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Directors Report of Kennametal India Ltd.

Jun 30, 2015

Dear Members,

The Directors are pleased to present the 50th Annual Report and the Audited Financials for the year ended June 30, 2015 (FY15).

FINANCIAL RESULTS in Lakhs)

FYI5 FYI4 Particulars Year ended Year ended June 30, 2015 June 30, 2014

Total Revenue 57579 55071

Profit before Tax 3994 2978

Add/Less: Exceptional items lncome/(Expense) 647 (1020)

Profit After Exceptional Items and Before Tax 4641 1958

Less: Provision for Tax

Current Tax 1581 1010

Tax provision relating to earlier years - (277)

Deferred Tax (credit)/charge (292) (482)

Profit after Tax 3352 1707

Add: Balance brought forward from previous year 16249 14542

Total available for appropriation I9601 16249

Interim Dividend (440) Dividend Distribution Tax (89) —

Balance transferred to Balance Sheet 19072 16249

DIVIDEND

An interim dividend of Rs 2/- per equity share of Rs 10/- each (20% on the paid up capital of the Company) was declared by the Board for the financial year ended June 30, 2015 and June 23,2015 was fixed as Record Date for the said purpose. The said interim dividend was paid on June 26,2015.The Board of Directors has decided to treat the same as final dividend and therefore, no additional dividend is recommended for the year ended June 30, 2015.

OPERATING RESULTS

Your Company continued to improve its operating results during FYI5 with Sales and Other Income increasing by 4.6 % to Rs 57579 Lakhs compared with Rs 55071 Lakhs in the previous year. Profit before Tax before Exceptional items was Rs 3994 Lakhs as compared to Rs 2978 Lakhs in the previous year. The growth in Sales and Profit for the year was driven by improved demand for the products and various cost containment initiatives undertaken by the Company during the year under review,

Your Company does not have any subsidiaries.

MATERIAL CHANGESAND COMMITMENTS

There was a significant material change which occurred affecting the financial position of your Company between June 30,2015 and the date of approval of this report, which is explained below:

The Company's part of land (3435.26 Sq. Mtrs. in Sy No. I I Nagasandra) was acquired by Karnataka Industrial Areas Development Board (KIADB) for Bangalore Metro Rail project in the year 2010 and the claim of the Company was disputed by other third parties. On August 19, 2015 your Company received the land compensation amount after tax deduction at source (Rs 55.52 Lakhs) along with interest total amounting Rs 5,91.80,773/- on August 19,2015 vide cheque from the City Civil Court, Bengaluru. The total of the above is Rs 647 Lakhs which is shown as an exceptional item in the Financial Results.

MANAGEMENT DISCUSSION ANDANALYSIS

A Management Discussion and Analysis (MD&A) report is annexed to this report as "Annexure I" as required under Clause 49 of the Listing Agreement with BSE Limited.

DIRECTORS

Mr, M. N. Bhagwat (DIN No. 00036692). Non-Executive Independent Director of the Company and Chairman of the Board since September 27, 2002 had expressed his unwillingness to be re-appointed as a Director at the 49th Annual Genera! Meeting of the Company. The Board of Directors and the employees accorded a farewell to Mr. Bhagwat. The Board and the management appreciated Mr. Bhagwat's guidance and advice to the Company for over 12 years. Over the years, the Company had progressed a lot under his guidance. His dedication and devotion to the Company has been an inspiration for all the employees.

During the year, the Board of Directors appointed Mr. Prakash M. Telang, Non-Executive Independent Director as an Additional Director with effect from November 04, 2014, to hold office up to the date of ensuing Annual General Meeting. Mr. Telang was appointed as the Chairman of the Board on November 04,2014. Being eligible, M r.Telang offered himself to be appointed as an Independent Director of your Company. A notice has been received from a member along with the prescribed deposit of Rs 1 Lakh proposing his appointment as a Non-Executive Independent Director at the ensuing Annual General Meeting of the Company.

As per the provisions of the Companies Act, 2013, independent Directors are required to be appointed for a term of five consecutive years, but shall be eligible for reappointment on passing of a special resolution by the Company and shall not be liable to retire by rotation. The Independent Directors of your Company have given the Certificate of Independence stating that they meet the criteria of Independence as mentioned under Section 149 (6) of the CompaniesAct, 2013.

The details of training and familiarization programmes and Annual Board Evaluation process for Directors have been provided under the Corporate Governance Report.

The policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, Independence of Director, and also remuneration for Key Managerial Personnel and other employees forms part of the Corporate Governance Report of this Annual Report.

Mr. John H.Jacko Jr. (DIN:069455 11) was appointed on August 12,2014 as a Non-Executive Director due to a casual vacancy caused by the resignation of Mr. John Chang on the same day. He is eligible for appointment as Director liable to retire by rotation in the ensuing Annual General Meeting.Your Directors recommend the same for your approval. A notice has been received from a member along with the prescribed deposit of Rs 1 Lakh proposing his appointment as a Director at the ensuing Annual General Meeting of the Company

Mr. Gerald Goubau (DIN:06566705) resigned as Director with effect from May 05, 2015.Your Directors place on record their appreciation of the valuable contributions made by him to the Company during his tenure as Director,

The Board at its meeting held on May 05,2015 approved the appointment of Mr. David Lee (DIN: 07175442) filling the casual vacancy caused by Mr.Gerald Goubau' s resignation.

Profile of Mr. David Lee

Mr. David Lee is currently the Sales Leader Asia, Kennametal Tooling at Kennametal Inc. He joined Kennametal Inc. in the year 2007 as Regional Sales and Marketing Director. He has served through different businesses in Kennametal over the span of seven years.

Prior to joining Kennametal Inc. he had served various organizations and handled various roles as Sales Engineer in Avery Dennison, Senior Sales Manager in ID Technologies and as Sales Manager in Brady Corporation. He has over 19 years of experience in the field of Sales, Marketing and Leadership.

He graduated as a Mechanical Engineer from Nanyang Technological University in the year 2001 and also holds a Master of Business Administration (MBA) from the University of Buffalo. USA.

Appropriate resolutions are being proposed at the ensuing Annual General Meeting seeking consent of the members for the aforesaid reappointments/appointments and your Directors recommend your approval.

A brief profile of the respective Directors being appointed/ re-appointed as required under Clause 49 of the Listing Agreement is furnished along with the Notice convening the 50th Annual General Meeting.

