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Notes to Accounts of Timex Group India Ltd.

Mar 31, 2022

Terms/ rights attached to issued preference shares:

25.00. 000 (2021:25,00,000) 0.10%(2021:0.10%) Non-cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 0.1% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed and the dividend liability on the preference shares for the respective year shall lapse.

1.57.00. 000 (2021:1,57,00,000) 13.88% (2021:13.88%) cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 13.88% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall be cumulated and paid to the holders of the preference shares.

2.29.00. 000 (2021:2,29,00,000) 13.88% (2021:13.88%) cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 13.88% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall be cumulated and paid to the holders of the preference shares.

3.50.00. 000 (2021: 3,50,00,000) 5% (2021: 5%) cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 5% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall be cumulated and paid to the holders of the preference shares.

Preference shares of all classes carry a preferential right as to dividend over equity shares. Where dividend on cumulative preference shares is not declared for a financial year, the entitlement thereto is carried forward whereas in the case of noncumulative preference shares, the entitlement for that year lapses. The preference shares are entitled to one vote per share at meetings of the Company on any resolutions of the Company directly affecting their rights. In the event of liquidation, preference shareholders have a preferential right over equity shareholders to be repaid to the extent of capital paid-up and dividend in arrears on such shares.

Terms of redemption of preference shares

106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years, i.e. till March 24, 2018 and were further extended by another five years, i.e till March 24, 2023.

Maturity period for redemption of 13.88% (2021:13.88%) preference shares amounting to Rs. 1,570 lakhs is till March 26, 2024. Original maturity was ten years from the date of allotment i.e. March 27, 2004, with an option to the Company of an earlier redemption after March 27, 2006. The shares were due for redemption on March 26, 2014 which pursuant to the provisions of Section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years i.e. till March 26, 2019 and were further extended by another five years, i.e till March 26, 2024. Maturity period for redemption of 13.88% (2021:13.88%) preference shares amounting to Rs. 2,290 lakhs is till March 20, 2026. Original maturity was ten years from the date of allotment i.e. March 21, 2006, with an option to the Company of an earlier redemption after March 21, 2008. The shares were due for redemption on March 20, 2016 which pursuant to the provisions of Section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years i.e. till March 20, 2021 and were further extended by another five years, i.e till March 20, 2026.

Maturity period for redemption of 5% (2021: 5%) preference shares amounting to Rs. 3,500 lakhs is till February 15, 2027, with an option to the Company of an earlier redemption after February 15, 2022.

The preference shareholders, vide their letter dated March 31, 2020, have relinquished their voting rights accrued/accruing on the preference shares in terms of second proviso to section 47(2) of the Companies Act, 2013 due to non-payment of dividend till date or during the remaining tenure of preference shares.

During the previous year 2017-2018, the holders of preference share capital had waived off the dividend for the financial years 2016-17 and 2017-2018. The Company had obtained relevant approval from the holders of preference shares and regulatory authority for the waiver of dividend upto FY 2017-18 and extension of maturity of above preference shares.

Also refer note 26(b)

The Company had received RBI approval for outstanding invoices against import of services delayed beyond three years through letter dated November 20, 2020 via reference number FED. NDRO. PCD. No. 911/02.02.003/Nov20/2020-21, accordingly during the current year the Company has remitted all outstanding amount above 3 years amounting to Rs. 1,881 lakhs. The payables for the year ended March 31, 2021 includes outstanding foreign currency payable to its group entities for more than 3 years amounting Rs. 1,881 lakhs.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Deferred tax assets have not been recognised in the financials, as per the management there is absence of reasonable certainty that sufficient taxable income in near future will be available against which such deferred tax assets can be realised.

Business losses upto financial year March 31, 2017 would expire upto financial year ending March 31, 2025. The unrecognised tax credits pertaining to MAT Credit as at March 31, 2019 has expired as the company has opted for New Tax Regime effective from April 1, 2019.

On 20th September 2019 the government of India vide the Taxation Laws (Amendment) Ordinance 2019, inserted Section 115BAA in the Income Tax Act, 1961, which provides domestic companies an option to pay income tax at reduced rate effective April 1, 2019, subject to certain conditions. The expenses for the year ended March 31, 2020 have been provided for at reduced tax rate.

On 29th November 2019 the Company has signed Unilateral Advance Pricing Agreement (APA) with the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India wherein the Company has agreed on the methodology to be followed for determining the Armâs Length Price of the transactions covered by the agreement. The Company has complied with the details mentioned in the agreement and has filed compliance report with the authorities on 26th February 2020. The above disclosure has been considered after effect of APA, however the compliance report filed by the Company are yet to be audited / verified by the authorities.

26 CONTINGENT LIABILITIES AND COMMITMENTS
	As at March 31, 2022	As at March 31, 2021
a. Claims against the Company not acknowledged as debts:
Sales tax	131	1,444
Income tax	465	-
Others	155	159
b. Dividend on cumulative preference shares*
2012-13 to 2017-18	-	-
2018-19	711	711
2019-20	711	711
2020-21	711	711
2021-22	711	-
Corporate dividend tax on cumulative preference shares*
2012-13 to 2017-18	-	-
2018-19	-	146
2019-20	-	146
2020-21	-	146
2021-22	-	-

* The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs. 10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2009 till the date of maturity. The holders of these preference shares have further waived the dividend for the years 2012-13, 2013-14, 2014-15 and 2015-16, subject to the condition that the coupon rate for these series shall be revised from 7.1% to 13.88%. During the financial year 2016-17, the Company obtained relevant approvals from the regulatory authorities and the coupon rate applicable to these series of preference shares was revised to 13.88% effective 1 April 2016 till the date of maturity. Further, the holders of these preference shares have waived the dividend for the financial years 2016-17 and 2017-18. The dividend liability on 35,700,000 5% cumulative redeemable non-convertible preference shares of Rs. 10 each payable until 31 March 2018, was waived off as per the consent of the holders of these preference shares vide their letter dated 22 February 2018. Thus there is no outstanding dividend on cumulative preference shares as at March 31, 2018. Also refer Note 11.B

c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

d. The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. Nil (2021: Rs. Nil).

e. The Company has other commitments, for purchases / sales orders which are issued after considering requirements as per operating cycle for purchase / sale of goods and services, employee benefits. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

f. There are no amount due for payment to the Investor Education and Protection Fund under Section 125(1) of the Companies Act, 2013

g. The Honâble Supreme Court has passed a judgement on the definition and scope of âBasic Wagesâ under the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952. As a matter of caution, the Company has made a provision on prospective basis from the date of such ruling, i.e. March 1, 2019. The Company will update its provision on receiving further clarity on this matter.

Foot notes :

1. Sale and purchase of goods and services to and from related parties and other transactions with related parties were made at arms length price.

2. All outstanding balances are unsecured and are repayable in cash. No expense has been recognised in the current or prior years for bad and doubtful debts in respect of amounts owed by related parties.

3. Tanager Group B.V. (formerly known as Timex Group B.V), an intermediate holding company, has provided bank guarantee amounting to Rs. 4,780 lakhs (2021: Rs. 3,580 lakhs) (including unfunded limit) to the bankers of the Company for use of cash credit and overdraft facilities (including working capital loans).

The expenses incurred on account of the above defined contribution plans have been included in Note 21 âEmployee Benefits Expensesâ under the head âContribution to provident and other fundsâ

(i) Superannuation fund

The Companyâs contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The trustees of the scheme have entrusted the administration of the trust scheme to Life Corporation of India Limited (LIC).

(ii) Provident fund

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund. The contributions are charged to the statement of Profit and Loss as they accrue.

(iii) Employee State Insurance fund

The Companyâs contribution paid/ payable under the scheme to the Employee State Insurance is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

28.2 Defined benefit plans

Gratuity- The Company provides for gratuity for employees as per the Payment of Gratuity Act 1972. The Company operates a post-employment defined benefit plan that provides for gratuity. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is not funded by plan assets.

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuations involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

29 SEGMENT REPORTING

The Company is primarily in the business of manufacturing and trading of watches and rendering of related after sales service (âWatchesâ). The other activities of the Company comprises of providing information & technology support services to the group companies. The income from these other activities is not material in financial terms. The Managing Director of the Company, who has been identified as being the chief operating decision maker (CODM), evaluates the Companyâs performance, allocate resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore there is no reportable segment of the Company.

Overseas information includes sales and services rendered to customers located outside India.

Non-current segment assets includes property, plant and equipments, right of use assets, capital work in progress, intangible assets and other non current assets.

There is only one customer representing more than 10% of the total companyâs revenue for the financial year 2021-22. There is only one customer representing more than 10% of the total companyâs revenue for the financial year 2020-21

31.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders through maintaining reasonable balance between debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. Holding Company has infused capital by way of preference shares as and when needed. The Companyâs management reviews the capital structure of the Company on a periodic basis. As part of review, the management considers the cost of capital and risk associated with each class of capital.(refer note 1.B.(xviii))

The Board of directors has approved risk management policy which provides framework to identify, evaluate business risk and challenges across the company. The company has constituted risk management committee of senior management team. These policies and guidelines cover foreign currency risk, credit risk and liquidity risk. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Companyâs results and financial position.

31.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The company is exposed to foreign exchange risk arising through its sales and purchases denominated in various foreign currencies.

Foreign Currency Risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Companyâs operating activities and financing activities.

In the operating activities, the Companyâs exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD). The Companyâs exposure to foreign currency changes for all other currencies is not material.

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. Refer note 8 for the disclosures for trade receivables.

31.3.3 Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles and realisation of financial assets with the liabilities. The company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.

32 LEASES

The Company has adopted Ind AS 116- leases beginning from April 1, 2019 using the modified retrospective approach method along with the transition option to recognise Right-of-Use asset (ROU) at an amount equal to the lease liability. Accordingly, comparatives for the year ended March 31, 2019 have not been retrospectively adjusted.

Disclosures as required under Ind AS 116:

The Company has entered into various lease agreements for acquiring space to do its day to day operations. Such lease contracts include monthly fixed payments for rentals. The lease contracts are generally cancellable at the option of lessee during the lease tenure. The Company also have a renewal option after the expiry of contract terms. There are no significant restrictions imposed under the lease contracts.

