We have the honour to present our Sixty-First Annual Report and Audited Statement ofAccounts for the year ended March 31 2021.
2020-21 Operations: Main Results
We are pleased to report excellent results despite the impact of COVID-19 in 2020-21.Once again sales are the highest ever. Revenue from operations in 2020-21 was Rs.768.46crores (up 14.0% over the previous year).
This year profits are also the highest ever. Profit before tax was Rs.108.06 crores(9.9% higher than the previous year). Net profit after tax was Rs.80.64 crores (11.2%higher than the previous year).
Management Discussion and Analysis
We operate in the market consisting of Pressure Cookers and Cookware. The industrystructure is quite competitive with both small-scale and organized sector units.
The Government of India has made the ISI mark compulsory for all pressure cookers soldin India from February 2021. Your Company is the undisputed leader in quality andexpects to gain from this development.
There was increased demand for our products post the COVID first wave due to increasedcooking at home especially by the housewife. Demand for quality cookware was excellent.
We expect our products to do well once the lockdown caused by the second wave isrelaxed. We have improved our presence in the online segment while improving thedistribution amongst dealers by 29%. We have successfully launched Pressure Die-CastAluminium Cookware and a range of other Cookware and Pressure Cookers.
Our permanent employees as on April 1 2020 were 651 and as on March 31 2021 were609 through normal attrition and recruitment. We have paid all employees their salariesduring the time that our factories and offices were closed. The morale of our employees atall locations is high and industrial relations were and are normal. We well appreciate thecontribution of our employees to the successful working of your Company especially underCOVID constraints.
Net profit after tax as a percentage of net sales in 2020-21 was 10.5% as against 10.8%in 2019-20. The average shareholders funds/net worth grew to Rs.158.64 crores vs.Rs.129.13 crores in 2019-20. The net return after tax on shareholders funds/networth was 51% (in 2019-20: 56%).
Key Financial Ratios
The details of significant changes (25% or more) in the key financial ratios for theyear 2020-21 as compared to the year 2019-20 are as follows:
|Ratio ||FY 2020-21 ||FY 2019-20 ||Formula used ||Reason for change |
|Debtors Turnover (Days) ||21 ||35 ||Average of Opening and Closing Trade receivables/ Revenue from operations per day ||Due to COVID we tightened our credit policy. |
|Quick Ratio ||1.27 ||0.87 ||Current Assets minus Inventory/ Total Current Liabilities ||Sales in the last quarter of 2019-20 were impacted due to lockdown resulting in higher inventory. Reversed in 2020-21. |
Cash flow during the year was good. Cash and cash equivalents plus balances with bankson deposit accounts as on March 31 2021 were Rs.161.29 crores (previous year: Rs.42.57crores). We have plans to utilise these funds appropriately in managing working capitalduring COVID led lockdowns and in expanding production capacity.
In our judgment the Company has adequate financial and administrative systems andcontrols and an effective internal audit function.
Risks and Concerns
Your Company has constituted a Risk Management Committee as required under the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the details of whichare provided in the Report on Corporate Governance.
All foreseeable risks that the Company may encounter and concerns have been addressedin a documented Risk Management Framework which is reviewed by the Risk ManagementCommittee and the Board from time to time.
COVID-19 has affected our operations partially. Our capital and financial resourcesliquidity position supply chain and assets are healthy.
Opportunities and Threats
The excellent demand for our brands augurs well for the future of the Company.
The future impact of COVID is difficult to predict. Your Company has been following allgovernment regulations but both managers and workers are required to come to work wheneverpossible. While we have work-from-home protocols when mandated we prefer to come to theoffice as soon as possible. We believe that this is useful for better co-ordinationeffectiveness and control.
While the COVID-19 lockdowns tend to adversely affect the demand and supply of ourproducts in the short term we have seen buoyant demand eventually and we expect to see anincrease in demand due to more eating at home and more cooking at home.