DIRECTORS' INTEREST

No Director was materially interested in any contracts or arrangements existing during or end of the period in relation to the business of the Company. No Director holds any shares in the Company as on June 30,2015 except Mr. B.Anjani Kumar. Non-Executive Independent Director, who holds 10 equity shares of Rs. 10/- each in the Company

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (c) of the CompaniesAct, 2013, the Board of Directors report that:

* the applicable accounting standards have been followed in the preparation of the financial statements, along with proper explanations relating to material departures, if any;

* the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at June 30,2015 and of the profit of the Company for the year ended on that date;

* that directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

* the directors have prepared the annual accounts on a going concern basis;

* the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

* the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

FIXED DEPOSITS

During the year, your Company has not invited/ accepted any Fixed Deposits under ChapterV of the Companies Act, 2013.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company has not provided any Loans or Guarantees to any other company as per the provisions of Section 186 of the Companies Act, 2013 and the details of investments made are given in the notes to the Financial Statements.

EVALUATION OFTHE BOARD'S PERFORMANCE

During the year, the Board adopted a formal mechanism for evaluating its performance and that of its Committees and Directors, including the Chairman of the Board.The exercise was carried out through a structured evaluation process covering various aspects of the functioning of the Board and Committees such as their composition, experience & competencies, performance of specific duties & obligations, governance issues etc. A separate exercise was carried out to evaluate the performance of each individual director including the Board's Chairman who were evaluated on parameters such as contribution at the meetings, independent judgment, attendance and other relevant aspects.The Board was satisfied with the evaluation results, which reflected the overall engagement of the Board, Committees and the Directors of the Company.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance along with the certificate from Mr. Vijayakrishna K.T. ,a Company Secretary in Practice confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with the BSE Limited is set out in"Annexure II" to this report.

COMPLIANCE WITH THE CODE OF CONDUCT

A declaration signed by the Managing Director affirming compliance with the Company's Code of Conduct by your Directors and Senior Management of your Company, for the year under review, as required under Clause 49 of the Listing Agreement with BSE Limited is annexed as"Annexure IIA" and forms part of this report.

The Kennametal Code of Business Ethics & Conduct is a major component of the Kennametal Value Business System (KVBS). The Code addresses the importance of fair dealing and compliance in all aspects of your Company's business and focuses on the concept of doing the right thing every day.

Your Company insists on its employees to embrace the Code of Business Ethics & Conduct to ensure maintenance of a strong ethical culture.

CEO/CFO CERTIFICATE

A certificate from the Chief Executive Officer (Managing Director) and the Chief Financial Officer dated August 21, 2015 on the financial statements and the cash flow statement of the Company for the financial year ended June 30, 2015 is annexed as "Annexure-IIB" and forms part of this report.

WHISTLE-BLOWER POLICY/VIGIL MECHANISM

Your Company was following a Whistle Blower policy/mechanism even prior to the requirements of the Companies Act 2013. However, pursuant to Section 177 of the Companies Act, 2013 your Company has taken on record the Vigil Mechanism (Whistle Blower Policy) of the Company subsequent to the approval of the Board of Directors at their meeting. The Whistle Blower policy provides avenues for employees to raise complaints and to receive feedback on action taken and seeks to reassure the employees that they will be protected against victimization and for any whistle blowing conducted by them in good faith.

THE KENNAMETAL ETHICS HELPLINE

Anyone can make a compliant about the violation of Code of Conduct of the Company. Reports made to the Helpline can be done via the phone or the web on a confidential and anonymous basis, where allowed by local law. The Helpline is administered by an independent third-party and is available 24 hours a day, 7 days a week.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE,ETC.

A report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of The Companies (Accounts) Rules, 2014, is set out in"Annexure III" to this report.

AUDITORS & AUDITORS' REPORT

Messrs. Price Waterhouse & Co Bangalore LLP, Chartered Accountants (FRN: 007567S/S-200012) were appointed as Statutory Auditors at the Annual General Meeting held on November 04, 2014 for a period of 3 (three) years from the conclusion of the Forty-ninth Annual General Meeting until the conclusion of the fifty second annual general meeting, subject to ratification at every annual general meeting of the Company. The Board recommends the ratification of their continuation as Auditors. The Company has received a confirmation from the Statutory Auditors to the effect that they would be eligible for such continuation,

The Auditors' Report to the Members on the Accounts of the Company for the year ended June 30, 2015 does not contain any qualification,reservation or adverse remarks.The notes on financial statement referred to in the Independent Auditor's Report are self-explanatory and do not call for any further comments.

SECRETARIAL AUDITOR

Mr. Vijayakrishna K.T., Company Secretary in practice (FCS 1788) carried out a Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2014-15 and submitted his report, which is annexed to this report as "Annexure-IV'.The report does not contain any qualification,

COST AUDITORS

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors of the Company upon recommendation made by the Audit Committee has appointed Messrs. K.S.Kamalakara & Co., Cost Accountants (Firm Registration No: 0000296), as the Cost Auditors of the Company for the financial year 2015-16 and has recommended his remuneration to the shareholders for their ratification at the ensuing Annual General Meeting.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

Pursuant to Section 188 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the related party transactions that were entered into during the financial year were on arm's length basis and in the ordinary course of business. Further, there are no material related party transactions during the year under review with the Directors or Key Managerial Personnel. All related party transactions are placed before the Audit Committee and the Board for approval as applicable under Section 188 of the Companies Act,2013 and Clause 49 of the ListingAgreement.

The policy on related party transactions as approved by the Board is uploaded on the Company's website at the link http://www.kennameta!.corn/contentidam/kennametal/kennameta l/hi/About%20Us/Companv%20Profile/KIL%20Related%20Party %20Transactions%20Policy%200S052015 %20.pdf

The Particulars on RPTs in AOC 2 is annexed to the Report as "AnnexureV".

PARTICULARS OF DISCLOSURES AS REQUIRED UNDER SECTION 197 OF THE COMPANIES ACT, 2013

Pursuant to Section 197(12) of the Companies Act, 2013 read with Companies (Appointments Remuneration of Managerial Personnel) Rules, 2014 the ratio of the remuneration of each director to the median employee's remuneration for the financial year and such other details as prescribed are set out in the "Annexure VI". The statement showing details of employees of the Company employed throughout the year and employed for the part of the year, who were in receipt of remuneration of Rs 60 Lakhs or more per annum / Rs 5 Lakhs or more per month is annexed herewith as"AnnexureVII" .

Prevention of Sexual Harassment

There was no complaint lodged by any woman employee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,2013, with the Company during the period under report.

RESEARCH & DEVELOPMENT (R &D)

The Research, Development and Engineering (RD& E), works on new Products and Process Developments with specific focus on materials,coatings and design.

