Directors Report of Timex Group India Ltd.
Mar 31, 2022
The business witnessed sharp recovery during the financial year 2021-22 as compared to previous year and as a result, the Company recorded good operating and financial performance. The financial year was a volatile year which started with the second wave of COVID-19 when the business came down to a standstill for most part of the first quarter with localised lockdowns across the country. For survival and business continuity in such unprecedented situation, we shifted our focus on cash, cost and collection, channel correction, product and margin, and health and safety of employees and took various measures across the board.
The consumer demand improved from second quarter of the financial year with the COVID-19 situation coming under control, thanks to the worldâs largest vaccination program of the Government of India combined with continuing monetary and fiscal support. While the recovery was led by the E-com channel with festival demand, attractive consumer events, marriage season led demand and new product introductions supported by exciting social media influencer campaigns, the offline channel remained under pressure.
The Q4 of the financial year again saw new challenges with the impact of third wave of COVID-19 and global geo-political factors including Russia-Ukraine conflict which resulted in currency depreciation, steep increase in raw material cost, shortage and cost increase of electronic components for smart watches and bands etc. However, the impact of these challenges on consumer demand was not much and the business saw good recovery as compared to last year.
With all-round thoughtful efforts of the Team âTimexâ, the Revenue from Operations (including other income) during the financial year 2021-22 has increased by 87% over the previous
The Directors are pleased to present the Thirty fourth Annual Report and Audited Statement of Accounts for the year ended 31st March 2022.
FINANCIAL RESULTS AND PERFORMANCE
|
(Rs. in Lakhs) |
||
|
Particulars |
2021-2022 |
2020-2021 |
|
Revenue from operations (including other income) |
26,554 |
14,211 |
|
Profit/ (Loss) before Interest and Depreciation |
869 |
(238) |
|
Less: Interest |
190 |
219 |
|
Less: Depreciation |
357 |
354 |
|
Profit/ (Loss) before tax |
322 |
(811) |
|
Tax expense |
- |
(10) |
|
Profit/ (Loss) after tax |
322 |
(801) |
|
Other comprehensive income |
(20) |
(12) |
|
Total comprehensive income |
302 |
(813) |
year, and the profit before tax was Rs. 322 lakhs as against loss before tax of Rs. 811 lakhs during the previous year. The Company has grown at a faster pace as compared with the industry.
All sales channels have recovered well and shown improved performance during the year as compared to previous financial year and contributed well to the revenue growth. With a twopronged approach of exclusive analog lines in Timex and exclusive technology products in Helix, the E-Commerce channel has been a major contributor to the growth. Good institutional orders also helped in revenue growth. Distribution channel recovered at a slower pace but continues to be the largest sales channel. OEM business has also grown significantly.
Our strategy continues to focus on analog as the core with smart technology products driving growth. The core analogue business will grow with the strong product portfolio with popular brands across the value chain. While Timex will continue to be our prime focus, Helix and TMX will grow exponentially at the bottom of the pyramid. The strong array of brands in fashion segment including Guess, Gc, Furla, Ted Baker, Missoni, Adidas Originals, Philipp Plein and UCB, will help in increasing our market share and give ample choice to the consumer. Versace and Salvatore Ferragamo will cater to the consumer in the luxury segment. During the year, we kept up our momentum on new product launches, developing innovative new product lines and introduction of new international brands for the Indian market. We continuously launched products at higher price points thereby increasing our average price point.
The Q Timex Colour Series and Timex Automatics Collection were very well received by the market and had positive feedback from the users. Further, various collections across brands and luxury portfolio were launched with the Valentineâs Day Campaign. We launched âTimex Ceramicsâ with two unique products with ceramic bracelets and impeccable stainless- steel cases. The Helix brand saw revival with exciting products supported by marketing initiatives during the year. The Helix Analog Collection was given a new minimal look with accents of colors to sprinkle class and fashion in the everyday go-to look. Helix smart watches were also well received by the market.
A new addition to the womenâs portfolio, the Fria collection was launched in the period leading up to the festive season. Feminine and organic shapes exploring new crystal cuts, bracelet designs, balancing a watch and a jewellery piece to create the perfect statement collection, Fria was received with overwhelming positive response from the market.
In collaboration with Coca-Cola, we launched three commemorative styles to celebrate Coca-Colaâs time-honored 1971 âHilltopâ commercial and the unity message it portrays. We also came together with contemporary luxury brand Judith Leiber to launch two limited-edition watch designs, the T80 digital and Q analog.
