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Hawkins Cookers FD: Should You Invest?

Hawkins Cookers Limited has recently released details of its FD scheme for 2019 and is offering FD interest rates up to 10.5%. Read more to check whether the investment is worthwhile.

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Hawkins Cookers, a renowned household brand, is offering a fixed deposit scheme with interest rate that goes up to 10.5% per annum and for a tenure of 36 months. Hawkins Cookers fixed deposit is a company fixed deposit scheme and unlike bank FD, has its share of risks. Incorporated in February 1959, Hawkins Cookers is engaged in manufacturing and marketing of Hawkins, Futura and Miss Mary Pressure cookers, along with Futura and Hawkins cookware. It has its manufacturing units in Thane, Hoshiarpur, and in the Jaunpur district. The company has introduced its fixed deposit scheme in September 2019, and it is authorised to raise Rs. 6.76 crore from the members and Rs. 16.90 crores of funds from the public.

Generally, banks fixed deposits are considered more secure than company FDs. Hawkins Cookers carries MAA (Stable) rating from the credit rating agency ICRA. This rating is given to the Hawkins Cookers FD as on July 26, 2019. This credit rating signifies “High credit quality with low credit risk”. Moreover, the directors of the company in their declaration has stated that in case of any adverse change in credit rating, the depositors will be given a chance to withdraw their money without any penalty.

FD interest rates offered on Hawkins Cookers FD scheme are as follows

Cumulative deposits (interest compounded monthly)

FD termInterest rate per annumMinimum depositThe amount payable upon maturity
12 months10%Rs. 25,000Rs. 27,618
24 months10.25%Rs. 25,000Rs. 30,661
36 months10.50%Rs. 25,000Rs. 34,210

Non-cumulative deposits (interest payment half-yearly)

FD termMinimum depositMInterest rate per annum
12 monthsRs. 25,00010%
24 monthsRs. 25,00010.25%
36 monthsRs. 25,00010.50%

The company’s fixed deposit scheme looks attractive because of its higher FD interest rates compared to bank FDs. Moreover, the company has a good credit history with low default risk. However, the question arises is: Should you invest in these FDs?

Market experts suggest that while investing money in any scheme, one must keep in mind his/her risk profile. For instance, company fixed deposits give better returns than bank fixed deposits. However, they are riskier as compared to bank FDs. Therefore, those willing to take some risk should go for company FDs. Whereas, investors with a low-risk appetite, better opt for bank FDs, although the returns may not be as good as corporate FDs.

Hawkins Cookers Limited has already raised money through fixed deposits worth approximately Rs. 22 crores on its books over the past few years. In the financial year 2018-19, the company made Rs. 54.22 crores profit after tax. It has profit after tax of Rs. 48.68 crores and Rs. 47.42 crores in the two preceding years, respectively. The company has a market capitalisation of over Rs. 1570 crores as on September 2019.

The Fixed deposit scheme introduced by Hawkins Cookers can be an excellent opportunity for investors seeking fixed returns on their principal amount. The company is well established and profitable. Hence, repaying the debts should not be an issue. In spite of the higher FD interest rates offered by the company, one should remember that company FDs are not as secure as bank FDs. Therefore, investors can take benefit of this higher FD interest rates offered by Hawkins Cookers by investing a small part (let us say 15 to 20%) of the corpus which they have for investing in fixed return securities.

Should you invest?

According to market and finance experts, while investing in any investment scheme, one must keep in mind his/her risk profile, the company's credit rating apart from the expected returns. The latest fixed deposit issued by Hawkins Cookers has received MAA credit rating from ICRA, which indicates high credit quality and low credit risk.

Till now, the company has never defaulted on any of its payments. However, it is also important to consider that there is no provision for premature withdrawals under the scheme. Those looking for an assured income higher than bank fixed deposits can consider this term deposit issued by Hawkins Cookers Ltd. Moreover, depositors must note that unlike bank FDs that are insured up to 1 lakh under DICGC (depositors’ insurance scheme), there is no statutory capital or interest protection available against company deposits.

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