Hawkins Cookers Ltd Directors Report.

We have the honour to present our Sixty-First Annual Report and Audited Statement of Accounts 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.768.46 crores (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 industry structure 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 sold in India from February, 2021. Your Company is the undisputed leader in quality and expects to gain from this development.

There was increased demand for our products post the COVID first wave, due to increased cooking 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 is relaxed. We have improved our presence in the online segment, while improving the distribution amongst dealers by 29%. We have successfully launched Pressure Die-Cast Aluminium 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, were 609 through normal attrition and recruitment. We have paid all employees their salaries during the time that our factories and offices were closed. The morale of our employees at all locations is high and industrial relations were and are normal. We well appreciate the contribution of our employees to the successful working of your Company, especially under COVID 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/net worth was 51% (in 2019-20: 56%).

Key Financial Ratios

The details of significant changes (25% or more) in the key financial ratios for the year 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 banks on deposit accounts as on March 31, 2021, were Rs.161.29 crores (previous year: Rs.42.57 crores). We have plans to utilise these funds appropriately, in managing working capital during COVID led lockdowns and in expanding production capacity.

Control Systems

In our judgment, the Company has adequate financial and administrative systems and controls 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 which are provided in the Report on Corporate Governance.

All foreseeable risks that the Company may encounter and concerns have been addressed in a documented Risk Management Framework which is reviewed by the Risk Management Committee and the Board from time to time.

COVID-19 has affected our operations partially. Our capital and financial resources, liquidity 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 all government regulations but both managers and workers are required to come to work whenever possible. While we have work-from-home protocols when mandated, we prefer to come to the office as soon as possible. We believe that this is useful for better co-ordination, effectiveness and control.

While the COVID-19 lockdowns tend to adversely affect the demand and supply of our products in the short term, we have seen buoyant demand eventually and we expect to see an increase 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 in the last few months – we have taken a price increase of 5 to 10% in order to mitigate the impact. Management continues to diligently watch cost increase trends and seeks effective cost controls and necessary adjustment in prices as needed from time to time.

Outlook

We believe the outlook for our business is very good under the circumstances. In this year, we have further strengthened the good reputation we have amongst our consumers and traders, associates and vendors, by being available and open even in difficult times. We expect to continue to increase our sales and profits.

All forward-looking statements in our report are based on our assessments and judgments exercised in good faith at this time. Of course, actual developments and/or results may differ from our present anticipation.

Directors

Mr. Brahm Vasudeva, Promoter Chairman and Non-Executive Director of the Company, ceased to be a Director with effect from July 10, 2020, due to his sad demise. He was a Director since 1968. He believed that doing business ethically – dealing with consumers, dealers, employees, associates and shareholders ‘straight’ – is good for the business. The senior management of the Company have been hand-picked and trained by him. We believe that the lasting legacy of the man is the stamp he has left in the Hawkins culture of meritocracy, honesty, attention to detail and the inclination to work hard and not take shortcuts. He leaves behind an organisation which is steeped in his values. Our excellent results for the year and our optimism for the future are indebted to the vision of Mr. Brahm Vasudeva. The Directors place on record their highest gratitude and deep appreciation for his valuable guidance received during his tenure of 52 years.

Mr. J. M. Mukhi, Independent Director, ceased to be a Director with effect from March 22, 2021, due to his sad demise. The Company has immensely benefitted from his legal acumen and overall guidance during his tenure of 44 years. The Directors place on record their highest gratitude and deep appreciation for his valuable guidance received during his tenure with the Company.

Mr. Shishir K. Diwanji, Independent Director, ceased to be a Director with effect from March 31, 2021, consequent to his resignation from the Board due to his intermittent health issues. The Company has immensely benefitted from his contribution over the years. The Directors place on record their highest gratitude and deep appreciation for his valuable 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 as Chief Executive Officer with effect from August 6, 2020, for the balance period of his existing term as Vice-Chairman of the Board and Managing Director designated as Chief Executive Officer ending on September 30, 2022, subject to the applicable regulatory requirements. At the said Meeting the Board changed the designation of Mr. Sudeep Yadav to Vice-Chairman of the Board of Directors and Chief Financial Officer with effect from August 6, 2020, for the balance period of his existing term as Executive Director-Finance & Administration designated as Chief Financial Officer ending on September 30, 2022, subject to the approval of the shareholders at the 61st Annual General Meeting of the Company. Suitable resolutions are recommended by the Board to the shareholders for their approval.

The present tenure of Mr. Ravi Kant, Independent Director, will expire on August 3, 2021. Based on the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting (Serial No. 24) held on May 27, 2021, has recommended to the shareholders a suitable resolution for his re-appointment for a second term of five years with effect from August 4, 2021. The Company has received a requisite notice from a Member in writing proposing the said re-appointment.

Pursuant to the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting (Serial No. 24) held on May 27, 2021, has recommended the following appointments for the approval of the Members at the 61st Annual General Meeting of the Company:

To appoint Mr. Murli Aildas Teckchandani as an

Independent Director of the Company for a period of five consecutive years with effect from August 1, 2021.

To appoint Mr. Tej Paul Sharma as a Wholetime

Director of the Company designated as Executive Director-Sales for a period of twenty-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 of twenty-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 above three 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 have given written declarations that they meet the criteria of independence as laid down under Section 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 and, being eligible, offers himself for re-appointment for which the Board has resolved to recommend to the shareholders a suitable resolution.