The Companyâs budget brand TMX performed well in Tier2/3 towns which recorded fastest recovery. With consistent new
introductions, the TMX brand will continue to be a pillar of success for the Company in these markets.
As the fashion segment continues to dominate the Indian Watch Market, we launched new international brands in the fashion and premium fashion space during the financial year.
We launched legendary Italian fashion brand Missoni in the India market which is well known for its colourful knitwear designs, as well as its unmistakable zigzag motif. Strengthening the brand portfolio further in the fashion segment, we launched the brand Furla. The Furla watch collection captures its joyful elegance, passion for colour and longstanding Italian heritage. Designed for women who love the style, we launched Ted Baker watches with stainless steel bracelets, mesh bands, and leather straps that bring British fashion to your wrist.
The United Colors of Benetton Timewear range was launched as part of the licensing deal with Benetton India. Capturing the brandâs DNA of colors, playfulness, and social responsibility, the collection is built on four pillars that embody the brand ethos of Benetton backed by Timexâs watchmaking legacy. The success of the launch was marked by a vast digital amplification in leading mainlines, and native articles in magazines. Popular actors Sanjana Sanghi and Abhishek Verma were brought on board to break the announcement on social media, alongside a seeding activation resulting in huge social media chatter.
In a significant move, the Company got the manufacturing and distribution rights of Guess and Gc branded watches in India. Given Guess and Gc market share, reach and brand recognition in the fashion watch segment, the partnership will allow the Company to expand its business through the distribution of style driven product assortments to the fashion-focused customer base, further securing credibility among the fashion-conscious youth of India.
The Company will soon be launching, the Adidas Originals watch collection. The new range will blend Timex Groupâs watchmaking and design expertise and Adidas Originalsâ street culture inspiration, while keeping in mind the brandâs commitment to sustainability. Further, the Company will be launching the German luxury fashion house Philipp Plein which is known for his use of crystals, studs, multicolour plating, the military patterns and the innovative combination of precious and refined materials in iconic emblems such as the skull and crossbones, all of which are expected to find their way into watches and jewellery styles. Tech Wearables are seeing strong growth across geographies in India, and the Company maintained a robust product pipeline to meet the demand of the fitness conscious Indian consumer at a variety of price points and feature concepts. The fast growth of technology products has helped drive quicker recovery, especially in the E-Commerce channel. As part of the product roadmap for smart products, we launched Timex Fit and Timex Fit 2.0 smart watches with various smart features such as activity tracker, telemedicine features, high resolution, Bluetooth calling and many more. Further, we introduced smartwatches under the brand Helix namely, Helix Metalfit and Helix Metalfit 2.0 with various smart features such as heart rate monitor, SpO2 sensor, sleep and activity tracker, mobile notifications and music control. The
Company also launched its first Made in India smartwatch, the Helix Smart 2.0, to great success. Manufactured at the Baddi factory, the smartwatch is packed with features and is priced affordably in the country. With the right mix of performance and style, the Companyâs tech portfolio presents compelling product choices for the Indian consumer of today. As a âFuture Fitâ Company, made in India technology products will remain a focus of the Supply Chain strategy.
The new product launches were supported with a 360 degree GTM strategy. We focused on digital media, influencer campaigns and performance marketing for our marketing activities. Owing to the evolution of media due to the pandemic, storytelling became largely online focused and new formats emerged during the year under review. Hence, our social media influencer campaigns for key launches such as the Timex Fit, Q Timex Colour Series, Helix Smartwatch, Timex Fit 2.0, Timex X Coca-Cola, Helix Metalfit, Versace Greca Sport, and many more were successful. Timex Given for Generations was the most exciting campaign launch during the Q4 that celebrated the rich heritage of the brand.
The Company had started new OEM business last year which has grown to a sizeable level and was one of the fastest growing business verticals for the Company. With two new brands added during the financial year, the partnership with Flipkart has yielded significant returns for the Company while helping bring the Baddi factory to pre-covid production levels. The supply chain team has gone all over the board to support this business with timely fulfilment of orders with high quality products during challenging times. The Company aims to grow this vertical with tie-ups with more brands for this category.
The COVID-19 pandemic, continued to be a global challenge, creating disruption across the world. In the first three months of FY 2022, the second wave of the pandemic overwhelmed Indiaâs medical infrastructure. While the business was on standstill, the Company continued to support the employees through this trying period. Free vaccination drives were organised for all employees at factory and other locations to ensure safety of all employees. Business disruption caused by COVID-19 pandemic resulted into negative impact on revenue, collection and cash flow during the first quarter of the financial year. However, the business saw good recovery thereafter. Still, the future of COVID-19 spread cannot be predicted and the appropriate action will be required to be taken as per situation.