Raw material prices are a cause for concern most items have increased sharply inthe last few months we have taken a price increase of 5 to 10% in order tomitigate the impact. Management continues to diligently watch cost increase trends andseeks effective cost controls and necessary adjustment in prices as needed from time totime.
We believe the outlook for our business is very good under the circumstances. In thisyear we have further strengthened the good reputation we have amongst our consumers andtraders associates and vendors by being available and open even in difficult times. Weexpect 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.
Mr. Brahm Vasudeva Promoter Chairman and Non-Executive Director of the Companyceased to be a Director with effect from July 10 2020 due to his sad demise. He was aDirector since 1968. He believed that doing business ethically dealing withconsumers dealers employees associates and shareholders straight isgood for the business. The senior management of the Company have been hand-picked andtrained by him. We believe that the lasting legacy of the man is the stamp he has left inthe Hawkins culture of meritocracy honesty attention to detail and the inclination towork hard and not take shortcuts. He leaves behind an organisation which is steepedin his values. Our excellent results for the year and our optimism for the future areindebted to the vision of Mr. Brahm Vasudeva. The Directors place on record theirhighest gratitude and deep appreciation for his valuable guidance received during histenure of 52 years.
Mr. J. M. Mukhi Independent Director ceased to be a Director with effect from March22 2021 due to his sad demise. The Company has immensely benefitted from his legalacumen and overall guidance during his tenure of 44 years. The Directors place onrecord their highest gratitude and deep appreciation for his valuable guidance receivedduring his tenure with the Company.
Mr. Shishir K. Diwanji Independent Director ceased to be a Director with effect fromMarch 31 2021 consequent to his resignation from the Board due to his intermittenthealth issues. The Company has immensely benefitted from his contribution over the years.The Directors place on record their highest gratitude and deep appreciation for hisvaluable guidance received during his tenure of 29 years.
The Board at its Meeting (Serial No. 21) held on August 5 2020 appointed Mr.Subhadip Dutta Choudhury as the Chairman of the Board and Managing Director designated asChief Executive Officer with effect from August 6 2020 for the balance period of hisexisting term as Vice-Chairman of the Board and Managing Director designated as ChiefExecutive Officer ending on September 30 2022 subject to the applicable regulatoryrequirements. At the said Meeting the Board changed the designation of Mr. Sudeep Yadav toVice-Chairman of the Board of Directors and Chief Financial Officer with effect fromAugust 6 2020 for the balance period of his existing term as Executive Director-Finance& Administration designated as Chief Financial Officer ending on September 30 2022subject to the approval of the shareholders at the 61st Annual General Meeting of theCompany. Suitable resolutions are recommended by the Board to the shareholders for theirapproval.
The present tenure of Mr. Ravi Kant Independent Director will expire on August 32021. Based on the recommendation of the Nomination and Remuneration Committee the Boardat its Meeting (Serial No. 24) held on May 27 2021 has recommended to the shareholders asuitable resolution for his re-appointment for a second term of five years with effectfrom August 4 2021. The Company has received a requisite notice from a Member in writingproposing the said re-appointment.
Pursuant to the recommendation of the Nomination and Remuneration Committee the Boardat its Meeting (Serial No. 24) held on May 27 2021 has recommended the followingappointments for the approval of the Members at the 61st Annual General Meeting of theCompany:
To appoint Mr. Murli Aildas Teckchandani as an
Independent Director of the Company for a period of five consecutive years with effectfrom August 1 2021.
To appoint Mr. Tej Paul Sharma as a Wholetime
Director of the Company designated as Executive Director-Sales for a period oftwenty-six months with effect from August 1 2021 to September 30 2023.
To appoint Mr. Neil Vasudeva as a Wholetime
Director of the Company designated as Executive Director-Marketing for a period oftwenty-six months with effect from August 1 2021 to September 30 2023.
The Company has received requisite notices from a Member in writing proposing the abovethree appointments.