The Company has entered into a lease agreement of 95 years for its factory land located in Baddi which is operational. The lease contract amount is fully paid and there are no significant restrictions imposed under the lease contracts. Earlier these contracts were recorded as operating lease and now these have been accounted as Right of Use assets under Ind AS 116.

Right of use assets

Following are the changes in the carrying value of right of use assets for the year ended March 31, 2022:

34 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.â

35 TRANSFER PRICING

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at armâs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

36 The Code on Social Security 2020 has been notified in the Official Gazette on September 29, 2020. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact if any of the change will be assessed and accounted in the period in which said Code becomes effective and the rules framed thereunder are published.

37 The Company does not have any immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the company.

38 No proceedings have been initiated during the year or are pending against the Company as at 31 March 2022 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

39 The Company is not a declared wilful defaulter by any bank or financial institution or other lender.

40 The Company has no borrowings from banks or financial institutions on the basis of security of current assets.

41 There are no charges or satisfaction yet to be registered by the Company with ROC beyond the statutory period.

Mar 31, 2018

1 CORPORATE INFORMATION, SIGNIFICANT ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

A CORPORATE INFORMATION

Timex Group India Limited (âthe Companyâ) is a public limited company domiciled in India and was incorporated on October 4, 1988. The Companyâs equity shares are listed at BSE Limited. The registered office of the Company is situated at 106-107, Ambadeep, 14, K G Marg, New Delhi, India-110001. The Companyâs Parent Company is Timex Group Luxury Watches B.V., Netherlands and Ultimate Holding Company is Eagleville Group B.V., Netherlands.

The principal activities of the Company are manufacturing and trading of watches and rendering of related after sales service. The Companyâs manufacturing facility is located at Baddi, Himachal Pradesh. The Company also provides information and technology support services to the Group Companies.

The financial statements were approved for issue in accordance with a resolution of the directors on May 24, 2018.

Notes

(i) The cost of inventories recognised as an expense during the year is Rs.12,358 lakhs (2017: Rs. 12,345 lakhs)

(ii) The cost of inventories recognised as an expense includes Rs. 195 lakhs ( 2017: Rs. 238 lakhs) in respect of write-downs of inventory or to bring the valuation of inventory to net realisable value.

(iii) The method of valuation of inventories has been stated in note 1.B.11.

The Company uses expected credit loss model to assess the impairement loss or gain. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in provision matrix and Company''s historical experience for customers.

Notes

(i) The credit period allowed generally varies on sales, on case to case basis, channel to channel and on market conditions.

Terms/ rights attached to equity shares :

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. All equity shareholders rank equally with regard to dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared by the Company subject to payment of dividend to preference shareholders.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Terms/ rights attached to issued preference shares:

25.00.000 (2017:25,00,000; 2016:25,00,000) 0.1%(2017:0.10%; 2016:0.10%) Non-cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 0.1% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed and the dividend liability on the preference shares for the respective year shall lapse.

3.86.00.000 (2017:3,86,00,000; 2016:3,86,00,000) 13.88% (2017:13.88%; 2016:7.1%) cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 13.88% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall be cumulated and paid to the holders of the preference shares.

3.50.00.000 (2017: 3,50,00,000) 5% (2017: 5%) cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 5% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall be cumulated and paid to the holders of the preference shares.

Preference shares of all classes carry a preferential right as to dividend over equity shares. Where dividend on cumulative preference shares is not declared for a financial year, the entitlement thereto is carried forward whereas in the case of non-cumulative preference shares, the entitlement for that year lapses. The preference shares are entitled to one vote per share at meetings of the Company on any resolutions of the Company directly affecting their rights. In the event of liquidation, preference shareholders have a preferential right over equity shareholders to be repaid to the extent of capital paid-up and dividend in arrears on such shares.

Terms of redemption of preference shares

Maturity period for redemption of 0.1% preference shares amounting to Rs. 250 lakhs is till March 24, 2023. Original maturity was ten years from the date of allotment i.e. March 25, 2003, with an option to the Company of an earlier redemption after March 24, 2005. The shares were due for redemption on March 24, 2013 which pursuant to the provisions of section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years, i.e. till March 24, 2018 and were further extended by another five years, i.e till March 24, 2023.

Maturity period for redemption of 13.88% (2017:13.88% ; 2016:7.10%) preference shares amounting to Rs. 1,570 lakhs is till March 26, 2024. Original maturity was ten years from the date of allotment i.e. March 27, 2004, with an option to the Company of an earlier redemption after March 27, 2006. The shares were due for redemption on March 26, 2014 which pursuant to the provisions of Section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by the five years i.e. till March 26, 2019 and were further extended by another five years, i.e till March 24, 2024. Maturity period for redemption of 13.88% (2017:13.88% ; 2016:7.10%) preference shares amounting to Rs. 2,290 lakhs is till March 20, 2026. Original maturity was ten years from the date of allotment i.e. March 21, 2006, with an option to the Company of an earlier redemption after March 21, 2008. The shares were due for redemption on March 20, 2016 which pursuant to the provisions of Section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years i.e. till March 20, 2021 and were further extended by another five years, i.e till March 24, 2026.

Maturity period for redemption of 5% preference shares amounting to Rs. 3,500 lakhs (previous year Rs 3,500 lakhs) is till February 15, 2027, with an option to the Company of an earlier redemption after February 15, 2022.

During the year, the holders of preference share capital have waived off the dividend for the financial years 2016-2017 and 2017-2018. The Company has obtained relevant approval from the holders of preference shares and regulatory authority for the waiver of dividend and extension of maturity of above preference shares.

Also refer note 27(b) and foot note 4 to note 28

* Cash credit facilities from banks carry interest ranging between 9.30% to 11.40% p.a., computed on a monthly basis on actual amount utilised, and are repayable on demand. The cash credit facilities are guaranteed by Timex Group B.V., an intermediate holding company.

Working capital loan carry interest ranging between 9.05% to 9.60% p.a. The working capital loan are guaranteed by Timex Group B.V., an intermediate holding company and are repayable within 30 days.

** The Company had taken loans from Timex Group Precision Engineering Limited during the previous year, which carries interest ranging between 8.00% to 8.50% p.a. and has been repaid on January 5, 2018.

* The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as on March 31, 2018, March 31, 2017 and April 1, 2016 has been made in the financial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

*Consequent to introduction of Goods and Services Tax (GST) with effect from July 1, 2017, Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST. In accordance with Indian Accounting Standard 18 on Revenue and Schedule III of the Companies Act, 2013, unlike Excise duties, levies like GST, VAT etc. are not part of Revenue. Accordingly, the following additional information is being provided to facilitate such understanding:

Business losses would expire upto financial year ending March 31, 2025. Further, the unrecognised tax credits pertaining to unabsorbed depreciation has no expiry.

* The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs. 10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2009 till the date of maturity. The holders of these preference shares have further waived the dividend for the years 2012-13, 2013-14, 2014-15 and 2015-16, subject to the condition that the coupon rate for these series shall be revised from 7.1% to 13.88%. During the previous year, the Company obtained relevant approvals from the regulatory authorities and the coupon rate applicable to these series of preference shares was revised to 13.88% effective 1 April 2016 till the date of maturity. Further, the holders of the preference shares have waived the dividend for the financial years 2016-17 and 2017-18, thus there is no outstanding dividend on cumulative preference shares as at March 31, 2018. Also refer Note 12.B.

d. The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 15 lakhs (2017: Nil; 2016: Nil).

f. There are no amount due for payment to the Investor Education and Protection Fund under Section 125(1) of the Companies Act, 2013.

Foot Notes :

1. Sale and purchase of goods and services to and from related parties and other transactions with related parties were made at arms length price.

3. Timex Group B.V., an intermediate holding company, has provided bank guarantee amounting to Rs. 3,880 lakhs (2017: Rs. 3,880 lakhs, 2016: Rs. 3,880 lakhs) to the bankers of the Company for use of cash credit and overdraft facilities (including working capital loans).

4. During the year, the Company has got extension of the maturity date for three series of preference shares with redemptions falling in the years 2023 to 2026 and dividends for the financial years 2016-2017 and 2017-2018 were waived off. (Refer Note 12.B and Note 27.b for details)

The expenses incurred on account of the above defined contribution plans have been included in Note 22 âEmployee Benefits Expensesâ under the head âContribution to provident and other fundsâ

(i) Superannuation fund

The Companyâs contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The trustees of the scheme have entrusted the adminstration of the trust scheme to Life Corporation of India Limited (LIC).

(ii) Provident fund

(iii) Employee State Insurance fund

2. Defined benefit plans

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment Risk

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

Interest Risk

Longevity Risk

(viii)The average duration of the defined benefit obligation is 7 years. The Company expects to make a contribution of Rs. 45 lakhs to the defined benefit plans during the next financial year.

(ix) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

3. SEGMENT REPORTING

Domestic information includes sales and services to customers located in India.

Overseas information includes sales and services rendered to customers located outside India.

Non-current segment assets includes property, plant and equipments, capital work in progress, intangible assets and other non current assets.

No single customer contributed 10% or more to the company''s revenue for both the financial years 2017-18 and 2016-17.

4. OPERATING LEASE

The Company has taken land and building, office premises, other business premises, vehicles and residential accommodation for some of its employees under operating lease arrangements, with an option of renewal at the end of the lease term and escalation clause in some of the cases. These arrangements are both cancellable and non-cancellable in nature and range between two to ninety five years. The future minimum lease payments under non-cancellable operating leases are as under:-

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

5.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders through maintaining reasonable balance between debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. Holding Company has infused capital by way of preference shares as and when needed. The Company''s management reviews the capital structure of the Company on a periodic basis. As part of review, the management considers the cost of capital and risk associated with each class of capital.

5.2 Financial Risk Management

5.3 Market Risk

Foreign Currency Risk Management

The Company does not enter into or trade financial instrument including derivative financial instruments for speculative purpose

# Amount is below rounding off threshold adopted by the Company Foreign currency sensitivity analysis

The Company is mainly exposed to USD.

