Your Directors are pleased to present the 50th Annual Report and the AuditedFinancials for the year ended June 30 2015 (FY15).
|Particulars ||FYI 5 Year ended June 30 2015 ||FYI 4 Year ended 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 ||19601 ||16249 |
|Interim Dividend ||(440) || |
|Dividend Distribution Tax ||(89) ||... |
|Balance transferred to Balance Sheet ||19072 ||16249 |
An interim dividend of Rs 21- per equity share of Rs 10/- each (20% on the paidup capital of the Company) was declared by the Board for the financial year ended June 302015 and June 232015 was fixed as Record Date for the said purpose. The said interimdividend was paid on June 262015.The Board of Directors has decided to treat the same asfinal dividend and therefore.no additional dividend is recommended for the year ended June30 2015.
Your Company continued to improve its operating results during FYI5 with Sales andOther Income increasing by 4.6 % to Rs 57579 Lakhs compared with Rs 55071 Lakhs in theprevious year. Profit before Tax before Exceptional items was Rs 3994 Lakhs as compared toRs 2978 Lakhs in the previous year. The growth in Sales and Profit for the year was drivenby improved demand for the products and various cost containment initiatives undertaken bythe 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 positionof your Company between June 302015 and the date of approval of this report which isexplained below:
The Company's part of land (3435.26 Sq. Mtrs. in Sy No. I I Nagasandra) was acquired byKarnataka Industrial Areas Development Board (KIADB) for Bangalore Metro Rail project inthe year 2010 and the claim of the Company was disputed by other third parties. On August19 2015 your Company received the land compensation amount after tax deduction at source(Rs 55.52 Lakhs) along with interest total amounting Rs 59180773/- on August 19 2015vide cheque from the City Civil Court Bengaluru. The total of the above is Rs 647 Lakhswhich is shown as an exceptional item in the Financial Results.
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis (MD&A) report is annexed to this report as "AnnexureI" as required under Clause 49 of the ListingAgreement with BSE Limited.
Mr. M. N. Bhagwat (DIN No. 00036692) Non-Executive Independent Director of the Companyand Chairman of the Board since September 27 2002 had expressed his unwillingness to bere-appointed as a Director at the 49"' Annual General Meeting of the Company. TheBoard of Directors and the employees accorded a farewell to Mr. Bhagwat. The Board and themanagement 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 anddevotion to the Company has been an inspiration for all the employees.
During the year the Board of Directors appointed Mr. Prakash M. Telang Non-ExecutiveIndependent Director as an Additional Director with effect from November 04 2014 to holdoffice up to the date of ensuing Annual General Meeting. Mr. Telang was appointed as theChairman of the Board on November 042014. Being eligible Mr.Telang offered himself to beappointed as an Independent Director of your Company. A notice has been received from amember along with the prescribed deposit ofRs I Lakh proposing his appointment as aNon-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 tobe appointed for a term of five consecutive years but shall be eligible for reappointmenton passing of a special resolution by the Company and shall not be liable to retire byrotation. The Independent Directors of your Company have given the Certificate ofIndependence stating that they meet the criteria of Independence as mentioned underSection 149 (6) of the CompaniesAct2013.
The details of training and familiarization programmes and Annual Board Evaluationprocess for Directors have been provided under the Corporate Governance Report.
The policy on Director's appointment and remuneration including criteria fordetermining qualifications positive attributes Independence of Director and alsoremuneration for Key Managerial Personnel and other employees forms part of the CorporateGovernance Report of thisAnnual Report.
Mr.John H.JackoJr. (DIN:069455I I) was appointed on August 122014 as a Non-ExecutiveDirector due to a casual vacancy caused by the resignation of Mr. John Chang on the sameday. He is eligible for appointment as Director liable to retire by rotation in theensuingAnnual General Meeting.Your Directors recommend the same for your approval. Anotice has been received from a member along with the prescribed deposit of Rs I Lakhproposing his appointment as a Director at the ensuingAnnual General Meeting of theCompany.
