We have the honour to present our Fifty-Seventh Annual Report and Audited Statement ofAccounts for the year ended March 31 2017.
2016-17 Operations: Main Results
We are pleased to report excellent results.
Once again sales are the highest ever. Revenue from operations including excise dutyin 2016-17 was Rs. 606.16 crores (up 6.1% over the previous year) and net of excise dutyit was Rs. 578.61 crores (up 6.3% over the previous year).
This year profits are also the highest ever. Profit before tax was Rs. 68.20 crores(13.2% higher than the previous year). Net profit after tax was Rs. 45.61 crores (13.1%higher than the previous year).
The net return after tax on shareholders' funds/net worth (after reducing the amount ofthe proposed dividend and the tax thereon - to make the net worth comparable to theprevious year) was 74% (previous year: 67%).
Management Discussion and Analysis
We operate in the Kitchenware segment consisting of Pressure Cookers and Cookware. Theindustry structure is quite competitive with both small scale and organized sector units.
In 2016-17 we did not take a price increase. This along with our now extremelyeffective advertising has led to a growth in demand for our pressure cookers andcookware. Our improved distribution has also helped sales. Our efforts at more efficientprocurement and production have produced a good impact on our profits.
We have undertaken projects to renovate and increase the production capacity of ourplants. The required investment is generated from internal resources. The new productslaunched during the year have done well.
The number of permanent employees as on April 1 2016 was 789 and as on March 312017 was 728. The morale of our employees at all locations is high. A three- yearsettlement with our workers in Hoshiarpur has been signed. Industrial relations at all ourlocations were and are normal. We appreciate very much the contribution of our employeesto the successful working of your Company.
Profit before tax as a percentage of net sales in 2016-17 was 11.8% as against 11.1% inthe previous year. Net profit after tax as a percentage of net sales in 2016-17 was 7.9%as against 7.4% in the previous year.
Cash flow during the year was comfortable. Cash and cash equivalents as on March 312017 were Rs. 64.29 crores (previous year: Rs. 48.92 crores). We have plans to utilisethese funds appropriately.
In our judgment the Company has adequate financial and administrative systems andcontrols and an effective internal audit function.
Risks and Concerns
All foreseeable risks that the Company may encounter and concerns have been addressedin a documented Risk Management Framework which is reviewed by the Board from time totime.
Threats and Opportunities
Management continues to diligently watch cost increase trends and seeks effective costcontrols and necessary adjustment in prices as needed from time to time. We are preparedfor the impact of the Goods and Services Tax and believe we are well equipped to deal withit.
The current and long-term vitality of the demand for our brands augur well for thefuture of your Company.
We believe the outlook for our business is excellent. In this year we have furtherstrengthened the good reputation we have amongst our consumers customers and associatesand vendors. We expect to continue to increase our sales and profits.
All forward-looking statements in our report are based on our assessments and judgmentsexercised in good faith at this time. Of course actual developments and/or results maydiffer from our present anticipation.
2016-17 Operations: Other Aspects
The value of exports at Rs. 32.83 crores in 2016-17 was up 18.4% over the previousyear. Foreign Exchange used in 2016-17 was Rs. 6.39 crores (Rs. 1.33 crores in theprevious year).
As our Research & Development Unit is recognised by the Department of Scientificand Industrial Research our expenditure on R&D in 2016-17 is eligible for the benefitof deductibility of expenses at the rate of 200% for the purpose of the computation ofincome tax subject to the necessary approvals by the Department of Scientific andIndustrial Research and the Income Tax Department. The expenditure on Research &Development in 2016-17 was Rs. 4.06 crores up 20% over previous year. Required detailsare given in Appendix I. Efforts continue in our factories and offices to save energywherever possible.
The details of Fixed Deposits under Sections 73 and 76 of the Companies Act 2013 areas follows:
(a) Amount accepted during the year: Rs. 1.33 crores.
