Kennametal India was established in September 21, 1964, and was formerly known a s Widia India Ltd.

headquartered at Bangalore is the premiere global provider of metalworking solutions using tungsten carbide inserts. Kennametal is a leading global supplier of tooling, engineered components and ad vanced materials that are consumed in production processes. It provides customer s with a broad range of technologically advanced tools, tooling systems and tech nical services. The company's expert scientists and engineers apply highly compl ex powder metallurgy, materials science and mechanical engineering technologies to cemented tungsten carbides, high-speed steels, ceramics, industrial diamonds and other material compositions to produce products that have the optimum combin ation of resistance to heat, impact, corrosion, pressure and wear to excel in pa rticular application. On May 3, 2002 Kennametal Inc.entered into an arrangement with Milacron B V and Milacron Inc., for the acquisition, either directly or through its affiliates, o f Milacron BV's European operations in Germany, Netherlands, Spain, U.K, France an d Italy upon obtaining certain statutory approvals and upon certain commercial r eorganisation of companies in different countries (hereinafter referred to as th e Stock Purchase Agreement). Pursuant to this arrangement, Kennametal was to acqui re control of Milacron Metal Working Technologies Holding GmbH, a wholly owned s ubsidiary of Milacron B. V., which through its subsidiary companies, Widia GmbH and Meturit AG., had indirect control over Widia (India) Limited. As on May 3, 2 002, Meturit AG, a wholly owned subsidiary of Widia GmbH, held 51% of the equity shares of the Company. Indirectly, Kennametal acquired from Milacron B. V. the majority of equity shares which resulted in change in control of the Company. Today most of India's leading manufacturing and industrial giants, from the privat e, public and government sectors, rely on Kennametal India's tooling expertise to produce its products. Among others, these include automobile majors like GM, TVS , Tata Motors, and Yamaha, BHEL, Northern Railways, Ordinance and Armament facto ries, Inter Drill Asia, Escorts Mahle, Gabriel, Sterling Tools and SKF Bearings. Kennametal's portfolio of well-respected brand names and broad global presence ena ble it to help customers of all sizes in virtually every geography drive success at every stage of their value chain. Strategically aligned across its two core businesses -- Metalworking Solutions and Services Group (MSSG) and the Advanced Materials Solutions Group (AMSG) -- their products and services touch nearly eve ry manufacturing process, and people around the globe can see and touch these re sults from the time they turn on the light switch in the morning, to the breakfa st they eat or the vehicle they drive. Shareholding pattern - Kennametal India Ltd. Holder's Name No of Shares % Share Holding Other Companies 184284 0.84% Foreign Promoter 19376013 88.16% General Public 2006637 9.13% N Banks Mutual Funds 206274 0.94% Foreign Institutions 134811 0.61% Foreign NRI 54390 0.25% Others 14791 0.07% Financial Institutions 1040 0.00%

Structure of the industry

Indian Machine Tool Industry India stands 12th in production and 7th in the consumption of machine tools in t he world as per the latest survey. The country is set to become a key player in the global machine tools industry and is likely to see substantial high-end mach ine tool manufacturing. Industry experts say that the phenomenon is linked to th e spurt in manufacturing, for which the machine tools sector serves as the mothe r industry. Since, the manufacturing capacity is stagnating and the growth rate for the machine tools industry falling in developed economies, shifting machine tool capacity to low-cost high skill geographies like India, has become imperati ve. The Indian Machine tool Industry has around 1000 units in the production of mach ine tools, accessories/attachments, subsystems and parts. Of these, around 20in the large scale sector account for 70 percent of the turnover and the rest are i n the SME sector of the industry. Approximately, 75 per cent of the Indian machi ne tool producers are ISO certified. While the large organized players cater to India's heavy and medium industries, the small-scale sector meets the demand of an cillary and other units. Many machine tool manufacturers have also obtained CE M arking certification, in keeping with the requirements of the European markets.

The industry can be segmented in several ways: CNC Conventional Forming Rs. 3,322 million (74 USD Million) RS. 1,717 million (38 USD millio n) Cutting Rs. 3,2486 million (722 USD Million) Rs. 5,466 million (122 USD milli on)

Indian Machine Tool Industry 2010-11 & 2011-12 (INR Million) 2010-11 2011-12 Growth Rate Production 36,238 42,990 19% Exports 1,358 1,802 33% Imports 67,033 76,454 11% Consumption 1,01,913 1,17,642 15% The Indian machine tools sector offers several opportunities for investment. Giv

en the current gap between demand and supply, there is a clear need for adding c apacities in this sector. The industry is moving towards increasingly sophistica ted CNC machines, driven by demand from key user segments, such as, automobiles and consumer durables. Machine tool manufacturers need to develop capabilities t o cater to this demand and investments in this area could yield long term benefi ts