The following table details the Company''s sensitivity to a 1% increase and decrease in the Rs. against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

5.4 Credit Risk Management

Financial assets for which loss allowance is measured:

5.5 Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. The company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.

6. FIRST TIME ADOPTION OF IND AS

These are the Company''s first financial statements prepared in accordance with Ind AS. The Company has prepared the opening balance sheet as per Ind AS as on April 1, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company. The Company has applied the following transition exemptions apart from mandatory exceptions in Ind AS 101:

1 Deemed cost for property, plant and equipment and intangible assets

The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangibles assets recognised as on April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as on transition date.

2 Arrangements containing a lease

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based on conditions in place as at the date of transition.

Notes to first time adoption

a. Operating lease:

Under previous GAAP in respect of operating lease, lease rental has to be recognised as expense in the statement of profit and loss on straight-line basis over the term of lease for which lease equalisation reserve was created. Under Ind AS, such straight-line basis of accounting for the operating lease is not required if such increase in rent is in line with the expected general inflation. Accordingly, lease equalisation reserve of Rs. 16 lakhs and Rs. 22 lakhs as on March 31, 2016 and March 31, 2017 respectively has been reversed and charged in the statement of profit and loss of Rs. 6 lakhs for the year end March 31, 2017 has been reversed.

b. Actuarial gain/ (loss) on defined benefit plans:

Under previous GAAP in respect of defined benefit plan, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the actuarial gains and losses forming part of re-measurement of the net defined benefit liability / asset is recognised in other comprehensive income. There is no impact on the total equity.

c. Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income.

d. The Company has issued preference share capital aggregating to Rs. 7,610 lakhs to its Holding Company which under the previous GAAP was forming part of share capital under the shareholderâs fund. The Company cumulatively never had significant cash flows/ profits to enable it to redeem the preference shares and considering this, at the time of issue of these preference shares, there was no valid expectations of this amount being repaid, as such the entire preference share capital needs to be classified as Equity under Ind AS. Accordingly, this amount has been classified as âEquity component of compound financial instrument - preference shareâ under the head Other Equity in these Ind AS Financial Statements on transition date.

7. The Ministry of Micro, Small and Medium Enterprises has issued an office Memorandum dated August 26, 2008 which recommends that the Micro and small enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum, Accordingly, the disclosure in respect of the amounts payable to such enterprises as on March 31, 2018, March 31, 2017 and April 1, 2016 has been made in the financial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

8. Transfer Pricing

9. Managerial remuneration of Rs 7.46 lakhs paid by the Company during the year ended March 31, 2012 was in excess of the amount approved by the Central Government. The Companyâs application for approval of such excess remuneration was rejected by Central Government vide its letter dated July 26, 2012. The Company had requested the Central Government to reconsider the same and an application was made in this regard by the Company vide its letter dated August 30, 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 March 31, 2012. Subsequently, the Company filed an application with the Central Government for waiver of such excess remuneration paid, since the concerned managerial personel has resigned w.e.f. January 31, 2013. In response, the government vide its letter dated November 18, 2014, rejected the application filed by the Company for waiver of remuneration paid in excess of the limits specified in the Companies Act, 1956. During the year, the Company has recovered the excess managerial remuneration along with interest thereon aggregating to Rs. 8.47 lakhs from the erstwhile managing director.

10. The prescribed corporate social responsibility expenditure required to be spent in financial year 2017-18 as per the requirements of section 135 of the Companies Act, 2013 is Rs. Nil, as the Company had reported losses in past three years.

11. Financial statements for the year ended and as at March 31, 2017 were audited by previous auditors - B S R & Co LLP.

Mar 31, 2017

1. Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. All equity shareholders rank equally with regard to dividends and share the Companyâs residual assets. The equity shareholders are entitled to receive dividend was declared by the Company subject to payment of dividend to preference shareholders.

In the event of liquidation the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to t number of equity shares held by the shareholders.

Rights, preferences and restrictions attached to preference shares

0.1% Non-cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of Q% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed and the dividend liability on the preference shares for the respective year shall lapse.

13.88% (previous year 7.%) Cumulative Redeemable non-convertible preference shares shall be entitled to dividend at the rate of 13.88% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for tl respective year shall be cumulated and paid to the holders of the preference shares.

5% Cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 5% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall cumulated and paid to the holders of the preference shares.

Preference shares of all classes carry a preferential right as to dividend over equity shareholders. Where dividend on cumulative preference shares is not declared for a financial year, the entitlement thereto is carried forward whereas in the case of non-cumulative preference shares, the entitlement for that year lapses. The preference s-hares are titled to one vote per share at meetings of the Company on any resolutions of the Company directly affecting their rights. In the event of liquidation, preference shareholders have a preferential right over equity shareholders to repaid to the extent of capital paid-up and dividend in arrears on such shares.

Terms of redemption of preference shares

Maturity Period for redemption of 0.1% preference shares amounting to Rs. 250 lakhs (previous year Rs. 250 lakhs) is till 24 March 2018 . Original maturity was ten years from the date of allotment i.e. 25 March 200., with an option to the Company of an earlier redemption after 24 March 2005. The shares were due for redemption on 24 March 2013 which pursuant to the provisions of section E6 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years, i.e. till 24 March 2018.

Maturity period for readmit of 13.88% (previous year 7.%) preference shares amounting to Rs. 1,570 lakhs (previous year Rs. 1570 lakhs) is till 26 March 2019. Original maturity was ten years from the date of allotment i.e. 25 March 2003, with an option to the Company of an earlier redemption after 24 March 2005. The shares were due for redemption on 24March 2004 which pursuant to the provisions of Section 106 of the Companies Act,1 956 was extended by the Company with the consent of preference shareholders by the five years i.e. till 26 March 2019.

(Refer note 32 and note 41)

Maturity period for redemption of 13.88% (previous year 7.%) preference shares amounting to Rs. 2290 lakhs (previous year Rs. 2290 lakhs) is till 20 March 2021 Original maturity was ten years from the date of allotment i.e. 21 March 2006, with an option to the Company of an earlier redemption after 21 March 2008. The shares were due for redemption on 20 March 2016 which pursuant to the provisions of Section E6 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years i.e. till 20 March 2021. (Refer note 32 and note 41)

Maturity period for redemption of 5% preference shares amounting to Rs. 3,500 lakhs (previous year nil) is till 5 February 2027, with an option to the Company of an earlier redemption after 5 February 2022. (Refer note B2 and note 41)

Provision for sales returns

Provision for sales returns has been created for estimated loss of margin on expected sales returns in future per against products sold during the year. The provision has been setup based on managementâs estimates and past trends.

Provision for unearned margin

Provision for unearned margin relates to certain sales where property in the goods has passed but a significant risk of ownership has not passed to the counter party by the date of the balance sheet.

Provision for litigations

This represents provisions made for probable liabilities/ claims arising out of pending disputes/litigations with various regulatory authorities (in respect of excise duty, sales tax and similar matters). Above provisions are affected by numerous uncertainties and management has taken all efforts to make a best estimate. Timing of outflow of resources will depend upon timing of decision of cases.

2. Managerial remuneration of Rs 7.46 lakhs paid by the Company during the year ended 31 March 202 was in excess of the amount approved by the Central Government. The Companyâs application for approval of such excess remuneration was rejected by Central Government vide its letter dated 26 July 202. The Company had requested the Central Government to reconsider the same and an application was made in this regard by the Company vide it letter dated 30 August 20)2.

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.

In response, the Central government vide its letter dated 18 November 2014, rejected the application filed by the Company for waiver of remuneration paid in excess of the limits specified in the Companies Act, 1956. Subsequent to 31 March 2017, the Company has recovered the excess managerial remuneration along with interest thereon from the erstwhile director.

3. Earnings/ (loss) per equity share (EPS)

Basic earnings/ (loss) per equity share

The calculation of basic earnings/ (loss) per equity share for the year ended 31 March 2017 is based on the profit/ (loss) attributable to equity shareholders of Rs. (1051) lakhs (previous year loss: Rs. (1237) lakhs), and weighted average number of equity shares outstanding of 100 lakhs (previous year: 100 lakhs).

Diluted earnings / (loss) per equity share

The calculation of diluted earnings/(loss) per share for the year ended 31 March 2017 is based on profit/ (loss) attributable to equity shareholders of Rs. (1051) lakhs (previous year loss: Rs (1257) lakhs and weighted average number of equity shares outstanding after adjustment for the effects of all dilutive potential equity shares of 100 lakhs (previous year: 100 lakhs).

4. Employee benefits: Post-employment benefit plans Provident fund

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund. The Company has no obligation other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to Provident Fund for the period aggregated to Rs. 97 lakhs (previous year: Rs . 87 lakhs).

The Company also has an approved provident fund for its own employees, which is exempt from the Income tax Act 961 In order to comply with the provisions of the Act, the Company matches the interest declared by Regional Provident Fund (RPFC) to its own subscribers. To the extent that the actual interest earned by the Companyâs previous fund falls short of the rate declared by RPFC, the shortfall is met by the Company. The benefit valued is the interest shortfall, if any, for future years on the provident fund balances of the employees.

The Defined Benefit Obligation of interest rate guarantee on exempt provident fund in respect of the employees of the Company as at 31 March 2017 amounts to Rs. Nil (previous year Rs. Nil) based on an actuarial valuation carried out by an independent actuary as at 31 March 2017.

Superannuation fund

The Companyâs contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The amount recognized as an expense towards contribution to Superannuation fund for the period aggregated to Rs. 7 lakhs (previous year: Rs. 9 lakhs).

Employee State Insurance fund

The Companyâs contribution paid/ payable under the scheme to the Employee State Insurance is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The amount recognized as an expense towards contribution to Employee State Insurance Fund for the period aggregated to Rs. 8 lakhs (previous year: Rs. 7 lakhs).

Gratuity

The Company operates a post-employment defined benefit plan that provides for gratuity. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is not funded by plan assets. The followed table summarizes the position of assets and obligations in relation to the plan:

5. Operating leases as lessee:

The Company has taken land and building, office premises, showrooms, other business premises, vehicles and residential accommodation for some of its employees under operating lease arrangements, with an option of renewal at the end of the lease term and escalation clause in some of the cases. Lease payments charged during the year the Statement of Profit and Loss aggregate Rs. 238 lakhs (previous year Rs. 316 lakhs). The future minimum lease payments under non-cancellable operating leases are as follows:

6. Segment information

The Companyâs business segment comprises:

- Watches: Manufacturing and trading of watches;

- Others: Providing IT and finance related back office support to other group companies.

Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenues within India (Domestic) includes sale of watches and spares to consumers located within India; and

- Revenues outside India (Overseas) includes of watches manufactured in India and service income earned from customers located outside India.

Segments have been identified in line with the Accounting Standard 17 on âSegment Reportingâ notified by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organization structure and the internal financial reporting system.

Secondary segment reporting is performed on the basis of the geographical segments.

7. Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital, reserves, current tax and deferred tax liability. Primary segment assets do not include advance tax, deferred tax asset cash and bank balance and fixed deposits.

8. Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments on the basis of specific identification. However, segment revenue and expenses do not include interest and other income/expense in respect of non-segmental activities.

9. The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customer the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as on 31 March 2017 and 31 March 2016 has been made in the financial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

10. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs. 0 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 0 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2009 till the date of maturity he holders of these preference shares have further waived the dividend for the years 2012-13, 2013-14, 2014-15 and 2015-16, subject to the condition that the coupon rate for these series shall be revised from 7.%o to 13.88%. During the current year, the Company has obtained relevant approvals from the regulatory authorities and the coupon rate applicable to these series of preference shares has been revised to 13.88% effective 1 April 2016 till the date of maturity.

11. As at 31 March 2017, the Company has foreign currency receivables amounting to Rs. 14 lakhs (previous year Rs.39 lakhs) outstanding for a period exceeding nine months. As per Reserve Bank of Indiaâs (RBI) Master Circular on Export of Goods and Services, foreign currency receivables should be realized, except with prior approval of RBI, within a period of nine months. The Company is in the process to write-off these amounts to comply with RBI guidelines.

12. Transfer Pricing

The Company has established a comprehensives tem of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at armâs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

Mar 31, 2016

* Cash credit facilities from banks carry interest ranging between 10%-13% p.a., computed on a monthly basis on actual amount utilized, and are repayable on demand. Timex Group B.V., a fellow subsidiary, has provided a standby letter of credit amounting to Rs. 3,880 lakhs (previous year Rs. 3,880 lakhs) to the bankers of the Company as a guarantee for use of cash credit and overdraft facilities.

** Working capital loans carry interest ranging between 10% to 11% p.a. The working capital loans are guaranteed by Timex Group B.V, a fellow subsidiary and are repayable within 30 days.

1. Managerial remuneration of Rs 7.46 lakhs paid by the Company during the year ended 31 March 202 was in excess of the amount approved by the Central Government. The Companyâs application for approval of such excess remuneration was rejected by Central Government vide its letter dated 26 July 2012. The Company had requested the Central Government to reconsider the same and an application was made in this regard by the Company vide its letter dated 3 August 202.

In response, the Company received direction from Central Government to recover the excess remuneration of Rs. 7. 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. 3 January 203.

In response, the Central government vide its letter dated 18 November 2014, rejected the application filed by the Company for waiver of remuneration paid in excess of the limits specified in the Companies Act, 1956. The Company is taking necessary steps for recovery of this amount from the erstwhile Managing Director.

2. Earnings/ (loss) per equity share (EPS)

Basic earnings/ (loss) per equity share

The calculation of basic earnings/ (loss) per equity share for the year ended 31 March 2016 is based on the profit/ (loss) attributable to equity shareholders of Rs. (1,257) lakhs (previous year loss: Rs. (1,428) lakhs), and weighted average number of equity shares outstanding of 1,010 lakhs (previous year: 1,010 lakhs).

Diluted earnings / (loss) per equity share

The calculation of diluted earnings/(loss) per share for the year ended 31 March 2016 is based on profit/ (loss) attributable to equity shareholders of Rs. (1,257) lakhs (previous year loss: Rs (1,428) lakhs and weighted average number of equity shares outstanding after adjustment for the effects of all dilutive potential equity shares of 1,010 lakhs (previous year: 100 lakhs).

3. Employee benefits: Post-employment benefit plans Provident fund

The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognized as an expense towards contribution to Provident Fund for the period aggregated to Rs. 87 lakhs (previous year: Rs. 84 lakhs).

The Company also has an approved provident fund for its own employees, which is exempt from the Income tax Act B61 In order to comply with the provisions of the Act, the Company matches the interest declared by Regional Provident Fund (RPFC) to its own subscribers. To the extent that the actual interest earned by the Companyâs pride fund falls short of the rate declared by RPFC, the shortfall is met by the Company. The benefit valued is the interest shortfall, if any, for future years on the provident fund balances of the employees.

The Defined Benefit Obligation of interest rate guarantee on exempt provident fund in respect of the employees of the Company as at 31 March 206 amounts to Rs. Nil (previous year Rs. Nil) based on an actuarial valuation carried out b an independent actuary as at 31 March 206.

Superannuation fund

The Companyâs contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered b the Company is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The amount recognized as an expense towards contribution to Superannuation fund for period aggregated to Rs. 9 lakhs (previous year: Rs. 13 lakhs).

Employee State Insurance fund

Gratuity

The Company operates a post-employment defined benefit plan that provides for gratuity. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The Scheme is not funded by plan assets. The following ta summarizes the position of assets and obligations in relation to the plan:

4. Operating leases as lessee:

The Company has taken land and building, office premises, showrooms, other business premises, vehicles and residential accommodation for some of its employees under operating lease arrangements, with an option of renewal at the end o the lease term and escalation clause in some of the cases. Lease payments charged during the year to the Statement Profit and Loss aggregate Rs. 316 lakhs (previous year Rs. 362 lakhs). The future minimum lease payments under non-cancellable operating leases are as follows:

5. Related party disclosures

A. Names of related parties:

Related parties and nature of related party relationship where control exists:

Description of Relationship Name of the Party

Ultimate Holding Company Eagleville Group B.V *

Holding Company Timex Group Luxury Watches B.V.

Other related parties:

Description of Relationship Name of the Party

Fellow Subsidiaries Timex Group B.V

Timex Nederland B.V

Timex Group B.V T/A Mersey Manufacturers Fralsen S.A.S*

__TMX Limited N.V_

Timex Group USA, Inc. (German Branch)*

Timex do Brasil Comedo E Indstria Ltda*

Timex Group USA, Inc.

Timex Group Precision Engineering Limited Timex Hong Kong Limited*

Timex Portugal Relojoaria LDA*

Timex Group Magyarorszag kft.*

Vertime B.V.

Key Management Personnel M.K Bandopadhyay, Managing Director -Operations and Supply Chain Management

(till 9 November 204)*

Sharmila Sahai, Managing Director

* No transactions during the current year

*Included in miscellaneous expenses

**Included in intangible assets as GSI implementation cost @ Included in sales promotion expense

Timex Group B.V., a fellow subsidiary, has provided a standby letter of credit amounting to Rs. 3,880 lakhs (previous year

Rs. 3,880 lakhs) to the bankers of the Company as a guarantee for use of cash credit and overdraft facilities (include working capital loans).

Period for redemption of 7.1% preference shares amounting to Rs. 1,570 lakhs (previous year Rs. 1,570 lakhs) is ten years from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after 27 March 2C05. The shares were due for redemption on 26 March 204. The redemption of such shares, pursuant to the provisions of Section 106 of the Companies Act, 1956 has been extended by the preference shareholders by five years i.e. till 26 March 20P and the Company has completed all formalities related to the same.

Period for redemption of 7.1% preference shares amounting to Rs. 2,290 lakhs (previous year Rs. 2,290 lakhs) is ten years from the date of allotment i.e. 21 March 2006, with an option to the Company of an earlier redemption after 21 March 2008. The shares were due for redemption on 20 March 206. The Company sought extension for redemption of such shares, pursuant to the provisions of Section 106 of the Companies Act, 1956 by five years i.e. till 20 March 2021. The preference shareholders and RBI have agreed to this extension. The Company has received an approval from the equity shareholders by postal ballot resolution dated 5 April 206 for extension of redemption date to 20 March 2021 progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital reserves, current tax and deferred tax liability. Primary segment assets do not include advance tax, deferred tax ass cash and bank balance and fixed deposits.

b) Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments o the basis of specific identification. However, segment revenue and expenses do not include interest and other income/ expense in respect of non-segmental activities.

# Amount is below rounding off threshold adopted by the Company.

6. As at 31 March 206, the Company has foreign currency receivables amounting to Rs. 39 lakhs (previous year Rs. 39 lakhs outstanding for a period exceeding nine months. As per Reserve Bank of Indias (RBI) Master Circular on Export of Goods Services, foreign currency receivables should be realized, except with prior approval of RBI, within a period of nine month The Company is in the process of complying with RBI guidelines in order to write-off these amounts.

7. Transfer Pricing

8. During the year ended 31 March 205, the Company renegotiated the terms of sales with one of its customers. This has resulted in reversal of provision for unearned margin recognized in the books of accounts in earlier years in respect this customer amounting to Rs.91 lakhs.

9. Pursuant to Companies Act, 203 (the Act)â being effective from April , 204, the Company has revised depreciation rates on tangible assets as per useful life specified in Para âCâ of Schedule II of the Act. As a result of this change, the depreciation charge for the previous year ended 31 March 205 is higher by Rs. 9 lakhs. Further, based on transitional provision provided in note no. 7 (b) of Schedule II, an amount of Rs. 67 lakhs has been adjusted against opening balance of reserves and surplus for the year ended 31 March 205.

Mar 31, 2015

Company overview

Timex Group India Limited (''TGIL'' or the ''Company''), a subsidiary of Timex Group Luxury Watches B.V., is a limited liability company incorporated on 4 October 1988 under the provisions of the Companies Act, 1956. The Company is listed on Bombay Stock Exchange in India.

The Company is engaged in the business of manufacturing and trading of watches and rendering of related after sales service. The Company''s manufacturing facilities are located at Baddi, Himachal Pradesh. The Company also provides accounting and information and technology support services to group companies.

