014 (1^st Quarter)	Dec 2014 (2^nd Quarter)
Audited / Unaudited	Unaudited	Unaudited
Net Sales	1412.400	1427.900
Total Expenditure	1278.200	1291.600
PBIDT (Excl OI)	134.200	136.300
Other Income	22.800	12.700
Operating Profit	157.000	149.000
Interest	0.000	0.000
Exceptional Items	0.000	0.000
PBDT	157.000	149.000
Depreciation	66.800	66.800
Profit Before Tax	90.200	82.200
Tax	24.900	22.200
Provisions and contingencies	0.000	0.000
Profit After Tax	65.300	60.000
Extraordinary Items	0.000	0.000
Prior Period Expenses	0.000	0.000
Other Adjustments	0.000	0.000
Net Profit	65.300	60.000

KEY RATIOS

PARTICULARS		30.06.2014	30.06.2013	30.06.2012
Net Profit Margin (PAT/Sales)	(%)	3.13	3.03	12.16
Return on Total Assets (PBT/Total Assets}	(%)	4.68	4.82	23.61
Return on Investment (ROI) (PBT/Networth)		0.06	0.06	0.33
Debt Equity Ratio (Total Debt /Networth)		0.00	0.00	0.00
Current Ratio (Current Asset/Current Liability)		3.11	2.64	2.20

FINANCIAL ANALYSIS

[all figures are in Rupees Million]

DEBT EQUITY RATIO

Particular	30.06.2012	30.06.2013	30.06.2014
	(Rs. In Million)	(Rs. In Million)	(Rs. In Million)
Share Capital	219.800	219.800	219.800
Reserves & Surplus	2795.000	2943.500	3114.200
Net worth	3014.800	3163.300	3334.000
long-term borrowings	0.000	93.500	88.800
Short term borrowings	0.000	0.000	0.000
Total borrowings	0.000	93.500	88.800
Debt/Equity ratio	0.000	0.030	0.027

YEAR-ON-YEAR GROWTH

Year on Year Growth	30.06.2012	30.06.2013	30.06.2014
	(Rs. In Million)	(Rs. In Million)	(Rs. In Million)
Sales	5623.300	4897.700	5451.300
		(12.903)	11.303

NET PROFIT MARGIN

Net Profit Margin	30.06.2012	30.06.2013	30.06.2014
	(Rs. In Million)	(Rs. In Million)	(Rs. In Million)
Sales	5623.300	4897.700	5451.300
Profit	683.900	148.500	170.700
	12.16%	3.03%	3.13%

LOCAL AGENCY FURTHER INFORMATION

Sr. No.	Check List by Info Agents	Available in Report (Yes / No)
1]	Year of Establishment	Yes
2]	Locality of the firm	Yes
3]	Constitutions of the firm	Yes
4]	Premises details	No
5]	Type of Business	Yes
6]	Line of Business	Yes
7]	Promoter's background	Yes
8]	No. of employees	Yes
9]	Name of person contacted	Yes
10]	Designation of contact person	Yes
11]	Turnover of firm for last three years	Yes
12]	Profitability for last three years	Yes
13]	Reasons for variation <> 20%	--
14]	Estimation for coming financial year	No
15]	Capital in the business	Yes
16]	Details of sister concerns	Yes
17]	Major suppliers	No
18]	Major customers	No
19]	Payments terms	No
20]	Export / Import details (if applicable)	No
21]	Market information	--
22]	Litigations that the firm / promoter involved in	--
23]	Banking Details	Yes
24]	Banking facility details	No
25]	Conduct of the banking account	--
26]	Buyer visit details	--
27]	Financials, if provided	Yes
28]	Incorporation details, if applicable	Yes
29]	Last accounts filed at ROC	Yes
30]	Major Shareholders, if available	Yes
31]	Date of Birth of Proprietor/Partner/Director, if available	No
32]	PAN of Proprietor/Partner/Director, if available	No
33]	Voter ID No of Proprietor/Partner/Director, if available	No
34]	External Agency Rating, if available	Yes

CONTINGENT LIABILITIES:

PARTICULARS	30.06.2014 (Rs. In Million)	30.06.2013 (Rs. In Million)
Income Tax matters [Note (a)]	229.400	176.300
Excise Duty/Service Tax matters under dispute	10.100	11.100
Sales Tax matters under dispute	6.500	8.600

Notes:

a) Mainly relates to transfer pricing adjustments made by the Income Tax Department for the tax assessment years 2007-08, 2008-09, 2009-10 and 2010-11, which is disputed by the Company and the matter is lying under appeal with The Income Tax Appellate Tribunal, Bangalore/ The Commissioner of Income Tax, Appeals, Bangalore. The Company has paid “under protest” an aggregate of Rs. 177.400 Million (2013: `Rs.148.900 Million) to the Income Tax Department in this regard.

b) There are certain non-quantifiable industrial disputes pending before various judicial authorities.

c) Considering the very nature of the above contingent liabilities, the estimate/ timing of cash outflow, if any, is not readily ascertainable.

