hawkins cooker ltd 2003

7/30/2019 Hawkins Cooker Ltd 2003

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FOCUSING ON A TURNAROUND: FINANCIAL PERFORMANCE HIGHLIGHTS

SALES A ND OTHER INCOMER s. CRORES

41.90

30.9937.66

26.1117.24 19.31

APRIL-JUNE2001

J U L Y -S E P T E M B E R

2001OCTOBER-DECEMBER

2001JANUARY-MARCH

2002APRIL-JUNE2002



2002JANUARY-MARCH

2003

NET PROFIT OR LOSS AFTER TA XR s . CRORES

2.09 1.84

-0.39-1 .41

-2.35

0.17

APRIL-JUNE2001



2001JANUARY-MARCH

2002

-4 .15A P R I L -JUNE2002

-4 .77J U L Y -

S E P T E M B E R2002

OCTOBER-DECEMBER2002

JANUARY-MARCH2003

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NOTES1 . (a) A member entitled to attend and vote at

the Meeting isentitled to appoint a proxyto attend and vote instead of himself andsuch proxy need not be a member of theCompany. Proxies, in order to be valid,must be lodged at the Registered Officeof the Company not less than forty-eighthours before the commencement of themeeting.

(b) Members/Joint shareholder(s)/Proxies arerequested to bring the attendance slipsduly completed and signed for themeeting.

2. The Register of Members and Transfer Bookswill remain closed from July 24, 2003, to July31, 2003, both days inclusive.

3. Dividend for the financial year ended March31, 1996, and thereafter which remainsunclaimed for a period of seven years will betransferred to the " INVESTOR EDUCAT IONAND PROTECTION FUND" of the CentralGovernment. Members who have notencashed their dividend warrant(s) for thefinancial year ended March 31, 1996, orthereafter are requested to contact theCompany'sShare Transfer Agent.

4. Members are requested to(a) bring their copy of the Annual Report

with them to the Annual GeneralMeeting.

(b) notify immediately the change ofaddress/ change in bank details if any, tothe Company's Registrar and ShareTransfer Agent, M/s Intime SpectrumRegistry Limited, C-13, Pannalal Silk M illsCompound, L B. Shastri Marg, Bhandup(West), Mumbai 400078 quoting theirfolio number. Members holding shares inthe electronic form are advised to informchange of address/bank details to theirrespective Depository Participants.

5. Information required under Clause 49 VI A ofthe Listing Agreement with The Stock

Exchange, Mumbai (relating to CorporateGovernance) with respect to the Directorsretiring by rotation and being eligible seekingreappointment is as under:Item No. 2 of the Notice Reappointment ofGeneral V.N.Sharma (Retd.)General V. N. Sharma retired in 1990 from theIndian Army as Chief of Army Staff after amost distinguished service of 40 years. He hasbeen awarded the Ati-Vishisht Seva Medal(AVSM) by the President of India in 1977 andthe Param-Vishisht Seva Medal ( PVSM) in1986 which is the highest award fordistinguished service of a most exceptionalorder. He thus brings with him a wealth ofexperience in Leadership and Management.After his retirement, he became the Trusteeof the World Memorial Fund for DisasterRelief. He runs a free tuberculosis project inHimachal Pradesh. He is also a member ofthe India International Centre and TheInstitute of Defence Studies and Analysis. Heha s served on the Local Advisory Board ofAB N Amro Bank for seven years and on theBoard of Directors of the Diamond and GemDevelopment Corporation for five years.General V. N. Sharma does not hold anydirectorship or membership of Committees ofthe Board of Directors of other companies.Item No. 3 of the NoticeMr. Gerson da Cunha

Reappointment ofM r. Gerson da Cunha graduated fromSt. Xaviers College, Mumbai. H is professionalcareer started with Press Trust of India andmoved on to Lintas Limited of which hebecame the Chief Executive. He worked withthe United Nations Children Fund (UNICEF) inLatin America and New York for nine yearsfrom 1980 and pioneered the use ofadvertising and marketing concepts with theUNICEF on issues like Maternal and ChildHealth, Immunisation and HIV and AidsPrevention and Control. He has served asAdvisor, Communications, in the Ministries ofCivil Aviation & Tourism, Information and

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Broadcasting and Health and Family Welfareat various times. He was presented theprestigious AAAI-Premnarayan award for theyear 2000 by the Advertising AgenciesAssociat ion of India which is the highesthonour given to an individual in India foroutstanding contribution to the AdvertisingIndustry. In April, 1999, he helped in theformation of AGNI (Action for GoodGovernance and Networking in India) whichis a non-government organisation. He hasbeen associated with organisations like CRY,Akanksha and Bombay First. He is also adistinguished theatre personality andjournalist.M r. Gerson da Cunha is a director of MediusIndia Services Private Limited. He does nothold membership of Committees of theBoard of Directors of other companies.

