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Hawkins Cookers FD Interest Rates

According to Hawkins Cookers Ltd “Proposed time schedule mentioning the date of opening of the Scheme and the time period for which the circular or advertisement is valid from September 15, 2021, to September 30, 2022, or the date of the Company’s 62nd Annual General Meeting, whichever is earlier.” The following interest rates will be applicable on minimum deposits of Rs.25,000 and in multiples of Rs.1,000 subject to a maximum of Rs.20,00,000.

Scheme (A) Cumulative (Interest compounded monthly)

Scheme (B) Non-Cumulative (Interest payment Half-Yearly)

Hawkins Cookers FD Ratings & Mode of Interest Payout

ECS/Direct Credit/RTGS/NEFT/Warrant mode will be used for interest payment and repayment. Deposits can be repaid through ECS/Direct Credit/RTGS/NEFT/Cheque, subject to SEBI and RBI restrictions. Hawkins Cookers Ltd has obtained [ICRA] MAA (Stable) rating by the Credit Rating Agency ICRA Limited. The rating was issued on July 21, 2021, and it simply means that the company has excellent credit quality with minimal credit risk. The credit rating of Hawkins Cookers Limited is a quantifiable evaluation of the company’s credibility that educates investors about the risk of the company failing on its financial commitments.

It is mandatory for interested investors to pre-register their interest online at www.hawkinscookers.com/fd2021.aspx from 9:30 am onwards on September 15, 2021, according to the circular of the company. The Fixed Deposit form along with the detailed Terms and Conditions can be downloaded from www.hawkinscookers.com/fdform2021.pdf.

Should you invest?

Amid the current low interest rates on fixed deposits of leading private and public sector banks, small finance banks offer higher interest rates with DICGC insurance benefit on fixed deposits up to Rs 5 lakhs which makes investment in small finance banks risk-free up to the amount covered. However, when it comes to corporate deposits, such as Hawkins Cookers Fixed Deposit Scheme, the only condition on which investors should rely is the credit rating.

Placing a fixed deposit with a positive score is a safe bet, which is why Hawkins Cookers FD Scheme can be a good option for debt investors as the company has obtained MAA (Stable) rating by the Credit Rating Agency ICRA Limited. As a result, investing in Hawkins Cooker FDs may be a better option than investing in a leading bank’s fixed deposit scheme like SBI, which offers a low-interest rate of 5,40 percent as of now. However, we advise our readers to briefly look at the applicable terms and conditions, inflation risk, and taxation as per your income tax slab which may lower your post-tax return if you are in the higher tax bracket.

If the interest income received on a corporate FD surpasses Rs. 5000, the TDS rate is 10% for all resident Indian citizens. TDS deduction on FD interest is charged at 20% if PAN details are not submitted, it is one of the main considerations apart from higher rates and credit rating which our readers should keep in mind. Last but not least, it is critical to select Corporate FD with caution and to reduce the risk of default, choose only those certified ‘AAA’ in terms of rating.

Investors these days are being more patient and staying put in the equity markets for the long-term, expecting better returns. However, some investors are yet not comfortable with the equity markets because of their volatility. They are interested in profit maximization beyond the stock market, in a short-term period. Bank Fixed Deposits (FD) or Life Insurance plans do not attract them because of their lengthy timeline and inflation dilemma. The below discussion is for those investors. The investment option is called invoice discounting – which is related to both MSMEs and big companies, in two different segments.

How is invoice discounting being operated?

Be it a big company or a medium scale company, when they are operating in a market they are most likely to sell products/goods to the buyers. Now, when a product is sold in the market, this includes multiple ingredients and items within it. For example, if Apple is selling mobile phones in the market, they will certainly need parts or materials like packaging items, metal parts, glass, etc. These will be manufactured by other suppliers to send to Apple, and they will assemble the parts, enable the software, do the packaging, and sell the final product. Here comes the importance of the suppliers or manufacturers.

When Apple will order its supplier to make mobile parts for them, they will not give the total payment for those parts. Rather, they will offer the suppliers an invoice that will commit the full payment for the manufactured parts, which will be paid after around 30-90 days. With this commitment, the manufacture will supply the parts to Apple. But what happens if the supplier needs the money immediately, cannot wait any longer? Then the supplier can sell the invoice to other investors in the market by online financial platforms. The investor will have to pay the amount payable by Apple to the supplier, but they will get a discount of 20%. Later the production company will pay the full amount directly to the investor, whereby the investor will have a profit margin.

This is why the investment option is called invoice discounting. For example, if the total amount payable by Apple is Rs. 1000, the investor will pay only Rs. 800 to the supplier. The 20% loss is neglected because it is assumed that the supplier has already counted profits within this amount. Thus, the supplier can fulfill its demand of immediate money, with a lesser profit. Later, after 30-90 days, at the time of payment, when Apple will remunerate for the parts, they will directly pay the full Rs. 1000 to the investor. So, in that way, within a very short period of 30-90 days, the investor will earn a good profit.

Profit share

However, the total profit of 20% is not attributed to the investor alone. A margin of this, at around 8%, is taken by the online financial platform, where the invoice was sold by the supplier. Hence, the rest 12% will be given to the investor. Now, this 8% and 12% can vary depending on the companies involved and the platforms.

In India mostly the MSME sector runs its operations through an invoice discounting system to earn their working capital. They manufacture for large-scale companies and earn the amount immediately from investors. Investors then after the short-term period earn their 12% profit.

Risk factors

The invoice discounting is a great investment opportunity, keeping in mind certain risk factors. The investor should always analyze the brand value of the company who will give the final payment. The credit history or credit risk should be checked, to understand how and when they have done their earlier payments. Along with this, the company’s insolvency factor or debt obligation should be another concern to look at.

On the other hand, the manufacturer company, who is dealing the invoice, should also be checked to understand if they are good companies or not. Otherwise, they might deal with invoices that are not going to be settled in the future. Also, the disputed invoice is another risk; if the sold products are disputed, then the big company can reject to pay the money, or can pay only a percentage of the total amount payable. In that case, the investor will face loss.

Invoice Discounting platforms

KredX, Receivables Exchange of India Ltd (RXIL), TradeCred, Finovate Capital, Invoice Mart, M1 Treds, and Priority Vendor are some of the popular online debt platforms, where the invoice discounting ecosystem is operated. In these platforms, the investors should find the risk mitigations, financial reports, credit history, shareholders details, internal rate of return (IRR), etc. to have a better outlook on the deal.

However, this investment option is most likely for big investors who can put a lump sum amount in this, a very small-scale investment will not be appropriate for the field. Also, not all of the companies – manufacturers or sellers will be reputed companies here. So, an in-depth study of the companies is required for invoice discounting.