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HAWKINS COOKER LIMITED

Financial Analysis 2018-19

SHRESHTHA SINGH

SECTION E

2019JULB02104

ACCOUNTS ASSIGNMENT
ABOUT THE COMPANY

Hawkins Cookers Limited has been in business since 1959. Today, it has two offices, three factories and about
800 persons working. It is the leader in the pressure cooker market in India and has exported its products
since 1974 to various countries in each of the six continents of the world.

Hawkins has sold over 72 million pressure cookers and cookware worldwide. All Hawkins pressure cookers
are listed by Underwriters Laboratories Inc., USA, an independent Worldwide institution testing products for
public safety.

Each pressure cooker made by Hawkins features an inside fitting lid. This design is inherently safer than
conventional pressure cookers. To open any Hawkins cooker, you have to first lower the lid slightly into the
body of the cooker; and that cannot be done until the steam pressure inside the cooker falls to a safe level.
Thus, Hawkins pressure cookers are pressure-locked for safety - like a jetliner door!

The Hawkins Company is well known for not compromising on quality and for continual product innovation.
The most thorough research and development, the most careful selection of materials, the best
manufacturing practices and the strictest quality control - all go into making pressure cookers which are
trusted by the millions of families using them.

Each cooker is tested to be leak-proof. Along with a superior pressure regulating system, this ensures that
Hawkins cooks quickest. Each pressure cooker comes individually packed in an attractive full-colour carton.
Cookbooks/Instruction Manuals come free with each pressure cooker. All Hawkins pressure cookers are
guaranteed for five years.
Hawkins cooker
Balance Sheet 19-Mar 18-Mar Percentage Change

12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 5.29 5.29 0

Total Share Capital 5.29 5.29 0

Reserves and Surplus 113.33 104.53 8.41


Total Reserves and Surplus 113.33 104.53 8.41
Total Shareholder Funds 118.62 109.82 8.01

NON-CURRENT LIABILITIES
Long Term Borrowings 21.34 13.82 54.41

Deferred Tax Liabilities [Net] 0 0 0

Long Term Provisions 4 4.32 7.4


Total Non-Current Liabilities 25.35 18.15 39.66
CURRENT LIABILITIES
Short Term Borrowings 6.97 4.24 64.38
Trade Payables 52.77 52.13 1.22
Other Current Liabilities 62.47 59.85 4.37
Short Term Provisions 1.08 1.34 19.04
Total Current Liabilities 123.28 117.56 4.86
Total Capital And Liabilities 267.24 245.52 8.84

ASSETS

NON-CURRENT ASSETS
Tangible Assets 28.27 23.17 22.01

Capital Work-In-Progress 0 1.05 0

Fixed Assets 28.27 24.21 16.76


Deferred Tax Assets [Net] 1.68 1.42 18.3
Long Term Loans and Advances 0 0 0
Other Non-Current Assets 4.5 4.48 0.44
Total Non-Current Assets 34.45 30.12 14.37
CURRENT ASSETS
Inventories 100.06 66.92 49.52
Trade Receivables 78.55 47.14 66.65
Cash and Cash Equivalents 35.2 87.13 59.6
Short Term Loans and Advances 0 0 0
Other Current Assets 18.99 14.21 33.63
Total Current Assets 232.8 215.41 8.07
Total Assets 267.24 245.52 8.84

OTHER ADDITIONAL INFORMATION


CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 0 19.4 19.4

balance sheet
Contingent Liabilities
Total Current Assets
Trade Receivables
Other Non-Current Assets
Capital Work-In-Progress
Total Capital And Liabilities
Trade Payables
Long Term Provisions
Total Shareholders Funds
Equity Share Capital
0 100 200 300 400 500 600

Series1 Series2 Series3


Profit and Loss Account
Mar 19 18-Mar Percentage Change

12 mths 12 mths

INCOME

Revenue From Operations [Gross] 652.84 549.82 18.73704121

Less: Excise/Sevice Tax/Other Levies 0 4.05 -100

Revenue From Operations [Net] 652.84 545.77 19.61815417

Other Operating Revenues 0 6.79 -100

Total Operating Revenues 652.84 552.56 18.14825539

Other Income 4.14 11.09 -62.66907124

Total Revenue 656.98 563.65 16.55814779


Profit/Loss Before Exceptional, ExtraOrdinary Items And
82.34 73.81 11.55669963
Tax

Exceptional Items 0 0

Profit/Loss Before Tax 82.34 73.81 11.55669963

Tax Expenses-Continued Operations

Current Tax 28.12 24.64 14.12337662


Deferred Tax 0 0.49 -100

Total Tax Expenses 28.12 25.13 11.89812973

Profit/Loss After Tax And Before ExtraOrdinary Items 54.22 48.68 11.38044371
Profit/Loss From Continuing Operations 54.22 48.68 11.38044371
Profit/Loss For The Period 54.22 48.68 11.38044371
19-Mar 18-Mar
12 mths 12 mths

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE


Basic EPS (Rs.) 102.53 92.06 11.3730176

Diluted EPS (Rs.) 102.53 92.06 11.3730176

VALUE OF IMPORTED AND INDIGENIOUS RAW MATERIALS


Imported Raw Materials 0 0
Indigenous Raw Materials 0 0

STORES, SPARES AND LOOSE TOOLS

Indigenous Stores And Spares 0 0

DIVIDEND AND DIVIDEND PERCENTAGE

Equity Share Dividend 0 44.55 -100


Tax On Dividend 0 0
Equity Dividend Rate (%) 800 700 14.28571429
Return on Equity - Hawkins Cookers
From an investor's perspective, ROE is a key ratio. The ROE (after subtracting preferred
shares) tells common shareholders how effectively their money is being employed. Ideal
long term average ROE should be above 15%.

