1. The Cash Flow Statement has been compiled from and is based on the
Balance Sheet as at June 30,2012and the related Statement of Profit and
Loss for the year ended on that date.
2. The Cash Flow Statement has been prepared under the indirect method
as set out in the Accounting Standard 3 on Cash flow Statement as
notified under Section 211(3C) of the Companies Act, 1956 and
reallocation required forthis purpose are as made by the Company.
* Current Investments in debt based Mutual Funds are readily
convertible into cash and having insignificant risk of changes of value
have been included in Cash and Cash Equivalents
4. Figuresin bracket indicate cash outgo, except foradjustments for
5. Previous year''s figures have been reclassified / regrouped,
1. GENERAL INFORMATION
Kennametal India Limited (the Company) is incorporated under The
Companies Act 1956. The Company is in the business of manufacturing and
trading of hard metal and hard metal products, and machine tools. The
Company has its registered office and a manufacturing facility at
Bangalore and sells its products and services through sales and support
offices. The Company is a public limited company listed on the Bombay
Stock Exchange (BSE).
(a) Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a par value of
Rs.10 per share. Each shareholder is eligible for one vote per share
held. The dividend proposed by the Board of Directors is subject to
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, if any, in pro
portion to their shareholding.
2. CAPITAL AND OTHER COMMITMENTS:
2.1 Capital Commitments (net of advances) Rs.905 (2011: Rs.2100)
3. CONTINGENT LIABILITIES
Nature of Contingent Liability 2012 2011
Income Tax matters [Note (a)] 1259 654
Excise Duty /Service Tax matters under dispute 93 70
Sales Tax matters under dispute 48 24
a) Relates to transfer pricing adjustments made by the Income Tax
Department for the assessment years 2007-08 and 2008-09 which is
disputed by the Company and the matter is lying under appeal with The
Income Tax Appellate Tribunal, Bangalore, and The Commissioner of
Income Tax, Appeals, Bangalore respectively. The Company has paid
under protest Rs.1237 (2011: Nil) to the Income Tax Department in
b)Thereare certain non-quantifi able industrial disputes pending before
various judicial authorities.
Note: The above disclosure of tangible fixed assets categories is based
on Department of Scientific & Industrial Research (DSIR), Ministry of
Science and Technology, Government of India requirements.
* The Guidance Note on implementation of AS15 Employee Benefits
issued by the Institute of Chartered Accountants of India states that
Provident Fund set up by employers that guarantee a specified rate of
return and which require interest shortfall to be met by employer would
be a Defined Benefit plan in accordance with the requirements of para
(26b) of AS15. Pursuant to the Guidance Note, the liability in respect
of the shortfall of interest determined on the basis of an independent
actuarial valuation [carried out as per the Guidance Note (GN29) issued
by Institute of Actuaries of India effective fromApril 1,2011], as at
i) The discount rate is based on the prevailing market yield on
Government securities as at the balance sheet date for the estimated
term of obligations.
ii) The expected return on plan assets is determined considering
several applicable factors mainly the composition of plan assets held,
assessed risk of asset management, historical results of the return on
plan assets, and the company''s policy for plan asset management.
iii) The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors such as supply and demand factors in the employment
4. SEGMENT REPORTING
The Company is in the business of manufacturing and trading of hard
metal and hard metal products, and machine tools, which have been
identified as business segment, for primary segment reporting. The
Company''s products are sold in domestic and export markets, which have
been identified as geographicsegmentsforsecondary segment reporting.
Note: Revenue from export sales is below threshold set out in
Accounting Standard 17 Segment Reporting and accordingly,
disclosure of revenue by geographical location of the customer and
carrying amount of segment assets by geographical location is
5. Accounting and disclosure for leases has been made in accordance
with the Accounting Standard 19 as follows:
I) Company as Lessee:
The Company has various operating leases for motor vehicles, office
facilities, residential premises for employees, etc. Such leases are
generally with options of renewal against increased rent and premature
termination of agreement through notice period of 1 to 3 months. The
particulars of these leases are as follows:
a) The Company sets up and maintains provisions for trade and other
demands when a reasonable estimate can be made. These provisions are
made based on estimates made by the management that are reviewed
annually. These matters involve quick settlements not exceeding a
period of two to three years in most cases.
b) Relates to provision toward disputed taxes. Considering the very
nature of such disputes, the timing/ uncertainties of cash outflow is
not readily ascertainable.
c) Figures in brackets relate to prioryear.
6. The Company does not have a scheme for grant of its stock options
either to the Executive Directors or employees for the shares issued in
India. However, the Managing Director and certain senior management
employees of the Company are granted stock options in a share based
compensation plan of Kennametal Inc. USA, the ultimate holding company.
These plans are assessed, managed and administered by the ultimate
holding company and no cross charges/ debits have been made on the
7. The financial statements for the year ended June 30, 2011 had been
prepared as per the then applicable, pre revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended June 30, 2012 are prepared as per Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year''s classification. The adoption of Revised Schedule
VI for previous year figures does not impact recognition and
measurement princi pies followed fo r pre paration of fi nancial