Company Sales (Rs.Million) Current Price Change (%) P/E Ratio Cap.(Rs.Million) 52-Week High/Low Engineers India 38984.52 Thermax 53040.60 AIA Engineering 12723.32 Kennametal India Texmaco Rail & Eng. Disa India

Market

241.10 -0.74 577.90 3.92 17.47

12.64

81235.41 584/388 35294.68 23858.48 11804.42

289/195

68860.43 24.07 34.89 14.64

374.20 2.97 5056.51 1085.55 3.00 7674.34 64.85 2.45 18.13 14.27 5.14 26.72

395/250 1247/641 88/47

1539.85 2941.65 -2.81

4442.49 3944/1401 4361.60 164/95 4333.13 126/85 4005.80 1162/1151 6.53 3552.47 131/80

Hercules Hoists 1210.01 136.30 -0.94 Sanghvi Movers 4504.74 100.10 -1.23 Sulzer India 1616.90 1161.10 0.00 20792.03

Mcnally Bharat Engg TRF

114.25 -2.23

8023.11 261.35 -4.11

187.48 2876.00 385/195 -0.20 9.99 12.89 2407.60 38/20 2248.40 155/112

Om Metals Infraproj. Guj. Apollo Inds

2333.53 25.00

2177.80 135.65 -0.70

Emerging trends An opportunity in form of Engineering Services Outsourcing (ESO) presents itself before this sector. It is estimated that the global engineering services spend will reach US $850 bn by 2020, with 180 billion expected to flow through the out sourcing channel into vendor countries. India can bring home about 2530 per cent of this outsourced revenue. Future outlook Government's focus on infrastructure development is expected to keep demand for th e engineering sector high. Continued growth of manufacturing sector and favourab le regulatory policies would further propel the sector's growth. Engineering Servi ces Outsourcing (ESO) services from India has the potential to exceed US $40bn b y 2020, and with the right support from Government and other stakeholders, can i mpact the engineering sector as a whole.

Buyer behavior in the industry Industrial buying activity Supplier Evaluation, Approval & Review Procedure The process of source selection consists of following stages: Information stage The information about suppliers is received in Supplier Development Cell. Some o f the sources of data are as follows: a) Supplier approaches directly. b) Information received through various disciplines of organization such as Engg ./MM/ Technology etc. c) Through Web search/ News papers/ Magazine/ Business Catalogue / Exhibitions/ Seminars / Electronic media etc. d) Suppliers technically qualified in Open Tenders e) Customer/ collaborator recommendation Assessment Process: Assessment on the basis of following three criteria: Organizational Soundness Organizational Soundness will be judged on the basis of information furnished by the supplier on the following aspects: General information about organization, which includes:a) b) c) d) e) Ownership information; Financial information; Registration particulars General Manufacturing facilities Industrial relations

Quality System Quality System will be judged on the following aspects: a) Incoming material control b) Process Control c) Control of Non-conformance d) Control of measuring & monitoring device e) Conformance to safety requirement f) Customer Supplier communication An example of a New Task in buying: The role of buying centre is very important while buying the material. The buyin g center comprises of people from the organization who have sufficient knowledge about the raw materials. In the purchases of raw materials the major members ar e the purchase manager, safety engineer, General Manager, vice-president of oper ations and mining engineer. These people with their specialized knowledge prepar e the initial draft of the specifications, identify the raw materials that meet those specifications, shortlist the suppliers, have detailed discussion about th e products and negotiate their prices.. Suppose a manufacturer wants to go for buying Jigs and Fixtures, the following p rocedure will be followed: 1. The company will understand the need and characteristic of the need. 2. The company will search for possible suppliers and will contact them.. 3. The supplier like Kennametal will send their sales representative to int eract with the company personnel. 4. The sales representative will brief on the product specifications and su ggest the tonnage required after considering various factors like size, quality

of offering . 5. Based on the interaction the buyer may ask one particular company for a proposal or a group of companies to submit their proposals. 6. The buying may be done on the basis of evaluation of the proposals. 7. In case of one company being asked for a proposal there will be a series of negotiations on price as well as specification till the final deal is struck . 8. The influencers in this decision maybe the administrative officer who lo oks after the upkeep and administration of manufacturing department. 9. The Gate keeper will be the Public relationship department of the compan y and also the secretary of the manager who filter the information reaching the buying centers. 10. The decider will be the director of the company who has the formal autho rity to finalize the deal and actually will make the final decision. He will com municate his decision to the manager who in turn will finalize the deal. 11. Once the deal has been finalized contract will be signed between the par ties.