RD&E, Bengaluru is a globally aligned matrix set-up and works for the Company's needs with a continued specific focus on up- gradation of products, processes and technology, which is also recognized by the Ministry of Science & Technology - Department of Scientific and Industrial Research - Government of India.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Environmental, Health, and Safety (EHS) are fundamental to your Company's business and its ability to Deliver The Promise to all the stakeholders, including its employees, customers, shareholders, and the public. Everyday, employees are empowered to demonstrate Kennametal EHS commitment by striving for:

100% Safe-pursuing a goal of zero injuries, illnesses, and incidents by living the belief that all are preventable. Your Company is pursuing the goal of zero through senior leader ownership of safety, preventative accions and processes, and by establishing leadership roles for employees in safety.

Protecting Our Planet- providing sustainable solutions by reducing the total environmental impact of our products and operations. Your Company have been working towards protecting our planet by continuously improving the management of energy and natural resources, promoting recycling and recovery of materials, and preventing pollution. Among other things, the following EHS activities/ improvements were undertaken during the year:

* A total 3,635 hours were spent on EHS training by employees of your Company.

* Annual medical examination of employees was conducted to maintain good health. Health awareness programme was also conducted to create awareness and improve good health of the employees of the Company.

* Your Company continued the Management Based Safety (MBS) programme,a standard global safety process that has been the cornerstone of great improvement in safety culture.

* A Risk Finder Tool and an improved Daily Safety Checklist are designed to strengthen every employee's ability to identify, document and eliminate hazards at their workplace.

* Your Company continued to monitor the hazardous and non-hazardous waste, according to waste stream and disposal route, with performance assessed on the basis of waste intensity.

To minimise risk and to improve the safe working environment through hazard identification and Risk assessment, the following EHS Improvements projects were completed in FYI5.

* Fire Hydrant improvement - Updating of Firefighting and sprinkler system to minimise the fire risk.

* Installed flame detection on Carburizing furnaces ( Six numbers) with alarm to alert the operator to take immediate action to minimize the fire risk

* 5 dust collectors for Bangalore Metallurgy Plant to improve safe working environment.

* In Production Unit No.2, installed dry dust collectors by removing wet type dust collector to improve efficiency of dust collection and also to improve safe working environment.

* Compact Heater to replace existing oil heating system to improve safe working and also to save energy.

* Ergonomics

* Drums with materials are handled using a customised lift and tilt unit to eliminate scooping and to minimize the exposure to dust.

* A pneumatically operated jib crane has been installed for lifting and lowering of milling drums from the Acetone bath to prevent finger injury and sprain to shoulder.

* Employee Involvement and Recognition

* The 404 Find and Fix program was implemented in FYI5, to involve employees in eliminating hazards and to recognize them for their contribution. This also helped in creating a safe working environment.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As required under Section 134(3)(o) of the Companies Act, 2013, details about the policy developed and implemented by the Company on Corporate Social Responsibility initiatives during the year ended June 30, 2015 are given in "Annexure VIII" to this report.

LAND COMPENSATION MATTER

As reported in the previous annual reports, the Special Land Acquisition officer of Karnataka Industrial Area Development Board (KIADB) had passed an order dated March 05,2012 to deposit the land compensation amount of Rs 499.75 Lakhs after Tax Deduction at Source (TDS) in the City Civil Court, Bangalore, due to objections raised by the representatives of Ramlingeshwar Mutt, Harnahaili, Shivamogga, Karnataka on the title of the property. The Civil Court finally heard the matter and passed the verdict on June 10,2014 in favor of your Company.The Court found an error in memo of the parties and corrected it in December, 2014.The order for release of compensation amount was passed on August 18,2015 and your Company has received the land Compensation amount along with interest totally amounting to Rs 647 Lakhs which is shown as an exceptional item in the Financial Results. After tax deduction at source, the net amount received from the court 19,2015 was Rs 5,91,80,773/-.

PERSONNEL/INDUSTRIAL RELATIONS

During the year under review, your Company maintained healthy, cordial and good industrial relations at ail levels.The enthusiasm and unstinting efforts of the employees have enabled your Company to remain at the forefront of the industry.Your Directors record their appreciation for the hard work and efficiency.

DISCLOSURES UNDERTHE COMPANIES ACT, 2013

Extract of the Annual Return

An extract of the annual return as per Form MGT - 9 is enclosed in''Annexure IX" to the Board's Report.

Number of Board Meetings

The Board of Directors met five times during FYI5.The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report,

Committees of Board of Directors

Details of memberships and attendance of various committee meetings of the Company are given in the Corporate Governance Report.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company has a structured familiarization programme for Independent Directors of the Company which is also extended to other Non-Executive Directors to ensure that the Directors are familiarized with their role, rights, responsibilities and the nature/details of the Company's business.

The Board of Directors has complete access to the information within the Company. Presentations are regularly made to the Board of Directors and all Committees of the Board on various matters, where Directors get an opportunity to interact with Senior Management. Presentations, inter alia, cover the Company's strategy, business model, operations, markets, organization structure, product offerings, finance, risk management framework, quarterly and annual results, human resources, technology, EHS, quality and such other areas as may arise from time to time.

The Company also issues an appointment letter to Independent Directors which also incorporates their role, duties and responsibilities.

GREEN INITIATIVES

Electronic copies of the Annual Report and the notice of the fiftieth AGM are being sent to all such members whose e-mail addresses are registered with the Company/ its Registrar and Transfer Agent.

To the other members physical copies of the Annual Report and Notice of the fiftieth AGM are being sent through the permitted modes of dispatch. However, Members who have received the said documents in electronic mode but seek physical copies of the same, can send their requests to the Company Secretary. The remote e-voting facility is being provided to the members to enable them to cast their votes electronically on all resolutions set forth in the notice, pursuant to Section 108 of the Companies Act, 2013 read with the Companies (Management and Administration) Amendment Rules, 2015. The instructions for the remote e- voting are provided in the notice.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and assistance received from customers, investors, business associates, bankers, vendors, regulatory and governmental authorities .Your Directors place on record their gratitude to the Members for their continued trust and confidence and express their sincere appreciation to all employees for their teamwork and contributions during the year.

For and on behalf of the Board of Directors of Kennametal India Limited

Bengaluru B.Anjani Kumar Bhagya Chandra Rao August 21,2015 Director Managing Director


Jun 30, 2013

The Directors are pleased to present the 48th Annual Report and Audited Accounts for the year ended June 30, 2013 (FY13).