Management believes that it has taken into account all the possible impact of known events arising from COVID-19 pandemic till date of approval of financial statements. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration and actual results may differ materially from these estimates. The Company will continue to monitor any material changes to future economic condition and any significant impact of these changes would be recognised in the financial statements as and when these material changes to economic condition arise. Based on an initial assessment of likely adverse impact on business and financial risks on account of COVID-19, the management is confident that
there is no medium to long term risks to the Companyâs ability to serve its customers and markets and the use of going concern assumption has been considered appropriate by the Board of Directors in preparation of financial statements of the Company.
Dividend
In view of the accumulated losses, the Board of Directors has not recommended any dividend for this year. The Company does not propose to transfer any amount to General Reserve on account of accumulated losses.
MANAGEMENT DISCUSSION AND ANALYSIS ECONOMIC CONDITIONS AND OUTLOOK
The Indian economy recovered strongly during the period under review even as new variants of the COVID-19 virus fueled additional waves of the pandemic. While the first quarter of the FY 2022 was badly impacted by the second wave of COVID-19, the period thereafter has seen sharp recovery supported by the vaccination programme of the Government of India and good consumer demand during festival season. The Indiaâs real GDP has grown at 9.2% during 2021-22 and RBIâs Monetary Policy Committee expects Indian economy to grow at 7.2% during 202223.
Still, it would depend a lot on how the pandemic plays out going forward, given the resurgence of the virus and the spread of infections. The challenges to business include the inflationary pressure in and availability of inputs, rising oil prices and inflation impacting consumer demand negatively, depreciating rupee and the uncertain market conditions which would require managing the business in a dynamic manner and altering operational priorities to suit the changing market conditions.
The long term India growth story remains intact and it will grow once it recovers from COVID overhang with consumption led by young and rising middle class with growing aspirations and willingness to spend, and lower tier cities and market emerging as new centers of economic revival & growth.
OVERVIEW OF WATCH INDUSTRY
The financial year, barring the first quarter, has been good for the watch industry and it has recovered fast from the impact of COVID-19 and low consumer demand during last year.
The new initiatives started by the Company last year including OEM business, exclusive products for online business and new product lines have shown good results. The Company will continue to engage in more such new initiatives to support growth and increase market share.
GROWTH DRIVERS OF THE COMPANY
The Company is focussed to maintain the growth momentum and achieve sustainable growth. In line with the growth plan and to keep pace with the fast-changing business environment, the Company has identified the following key growth drivers:
Growing E-commerce channel and increasing points of Sale:
Post pandemic, the E-Commerce channel has emerged as the preferred channel for shopping and has been the fastest growing
channel. We believe that this channel will continue to grow at a faster pace when compared to other channels with the increasing internet users, growing online shopper base, growing comfort for online shopping, enhanced shopping experience and e-com platforms serving majorly the whole of the country.
The Company will continue to focus on increasing its market share in e-commerce segment through launch of exciting products through all key players in E-commerce channel, omni channel, direct online sales through brand website and becoming a seller on all major e-commerce portals.
Consumer engagement and business through brand website is also a focus area. This channel provides authenticity and attracts consumer loyalty. We will continue to focus on growth of this channel and grow it to a sizeable level.
Distribution is our largest and profitable channel. We will continue to grow this channel along the length and breadth of the country. Tier II / III markets have seen fast recovery last year and we will continue to focus on growth of this segment with exciting range of affordable brands and products alongwith localised marketing interventions. Our wide variety of products ranging from mass to fashion to luxury and from Indian to international brands will help grow this segment. Further, we have a clear plan to grow our business in the large format stores with improved branding, increased consumer engagement and products relevant for this consumer segment. We will increase the presence of our exclusive stores in B & C class towns, which will help enhance the brand visibility, consumer insights, consumer engagement and showcasing of global collection.
Product portfolio:
The Company has one of the most powerful portfolios of brands in the Indian watch market, and with its global organization and breadth of expertise in design and manufacturing, the Company has a true advantage in a highly competitive marketplace.
