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Directors Report of Titan Company Ltd.

Mar 31, 2016

The Directors are pleased to present the Thirty Second Annual Report and the Audited Statement of Accounts for the year ended 31st March 2016:

FINANCIAL RESULTS

Rs. in crores

Standalone Consolidated

2015-2016 2014-2015 2015-2016 2014-2015

Sales Income 11,295.74 11,936.71 11,312.07 11,949.33

Other Income 64.36 70.58 64.95 70.75

Total Income 11,360.10 12,007.29 11,377.02 12,020.08

Less: Excise Duty 31.21 33.50 34.13 35.92

Net Income 11,328.89 11,973.79 11,342.89 11,984.16

Expenditure 10,319.04 10,749.85 10,346.58 10,765.01

Gross profit 1,009.85 1,223.94 996.31 1,219.15

Finance Costs 42.28 80.66 42.29 80.69

Cash operating profit 967.57 1,143.28 954.02 1,138.46

Depreciation / Amortisation 96.91 87.39 99.56 89.57

Profit before taxes 870.66 1,055.89 854.46 1,048.89

Income taxes - Current 169.07 241.00 169.07 241.00

- Deferred (4.26) (8.18) (4.17) (8.36)

Profit after taxes for the year 705.85 823.07 689.56 816.25

Share of profit/(Loss) of associate - - (0.17) 0.01

Net Profit 705.85 823.07 689.39 816.26

Profit brought forward 1,042.52 934.56 1,033.91 932.76

Appropriations

Interim dividend 195.31 - 195.31 -

Proposed dividend on equity shares - 204.19 - 204.19

Tax on dividends 39.76 41.57 39.76 41.57

Transfer to general reserve 521.26 469.35 521.26 469.35

Balance carried forward 992.04 1,042.52 966.97 1,033.91

During the year under review, the Company''s sales income declined by 5.4 % to Rs. 11,295.74 crores compared with Rs. 11,936.71 crores in the previous year. Profit before tax declined by 17.5 % to Rs. 870.66 crores and the net profit declined by 14.2% to Rs. 705.85 crores. This performance came in the backdrop of an environment where the consumer sentiment did not pick up as expected and regulatory measures adversely affected the jewellery business.

The Watches business of the Company recorded an income of Rs. 1,953.55 crores, a growth of 1.7%, which was achieved through meticulous planning and execution of key initiatives. The income from Jewellery segment declined by 7.6% touching Rs. 8,717.40 crores. The income from Eyewear segment grew by 11.8% touching Rs. 371.58 crores. The income from other segments comprising Precision Engineering, a B2B Business, and accessories recorded a sale of Rs. 235.17 crores, a growth of 1.3%.

The year witnessed aggressive expansion of the Company''s retail network with a net addition of 82 stores. As on 31st March 2016, the Company had 1,283 stores, with over 1.7 million square feet of retail space delivering a retail turnover of Rs. 11,295 crores.

The Management Discussion and Analysis report, which is attached, dwells into the performance of each of the business division and the outlook for the current year.

International Operations

The Watches exports registered a handsome growth of 17% to clock a turnover of Rs. 161 crores despite several challenges in Middle East, which remained volatile and South East, which had economic and currency fluctuations. The business sustained its targeted investments in retail and brand building in key, large markets. Vietnam, UAE and Malaysia have seen brand scores enhanced along with business growth. There was visible shift to digital, new age media, e-commerce along with greater thrust on Fastrack and Sonata. Indonesia, Nigeria, Philippines and SAARC markets have shown promising results.

Dividend

The Directors at the meeting held on March 16, 2016 declared an interim dividend of Rs. 2.20 per share (220%) involving a total payment of Rs. 235.07 crores (including dividend distribution tax) for the year ended March 31, 2016. The said interim dividend was paid to the shareholders on March 29, 2016. The Directors do not recommend any further dividend for the year 2015-16.

Transfer to General Reserve

An amount of Rs. 521.26 crores is proposed to be transferred to the general reserve.

Finance

At the projected rate of 7% GDP growth, below earlier projections, the current fiscal has been a challenge. After two consecutive years of drought, with the expectation of a good monsoon this year, rural demand is expected to pick up in the second half. The PAN card rule has caused considerable dampening of sentiment in consumers and uncertainty in retailers. The Company plans to invest disproportionately in the digital space and contain its employee cost.

Public Deposits

The Jewellery Division of the Company was successfully operating customer schemes for jewellery purchases for many years. When the Companies Act, 2013 became substantially effective from 1st April 2014, the Company had around seven lakhs subscribers contributing to these schemes. However, these schemes were exempt under the Companies Act, 1956 relating to acceptance of public deposits as such schemes were not covered in the definition of deposits. Under the Companies Act, 2013 (the "Act") and Regulations made there under (''Deposit Regulations'') the scope of the term "deposit" was enlarged and therefore a view was taken that the jewellery purchase schemes offered by the Company to its customers would be treated as public deposits. Thereupon, the Company discontinued fresh enrolment of subscribers and initiated steps to close the erstwhile customer schemes, which were wound down by 31st August 2014.

Under the Deposit Regulations, a company is permitted to accept deposits subject to applicable provisions, to the extent of 25% of the aggregate paid-up share capital and free reserves from public and 10% of the aggregate paid-up share capital and free reserves from Members of the company, after prior approval by way of a special resolution passed by the Members in this behalf. In pursuance thereof, a Postal Ballot was conducted during August/September 2014 and requisite approval was obtained from the Members of the Company and a new customer scheme for jewellery purchase was launched in November 2014 in compliance with the Deposit Regulations.

The details relating to deposits, covered under Chapter V of the Companies Act, 2013 are as under:

(a) accepted during the year: Rs. 775.82 crores

(b) remained unpaid or unclaimed as at the end of the year: Rs. 20.10 crores

(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved- (i) at the beginning of the year: Nil

(ii) maximum during the year: Nil

(iii) at the end of the year: Nil

There are no deposits that have been accepted by the Company that are not in compliance with the requirements of Chapter V of the Act.

Material changes and commitments affecting financial position between end of the financial year and date of report

There have been no material changes and commitments affecting financial position between end of the financial year and the date of the report.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements. There have been no investments made or guarantees given under Section 186 of the Companies Act, 2013 during the year under review. The particulars of loans given as part of treasury operations of the Company bearing interest ranging from 10.4% to 11.3% p.a. are furnished below:

Rs.

Information under Section 186(4) of the Companies Act, 2013

Opening balance Additional ICD Amount Closing balance as on 1st April during the year Matured and as on 31st March 2015 paid 2016

Loans given in the form of un secured short term Inter- 2,380,000,000 - 380,000,000 2,000,000,000

Corporate Deposits

Contribution to Exchequer

During the year under review, the Company made payments aggregating Rs. 931.20 crores by way of taxes (central, state and local) and duties as against Rs. 939.03 crores in the previous year.

Adequacy of internal controls and compliance with laws

The Company during the year has reviewed its Internal Financial Control systems and has continually contributed to establishment of more robust and effective IFC framework, prescribed under the ambit of Section 134(5) of Companies Act, 2013. The preparation and presentation of the financial statements is pursuant to the control criteria defined considering the essential components of Internal control - as stated in the "Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI)".

The control criteria ensures the orderly and efficient conduct of the Company''s business, including adherence to its policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

Based on the assessment carried out by the Management and the evaluation of the results of the assessment, the Board of Directors are of the opinion that the Company has adequate Internal Financial Controls system that is operating effectively as at March 31, 2016.

There were no instances of fraud which necessitates reporting of material misstatement to the Company''s operations.