FINANCIAL RESULTS

(Rs.in Lakhs)

FY13 FY12 Particulars Year ended Year ended June 30, 2013 June 30, 2012

Total Revenue 49745 57278

Proft before Tax 1958 9894

Less: Provision for Tax

Current Tax 560 3145

Tax provision relating to earlier years (112)

Deferred Tax (credit)/charge 25 (90)

Proft after Tax 1485 6839

Add: Balance brought forward from previous year 13057 13288

Total available for appropriation 14542 20127

Transfer to General Reserve 684

Interim Dividend 5495

Tax on Interim Dividend 891

Balance transferred to Balance Sheet 14542 13057



DIVIDEND

Your Company intends to acquire suitable parcel of land for modernization, expansion and relocation of its manufacturing operations and other services for future growth. The resources available would be required for the above said purpose and hence, your Directors have thought it prudent not to recommend any dividend for the year ended June 30, 2013.

OPERATING RESULTS

Uncertainty in the Indian economy particularly in Automobile Industry has resulted in a drop in your Company''s revenue in FY13. During the year, the revenue of your Company has declined by 13.5% from Rs. 57278 Lakhs to Rs. 49745 Lakhs as compared to the previous year. This decline in revenue has resulted in underutilisation of manufacturing capacity. As a consequence of reduction in Sales and underutilisation of the capacity, the Proft before Tax has declined from Rs. 9894 Lakhs to Rs. 1958 Lakhs during FY 13.

Your Company does not have any subsidiaries.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments which occurred affecting the fnancial position of your Company between June 30, 2013 and the date of approval of this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis (MD&A) report is annexed to this report as "Annexure I" as required under Clause 49 of the Listing Agreement with BSE Limited.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Vinayak K. Deshpande and Mr. John Chang retire by rotation, and being eligible, offers themselves for re-appointment.

While Mr. B. Anjani Kumar has earlier represented Kennametal Inc. as a Non-Executive director of the Company''s Board, he has been functioning as an Independent Director for all intents and purposes. He has also not been in the executive employment of the Company during the past three fnancial years. In view of this, the Board approved the change in the status of Mr. B. Anjani Kumar from Non-Executive Director to Non-Executive Independent Director on August 16, 2013.

Mr.Bernard North resigned as Director with effect from April 30, 2013. Your Directors place on record their appreciation of the valuable contribution made by him to the Company during his tenure as Director.

The Board at its meeting held on April 30, 2013 approved the appointment of Mr. Gerald Goubau flling the casual vacancy caused by Mr. Bernard North''s cessation.

Profle of Mr. Gerald Goubau:

Mr. Gerald Goubau is Vice president- Sales EMEA region, Kennametal Inc. and has been associated with Kennametal group since year 2007.

Mr. Goubau has over 28 years of experience in Sales & Marketing, Engineering, Industries and General Management. He holds a Master''s Degree in Science- Electro-Mechanical Engineering from University of Louvain, as well as an MBA from INSEAD, France.

Resolutions are being proposed seeking consent of the members for the re-appointment of Mr. Vinayak K. Deshpande and Mr. John Chang in the ensuing Annual General Meeting and your Directors recommend the same for your approval.

The brief profles of respective Directors being re-appointed as required under Clause 49 of the Listing Agreement are furnished along with the Notice convening 48th Annual General Meeting.

REMUNERATION COMMITTEE

The Remuneration Committee of Directors was constituted on August 16, 2013 in accordance with the applicable laws and regulations to determine and approve remuneration payable to the Managing Director and/or Whole time Directors and at its discretion also the remuneration of such management team as required from time to time in compliance of the Companies Act and rules made thereunder. The Committee consists of Mr. B. Anjani Kumar as its Chairman, Mr. M. N. Bhagwat, Mr. Vinayak K. Deshpande and Mr. John Chang as members.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the Annual Accounts for the fnancial year ended June 30, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures

- Accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on June 30, 2013 and of the proft for the period of July 01, 2012 to June 30, 2013;

- Proper and suffcient care has been taken for the maintenance of adequate accounting records in

accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The Annual Accounts have been prepared for the year ended June 30, 2013 on a going concern basis.

FIXED DEPOSITS

During the year, your Company has not invited/ accepted any Fixed Deposits under Section 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

AUDITORS

M/s. Price Waterhouse & Co, Chartered Accountants (Firm registration No. FRN 007567S), will retire at the conclusion of the forthcoming 48th Annual General Meeting and being eligible, offer themselves for re-appointment. They have furnished a written certifcate to the Company certifying that, if they will be re-appointed as auditors of your Company, such appointment would be within the limits specifed in Section 224(1)(B) of the Companies Act, 1956.

The Notes to the Accounts referred to by the auditors in their report are self-explanatory and may be treated as information / explanation submitted by the Board as contemplated under Section 217 (3) of the Companies Act, 1956.

zCORPORATE GOVERNANCE

A detailed report on Corporate Governance and the certifcate from Mr. Vijayakrishna K. T, a Practicing Company Secretary confrming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with the BSE Limited is set out in "Annexure II" to this report.

CODE OF CONDUCT COMPLIANCE

A declaration signed by the Managing Director affrming compliance with the Company''s Code of Conduct by your Directors and Senior Management of your Company, for the year under review, as required under Clause 49 of the Listing Agreement with BSE Limited is annexed and forms part of this report.

Kennametal Code of Business Ethics & Conduct is a major component of the Kennametal Value Business System (KVBS). The Code addresses the importance of fair dealing and compliance in all aspects of your Company''s business and focuses on the concept of doing the right thing every day.

Your Company encourages its employees to embrace the Code of Business Ethics & Conduct to ensure maintenance of strong ethical culture.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees forms part of this report. However, as per the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of your Company and others entitled thereto. Any member interested in obtaining a copy of the statement containing the aforesaid information may write to the Company Secretary at the Registered Offce of the Company and the same shall be provided by the Company.

INCREASE OF PUBLIC SHAREHOLDING

Pursuant to the notifcation of the Securities and Exchange Board of India (SEBI) read with the Securities Contracts (Regulation) Rules, 1957, Kennametal Inc., Promoter of your Company sold in March, 2013, an aggregate of 28,92,333 Equity Shares of the face value of Rs. 10 each, aggregating to approximately 13.16 % of the total paid-up share capital of the Company by way of the Offer For Sale (OFS) through Stock Exchange mechanism notifed by SEBI. As a result of this sale, public shareholding of the Company has increased from 11.84% to 25% of the total paid up share capital of your Company.

RESEARCH & DEVELOPMENT (R &D)

The Research, Development and Engineering (RD&E), works on new Product and Process Developments with specifc focus on materials, coatings and design.