From luxury statement timepieces to everyday utilitarian watches, to tech wearables, the Companyâs product portfolio is compelling and designed to achieve sustained growth in a fast-changing business environment to ensure returns for all its stakeholders. With a view to give access to consumer to international brands and products, the Company has been launching strong fashion brands in India and the recent launches include Guess, Gc, Furla, Missoni, Ted Baker, to name a few. The Company will further strengthen its brand portfolio by launching popular international lifestyle and fashion brands in India to cater to the high demand in the Premium Fashion and Bridge to Luxury segments driven by upper middle-class customers and the continued affinity for international brands. The enhanced fashion brand portfolio will help gain better visibility and counter share in retail formats. Always maintaining a link to its roots, the Company will continue to launch heritage products and trend-based collections from its global portfolio under the Timex brand. These collections such as the Coca Cola Collaboration, the Judith Leiber Collaboration, and the Pac-Man series, have become consumer favourites and the Company will continue to launch more such collaborations. In addition to the above, the womenâs statement watch collection
Fria will be strengthened with new innovative and attractive designs.
We have witnessed strong growth in Tech Wearables across geographies in India. The Company has a robust product pipeline across the brands Timex and Helix to meet the demands of the fitness conscious Indian consumer at a variety of price points and feature concepts. The Company will continue to focus on strengthening its technology product road map.
With Gen Z driving digital and market trends, the Company will continue to expand its youth portfolio with on-trend seasonal launches backed by social media marketing for the digital native young consumers.
Tier-2 and smaller towns are emerging as the new centres of economic revival and growth and are expected to drive sustainable growth. The Company recognizes this reducing urban-rural divide and is poised to grow its mass brand TMX with exciting new launches.
Innovative products that leave a mark in the mind of the consumer at various price points have been one of the pillars of the Companyâs growth strategy for the past few years. With continued innovation, an eye on trends, and a strong connection with its legacy, the Company will maintain its focus on this pillar in the times to come.
Increasing Marketing initiatives:
Timex is an authentic American watch brand known for innovation, craftsmanship and a heritage of par excellence and all the marketing initiatives will continue to establish this brand image. We will continue to leverage digital channels in order to portray its brandâs uniqueness through iconic global products. We will continue to focus on smart digital strategies to increase customer engagement.
The Company will continue to translate its values to life by focusing on digital marketing, visual merchandising, tactical consumer initiatives and in-store visibility to achieve consumer delight. The Timex India website provides access to our new launches & technological advancements that only aims at delivering a seamless experience to our consumers.
Through marketing activities, we will continue to improve the brand imagery of our three core brands, Timex, Helix and TMX using digital marketing campaigns for tech savvy and young consumer utilising social media, influencers etc. Tactical marketing (VM, In-shop displays) would be used to ensure onground brand presence and displays in line with overall brand imagery to compliment awareness and drive in-store awareness. More initiatives would be taken to build awareness of fashion brands amongst target segment to take advantage of growing demand for fashion brands and drive future sales.
Marketing activities will be augmented with use of more digital means including use of high quality content creation (interactive/ 3D with the use of new technology like augmented reality etc.) for increased consumer engagement, use of artificial intelligence for faster service & for better customer experience along with high level of human touch, use of advance tools for data analytics & improved decision making etc.
Strengthening our manufacturing capability:
Our well-equipped, most advanced and sophisticated manufacturing facility in Baddi is fully capable to fulfil all our product requirements. The facility has well experienced watch makers and advanced state of the art technology and equipment to produce high quality watches. The facility has best of the class certifications such as SA 8000:2014 and ISO 45001:2018. It can assemble all sorts of watches including digital, Analogue, Ana-Digi, Indiglo® and Smart-bands/ watches.
In addition to assembling Timex Group brand watches, Baddi facility has very well fulfilled license brand and OEM brand requirements for partners with high quality watches. These watches have been well appreciated by partners and ultimate consumer. We will continue to explore more such opportunities to leverage the Baddi facility.
Internal and External stakeholder support:
With our team of highly skilled, experienced and motivated employees, we are confident of maintaining our growth momentum. The Company provides best of the class facilities to its employees which has resulted in low attrition rate and retention of experienced manpower. The Company has a strong network of partners for both backend and frontend integration. These resources are crucial for our growth and we will continue to invest / improve them further.
We are confident that the Indian watch industry is poised for a
strong growth which is substantiated by the following factors:
1. The growth outlook for Indian economy is bright on account of demographic, urbanization, and increasing fashion spends. This will boost overall consumer demand and specifically demand for more discretionary goods including watches.
2. The consumer demand will be further supported by consumption led by the young (Millennial & Gen Z), young, digital savvy, low median-age (<30 years) and rising middle class consumers.
3. Lower tier cities have huge growth potential. Consumer demand in these cities has recovered comparatively faster post COVID-19 pandemic coming under control. This segment would help growing the business at faster pace.
4. We expect exponential growth in new age digital sales channels such as e-commerce, online and omni channels. This will contribute to the overall growth of watch industry.
