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Auditor Report of Timex Group India Ltd.

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Timex Group India Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2015,the Statement of Profit and Loss,the Cash Flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information.

Management''s responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

Managerial remuneration of Rs 7.46 lakhs paid by the Company during the year ended 31 March 2012 was in excess of the amount approved by the Central Government. The Company''s application for approval of such excess remuneration was rejected by the Central Government vide its letter dated 26 July 2012. The Company had requested the Central Government to re-consider the same and an application had been made in this regard by the Company vide its letter dated 30 August 2012.

In response, the Company received direction from Central Government to recover the excess remuneration of Rs. 7.09 lakhs paid during the year ended 31 March 2012. Subsequently, the Company filed an application with the Central Government for waiver of such excess remuneration paid, since the concerned managerial person has resigned w.e.f. 31 January 2013. The Central Government vide its letter dated 18 November 2014, has rejected the application filed for waiver of excess remuneration paid. The Company is in the process of taking necessary steps for recovery of this amount from the erstwhile Managing Director.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31March 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

Attention is invited to note 2 (b) of the financial statements, wherein it is explained that the Company has significant accumulated losses which have resulted in complete erosion of the net worth of the Company as at 31 March 2015. The ability of the Company to continue as a going concern is dependent on improvement of the Company''s future operations and continued financial support from the holding and ultimate holding company. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by section 143(3) of the Act, we report, to the extent applicable, that:

a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) the matter described in the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) on the basis of the written representations received from the directors as on 31 March 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act; and

g) with respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 38 to the financial statements;

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. The Company did not have any dues on account of Investor Education and Protection Fund.

Annexure to the Independent Auditor''s report

The Annexure referred to in our Independent Auditor''s Report to the members of the Company on the standalone financial statements for the year ended 31 March 2015, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. According to this programme, during the year, the Company has verified all fixed assets at the factory location. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verification.

(ii) (a) According to the information and explanations given to us, the inventories have been physically verified by the management as at the year end. In our opinion, the frequency of such verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account

(iii) According to the information and explanation given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) In our opinion, and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialised requirements and similarly certain goods and services sold are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

(v) The Company has not accepted any deposits from the public during the year.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 148(1) of the Companies Act, 2013 in respect of its products and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to ensure whether they are adequate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, duty of Customs, duty of Excise, Value added tax, Cess and other material statutory dues, as applicable, have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us,the Company did not have any dues on account of Wealth tax.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, duty of Customs, duty of Excise, Value added tax, Cess and other material statutory dues, as applicable, were in arrears as at 31 March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues in respect of Service tax which have not been deposited with the appropriate authorities on account of any dispute.According to the information and explanations given to us, the following dues of Income tax, Sales tax, duty of Customs, duty of Excise, Cess and Value Added Tax which have not been deposited by the Company on account of disputes:

Name of the Nature of the Amount Amounts paid Statute dues Disputed under protest (Rs. lakhs) (Rs. lakhs)

Central Excise duty 43 7 Excise (Cenvat Act, 1944 credit) Penalty 43

Central Excise duty 6 5 Excise Act, 1944

Central Sales Tax 59 - Sales Tax Act, 1956

The Kerala Sales Tax 1 - Sales Tax Act, Tax 1963

Tamil Nadu Sales Tax 8 - General Sales Tax Act, 1959

Andhra Sales Tax 1 - Pradesh Sales Tax Act, 1957

Karnataka Cess 1 - Sales Tax Act, 1957

Tamil Nadu Sales Tax 9 7 General Sales Tax Act, 1959

Customs Customs duty 8 8 Act,1962

The Kerala Sales Tax 1 1 Value Added Tax Rules, 2005

The MP Value Sales Tax 7 1 Added Tax

The UP VAT Sales Tax 84 42 Act 2008

Central Sales Tax 12 - Sales Tax Act, 1956

The UP Sales Tax 100 - Sales Tax Act 1948

Income Income Tax 610 - Tax Act, 1961 *

Income Income Tax 786 - Tax Act, 1961 *

Income Income Tax 397 - Tax Act, 1961 */**

Name of the Period to Forum where dispute is Statute which the pending amount relates (Financial year)