RD&E, Bangalore is a globally aligned set-up and works with a specifc focus on up-gradation of products, processes and technology.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In terms of Section 205C of the Companies Act, 1956, the following amounts lying with the Company for a period of seven years were transferred during the year to the Investor Education Protection Fund:

Unclaimed dividend - Rs.128256/-

Unclaimed fxed deposit - NIL

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.

A report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(1)(e) read with the Company''s (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in "Annexure III" to this report.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Safety, Health and Environment protection have continued to be an important focus area in your Company. Your Company has taken efforts in building awareness about EHS among employees, suppliers and service providers. It is worthwhile to mention here that your Company has commissioned a modern and very effcient system for effuent treatment of waste, and also engaged in improving the greenery all around the manufacturing plants.

Your Company celebrated India''s 42nd National Safety Day, and organised a Safety exhibition in Company''s cafeteria by displaying of Personal Protective Equipment''s, Fire and First Aid equipment''s and demo of automatic emergency shut-off for domestic LPG Systems to create awareness to improve safety in workplace and at home.

Employee Wellness and Well-Being are of prime concern for your Company. Periodic preventive health checks and health promotion programs are organised. A new Occupational Health Clinic (OHC) was constructed during the year with facilities to treat illness and injuries.

Your Company has committed itself to the safety of its employees and conservation of the environment by setting clear expectations, fxing responsibilities and accountabilities. Safety campaign 2013 was organised to create awareness and recognize employees for their contribution. Your Company recognizes its employees for EHS achievements and innovative EHS activities through award programs.

Management Based Safety (MBS) is your Company''s standard global safety process that has been the cornerstone of great improvement in our safety culture. Implementing MBS has resulted in a dramatic reduction in safety incidents across your Company.

A Risk Finder Tool and an improved Daily Safety Checklist have been designed to strengthen every employee''s ability to identify, document and eliminate hazards in his or her workplace.

Waste management is a key area of focus of your Company with opportunities to reduce the use of raw materials, packaging and other consumables.

Hazardous and non-hazardous waste is monitored according to waste stream and disposal route, with performance assessed on the basis of waste intensity.

EHS Improvements undertaken during the year

- Improvements in hazardous waste storage area. Installed chip compacting machine to facilitate compacting the Borings which helped in the safe storage and transportation

- Disposal of E waste to Recyclers.

- Replaced the asbestos roofng in the shop foors with sandwiched sheets and disposed the asbestos in approved Land fll site.

- The tree transplantation was done successfully to facilitate construction of new parking area.

- Adopted various Green Initiatives to conserve the natural resources .

- The "Protecting Our Planet" program initiated by your Company in 2007 has resulted in achieving reduced Energy consumption by 46 %, Water consumption by 15 %, Paper Consumption by 48 % and Hazardous waste generation by 15 % in last 5 years The Company has been annually Rain Water Harvesting 80 Million Liters of Rain water.

Awards and Recognitions for EHS activities:

During the year, your Company won the "Environmental Excellence Award 2012-13" under the Engineering & Automobile industries category from Karnataka State Pollution Control Board.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility continues to be an important part in the activities of your Company. The employees of your Company continued their commitment to "Protect Our Planet". Your Company has undertaken following initiatives/activities relating to CSR during the year.

- Participated in the Independence Day Flower show as well as the Republic Day Flower Show held at Lalbagh, which were organised by Mysore Horticulture Society as a part of our ''Protecting Our Planet'' initiative.

- As a part of Delivering the Promise to the Community, Kennametal organised a Blood Donation Drive in the campus and collected 160 Units of blood. This was further donated to the Rashtrotthana Blood Bank.

- Continued to contribute to Akshayapatra programme under which Mid-Day meals were provided to the students of government schools in the nearby area.

LAND COMPENSATION MATTER

As reported in the last year''s annual report FY12, the Special Land Acquisition Offcer of Karnataka Industrial Area Development Board (KIADB) had passed an order dated March 05, 2012 to deposit compensation amount of Rs.4,99,75,679/- after deduction of TDS in the City Civil Court, Bangalore due to objections raised by the representatives of Sri Ramlingeshwar Mutt, Harnahalli, Shimoga,

Karnataka on title of the property. Upon your Company fling a Writ Petition before the Hon''ble High Court of Karnataka, Bangalore on July 05, 2012 vide its order dated March 18, 2013 it directed the Civil Court to complete the proceedings within 6 months. Meanwhile, the Special Land Acquisition Offcer, KIADB fled a Land Acqusition Case (LAC) on August 27, 2012 before the Civil Court whereby, the dispute was referred to the court irrespective of the stay order passed by the Hon''ble High Court. Your Company has fled contempt proceedings against the Special Land Acquisition Offcer, KIADB. The Civil Court vide its order dated October 20, 2012 directed to deposit the compensation amount of Rs.4, 99, 75,679/- payable by KIADB after deducting the tax, by way of fxed deposit for a term of three years. Your Company is taking all legal steps required and necessary to receive its entitled compensation with interest.

PERSONNEL/INDUSTRIAL RELATIONS

During the period under review, your Company maintained healthy, cordial and good industrial relations at all levels. The enthusiasm and unstinting efforts of the employees have enabled your Company to remain at the forefront of the industry. Your Directors record their appreciation for this hard work and effciency.

COST AUDIT AND COMPLIANCE CERTIFICATE

Your Company appointed M/s. K.S. Kamalakara & Co., Cost Auditors, Bangalore (frm Registration Number: 0000296) for the fnancial year 2012-13 for undertaking Cost Audit under the Companies Act, 1956 and the Companies (Cost Accounting Records) Rules, 2011.

The Compliance Certifcate for the fnancial year ended June 30, 2012 was fled with the Ministry of Corporate Affairs within the permissible time.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and assistance received from customers, investors, business associates, bankers, vendors, regulatory and governmental authorities. Your Directors place on record their gratitude to the Members for their continued trust, confdence and expresses its sincere appreciation to all the employees for their teamwork and contributions during the year. For and on behalf of the Board of Directors of

Kennametal India Limited

M.N. Bhagwat

August 16, 2013 Chairman


Jun 30, 2012

The Directors are pleased to present the 47th Annual Report and Audited Accounts for the year ended June 30, 2012(FY12).