5. Demand in watch industry will get boost from surge in aspirational consumer with high disposable income and premiumizing across categories.
6. The watch industry demand will be further supported by rise of the Private Labels which provides affordable products, captures gap between unbranded and branded and high retailer margin.
7. Wrist watch penetration is very low in India which provides huge untapped potential to cover.
8. Majority of the Indian consumers like to wear traditional
watches which confirms further room for growth.
9. Technology based products such as Smart watches, bands and wearables are growing and are expected to further grow at a fast pace and will increase the overall size of watch market.
10. International / fashion brands and premium watches are witnessing growing demand by young population, which will improve the average prices and margins.
11. Our licensing arrangements with aspirational brands to start watch category will give additional boost.
12. Additional opportunities such as OEM business will help boost revenue, higher capacity utilisation and reduction in overheads.
A well-defined risk management framework has been put in place to identify, evaluate and assess the potential risks and challenges and determine the processes to mitigate and manage the same. The Risk Management Committee comprising of Managing Director and senior management executives, periodically reviews and assesses the key risks in consultation with the functional managers. The potential risks to the operations are identified, evaluated, managed and monitored regularly. The Board periodically reviews the risks and suggests steps to be taken to mitigate and manage the same. The Company has identified the below specific key risks:-
1. The accumulated losses of the past years have eroded substantial part of the net worth of the Company. Further, Companyâs performance has been severely impacted due to COVID-19 pandemic. However, the operational performance of the Company has significantly improved during the year under review and is expected to improve further with the focussed approach to strengthen the bottom line. While accumulated losses will be wiped off from profits over a period of time, the Company continues to recognize and monitor this risk closely.
2. Foreign exchange fluctuations with a falling rupee pose a risk for the Companyâs margins as the Company imports significant amount of material. The Company is integrating with the Timex Global supply chain and taking measures to indigenise and develop indigenous vendors which will reduce the impact of adverse exchange rate fluctuations on the Companyâs margins.
1. Supply chain risks include dependence upon some key vendors, dependency on China for import of material, risk of availability and cost increase of inputs/ freight cost etc.
2. COVID -19 pandemic has badly impacted the entire demand and supply chain. If we see further waves of infection, it may have further impact on business.
3. Technology and fashion products are witnessing fast
growing demand. Fitness trackers and smart watches will also continue to grow. Growth of this segment might impact analogue business. To mitigate this risk, the Company has made a solid technology product roadmap and has introduced series of such products which have seen huge success. The Company will be coming out with more technology products for the users of this category. Further, the Company has added highly renowned international fashion brands in its portfolio and will continue to add more.
4. With the increased penetration of internet, digital sales channel will grow faster. E-commerce sales, omni channel sales and online sales through the brand websites and e-retail venture are the focus areas for next level of growth.
5. Competition is increasing its investment in brand campaigns and is adopting price reduction techniques to disrupt the market. The Company believes that continuous innovation is key to success. Timex Group Global Design Centre located in Milan, and the Global Supply Chain organization supports the Company in creating differentiation and bringing cutting edge technology and designs to a highly competitive marketplace. By thinking and acting both locally and globally, we are constantly challenging ourselves to look at the future.
6. For OEM business, the Company is majorly dependent upon Flipkart and this business has other risks including high quantity and short lead time, low margins, pressure on production lines/ vendor capacities, impact on Timex main business on backend as well as frontend etc. This risk will be mitigated with OEM business development with other partners in apparel and retail category.
7. The world is moving towards digitization. Data has become the most important asset and has the potential to grow the business exponentially. For sustainable future growth, it is important to drive digital and encourage innovation across all functions. If the Company fails to adapt to digitalization, it may be left behind the competition and may lose business opportunities.
8. Fake / counterfeit products continue to pose challenge for the watch industry. The Industry needs to counter this collectively. The Company keeps a close watch on counterfeit products and has been regularly taking legal action against counterfeiters.
⢠Labour risk at Baddi plant
The manufacturing facility of the Company is situated in Baddi Industrial area. It faces the potential risks emanating from a concentration of industries in one area like loss of trained manpower, labour movement, labour unrest, strike etc. are inherent at the location even though we have not had any industrial unrest in our factory ever since inception. Skilled manpower is critical for assembly of watches and
other processes. We face risk of losing our technically trained manpower as the competition is setting up manufacturing facilities in India. Further, with the rapidly changing nature of work and skills, there is a risk that our workforce is not equipped with the skills required for the new environment.
