Cablegate: Extrancheck: Post-Shipment Verification: Kennametal Widia

VZCZCXYZ0000
RR RUEHWEB

DE RUEHNE #0665/01 0430333
ZNR UUUUU ZZH
R 120333Z FEB 07
FM AMEMBASSY NEW DELHI
TO RUCPDOC/USDOC WASHDC
RUEAHLC/HQ ICE IAO WASHINGTON DC
INFO RUEHC/SECSTATE WASHDC 2872

UNCLAS NEW DELHI 000665

SIPDIS

SIPDIS

USDOC FOR 532/OEA/M. NICKSON-D/JAY HATFIELD
USDOC FOR 3131/USFCS/OIO/ANESA/KREISSL
USDOC FOR 4530/MAC/ANESA/OSA
ICE HQ FOR STRATEGIC INVESTIGATIONS
STATE FOR EB/ESP

E.O. 12958: N/A
TAGS: ETTC ETRD BEXP IN
SUBJECT: EXTRANCHECK: POST-SHIPMENT VERIFICATION: KENNAMETAL WIDIA
INDIA LTD., BANGALORE, LICENSE NO. D347236

REF: USDOC 0380

1. Unauthorized disclosure of the information provided below is
prohibited by Section 12(c) of the Export Administration Act.

2. Acting Export Control Officer (ECO) David Nardella and BIS FSN
Prem Narayan conducted a Post-shipment Verification (PSV) at
Kennametal Widia India Ltd. (Kennametal), Bangalore, on January 20,
2007.

3. BIS requested a PSV at Kennametal, a private sector company
located at: 8/9 Mile, Tumkur Road, Bangalore 560073, Tel:
91-80-2839-0126, Fax: 91-80-2839-4325, Email:
Ramakrishna.avs@kennametal.com, Website: www.Kennametal.com.
Kennametal was listed as the Ultimate Consignee for two shipments of
Inco nickel powder consisting of 317 and 211 kilograms controlled
under ECCN 1C240. The license applicant was Novamet Specialty
Products Corp. (Novamet), Wyckoff, NJ.

4. ECO along with FSN Narayan met with A.V.S. Ramakrishna
(Ramakrishna), Senior Manager - Sales Administration & Planning,
Engineered Products Group (EPG); G. Nagarajan, Senior Manager -
Research and Development; T.K. Manjunath (Manjunath), Manager,
Purchase; and R. Ramesh (Ramesh), Assistant Manager - Purchase -
Imports, Kennametal.

5. Kennametal executives were aware of certain BIS regulations.
However, this was the first USG or BIS official visit to Kennametal.
They have been party to previous BIS export licenses. Manjunath
provided a copy of the Kennametal Purchase Order, Novamet End-User
Certificate acknowledging and agreeing to abide by the BIS export
laws, Novamet Invoices reflecting their 500 kilograms of nickel
powder, and Kennametal disposition log for nickel powder. Although
Kennametal completed an end-user certificate, the company did not
appear to have been sent the actual conditions of D347236 by Novamet
(as was itself a condition of the above export license). As a
result, ECO read the conditions of D347236, as shown in reftel, to
all in attendance. They acknowledged that they understood those
conditions.

6. During the production of the above documents, Ramesh stated that
Kennametal had received additional prior imports of Type 123 Nickel
Powder, from Novamet. In addition to the above documents,
specifically related to D347236, Ramesh produced Novamet Invoice
25154, dated 05/03/05 showing the sale of 100 kilograms Nickel
Powder Type 123, Novamet Invoice 26029, dated 10/31/05, showing the
sale of 200 kilograms Nickel Powder, Type 123. In addition, Menlo
Freight Forwarder Air Waybill "Office Copy" No. 542 944 3591 1 was
affixed to Invoice 26029. Those two shipments, received by
Kennametal previously, did not appear to have been affected by
Novamet with the use of an export license.

7. Ramakrishna stated that Kennametal Widia India Ltd.'s name
changed to Kennametal India Ltd. in February 2006. He confirmed
that the end-use of the nickel powder is for the manufacture of
tungsten carbide. It is used to make carbide tools and carbide
inserts primarily for machine tools, automotive components, and
metal parts manufacturers. The Kennametal's EPG closely work with
their customers to find solutions for them and make customized dies.
He stated that nickel is a binder material. For making dies, the
raw material is machined in the shop to bring it to the required
shape and size and subsequently it is sintered along with the nickel
powder and lubricants in a vacuum chamber. The whole process
improves the strength and properties of a metal for high wear
resistance.

8. ECO asked the Kennametal executives if there was ever an instance
when they had been asked to sell the raw Nickel Power, Type 123. To
that question, Ramakrishna stated there had not, and added that
Kennametal would never sell that product to anyone else.
Ramakrishna added that it is needed for the manufacturing process
there, and they understand the export license conditions prohibiting
such a transfer.

9. After the meeting, ECO and FSN Narayan were given a brief tour of
the Kennametal manufacturing facility and were educated on the
process of how the nickel powder is used for making dies. ECO and
FSN Narayan were also given a tour of the storage area where the
unused nickel powder is housed, in a locked building. The
Kennametal building is guarded 24 hours a day.

10. Established in Q964, Kennametal is a wholly owned subsidiary of
Kennametal, Inc. headquartered in Latrobe, PA. Kennametal is one of
the leading suppliers of tooling, engineered components and advanced
materials that are consumed in production processes. Kennametal's

products use highly complex metallurgy and materials science in
tungsten carbide powders, high-speed steels, ceramics, industrial
diamond and other materials that are particularly resistant to heat,
abrasion, pressure and wear. Kennametal customers include
automobile, automotive components, metal parts manufacturers and GOI
owned Indian ordnance factories. Kennamtel has branch offices in
all major cities in India including Bhopal, Madhya Pradesh;
Chandigarh, Chennai, Tamilnadu; Hyderabad, Andhra Pradesh; Kolkata,
Mumbai, Pune, New Delhi, Jamshedpur and Ranchi. Kennametal sales
turnover for FY 2006 exceeded $90 million including & $17 million of
its EPG. Kennametal employs approximately 950 personnel
India-wide.

11. Recommendation: Post recommends Kennametal India Pvt. Ltd. as a
reliable recipient of the controlled U.S.-origin commodity. All
indications are that the listed commodity is being used in
accordance with U.S. Export Administration Regulations.
(DNARDELLA/PNARAYAN) Mulford

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