OPERATING RESULTS

The Company improved its operating results during FY14 with Sales and Other Income increasing by 10.86%

to Rs. 5515.100 Million compared with Rs.4974.5 Million in the previous year. Profit before Tax before Exceptional items was Rs. 297.800 Million as compared to Rs. 1958 Million in the previous year. The growth in Sales and Profit for the year was driven by improved demand for the products and growth initiatives undertaken by the Company. The Company does not have any subsidiaries.

INDUSTRY STRUCTURE AND DEVELOPMENTS

OPPORTUNITIES AND THREATS

The Company is a leading 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, power generation equipment, earthworks, mining and construction. 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, metalworking 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 Indian Economy continued to be subdued during the Financial Year 2013-2014 (FY14). The GDP growth for FY14 was again below the 5% level at 4.7% which was only marginally better than 4.5 % in FY13. The Index for Industrial Production (IIP) an important indicator of the manufacturing activity in the country, actually had a negative growth of (0.1%) as compared to 1.1% in FY13. One of the industries which has been adversely affected is the automobile industry, particularly the Medium and Heavy Commercial Vehicle (MandHCVs) segment. MandHCVs segment has shown a negative growth of 21% in FY14 after an even larger negative growth of 23 % in FY 13. This continued large decline has impacted The Company in a very negative manner, as tooling consumption is significant in the machining of parts which go into medium and heavy commercial vehicles. Continued slowdown

in the economy is largely on account of the poor macro-economic scenario and lack of adequate policy / growth initiatives at the center.

The Company has significant imports and hence any rupee depreciation has an impact on cost and profitability. During the financial year, the Indian Rupee was down to unprecedented levels, falling to levels of Rs. 68 in September 2013. In a poor economic environment where cost rationalization is the order of the day to the end customers the Company is unable to pass all the cost escalation to the customers.

OPERATIONS

During the Financial Year 2013-2014, The Company has delivered a growth of 11% despite the negative growth in the manufacturing sector. This was primarily driven by special initiatives in each of the business verticals. The Hard Metals business grew by 14% and MSG grew by 1.8%. Implementation of our dual brand strategy of Kennametal and WIDIA is complete with 100% separation of customers and distributors. Kennametal would serve the customers both directly and indirectly backed by component specific and other high end solutions to the customers where as WIDIA would serve the customers through distributors, focusing on standards and simple specials through enhanced reach. As part of the strategy new distributors have been brought on board under both Kennametal and WIDIA brands to make sure that each brand is adequately represented across the country. Some of the initiatives such as productivity optimization services, tools management services have met good success both in terms of obtaining new business as well as retaining the existing business. Product transfer and localization initiatives started in FY13 gained momentum and contributed for the growth in FY14. Focused business initiatives like Extrude Hone and Conforma Clad are expected to do better in forthcoming years. The following initiatives launched in FY14 in the hard metals segment to grow the business are worth noting:

1. Component Specific solutions:

The Company intends to build competency in certain key components of high volume which are manufactured by its customers. The objective of the Company is to “own” these key components through the development and application of the “total solutions” (production process input, tool supply and appropriate service support)

required to effectively and efficiently produce them for our customers.

2. Stellram product portfolio introduction:

Stellram product portfolio has been brought into Kennametal basket through the TMB acquisition globally by Kennametal Inc. This product portfolio improves Kennametal’s metal cutting and metal finishing product offerings. Stellram draws on the advanced RandD capabilities to provide “Best in Class” machining solutions for the aerospace, defense, power generation and medical industries. This is a strategic fit for The Company.

3. NOVO deployment.

NOVO is a process enabler as a digital assistant with data-rich machining strategies that starts working from the moment a parts drawing is received from a Customer. With a refined and intuitive tool advisor, tool selector, and tool configurator, everything down the line gets more efficient—from parts quoting through programming, presetting, and production. NOVO is process knowledge delivered via the cloud. Customers are able to access NOVO via a PC application and tablet solutions.

The Company believes that these initiatives would yield good results for the Company in the long run.