We understand that it is important to keep the employees motivated and happy to enable them to contribute to Companyâs growth. We have well defined policies and systems for recruitment and appraisal of employees at factory. With regular on-the-job training and job rotation, we ensure that we have seamless availability of trained and skilled manpower. Employees are motivated with monthly rewards programs, employee engagement activities, welfare activities etc. The Companyâs environment, health and safety policies have been certified by world class certifications such as SA-8000 and ISO 45001:2018. All labour related issues are handled proactively and prompt action is taken to avoid any adverse situation.
Other risks include the usual risks relating to information technology (IT), business continuity and disaster management, retention of key personnel, compliance of various laws, contractual obligations, risks relating to the general macroeconomic environment including risks associated with political and legal changes, changes in tax structures, commercial rules & laws. These are analyzed regularly and measures are taken to mitigate the same.
Composition
The Board of Directors comprises six (6) Directors consisting of three (3) Independent Directors, two (2) Non-Executive Directors and One (1) Managing Director.
Appointment/ Resignation from the Board of Directors/Key Managerial Personnel
Ms. Sharmila Sahai was re-appointed as Managing Director of the Company for a period of 9 months with effect from November 18, 2021. The matters relating to her re-appointment and revision of remuneration was approved by the members of the Company vide special resolution passed through Postal Ballot on March 29, 2022. However, she has resigned from the directorship of the Company with effect from March 27, 2022 due to her personal reasons.
Pursuant to the provisions of Section 160, 196, 197 and 198 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Deepak Chhabra was appointed as an Additional Director as well as Managing Director of the Company for a term of 3 years with effect from March 28, 2022. The Company has, vide postal ballot notice dated April 11, 2022, placed before the members, the resolutions for appointment of Mr. Chhabra as Director and Managing Director of the Company. The results of the said postal ballot would be announced on or before June 7, 2022.
In accordance with Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Sylvain Ernest Louis Tatu retires by rotation as a Director, and being eligible, offers himself for re-appointment. The Board recommends his reappointment as a Director.
Apart from change in the Managing Director of the Company being a key managerial person, as provided above, there was no other change in the Key Managerial Personnel during the year.
Declaration by the Independent Directors
Pursuant to the provisions of Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), the Company has received declaration from all Independent Directors confirming their compliance with the criteria of independence and their independence from the management. In the opinion of the Board, the Independent Directors, fulfil the conditions of independence specified in Section 149(6) of the Act and Regulation 16(1) (b) of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company. In the opinion of the Board all Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of retail, sales and marketing, manufacturing, finance and tax, governance and risk, human resources, strategy etc. and that they hold highest standards of integrity.
All Independent Directors of the Company have registered themselves with the Independent Directorsâ Database maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.
The Company has also received confirmation from all Independent Directors regarding their compliance with the Companyâs code of conduct during the FY 2021-22.
Number of meetings of Board of Directors
Eight Board meetings were held during the financial year 202122 on May 28, 2021, June 11, 2021, June 30, 2021, August 11, 2021, October 27, 2021, November 22, 2021, February 3, 2022 and March 15, 2022. All directors attending the meeting actively participated in the deliberations at these meetings. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. More details of the Board meetings have been provided in the âReport on Corporate Governanceâ.
The Board has constituted the following Committees pursuant to the requirements ofthe Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholdersâ Relationship Committee
4. Share Allotment and Transfer Committee More details with respect to the composition, powers, roles, terms of reference, etc. of these Committees are given in the âReport on Corporate Governanceâ of the Company which forms part of this Annual Report.
NOMINATION AND REMUNERATION POLICY The Board of Directors has, on the recommendations of the Nomination and Remuneration Committee, adopted a Nomination and Remuneration Policy which contains the process and guidelines to be followed for identification, evaluation and fixation of remuneration of directors, key managerial personnel and other employees and other matters as prescribed under the Companies Act, 2013 and Listing Regulations.
The Policy has been drafted mainly to deal with the following matters, falling within the scope of the NRC:
⢠to institute processes which enable the identification of individuals who are qualified to become Directors and who may be appointed as KMP and/or in senior management/ other employees and recommend to the Board of Directors their appointment and removal from time to time;
⢠to formulate the criteria for determining qualifications, positive attributes and independence of Directors;
⢠to establish evaluation criteria of Board, its Committees, individual Directors, key managerial personnel, senior management and other employees;
⢠to establish processes for fixation of remuneration of Directors, key managerial personnel, senior management and other employees.
The Nomination and Remuneration Policy is available on the website of the Company i.e. www.timexindia.com. It is affirmed that the remuneration paid to Directors, key managerial personnel and all other employees of the Company is in accordance with the Nomination and Remuneration Policy of the Company.
