We have the honour to present our Fifty-Eighth Annual Report and Audited Statement ofAccounts for the year ended March 31 2018.
2017-18 operations: main results
We are pleased to report good results. Once again sales are the highest ever. Revenuefrom operations including excise duty in 2017-18 was Rs. 556.61 crores (up 3.1% over theprevious year). The revenues are not comparable since Revenues for the periods up to June30 2017 include Excise Duty while Revenues for the periods after June 30 2017 areexclusive of Goods and Service Tax which subsumed Excise Duty. Therefore the growth ofRevenue from operations on a comparable basis for the year ended March 2018 over the yearended March 2017 is actually 7.9% (Rs. 552.56 crores in 2017-18 versus Rs. 512.28 croresin 2016-17).
This year profits are also the highest ever. Profit before tax was Rs. 73.81 crores(4.0% higher than the previous year). Net profit after tax was Rs. 48.68 crores (2.6%higher than the previous year). The net return after tax on the average of the year'sopening and closing shareholders' funds/net worth (including the amount of the proposeddividend and the tax thereon) was 45% (previous year: 46%). As required the Company hasreported its results for the first time under the new accounting standard Ind AS. Previousyears' figures have been re-stated as per Ind AS.
Management Discussion And Analysis
We operate in the Kitchenware market consisting of Pressure Cookers and Cookware. Theindustry structure is quite competitive with both small scale and organized sector units.In 2017-18 we have successfully moved to the Goods and Service Tax System. This hashelped us to gain good growth in dealer sales. Our advertising now continues to generateexcellent demand. Our new products have done well. One such product is illustrated on theinside back cover of this Annual Report. We have managed our operations more efficientlyand have thus produced record profits even though Aluminium prices have been on the rise.Consequent to the increase in input costs we have taken a price increase of 4.8% inPressure Cookers and 4.2% in Cookware effective April 1 2018. Our permanent employees ason April 1 2017 were 728 and as on March 31 2018 were 676. The morale of our employeesat all locations is high. During the course of this year we have signed three-year wageagreements with the workers in our factories in Thane and Jaunpur. Industrial relations atall our locations were and are normal. We appreciate well the contribution of ouremployees to the successful working of your Company.
Profit before tax as a percentage of net sales in 2017-18 was 13.3% as against13.1% in the previous year. Net profit after tax as a percentage of net sales in 2017-18was 8.7% as against 8.8% in the previous year. The 0.1% lower profit after tax despite the0.2% higher profit before tax is because of higher tax in the year under report ascompared to the previous year mainly on account of the lower deductibility benefit ofResearch and Development Expenses in the computation of taxable income (as explained inthe section 2017-18 Operations: Other Aspects' hereinbelow).
Cash flow during the year was comfortable. Cash and cash equivalents plus balances withbanks on deposit accounts as on March 31 2018 were Rs. 80.01 crores (previous year: Rs.60.41 crores). We have plans to utilise these funds appropriately as will beexplained later in our this report.
In our considered judgment the Company has adequate financial and administrativesystems and controls 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 costincrease trends and seeks effective cost controls and necessary adjustment in prices asneeded from time to time. The increase in Aluminium prices is a cause for concern. We havedealt well and promptly with the introduction of the Goods and Services Tax (GST). Thiswill benefit the Company in the long run in various ways as much of our competition isadversely affected by GST.
The current and long-term vitality of the demand for our brands augur well for thefuture of your Company. In Hawkins through many years of practice we have come to anunderstanding of the Seven Steps of Building a Brand. These Seven Steps are featured onthe front and back cover of this Annual Report.
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. Our direct distribution in India in 2017-18 has increased by 7.1% to 5050dealers over the previous year. 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.
2017-18 operations: other aspects
The value of exports at Rs. 34.76 crores in 2017-18 was up 2.4% over the previous year.Foreign Exchange used in 2017-18 was Rs. 1.30 crores (Rs. 6.39 crores in the previousyear).