Central 1995-96to CESTAT, New Delhi Excise 1998-99 Act, 1944

Central 1992-93and Deputy Commissioner, Central Excise 1996-97 Excise Act, 1944

Central 1994-95 Deputy Commissioner- Sales Commercial tax Tax Act, 1956

The Kerala 1995-96 Assistant Commissioner-Sales Sales Tax Act, Tax 1963

Tamil Nadu 1992-93to Commercial taxation officer General 1993- 94 Sales Tax Act, 1959

Andhra 1995-96 Commercial taxation officer Pradesh Sales Tax Act, 1957

Karnataka 1995-96 Deputy Commissioner- Sales Tax Commercial taxes Act, 1957

Tamil Nadu 2002-03 High Court, Chennai General Sales Tax Act, 1959

Customs 1995-96 Commissioner, Customs Act,1962 (Appeals)

The Kerala 2009-10 Assistant Commissioner Value Added Tax Rules, 2005

The MP Value 2009-10 M.P VAT Authority Added Tax

The UP VAT 2010-11 Additional Commissioner Act 2008 (Appeals)

Central 2010-11 Assistant Commissioner- Sales Commercial tax Tax Act, 1956

The UP 2011-12 Deputy Commissioner Sales Tax Act 1948

Income 2001-02 Income tax Appellate Tax Tribunal Act, 1961 *

Income 2002-03 Income tax Appellate Tribunal Tax Act, 1961 *

Income 2003-04 Income tax Appellate Tribunal Tax Act, 1961 */**

Name of the Nature of the Amount Amounts paid Statute dues Disputed under protest (Rs. lakhs) (Rs. lakhs)

Income Income Tax 329 - Tax Act, 1961 *

Income Income Tax 338 - Tax Act, 1961 *

Income Income Tax 75 - Tax Act, 1961 *

Income Income Tax 2,000 - Tax Act, 1961 *

Income Income Tax 2,689 - Tax Act, 1961 *

Income Income Tax 2,084 - Tax Act, 1961 */**

Income Income Tax 2,434 - Tax Act, 1961 */**

Name of the Period to Forum where dispute is Statute which the pending amount relates (Financial year)

Income 2004-05 Income tax Appellate Tax Tribunal Act, 1961 *

Income 2005-06 Income tax Appellate Tribunal Tax Act, 1961 *

Income 2006-07 Commissioner of Income Tax, Tax (Appeals) Act, 1961 *

Income 2007-08 Commissioner of Income Tax, Tax (Appeals) Act, 1961 *

Income 2008-09 Commissioner of Income Tax, Tax (Appeals) Act, 1961 *

Income 2009-10 Commissioner of Income Tax, Tax (Appeals) Act, 1961 */**

Income 2010-11 Dispute Resolution Panal Tax Act, 1961 */**

* Represents additions made to the total taxable income of the Company by the tax authorities which have been disputed by the Company. No demand has been raised by the tax authorities as any additions to the income will be adjusted against the brought forward losses / unabsorbed depreciation.

** Total addition of Rs. 397 lakhs made to the total income of the Company for the financial year 2003-04, out of which Commissioner of Income Tax, (Appeals) has passed an order dated 23 March 2012 allowing a partial relief in favour of the Company and has directed the Assessing Officer (AO) / Transfer Pricing Order (TPO) to make necessary adjustments. As informed to us, the Company has not received the amended tax order from the AO/TPO after incorporation of the above changes. Further, during the current year, the tax department has filed an appeal in Income tax Appellate Tribunal against the order of Commissioner of Income Tax, (Appeals). The proceedings are in progress.

(c) The Company did not have any dues on account of Investor Education and Protection Fund.