6. A n Explanatory Statement as required underSection 173(2) of the Companies Act, 1956 inrespect of Item No. 5 and 6 is given below:

Explanatory Statement in respect of the SpecialBusiness Pursuant to Section 173(2) of theCompanies Act, 1956.Item No. 5 of the NoticeM r. B. K. Khare, was appointed as an AdditionalDirector on the Board of the company, witheffect from March 1 , 2003. Pursuant to Section260 of the Companies Act, 1956, read withArticle 118 of the Articles of Association of theCompany, M r. B . K . Khare holds office upto thedate of the 43rd Annual General Meeting. TheCompany has received a notice in writingunder Section 257 of the Companies Act, 1956,from a Member proposing M r. B. K. Khare forthe office of a Director alongwith a deposit ofR s . 500 which will be refunded to such Memberif Mr. B . K. Khare is elected as a Director.Mr. B. K. Khare is a practising CharteredAccountant and also holds degrees inCommerce and Law. He is also a Fellow Memberof the Institute of Company Secretaries of India.He is he FounderSenior Partnerof M/s.B. K. Khare

& Company, Chartered Accountants since 1955.Besides the audit function, he has specialised inthe field of taxation, corporate taxation, taxplanning, financial management, managementaudit, corporate law and restructuring. Mr. Kharewas formerly Professor of Accounting and Headof Accounts Department in H.R. College ofCommerce & Economics, Mumbai. He regularlyparticipates in the seminars and conferences ontaxation and corporate finance. Hewrites articlesof topical interest related to taxation. He alsocomments each year on the Annual Budgetproposals of Union Government since last twodecades.M r. B. K. Khare is a Director on the Board of thefollowing Companies: Gabriel India Limited,Spice Islands Apparels Limited, Lloyd's RegisterIndustrial Services (I) Limited, EmcurePharmaceuticals Limited, Divgi Warner Limited,Kema Services (International) Pvt. Ltd., J .P.Mukherji & Associates Pvt. Limited and SerumInstitute of India Limited. He is a member of theAudit Committee of Gabriel India Limited.The Directors recommend resolution under itemNo . 5 for acceptance by the Members.No other director except M r. B. K. Khare isdeemed to be interested in this resolution.Item No. 6 of the NoticeThe approval of the Membersof the Company isrequired for keeping the Register of Members,the Index of Members, the Register and Index ofDebenture holders, copies of Annual Returnsunder Section 159 together with the copies ofcertificates and documents required to beannexed thereto under Section 161 at any placeother than the Registered Office of theCompany. This approval is required underSection 163 of the Companies Act, 1956. Themembers have given their approval at the 39thAnnual General Meeting of the Company forkeeping the said documents in the office of theRegistrar and Share Transfer Agent: M/s. IntimeSpectrum Registry Limited, at 260, ShantiIndustrial Estate, Sarojini Naidu Road, Mulund(West), Mumbai 400 080. Consequent to the

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shifting of the office of Intime Spectrum RegistryLimited to C-13, Pannalal Silk M ills Compound,L. B . Shastri Marg, Bhandup (W), Mumbai 400 078,members' approval is sought for keeping thesaid documents at their new office.

The Directors recommend the resolution underItem No. 6 for acceptance by the Members.None of the directors are deemed to beconcerned or interested in the proposedresolution.