1 Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. All equity shareholders rank equally with regard to dividends and share in the Company''s residual assets. The equity shareholders are entitled to receive dividend as declared by the Company subject to payment of dividend to preference shareholders.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Rights, preferences and restrictions attached to preference shares

0.1% Non-cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 0.1% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed and the dividend liability on the preference shares for the respective year shall lapse.

7.1% Cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 7.1% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year shall be cumulated and paid to the holders of the preference shares.

Preference shares of all classes carry a preferential right as to dividend over equity shareholders. Where dividend on cumulative preference shares is not declared for a financial year, the entitlement thereto is carried forward whereas in the case of non-cumulative preference shares, the entitlement for that year lapses. The preference shares are entitled to one vote per share at meetings of the Company on any resolutions of the Company directly affecting their rights. In the event of liquidation, preference shareholders have a preferential right over equity shareholders to be repaid to the extent of capital paid-up and dividend in arrears on such shares.

2 Terms of redemption of preference shares

Maturity period for redemption of 0.1% preference shares amounting to Rs. 250 lakhs (previous year Rs. 250 lakhs) is till 24 March 2018 . Original maturity was ten years from the date of allotment i.e. 25 March 2003, with an option to the Company of an earlier redemption after 24 March 2005. The shares were due for redemption on 24 March 2013 which pursuant to the provisions of section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years, i.e. till 24 March 2018.

Maturity period for redemption of 7.1% preference shares amounting to Rs. 1,570 lakhs (previous year Rs. 1,570 lakhs) is till 26 March 2019. Original maturity was ten years from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after 27 March 2006. The shares were due for redemption on 26 March 2014 which pursuant to the provisions of Section 106 of the Companies Act, 1956 was extended by the Company with the consent of preference shareholders by the five years i.e. till 26 March 2019.

Maturity period for redemption of 7.1% preference shares amounting to Rs. 2,290 lakhs (previous year Rs. 2,290 lakhs) is ten years from the date of allotment i.e. 21 March 2006, with an option to the Company of an earlier redemption after 21 March 2008.

3 Provision for warranties

A provision is estimated for expected warranty claims in respect of products sold during the year on the basis of a technical evaluation and past experience regarding failure trends of products and costs of rectification or replacement. It is expected that most of this cost will be incurred over the next one year as per warranty terms.

4 Provision for sales returns

Provision for sales returns has been created for estimated loss of margin on expected sales returns in future period against products sold during the year. The provision has been setup based on management''s estimates and past trends.

5 Provision for unearned margin

Provision for unearned margin relates to certain sales where property in the goods has passed but a significant risk of ownership has not passed to the counterparty by the date of the balance sheet.

6 Provision for litigations

This represents provisions made for probable liabilities/ claims arising out of pending disputes/litigations with various regulatory authorities (in respect of excise duty, sales tax and similar matters). Above provisions are affected by numerous uncertainties and management has taken all efforts to make a best estimate. Timing of outflow of resources will depend upon timing of decision of cases.

* Cash credit facilities from bank carry interest ranging between 10%-13% p.a., computed on a monthly basis on actual amount utilised, and are repayable on demand.

Timex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amounting to Rs. 3,880 lakhs (previous year Rs. 3,380 lakhs) to the bankers of the Company as a guarantee for use of cash credit and overdraft facilities.

** Working capital loans carry interest ranging between 10% to 11% p.a. The working capital loans are guaranteed by Timex Group B.V, the holding company and are repayable within 30 days.

7 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 Central Government vide its letter dated 26 July 2012. The Company had requested the Central Government to reconsider the same and an application was 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.

In the current year, the Central government vide its letter dated 18 November 2014, has rejected the application filed by the Company for waiver of remuneration paid in excess of the limits specified in the Companies Act, 1956. The Company is in the process of taking necessary steps for recovery of this amount from the erstwhile Managing Director.

8 Earnings/ (loss) per equity share (EPS)

Basic earnings/ (loss) per equity share

The calculation of basic earnings/ (loss) per equity share for the year ended 31 March 2015 is based on the profit/ (loss) attributable to equity shareholders of Rs. (1,428) lakhs (previous year loss: Rs. (3,619) lakhs), and weighted average number of equity shares outstanding of 1,010 lakhs (previous year: 1,010 lakhs).

Diluted earnings / (loss) per equity share

The calculation of diluted earnings/(loss) per share for the year ended 31 March 2015 is based on profit/(loss) attributable to equity shareholders of Rs. (1,428) lakhs (previous year loss: Rs(3,619)lakhs and weighted average number of equity shares outstanding after adjustment for the effects of all dilutive potential equity shares of 1,010 lakhs (previous year: 1,010 lakhs).

9 Employee benefits: Post-employment benefit plans Provident fund

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the period aggregated to Rs. 84 lakhs (previous year: Rs. 76 lakhs).

The Company also has an approved provident fund for its own employees, which is exempt from the Income tax Act 1961. In order to comply with the provisions of the Act, the Company matches the interest declared by Regional Provident Fund (RPFC) to its own subscribers. To the extent that the actual interest earned by the Company''s private fund falls short of the rate declared by RPFC, the shortfall is met by the Company. The benefit valued is the interest shortfall, if any, for future years on the provident fund balances of the employees.

The Defined Benefit Obligation of interest rate guarantee on exempt provident fund in respect of the employees of the Company as at 31 March 2015 works out to Rs. Nil (previous year Rs. Nil). The balance in the surplus account of the provident fund is Rs. 114 lakhs (previous year Rs. 92 lakhs) and hence the net liability which needs to be provided for in the books of accounts of the Company is Rs. Nil (previous year Nil).

Superannuation fund

The Company''s contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.The amount recognised as an expense towards contribution to Superannuation fund for the period aggregated to Rs. 13 lakhs (previous year: Rs. 20 lakhs).

Employee State Insurance fund

The Company''s contribution paid/ payable under the scheme to the Employee State Insurance is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.The amount recognised as an expense towards contribution to Employee State Insurance Fund for the period aggregated to Rs. 5 lakhs (previous year: Rs. 7 lakhs).

10 Segment information

The Company''s business segment comprises:

* Watches: Manufacturing and trading of watches;

* Others: Providing IT and finance related back office support to other group companies.

Segment revenue in the geographical segments considered for disclosure are as follows:

* Revenues within India (Domestic) includes sale of watches and spares to consumers located within India; and

* Revenues outside India (Overseas) includes sale of watches manufactured in India and service income earned from customers located outside India.

Segments have been identified in line with the Accounting Standard 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organisation structure and the internal financial reporting system.

Segment accounting policies

Besides the normal accounting policies followed as described in note 2, segment revenues, results, assets and liabilities include the respective amounts directly identified to each of the segments and amounts allocated on a reasonable basis. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of a segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital, reserves, current tax and deferred tax liability.Primary segment assets do not include advance tax, deferred tax asset, cash and bank balance and fixed deposits.

b) Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments on the basis of specific identification. However, segment revenue and expenses do not include interest and other income/expense in respect of non segmental activities.

11 Contingent liabilities and commitments (to the extent not provided for)

Commitments (Rs. in lakhs)

Particulars 31 March 2015 31 March 2014

Estimated amount of contracts 15 - remaining to be executed on capital account and not provided for (net of advances)

Contingent liabilities (Rs. in lakhs)

Particulars 31 March 2015 31 March 2014

Claims against the Company not acknowledged as debts

a) Sales tax 283 119

b) Excise duty 92 92

c) Customs duty 8 8

d) Income tax* - -

e) Others 141 167"

Dividend on cumulative preference shares

2012-2013 274 274

2013-2014 274 274

2014-2015 274 L

Corporate dividend tax on cumulative preference shares

2012-2013 56 47

2013-2014 56 47

2014-2015 56

* 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.

12 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as on 31 March 2015 and 31 March 2014 has been made in the financial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

13 The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2010 till the date of maturity.

14 As at 31 March 2015, the Company has foreign currency receivables amounting to Rs. 39 lakhs (previous year Rs. 40 lakhs) outstanding for a period exceeding nine months. As per Reserve Bank of India''s (RBI) Master Circular on Export of Goods and Services, foreign currency receivables should be realized, except with prior approval of RBI, within a period of nine months. The Company is in the process of filing an application with RBI to seek approval for writing off these amounts.

15 Transfer Pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

16 During the year, the Company has renegotiated the terms of sales with one of its customers. This has resulted in reversal of provision for unearned margin recognised in the books of accounts in earlier years in respect of this customer amounting to Rs. 171 lakhs.

17 Pursuant to Companies Act, 2013 ("the Act") being effective from April 1, 2014, the Company has revised depreciation rates on tangible assets as per useful life specified in Para ''C'' of Schedule II of the Act. As a result of this change, the depreciation charge for the year ended 31 March 2015 is higher by Rs. 19 lakhs.Further, based on transitional provision provided in note no. 7 (b) of Schedule II, an amount of Rs. 67 lakhs has been adjusted against opening balance of reserves and surplus.

Mar 31, 2014

1. Company overview

Timex Group India Limited (''TGIL'' or the ''Company''), a subsidiary of Timex Group Luxury Watches B.V., is a limited liability company incorporated on 4 October 1988 under the provisions of the Companies Act, 1956. The Company is listed on Bombay Stock Exchange in India.

The Company is engaged in the business of manufacturing and trading of watches and rendering of related after sales service. The Company''s manufacturing facilities are located at Baddi, Himachal Pradesh. The Company also provides accounting and information and technology support services to group companies.

2. Managerial remuneration of Rs 7.46 lakhs paid by the Company during the year ended 31 March 2012 was in excess of amount approved by the Central Government. The Company''s application for approval of such excess remuneration was rejected by 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.

The Company has received a direction to recover the 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.

3. Earnings/ (loss) per equity share (EPS)

Basic earnings/ (loss) per equity share

The calculation of basic earnings/ (loss) per equity share for the year ended 31 March 2014 is based on the loss attribut- able to equity shareholders of Rs. (3,617) lakhs (previous year loss: Rs. (4,515) lakhs), and weighted average number of equity shares outstanding of 1,010 lakhs (previous year: 1,010 lakhs).

