ANNEXURE – A
EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013:
Item No. 1:
The Board of Directors in its Meeting held on 10th May, 2018, decided, subject to the approval of the
Shareholders, to separate the WIDIA brand business from the Company and vest the same in a wholly owned
subsidiary of the Company to be formed for the purpose, in the overall best interests of all the stakeholders of
the Company.
Following are the primary circumstances leading to this decision being taken by the Board:
Kennametal India Limited (KIL) is the subsidiary of Kennametal Inc., USA, operating in India in the area of
manufacture and sale of cutting tools under the ‘Kennametal’ and ‘WIDIA’ brands, with both brands having
distinctive identity and markets within the cutting tools industry. The manufacturing facility in Bangalore, India,
produces both ‘WIDIA’ and ‘Kennametal’ branded products.
‘Kennametal’ is the preferred brand for customers seeking peak productivity in metal cutting operations and is
known for its proven solutions and innovative cutting tools. ‘Kennametal’ has a wide range of standard and also
custom solutions to meet customer’s demanding needs in metal cutting. It has strong presence in Automotive,
Aerospace, General Engineering and Energy segments.
‘WIDIA’ is a pioneer in development of innovative solutions beginning with the first patent for tungsten carbide
in 1926 and was acquired by Kennametal as part of a global acquisition in 2002. WIDIA has distinctive products
catering to the cutting tools markets, very strong brand recognition and strong sub brands like Hanita and GTD.
Business Justification for WIDIA – Wholly Owned Subsidiary of KIL
In India, WIDIA has been a prominent brand in Indian cutting tools industry for over 5 decades with the potential
for significant expansion. The present WIDIA business in India is carried out within Kennametal India Limited
exclusively through the Indirect Channel.
Following grounds are placed before the Shareholders based on which your Board recommends the proposal:
i. Based on the current market dynamics, competitive landscape and most importantly the WIDIA strategy
there is a need for focussing the entire WIDIA business of Kennametal India Limited within a separate
entity that would allow WIDIA to directly do business with
• Distributors
• Direct customers if strategically required or if the only way to access a customer is direct,
• Government and Defence Customer
• Aerospace customers
• Participation in Tenders for Widia brand products.
ii. There is a considerable business segment which can be addressed by WIDIA with Direct Customers.
iii. Some big Customers prefer to do business directly with companies instead of through Distributors.
iv. These customers due to their internal process requirements cannot register another Brand WIDIA under
the Kennametal India Limited customer code. They expect a separate legal entity to exist with separate
Tax Registration Number and Invoices to be printed under its name to register as an additional vendor
for the WIDIA products.
v. With the entry into OEM customers, there could also be some upside opportunities in the business from
their sub-contractors.
vi. Major Competitors of Kennametal are aggressively growing their multiple brands as independent
businesses each within separate companies which compete in the market and address different
customer segments and requirements.
WIDIA offers world class cutting tools which include standard product range for various metal cutting applications
like turning, milling, hole-making and customized tooling solutions. WIDIA also offers services like tool reconditioning,
tool vending machines and trainings which are provided across the country.