All the five Independent Directors namely Mr. Gerson da Cunha General V. N.Sharma (Retd.) Mr. E. A. Kshirsagar Mr. Ravi Kant and Prof. Leena Chatterjee havegiven written declarations that they meet the criteria of independence as laid down underSection 149(6) of the Companies Act 2013 and Regulation 16(1)(b) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
Mr. Sudeep Yadav retires by rotation as a Director at the 61st AGM of the Company andbeing eligible offers himself for re-appointment for which the Board has resolved torecommend to the shareholders a suitable resolution.
At the Board Meeting (Serial No. 24) held on May 27 2021 the Chief ExecutiveOfficer made a presentation to the Independent Directors to update them on theCompanys operations products sales production and how the Company is dealing withthe COVID-19 crisis. The required details of the Independent DirectorsFamiliarization Programs are available at https://www.hawkinscookers.com/idfp.
2020-21 Operations: Other Aspects
The value of exports at Rs.65.58 crores in 2020-21 was up 63% over the previous year.Foreign Exchange used in 2020-21 was Rs.6.15 crores (Rs.1.23 crores in the previous year).
Our Research & Development Unit is recognised by the Department of Scientific andIndustrial Research. The expenditure on Research & Development in 2020-21 was Rs.5.22crores 24.2% higher than the previous year. Required details are given in Appendix I.
Efforts continue in our factories and offices to save energy wherever possible.
The required details of Fixed Deposits taken under Sections 73 and 76 of the CompaniesAct 2013 are as follows:
(a) Additional Amount accepted during the year: Rs.11.19 crores.
(b) Amounts remained unpaid or unclaimed as at the end of the year are Nil.
(c) Defaults in repayment of deposits or payment of interest thereon are Nil.
Dividend Distribution Policy
The Board of Directors have adopted the Dividend Distribution Policy in terms of therequirements of the Listing Regulations. The Policy is available on the website of theCompany at https://www.hawkinscookers.com/download/ DividendDistributionPolicy.pdf.
Appropriations and Dividend
Out of the amount available for appropriation of Rs.123.32 crores (previous year:Rs.86.35 crores) we propose:
Rs.1.00 crore transfer to General Reserve (previous year: Rs.1.00 crore) and
Rs.122.32 crores as surplus carried to the Balance Sheet (previous year: Rs.85.35crores).
In view of the continuing uncertainties due to COVID it was decided by the Board thatit will not recommend any final dividend for 2020-21. The interim dividend paid in September2020 of Rs.80 per equity share of paid-up and face value of Rs.10 each shall be taken asthe total dividend for the financial year ended March 31 2021.
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 if any. TheDirectors have 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 as at the end of the financial year andof the 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 the Managementand the relevant Board Committees including the Audit Committee the Board is of theopinion that the Companys internal financial controls were adequate and effectiveduring the financial year 2020-21.
5. The Directors have devised proper systems that are in our opinion adequateand operating effectively 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 the Directorsof the Board and the Senior Managers of the Company. This Code is available on the websiteof the Company. All Directors and Senior Management Personnel have affirmed compliancewith the Code. A declaration to this effect signed by the Chairman and Chief ExecutiveOfficer of the Company appears elsewhere in this Annual Report.
Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013
The Company has constituted Internal Complaints Committees at each of the fivelocations of the Company under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 to redress complaints received regarding sexualharassment. In the year 2020-21 no case of sexual harassment of women was filed under thesaid Act.
Business Responsibility Report
A separate section on Business Responsibility forms part of our Report describing theinitiatives taken by the Company from an environmental social and governance perspective.The Business Responsibility Policy has also been placed on the Companys website athttps://www.hawkinscookers.com/ download/BusinessResponsibilityPolicy.pdf.
A separate section on Corporate Governance forms part of our Report. A certificate hasbeen received from the Auditors of the Company regarding compliance of the conditions ofCorporate Governance as stipulated under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Both appear elsewhere in the Annual Report.