Diluted earnings / (loss) per equity share

The calculation of diluted earnings/(loss) per share for the year ended 31 March 2013 is based on loss attributable to equity shareholders of Rs. (3,617) lakhs (previous year loss: Rs (4,515) lakhs and weighted average number of equity shares out- standing after adjustment for the effects of all dilutive potential equity shares of 1,010 lakhs (previous year: 1,010 lakhs).

4. Employee benefits: Post-employment benefit plans Provident fund

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund. The Company has no obligations other than to make the specified contributions. The contributions are charged to the Statement of profit and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the period aggregated to Rs. 76 lakhs (previous year: Rs. 80 lakhs).

The Company also has an approved provident fund for its own employees, which is exempt from the Income tax Act 1961. In order to comply with the provisions of the Act, the Company matches the interest declared by Regional Provident Fund (RPFC) to its own subscribers. To the extent that the actual interest earned by the Company''s private fund falls short of the rate declared by RPFC, the shortfall is met by the Company. The benefit valued is the interest shortfall, if any, for future years on the provident fund balances of the employees.

The Defined benefit Obligation of interest rate guarantee on exempt provident fund in respect of the employees of the Company as at 31 March 2014 works out to Rs. Nil. The balance in the surplus account of the provident fund is Rs. 116 lakhs (previous year Rs. 1,026 lakhs) and hence the net liability which needs to be provided for in the books of accounts of the Company is Rs. Nil (previous year Nil).

Superannuation fund

The Company''s contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognised as an expense in the Statement of profit and Loss during the period in which the employee renders the related service. The amount recognised as an expense towards contribution to Superannuation fund for the period aggregated to Rs. 20 lakhs (previous year: Rs. 44 lakhs).

Employee State Insurance fund

The Company''s contribution paid/ payable under the scheme to the Employee State Insurance is recognised as an expense in the Statement of profit and Loss during the period in which the employee renders the related service. The amount recognised as an expense towards contribution to Employee State Insurance Fund for the period aggregated to Rs. 7 lakhs (previous year: Rs. 6 lakhs).

Gratuity

The Company operates a post-employment Defined benefit plan that provides for gratuity. The gratuity plan entitles an employee, who has rendered atleast five years of continuous service, to receive one-half month''s salary for each year of completed service at the time of retirement/exit. The Scheme is not funded by plan assets. The following table summarises the position of assets and obligations in relation to the plan:

The estimates of future salary increases considered in actuarial valuation take account of infation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Assumptions regarding future mortality are based on published statistics and mortality tables. The calculation of the Defined benefit obligation is sensitive to the mortality assumptions.

5. Related party disclosures A. Names of related parties:

Related parties and nature of related party relationship where control exists:

Description of Relationship Name of the Party

Ultimate Holding Company Timex Group B.V.

Holding Company Timex Group Luxury Watches B.V (formerly Timex Watches B.V)

Other related parties with whom transactions have taken place:

Description of Relationship

Fellow Subsidiaries

Name of the Party

Timex Group B.V. T/A Mersey Manufacturers

Fralsen Horlogerie S.A.*

TMX Limited NV

Timex Corporation (Germany)*

Timex Limited NV

Timex Nederland B.V.

Timex Group USA Inc.

Timex Group Luxury Watches B.V. (Ferragamo) **

Timex Group Precision Engineering Limited (TGPEL)

Timex Hong Kong Limited*

Timex Portugal*

Timex Hungary Limited*

Description of Relationship

Key Management Personnel

Name of the Party

Vertime S.A.**

Vertime B.V.**

M.K Bandopadhyay

- Acting Managing Director (1 February 2013 to 17 November 2013)

- Managing Director Â Operations and Supply Chain Management (18 November 2013 onwards)

Sharmila Sahai, Managing Director (18 November 2013 onwards)

a. Transactions and outstanding balances with related parties (Rs. in lakhs)

Besides the above, the Company has paid Nil (previous year Rs. 274 lakhs) to Timex Group Luxury Watches B.V. as dividend during the year.

Timex Group Luxury Watches B V, the holding company, has provided a standby letter of credit amounting to Rs. 3,380 lakhs (previous year Rs. 3,380 lakhs) to the bankers of the Company as a guarantee for use of cash credit and overdraft facilities. The working capital loans are also guaranteed by Timex Group B.V, the holding company.

Maturity period for redemption of 0.1% preference shares amounting to Rs. 250 lakhs (previous year Rs.250 lakhs) is ten years from the date of allotment i.e. 25 March 2003, with an option to the Company of an earlier redemption after 24 March 2005. The shares were due for redemption on 24 March 2013. The redemption of such shares, pursuant to the provisions of Section 106 of the Companies Act, 1956 has been extended by the preference shareholders by five years i.e. till 24 March 2018 and the Company has completed all formalities related to the same.

Maturity period for redemption of 7.1% preference shares amounting to Rs. 1,570 lakhs (previous year Rs. 1,570 lakhs) is ten years from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after 27 March 2006. The shares were due for redemption on 26 March 2014. The Company sought extension for redemption of such shares, pursuant to the provisions of Section 106 of the Companies Act, 1956 by five years i.e. till 26 March 2019. The preference shareholders have agreed to this extension. The Company is in the process of complying with the provisions of the Companies Act, 1956 in relation to the same and has received approval from the Reserve Bank of India vide its letter dated 09 April 2014 for extension of redemption date to 26 March 2019.

6. Segment information

The Company''s business segment comprises:

- Watches: Manufacturing and trading of watches;

- Others: Providing IT and finance related back office support to other group companies. Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenues within India (Domestic) includes sale of watches and spares to consumers located within India; and

- Revenues outside India (Overseas) includes sale of watches manufactured in India and service income earned from customers located outside India.

Segments have been identified in line with the Accounting Standard 17 on "Segment Reporting" notifed by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organisation structure and the internal financial reporting system.

Secondary segment reporting is performed on the basis of the geographical segments.

Segment accounting policies

Besides the normal accounting policies followed as described in note 2, segment revenues, results, assets and liabilities include the respective amounts directly identified to each of the segments and amounts allocated on a reasonable basis. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of a segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital, reserves, current tax and deferred tax liability. Primary segment assets do not include advance tax, deferred tax asset and fixed deposits.

b) Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments on the basis of Specific identifcation. However, segment revenue and expenses do not include interest and other income/expense in respect of non segmental activities.

7. Contingent liabilities and commitments (to the extent not provided for)

Commitments (Rs. in lakhs)

Particulars 31 March 2014 31 March 2013

Estimated amount of contracts remaining to be executed on capital - 0 # account and not provided for (net of advances)

# Amount is below rounding of threshold adopted by the Company.

Contingent liabilities (Rs. in lakhs

Particulars 31 March 2014 31 March 2013

Claims against the Company not acknowledged as debts

a) Sales tax 119 107

b) Excise duty 92 92

c) Customs duty 8 8

d) Income tax* - -

e) Others 167 167

Dividend on cumulative preference shares

2012-2013 274 274

2013-2014 274 -

Corporate dividend tax on cumulative preference shares

2012-2013 47 45

2013-2014 47 -

Bills discounted - 2

* 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.

8. The Ministry of Micro, Small and Medium Enterprises has issued an office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises 31 March 2014 and 31 March 2013 has been made in the financial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as Defined in the Micro, Small and Medium

Enterprises Development Act, 2006. 40. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2010 till the date of maturity.

9. Amount remitted during the year ended 31 March 2014 in foreign currency on account of dividend was Rs. Nil (previous year Rs. 274 lakhs).

10. As at 31 March 2014, the Company has foreign currency receivables amounting to Rs. 40 lakhs (previous year Rs. 49 lakhs) outstanding for a period exceeding one year. As per Reserve Bank of India''s (RBI) Master Circular on Export of Goods and Services, foreign currency receivables should be realized, except with prior approval of RBI, within a period of one year. The Company is in the process of fling an application with RBI to seek approval for writing off these amounts.

11. Transfer Pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

Mar 31, 2013

1. Company overview

Timex Group India Limited (''TGIL'' or the ''Company''), a subsidiary of Timex Group Luxury Watches B.V., is a limited liability company incorporated on 4 October 1988 under the provisions of the Companies Act, 1956. The Company is listed on Bombay Stock Exchange in India.

The Company is engaged in the business of manufacturing and trading of watches and rendering of related after sales service. The Company''s manufacturing facilities are located at Baddi, Himachal Pradesh. The Company also provides information and technology support services to group companies.

2. Earnings per share (EPS)

Basic earnings per share

The calculation of basic earnings per share for the year ended 31 March 2013 is based on the proft/ (loss) attributable to equity shareholders of Rs. (4,514) lakhs (previous year proft: Rs 134 lakhs), and weighted average number of equity shares outstanding of 1,010 lakhs (previous year: 1,010 lakhs).

Diluted earnings per share

The calculation of diluted earnings per share for the year ended 31 March 2013 is based on proft/ (loss) attributable to equity shareholders of Rs. (4,514) lakhs (previous year proft: Rs 134 lakhs) and weighted average number of equity shares outstanding after adjustment for the effects of all dilutive potential equity shares of 1,010 lakhs (previous year: 1,010 lakhs).

3. Employee benefts: Post-employment beneft plans

Provident fund

The Company makes contributions, determined as a specifed percentage of employee salaries, in respect of qualifying employees towards Provident Fund. The Company has no obligations other than to make the specifed contributions. The contributions are charged to the Statement of Proft and Loss as they accrue. The amount recognised as an expense towards contribution to Provident Fund for the period aggregated to Rs. 80 lakhs (previous year: Rs. 70 lakhs).

The Company also has an approved provident fund for its own employees, which is exempt from the Income tax Act 1961. In order to comply with the provisions of the Act, the Company matches the interest declared by Regional Provi- dent Fund (RPFC) to its own subscribers. To the extent that the actual interest earned by the Company''s private fund falls short of the rate declared by RPFC, the shortfall is met by the Company. The beneft valued is the interest shortfall, if any, for future years on the provident fund balances of the employees.