FINANCIAL RESULTS (Rs. In Lakhs)

FY12 FY11 Particulars Year ended Year ended June 30, 2012 June 30, 2011

Total Revenue 57278 51905

Profit Before Tax 9894 12754

Less: Provision for Tax

Current Tax 3145 4019

Tax provision relating to earlier years - (115)

Deferred Tax (credit)/charge (90) (5)

Profit After Tax 6839 8855

Add: Balance brought forward from previous year 13288 14259

Tota! available for appropriation 20127 23114

Transfer to General Reserve 684 886

Interim Dividend 5495 7692

Tax on Interim Dividend 891 1248

Balance transferred to Balance Sheet 13057 13288

DIVIDEND

An interim dividend of Rs.25 per equity share of Rs.10/- each (250% on the paid-up capital of the Company) was declared by the Board for the financial year ended June 30, 2012. May 25, 2012 was fixed as 'Record Date' for the said purpose. The said interim dividend was paid from June 4, 2012. The Board of Directors has decided to treat the same as final dividend and therefore no additional dividend is recommended for the year ended June 30,2012.

OPERATING RESULTS

During FY12, Total revenue was Rs. 57278 Lakhs as compared to Rs. 51905 Lakhs during the previous year {10.35% higher). Profit after tax declined to Rs. 6839 Lakhs from Rs.8855 Lakhs recorded for the previous year. The decline in profit is mainly due to increase in the cost of input raw materials.

Your Company does not have any subsidiaries.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments that occurred affecting the financial position of your Company between June 30, 2012 and the date of approval ofthis report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis (MD&A) report is annexed to this report as Annexure I as required under Clause 49 of the Listing Agreement with BSE Limited.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr.Bidadi Anjani Kumar and Mr.Bernard North retire by rotation, and being eligible, offers themself for re-appointment. Your Directors commend the re-appointment of Mr. Bidadi Anjani Kumarand Mr. Bernard North for youracceptance.

Mr. Santanoo Medhi, resigned as Managing Director and Director of the Company and the Board of Directors have relieved him from the position of the Managing Director with effect from September 17, 2012. The Directors place on record their appreciation for the valuable contributions made by Mr. Medhi during his tenure as Managing Director of the Company. .

Mr. Bhagya Chandra Rao was appointed as Additional Director on the Board and subsequently as Managing Director of the Company with effect from September 17,2012, subject to the approval of the members.

Appropriate resolutions are being proposed seeking consent of the members for the aforesaid reappointments/appointment and your Directors recommend your approval. Profiles of respective Directors being appointed/reappointed as required under Clause 49 of the Listing Agreement are given along with the Notice convening 47" Annual General Meeting.

DIRECTORS'RESPONSIBILITY STATEMENT

Pursuant to Section 217{2AA) of the Companies Act, 1956, the Board of Directors report that:

- that in the preparation of the Annual Accounts for the financial year ended June 30, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures

- Accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and, prudent so as to give a true and fair view of the state of affairs of the Company as on June 30, 2012 and of the profit for the period of July 1,2011 toJune 30,2012;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities:

- The Annual Accounts have been prepared for the year ended June 30, 2012 on a going concern basis.

FIXED DEPOSITS

During the year, your Company has not invited/accepted any Fixed Deposits under Section 58Aand 58AAofthe Companies Act, 1956 read with the Companies {Acceptance of Deposits) Rules, 1975.

AUDITORS

M/s.Price Waterhouse & Co., Chartered Accountants (Firm registration No. FRN 007567S), will retire at the conclusion of the forthcoming 47th Annual General Meeting and being eligible, offer themselves for re-appointment. They have furnished a written certificate to the Company certifying that, if they are re-appointed as auditors of your Company, such appointment would be within the limits specified in Section 224(1)(B) of the Companies Act, 1956.

The Notes to the Accounts referred to by the auditors in their report are self-explanatory and may be treated as information/explanation submitted by the Board as contemplated under Section 217 (3) of the Companies Act, 1956.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance and the certificate from Mr. Vijay Krishna VT, a Practicing Company Secretary confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with BS E Li mited is set out in Annexure II to this report.

CODE OF CONDUCT COMPLIANCE

A declaration signed by the Managing Director affirming compliance with the Company's Code of Conduct by your Directors and Senior Management of your Company, for the year under review, as required under Clause 49 of the Listing Agreement with BSE Limited is annexed and forms part of this report.

Kennametal Code of Business Ethics & Conduct is a major component of the Kennametal Value Business System (KVBS). The Code addresses the importance of fair dealing and compliance in ail aspects of your Company's business and focuses on the concept of doing the right thing everyday.

Your Company encourages its employees to embrace the Code of Business Ethics & Conduct to ensure maintenance of strong ethical culture.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees forms part of this report. However, as per the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of your Company and others entitled thereto. Any member interested in obtaining a copy of the statement containing the aforesaid information may write to the Company Secretary at the Registered Office of the Company and the same shall be provided by the Company.

RESEARCH & DEVELOPMENT (R&D)

The Research, Development and Engineering (RD&E) works on development of new Products and Process Developments with specific focus on materials, coatings and design.

RD&E function of your Company in collaboration with the parent Company-Kennametal Inc. continues its endeavor for new products development, enhancement of product efficiency, reduction in cost, enhancement of durability etc. and has a globally aligned matrix set-up. RD&E works as per the global requirements of Kennametal Inc. with a continued specific focus on up-gradation of products, processes and technology in line with local market requirements.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.

A report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217{1){e) read with the Company's (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in Annexure III to this report.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Safety, Health and Environment protection have continued to be an important focus area in your Company. Your Company has adopted an integrated approach towards EHS and has incorporated these in business practices. Your Company is committed to maintain highest standard of Health, Safety and Environment Protection and also complying with all applicable EHS laws and regulations and align EHS strategies with business goals and objectives.

On Safety front, you r Company strives to work safely in a manner that protects and promotes the health and well-being of employees, contractors, and the communities in which it operates because it is fundamentally the right thing to do. Your Company believes that safety is largely about cultural change, with the ultimate goal of institutionalizing a safety system that first and foremost protects its employees, contractors, and the communities in which it operates. Management Based Safety (MBS) process is implemented in your Company which involves Leaders , Supervisors and Employees to practice MBS Tools which will help to build safety culture.

EHSTraining

Your Com pany du ring the year under review -

- Focused-Hand Safety awareness, Chemical Safety, Office ergonomics, MBS office, MBS Refreshing , Health Awareness and Industrial Safety. Achieved 5.73 hrs peremployee EHStraining.

- EHS e-learning tool has been designed and developed to give its employees the knowledge needed to develop skill, and competency to create 100% compliance and safe working environment.

- Developed on line reporting system to inculcate a habit to follow MBS Tools practice with meaning by all the levels.