(viii) The Company''s accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current year and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to its bankers during the year. The Company did not have any debentures or dues to any financial institution during the year.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) According to the information and explanations given to us, the Company did not have any term loans outstanding during the year.

(xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co. LLP Chartered Accountants ICAI Firm Registration No.: 101248W/W-100022

Jiten Chopra Place : Gurgaon Partner Date : 21 May 2015 Membership No.: 092894


Mar 31, 2014

We have audited the accompanying financial statements of Timex Group India Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2014, the Statement of profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our qualifed audit opinion.

Basis for Qualifed Opinion

Managerial remuneration of Rs 7.46 lakhs paid by the Company during the year ended 31 March 2012 was in excess of the amount approved by the Central Government. The Company s application for approval of such excess remuneration was rejected by the Central Government vide its letter dated 26 July2012. The Company had requested the Central Government to re-consider the same and an application had been made in this regard by the Company vide its letter dated 30 August 2012.

The Company has received a direction to recover the excess remuneration of Rs. 7.09 lakhs paid during the year ended 31 March 2012. The Company has not recovered such excess remuneration paid till date and is in the process of fling an application with the Central Government for waiver of such excess remuneration paid, since the concerned managerial person has resigned w.e.f. 31 January 2013.

Qualifed Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualifed Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2014;

(b) in the case of the Statement of profit and Loss, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

Attention is invited to note 2 (b) of the financial statements, wherein it is explained that the Company has significant accumulated losses which have resulted in complete erosion of the net worth of the Company as at 31 March 2014. The ability of the Company to continue as a going concern is dependent on improvement of the Company''s future operations and continued financial support from the holding and ultimate holding company. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. Our opinion is not qualifed in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of profit and Loss and Cash Flow Statement comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualifed as on 31 March 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in our report to the members of Timex Group India Limited on the accounts of the Company for the year ended 31 March 2014

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a regular programme of physical verifcation of its fixed assets by which all fixed assets are verifed in a phased manner over a period of three years. According to this programme, the Company has verifed all its assets over a period of three years. In our opinion, this periodicity of physical verifcation is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verifcation. For assets lying with third parties at the year-end, written confirmations have been obtained.

(c) In our opinion, and according to information and explanations given to us, fixed assets disposed off during the year are not substantial and therefore, do not affect the going concern assumption.

(ii) (a) According to the information and explanations given to us, the inventories have been physically verifed by the management during the year. In our opinion, the frequency of such verifcation is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for the physical verifcation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verifcation of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii) (b) to (g) of the Order are not applicable. (iv) In our opinion, and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialised requirements and similarly certain goods and services sold are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system. (v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. (b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh are for the specialized requirements of the Company/buyers for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided, the same appear to be reasonable.

(vi) The Company has not accepted any deposits from public.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of the products covered and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to ensure whether they are adequate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund and other material statutory dues, as applicable, have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the provisions of Wealth tax are not applicable to the Company.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund and other material statutory dues, as applicable, were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues in respect of Service tax which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of Income tax, Sales tax, Customs duty and Excise duty have not been deposited by the Company on account of disputes:

Name of the Nature of the Amounts Amounts paid Statute dues (Rs. lakhs) under protest (Rs. lakhs)

Central Excise Act, Excise duty 43 7 1944 (Cenvat credit) Penalty 43

Central Excise Act, Excise duty 16 - 1944 Penalty 1

Central Excise Act, Excise duty 6 5 1944

Central Sales Tax Act, Sales Tax 59 - 1956

The Kerala Sales Tax Sales Tax 1 - Act, 1963

Tamil Nadu General Sales Tax 8 - Sales Tax Act, 1959

Andhra Pradesh Sales Sales Tax 1 - Tax Act, 1957

Karnataka Sales Tax Cess 1 - Act, 1957

Tamil Nadu General Sales Tax 9 9 Sales Tax Act, 1959

Customs Act,1962 Customs duty 8 8

The Kerala Value Added Sales Tax 1 1 Tax Rules, 2005

The MP Value Added Tax Sales Tax 7 1

The Kerala Value Added Sales Tax 20 - Tax Rules, 2005

Central Sales Tax Act, Sales Tax 12 - 1956

Income Tax Act, 1961 * Income Tax 610 -

Income Tax Act, 1961 * Income Tax 786 -

Income Tax Act, Income Tax 397 - 1961*/**

Name of the Statute Period to which the Forum where dispute is amount relates pending (Financial year)