EMPLOYEE REMUNERATION
Pursuant to the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is provided in the Annual Report, which forms part of this Report.
Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this Report.
Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
FORMAL ANNUAL EVALUATION
The Board has carried out performance evaluation of itself, its Committees and each of the Directors (without participation of the concerned director). Independent Directors collectively evaluated the Boardâs performance, performance of the Chairman and other non-independent Directors.
The performance evaluation concluded on the note that each of the individual directors, Committees and the Board as a whole, were performing efficiently and effectively and shared a common vision to turn organization goals into reality.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy which provides a mechanism for employees / Board Members and others to raise good faith concerns about violation of any applicable law/ Code of Conduct of the Company, gross wastage or misappropriation of funds, substantial or specific danger to public health and safety, abuse of authority or unethical behaviour and to protect the individuals who take such actions from retaliation or any threat of retaliation and also provides for direct access to the Chairman of the Audit Committee. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time.
Any incidents that are reported are investigated and suitable action is taken in line with the Whistle Blower Policy.
The Whistle Blowers are not denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are given in the Report on Corporate Governance and are also available on the website of the Company at the link www.timexindia.com.
POLICY ON PREVENTION OF INSIDER TRADING
In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended, the Company has framed, a) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders, b) Code of Fair Disclosure and c) Policy on investigation in case of leak / suspected leak of unpublished price sensitive information. The Companyâs Code, inter alia, prohibits dealing in the shares of the Company by an insider, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The Company has not given any loans or guarantees or made any investments covered under Section 186 of the Companies Act, 2013 during the year under review.
RELATED PARTY TRANSACTIONS
Pursuant to the provisions of the Companies Act 2013, the Rules there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has, on the recommendation of the Audit Committee, adopted a Policy to regulate transactions between the Company and its Related Parties. This Policy has been uploaded on the website of the Company at www.timexindia.com.
All the related party transactions executed by the Company during the year were in the ordinary course of business, on armâs length basis and in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Omnibus approval of Audit Committee is obtained at the beginning of the financial year for the related party transactions which are foreseen and repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.
No material related party transaction was entered during the financial year. Accordingly, the disclosure required under section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company. The details of the related party transactions entered during the year are given in the financial statements of the Company.
FINANCE
The Company has not invited nor holds any fixed deposits. There were no overdue / unclaimed deposits as on 31st March, 2022. During the year under review, the Company made payment, net of credits, aggregating to Rs. 3,553 Lakh by way of Central, State and local sales taxes and duties as against Rs. 2,137 Lakh in the previous year.
SEGMENT WISE REPORTING
The segment wise information for watches and other activities are provided in the Notes to the Accounts.
LISTING
The Equity Shares of the Company are listed on the BSE Ltd. The annual listing fee for the financial year 2022-23 has been paid to the Exchange.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has put in place adequate internal control systems, commensurate with size, scale and complexity of Companyâs operations to ensure compliance with policies and procedures. The Company has also adopted policies and procedures for ensuring the orderly and efficient conduct of its business, 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 disclosures.
The internal control mechanism comprises a well-defined organization, which undertakes time bound audits and reports its findings to the Audit Committee, documents policy guidelines and determines authority levels and processes.
The Audit Committee regularly reviews the systems and operations to ensure their effectiveness and implementation. The Internal Auditors and Statutory Auditors regularly attend Audit Committee meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee is briefed about the corrective actions taken by the management on the audit observations. The Audit scope is
regularly reviewed by the Audit Committee for enhancement/ modification of scope and coverage of specific areas. The Statutory Auditors review the internal financial controls periodically.
AUDITORS AND AUDITORSâ REPORT
a. Statutory Auditors
M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), were appointed as the Statutory Auditors of the Company by the shareholders in their 29th annual general meeting, to hold office for a period of 5 years from the conclusion of 29th Annual General Meeting till the conclusion of 34th Annual General Meeting.
As the Statutory Auditors will be completing their current tenure in the ensuing Annual General Meeting of the Company, the Board of Directors has, in its meeting held on May 26, 2022, on the recommendations of the Audit Committee, recommended to the shareholders the reappointment of M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/ W-100018), as the Statutory Auditors of the Company for the second term of 5 consecutive years from the conclusion of 34th Annual General Meeting till the conclusion of 39th Annual General Meeting. The Company has received their written consent and a certificate that they satisfy the criteria provided under section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and the rules framed thereunder.