The Machining Solutions Group (MSG) once again had a record year with a sale of Rs. 10184 Million, which is the highest ever sale achieved during a year. The MSG continues to work effectively with growing customers to grow the sales and gain market share in special purpose machines.

In FY14 specific customers were targeted to grow

the sales and market. Numerous “roadshows” and “technology days” were organised at specific customer locations. These “roadshows” and “technology days” enhanced our brand image and visibility besides generating more business From the customers. Besides these events The Company actively engaged with customers through the knowledge center imparting training on tools and products.

Our overall long term strategy to have >40% of the sales from the new products continues to sustain. In FY14 we had close to 42% of hard metals revenue from new products i.e. the products introduced with in the last five years. Capacity utilization improved quite a bit in FY14 on account of better sales and there exists an opportunity to produce even more in a few product lines. The capital investment during the year has been low as The Company believes that the existing capacity would meet the requirement of the customers for the forthcoming financial year (FY15) as well.

The Company remains focused on operational excellence to improve operating efficiencies. In order to take the operational excellence model to the next level the “K 100 Operating System“ has been launched in FY14. The “K100 Operating System” is a comprehensive and balanced approach to assessing an organization against necessary practices to achieve operational excellence. The goal is to bring the organization up to the level of the best performing organizations through the deployment of global solutions and best practices.

The Company as in the past has been bestowed with many awards. To name a few:

• Kennametal Value Business System (KVBS) lean award by Kennametal Inc. for a project on “Prevention of Spindle Failure of KAVO Stators”
• Award by National Institute of Quality and Reliability for “Grade Rationalization “
• Award by Symbiosis Centre of Management and Human Resource Development (SCMHRD) for six sigma project on “Grinding Cycle Time Reduction in Anca cell”

COMPANY’S OUTLOOK

With the new Government taking charge with a clear mandate from the electorate, the investor sentiment has improved. During April-June 2014 quarter the GDP has grown by 5.7% vs 4.4% in the same quarter last year. The car sales – a key barometer of consumer sentiment expanded in double digits between April to June 2014. FII inflows over January to July 2014 touched $26.5 billion and FDI exceeds $17 billion in the first 5 months of the calendar year which is 25% higher than the same period last year. The new Government has also initiated the process of clearing the massive backlog of stalled investment projects. With several initiatives and reforms for economic growth expected in the upcoming budget session of the parliament, there is optimism in the coming days for the Indian economy.

While these initiatives would yield results in the long term, the short term outlook seems to be cautiously optimistic. The general expected GDP growth is in the range of 5 to 5.5% for the year 2014-15.

Since the recovery would be a slow process on the economic front, The Company continues to focus on special initiatives for FY15 to grow the sales (as in FY14). The Tungsten Materials Business (TMB) and Emura acquisitions globally by Kennametal Inc., would benefit Kennametal India Limited (KIL) in the long run with accessibility to high quality raw materials and the best carbide recycling technologies. The TMB acquisition has brought in the Stellram product portfolio to KIL which would benefit The Company to get better market share in the energy and aerospace sectors .The Company has been engaged in moving up the value chain in the infrastructure side of the business by focusing on more value added products and phasing out commodity products with lower profitability.

Exports to Asian markets has seen impressive growth in FY14 and The Company believes that this market will further expand in FY15 to grow the hard metals exports business. Besides the hard metal products there is a good opportunity to grow our Machine Tools Business in South Asian markets. This initiative started off in FY14 and needs to be developed further to sustain the growth rates delivered by the Machining Solutions Group (MSG) business over a period of four years.

FINANCIAL PERFORMANCE

During FY14, The Company has delivered a sale of Rs. 5451.300 Million compared to Rs. 4897.700 Million in FY13. This translates into a Year Over Year (YOY) growth of 11%. The Hard metals segment grew faster than the MSG segment. Hard metals recorded a 14% growth primarily driven by exports and market share gain. Specific efforts to improve export sales to the Asia Pac region have shown encouraging results for the Company. Profit before tax and exceptional items grew by 52% to Rs. 298.000 Million from Rs. 1960 Million. This improvement is significant considering the fact that the Company had to bear an increase in raw materials costs to the extent of Rs. 90.000 Million on account of the rupee further deprecating from Rs. 55 levels in FY13 to Rs. 61 levels in FY14. The improvement in profitability has been primarily driven by the volumes leverage supported by many cost containment/reduction initiatives taken up during the year.