Central Excise Act, 1944 1995-96 to CESTAT, New Delhi 1998-99

Central Excise Act, 1944 1999-2000 to Supreme Court 2000-01

Central Excise Act, 1944 1992-93 and Deputy Commissioner, 1996-97 Central Excise

Central Sales Tax Act, 1956 1994-95 Deputy Commissioner - Commercial tax

The Kerala Sales Tax Act, 1963 1995-96 Assistant Commissioner - Sales Tax

Tamil Nadu General Sales Tax Act, 1959 1992-93 to Commercial taxation 1993-94 officer

Andhra Pradesh Sales Tax Act, 1957 1995-96 Commercial taxation officer

Karnataka Sales Tax Act, 1957 1995-96 Deputy Commissioner - Commercial taxes

Tamil Nadu General Sales Tax Act, 1959 2002-03 High Court, Chennai

Customs Act,1962 1995-96 Commissioner, Customs (Appeals)

The Kerala Value Added Tax Rules, 2005 2009-10 Assistant Commissioner, Ernakulam

The MP Value Added Tax 2009-10 M.P VAT Authority

The Kerala Value Added Tax Rules, 2005 2010-11 Kerala VAT Authority

Central Sales Tax Act, 1956 2010-11 Assistant Commissioner - Commercial taxes

Income Tax Act, 1961 * 2001-02 Income tax Appellate Tribunal

Income Tax Act, 1961 * 2002-03 Income tax Appellate Tribunal

Income Tax Act, 1961*/** 2003-04 Income tax Appellate Tribunal



Name of the Nature of the Amounts Amounts paid Statute dues (Rs. lakhs) under protest (Rs. lakhs)

Income Tax Act, 1961 * Income Tax 329 -

Income Tax Act, 1961 * Income Tax 341 -

Income Tax Act, 1961 * Income Tax 75 -

Income Tax Act, 1961 * Income Tax 2,000 -

Income Tax Act, 1961 * Income Tax 2,686 -

Income Tax Act, 1961 * Income Tax 2,086 -

Name of the Statute Period to which the Forum where dispute is amount relates pending (Financial year)

Income Tax Act, 1961 * 2004-05 Income tax Appellate Tribunal

Income Tax Act, 1961 * 2005-06 Income tax Appellate Tribunal

Income Tax Act, 1961 * 2006-07 Commissioner of Income Tax, (Appeals)

Income Tax Act, 1961 * 2007-08 Commissioner of Income Tax, (Appeals )

Income Tax Act, 1961 * 2008-09 Commissioner of Income Tax, (Appeals )

Income Tax Act, 1961 * 2009-10 Commissioner of Income Tax, (Appeals )

* Represents additions made to the total taxable income of the Company by the tax authorities which have been disputed by the Company. No demand has been raised by the tax authorities as any additions to the income will be adjusted against the brought forward losses / unabsorbed depreciation.

** Total addition of Rs. 397 lakhs made to the total income of the Company for the financial year 2003-04, out of which Commissioner of Income Tax, (Appeals) has passed an order dated 23 March 2012 allowing a partial relief in favour of the Company and has directed the Assessing officer (AO) / Transfer Pricing Order (TPO) to make necessary adjustments. As informed to us, the Company has not received the amended tax order from the AO/TPO after incorporation of the above changes. Further, during the current year, the tax department has fled an appeal in Income tax Appellate Tribunal against the order of Commissioner of Income Tax, (Appeals). The proceedings are under process.