Mr.Gerald Goubau (DIN:06566705) resigned as Director with effect from May 052015.YourDirectors place on record their appreciation of the valuable contributions made by him tothe 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. Hehas served through different businesses in Kennametal over the span of seven years.
Prior to joining Kennametal Inc. he had served various organizations and handledvarious roles as Sales Engineer in Avery Dennison Senior Sales Manager in IDTechnologiesand as Sales Manager in Brady Corporation. He has over 19 years of experience in the fieldof Sales Marketing and Leadership.
He graduated as a Mechanical Engineer from Nanyang Technological University in the year2001 and also holds a Master of Business Administration (MBA) from the University ofBuffalo USA.
Appropriate resolutions are being proposed at the ensuing Annual General Meetingseeking consent of the members for the aforesaid reappointments/appointments and yourDirectors recommend your approval.
A brief profile of the respective Directors being appointed/ re-appointed as requiredunder Clause 49 of the Listing Agreement is furnished along with the Notice convening the50" Annual General Meeting.
No Director was materially interested in any contracts or arrangements existing duringor end of the period in relation to the business of the Company. No Director holds anyshares in the Company as on June 302015 except Mr. B.Anjani Kumar Non-ExecutiveIndependent Director who holds 10 equity shares of Rs. 101- each in the Company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134 (3) (c) of the Companies Act 2013 the Board of Directorsreport that:
the applicable accounting standards have been followed in the preparation of thefinancial statements along with proper explanations relating to material departures ifany;
the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at June 302015 and ofthe profit of the Company for the year ended on that date;
that directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe 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 theCompany and that such internal financial controls are adequate and were operatingeffectively; and
the directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
During the year your Company has not invited/ accepted any Fixed Deposits underChapterV of the CompaniesAct2013.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year the Company has not provided any Loans or Guarantees to any othercompany as per the provisions of Section 186 of the Companies Act 2013 and the details ofinvestments 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 performanceand that of its Committees and Directors including the Chairman of the Board.The exercisewas carried out through a structured evaluation process covering various aspects of thefunctioning of the Board and Committees such as their composition experience &competencies performance of specific duties & obligations governance issues etc. Aseparate exercise was carried out to evaluate the performance of each individual directorincluding the Board's Chairman who were evaluated on parameters such as contribution atthe meetings independent judgment attendance and other relevant aspects.The Board wassatisfied with the evaluation results which reflected the overall engagement of theBoard 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 CorporateGovernance norms as stipulated in Clause 49 of the Listing Agreement with the BSE Limitedis 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'sCode of Conduct by your
Directors and Senior Management of your Company for the year under review as requiredunder Clause 49 of the Listing Agreement with BSE Limited is annexed as"AnnexureIIA" and forms part of this report.
The Kennametal Code of Business Ethics & Conduct is a major component of theKennametal Value Business System (KVBS). The Code addresses the importance of fair dealingand compliance in all aspects of your Company's business and focuses on the concept ofdoing 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 ChiefFinancial Officer dated August 21 2015 on the financial statements and the cash flowstatement 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 therequirements of the CompaniesAct20l3.However pursuant to Section 177 of the CompaniesAct 2013 your Company has taken on record the Vigil Mechanism (Whistle Blower Policy) ofthe Company subsequent to the approval of the Board of Directors at their meeting. TheWhistle Blower policy provides avenues for employees to raise complaints and to receivefeedback on action taken and seeks to reassure the employees that they will be protectedagainst 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 andanonymous basis where allowed by local law. The Helpline is administered by anindependent third-party and is available 24 hours a day7 days a week.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTIONFOREIGN EXCHANGEETC.
A report in respect of conservation of energy technology absorption foreign exchangeearnings and outgo as required under Section I34(3)(m) of the Companies Act 2013 readwith the Rule 8(3) of The Companies (Accounts) Rules 2014 is set outin"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 heldon
November 04 2014 for a period of 3 (three) years from the conclusion of theForty-ninth Annual General Meeting until the conclusion of the fifty second annual generalmeeting subject to ratification at every annual general meeting of the Company. The Boardrecommends the ratification of their continuation as Auditors. The Company has received aconfirmation from the Statutory Auditors to the effect that they would be eligible forsuch continuation.