The Defned Beneft Obligation of interest rate guarantee on exempt provident fund in respect of the employees of the Company as at 31 March 2013 works out to Rs. Nil. The balance in the surplus account of the provident fund is Rs. 1,026 lakhs and hence the net liability which needs to be provided for in the books of accounts of the Company is Rs. Nil. Contri

Superannuation fund

The Company''s contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognised as an expense in the Statement of Proft and Loss during the period in which the employee renders the related service. The amount recognised as an expense towards contribution to Superannuation fund for the period aggregated to Rs. 44 lakhs (previous year: Rs. 40 lakhs).

Employee State Insurance fund

The Company''s contribution paid/ payable under the scheme to the Employee State Insurance is recognised as an expense in the Statement of Proft and Loss during the period in which the employee renders the related service. The amount recognised as an expense towards contribution to Employee State Insurance Fund for the period aggregated to Rs. 6 lakhs (previous year: Rs. 8 lakhs).

Gratuity

The Company operates a post-employment defned beneft plan that provides for gratuity. The gratuity plan entitles an employee, who has rendered atleast fve years of continuous service, to receive one-half month''s salary for each year of completed service at the time of retirement/exit. The Scheme is not funded by plan assets. The following table sum- marises the position of assets and obligations in relation to the plan:

4. Taxation

The Company has signifcant unabsorbed depreciation and carry forward losses. In view of the absence of virtual certainty of realisation of carried forward tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent of deferred tax liabilities.

5. Segment information

The Company''s business segment comprises:

- Watches: Manufacturing and trading of watches;

- Others: Providing IT and fnance related back offce support to other group companies.

Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenues within India (Domestic) includes sale of watches and spares to consumers located within India; and

- Revenues outside India (Overseas) includes sale of watches manufactured in India and service income earned from customers located outside India.

Segments have been identifed in line with the Accounting Standard 17 on "Segment Reporting" notifed by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organisation structure and the internal fnancial reporting system.

Secondary segment reporting is performed on the basis of the geographical segments.

Segment accounting policies

Besides the normal accounting policies followed as described in note 2, segment revenues, results, assets and liabilities include the respective amounts directly identifed to each of the segments and amounts allocated on a reasonable basis. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of fxed assets, capital work in progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of a segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital, reserves, current tax and deferred tax liability. Primary segment assets do not include advance tax, deferred tax asset and fxed deposits.

b) Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments on the basis of specifc identifcation. However, segment revenue and expenses do not include interest and other income/expense in respect of non segmental activities.

6. Contingent liabilities and commitments

(to the extent not provided for)

Commitments (Rs. in lakhs)

Particulars 31 March 2013 31 March 2012

Estimated amount of contracts remaining to be executed on capital account 0# 1

and not provided for (net of advances)

# Amount is below rounding of threshold adopted by the Company.

Contingent liabilities (Rs. in lakhs)

Particulars 31 March 2013 31 March 2012

Claims against the Company not acknowledged as debts

a) Sales tax 107 79

b) Excise duty 92 92

c) Customs duty 8 8

d) Income tax* - -

e) Others 167 144

Dividend on cumulative preference shares

- 2012-2013 274 - Corporate dividend tax on cumulative preference shares

- 2012-2013 45 - Bills discounted 2 462

* 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.

7. The Ministry of Micro, Small and Medium Enterprises has issued an Offce Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises 31 March 2013 and 31 March 2012 has been made in the fnancial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as defned in the Micro, Small and Medium Enterprises Development Act, 2006.

8. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2010 till the date of maturity.

9. As at 31 March 2013, the Company has foreign currency receivables amounting to Rs. 49 lakhs (previous year Rs. 34 lakhs) outstanding for a period exceeding one year. As per Reserve Bank of India''s (RBI) Master Circular on Export of Goods and Services, foreign currency receivables should be realized, except with prior approval of RBI, within a period of one year. The Company has fled an application with Authorized dealer (AD) / RBI for condonation and extension of period of collection.

10. Transfer Pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the fnancial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the fnancial statements, particularly on the amount of tax expense and that of provision for taxation.

11. Managerial remuneration of Rs. 7 lakhs provided by the Company in the previous year is in excess of the limits specifed in the relevant provisions of the Companies Act, 1956 and the amount approved by the Central Government. Further, as required by the relevant provisions of the Act, the Company is taking necessary steps to seek approval from the Central Government for excess remuneration paid.

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. As required by the relevant provisions of the Act, the Company is taking necessary steps to seek approval from the Central Government for excess remuneration paid.

Mar 31, 2012

1. General information

Timex Group India Limited ("TGIL" or the "Company"), a subsidiary of Timex Group Luxury Watches B.V, is a limited liability company incorporated on 4 October 1988 under the provisions of the Companies Act, 1956. The Company is listed on Bombay Stock Exchange in India.

The Company is engaged in the business of manufacturing and trading of watches and rendering of related after sales service. The Company's manufacturing facilities are located at Baddi, Himachal Pradesh. The Company also provides accounting and information and technology support services to group companies.

2. Basis of preparation of financial statements

The financial statements are prepared and presented under the historical cost convention, on accrual basis of accounting in accordance with the Generally Accepted Accounting Principles ("GAAP") in India and comply with the accounting standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the presentational requirements of the Companies Act, 1956, to the extent applicable All the assets and liabilities have been classified as current and non-current as per the Company's normal operating cycle and other criteria set out in the revised schedule VI to the Companies Act, 1956.Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle being a period within 12 months for the purpose of classification of assets and liabilities as current and non-current.

a. Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Terms / rights attached to preference shares

- 0.1% Non-cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 0.1%

per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed and the dividend liability on the preference shares for the respective year's shall lapse.

- 7.1% Cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 7.1% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year's shall be cumulated and paid to the holders of the preference shares.

- 7.1% Cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 7.1% per annum. In case of insufficiency of profits /no profits, the dividend on preference shares shall not be declared and distributed in the respective year but the dividend liability on the preference shares for that respective year's shall be cumulated and paid to the holders of the preference shares.

c Terms of redemption of preference shares

- Maturity period for redemption of 0.1% preference shares amounting to Rs. 250 (Previous year Rs. 250) is ten years from the date of allotment i.e. 25 March 2003, with an option to the Company of an earlier redemption after 24 March 2005.

- Maturity period for redemption of 7.1% preference shares amounting to Rs. 1,570 (previous year Rs. 1,570) is ten years from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after 27 March 2006. (Refer note 27)

- Maturity period for redemption of 7.1% preference shares amounting to Rs. 2,290 (previous year Rs. 2,290) is ten years from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after 27 March 2006. (Refer note 27)

1. (a) Capital and other commitments (Rs. in lakhs)

As at As at

Particulars 31 March 2012 31 March 2011

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 1 5

(b) Contingent liabilities (Rs. in lakhs)

As at As at

Particulars 31 March 2012 31 March 2011

Claims against the Company not acknowledged as debts a) Sales tax 79 79

b) Excise duty 92 92

c) Customs duty 8 8

d) Income tax - 67

e) Others 144 128* Bills discounted 462 457

*During the previous years, the Company had received a notice from the relevant Government authorities for non payment of stamp duty on a lease entered into by the Company. The demand order of the same has not been received by the Company in the previous year and the liability on this account could not be ascertained. During the current year, the aforesaid demand order has been received and the amount has been settled.

2. The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2012 and as at 31 March 2011 has been made in the financial statements based on information received and available with the Company. Based on the information currently available with the Company, there are no dues payable to Micro and Small Suppliers as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

3. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2010 till the date of maturity.

Besides the above, the Company has paid Rs. 274 lakhs (previous year Rs. 274 lakhs) to Timex Group Luxury Watches

B.V. as dividend during the year.

Timex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amounting to Rs. 1,780 lakhs (previous year Rs. 1,780 lakhs) to the bankers of the Company as a guarantee for use of cash credit and overdraft facilities.

4. Loans and advances include dues from Managing Director of the Company Rs. Nil (previous year Rs. 2 lakhs).

5. Taxation

The Company has significant unabsorbed depreciation. In view of the absence of virtual certainty of realization of carried forward tax losses and unabsorbed depreciation allowance, deferred tax assets are recognized only to the extent of deferred tax liabilities.

6. Segment information

The Company's business segment comprises:

- Watches: Manufacturing and trading of watches;

- Others: Providing IT and finance related back office support to other group companies.

Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenues within India (Domestic) includes sale of watches and spares to consumers located within India; and

- Revenues outside India (Overseas) includes sale of watches manufactured in India and service income earned from customers located outside India.

Segments have been identified in line with the Accounting Standard 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organization structure and the internal financial reporting system.

Secondary segment reporting is performed on the basis of the geographical segments.

Segment accounting policies

Besides the normal accounting policies followed as described in note 2, segment revenues, results, assets and liabilities include the respective amounts directly identified to each of the segments and amounts allocated on a reasonable basis. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of a segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital, reserves, current tax and deferred tax liability. Segment assets do not include advance tax, deferred tax asset and fixed deposits.

b) Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments on the basis of specific identification. However, segment revenue and expenses do not include interest and other income/ expense in respect of non segmental activities.

7. Employee benefits

The Company primarily provide the following benefits to its employees:

(a) Gratuity

(b) Provident fund

(i) The amount recognized as an expense under defined contribution plans for employer contribution Rs. 118 lakhs (previous year Rs. 100 lakhs).

(ii) The details of employee benefits with regard to provision/charge for the year on account of gratuity, which is in the nature of an unfunded defined benefit are as under:

The Company has an approved provident fund for its own employees, which is exempt from the Income tax Act 1961. In order to comply with the provisions of the Act, the Company matches the interest declared by Regional Provident Fund (RPFC) to its own subscribers. To the extent that the actual interest earned by the Company's private fund falls short of the rate declared by RPFC is met by the Company. The benefit valued is the interest shortfall, if any, for future years on the provident fund balances of the employees.

The Defined Benefit Obligation of interest rate guarantee on exempt provident fund in respect of the employees of the Company as at 31 March 2012 works out to Rs. Nil. The balance in the surplus account of the provident fund is Rs. 85 lakhs and hence the net liability which needs to be provided for in the books of accounts of the Company is Rs. Nil.

Other long term benefits:

The amount recognized in the Statement of Profit and Loss in respect of compensated absences is Rs. 23 lakhs (previous year Rs. 40 lakhs).

8. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

9. Managerial remuneration of Rs. 7 lakhs provided by the Company in the current year is in excess of the limits specified in the relevant provisions of the Companies Act, 1956 and the amount approved by the Central Government. Further, we are informed that as required by the relevant provisions of the Act, the Company is taking necessary steps to seek approval from the Central Government for excess remuneration paid.

10. Till the financial year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

Mar 31, 2011

(A) Contingent liabilities

(Rs. in thousands)

Particulars As at As at

31 March 2011 31 March 2010

Claims against the Company not acknowledged as debts

a) Sales tax 7,854 7,854

b) Excise duty 9,188 9,188

c) Customs duty 779 779

d) Income tax 6,676 6,676

e) Others* 12,788 12,081

Bills discounted 45,663 38,719

*During the previous years, the Company had received a notice from the relevant Government authorities for non payment of stamp duty on a lease entered into by the Company. However, the demand order has not been received by the Company and the liability on this account cannot be ascertained.

2. Based on the information presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006 as at 31 March 2011 (previous year Rs. Nil).

3. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009 was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2010 till the date of maturity.

4. Related parties

a Related parties and nature of related party relationship where control exists:

Description of Relationship Name of the Party

Ultimate Holding Company Timex Group B.V.

Holding Company Timex Group Luxury Watches B. V (formerly Timex Watches B.V)

b. Other related parties with whom transactions have taken place:

Description of Relationship Name of the Party

Fellow Subsidiaries

Timex Group B.V. T/AMersey Manufacturers

Fralsen Horlogerie S.A

TMX Limited NV

TMX Limited NV (International Sales Division)

Timex Corporation (Germany)

Timex Corporation (Middlebury)

Opex S.A.

Timex Limited NV

Timex Group UK

Timex Nederland B .V.

Timex Group USA Inc.

Timex Group Luxury Watches B.V.(Ferragamo)

Tiempo, S.A. de. C.V

Timex Group Precision Engineering Limited (TGPEL)

Timex Hong Kong Limited

Timex Do Brasil Comercio E Industria Ltd.

Timex Portugal Timex Hungary Limited

Verstime S.A.

Key Management Personnel

Gopalratnam Kannan (upto 28 April 2010)V.D. Wadhwa

(w.e.f 29 April 2010)

5. Loans and advances include dues from Managing Director of the Company Rs. 153 thousand (previous year Rs. Nil). The maximum amount outstanding during the year was Rs. 153 thousand (previous year Rs. 178 thousand).

6. Taxation

The Company has significant carried forward tax losses and unabsorbed depreciation. In view of the absence of virtual certainty of realisation of carried forward tax losses and unabsorbed depreciation allowance, deferred tax assets are recognised only to the extent of deferred tax liabilities.

7. Segment information

The Company's business segment comprises:

- Watches : Manufacturing and trading of watches;

- Timex Global Services : Providing IT and finance related back office support to other group companies. Segment revenue in the geographical segments considered for disclosure are as follows:

- Revenues within India (Domestic) include sale of watches and spares to consumers located within India; and

- Revenues outside India (Overseas) include sale of watches manufactured in India and service income earned from customers located outside India.

Segments have been identified in line with the Accounting Standard 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organisation structure and the internal financial reporting system.

Secondary segment reporting is performed on the basis of the geographical segments.

Segment accounting policies

Besides the normal accounting policies followed as described in Schedule 14, segment revenues, results, assets and liabilities include the respective amounts directly identified to each of the segments and amounts allocated on a reasonable basis. The description of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:

a) Segment assets and liabilities

Segment assets include all operating assets used by a segment and consist principally of fixed assets, capital work in progress, current assets and loans and advances. Segment liabilities include all operating liabilities in respect of a segment and consist principally of creditors and accrued liabilities. Segment liabilities do not include share capital, reserves, current tax and deferred tax liability. Segment assets do not include advance tax, deferred tax asset and fixed deposits.

b) Segment revenue and expenses

Segment revenue and expenses are directly attributable to the segment and have been allocated to various segments on the basis of specific identification. However, segment revenue and expenses do not include interest and other income/expense in respect of non segmental activities.

8. Employee benefits

(i) The amount recognised as an expense for defined contribution plans is Rs. 4,150 thousand (previous year Rs. 3,220 thousand).

9. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by such date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

Mar 31, 2010

1. Background

Timex Group India Limited (TGIL or the Company), a subsidiary of Timex Group Luxury Watches B.V, is a limited liability Company incorporated on 4 October 1988 under the provisions of the Companies Act, 1956. The Company is listed on Bombay Stock Exchange in India.

The Companys business consists of manufacture and trade of watches and rendering of related after sales service. The Company provides Technology and International Taxation support services to certain group companies.

(Rs. in thousands) As at31 March 2010 As at 31 March 2009"

2.(a)Capital commitments

(i)Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) 781 144

(b) Contingent liabilities

(Rs. in thousands)

As at31 March 2010 As at 31 March 2009

(i)Claims against the Company not acknowledged as debts

a) Sales tax 7,854 7,903

b) Excise duty 10,333 10.333

c) Customs duty 779 779

d) Income tax 6,676 -

e) Others 12,081 2,742

(ii) Bills discounted 38,719 4,074

3. The Timex Global Services Division of the Company renders information technology and finance support services to its overseas group companies. The expenditure incurred by the Division is recovered from the group companies at a mark up of 10% on costs, with reimbursement of specified expenses, and forms part of the service income.

4. Based on the information presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enteiprises Development Act, 2006 as at 31 March 2010 (previous year Rs. Nil).

5. The dividend liability on 15.700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009 was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares have been revised to 7.1% effective 1 April 2009 till the date of maturity.

6. Pursuant to shareholders approval via Postal Ballot, the Precision Engineering Division of the Company was divested on a slump sale basis to Timex Group Precision Engineering Limited, a fellow subsidiary Company w.e.f. 1 November 2008 for a consideration of Rs. 130,438 thousand, including Rs. 9,238 thousand for working capital adjustment as on date of transfer of risk and reward i.e. 1 November 2008 (effective transfer date) of the business. Profit on sale of above (shown as an exceptional item in Profit and Loss Account of the previous year) amounted to Rs 63,533 thousand. The balance consideration receivable amounting to Rs. 9,238 thousand as at the end of March, 31 2009 were included in Other Current Asset in Schedule 8. The related operations of the Division upto October 31. 2008 were included in the financial statements as "discontinued business".

* Does not include expenses towards gratuity and leave encashment since the same are based on actuarial valuation carried out for the Company as a whole. Includes Rs. 1,019 thousand as managerial remuneration in the current year which is subject to approval by the Central Government.

Note:

Tiraex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amounting to Rs. 178,000 thousand (previous year Rs. 178,000 thousand) to the bankers of the Company as a guarantee for use of cash credit and overdraft facilities.

* include production at Parwanoo and Baddi in Himachal Pradesh.

** excludes plastic components, tools and moulds produced for captive consumption. (Refer to note 5 also) *** Installed capacities are as certified by management and have not been verified by the auditors, being a technical matter.

# in view of the items of varying size and nature that can be manufactured by the Companys facilities, the installed capacity is not ascertainable.

@ includes 163 thousand watches valued at Rs 117,605 thousand on account of watches received at Baddi for repackaging which are liable for excise duty.

* Values are inclusive of excise duty

** Does not include 3,035 thousands (Nos) of plastic components transferred on sale of Precision Engineering Division.

7. Loans and advances include dues from Managing Director of the Company Rs. Nil thousand (previous year Rs. 178 thousand). The maximum amount outstanding during the year was Rs. 178 thousand (previous year Rs. 311 thousand)

8. Taxation

The Company has significant carried forward tax losses. In view of the absence of virtual certainty of realisation of carried forward tax losses and unabsorbed depreciation allowance, deferred tax assets are recognised only to the extent of deferred tax liabilities.

9. The Company has taken land and building, office premises, showrooms, other business premises and residential accommodation for some of its employees under operating lease arrangements, with an option of renewal at the end of the lease term and escalation clause in some of the cases. Lease payments charged during the year to the profit and loss account aggregate Rs. 30,450 thousand (previous year Rs. 33,088 thousand). The future minimum lease payments under non-cancellable operating leases are as follows:

10. The Company has given certain items of plant and machinery on operating lease, with an option of renewal at the end of the lease term. However, the lease agreements entered into with the lessees do not provide for any escalation. Lease rentals recognised during the year in the profit and loss account amount to Rs. 1,540 thousands (previous year Rs. 1,878 thousand). The future lease payments receivable under non-cancellable operating leases are as follows:

11. i) Segment information

Following divestment of Precision Engineering Division in 2008-09 (Refer to note 5), the Companys business segment comprises of:

- Watches : Manufacturing and trading of watches;

- Timex Global Services : Providing IT and finance related back office support to other group companies.

Segment revenue in the geographical segments considered for disclosure are as follows:

Revenues within India (Domestic) include sale of watches and spares to consumers located within India; and

Revenues outside India (Overseas) include sale of watches manufactured in India and service income earned from customers located outside India.

Segments have been identified in line with the Accounting Standard 17 on "Segment Reporting" notified by the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks and returns, the organisation structure and the internal financial reporting system.

Besides the normal accounting policies followed as described in Schedule 16, segment revenues, results, assets and liabilities include the respective amounts directly identified to each of the segments and amounts allocated on a reasonable basis.

12 Employee benefits

The details of employee benefits with regard to provision/ charge for the year on account of gratuity, which is in the nature of an unfunded defined benefit are as under:

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors. Discount rate is based on market yields prevailing on government securities for the estimated term of the obligations. ,

The guidance on implementing AS-15 issued by Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India states that benefit involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefits plans. Pending the issuance of the guidance note from Actuarial Society of India, the Companys actuary has expressed its inability to reliably measure provident fund liabilities. Accordingly, the related information has not been disclosed.

13. 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.

14. Previous years figures have been re-grouped / reclassified, wherever necessary, to conform to current years classification. The previous year figures are not comparable as those include tool room business operation till 31 October 2008.

15. Schedules 1 to 17 form an integral part of the financial statements.

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