(x) The Company s accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to its bankers during the year. The Company did not have any debentures or dues to any financial institution during the year.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that funds raised on short term basis amounting to Rs. 1,902 lakhs have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares during the year to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co. LLP

Chartered Accountants Firm Registration No.: 101248W

Jiten Chopra

Place: Gurgaon Partner

Date : 29 May 2014 Membership No.: 092894


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of Timex Group India Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2013, the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our qualifed audit opinion.

Basis for Qualifed Opinion

Managerial remuneration of Rs 7.46 lakhs provided by the Company in the previous year was in excess of the amount approved by the Central Government for which the application of the Company to the Central Government was rejected vide its letter dated 26 July 2012. The Company has requested the Central Government to re-consider the same and an application has been made in this regard by the Company vide its letter dated 30 August 2012. Pending approval from the Central Government in this regard, the impact thereof on the loss of the Company for the current year, to the extent of amount of excess remuneration that may be disallowed by the Central Government, if any, is presently unascertainable. We had also qualifed our previous year audit report for the above matter.

Further, the Company had applied to the Central Government seeking approval of managerial remuneration for the period 29 April 2012 till 28 April 2013 vide its application dated 7 September 2012. The remuneration paid is in excess of the limits specifed in the Companies Act, 1956. The managerial person of the Company in respect whom the approval was sought has since resigned with effect from 31 January 2013. Pending approval from the Central Government, the impact of the excess remuneration paid, if any, on the loss of the Company for the current year is presently unascertainable.

Qualifed Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualifed Opinion paragraph, the fnancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;

(b) in the case of the Statement of Proft and Loss, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of Proft and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Proft and Loss and Cash Flow Statement comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in our report to the members of Timex Group India Limited on the accounts of the Company for the year ended 31 March 2013

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fxed assets.

(b) As explained to us, the Company has a regular programme of physical verifcation of its fxed assets by which all fxed assets are verifed in a phased manner over a period of three years. According to this programme, the Company has verifed all its assets over a period of three years. In our opinion, this periodicity of physical verifcation is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verifcation. For assets lying with third parties at the year-end, written confrmations have been obtained.

(c) In our opinion, and according to information and explanations given to us, fxed assets disposed off during the year are not substantial and therefore, do not affect the going concern assumption.

(ii) (a) According to the information and explanations given to us, the inventories, except goods-in-transit have been physically verifed by the management during the year. In our opinion, the frequency of such verifcation is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures for the physical verifcation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As informed to us, the discrepancies noticed on physical verifcation of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii) (b) to (g) of the Order are not applicable. (iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fxed assets are for the Company''s specialised requirements and similarly certain goods and services sold are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fxed assets and with regard to the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system. (v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. (b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh are for the specialized requirements of the Company/buyers for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided, the same appear to be reasonable. (vi) The Company has not accepted any deposits from public. (vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate

with the size and nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of the products covered

and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to ensure whether they are adequate or complete. (ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund and other material statutory dues, as applicable, have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the provisions of Wealth tax are not applicable to the Company. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund and other material statutory dues, as applicable, were in arrears as at 31 March 2013 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues in respect of Service tax which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of Income tax, Sales tax, Customs duty and Excise duty have not been deposited by the Company on account of disputes:

Name of the Nature of the Amounts Amounts paid Statute dues (Rs. lakhs) under protest (Rs. lakhs)

Central Excise Excise duty 43 7 Act, 1944 (Cenvat credit) Penalty 43

Central Excise Excise duty 16 - Act, 1944 Penalty 1

Central Excise Excise duty 6 5 Act, 1944

Central Sales Sales Tax 59 - Tax Act, 1956

The Kerala Sales Tax 1 - Sales Tax Act, 1963

Tamil Nadu Sales Tax 8 - General Sales Tax Act, 1959

Andhra Pradesh Sales Tax 1 - Sales Tax Act, 1957

Karnataka Sales Cess 1 - Tax Act, 1957

Tamil Nadu Sales Tax 9 9 General Sales Tax Act, 1959

Customs Customs duty 8 8 Act,1962

The Kerala Sales Tax 1 1 Value Added Tax Rules, 2005

The MP Value Sales Tax 7 1 Added Tax

The Kerala Sales Tax 20 - Value Added Tax Rules, 2005

Income Tax Act, Income Tax 610 - 1961 *

Income Tax Act, Income Tax 786 - 1961 *

Income Tax Act, Income Tax 397 - 1961 */**

Name Period to which Forum where dispute is the amount relates pending (Financial year)