The Company actively pursued its efforts in bringing down the spiraling energy costs during the financial year. As a result The Company is in the process of executing a project to utilize the grid power more effectively by installing UPS system across the factory. With this initiative the Company would save around Rs. 30.000 Million every year and this savings would start flowing in from FY15 onwards.

The Company continues to aggressively pursue the localization efforts and also use India as a low cost production location for exporting to other markets in the world particularly Asia. This effort besides improving the capacity utilization should help the Company in Forex risk mitigation. In the year under review the MSG business growth softened after witnessing double digit growth for four years in row. The YOY growth was 1.8% compared to 23% in FY13. The decline in growth rates is primarily on account of delay or postponement of projects by our customers. The Company continues to evaluate the market scenario to respond in a quick and appropriate manner to the changing market requirement and trends.

The Company continues to maintain optimized working capital deployment into the business. On account of surge in MSG receivables the DSO (Days of Sales Outstanding) has also increased by 3 days to 63 in comparison to the prior year. Special emphasis was given to reduce the aging of the receivables during the year because of which The Company’s receivable beyond 60 days has been reduced to 16% compared to 18% in FY13. The Company continues to maintain strong collection trends as in the past despite liquidity challenges in the market place. The Company did not have to write off any receivables in last eight years which is a notable achievement.

During FY14, a project was undertaken to directly ship products to the end customers from the originating warehouse instead of routing through Bangalore warehouse to serve the dual purpose of quicker deliveries and reduction of finished goods inventory. Because of this project The Company has been able to reduce the traded goods inventory by more than Rs. 300 Million. Inventory and Accounts Payable as a percentage to sales have been at 18% and 16% respectively for FY14. Prudent expense and working capital management has ensured a significant improvement in profitability and Return on Capital Employed in the current financial year over the previous year.

STATEMENT OF STANDALONE UNAUDITED RESULT FOR THE QUARTER AND HALF YEAR ENDED DECEMBER 31, 2014

(Rs. In Million)

Particulars	For 3 Months Ended	Preceding 3 Months Ended	Year to date figure current period ended
	31.12.2014	30.09.2014	31.12.2014
1. Income from operations	(Unaudited)	(Unaudited)	(Unaudited)
a) Net sales/ Income from operation (net of excise duty)	1427.300	1411.900	2839.200
b) Other operating income	0.600	0.500	1.100
Total income from Operations(net)	1427.900	1412.400	2840.300
2.Expenditure
a) Cost of raw material consumed	424.300	405.700	830.000
b) Purchases of stock in trade	344.100	321.500	665.600
c) Changes in inventories of finished goods, work-in-progress and stock-in-trade	3.000	18.800	21.800
d) Employees benefit expenses	264.900	261.300	526.200
e) Depreciation and amortization expenses	66.800	66.800	133.600
f) Other expenditure	255.300	270.900	526.200
Total expenses	1358.400	1345.000	2703.400
3. Profit from operations before other income and interest and Exceptional Items	69.500	67.400	136.900
4. Other income	12.700	22.800	35.500
5. Profit before Interest and Exceptional Items (3+4)	82.200	90.200	172.400
6. Finance costs	--	--	--
7. Profit after Interest and Finance Charges	82.200	90.200	172.400
8. Exceptional item	--	--	--
9. Profit from ordinary activities before tax Expense: (7+8)	82.200	90.200	172.400
10.Tax expenses	22.200	24.900	47.100
11.Net Profit / (Loss) from ordinary activities after tax (9-10)	60.000	65.300	125.300
12.Extraordinary Items (net of Tax)	-	--	--
13. Net Profit / (Loss) for the period (11 -12)	60.000	65.300	125.300
14. Paid-up equity share capital (Nominal value Re. 1/- per share)	2198	2198	2198
15i. Earing per share (not annualized)
Basic	2.73	2.97	5.70
Diluted	2.73	2.97	5.70
20. Particulars of shareholding
- Number of shares	5494560	5494560	5494560
- Percentage of shareholding	25.00	25.00	25.00
21. Promoters and Promoters group Shareholding-
a) Pledged /Encumbered
Number of shares	--	--	--
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	--	--	--
Percentage of shares (as a % of total share capital of the company)	--	--	--
b) Non Encumbered
Number of shares	16483680	16483680	16483680
Percentage of shares (as a % of total shareholding of the promoter and promoter group)	100.00	100.00	100.00
Percentage of shares (as a % of total share capital of the company)	75.00	75.00	75.00

B	INVESTOR COMPLAINTS [Nos.]	3 months ended 31.12.2014
	Pending at the beginning of the quarter	-
	Received during the quarter	-
	Disposed of during the quarter	-
	Remaining unresolved at the end of the quarter	-