The Auditors' Report to the Members on the Accounts of the Company for the year endedJune 30 2015 does not contain any qualification reservation or adverse remarks.The noteson financial statement referred to in the Independent Auditor's Report areself-explanatory and do not call for any further comments.
Mr. Vijayakrishna K.T. Company Secretary in practice (FCS 1788) carried out aSecretarial Audit under the provisions of Section 204 of the Companies Act 201 3 for thefinancial year 2014-15 and submitted his report which is annexed to this report as "Annexure-IV.Thereport does not contain any qualification.
Pursuant to Section 148 of the CompaniesAct2013 the Board of Directors of the Companyupon recommendation made by the Audit Committee has appointed Messrs. K.S. Kamalakara& Co. Cost Accountants (Firm Registration No: 0000296) as the Cost Auditors of theCompany for the financial year 2015-16 and has recommended his remuneration to theshareholders for their ratification at the ensuingAnnual General Meeting.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
Pursuant to Section 188 of the Companies Act 2013 and Clause 49 of the ListingAgreement the related party transactions that were entered into during the financial yearwere on arm's length basis and in the ordinary course of business. Further there are nomaterial related party transactions during the year under review with the Directors or KeyManagerial Personnel. All related party transactions are placed before the Audit Committeeand the Board for approval as applicable under Section 188 of the Companies Act 2013 andClause 49 of the Listing Agreement.
The policy on related party transactions as approved by the Board is uploaded on theCompany's website at the link http://www.kennametal.com/content/damlkennametallkennametal/hi/About%20Us/Company%20Profile/KIL%20Related%20Party%20Transactions%20Policv7o20050S2015%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(Appointment & Remuneration of Managerial Personnel) Rules 2014 the ratio of theremuneration of each director to the median employee's remuneration for the financial yearand such other details as prescribed are set out in the "Annexure VI". Thestatement showing details of employees of the Company employed throughout the year andemployed for the part of the year who were in receipt of remuneration of Rs 60 Lakhs ormore 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 atWorkplace (Prevention Prohibition and Redressal) Act2013 with the Company during theperiod under report.
RESEARCH & DEVELOPMENT (R &D)
The Research Development and Engineering (RD& E) works on new Products andProcess Developments with specific focus on materials.coatings and design.
RD&E Bengaluru is a globally aligned matrix set-up and works for the Company'sneeds with a continued specific focus on up- gradation of products processes andtechnology 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 andits ability to Deliver The Promise to all the stakeholders including itsemployees customers shareholders and the public. Everyday employees are empowered todemonstrate Kennametal EHS commitment by striving for:
100% Safe-pursuing a goal of zero injuries illnesses and incidents by living thebelief that all are preventable. Your Company is pursuing the goal of zero through seniorleader ownership of safety preventative actions and processes and by establishingleadership roles for employees in safety.
Protecting Our Planet- providing sustainable solutions by reducing the totalenvironmental impact of our products and operations. Your Company have been workingtowards protecting our planet by continuously improving the management of energy andnatural resources promoting recycling and recovery of materials and preventingpollution. Among other things the following EHS activities/ improvements were undertakenduring the year:
A total 3635 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 healthof the employees of the Company.
Your Company continued the Management Based Safety (MBS) programmea standardglobal safety process that has been the cornerstone of great improvement in safetyculture.
A Risk Finder Tool and an improved Daily Safety Checklist are designed tostrengthen every employee's ability to identify document and eliminate hazards at theirworkplace.
Your Company continued to monitor the hazardous and non-hazardous wasteaccording to waste stream and disposal route with performance assessed on the basis ofwaste intensity.
To minimise risk and to improve the safe working environment through hazardidentification and Risk assessment the following EHS Improvements projects were completedin FYI5.