Central Excise 1995-96 to CESTAT, New Delhi 1998-99

Central Excise 1999-2000 to 2000-01 Supreme Court

Central Excise 1992-93 and 1996-97 Deputy Commissioner, Central Excise

Central Excise 1994-95 Deputy Commissioner Commercial tax

Central Excise 1995-96 Assistant Commissioner Sales Tax

Andhra Pradesh 1992-93 to 1993-94 Commercial taxation of- fcer

Andhra Pradesh 1995-96 Commercial taxation of- fcer

Andhra Pradesh 1995-96 Deputy Commissioner – Commercial taxes

Andhra Pradesh 2002-03 High Court, Chennai

Andhra Pradesh 1995-96 Commissioner, Customs (Appeals) 2009-10 Assistant

Income Tax Act, 2009-10 M.P VAT Authority

Income Tax Act, 2010-11 Kerala VAT Authority

Income Tax Act, 2001-02 Income tax Appellate

Income Tax Act, Tribunal 2002-03 Income tax Appellate

Income Tax Act, Tribunal 2003-04 Income tax Appellate

Income Tax Act, Tribunal

Name of the Nature of the Amounts Amounts paid Statute dues (Rs. lakhs) under protest (Rs. lakhs)

Income Tax Act, Income Tax 329 - 1961 *

Income Tax Act, Income Tax 341 - 1961 * Income Tax Act, Income Tax 75 - 1961 *

Income Tax Act, Income Tax 2,000 - 1961 *

Income Tax Act, Income Tax 2,686 - 1961 *

Name Period to which Forum where dispute is the amount relates pending (Financial year)

Income Tax Act, 2004-05 Income tax Appellate Tri- bunal

Income Tax Act, 2005-06 Income tax Appellate Tri- bunal

Income Tax Act, 2006-07 Commissioner of Income Tax, (Appeals)

Income Tax Act, 2007-08 Commissioner of Income Tax, (Appeals )

Income Tax Act, 2008-09 Commissioner of Income Tax, (Appeals )

* Represents additions made to the total taxable income of the Company by the tax authorities which have been disputed by the Company. No demand has been raised by the tax authorities as any additions to the income will be adjusted against the brought forward losses / unabsorbed depreciation.

** Total addition of Rs. 397 lakhs made to the total income of the Company for the fnancial year 2003-04, out of which Commissioner of Income Tax, (Appeals) has passed an order dated 23 March 2012 allowing a partial relief in favour of the Company and has directed the Assessing Offcer (AO) / Transfer Pricing Order (TPO) to make necessary adjustments. As informed to us, the Company has not received the amended tax order from the AO/TPO after incorporation of the above changes. Further, during the current year, the tax department has fled an appeal in Income tax Appellate Tribunal against the order of Commissioner of Income Tax, (Appeals). The proceedings are under process.

(x) The Company''s accumulated losses do not exceed ffty percent of its net worth. However, the Company has incurred cash losses during the fnancial year. The Company has not incurred cash losses in the immediately preceding fnancial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to its bankers during the year. The Company did not have any debentures or dues to any fnancial institution during the year.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual beneft fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or fnancial institutions.

(xvi) According to the information and explanations given to us, the Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares during the year to companies/frms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co.