Market Segments and positioning Positioning: Kennametal positions itself on the basis of superiority in pre- and post sale se rvice capabilities, on its capability of solving customer problems; on the abili ty to teach and help customers ; or on its capabilities in developing new method s and technologies Market segments addressed: Aerospace Earthworks Energy Transportation General Engineering Machine Tool Industry

Product/Services Strategies

Product range of the company includes: Kennametal has engineered innovative metal-cutting products and techniques for n early 70 years using complex metallurgy and materials science in tungsten carbid e, ceramics, high-speed steels and other materials. Many of these products serve as workhorses in their industries to this day. Newer, more advanced products ar e always under development to better serve needs. In fact, nearly half of Kennam etal's revenue comes from products less than four years old. Metalworking- Metalworking has been expertise for 70 years. Kennametal never sto ps inventing, designing, testing, and manufacturing the world's best tools. Ener gy, Mining & Construction. They work with mining companies worldwide to engineer bold new designs that utilize advanced technologies to increase the productivit y of mining and wear products. Advanced Materials- Kennametal specializes in solving unique wear problems by en gineering and manufacturing customized protective systems made of the world's to ughest materials Wear Components- Kennametal is focused on delivering value to the customers for many different applications that offer long life, maintain tolerance through mul tiple-use cycles, and deliver superior overall performance. Saw Mill- Kennametal knows how critical uptime and performance are in the sawmil l industry. That's why they manufacture a wide range of Carbide and APF Superall oy cutting tips for the sawmill industry worldwide.

Services Service and Repair Your tools are a valuable investment. Protect them, as you wo uld any investment. Restore your tools to like-new condition for half the cost o f new with Kennametal's expert repair service. We repair and service pocketed tool ing and non-pocketed tooling. The average repair costs about 50% less than the c ost of a tool new. Reconditioning Services Reconditioning your tools is smart for your business and the environment. You save money, reduce inventory, and avoid material waste. We make it easy! Just follow these simple steps to start saving today! Cost Per Part Program It's like having the perfect house guest: we come only when invited; we use our own stuff; and we help you out while we're there. And during o ur stay, we save you money. Kennametal's Cost Per Part (CPP) program could be the perfect house guest at your sh op for proven production methods with guaranteed savings. The CPP program reduce s overall costs per part by managing tooling, increasing efficiency, and trackin g outcomes. We guarantee a specific cost per part savings and partner with you f or your long-term success. Supply Chain Services If the phrase where is the ? is heard around your shop, it's time for an efficient to ol management system. ToolBOSS is such a system. It's not a vending machine. Kennametal TooLBOSS is a secu re, electronically locked tool storage cabinet with 24-hour tool control over hi gh value items like carbide inserts, drills, and taps. It issues tools, returns tools, sends tools to re-work, supports EDI ordering, and has multi-vendor secur ity. What's more, it's easy to use. Users are given access permission, and you can o nly select tools you're permitted to access. Each transaction is logged and time-s tamped through the ToolBOSS inventory management software

Product Name

Year

Month

Sales

Quantity

Sales Value(Rs.Million) % of STO 2011 06 14086612.00 4400.85

Hard Metal and Hard Metal Products 81.47

Special Purpose Machines including accessories (Machine Tools) 2011 63.00 470.02 8.70 Jigs and Fixtures (Machine Tools) Others 2011 06 0.00 54.63 2011 1.01 2011 06 0.00

06

143.97 2.67

Hard Metal and Hard Metal Products Including Tools - Traded 0.00 0.00 0.00 Others - Traded 2011 06 0.00 0.00 0.00

06

Channel and Distribution Strategies

Channel and Distribution Strategies: a. Industry distribution characteristics: In the industry when the manufacturer decides to utilize independent distributor s, then they should decide on what marketing functions will be assigned to or sh ared with distributors, what portion of the product line will be sold through th is channel, what size and type of distributor should be chosen, should exclusive or multiple distribution be used, how should the selling function be divided be tween distributors and the company sales force, what policies must be spelled ou t to ensure an effective, profitable, mutually satisfying relationship. The characteristics for the industry's distribution are like the product line cove rage i.e,. the fragmented channels and the specialized products. The distributor size and the type is also considered. By the distribution, companies can get in creased market coverage, lower channel costs, more customized selling.

b. Channel/distribution strategies adopted by the company and analysis: In B2B Wholesaler Retailer Customer