There have been no communication from regulatory agencies concerning non-compliance with or deficiencies in financial reporting practices.

Risk Management

Pursuant to the requirement of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations"), the Company has constituted a Risk Management Committee.

The Company has in place a Risk Management framework to identify, evaluate business risks and challenges across the Company both at corporate level as also separately for each business division.

The top tier of risks for the Company is captured by the operating management after extensive deliberations on the nature of the risk being a gross or a net risk and thereafter in a prioritized manner presented to the Board for their inputs on risk mitigation/ management efforts. Based on this framework, a Risk Management policy is being developed.

The Board engages in the Risk Management process and has set out a review process so as to report to the Board the progress on the initiatives for the major risks of each of the businesses that the Company is into.

The Risk Register of each Business gets updated on an annual basis and is placed for due discussions at Board meetings and appropriateness of the mitigation measures to ensure that the risks remain relevant at any point in time and corresponding mitigation measures are optimized.

The Board Audit Committee (BAC) has been engaged in reviewing the IT initiatives and governance mechanisms pertaining to information security. The BAC also reviewed the new IT controls incorporated to comply with IFC requirements mandated by the Companies Act, 2013.

Related Party Transactions

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interests of the Company at large. All related party transactions are placed before the Audit Committee and the Board for approval, if applicable. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are verified by the Internal Auditor and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval, if applicable on a quarterly basis. The Company has developed an Internal Guide on Related Party Transactions Manual and prescribed Standard Operating Procedures for purpose of identification and monitoring of such transactions. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website. None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company. There were no transactions during the year which would require to be reported in Form AOC-2.

Subsidiaries / Joint Venture / Associate Company

As on 31st March 2016, the Company had the following subsidiaries:

1) Titan TimeProducts Limited, Goa (TTPL)

2) Favre Leuba AG, Switzerland

3) Titan Watch Company Limited, Hong Kong and

4) Titan Engineering and Automation Limited

During the year 2015-2016, TTPL sold a total of 59,68,000 nos. of ECBs and micro assemblies (previous year: 59,81,400 nos.). Net sales income during the year was Rs. 25.60 crores against the previous year''s figure of Rs. 24.46 crores. The quality, delivery and competitive price of the products continue to be well-received by the Holding Company and external customers.

As at 31st March 2016, Favre Leuba AG had registered a loss of CHF 1.88 million, i.e. Rs. 13.00 crores (2014-15: CHF 0.92 million i.e. Rs. 5.89 crores) which apart from amortization of trademarks design and development expenses, includes operating expenses incurred in preparation of product launches scheduled to commence from October 2016.

Titan Watch Company Limited is a subsidiary of the Company''s subsidiary Favre Leuba AG and hence is a subsidiary of the Company. It has a capital of HK $ 10,000 and no Profit and Loss account has been prepared as it has not yet commenced business.

Titan Engineering and Automation Limited (TEAL) was incorporated on 24th March 2015 to acquire the Precision Engineering Business of the Company through a court approved scheme of arrangement.

The annual accounts of these subsidiary companies were consolidated with the accounts of Titan Company Limited for 2015-16. None of these companies declared a dividend in 2015-16.

The Company holds a 49% equity stake in a joint venture entered into with Montblanc Services B.V., the Netherlands for operation of retail boutiques in India for Montblanc products.

The Company holds 26.79% stake in Green Infra Wind Power Theni Limited which supplies energy to the Company.

The statement containing salient features of the financial statement of subsidiaries/associate company/joint venture forms part of the Annual Report.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared as per Accounting Standard AS 21, Accounting Standard AS 23 and Accounting Standard AS 27 consolidating the Company''s accounts with its subsidiaries, a joint venture and an associate have also been included as part of this Annual Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (3) (m) of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, are furnished in Annexure- I to the Board''s Report.

Corporate Social Responsibility

A report on CSR is attached in Annexure II.

Extract of Annual Return

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure-III in the prescribed Form MGT-9, which forms part of this Report.

Vigil Mechanism

The Company has a whistle blower mechanism wherein the employees can approach the Management of the Company (Audit Committee in case where the concern involves the Senior Management) and make protective disclosures to the Management about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct. The Whistle Blower Policy requires every employee to promptly report to the Management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the policy. A mechanism is in place whereby any employee of the Company has access to the Chairman of the Audit Committee to report any concern. No person has been denied access to the Chairman to report any concern. Further, the said policy has been disseminated within the organisation and has also been posted on the Company''s website.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.

During the financial year 2015-16, the Company had received eight complaints on sexual harassment, which were disposed-off with appropriate action taken and nil complaints remain pending as of 31st March 2016.

Details in respect of Frauds reported by Auditors under sub-section (12) of Section 143 other than those which are reportable to the Central Government

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013 (including any statutory modification(s) or re- enactment(s) for the time being in force).

Corporate Governance

Pursuant to Regulation 34 of the Listing Regulations executed with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance forms part of the Annual Report.

Business Responsibility Reporting

As per Regulation 34 of the Listing Regulations with the Stock Exchanges, a Business Responsibility Report is attached and forms part of this Annual Report.

Directors and Key Managerial Personnel

Mr. T.K. Balaji, Dr. C.G. Krishnadas Nair, Ms. Vinita Bali, Mrs. Hema Ravichandar, Prof. Das Narayandas and Mrs. Ireena Vittal are the Independent directors and all have given declarations that they continue to meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. In accordance with his appointment resolution, term of directorship of Dr. C.G. Krishnadas Nair ends on 16th August 2016. The Board places on record its appreciation to Dr. Nair for the valuable contribution and wise counsel rendered by him during his tenure as a Director of the Company.

In accordance with the provisions of the Act and in terms of the Memorandum and Articles of Association of the Company, Mr. C.V. Sankar retires by rotation at the Annual General Meeting.

Mr. Ashwani Puri, Independent Director was appointed as an Additional Director on the Board of the Company on 6th May 2016. Member''s attention is drown to Item No. 8 of the Notice for the appointment of Mr. Ashwani Puri as a Director of the Company.

None of the Directors are related to each other within the meaning of the term "relative" as per Section 2(77) of the Act.

Five meetings of the Board were held during the year. For details of the meetings of the Board, reference may be made to the Corporate Governance Report, which forms part of the Annual Report.

Details of Directors and Key Managerial Personnel who were appointed or have resigned during the year

Pursuant to Section 134 of Companies Act, 2013 read with Rule 8(5) (iii) of Companies (Accounts) Rules, 2014, no Directors or Key Managerial Personnel were appointed or resigned. Pursuant to the provisions of Section 203 of the Act, Mr. Bhaskar Bhat-Managing Director, Mr. S. Subramaniam-Chief Financial Officer and Mr. A.R. Rajaram-Head Legal & Company Secretary continue to be the Key Managerial Personnel of the Company.

Directors'' Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls are adequate and operating effectively.

Accordingly, pursuant to the requirements of Section 134 (5) of the Act, the Directors hereby confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Board Evaluation

The performance evaluation of the Board, its Committees and ndividual Directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, its Committees and self-evaluation

The Chairperson of the Board Nomination and Remuneration Committee (BNRC) held separate discussions with each of the Directors of the Company and obtained their feedback on overal Board effectiveness as well as on each of the other Directors.