Chartered Accountants

Firm Registration No.: 101248W

Vikram Advani

Place: Gurgaon Partner

Date: 30 May 2013 Membership No.: 091765


Mar 31, 2011

1. We have audited the attached Balance Sheet of Timex Group India Limited ('the Company') as at 31 March 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 ('the Order'), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

(e) on the basis of written representations received from the directors as on 31 March 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956, except in respect of one of the directors of the Company, who has since expired, no such representation as on 31 March 2011 has been made available to us in respect of such director. In the absence of such written representation, we are unable to comment whether such director was disqualified from being appointed as director under clause (g) of sub section (1) of section 274 of the Companies Act, 1956;

(f) in our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2011;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure referred to in para 3 of the Auditors' report to the members of Timex Group India Limited on the financial statements for the year ended 31 March 2011

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two years. According to this programme, the Company has verified certain fixed assets at its factory at Baddi and its corporate office during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verification. For assets lying with third parties at the year-end, written confirmations have been obtained.

(c) In our opinion, and according to information and explanations given to us, the fixed assets disposed off during the year are not substantial and therefore, do not affect the going concern assumption.

(ii) (a) According to the information and explanations given to us, the inventories, except goods-in-transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) In our opinion and according to the information and explanations given to us, the procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As confirmed to us, the discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)(b) to (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company's specialised requirements and similarly certain goods and services sold are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh are for the specialized requirements of the Company/buyers for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided, the same appears to be reasonable.

(vi) The Company has not accepted any deposits from public during the year.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect of the products covered and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.However, we have not made a detailed examination of the records with a view to ensure whether they are adequate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income tax, Sales-tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund, Wealth tax and other material statutory dues, as applicable, have generally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund, Wealth tax and other material statutory dues, as applicable, were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable.

There were no dues on account of cess under section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(b) According to the information and explanations given to us, there are no dues in respect of Income-tax, Service tax and Wealth tax which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of Sales tax, Custom duty and Excise duty have not been deposited by the Company on account of disputes:

Name of the Nature of Amounts Amounts paid Period to Forum where Statute the dues (Rs. thousand) under protest which the dispute (Rs. Thousand)amount relates is pending

Central Excise Act, 1944 Excise duty 4,253 700 1995-96 to CESTAT, (Cenvat credit) 1998-99 New Delhi Penalty 4,253

Central Excise Act, 1944 Excise duty 1,630 - 1999-2000to Supreme Court Penalty 50 2000-01

Central Excise Act, 1944 Excise duty 632 550 1992-93 and Deputy Commissioner, 1996-97 Central Excise

Central Sales Tax Sales Tax 5,898 - 1994-95 Deputy Commissioner Act, 1956 Commercial tax

The Kerala Sales Sales Tax 84 - 1995-96 Assistant Commissioner Tax Act, 1963 - Sales Tax

Tamil Nadu General Sales Sales Tax 818 - 1992-93 to Commercial Tax Act, 1959 1993-94 taxation officer

Andhra Pradesh Sales Sales Tax 44 - 1995-96 Commercial Tax Act, 1957 taxation officer

Karnataka Sales Tax Cess 69 - 1995-96 Deputy Commissioner Act, 1957 Commercial taxes

Tamil Nadu General Sales Sales Tax 941 941 2002-03 High Court, Chennai Tax Act, 1959

Customs Act, 1962 Custom duty 779 779 1995-96 Commissioner, Customs(Appeals)

In respect of cess, refer to our comment in para (ix) (a).

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) The Company did not have any outstanding due to any financial institution, banks or debenture holders during the year.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares during the year to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit for the year.

ForBSR&Co.