Environment:

Your Company during the year under review-

* continued its green initiatives and conserved Energy of 5.7 Lakh units, reduced its water consumption by 20 % and continued the rain water harvesting. The factory premises' greenery was increased by 25,000 Sq.ft and trees which were up- rooted due to land acquisition by Karnataka Industrial Areas Development Board (KIADB) for the Bangalore Metro Rail Project were successfully transplanted. In addition about 100 saplings were planted to facilitate green coverage of the facility. Your Company continued to recycle sewage water by treating it in the Sewage Treatment Plant and using the treated water for gardening.

* conducted Carbide Recycling process- 8.5 Tons of used Carbide was purchased from various customers and recycled the same, so as to reduce energy usage, and add sustainable raw material usage.

Awards and Recognitions for EHS activities:

Awards received from Kennametal Inc. USA, the Parent company viz. (1)100% Safe - Health and Safety Awards- Excellence Award No.1, and (2) 'Protecting Our Plant'-Environmental Awards - Presidential Award.

Your Company was conferred with the following awards (1)" Certificate of Commendation for Strong Commitment - 2011" by Confederation of Indian Industries (Cll)— Indian Tobacco Company (ITC) Sustainability Center (2) State Energy Conservation Award- 2011 by Government of Karnataka and Karnataka Renewable Energy Development Ltd. (KREDL) (3) State Best Maintained Industrial Garden by - Department of Horticulture & Mysore Horticultural Society and "Gold Award" in Engineering Sector at National Level Competition for outstanding achievement in Safety Management, during the year under review.

CORPORATE SOCIAL RESPONSIBILITY {CSR)

Corporate Social Responsibility continues to be an important part in the activities of your Company, The employees of your Company continued their commitment to Protect Our Planet. Your Company undertaken following initiatives/activities relating to CSR.

- Active participation in the 'LaSbagh Republic Day Flower Show' organized by Mysore Horticultural Society, as a part of 'Protect Our Planet' initiative.

- In order to create Environmental Awareness among school children the employees of your Company conducted workshop on Rain Water Harvesting in schools located adjacenttothe premises of your Company, .

- Continued to participate in the Akshaya Patra Programme under which Mid-Day meals were provided to the students of government schools located adjacent to the premises of your Company.

FACTORY LAND ATTUMKUR ROAD

KIADB had acquired and taken possession of your Company's land to the extent of 3,435.26 sq. mts located at Sy. No. 11 Nagasandra, Yeshwanthpur Hobli, Bangalore for the use of Bangalore Metro Rail Project. The Company had sought release of compensation amount by producing all the relevant records establishing the title of the Company over the acquired land, without prejudice to its right to claim higher compensation in future. Meanwhile, Sri Ramlingeshwar Mutt, Harnahalli, Shimoga, Karnataka, a religious organisation filed an objection against payment of the compensation amount to your Company contending that several lands including that acquired by KIADB belongs to them. The Office of the Special Land Acquisition Officer-2 vide its Order dated March 05, 2012 has decided to refer the matter to the City Civil Court under Section 30, 31 of the Land Acquisition Act, 1894 stating that there is an objection with regard to the right of ownership of land existed and that civil court was the appropriate authority to decide the same. Upon challenging the order by your Company by way of a Writ application, the Hon'ble High Court of Karnataka, Bangalore has, vide its Order dated July 11, 2012 granted an interim stay of the Order passed by the Special Land Acquisition Officer. The matter is pending before the High Court of Karnataka, Bangalore.

PERSONNEL / INDUSTRIAL RELATIONS

During the period under review, your Company maintained healthy, cordial and good industrial relations at all levels. Kennametal India Employees Association (KlEA) had served a notice of indefinite strike due to delay in wage settlement. The 4 Year Wage Settlement was signed between KIEAand the Company on June 29, 2012. The enthusiasm and unstinting efforts of the employees have enabled your Company to remain at the forefront of the industry. Your Directors record their appreciation for this hard workand efficiency.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and assistance received from customers, investors, business associates, bankers, vendors, regulatory and governmental authorities. Your Directors place on record their gratitude to the Members for their continued trust, confidence and expresses its sincere appreciation to all the employees for their teamwork and contributions during the year.

For and on behalf of the Board of Directors

of Kennametal India Limited

M. N. Bhagwat

September 17,2012 Chairman


Jun 30, 2010

The Directors are pleased to present the 45th Annual Report and Audited Accounts for the year ended June 30, 2010 (FY10).



FINANCIAL RESULTS (Rs. in million)

FY10 FY09 PARTICULARS Year ended Year ended June 30, 2010 June 30, 2009

Sales including other income 3,828.59 3,182.83

Profit Before Depreciation and Tax 969.42 599.33

Less: Depreciation 202.95 188.13

profit Before tax 766.47 411.20

Less: Provision for Tax

Current Tax 238.00 169.82

Deferred Tax 8.79 (46.26)

Fringe Benefit Tax - 7.50

profit After tax 519.68 280.14

Add: Balance brought forward from previous year 1,291.35 1,011.21

profit available for appropriations 1,811.03 1,291.35

Transfer to General Reserve 52.00 0

Interim Dividend 285.72 0

Tax on Interim Dividend 47.45 0

Balance transferred to Balance Sheet 1,425.86 1,291.35



DIVIDEND

During the year, the Board of Directors declared and paid an Interim Dividend of Rs.13/- per equity share on 21,978,240 equity shares of Rs.10/- each (130% on the paid up capital of the Company) during May 2010. The total outgo on account of

dividend, inclusive of taxes, for FY10 was Rs.333.17 Million which represents a pay-out of 64% of the Companys profits. The Board of Directors have decided to treat the same as final dividend and therefore no additional dividend is recommended for the financial year ended June 30, 2010.

OPERATING RESULTS

Your Company significantly improved its operating results in FY10 with Total Income increasing by 20% to Rs.3,828.59 Million compared with Rs.3,182.83 Million in the previous year. The growth in total income for the year was driven by an improved performance in the Automobile Industry and General Engineering Sector. Consequent to this commendable performance, the profit after tax of your Company for the year under review was Rs. 519.68 Million as against Rs. 280.14 Million of the prior year, an increase of 86% over prior year.

Your Company does not have any subsidiaries.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments that occurred affecting the financial position of the Company between June 30, 2010 and the date of approval of this report.

MANAGEMENT DISCUSSION AND ANALYSIS

A Management Discussion and Analysis (MD&A) report is annexed to this report as Annexure I as required under Clause 49 of the Listing Agreement with Bombay Stock Exchange Limited.