Based on the questionnaire and feedback, the performance of every Director was evaluated by the BNRC

Some of the key criteria for performance evaluation, as laid down by the BNRC were as follows-

Performance evaluation of Directors:

- Contribution at Board / Committee meetings

- Guidance / Support to Management outside Board / Committee Meetings

Performance evaluation of Board and Committees:

- Board structure and composition

- Degree of fulfillment of key responsibilities

- Establishment and delineation of responsibilities to Committees

- Effectiveness of Board Processes, Information and Functioning

- Board Culture and Dynamics

- Quality of relationship between the Board and Management

- Efficacy of communication with External Stakeholders

- Committees - strengths and areas of improvement

Independent Directors

A separate meeting of the independent directors ("Annual ID Meeting") was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Post the Annual ID Meeting, the collective feedback of each of the Independent Directors was discussed by the Chairperson of the BNRC with the Board covering performance of the Board as a whole, performance of the non-independent directors and performance of the Board Chairman

Remuneration Policy

The Board has, on the recommendation of the BNRC framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Policy on Directors'' appointment and remuneration and other details

In accordance with the agreement between the promoters, three Directors each may be nominated by Tata Sons Limited and Tamilnadu Industrial Development Corporation Limited.

The guidelines for selection of Independent Directors are as set out below:

The Board Nomination and Remuneration Committee oversees the Company''s nomination process for Independent Directors and in that connection to identify, screen and review individuals qualified to serve as an Independent Director on the Board.

Process for selection

The Committee may act on its own in identifying potential candidates. The Committee shall review and discuss details pertaining to candidates and will conduct evaluation of candidates in accordance with the process that it sees fit and appropriate and thereafter pass on its recommendation for nomination to the Board, based on the following guidelines:

Attributes

i) The Committee shall seek candidates who is not a nominee or related to either Promoter of the Company. Such candidates shall possess integrity, leadership skills, managerial qualities, foresight abilities and competency required to direct and oversee the Company''s management in the best interest of its stakeholders i.e. shareholders, customers, employees and communities it serves.

ii) The candidate must be willing to regularly attend the meetings of the Board and develop a strong understanding of the Company, it''s businesses and it''s needs, to contribute his/ her time and knowledge to the Company and to be prepared to exercise his/her duties with skill and care. Besides these, the candidate should have an understanding of governance concepts and legal duties of a Director.

iii) It is desirable that the candidate should have expertise to fill in the gap(s) identified by the Company in the current composition of the Board.

iv) Ideally the candidate should possess experience of 5 years on the Board of a listed company.

v) The candidate''s age shall not exceed 70 years at the time of joining the Board.

vi) Forthrightness and ability to possess foresight abilities in the Governance of a Corporate.

Board Composition

Keeping in mind that women constitute a majority of the Company''s customers it would be desirable to have one-third of the Board''s strength represented by woman members.

Procedure

1. The Committee may retain search firms or advisors as it deems appropriate to identify candidates.

2. Develop a list of potential candidates of Independent Directors which may be refreshed every year. The Committee to create a list of probable candidates from known sources or from the database of Ministry of Corporate Affairs, Government of India or Stock Exchanges.

3. The Committee may also consider profiles of suitable expatriates.

4. The candidate considered by the Committee as potentially qualified will be contacted to determine their interest in being considered to serve on the Board and if interested will be interviewed.

As and when a candidate is shortlisted, the Committee will make a formal recommendation to the Board.

Other Disclosures

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Sl. No. Name of the Director Commission (Rs.) Sitting fee (Rs.) Total (Rs.) Ratio (times)

A] Median Employee remuneration 5,50,000

B] Directors remuneration

1 Mr. C.V. Sankar 47,13,500 2,80,000 49,93,500 9.07

2 Mr. T. K. Arun 29,99,500 3,02,500 33,02,000 6.00

3 Mr. Harish Bhat - 2,45,000 2,45,000 0.45

4 Mr. N. N. Tata 22,71,050 1,45,000 24,16,050 4.39

5 Mr. T. K. Balaji 35,13,700 3,15,000 38,28,700 6.96

6 Dr. C. G. Krishnadas Nair 41,13,600 3,97,500 45,11,100 8.20

7 Ms. Vinita Bali 31,70,900 2,50,000 34,20,900 6.22

8 Mrs. Ireena Vittal 31,70,900 3,10,000 34,80,900 6.32

9 Mrs. Hema Ravichandar 34,28,000 3,17,500 37,45,500 6.81

10 Prof. Das Narayandas 12,85,500 30,000 13,15,500 2.39

11 Mr. Bhaskar Bhat 2,50,00,000 - 4,75,89,556* 86.53

*Inclusive of salary, perquisites, commission and retiral benefits.

i) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:-

Name % Change

Mr. C. V. Sankar 50.32

Mr. T. K. Arun -46.15

Mr. Harish Bhat NA

Mr. N. N. Tata 158.51

Mr. T. K. Balaji 84.15

Dr. C. G. Krishnadas Nair -17.04

Ms. Vinita Bali -11.45

Mrs. Hema Ravichandar -4.04

Prof. Das Narayandas -29.43

Mrs. Ireena Vittal -25.43

Mr. Bhaskar Bhat -3.12

Mr. S. Subramaniam 13.54

Mr. A. R. Rajaram 11.31

iii) The percentage increase in the median remuneration of employees in the financial year - 6.6%

iv) The number of regular employees on the rolls of company - 7859

v) The explanation on the relationship between average increase in remuneration and company performance -

The average increase in the remuneration of the employees of the organisation takes into account the Company performance, inflation rate, market salary increase and trends as projected by consulting firms

vi) Comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

(Rs. in crores)

Particulars Mr. Bhaskar Bhat, Mr. S. Subramaniam, Mr. A. R. Rajaram, Managing Director Chief Financial Officer Head - Legal & Company Secretary

Remuneration in FY 2016 4.76 2.25 1.08

Revenue 11,264.53 11,264.53 11,264.53

Remuneration as a % of revenue 0.042% 0.019% 0.009%

Profit before Tax (PBT) 870.66 870.66 870.66

Remuneration (as % of PBT) 0.55% 0.26% 0.12%

vii) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year.

Particulars 2015-16 2014-15 % Change

Market Capitalisation (Rs. crores) 30,104.83 34,765.71 -13.41

Price Earnings Ratio 42.61 42.24 0.88

viii) Percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year.

Particulars 31st March 2016 1987-88 IPO % Change*

Market Price (NSE) in Rs. 339.10 10.00 67720

Market Price (BSE) in Rs. 338.80 10.00 67660

*Adjusted for Bonus and Split in 2011

ix) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

No such differentiation was followed in giving the increment during the last financial year. The average increment in salary was basis individual performance.

x) The key parameters for any variable component of remuneration availed by the directors

The Members had, at the AGM of the Company held on 31st July 2015 approved payment of Commission to the non- executive directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions of the Act. The said Commission is decided each year by the Board of Directors and distributed amongst the non-executive directors based on performance evaluation, attendance and contribution at the meetings of the Board and its Committees, as well as the time spent on operational matters other than at meetings.

xi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year:

The highest paid Director is the Managing Director. No employee has received remuneration in excess of the Managing Director during the year.

xii) Affirmation that the remuneration is as per the Remuneration Policy of the Company.

The Company''s Remuneration Policy is based on the principle of internal equity, competence and experience of the employee and industry standards. Through its compensation programme, the Company endeavours to attract, retain, develop and motivate a high performance workforce and engaged workforce. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process. The Company affirms remuneration is as per the Remuneration Policy of the Company.

Information as per Rule 5(2) of the Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be available at the Registered Office of the Company during working hours for a period of 21 days before the date of the Annual General Meeting. Any member interested in obtaining such particulars may write to the Company Secretary or through mail addressed to arrajaram@titan.co.in.