The company has adopted 2 intermediaries i.e., the wholesaler and the retailer. There is less cost incurred by this channel where in the channel length is short and the delivery of the product is also soon. There are no other participants i n the channel by which lower cost is incurred in the distribution and is more ef fective with less time consuming c. online distribution The company uses various internet sites to sell its products

Pricing Strategies Pricing Strategies: Pricing Determinants; Value: The prices are dependent on the value the customer receives. Since these are imp ortant components for the manufacturing or any other factions of the OEM, the va lue addition plays a important role in the pricing. Brand: companies with a better equity charge higher, eg: Kennametal charges 8-10 % more than a competitor selling a better product. Reliability: how far the OEM can rely on the supply and services of the company. Service: application engineers go to the clients place advice on the suitable be aring based on the tolerance, the longevity etc. Warranty: top companies provide replacement warranty Online monitoring tool that could warn potential failure in customers' machine. Pricing Strategies: Market Skimming Pricing: Used for Innovative products Eg: Machine tools Price Penetration Strategy: For me too products Add value through added services and rise price. Strengths: Strategically strong Helpful In gaining market share Competitive Different pricing for different sectors. OME,OMS Weakness: High prices could lead to market loss Replacement markets are price sensitive. Difficult to compete with Chinese low cost players

Finding And Serving Customer We are where our customers need us to be. Quick, thorough response to customer n eeds has been a key component of Kennametal's success. The application experts w

ho make up our field sales force work directly on the customer shop floor, at th e mine face or on the construction site to solve problems and increase productiv ity. Kennametal's real-time, on-line customer service system provides instantane ous information on global product availability, order status and application sol utions. Continued global growth organically and through acquisitions is a key strategy f or Kennametal. Acquisitions in our core businesses are conducted according to a disciplined process that is part of KVBS. Recent acquisitions enable us to enhan ce our technologies to better engineer our customers' competitive edge. We also continue to expand our reach through our distribution and channel / bran d strategy touching more customers through our strong distribution partnerships. Kennametal delivers productivity and savings to our customers across a range of industries and networks. Brand portfolio management drives down our cost-to-ser ve as we continue to grow and makes our brands more distinct for our customers.

Training Knowledge Center We have always done it that way. Don't let this be your mantra for machining methods. Instead, manufacturing comp anies must adjust methods to stay competitive globally. You need to produce part s more efficiently and accurately. Education is key to staying competitive. The Kennametal Knowledge Center knows t his. We teach the latest machining practices and focus on the process, regardles s of the tooling brand you use. Because it doesn't matter what brand of tooling you use if you aren't machining by the best method. The Premier Source for Metal cutting Education The Knowledge Center believes metalworking is a science, not an art. We teach pr inciples and facts in a non-commercial way. We offer comprehensive application engineering courses; industry- and applicatio n-specific courses, customer onsite programs, and the online-based certified met alcutting professional (CMP) program. Courses range from online to in-person cla sses over several days. Metal cutting Application Course - Duration: 4 days The Metal cutting Application Course is designed to provide a broad base of know ledge for the selection and use of metal cutting tools. This course is divided i nto four sections with each being covered by lecture, lab and machine demonstrat ions. 1. Mechanics of Metal cutting will cover tooling from a design perspective. This section starts with a discussion on How Tools Cut and progress through the desi gn elements related to turning, milling and drilling. All aspects of cutting geo metry will be discussed along with its relationship to the cutting edge, workpie ce material and power. 2. Materials Technology will start with a discussion of common cutting tool mate

rials and how they relate to each other. A discussion of powder metal technology will start with How Carbide is made and progress through modern carbide and cer amic grade technology. Coating technology will include common application method s as well as the latest advances in coating materials. 3. Selection and Application will introduce the tool path method of selecting an d applying tooling. This section will be divided into the three main operations of turning, milling and hole making. Selection and application will include proc essing exercises to provide hands on experience. 4. Machining Economics will cover elements that effect productivity and overall cost, such as establishing operating conditions to gain maximum efficiency; the cause and effect relationship between operating conditions and tool failure; mac hinability, testing methods and cost justification. Authorized Distributor Training - Duration: 4-5 days The Authorized Distributor Training Program is designed to provide a broad base of knowledge for the selection and use of metal cutting tools. This course is di vided into 10 sections, with each covered by lecture, lab, and machine demonstra tions: Technical Training Mechanics of Metal cutting Materials Technology Tool Selection and Application Troubleshooting & Machining Economics Product Training Turning Threading, Grooving and Cutoff Hole making Tapping Milling Systems Typical course day consists of application training; product review; lunch; tool selection and application workshop; and product demonstrations in the lab.