M/s. Kalyaniwalla & Mistry LLP (Firm Registration No.104607W/W100166) CharteredAccountants have been appointed as the Statutory Auditors of the Company at the 57thAnnual General Meeting held on August 2 2017 for an initial term of five years from theconclusion of the 57th Annual General Meeting till the conclusion of the 62nd AnnualGeneral Meeting of the Company in 2022.
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Company hadappointed M/s. Jayshree Dagli & Associates Company Secretaries in Practice tocontinue to undertake the secretarial audit of the Company for the year 2020-21. TheSecretarial Audit Report is annexed as Appendix II.
Cost Records and Cost Audit
Maintenance of Cost Records and the requirement of a Cost Audit as prescribed under theprovisions of Section 148(1) of the Companies Act 2013 are not applicable to ourCompany.
The Annual Return of the Company for the year 2020-21 shall be filed within 60days of the ensuing 61st AGM. The Return for the year 2019-20 filed with theMinistry of Corporate Affairs after the 60th AGM held in the year 2020 isavailable on the Company s website at https://www.hawkinscookers.com/download/MGT-7_201920.pdf.
Contracts or Arrangements with Related Parties
All related party transactions during the year were on arms length basis and werenot material as per the Related Party Transactions Policy of the Company.
Corporate Social Responsibility
The Company has selected a project called
Improving the Health of Women and Children and Saving Money and Energy by usingPressure Cookers. The Company continued its extensive education campaign through apublic service campaign in newspapers about the dangers of Indoor Air Pollution and howto use the Pressure Cooker to avoid it and about how to save 25% fuel cost using thePressure Cooker with the potential of conserving precious fuel resources for India.Additionally the Company donated to the Prime Ministers National Relief Fund.
The Company has spent the entire amount of Rs.167 lakhs required to be spent onCorporate Social Responsibility (CSR) in the year 2020-21 and the excess amount of Rs.0.62lakhs spent on CSR in 2020-21 is carried forward to the financial year 2021-22 for settingoff from the CSR spend target for 2021-22.
In addition to the foregoing information on CSR the required Annual Report on CSR isgiven as Appendix III.
Directors Performance Evaluation
The performance evaluation of each Director of the Board was carried out by theNomination and Remuneration Committee at its Meeting (Serial No.13) held on May 26 2021as per the criteria set by it earlier. The said criteria are included in the CorporateGovernance Report enclosed herewith. The performance evaluation of the non-IndependentDirectors the Board as a whole and the Chairman of the Board was carried out by theIndependent Directors at their separate meeting held on May 26 2021.
The Board of Directors at its Meeting (Serial No.24) held on May 27 2021 reviewed thereports of evaluation received from the Nomination and Remuneration Committee and theIndependent Directors and also the functioning of the Committees of the Board and carriedout the evaluation of the Board as a whole the Committees of the Board and each Directorand found the performance of the Board the Committees and all the individual Directors tobe 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.
Directors Report (Continued)
The Remuneration Policy of the Company is designed to attract motivate and retainsuitable manpower in a competitive market. The remuneration package for each person isdesigned keeping a balance between fixed remuneration and profit and performance-linkedincentives in order to achieve corporate performance targets. The Policy is aligned withthe Companys mission which states: "Our single-minded determination to pleasecustomers drives the kind of people we employ and promote the investments we make and theresults we produce."
The Remuneration Policy is placed at the Companys website athttps://www.hawkinscookers.com/download/ RemunerationPolicy.pdf. The Board affirms thatall the remunerations are as per the Remuneration Policy of the Company. Information asper Section 197 of the Companies Act 2013 is given in Appendix IV.
The Company has an established Vigil Mechanism/ Whistle Blower Policy for Directors andemployees to report concerns or grievances including unethical behaviour fraud orviolation of the Companys Corporate Governance Code of Conduct. The authority forthe implementation of the Policy rests with the Vice-Chairman and Chief Financial Officerunder the overall supervision of the Audit Committee of the Board.
ON BEHALF OF THE BOARD OF DIRECTORS
SUBHADIP DUTTA CHOUDHURY
June 28 2021