AUDITORS

Statutory Auditors

The Members are requested to ratify the appointment of its Statutory Auditors, Messrs Deloitte Haskins & Sells, Chartered Accountants (Firm''s Registration No. 008072S), from the conclusion of this Thirty Second Annual General Meeting upto the conclusion of the Thirty Third Annual General Meeting. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for re-appointment as Auditors of the Company. As required under Regulation 33 of the Listing Regulations, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its PED activity may require to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. M.R. Rajashekar & Co. to audit the cost accounts of the Company for the financial year 2015-

16. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to M/s. M.R. Rajashekar & Co., Cost Auditors is included at Item No. 6 of the Notice convening the Annual General Meeting.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs HBP & Co, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as (Annexure-IV).

Auditor''s Report and Secretarial Auditor''s Report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s report and secretarial auditor''s report.

Acknowledgements

Your Directors wish to place on record their appreciation of the support which the Company has received from its promoters, shareholders, lenders, business associates, vendors, customers, media and the employees of the Company.



On behalf of the Board of Directors,

C.V. Sankar

6th May 2016 Chairman


Mar 31, 2015

To the Members of Titan Company Limited

The Directors are pleased to present the Thirty First Annual Report and the Audited Statement of Accounts for the year ended 31st March 2015:

Financial Results

Rs. in crores

2014-2015 2013-2014

Sales Income 11,936.71 10,955.14

Other Income 70.58 120.19

Total Income 12,007.29 11,075.33

Less: Excise Duty 33.50 39.35

Net Income 11,973.79 11,035.98

Expenditure 10,749.85 9,867.35

Gross profit 1,223.94 1,168.63

Finance Costs 80.66 87.11

Cash operating profit 1,143.28 1,081.52

Depreciation / Amortisation 87.39 65.59

Profit before taxes 1,055.89 1,015.93

Income taxes - Current 241.00 263.00

- Deferred (8.18) (1.31)

Profit after taxes for the year 823.07 754.24

Less: Income tax of earlier years - 13.10

Net Profit 823.07 741.14

Profit brought forward 934.56* 831.39

Appropriations

Proposed dividend on equity shares 204.19 186.44

Tax on dividends 41.57 31.68

Transfer to general reserve 469.35 415.70

Balance carried forward 1,042.52 938.71

*after adjusting depreciation on transition to Schedule II of the Companies Act, 2013 on tangible fixed assets with NIL remaining useful life (net of deferred tax).

The economic outlook for the year 2014-15 was promising while improvement in consumer demand was quite lukewarm. The Company''s jewellery business was also impacted due to regulatory changes and termination of the consumer friendly Golden Harvest Scheme. The Company''s brands witnessed good growth during the first half, while in the later half it witnessed a decline due to the absence of the Golden Harvest Scheme which used to contribute about 30% of the Jewellery Division''s revenues. The Company will however continue to invest in strategic initiatives taking into account its long term and sustainable growth plans.

During the year under review, the Company''s sales income grew by 8.96% to Rs. 11,936.71 crores compared with Rs. 10,955.14 crores in the previous year. Profit before tax grew by 3.93 % to Rs. 1,055.89 crores and the net profit grew by 11.05% to Rs. 823.07 crores. This performance came in the backdrop of an environment where the consumer sentiment did not pick up as expected. The strength of Company''s brands contributed to sales growth across all retail formats of watches, jewellery and eyewear.

The Watches business of the Company recorded an income of Rs. 1,921.04 crores, a growth of 7.27%, which was achieved through meticulous planning and execution of key initiatives. The income from Jewellery segment grew by 9.24% touching Rs. 9,429.97 crores. The income from other segments comprising Precision Engineering, a B2B Business, the Eyewear Business and accessories grew by 12.91% to Rs. 564.31 crores.

The year witnessed aggressive expansion of the Company''s retail network with a net addition of 123 stores. As on 31st March 2015, the Company had 1201 stores, with over 1.59 million square feet of retail space delivering a retail turnover of just under Rs. 12,000 crores.

The Management Discussion and Analysis report, which is attached, dwells into the performance of each of the business division and the outlook for the current year.

International Operations

The Watches exports registered a handsome growth of 12% to clock a turnover of Rs. 137.76 crores against a backdrop of several headwinds in international markets. The business sustained its targeted investments in retail and brand building in key, large markets. The presence of Titan in modern retail is adding to both image and business. Entry into In-flight sales through Singapore Airlines paves way for a new route to building the brand. Vietnam, UAE and Malaysia lead the growth stories while Indonesia, Nigeria, Philippines and SAARC markets hold promise for future.

Dividend

The Directors are pleased to recommend the payment of dividend on equity shares at the rate of 230% (Rs. 2.30 per equity share), subject to approval by the shareholders at the Annual General Meeting (AGM).

Transfer to General Reserve

An amount of Rs. 469.35 crores is proposed to be transferred to the general reserve.

Finance

The Jewellery Division of the Company was successfully operating customer schemes for jewellery purchases for many years. As on 1st April 2014, the Company had around seven lakhs subscribers contributing to these schemes. These schemes were not covered under the Companies Act, 1956 relating to acceptance of public deposits as such schemes were exempt from the definition of deposits. However, under the Companies Act, 2013 (the "Act") and Regulations made there under (''Deposit Regulations'') the scope of the term "deposit" has been enlarged and therefore a view has been taken that the jewellery purchase schemes offered by the Company to its customers will be treated as public deposits. In these circumstances, the Company discontinued fresh enrolment of subscribers and initiated steps to close the current customer schemes, which were wound down by 31st August 2014.

Under the Deposit Regulations, a company is permitted to accept deposits subject to applicable provisions, to the extent of 25% of the aggregate paid-up share capital and free reserves from public and 10% of the aggregate paid-up share capital and free reserves from Members of the company, after prior approval by way of a Special Resolution passed by the Members in this behalf. In pursuance thereof, a Postal Ballot was conducted during August/September 2014 and requisite approval was obtained from the Members of the Company and a new customer scheme for jewellery purchase was launched in November 2014 in compliance with the Deposit Regulations.

The details relating to deposits, covered under Chapter V of the Act, are as under:

(a) accepted during the year: Rs. 51,148.86 lakhs*

(b) remained unpaid or unclaimed as at the end of the year: Rs. 3.85 lakhs

(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved-

(i) at the beginning of the year: No

(ii) maximum during the year: No

(iii) at the end of the year: No

*Includes an amount of Rs. 44,238 lakhs received under the old Jewellery Purchase Scheme which was outside the purview of deposits under the Companies Act, 1956

There are no deposits that have been accepted by the Company that are not in compliance with the requirements of Chapter V of the Act. Material changes and commitments affecting financial position between end of the financial year and date of report There have been no material changes and commitments affecting financial position between end of the financial year and the date of the report.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Particulars of loans, guarantees and investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements. There have been no investments made or guarantees given under Section 186 of the Companies Act, 2013 during the year uner review. The particulars of loans given as part of treasury operations of the Company bearing interest ranging from 10.40% to 11.25% p.a. are furnished below:

Information under Section 186(4) of the Companies Act, 2013 Rs. Opening Additional ICD Amount Closing balance as on during the Matured and balance as on 1st April 2014 year paid 31st March 2015

Loans given in the form of unsecured short term Inter- 1,900,000, 000 5,060,000, 000 4,580,000, 000 2,380,000,000 Corporate Deposits

Contribution to Exchequer

During the year under review, the Company made payments aggregating Rs. 939.04 crores by way of taxes (central, state and local) and duties as against Rs. 973.78 crores in the previous year.

