Jun 30, 2015
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) Â
Balance transferred to Balance Sheet 19072 16249
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.
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.
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.
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.
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.
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.
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.
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,
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.
* 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/-.
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.
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.
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).
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
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.
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.
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.
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.
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.
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.
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.
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.
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
August 16, 2013 Chairman