Chartered Accountants Registration No: 101248W

Rakesh Dewan

Place: New Delhi Partner

Date: 26 May 2011 Membership No.: 092212










Mar 31, 2010

1. We have audited the attached Balance Sheet of Timex Group India Limited (the Company) as at 31 March 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable;

(e) on the basis of written representations received from the directors as on 31 March 2010 and taken on record by the Board of Directors, we report that none of the other directors of the Company is disqualified as on 31 March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(f) managerial remuneration of Rs. 1,019 thousands paid by the Company is in excess of the amount approved by the Central Government. The application of the Company to the Central Government for the necessary approval in this regard is pending. In the absence of Central Government approval, we are unable to comment on the impact of this payment on the profit for the year and on the reserves and surplus as at the end of the year. (Refer to note 7 of Schedule 17)

(g) subject to our comments in para (f) above, in our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2010; (ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure referred to in para 3 of the Auditors report to the members of Timex Group India Limited on the financial statements for the year ended 31 March 2010

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two years. According to this programme, the Company has verified a portion of its fixed assets during the year. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. As informed to us, no material discrepancies were noticed on such verification.

(c) In our opinion, and according to information and explanations given to us, the fixed assets disposed off during the year are not substantial and therefore, do not affect the going concern assumption.

(ii) (a) According to the information and explanations given to us, the inventories, except goods-in-transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) In our opinion and according to the information and explanations given to us, the procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. As confirmed to us, the discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paras 4(iii)(b) to (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Companys specialised requirements and similarly certain goods and services sold are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us and having regard to the explanation in para (iv) above, the transactions made in pursuance of contracts and arrangements referred to in para v(a) above and exceeding the value of Rs 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from public during the year.

(vii) In our opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business. *

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956 in respect of the products covered and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records with a view to ensure whether they are adequate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the recordsof the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Sales-tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund, Wealth tax and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Investor Education and Protection Fund, Wealth tax and other material statutory dues were in arrears as at 31 March 2010 for a period of more than six months from the date they became payable.

There were no dues on account of cess under section 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(b) According to the information and explanations given to us, there are no dues in respect of Income-tax, Service tax, Wealth tax and Customs duty which have not been deposited with the appropriate authorities on account of any dispute. According to the information and explanations given to us, the following dues of Sales tax and Excise duty have not been deposited by the Company on account of disputes:

Name of the Nature of Amounts Amounts paid Period to Forum where Statute the dues (Rs. under protest which the dispute Thousand) (Rs.Thousand) amount relate is pending

Central Excise duty 4,253 700 1995-96 to CESTAT, Act, 1944 (Cenvat Credit) 1998-99 New Delhi Penalty 4,253

Central Excise Excise 1,630 - 1999-2000 to Supreme Court Act, 1944 duty 2000-01 Penalty 50

Central Excise Excise duty 632 550 1992-93 and Deputy Commiss- ioner, Act, 1944 1996-97 Central Excise

Central Sales Sales Tax 5,898 - 1994-95 Deputy Comm- issioner Tax-Act, 1956 Commercial tax

The Kerala Sales Sales Tax 84 - 1995-96 Assistant Commissioner

Tax Act, 1963 -Sales Tax

Tamil Nadu Sales Tax 818 - 1992-93 to Commercial General Sales 1993-94 taxation officer Tax Act, 1959

Andhra Pradesh Sales Tax 44 - 1995-96 Commercial taxation Sales Tax officer Act, 1957

Karnataka Sales Cess 69 - 1995-96 Deputy Commiss- ioner- Tax Act, 1957 Commercial taxes Tamil Nadu Sales Tax 941 941 2002-03 High Court, Chennai General Sales Tax Act, 1959

In respect of cess, refer to our comment in para (ix) (a).

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institutions or debenture holders during the year.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares during the year to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, In relation to a sales transaction for the year ended 31 March 2009, the Company has during the year noticed misappropriation of Rs. 625 thousand by an ex-employee. The Company has taken appropriate action and has recovered the amount from the ex-employee. (Refer to note 27 of schedule 17). Based on the audit procedures performed and according to the information and explanations given* to us, no other fraud on or by the Company has been noticed or reported during the year

ForBSR&Co.

Chartered Accountants Registration No: 101248W

Kaushal Kishore

Partner

Membership No.: 090075

Place: New Delhi Date: 27 May 2010

 
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