SEGMENTWISE REVENUE, RESULTS AND CAPITAL EMPLOYED

Sl. No.	Particulars	For 3 Months Ended	Preceding 3 Months Ended	Year to date figure current period ended
1	Segment Revenue	31.12.2014	30.09.2014	31.12.2014
	Net Sales
	Machine Tools	240.100	191.700	431.800
	Hard Metal and Hard Metal Products	1187.800	1220.700	2408.500
	Net Sales/ Income from Operations	1427.900	1412.400	2540.300
2	Segment Results
	Machine Tools	32.300	17.600	49.900
	Hard Metal and Hard Metal Products	108.400	126.200	234.600
	Total	140.700	143.800	284.500
	Exceptional and other non recurring items	--	--	--
	Other Unallocable Expenditure (net of income)	58.500	53.600	112.100
	Total Profit before Tax	82.200	90.200	172.400
3.	Capital Employed
	Machine Tools	46.400	100.200	46.400
	Hard Metal and Hard Metal Products	2168.100	2199.200	2168.100
	Unallocated	1244.800	1099.900	1244.800
	Total Capital Employed	3459.300	3399.300	3459.300

Note :

1. The unaudited financial results for the quarter and half year ended December 31, 2014, 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 at its meeting held on January 30, 2015.

2. Segments have been identified in line with the Accounting Standard on Segment Reporting (AS - 17). taking into account the organisation structure as well as the differential risks and returns of these segments.

3. Segment revenue, results and capital employed figures include the respective amounts identifiable to each of these segments. Other unallocable expenditure include expenses incurred on common services provided to these segments which are not directly identifiable to the individual segments as well as expenses incurred at a corporate level which relate to the Company as a whole.

4. Previous quarter's / year's figures have been regrouped wherever necessary to conform to current quarter's / year's classification.

STANDALONE STATEMENT OF ASSETS AND LIABILITIES

(Rs. In Million)

Particulars		As at half year ended on 31.12.2014 (Unaudited)
A	EQUITY AND LIABILITIES
1	Shareholders' Funds
	(a) Share Capital	219.800
	(b) Reserves & Surplus	3239.500
	Total Shareholders’ Funds	3459.300
2	Non-Current Liabilities
	(a) long-term borrowings	0.000
	(b) Deferred tax liabilities (Net)	0.000
	(c) Other long term liabilities	0.000
	(d) long-term provisions	103.200
	Sub Total Non-current Liabilities	103.200
3	Current Liabilities
	(a) Short term borrowings	0.000
	(b) Trade payables	529.200
	(c) Other current liabilities	339.300
	(d) Short-term provisions	68.800
	Sub Total Current Liabilities	937.300
	TOTAL- EQUITY AND LIABILITIES	4499.800
A	ASSETS
1	Non-current assets
	(a) Fixed Assets	1118.100
	(b) Non-current Investments	0.000
	(c) Deferred tax assets	83.400
	(d) Long-term Loan and Advances	303.500
	(e) Other Non-current assets	9.200
	Sub Total Non-Current Assets	1514.200
2	Current assets
	(a) Current investments	0.000
	(b) Inventories	955.700
	(c) Trade receivables	1103.400
	(d) Cash and cash equivalents	761.700
	(e) Short-term loans and advances	164.000
	(f) Other current assets	0.800
	Sub Total Current Assets	2985.600
	TOTAL-ASSETS	4499.800

INDEX OF CHARGES

S.No.	Charge ID	Date of Charge Creation/Modification	Charge amount secured	Charge Holder	Address	Service Request Number (SRN)
1	80067518	23/02/2004	295,000,000.00	CORPORATION BANK	QUEENS ROAD , , BANGALORE , Karnataka - 560001, INDIA	-

* Date of charge modification

FIXED ASSETS

• Land
• Buildings
• Plant and Machinery:

Ø Data Processing

Ø Equipment

Ø Others

• Furniture and Fixtures
• Leasehold Improvements
• Office Equipment
• Vehicles

CMT REPORT (Corruption, Money Laundering and 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 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.63.58
UK Pound	1	Rs.97.99
Euro	1	Rs.70.53

INFORMATION DETAILS

Information Gathered by :	PRT
Analysis Done by :	KAR
Report Prepared by :	ART

SCORE and RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILITY	1~10	6
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	6
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	NO
--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
DEFAULTER
--RBI	YES/NO	NO
--EPF	YES/NO	NO
TOTAL		54

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 and 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.