Adequacy of internal controls and compliance with laws

The Management of the Company has over the years set up internal control mechanisms to cater to the growing needs of the businesses. The Company has invested significantly in computerization of processes across the network and has implemented ERP systems to automate and control transactions in all its businesses. The process is a continuing one and refinements are made as and when felt required. One of the big initiatives to enhance control in retail operations in the last few years was the establishment of the Operations Control Group, reporting to the Chief Financial Officer, which conducts comprehensive periodic audit of retail operations through its team members and outsourced resources. This group also conducts investigation of frauds at store levels as and when detected. The Company has also established various back office desktop audits to detect frauds across the network, be they from employees, business associates or even customers. The Company is currently working on implementation of Internal Financial Controls as per the Committee of Sponsoring Organisation 2013 framework.

The Company has an internal audit department for reviewing the internal control systems. The department is headed by a Chartered Accountant who oversees a team comprising currently of 8 members. The Head - Internal Audit reports to the Audit Committee and issues reports on monthly and/or quarterly basis on audit plans and audit findings. Besides the internal team, the Company is also utilizing the services of an external team from a globally reputed audit firm to conduct internal audits in various areas throughout the year. The Board Audit Committee reviews the effectiveness of the internal audit function periodically at its Committee meetings. The composition of the Board Audit Committee is disclosed in the Corporate Governance Report which forms a part of the Annual Report. The internal audit function also reviews the Corporate Risk Assessment exercises and the Risk Register on a yearly basis. The Company intends to appoint a Head of Risk Management who will oversee and coordinate the Company''s risk management function.

A compliance team in the Legal & Secretarial department ensures, amongst others, that there are adequate systems and processes in the Company commensurate with the size and operations to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. The Human Resources department carries out a similar exercise for ensuring compliance with all relevant labour legislations.

Based on the foregoing, the Board of Directors, after making all reasonable enquiries and to the best of its knowledge and belief, with the concurrence of the Board Audit Committee, is of the opinion that the internal controls of the Company are adequate to address the financial, operational and compliance risks of the Company.

Risk Management

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board''s Report.

The Company has in place, a Risk Management framework to identify, evaluate business risks and challenges across the Company both at corporate level as also separately for each business division.

The top tier of risks for the Company is captured by the operating management after serious deliberations on the nature of the risk being a gross or a net risk and thereafter in a prioritized manner presented to the Board for their inputs on risk mitigation/management efforts. Based on this framework, a Risk Management policy is being developed.

The Board engages in the Risk Management process and has set out a review process so as to report to the Board the progress on the initiatives for the major risks of each of the businesses that the Company is into.

The Risk Register of each Business gets updated on an annual basis and is placed for due discussions at Board meetings and appropriateness of the mitigation measures to ensure that the risks remain relevant at any point in time and corresponding mitigation measures are optimized.

Related Party Transactions

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are subject to internal audit and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The Company has developed an Internal Guide on Related Party Transactions Manual and prescribed, Standard Operating Procedures for purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website. None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company. The Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 in Form AOC-2 is annexed as Annexure- I.

Subsidiaries

As on 31st March 2015, the Company had the following subsidiaries:

1) Titan TimeProducts Limited, Goa

2) Favre Leuba AG, Switzerland

3) Titan Watch Company Limited, Hong Kong and

4) Titan Engineering and Automation Limited

During the year 2014-2015, TTPL sold a total of 59,81,400 nos. of ECBs and micro assemblies (previous year: 64,59,583 nos.). Net sales income during the year was Rs. 24.46 crores against the previous year''s figure of Rs. 23.11 crores. The drop in volumes is largely attributed to the decline in the off-take of watch circuit boards from Titan Company Limited (2012-13: 6.43 million nos., 2013-14: 4.85 million nos., 2014-15: 4.7 million nos.). The quality, delivery and competitive price of the products continue to be well-received by the Holding Company and external customers.

As at 31st March 2015, Favre Leuba AG had registered a loss of CHF 0.92 million, i.e. Rs. 5.89 crores (2013-14: CHF 0.61 million i.e. Rs. 3.60 crores) which primarily represents amortization of trademarks design and development expenses.

Titan Watch Company Limited, became a subsidiary of the Company''s subsidiary Favre Leuba AG during the year and hence is a subsidiary of the Company. It has a capital of HK $ 10,000 and no Profit and Loss account has been prepared as it has not yet commenced business.

Titan Engineering and Automation Limited (TEAL) was incorporated on 24th March 2015 to acquire the Precision Engineering Business Division of the Company subject to such approvals as may be statutorily applicable through a court approved scheme of arrangement. The first financial year of the Company will be upto 31st March 2016 and hence annexation of its financial statements would not arise.

The annual accounts of these subsidiary companies were consolidated with the accounts of Titan Company Ltd for 2014- 15. None of these companies declared a dividend in 2014-15.

The statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures forms part of the Annual Report.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared as per Accounting Standard AS 21 and Accounting Standard AS 23, consolidating the Company''s accounts with its subsidiaries and an associate have also been included as part of this Annual Report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (3) (m) of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, are furnished in Annexure-II to the Board''s Report.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-III of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company.

Extract of Annual Return

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure-IV in the prescribed Form MGT-9, which forms part of this Report.

Vigil Mechanism

The Company has a whistle blower mechanism wherein the employees can approach the Management of the Company (Audit Committee in case where the concern involves the Senior Management) and make protective disclosures to the Management about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct. The Whistle Blower Policy requires every employee to promptly report to the Management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the policy. A mechanism is in place whereby any employee of the Company has access to the Chairman of the Audit Committee to report any concern. No person has been denied access to the Chairman to report any concern. Further, the said policy has been disseminated within the organisation and has also been posted on the Company''s website.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.

During the financial year 2014-15, the Company had received six complaints on sexual harassment, all were disposed-off with appropriate action taken and nil complaints remain pending as of 31st March 2015.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement executed with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance forms part of the Annual Report.

Business Responsibility Reporting

As per Clause 55 of the Listing Agreement executed with the Stock Exchanges, the Company''s corporate sustainability initiatives has been hosted on the Company''s website as permitted vide circular no. CIR/CFD/DIL/8/2012 issued by the Securities and Exchange Board of India.

Directors and Key Managerial Personnel

At the Annual General Meeting of the Company held on 1st August 2014, the Company appointed Mr. T.K. Balaji, Dr. C.G. Krishnadas Nair, Ms. Vinita Bali, Mrs. Hema Ravichandar, Prof. Das Narayandas and Mrs. Ireena Vittal as the Independent Directors and all have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

In accordance with the provisions of the Act and in terms of the Memorandum and Articles of Association of the Company, Mr. N N Tata and Mr. T K Arun retire by rotation and are eligible for re-appointment.

During the year Mr. Hans Raj Varma resigned from the Board and TIDCO nominated Mr. CV Sankar as Chairman. The Board places on record its appreciation of the valuable contribution and guidance provided by Mr. Varma. Mr. Ishaat Hussain resigned from the Board on 20th March 2015 and was associated with the Company as a Board member for over twenty five years. The Board places on record its appreciation of the valuable contributions and guidance provided by him. Mr. Harish Bhat was appointed as an Additional Director with effect from 20th April 2015 and he holds office till the conclusion of the Annual General Meeting. A notice has been received from a shareholder to appoint Mr. Harish Bhat as a Director, along with the requisite deposit amount.

None of the Directors are related to each other within the meaning of the term "relative" as per Section 2(77) of the Act.

Six meetings of the Board were held during the year. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of the Annual Report.

Pursuant to the provisions of Section 203 of the Act, which came into effect from 1st April 2014, the appointments of Mr. Bhaskar Bhat, Managing Director, Mr. S. Subramaniam, Chief Financial Officer and Mr. A.R. Rajaram, Company Secretary as Key Managerial Personnel of the Company were formalised.

