KMS - Key Management Service it is a feature with which you can complete activations on your local network, eliminating the need for individual computers to connect to Microsoft for product activation.
A KMS host key is used only to activate the KMS host with a Microsoft activation server. A KMS host key can activate six KMS hosts with 10 activations per host. Each host can activate an unlimited number of computers. If you have an existing machine configured as Windows KMS* host, you will need to enter and activate the Office 2010 KMS host key before the KMS host can activate Office 2010, Project 2010, and Visio 2010.
I want to know Sanjay do you already have KMS for your Windows 7??? If No then check this link: Download details: KMS Setup in Windows 7
Are you also getting any error while installing KMS (if you have the KMS)????