(b) Amount remained unpaid or unclaimed as at end of the year: Nil.
(c) Default in repayment of deposits or payment of interest thereon: Nil.
Dividend and Appropriations
We are pleased to recommend Rupees Seventy as dividend per Equity Share of Rs.10(previous year: Rupees Sixty per Share). Our recommendation takes into account theprofitability circumstances and requirements of the business.
Out of the amount available for appropriation of Rs. 58.38 crores (previous year: Rs.51.95 crores) we propose:
Rs. 1.00 crore transfer to General Reserve (previous year: Rs. 1.00 crore) and
Rs. 57.38 crores as surplus carried to the Balance Sheet (previous year: Rs.12.77 crores). The much larger said amount this year is because the entire proposeddividend and the tax thereon which is Rs. 44.55 crores is carried as surplus to thebalance sheet as is required by the Accounting Standard 4 in the year under report.
Directors' Responsibility Statement
The Board confirms that:
1. The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
2. In the preparation of the Annual Accounts the applicable accounting standards havebeen followed and proper explanation given relating to material departures. The Directorshave prepared the Annual Accounts on a going- concern basis.
3. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period.
4. Based on the framework of the internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the Internal Statutoryand Secretarial Auditors including audit of the internal financial controls overfinancial reporting by the Statutory Auditors and the reviews performed by Management andthe relevant Board Committees including the Audit Committee the Board is of the opinionthat the Company's internal financial controls were adequate and effective during thefinancial year 2016-17.
5. The Directors have devised proper systems that are adequate and operatingeffectively to ensure compliance with the provisions of all applicable laws.
Code of Conduct
The Board has formulated a Corporate Governance Code of Conduct for all Directors ofthe Board and Senior Managers of the Company. This Code is available on the website of theCompany. All Directors and Senior Management Personnel have affirmed compliance with theCode. A declaration to this effect signed by the Vice-Chairman and Chief Executive Officerof the Company appears elsewhere in this Annual Report.
Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 As required under the abovementioned Act we report that in the year 2016-17 no caseof sexual harassment of women was filed under the said Act.
A separate section on Corporate Governance forms part of our Report. A certificate hasbeen received from the Auditors of the Company regarding compliance of conditions ofCorporate Governance as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Both appear elsewhere in the Annual Report.
Mr. Ravi Kant was appointed as an Additional Director of the Company with effect fromJune 1 2016. At the Annual General Meeting (AGM) of the Company held on August 4 2016the shareholders appointed him as an Independent Director for a period of five years.
Mrs. Susan M. Vasudeva retires by rotation as a Director at the 57th AGM ofthe Company and being eligible offers herself for re-appointment for which the Board hasresolved to recommend to the shareholders a suitable resolution.
All the six Independent Directors namely Mr. J. M. Mukhi Mr. Shishir K. Diwanji Mr.Gerson da Cunha General V N. Sharma (Retd.) Mr. E. A. Kshirsagar and Mr. Ravi Kant havegiven written declarations that they meet the criteria of independence as laid down underSection 149(6) of the Companies Act 2013.
The Chief Executive Officer made presentations to the Independent Directors to updatethem on the Company's operations products and marketing policies and the main challengesfaced by the Company in 2016-17 and how the Company has managed them. The required detailsof the Familiarization Program presentations made to the Independent Directors areavailable at www.hawkinscookers.com/idfp.
As per Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the term of M/s. Deloitte Haskins & Sells LLP (FirmRegistration No. 1 17366W/W-100018) Chartered Accountants as the Statutory Auditors ofthe Company expires at the conclusion of the 57th Annual General Meeting of theCompany. The Board of Directors of the Company at its meeting held on May 25 2017 on therecommendation of the Audit Committee has decided to recommend to the shareholders theappointment of M/s. Kalyaniwalla & Mistry LLP (Firm Registration No.104607W/W100166)Chartered Accountants as the Statutory Auditors of the Company for an initial term offive years from the conclusion of the 57th Annual General Meeting till theconclusion of the 62nd Annual General Meeting of the Company. The Board placeson record its appreciation for the services rendered admirably by M/s. Deloitte Haskins& Sells LLP as the Statutory Auditors of the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Company hadappointed M/s. Jayshree Dagli & Associates Company Secretaries in Practice toundertake the secretarial audit of the Company for the year 2016-17. The Secretarial AuditReport is annexed as Appendix II.