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Bernard North retires by rotation, and being eligible, offers himself for re-appointment.

During the year -

- Mr. Dinakar A, resigned as Managing Director and Director of the Company with effect from September 04, 2009. Mr. Frank P. Simpkins resigned as Director with effect from April 24, 2010. Mr.Rakesh Makhija resigned as Director with effect from on August 14, 2010. Your Directors place on record their appreciation and acknowledge the valuable contributions made by them to the Company during their tenure as Directors.

- Mr. Bidadi Anjani Kumar was appointed as Additional Director on the Board of the Company with effect from April 02, 2010.

- Mr. Santanoo Medhi was appointed as Additional Director on the Board and subsequently as Managing Director of the Company with effect from April 24, 2010, subject to the approval of the Central Government, the application for which has already been made.

- Further, Mr. Vinayak Kashinath Deshpande was appointed as Additional Director (Non Executive Independent Director) effective September 06, 2010.

Appropriate resolutions are being proposed seeking consent of the members for the aforesaid re-appointment/appointments and your Directors recommend your approval. Profiles of respective Directors being appointed / re-appointed as required under Clause 49 of the Listing Agreement, are given along with the Notice convening 45th Annual General Meeting.

Directors responsibility statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of Directors report that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- Accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- The annual accounts have been prepared on a going concern basis.

RECONSTITUTION OF THE COMMITTEES AND CESSATION OF OFFICE OF "MANAGER"

The Audit Committee of Directors, Shareholders / Investors Grievance Committee of Directors and Share Transfer Committee were reconstituted during the year, the details of which have been provided in the Corporate Governance Section of this report. Consequent to the appointment of Mr. Santanoo Medhi as Managing Director of the Company, Mr. D. Sarathy ceased to be the “Manager” of the Company with effect from April 24, 2010.

FIXED DEPOSITS

The Companys fixed deposit scheme was foreclosed on April 01, 2003 and all deposits outstanding as on March 31, 2003 were sought to be repaid. During the year, your Company has not invited/accepted any Fixed Deposits under Section 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

As on June 30, 2010, six depositors having fixed deposits aggregating to Rs.336,750/- remained unclaimed. In terms of Section 205C of the Companies Act, 1956, such amount remaining unclaimed upon the expiry of seven years from the date of maturity will be transferred to the Investor Education and Protection Fund.

TRANSFER to iNVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 205C of the Companies Act, 1956, the following amounts lying with the Company for a period of seven years were transferred during the year under review to the Investor Education and Protection Fund :

Unclaimed fixed deposit Rs. 75,103

Unclaimed dividend Nil

AUDITORS

M/s. Price Waterhouse, Chartered Accountants, Auditors of the Company will retire at the conclusion of the forthcoming 45th Annual General Meeting and being eligible, offer themselves for re-appointment. They have furnished a written certificate to the Company certifying that, if they are re-appointed as auditors of your Company, such appointment would be within the limits specified in Section 224 (1)(B) of the Companies Act, 1956.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance and the certificate from the Company’s Statutory Auditors confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited is set out in Annexure II to this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees forms part of this report. However, as per the provisions of Section 219(1) (b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining a copy of the statement containing the aforesaid information may write to the Company Secretary at the Registered Office of the Company and the same shall be provided by the Company. Shareholders may inspect the said Statement at the Registered Office of the Company between 10.30 am and 12.30 pm on any working day for the Company till the date of the forthcoming 45th Annual General Meeting.

RESEARCH & DEVELOPMENT (R &D)

The Research, Development and Engineering (RD& E), unit at your Company works on new Product and Process Developments with specific focus on materials, coatings and design.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC.

A report in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 217(1)(e) read with the Companys (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in Annexure III to this report.

Your Company was conferred “State Energy Conservation Award 1st Prize” in general category by Karnataka Renewable Energy Development Limited and Department of Energy, Government of Karnataka. Your Company was also conferred, the “Most Innovative Energy Conservation Project in Karnataka – 2010” – by Bangalore Chamber of Industries and Commerce (BCIC) and Government of Karnataka.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Safety, Health and Environment protection are of paramount concern to your Company. To celebrate India’s 39th Safety Day, a safety exhibition was organized at the factory premises for the benefit of the employees. An Automatic Fire Hydrant System was installed and commissioned during the year under review. Your Company was awarded the First Position in the State Level Award for Outstanding Safety Performance and Management Systems - Athyunnatha Surksha Puraskara by the National Safety Council (Karnataka Chapter). Your Company has recorded zero eye injuries sustained for the past 6 years.

Water Conservation: Your Company harvested 80 Million Liters of rainwater during the monsoon season which seems to have recharged the groundwater in the factory premises and in surrounding villages. Your Company’s water requirement for domestic usage is catered to by inhouse bore wells. Domestic sewage water is treated in the sewage treatment plant and subsequently used for gardening. 50,000 sq.ft. of additional greenery was developed in the campus of factory premises at Bangalore.

Through a specially designed Management Based Safety programme, your Company has inculcated global best practices in safety and created a culture that accords pre-eminence to the safety of its employees. Your Company has a

stated objective of ensuring one hundred percent safety for its employees. Your Company has committed itself to the safety of its employees and conservation of the environment by setting clear expectations, fixing responsibilities and ensuring accountability.

CORPORATE SOCIAL RESPONSIBILITY

Your Company takes its responsibilities as a corporate citizen. During the year under review your Company has initiated many activities to contribute its might towards the betterment of the under privileged sections of society, the support to those affected by natural disasters, and the conservation of the environment.

- Your Companys employees participated in the Bangalore Walkathon on June 05, 2010 thereby demonstrating its strong commitment towards protecting the planet on the eve of the World Environment Day.

- Your Companys employees generously contributed to "A-Coin-A-Day" programme, the proceeds of which were utilised for the benefit of the Abhilashrayam Foundation and a nearby Government Primary School,

- To mitigate the misery caused by unprecedented food in the Northern part of Karnataka, the employees of your Company contributed a days salary and your Company matched their contribution to aggregate a donation of Rs. 1.13 Million towards the Chief Ministers Relief Fund during the year.

ACKNOWLEDGEMENTS

Your Directors place on record their appreciation for the support and assistance received from customers, investors, business associates, bankers, vendors, regulatory and governmental authorities. The Board places on record its gratitude to the Members for their continued trust, confidence and expresses its sincere appreciation to all the employees for their teamwork and contributions during the year.

For and on behalf of the Board of Directors of Kennametal India Limited

Bangalore M.N. Bhagwat September 06, 2010 Chairman