BY O R D E R O F T H E BOARD

Mumbai: BRAHM VASUDEVAJune 7 , 2003 C H A I R M A N & C H I E F E X E C U T IV E O F F IC E R

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H A W K I N S C O O K E R S L I M I T E DANNUAL R E P O R T 2002 - 2003

CONTENTSFinancial Performance Highlights Inside Front Cover

Directors' ReportCorporate Governance Report

Auditors' ReportBalance Sheet

Profit & Loss AccountSchedules

Cash Flow StatementThe NewAdvertising

261012131424Inside Back Cover

BOARD OF DIRECTORSJ. M. Mukhi Shishir K. Diwanji Gerson da Cunha Gen. V. N. Sharma (Retd.) B. K, Khare

Brahm VasudevaCHAIRMAN & CHIEF EXECUTIVE OFFICER

M. A. TeckchandaniEXECUTIVE DIRECTOR - OPERATIONS

K. SundararaghavanE XE C U T IVE DIRECTOR - FINANCE &ADMINISTRATION

B. K. KhareCHAIRMAN

AUDIT COMMITTEEShishir K. Diwanji Gerson da Cunha

COMPANY S E C R E T A R YHutoxi Bhesania

R E G I S T E R E D O F F I C EMaker Tower F 101, Cuffe Parade, Mumbai 400 005 India

Tel: 2218 66 07 Fax: 2218 11 90R E G I S T R A R A N D S H A R E T R A N S F E R A G E N T

Intime Spectrum Registry Ltd.C-l 3, Pannalal Silk M ills Compound,

L . B. S hastri Marg, Bhandup (West),Mumbai 400 078

Tel: 2592 38 37 Fax: 2567 26 93

A U D I T O R SA. F. Ferguson & Co .S O L I C I T O R SDesai &DiwanjiCrawford Bayley & Co.

B A N K E R SDena BankPunjab National BankThe Hongkong and Shanghai Banking Corporation LimitedThe Saraswat Co-operative Bank LimitedCorporation Bank

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D I R E C T O R S ' R E P O R T T O S H A R E H O L D E R SWe have the honour to present our 43rd report

and audited statement of accounts for the year endedMarch 31, 2003.2002-03 OPERATIONS: MAIN RESULTS

In 2001 -02,we had reported the first loss in 40 years.As stated in our report last year, th e main reason fo rthe loss in that year was a 19% year-on-year decreasein the volume of our pressure cookers sold in India. In2002 -03 , we launched a new sales policy which hassucceeded in reducing the year-on-year rate ofdecrease in the volume of our pressure cookers sold inIndia from 19% in 2001-02 to 3.4% in 2002-03.

Aggregate net sa le s value in 2002-03 wasR s . 1,083,5 million, down 6.0% over the previous year. Thereason why the sales value is down more than the salesvolume of pressure cookers is because we have taken aprice reduction in our pressure cookers of up to 7% onMarch 1, 2003, following a reduction in excise duty onpressure cookers from 16% to 8% on the same date. Also,sales value of spare parts in 2002-03 was 18 % less thanthe previous year. Thedecline in the sales value of pressurecookers and parts has been offset to some extent by theincrease in our cookware sales in India (up 6.5% by value)and the increase in our totalexports (up 2.8% by FOB value).

Total income was Rs. 1,105.7 million, down 4.9%over the previous year. The net loss after tax for the yearwas Rs.69.1 million as against the net loss after tax ofRs.20.6 million in the previous year.MANAGEMENT DISCUSSION A ND ANALYSISHawkins Position in the PressureCooker Market

M ark e t research shows that the market for allpressure cookers in India was flat in the last tw o years.In this period, the market share of Hawk ins pressurecookers has remained about the same. Hawkinscontinues to be the clear Number One brand in thepressure cooker market and has in fact increased itslead over the Number Twobrand.

The apparent contradiction between Hawkinsdeclining sales volumes and the fact that Hawkins hasvirtually maintained market share in a steady market isexplained by the down-stocking of Hawk ins p ressurecookers by the trade. In the year 2001-02, suchdown-stocking was occurring as a result of "loss-leading"in Hawk ins p r e s s u r e cookers by large wholesalers.In 2002-03, the down-stocking has continued, though fora different reason. The "loss-leading"by large wholesalershas been stopped by our new sales policy. However, thechanges made by our newsales policy discouraged manyof our wholesalers: large wholesalers found that thearbitrage they enjoyed previously was no longer available;instead, they were offered some new proposalsby uswhichthey did not find practical. As a result, down-stocking bywholesalers continued through 2002-03. With the benefitof hindsight, we can say that a period of withdrawal fromintense activity by wholesalers around Hawkins was perhapsinevitable in the implementation of a newsales policy thatsought to end "loss-leading" and to create a level-playingfield amongst all the dealers, whether wholesaler or retailer.