Directors'' Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls are adequate and operating effectively.

Accordingly, pursuant to the requirements of Section 134 (5) of the Act the Directors hereby confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Board Evaluation

The performance evaluation of the Board, its Committees and individual Directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, its Committees and self-evaluation.

The Chairperson of the Board Nomination and Remuneration Committee (BNRC) held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as on each of the other Directors.

Based on the questionnaire and feedback, the performance of every Director was evaluated in the meeting of the BNRC.

Some of the key criteria for performance evaluation, as laid down by the BNRC were as follows-

Performance evaluation of Directors:

- Contribution at Board / Committee meetings

- Guidance / Support to Management outside Board / Committee Meetings

Performance evaluation of Board and Committees:

- Board structure and composition

- Degree of fulfillment of key responsibilities

- Establishment and delineation of responsibilities to Committees

- Effectiveness of Board Processes, Information and Functioning

- Board Culture and Dynamics

- Quality of relationship between the Board and Management

- Efficacy of communication with External Stakeholders

- Committees – strengths and areas of improvement

Independent Directors

A separate meeting of the independent directors ("Annual ID meeting") was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Post the Annual ID meeting, the collective feedback of each of the Independent Directors was discussed by the Chairperson of the BNRC with the Board covering performance of the Board as a whole, performance of the non-independent directors and performance of the Board Chairman.

Remuneration Policy

The Board has, on the recommendation of the BNRC framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Policy on Directors'' appointment and remuneration and other details

In accordance with the agreement between the promoters, 3 Directors each may be nominated by Tata Sons Limited and Tamilnadu Industrial Development Corporation Limited. The guidelines for selection of Independent Directors is as set out below:

The Board Nomination and Remuneration Committee shall oversee the Company''s nomination process for Independent Directors and in that connection to identify, screen and review individuals qualified to serve as an Independent Director on the Board.

Process for selection

The Committee may act on its own in identifying potential candidates. The Committee shall review and discuss details pertaining to candidates and will conduct evaluation of candidates in accordance with the process that it sees fit and appropriate and thereafter pass on its recommendation for nomination to the Board, based on the following guidelines:

Attributes

i) The Committee shall seek candidates who is not a nominee or related to either Promoters of the Company. Such candidates shall possess integrity, leadership skills, managerial qualities, foresight abilities and competency required to direct and oversee the Company''s management in the best interest of its stakeholders i.e. shareholders, customers, employees and communities it serves.

ii) The candidate must be willing to regularly attend the meetings of the Board and develop a strong understanding of the Company, it''s businesses and it''s needs, to contribute his/her time and knowledge to the Company and to be prepared to exercise his/her duties with skill and care. Besides these, the candidate should have an understanding of governance concepts and legal duties of a Director.

iii) It is desirable that the candidate should have expertise to fill in the gap(s) identified by the Company in the current composition of the Board.

iv) Ideally the candidate should possess experience of 5 years on the Board of a listed company.

v) The candidate''s age shall not exceed 70 years at the time of joining the Board.

vi) Forthrightness and ability to possess foresight abilities in the Governance of a Corporate.

Board Composition

Keeping in mind that women constitute a majority of the Company''s customers it would be desirable to have one-third of the Board''s strength represented by woman members.

Procedure

1. The Committee may retain search firms or advisors as it deems appropriate to identify candidates.

2. Develop a list of potential candidates of Independent Directors which may be refreshed every year. The Committee to create a list of probable candidates from known sources or from the database of Ministry of Corporate Affairs, Government of India or Stock Exchanges.

3. The Committee may also consider profiles of suitable expatriates.

4. The candidate considered by the Committee as potentially qualified will be contacted to determine their interest in being considered to serve on the Board and if interested will be interviewed.

As and when a candidate is shortlisted, the Committee will make a formal recommendation to the Board.

Other Disclosures

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Sl. No. Name of the director Commission (Rs.) Sitting fee (Rs.)

A] Median Employee remuneration

B] Directors remuneration

1 Mr. C.V. Sankar 32,41,900 80,000

2 Mr. Hans Raj Verma 7,09,700 60,000

3 Mr. T. K. Arun 58,54,900 2,77,500

4 Mr. Ishaat Hussain 66,12,900 2,95,000

5 Mr. N. N. Tata 8,87,100 47,500

6 Mr. T. K. Balaji 19,51,600 1,27,500

7 Dr. C. G. Krishnadas Nair 51,45,200 2,92,500

8 Ms. Vinita Bali 36,93,500 1,70,000

9 Mrs. Ireena Vittal 44,35,500 2,32,500

10 Mrs. Hema Ravichandar 36,93,500 2,10,000

11 Prof. Das Narayandas 17,74,200 90,000

12 Mr. Bhaskar Bhat 2,88,00,000 -

Name of the director Total (Rs.) Ratio (times)

Median Employee remuneration 5,16,000

Directors remuneration

Mr C V Sankar 33,22,000 6.43

Mr Hans Raj Verma 7,69,700 1.49

Mr T K Arun 61,32,400 11.88

Mr Ishaat Hussain 69,07,900 13.38

Mr N N Tata 9,34,600 1.81

Mr T K Balaji 20,79,100 4.02

Dr C G Krishnadas Nair 54,37,700 10.53

Ms Vinita Bali 38,63,500 7.48

Mrs Ireena Vittal 46,68,000 9.04

Mrs Hema Ravichandar 39,03,500 7.56

Prof.Das Narayandas 18,64,200 3.61

Mr Bhaskar Bhat 4,91,25,764* 95.20

*Inclusive of salary, perquisites, commission and retiral benefits.

ii) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year; -

Name % Change

Mr. C.V. Sankar NA

Mr. Hans Raj Verma (Upto 16th June 2014) -83.53

Mr. T.K. Arun 34.42

Mr. Ishaat Hussain (Upto 20th March 2015) 42.86

Mr. N.N. Tata -51.56

Mr. T.K. Balaji -38.46

Dr. C.G. Krishnadas Nair -5.78

Ms. Vinita Bali 33.72

Mrs. Hema Ravichandar 1.07

Prof. Das Narayandas 30.86

Mrs. Ireena Vittal 49.26

Mr. Bhaskar Bhat 9.90

Mr. S.Subramaniam 14.71

Mr. A.R Rajaram 12.57

iii) The percentage increase in the median remuneration of employees in the financial year - 10.5%

iv) The number of permanent employees on the rolls of Company - 7558.

v) The explanation on the relationship between average increase in remuneration and company performance –

The average increase in the remuneration of the employees of the organisation takes into account the Company performance which is typically done on a scale of 20, inflation rate in the market and trends as projected by benchmarking professional consultants.

vi) Comparison of the remuneration of the Key Managerial Personnel against the performance of the company:

(Rs. in crores)

Particulars Mr. Bhaskar Bhat, Mr. S. Subramaniam, Mr. A.R. Rajaram, Managing Director Chief Financial Officer Head - Legal & Company Secretary

Remuneration in FY 2015 4.91 2.02 0.81

Revenue 11903.21 11903.21 11903.21

Remuneration

As a % of revenue 0.041% 0.017% 0.006%

Profit before Tax (PBT) 1055.89 1055.89 1055.89

Remuneration (as % of PBT) 0.46% 0.2% 0.1%

vii) Variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year.

Particulars 2014-15 2013-14 % Change

Market Capitalisation (Rs. crores) 34,765.71 23,322.14 49.06

Price Earnings Ratio 42.24 31.46 34.27

viii) Percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies, and in case of unlisted companies, the variations in the net worth of the company as at the close of the current financial year and previous financial year.