As our Research & Development Unit is recognised by the Department of Scientificand Industrial Research our expenditure on R&D in 2017-18 is eligible for the benefitof deductibility of expenses at the rate of 150% 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 (previous year the benefit ofdeductibility of R&D expenses was at the rate of 200%). The expenditure on Research& Development in 2017-18 was Rs. 3.70 crores 9% lower than the previous year.Required details are given in appendix i. Efforts continue in our factories andoffices to save energy wherever possible. The required details of Fixed Deposits takenunder Sections 73 and 76 of the Companies Act 2013 are as follows: (a) Amount acceptedduring the year: Rs. 5.64 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. dividendand appropriations
We are pleased to recommend Rupees Seventy as dividend per Equity Share of Rs.10(previous year: Rupees Seventy per Share). Our recommendation takes into account theprofitability the circumstances and the requirements of the business.
Out of the amount available for appropriation of Rs.60.52 crores (previous year: Rs.58.38 crores) we propose:
Rs. 2.00 crore transfer to General Reserve (previous year: Rs. 1.00 crore) and
Rs. 58.52 crores as surplus carried to the Balance
Sheet (previous year: Rs. 57.38 crores).
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 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 opinion that theCompany's internal financial controls were adequate and effective during the financialyear 2017-18.
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 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 Vice-Chairman and ChiefExecutive Officer of the Company appears elsewhere in this Annual Report.
Sexual harassment of Women at Workplace (p revention prohibition and redressal) act2013
As required under the abovementioned Act we report that in the year 2017-18 no case ofsexual 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 the conditions ofCorporate Governance as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Both appear elsewhere in the Annual Report. directors
Mr. Sudeep Yadav retires by rotation as a Director at the 58th AGM of the Company andbeing eligible offers himself for re-appointment for which the Board has resolved torecommend to the shareholders a suitable resolution.
As required by the SEBI (Listing Obligations & Disclosure Requirements) (Amendment)Regulations 2018 notified on May 9 2018 Special Resolutions are proposed for yourapproval at the 58th Annual General Meeting for the continuing from April 1 2019 of theexisting directorships of the following seven Non-Executive Directors who have attained orwill attain the age of 75 years during 2019-20: Mr. Brahm Vasudeva 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.
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 have given written declarations that they meet the criteria of independence aslaid down under Section 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 the challenges faced bythe Company in 2017-18 how the Company has managed them and the challenges before theCompany in 2018-19. Further all the six Independent Directors also attended a 6-hourFamiliarization Program at the
Hawkins Thane factory. The required details of the Independent Directors'Familiarization Programs are available at http://www.hawkinscookers.com/idfp.pdf.
M/s. Kalyaniwalla & Mistry LLP (Firm Registration No.104607W/W100166) CharteredAccountants have been appointed as the Statutory Auditors of the Company for an initialterm of five years from the conclusion of the 57th Annual General Meeting till theconclusion of the 62nd Annual General Meeting 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 2017-18. 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 sevensections: I. Registration and Other Details II. Principal Business Activities of theCompany III. Particulars of Holding Subsidiary and Associate Companies IV. ShareholdingPattern V. Indebtedness VI. Remuneration of Directors and Key Managerial Personnel 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. After thesuccessful pilot project conducted by the Company itself in a few villages in Jalna andAhmednagar districts of Maharashtra in 2016-17 we have decided to implement the saidproject appropriately scaled up with suitable Implementation Partner(s). The Company hasinitiated this approach by partnering with Bhagirath Gramvikas Pratishthan (BGP) inimplementing the said project in the Sindhudurg district of Maharashtra. The village womenwere explained how they could reduce their and their children's exposure to Indoor AirPollution by the use of Pressure Cookers with live demonstrations and pressurecookers being offered to the villagers by BGP at a 50% discount on the MRP. Howeverbecause of the time taken to identify and implement the said project with a suitableImplementation Partner we could not spend all of the Rs. 1.17 crores on activities underCorporate Social Responsibility in the year ended March 31 2018.
We plan to scale up the implementation of the said project in 2018-19 in partnershipwith the suitably identified and selected Implementation Partner(s) in one or more Statesof India. The required Annual Report on CSR is given as 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 30 2018 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 30 2018. The Board of Directors at itsmeeting held on May 30 2018 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 Remuneration Policy is placed atthe Company's website at http://www.hawkinscookers.com/ download/RemunerationPolicy.pdf.The Board affirms that the remuneration is as per the Remuneration Policy of the Company.Information as per Section 197 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 25 2018 ||CHAIRMAN |