At the Board Meeting (Serial No. 24) held on May 27, 2021, the Chief Executive Officer made a presentation to the Independent Directors to update them on the Company’s operations, products, sales, production and how the Company is dealing with the COVID-19 crisis. The required details of the Independent Directors’ Familiarization 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 and Industrial Research. The expenditure on Research & Development in 2020-21 was Rs.5.22 crores, 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 Companies Act, 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 the requirements of the Listing Regulations. The Policy is available on the website of the Company 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.85.35 crores).

In view of the continuing uncertainties due to COVID, it was decided by the Board that it will not recommend any final dividend for 2020-21. The interim dividend paid in September 2020 of Rs.80 per equity share of paid-up and face value of Rs.10 each shall be taken as the 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 adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

2. In the preparation of the Annual Accounts, the applicable accounting standards have been followed and proper explanation given relating to material departures, if any. The Directors have prepared the Annual Accounts on a going-concern basis.

3. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit and loss of the Company for that period.

4. Based on the framework of the internal financial controls and compliance systems established and maintained by the Company, the work performed by the Internal, Statutory and Secretarial Auditors, including audit of the internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2020-21.

5. The Directors have devised proper systems that are, in our opinion, adequate and 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 Directors of the Board and the Senior Managers of the Company. This Code is available on the website of the Company. All Directors and Senior Management Personnel have affirmed compliance with the Code. A declaration to this effect signed by the Chairman and Chief Executive Officer of the Company appears elsewhere in this Annual Report.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has constituted Internal Complaints Committees at each of the five locations of the Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to redress complaints received regarding sexual harassment. In the year 2020-21, no case of sexual harassment of women was filed under the said Act.

Business Responsibility Report

A separate section on Business Responsibility forms part of our Report describing the initiatives taken by the Company from an environmental, social and governance perspective. The Business Responsibility Policy has also been placed on the Company’s website at https://www.hawkinscookers.com/ download/BusinessResponsibilityPolicy.pdf.

Corporate Governance

A separate section on Corporate Governance forms part of our Report. A certificate has been received from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Both appear elsewhere in the Annual Report.

Auditors

M/s. Kalyaniwalla & Mistry LLP (Firm Registration No.104607W/W100166), Chartered Accountants, have been appointed as the Statutory Auditors of the Company at the 57th Annual General Meeting held on August 2, 2017, for an initial term of five years from the conclusion of the 57th Annual General Meeting till the conclusion of the 62nd Annual General Meeting of the Company in 2022.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company had appointed M/s. Jayshree Dagli & Associates, Company Secretaries in Practice, to continue to undertake the secretarial audit of the Company for the year 2020-21. The Secretarial 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 the provisions of Section 148(1) of the Companies Act, 2013, are not applicable to our Company.

Annual Return

The Annual Return of the Company for the year 2020-21 shall be filed within 60 days of the ensuing 61st AGM. The Return for the year 2019-20 filed with the Ministry of Corporate Affairs after the 60th AGM held in the year 2020 is available 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 arm’s length basis and were not 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 using Pressure Cookers. The Company continued its extensive education campaign through a public service campaign in newspapers, about the dangers of Indoor Air Pollution and how to use the Pressure Cooker to avoid it, and about how to save 25% fuel cost using the Pressure Cooker, with the potential of conserving precious fuel resources for India. Additionally, the Company donated to the Prime Minister’s National Relief Fund.

The Company has spent the entire amount of Rs.167 lakhs required to be spent on Corporate Social Responsibility (CSR) in the year 2020-21 and the excess amount of Rs.0.62 lakhs spent on CSR in 2020-21 is carried forward to the financial year 2021-22 for setting off from the CSR spend target for 2021-22.

In addition to the foregoing information on CSR, the required Annual Report on CSR is given as Appendix III.

Directors’ Performance Evaluation

The performance evaluation of each Director of the Board was carried out by the Nomination and Remuneration Committee at its Meeting (Serial No.13) held on May 26, 2021, as per the criteria set by it earlier. The said criteria are included in the Corporate Governance Report enclosed herewith. The performance evaluation of the non-Independent Directors, the Board as a whole and the Chairman of the Board was carried out by the Independent 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 the reports of evaluation received from the Nomination and Remuneration Committee and the Independent Directors and also the functioning of the Committees of the Board and carried out the evaluation of the Board as a whole, the Committees of the Board and each Director and found the performance of the Board, the Committees and all the individual Directors to be satisfactory.

Remuneration Policy

On the recommendation of the Nomination and Remuneration Committee, the Board has framed a Remuneration Policy for all employees of the Company including senior management and the Directors.

Directors’ Report (Continued)

The Remuneration Policy of the Company is designed to attract, motivate and retain suitable manpower in a competitive market. The remuneration package for each person is designed keeping a balance between fixed remuneration and profit and performance-linked incentives in order to achieve corporate performance targets. The Policy is aligned with the Company’s mission, which states: "Our single-minded determination to please customers drives the kind of people we employ and promote, the investments we make and the results we produce."

The Remuneration Policy is placed at the Company’s website at https://www.hawkinscookers.com/download/ RemunerationPolicy.pdf. The Board affirms that all the remunerations are as per the Remuneration Policy of the Company. Information as per Section 197 of the Companies Act, 2013, is given in Appendix IV.

Vigil Mechanism

The Company has an established Vigil Mechanism/ Whistle Blower Policy for Directors and employees to report concerns or grievances including unethical behaviour, fraud or violation of the Company’s Corporate Governance Code of Conduct. The authority for the implementation of the Policy rests with the Vice-Chairman and Chief Financial Officer under the overall supervision of the Audit Committee of the Board.

ON BEHALF OF THE BOARD OF DIRECTORS

SUBHADIP DUTTA CHOUDHURY

CHAIRMAN

Mumbai

June 28, 2021