Extract of Annual Return in Form MGT-9 (Section 92(3) of the Companies Act 2013)
Given in Appendix III are the details required as per the following seven sections:
I. Registration and Other Details
II. Principal Business Activities of the Company
III. Particulars of Holding Subsidiary and Associate
IV. Shareholding Pattern
VI. Remuneration of Directors and Key Managerial
VII. Penalties/Punishment/Compounding of Offences
Contracts or Arrangements with Related Parties
All related party transactions during the year were on an arm's length basis and werenot material as per the Related Party Transactions Policy of the Company.
Corporate Social Responsibility
The Company has selected an appropriate project called Improving the Health of Womenand Children by Cutting Indoor Air Pollution with Pressure Cooking. A pilot project wasconducted in a few villages in Jalna and Ahmednagar districts of Maharashtra in 2016-17.The village women were explained how they can reduce the exposure to Indoor Air Pollutionby the use of Pressure Cookers with live demonstrations and pressure cookers were offeredto the villagers at a 50% discount on the MRP
After evaluating the results of the pilot project we concluded that it was a successand decided to pursue the project on a suitably enlarged scale. However because of thetime taken to conduct the pilot we could not spend the Rs.1.10 crores on activities underCorporate Social Responsibility in the year ended March 312017 as required by Section135 of the Companies Act 2013.
We plan to scale up this project in 2017-18 by recruiting training and deployingdemonstrators in one or more States of India. The required Annual Report on CSR is givenas Appendix IV.
Directors Performance Evaluation
The performance evaluation of each Director of the Board was carried out by theNomination and Remuneration Committee at its Meeting held on May 25 2017 as per thecriteria set by it earlier. The said criteria are included in the Corporate GovernanceReport enclosed herewith. The performance evaluation of the non-Independent Directors theBoard as a whole and the Chairman of the Board was carried out by the IndependentDirectors at their separate meeting held on May 25 2017. The Board of Directors at itsmeeting held on May 25 2017 reviewed the reports of evaluation received from theNomination and Remuneration Committee and the Independent Directors and also thefunctioning of the Committees of the Board and carried out the evaluation of the Board asa whole the Committees of the Board and each Director and found the performance of theBoard the Committees and all the individual Directors to be satisfactory.
On the recommendation of the Nomination and Remuneration Committee the Board hasframed a remuneration policy for all employees of the Company including senior managementand the Directors. The remuneration policy of the Company is designed to attract motivateand retain suitable manpower in a competitive market. The remuneration package for eachperson is designed keeping a balance between fixed remuneration and profit andperformance-linked incentives in order to achieve corporate performance targets. Thepolicy is aligned with the Company's mission which states: "Our single-mindeddetermination to please customers drives the kind of people we employ and promote theinvestments we make and the results we produce." The Board affirms that theremuneration is as per the Remuneration Policy of the Company. Information as per Section197 of the Companies Act 2013 is given in Appendix V.
The Company has established a Vigil Mechanism/ Whistle Blower Policy for Directors andemployees to report genuine concerns or grievances including unethical behaviour fraud orviolation of the Company's Corporate Governance Code of Conduct. The authority for theimplementation of the policy rests with the Executive Director-Finance &Administration under the overall supervision of the Audit Committee of the Board.
|ON BEHALF OF THE BOARD OF DIRECTORS || |
|Mumbai ||BRAHM VASUDEVA |
|June 28 2017 ||CHAIRMAN |