Nevertheless, we are confident that our new salespolicy is succeeding because:

We have stopped "loss-leading". Wehave increased the number of dealers

dealing directly with the company from 1,604in the previous year to 2,490 in the year underreport, an increase of 55%.

Our newer brands/sub-brands of pressurecookers and all items of cookware haveparticularly benefited from increased directdistribution. This is because the classicHawkins pressure cookers were even earlierfinding their way through wholesalers to amuch larger number of dealers than thosethat dealt directly with us. The newer brands/sub-brands of pressure cookers and all items

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of cookwore did not enjoy wholesaledistribution to the same extent as classicHawkins pressure cookers and consequentlyhave gained the most by the increase in ourdirect distribution.

Wehave recently, in the current year, madecertain fine-tuning adjustments to our newsales policy in regard to wholesalers whichhave been widely welcomed by them,Without increasing the advantage availableto wholesalers, we have offered themopportunities which they find practical. Oursales force isconfident that we will now havethe full cooperation of our wholesalers withoutonce again creating a situation of endemic"loss-leading".

As far as the total market for pressure cookers isconcerned, we expect that, starting in the current year,the market will resume growth at a secular rate of 4%to 5% per annum in the foreseeable future, provided wehave a fairly normal monsoon this year. 37% of pressurecookers are being bought by consumers in rural areasand their sentiment will be important for the growth ofthe pressure cooker market. Another reason for us to beoptimistic is the fact that excise duty has been reducedfrom 16% to 8% and the benefit of this reduction hasbeen substantially passed on to the consumer. 64%of p ressu re cookers are bought by consumers withmonthly household incomes of Rs.5,000 or less. Providedthe suppliers of our main rawmaterial, aluminium, exerciserestraint in pricing, we are hopeful that lower consumerprices will translate into larger sales volumes.

Hawkins is well positioned to benefit from theresurgence of growth in the pressure cooker marketbecause the number of repeat buyers of pressure cookersin the market isgrowing. Purchases by repeat buyers havealready reached around 50% of the total purchases byconsumers in the pressure cooker market. Whereas Hawkinshas the largest share of any brand amongst f i rs t timebuyers, H a w k i n s share amongst repeat buyers is

substantially more. We can only conclude that consumerswho have experienced pressure cooking appreciate thequality, features and benefits offered to them by the Hawkinsrange of pressure cookers and are better able to justify thepremium they have to pay for a Hawkins pressure cookerover the cheap brands that flood the market.Hawkins Cookware

In the cookware market, Hawkins occupies thehigh quality niche. Here, too, as more and more consumersexperience the quality, features and benefits ofHawk ins cookware, more and more consumers preferto buy Hawkins notwithstanding the premium they mayhave to pay over cheap cookware. Our growth in cookwarein the year under report was ser ious ly hampered byproduct shortages. We are taking energetic steps to gearup cookware supplies in line with market requirements.We are pleased to report that our cookware quality isappreciated even in the highly competitive export marketswhere our cookware sales are up 30% by value.Material Costs

In the year 2 0 0 2 - 0 3 , stock of finished goodscame down from Rs .258 .7 million at the start of the yearto R s . 1 7 3 . 2 million at the close of the year. Similarly,work- in-progress came down from Rs .52 .6 million at thestart of the year to Rs.33.1 million at the close of the year.If adjustment is made for this reduction in stock andwork- in-progress, material cost as a percentage of netsa les value in the year 2 0 0 2 - 0 3 would not be 43.0%but 3 7 .0%. In the previous year, after adjustment forthe increase in closing stocks in that year, material costas a percentage of net sales value was 35 .1 %.Expenses

Total expenses were reduced by Rs .94 .0 millionfrom R s . 7 9 6 . 5 million in 2 0 0 1 - 0 2 to R s . 7 0 2 . 5 millionin 2 0 0 2 - 0 3 . The major elements of the cost werecontrolled as fol lows:

Personne l cos t s were brought down fromRs .207 .9 million in 2001 -02 to Rs . l 96.8 million
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hawkins cooker ltd 2003

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