On behalf of the Board it is my pleasure to present to you the 52nd Annual Report andAudited Financial statements of Kennametal India Limited for the Financial Year ended June30 2017.
In thefinancial year 2016-17 there were signficant developments in India's economicscenario which have the potential to transform the economy. The Governmentsinitiatives to improve the ease of doing business and SKILL INDIA - amulti-skill development programme for promoting skills required for the manufacturingsector augur well for the future of the Indian economy.The Make in Indiainitiative aims to signficantly enhance the quality of the Indian economy by creating highvalue jobs maximising revenue and enabling sustainable development.
The Governments bold decision to demonetize higher value currency last year had asignficant short term impact on economic activities across the country but provided allip to greater digitization and offers hope for long term bene ts in the form of greatertax compliance.
The demonetization caused some disruption in economic activities resulting in the GDPgrowth rate slipping to 6.1 per cent in the January-March quarter but the economy isexpected to gradually recover.
In the face of these paradigm changes in the economy it is gratifying to note thatyour Company could signficantly improve its total revenue in FY17 with a growth of 14%despite the disruption in the domestic market and slower than anticipated global recovery.The operating pro t also showed improvement with a growth of 16.5% before exceptionalone-time cost. This is commendable in the face of challenging business environment costpush factors experienced on raw material and manpower costs and intense competitionfromAsian Players.
The Implementation of GST from the 1st of July 2017 is another landmark measure whichhas the potential of radically improving the countrys growth trajectory in thecoming years by bringing the entire country under one indirect tax regime which wouldresult in improved compliance and boost economic activity and growth. Although it is tooearly to analyze the impact of GST implementation on the economic growth in FY18 it isexpected that there would be some impact in the initial phase when businesses are adaptingto the changed scenario.
However the expectation of a good Monsoon this year a benign macro-economicenvironment globally with lower oil prices and signs of economic recovery in the globalmarkets all bode well for the sustained growth of the Indian economy. The likelihood offresh investments in manufacturing activities in infrastructure defense and aerospacesectors under the Make in India initiative also offer hope for revival of demand in theeconomy. The expectation from the NitfiAayog and the Government of India is that GDPgrowth would continue to be in the range of around 7 to 7.5 per cent in the current yearand would eventually attain the 8 % growth trajectory over the next few years.
Your Company serves industry segments such as transportation general engineeringaerospace & defense energy power generation equipment earthworks mining &construction and we believe that the aforesaid initiatives taken by the Government wouldprovide enhanced growth opportunities to your Company. With the several initiativesalready taken to manage the costs during FY17 we expect FY18 to be better than thepreviousfinancial year.
The new operating structure involving focused approach on both the Kennametal andWIDIAbrand products to better leverage the opportunities which lie in this business have begunyielding positive results and is being driven more forcefully to make the Company moreagile and competitive in the marketplace.Your Company continues to localize toolingproducts and make capital investment to meet the quality standard and demand both atdomestic and international levels.
Your Company is continuously monitoring the market and pro-actively taking varioussteps to include and increase its share through new and cost effective products which willenable us to speed with the market. It would also help the Company in increasing exportvolume.We are also expanding the distribution channel network to cover all regions acrossthe country for all the brands.
Your Company is committed to follow best practices for good Corporate Governance andalways strives to achieve an optimum level of shareholder involvement Board oversight andManagement reporting within the proper governance principles.
Your Company is committed to sustainable development that involves integrating economichealth safety and environmental aspects into our business decisions. Safety and Ethicsare non-negotiable at Kennametal. Continuous drive to operate safely and responsibly setsKennametal apart.
In addition your Company is committed to contribute to society through meaningfulCorporate Social Responsibility activities. Three primary categories have been establishedfor CSR activities which include the support of education Kennametal in the Community andProtecting Our Planet.
During FY17 as in the previous years your Company focused on activities in the areasof Education Health and Environment with a view to create measurable and lasting valuefor neighboring communities. Your Company has enabled access to education throughscholarships to help underprivileged children pursue higher education in addition tosupporting Sparsha Trust by donating a School Bus for their project NisargaGram a home for underprivileged children particularly girls which the Company hadhelped build last year. Your company is also working with an NGO the India LiteracyProject on a project called MDLS (Multi-Dimensional Learning Spaces) aimed at improvingthe quality of education in Government Schools in the Companys neighborhood.
The Company also contributed an ambulance to People Tree Foundation to further thecause of healthcare of the underprivileged people living in the vicinity of the Company.
As part of the Protecting the Planet initiatives your Company organized awarenesssessions on environmental protection in the Government high school in the local areafollowed by interschool competitions with speeches debates drawing and essay writingcompetitions which saw the active participation of around 150 School students from variousschools.
On behalf of the Board of Directors FIwould like to thank the employees for theiraspiration focus on customers hard work commitment and teamwork. FIalso place onrecord our sincere appreciation to the Customers Distribution PartnersVendorsShareholders and Bankers for their continued support.
FIwould like to place special thanks to the unionized employees who supported us invarious initiatives taken by the Company for meeting the quality and deliveryrequirements.
FIthank the members of the Board for their continued guidance in making ourorganization successful in every sphere. FIwish the entire Kennametal team great successin their pursuit of excellence and in their journey for the growth of the Company.