- Fire Hydrant improvement - Updating of Firefighting and sprinkler system to minimisethe fire risk.
- Installed flame detection on Carburizing furnaces ( Six numbers) with alarm to alertthe 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 dustcollector to improve efficiency of dust collection and also to improve safe workingenvironment.
- Compact Heater to replace existing oil heating system to improve safe working andalso to save energy.
Drums with materials are handled using a customised lift and tilt unit toeliminate scooping and to minimize the exposure to dust.
A pneumatically operated jib crane has been installed for lifting and loweringof 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 FYI5to involve employees ineliminating hazards and to recognize them for their contribution. This also helped increating a safe working environment.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
As required under Section l34(3)(o) of the Companies Act 2013 details about thepolicy developed and implemented by the Company on Corporate Social Responsibilityinitiatives during the year ended June 30 2015 are given in "Annexure Vlll" tothis report.
LAND COMPENSATION MATTER
As reported in the previous annual reports the Special Land Acquisition officer ofKarnataka Industrial Area Development Board (KIADB) had passed an order dated March052012 to deposit the land compensation amount of Rs 499.75 Lakhs after Tax Deduction atSource (TDS) in the City Civil Court Bangalore due to objections raised by therepresentatives of Ramlingeshwar Mutt Harnahalli Shivamogga Karnataka on the title ofthe property. The Civil Court finally heard the matter and passed the verdict on June102014 in favor of your Company. The Court found an error in memo of the parties andcorrected it in December 20l4.The order for release of compensation amount was passed onAugust 182015 and your Company has received the land Compensation amount along withinterest totally amounting to Rs 647 Lakhs which is shown as an exceptional item in theFinancial Results. After tax deduction at source the net amount received from the courtonAugust 192015 was Rs 59180773/-.
PERSONNEL/ INDUSTRIAL RELATIONS
During the year under review your Company maintained healthy cordial and goodindustrial relations at all levels. The enthusiasm and unstinting efforts of the employeeshave enabled your Company to remain at the forefront of the industry.Your Directors recordtheir 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 "AnnexureIX" to the Board's Report.
Number of Board Meetings
The Board of Directors met five times during FY15.The details of the Board meetings andthe 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 aregiven in the Corporate Governance Report.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company has a structured familiarization programme for Independent Directors of theCompany which is also extended to other Non-Executive Directors to ensure
that the Directors are familiarized with their role rights responsibilities and thenature/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 Boardon various matters where Directors get an opportunity to interact with Senior Management.Presentations inter alia cover the Company's strategy business modeloperations markets organization structure product offeringsfinance risk managementframework quarterly and annual results human resources technology EHS quality andsuch other areas as may arise from time to time.
The Company also issues an appointment letter to Independent Directors which alsoincorporates their role duties and responsibilities.
Electronic copies of the Annual Report and the notice of the fiftieth AGM are beingsent to all such members whose e-mail addresses are registered with the Company/ itsRegistrar and Transfer Agent.
To the other members physical copies of the Annual Report and Notice of the fiftiethAGM are being sent through the permitted modes of dispatch. However Members who havereceived the said documents in electronic mode but seek physical copies of the same cansend their requests to the Company Secretary. The remote e-voting facility is beingprovided to the members to enable them to cast their votes electronically on allresolutions set forth in the notice pursuant to Section 108 of the Companies Act 2013read with the Companies (Management and Administration) Amendment Rules 2015. Theinstructions for the remote e- voting are provided in the notice.
Your Directors place on record their appreciation for the support and assistancereceived from customers investors business associates bankers vendors regulatory andgovernmental authorities.Your Directors place on record their gratitude to the Members fortheir continued trust and confidence and express their sincere appreciation to allemployees for their teamwork and contributions during the year.
| ||For and on behalf of the Board of Directors of ||Kennametal India Limited |
|Bengaluru August 212015 ||B.Anjani Kumar ||Bhagya Chandra Rao |
| ||Director ||Managing Director |