Average 2 year ROE of Hawkins Cookers : 44%

Return on Equity = ( Net Income - Preferred Dividend ) / Shareholder's Equity

Gross, Operating, Net Profit Margin

The most important ratio is Net Profit Margin percentage or Net margin. It tells us how much
out of every sale HAWKINS gets to keep after everything else has been paid for. It is highly
variable from one industry sector to another. An ideal company has consistent profit
margins.

Gross Profit Margin = ( Revenue - Cost of Revenue ) / Revenue


Net Profit Margin = Net Income / Revenue

Net Income & Cash from Operations

Operating cash flow is a better metric of a company's financial health for two main
reasons. Cash flow is harder to manipulate than net income (although it can be done to
a certain degree). Second, "cash is king", a company that does not generate cash over
the long term is on its deathbed. Investors can avoid a lot of bad investments if they
analyze a company's operating cash flow.

Net Income (Income Statement) and Cash from operations (Cash Flow Statement)
should ideally be parallel. A consistently falling or negative operating Cash Flow(OCF)
despite a rising net profit is a cause for concern because of aggressive accounting
techniques or high working capital requirements. An ideal company has a higher
operating cash flow than its net profit (income).

Percentage change in income


600
500
400
300
200
100
0
-100 0 100 200 300 400 500 600 700
-100
-200

Series1 Series2

EXPENSES OF THE YEAR 2018 & 2019


18-
EXPENSES 19-Mar percentage change
Mar

Cost Of Materials Consumed 246.75 183.67 34.34420428

Purchase Of Stock-In Trade 74.29 60.67 22.44931597

Changes In Inventories Of FG, WIP And Stock-In


-27.65 16.17 -270.995671
Trade

Employee Benefit Expenses 90.82 76.09 19.35865423

Finance Costs 3.98 4.14 -3.8647343

Depreciation and Amortization Expenses 4.01 3.66 9.56284153

Other Expenses 182.44 145.44 25.440044

Total Expenses 574.64 489.84 17.31177527


Financial ratios 19-Mar 18-Mar
Current Ratio 1.78 1.82
Quick Ratio 1.14 1.3
Debt Equity Ratio 0.24 0.16
Long Term Debt Equity Ratio 0.18 0.13
Interest Cover 21.69 18.81
Total Debt to Owners Fund 0.24 0.16
Financial Charges Coverage Ratio 22.7 19.69
Financial Charges Coverage Ratio Post Tax 15.63 13.63
Inventory Turnover Ratio 6.52 8.32
Debtors Turnover Ratio 10.39 11.82
Investments Turnover Ratio 6.52 8.32
Fixed Assets Turnover Ratio 23.09 18.35
Total Assets Turnover Ratio 4.44 4.32
Asset Turnover Ratio 4.75 4.43
Book Value 224.31 207.69

Current Ratio
Current Ratio measures the company's current assets against its current liabilities. Ideally
the current ratio should be greater than 1.5. Avoid investing in companies whose current
ratio is less than 1. There are exceptions to this rule, some good companies can have less
than 1 or even a negative current ratio when they recieve money faster from their customers
than they have to pay to their vendors.

Current Ratio = Current Assets / Current Liabilities

Interest Coverage Ratio


An interest coverage ratio less than 1.5 is a red flag. The higher the ratio the less a
company is burdened by debt. If a company has no debt or the loan interest is being paid by
interest income from investments or other activities the ratio is zero which of course is
excellent. A negative ratio tells us that the company cannot even pay its interest on loans
from its operating income, stay far away from such companies.

Interest Coverage Ratio = Operating Income / Interest


Debt to Equity Ratio (D/E)
Debt-to-Equity ratio varies across industries but many companies have a ratio larger than 1,
that is they have more debt than equity. If the ratio is very high, raising more cash through
borrowing could be difficult. Capital intensive industries such as auto manufacturing tend to
have a debt/equity ratio above 2, while IT companies have a debt/equity of under 0.5.

Overall Performance

Company Performance

Hawkins is on the threshold of huge expansion. It is just not focused on enhancing its
installed capacity but is also vigorously trying to expand its distribution channel. Its margins
are also improving slowly. Given its strong balance sheet, good prompter pedigree and
bright industry prospects, the stock has the potential to rise to Rs.4000 in the next two
quarters and further to Rs. 5000 in within a year. Taking a look at all the above observation
and analysis the overall performance of revenue and profit, needless to say you should
invest in a company whose numbers are going up.