Particulars 31st March 2015 1987-88 IPO % Change*

Market Price (BSE) in Rs. 392 10 78300

Market Price (NSE) in Rs. 391.60 10 76320

*Adjusted for Bonus and Split in 2011

ix) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

No such differentiation was followed in giving the increment during the last financial year. The average increment in salary was basis individual performance.

x) The key parameters for any variable component of remuneration availed by the directors

The Members had, at the AGM of the Company held on 27th July 2010 approved payment of Commission to the non-executive directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions of the Act. The said Commission is decided each year by the Board of Directors and distributed amongst the non-executive directors based on performance evaluation, attendance and contribution at the meetings of the Board and its Committees, as well as the time spent on operational matters other than at meetings.

xi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year:

The highest paid Director is the Managing Director. No employee has received remuneration in excess of the Managing Director during the year.

xii) Affirmation that the remuneration is as per the Remuneration Policy of the Company.

The Company''s Remuneration Policy is based on the principle of internal equity, competence and experience of the employee and industry standards. Through its compensation programme, the Company endeavours to attract, retain, develop and motivate a high performance workforce and engaged workforce. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process. The Company affirms remuneration is as per the Remuneration Policy of the Company.

Information as per Rule 5(2) of the Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours before 21 days of the Annual General Meeting. Any member interested in obtaining such particulars may write to the Company Secretary or through mail addressed to arrajaram@titan.co.in.

AUDITORS

Statutory Auditors

The Members are requested to ratify the appointment of its Statutory Auditors, Messrs Deloitte, Haskins & Sells, Chartered Accountants (Firm''s Registration No. 008072S), from the conclusion of this Thirty First Annual General Meeting upto the conclusion of the Thirty Second Annual General Meeting. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re- appointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its PED activity may require to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed Messrs PSV & Associates to audit the cost accounts of the Company for the financial year 2014-15 on a remuneration of Rs. 3 lakhs. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to Messrs PSV & Associates, Cost Auditors is included at Item No. 7 of the Notice convening the Annual General Meeting.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs HBP & Co, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as (Annexure-V)

Auditor''s report and secretarial auditor''s report

There are no disqualifications, reservations, adverse remarks or disclaimers in the auditor''s report and secretarial auditor''s report.

Acknowledgements

Your Directors wish to place on record their appreciation of the support which the Company has received from its promoters, shareholders, lenders, business associates, vendors, customers, media and the employees of the Company.

On behalf of the Board of Directors,

C.V. Sankar

7th May 2015 Chairman


Mar 31, 2010

The Directors are pleased to present the Twenty sixth Annual Report and the Audited Statement of Accounts for the year ended 31st March 2010:

Financial Results

Rs. in Crores

2009-2010 2008-2009

Total Income 4714.98 3852.98 Less: Excise Duty 28.70 44.34 Net Income 4686.28 3808.64 Expenditure 4279.46 3506.89 Gross profit 406.82 301.75 Interest 25.42 29.43 Cash operating profit 381.40 272.32 Depreciation/Amortisation 60.08 41.76 Profit before taxes 321.32 230.56 Income taxes - Current 81.50 63.00 - Deferred (13.42) (6.53) - Fringe Benefit Tax - 4.21 Profit after taxes for the year 253.24 169.88 Less : Income tax of earlier years 2.92 10.92 Net Profit 250.32 158.96 Profit brought forward 211.03 218.55 Amount available for appropriation 461.35 377.51 Appropriations: Debenture redemption reserve 5.28 5.28 Proposed dividend on equity shares 66.58 44.39 Tax on dividends 11.06 7.54 Transfer to general reserve 105.51 109.27 188.43 166.48 Balance carried forward 272.92 211.03

In its silver jubilee year, Titan Industries Limited has come out with a sterling performance. Sales income for the year 2009-10 was Rs.4,703.12 crores, crossing the billion dollar (US) figure and registering a growth of 22.2% over last year sales of Rs.3,847.72 crores. The year started on a sombre note against the backdrop of a slowdown worldwide but the recovery of the Indian economy and strategic steps taken by Titan Industries have helped register a historic performance. Profit before tax for the Company grew by 39.4% to Rs.321.32 crores, while net profit grew by 57.5% over last year to Rs.250.32 crores.

Both Watches and Jewellery segments benefited from a good wedding season in the first quarter of 2009-10. Retail sales were extremely good for watches post October 2009. Tanishq ran a successful promotion the Queen of Diamonds and the new Eyewear business had an extremely impactful activation in the first half of the year and a very successful advertising campaign in the last quarter of the year.

The Jewellery segment sales grew by 26.8% to Rs. 3,504.19 crores and the Watch segment sales grew by 13% to Rs.1,026.78 crores. Sales of others including Eyewear and Precision Engineering rose by 11.4% to Rs.151.76 crores.

The year witnessed expansion of the Companys retail network with a net addition of 52 stores (81,267sq.ft.) across Watches, Jewellery and Eyewear businesses. As on 31st March 2010, the Company has a total of 539 stores, with over 6,85,000 sq. ft of retail space, delivering a retail turnover of Rs. 4,400 crores.

To support the increase in sales growth, the Company has established one more assembly unit on 29th March 2010, at an excise duty free zone in Uttarakhand State, with a production capacity of 5.0 million watches per annum having-a total built up area of 4,500 sqmtrs.

International Operations

The Company achieved an export turnover of Rs.101 crores during the year. Exports include sale of watches and precision engineered components.

The international markets for watches presented a mixed picture, with markets such as Vietnam, Saudi Arabia and Qatar displaying good growth, but countries such as UAE and Singapore remained sluggish. The export of precision engineered components during the year was impacted due to the global meltdown.

Dividend

The Directors are pleased to recommend payment of dividend on equity shares at the rate of 150% {Rs.15.00 per equity share), subject to approval by the shareholders at the Annual General Meeting.

Finance

During the year under review, the Company raised a total of Rs.10.43 crores from commercial banks. Borrowings of Rs.110.47 crores were repaid during the year. The Company incurred Rs. 44.16 crores as capital expenditure in respect of refurbishment and expansion programmes at manufacturing facilities and retail outlets and in IT Hardware systems.

The Companys continued effort at conserving cash and containing capital employed has enabled the company to reduce its borrowings by more than Rs.100 crores and generate net cash inflow of Rs.232 crores.

During the year, the Companys long term debt rating was upgraded from AA- Stable (pronounced as AA minus) to AA Stable. This indicates high degree of safety.

The Indian economy however started showing revival during the later half of the year. Due to Inflationary pressures. Reserve Bank of India had to tighten the monetary policy by increasing the key interest rates.The Companys average cost of borrowings for the year was 10.70% as against 10.97% in the previous year.

As on 31st March 2010, there were no fixed deposits held by the Company from the public, shareholders and employees other than unclaimed deposits amounting to Rs.0.08 crores.

An amount of Rs.5.28 crores has been transferred to the debenture redemption reserve in accordance with statutory requirements and the terms of Rights Issue.

As amount of Rs.105.51 crores has been transferred to the general reserve.

During the year under review, the Company made payments aggregating to Rs. 456.65 crores by way of central, state and local taxes and duties as against Rs. 388.23 crores in the previous year.

Amortization of Trademarks

During the year, the Company reviewed the expected pattern of economic benefits from the use of trademarks. Consequent to such review, a further amount of Rs. 24.04 crores has been amortized.

