Hawkins Cookers Ltd, India’s leading pressure cooker maker, has come out with an unsecured but lucrative fixed deposit scheme. The company is offering 10.75% interest rate on 36-month deposits (compounding yields up to 11.3% per annum) and 10.25% on 12-month deposits.

The high-credit-quality MAA rating assigned by ICRA indicates that the unsecured deposit programme carries low-credit risks. MAA is a high-quality rating, which falls on ICRA’s medium-term rating scale and is used only for public deposits.

The company is authorised to collect Rs 6,51,97,000 from its members and Rs 16,29,93,000 from general public. The minimum amount one can invest is Rs 25,000. The objectives of raising the deposits are to meet the working capital requirements as well as unforeseen contingencies, if they arise.

Incorporated on February 25, 1959, Hawkins Cookers is engaged in the manufacture and marketing of Hawkins, Futura and Miss Mary pressure cookers and Hawkins and Futura cookware. The company has manufacturing units for its products at Thane, Hoshiarpur and in the Jaunpur district.

The company’s new FD scheme, which is effective September 18, 2018, looks attractive because of its high interest rate compared to bank FDs and many corporate FDs. Moreover, the deposits have high credit quality with low credit risk. However, the question arises: Are these FDs worth investing and should one go for them?

Market and financial experts are of the view that while investing in any investment scheme, one must keep in mind one’s risk profile apart from the expected return.

For instance, company FDs give better returns than bank FDs, but they are more risky compared to the latter. Therefore, only those who are willing to take some investment risk should go for company FDs, while people who don’t want to take any risk should better opt for bank FDs, although returns may be a bit lower in this case.

Thus, in case of Hawkins Cookers also, investors looking for superior returns than the bank fixed deposits with the willingness to take some risks may consider the scheme.

“This offer looks to be a good opportunity for investors seeking fixed returns on their capital. The company is well established and highly profitable. Hence servicing the debt should not be an issue. Only precaution here is that the company fixed deposits are never considered secure lending. Therefore, only a small part (around let us say 20%) of the corpus which you have for fixed income investments should be put into these deposits,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.

Sahil Arora, Head of Payment Products, Paisabazaar.com, also has similar views. He says, “The latest FD issue from Hawkins Cookers Ltd has received ‘MAA’ credit rating from ICRA, which signifies high credit quality and low credit risk. The company has never defaulted on any of its repayments. However, its flip side is that there is no provision for premature withdrawal. Those looking for an assured income higher than bank FDs can consider the FD issue from Hawkins Cookers Ltd. However, depositors should remember that unlike bank FDs that are insured up to Rs 1 lakh under deposit insurance scheme, there is no statutory capital/interest protection for company deposits.”

(Disclaimer: The views given are generic. Please consult your financial advisor before investing.)