Change in the method of valuation of inventory

Consequent to the adoption of hedge accounting of gold, for a more accurate reflection of the operational performance and appropriate presentation of the financial statements, the Company has adopted First-in-First-Out (FIFO) method of valuation of gold from April 1,2009 as against weighted average method adopted upto March 31,2009. This change has resulted in a higher profit before taxes of Rs. 13.41 crores during the year ended March 31,2010.

Subsidiaries

As part of the proposal to reduce the number of subsidiary companies, the Board of Directors of the Company have approved the amalgamation of Tanishq (India) Ltd, with the Company, for which the process of the Scheme of Merger is proposed to be filed with the jurisdictional High Courts.

Titan Mechatronics Ltd ceased to be a subsidiary of the Company on 30th March 2010 consequent to the Company divesting its entire shareholding in the subsidiary.

As at 31st March 2010, the Company has the following subsidiaries:

1) Titan TimeProducts Ltd, Goa 2) Tanishq (India) Ltd, Bangalore 3) Titan Properties Ltd, Hosur

The performance highlights of these subsidiary companies for FY 2009-10 are as under:

Titan TimeProducts Ltd sold 6.27 million (2008-09: 6.85 million) Electronic Circuit Boards in 2009-10 registered a turnover of Rs.1,461.59 lakhs (2008-09: Rs. 1,591.38 lakhs) and a net profit of Rs.34.43 lakhs (2008-09: Rs. 80.68 lakhs).

Tanishq (India) Ltd made a net profit of Rs. 41.92 lakhs (2008-09: Rs.23.30 lakhs);Titan Properties Ltd made a net profit of Rs. 9.53 lakhs (2008-09: Rs. 382.02 lakhs).

None of these companies has declared a dividend.

As per section 212(1) of the Companies Act, 1956, the Company is required to attach to its Accounts the Directors Report, Balance Sheet and Profit and Loss Account of each of these subsidiaries. As the consolidated accounts present a complete picture of the financial results of the Company and its subsidiaries, the Company had applied to the central government seeking exemption from attaching the documents referred to in section 212 (1). Approval for the same has been granted. Accordingly, the annual report of the Company does not contain the individual financial statements of these subsidiaries, but contains the audited consolidated financial statements of the Company and its subsidiaries. The annual accounts of these subsidiary companies, along with the related information, is available for inspection at the Companys registered office and copies will be provided on request. The statement pursuant to the approval of the central government under section 212(8) of the Companies Act, 1956, is annexed together with the annual accounts of the Company.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared as per Accounting Standards AS 21, consolidating the Companys accounts with its subsidiaries has also been included as part of this Annual Report.

Outlook for 2010-11

The year 2009-10 started on a rather cautious note against the backdrop of the global economic meltdown. However, during the later half of 2009-10, Indian economy showed a turn around with a double digit industrial growth and enhanced consumer confidence.

The Watch business will continue to pursue profitable growth through investment in brands, sensible expansion of retail net work, making Titan a premium brand, product innovation and new product collections and other initiatives in Manufacturing and Sourcing.

The watch business will also continue to drive profitable growth in existing Asian markets, focus on marketing investments in Vietnam, Saudi Arabia and South Africa.

The Jewellery business will continue its growth path through various initiatives, including launching of new collections, setting up large format stores, increasing share of studded jewellery and achieving design leadership.

The Precision Engineering Division of the Company, which was significantly impacted in 2009-10 due to the global melt down and the slow down of the Indian manufacturing sector, will continue to build technical expertise comparable to leading international players, develop industry specific capabilities, focus on developing quality vendors, besides seeking opportunities for moving up the value chain.

The Companys fledgling Eyewear business will pursue its focus on enhancing its market share through several initiatives, including expansion of its retail net work, introduction of technologically superior lens products, build awarenenss/brand appeal through mass media, and by creating a differentiated and consistent service ambience across all stores.

Overall, the year 2010-11 will be a year where the Company would drive for strong and profitable growth in all its Indian consumer businesses, retain focus on elimination of wasteful costs, and skillfully navigate the international businesses which will continue to pose challenges due to sluggish demand in some of the geographies.

Corporate Social Responsibility

Titan Industries Limited has over the past many years made a conscious effort to incorporate sustainability principles in its approach to Business.

Corporate Sustainability is about sustainability of Profits, Planet and People. It is about value creation that provides lasting and enduring benefits leading to the enhancement of human, social, natural economic and financial capital.

Our initiatives in MEADOWS women empowerment program, employment of the differently abled, education initiatives in the Ttan Scholarship Program, the Titan School and skill enhancement and business linked initiatives such as the Karigar Parks are to be viewed in this context of enhancing human and social capital. The Jewellery division of the Company has recently launched the Mr. Perfect program which ensures a clean and modern work space for the skilled craftsmen in our Jewellery business and is also aimed at retention and enhancement of human skills.

In the year under review, the number of people impacted by the MEADOWS program increased for 135 to 160 and the Karigar Parks from 139 to 153. Under the Titan Scholarship program, the number of recipients increased from 44 to 1 u.The number of saplings planted during the year increased from 9,000 to 11,000. Titan Industries in partnership with Narayana Nethralaya regularly conducts Eye Camps in rural Tamil Nadu. This year 25 Eye Camps were held during which 2,634 free spectacles were distributed, up from 1,676 last year.

All these initiatives create a socially and ethically responsible business entity and helps in long term sustainability thus ensuring value growth for all our various stakeholders.

Awards and Recognition

Titan Industries received the Award for the Most Admired Timewear Brand of the Year in 2009. And to follow was, the Most Admired Jewellery Brand of the Year. Titan has won for the ninth consecutive year and Tanishq has won for the seventh consecutive year.

While honouring Titan Industries sustainable advantages, Indian Fashion Award (IFA) presented the Company with a special award to acknowledge its uncontested leadership in the Timewear and Jewellery categories.

Particulars of Employees

In terms of provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars are set out in the Annexure to the Directors Report. However, having regard to the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company, and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary or through mail by sending their requests to the Company Secretary at arraiaram@titan.co.in.

Annexure

Required information as per section 217(1)(e) of the Companies Act, 1956 is annexed.

Auditors

Members will be requested at the Annual General Meeting to appoint auditors for the current year and pass resolutions per item No. 6 of the Notice.

Corporate Governance

A separate report on Corporate Governance forms a part of the Annual Report along with the AuditorsCertificate on Compliance.

Directors

Mr. N N Tata, Mr. T K Balaji and Dr. C G Krishnadas Nair retire by rotation and are eligible for re-election.

Mr. Rajeev Ranjan, IAS, Principal Secretary to the Government of Tamilnadu, Industries Department, and a nominee of Tamilnadu Industrial Development Corporation Ltd (TIDCO) was appointed as Chairman and Director on the Board of the Company on 29th January 2010. Mr. M. F. Farooqui, IAS resigned as Chairman and Director of the Company on 29th January 2010. The Directors wish to record their gratitude and appreciation for the wise counsel and contribution by Mr. M.F. Farooqui during his tenure as a Director of the Company. Members attention is drawn to item no 7 of the Notice for the appointment of Mr. Rajeev Ranjan as a Director of the Company.

Directors Responsibility Statement

Pursuant to section 217(2AA> of the Companies Act, 1956, the Directors based on the representations received from the operating management confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

2. they have in the selection of the accounting policies, consulted the statutory auditors and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

3. they have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. they have prepared the annual accounts on a going concern basis.

Acknowledgements

The Directors wish to place on record their appreciation of the support which the Company has received from its promoters, lenders, business associates including distributors, vendors and customers, the press and the employees of the Company.

On behalf of the Board of Directors,

Rajeev Ranjan Bangalore, 7th June 2010 Chairman



 
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