During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
The Report given by M/s Deloitte Haskins & Sells LLP, Statutory Auditors on the financial statement of the Company for the year 2021-22 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.
b. Secretarial Auditors and Secretarial Audit Report
M/s NKJ and Associates, Company Secretaries (Certificate of Practice No. 5233) have carried out the Secretarial Audit of the Company for the financial year 2021-22. The Report given by the Secretarial Auditors is annexed as Annexure A and forms integral part of this Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.
They have undertaken the audit keeping in account all the applicable compliances as per the Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by the Secretarial Auditors has been submitted to the Stock Exchanges within 60 days of the end of the Financial Year.
During the year under review, the Secretarial Auditors had
not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section
134 (3)(ca) of the Act.
In terms of Section 204 of the Companies Act, 2013, the Audit Committee recommended and the Board of Directors appointed M/s NKJ & Associates, Company Secretaries (Certificate of Practice No. 5233) as the Secretarial Auditors of the Company in relation to the financial year 2022-23. The Company has received their consent for appointment.
HUMAN RESOURCES
2021-22 was another challenging year on HR front. The year started with the second wave of COVID-19. In order to keep our work force safe, we moved to work from home model during peak infection time and kept the work places closed for most part of the first quarter. The Baddi facility and warehouse worked for part of the quarter. We organised free vaccination drives for Baddi and regional office employees and ensured that all our employees are fully vaccinated. All COVID-19 safety protocols have been followed religiously across all locations. During these difficult time, new HR policies and initiatives were adopted considering care and empathy for employees. It was also important to take the team along towards individual and organisational success.
Our experienced, talented and motivated manpower is our key to successful operations and achieving the growth plans. We are committed to hiring and retaining the best talent. Our efforts and initiatives are driven towards promoting a collaborative, transparent and participative organization culture, and rewarding individual contribution and innovation. Growth and development of the manpower is a regular focus area and we will continue to invest in this. We regularly organise training programmes to sharpen employee skills and hold employee engagement activities to keep the employees fully motivated and aligned.
We boast of a low attrition rate of employees which is a result of the good work culture and regular growth opportunities that we provide to employees. Our succession planning roadmap for critical roles at the senior leadership ensures seamless availability of competent talent.
Our policies are driven towards the culture of performance and meritocracy at all levels of the organisation. Smart KRAs and KPIs are agreed in the beginning of the year in line with the Companyâs growth strategy and plan. The goals and objectives are defined and tracked in an online performance management system. Performance appraisals are also linked with these smart goals and objectives.
As on 31st March, 2022, our team consists of 345 very efficient and dedicated employees across the country.
SIGNIFICANT CHANGE IN KEY FINANCIAL RATIOS The Debtors turnover ratio was at 6.11 for the financial year ended March 31, 2022 as compared to 2.78 for the previous financial year. Increase of 120% in the ratio is mainly caused by sharp increase of 89% in Sales of the Company, Sales in the previous year was adversely impacted due to Covid-19 Pandemic as compared to the current year.
The Inventory turnover ratio was at 3.41 for the financial year ended March 31, 2022 as compared to 2.06 for the previous financial year. An improvement of 66% in the ratio is mainly caused by sharp increase of total cost of goods sold in line with increase in sales of the company.
The interest coverage ratio was at 2.69 for the financial year ended March 31, 2022 as compared to negative 2.70 for the previous financial year. The ratio has improved due to increase in the earnings before interest, which again has resulted due to reasons including increase in sales of the Company.
The Debt Equity ratio was at 1.53 for the financial year ended March 31, 2022 as compared to 0.23 for the previous financial year. The ratio has increased due to increase in the utilisation of working capital limits.
The Operating Profit Margin of the Company has improved from negative 1.67% to positive 3.27% due to increase in Operating profit. The Net Profit Margin has improved from negative 5.64% to positive 1.21% due to increase in the Net profits of the Company.
The return on net worth has increased from negative 64.8% to positive 19.4% due to increase in the net income and profit after tax of the Company.
SECRETARIAL STANDARDS
The Directors state that applicable secretarial standards, i.e. SS-1 and SS-2, relating to âMeetings of the Board of Directorsâ and âGeneral Meetingsâ, respectively, have been duly followed by the Company.
MATERIAL CHANGES
There have been no material changes and commitments affecting the financial position of the Company that occurred between the end of the financial year and the date of Directorsâ Report of the Company i.e. May 26, 2022.
Further, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.
ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134 (3)(a) of the Act, the Annual Return as on March 31, 2022 is available at the web link
https://www.timexindia.com/wp-content/uploads/2022/06/Timex_Draft_Annual_Return_2021-22.pdf
CORPORATE GOVERNANCE
As per Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a separate section on Corporate Governance together with a certificate from the practicing Company Secretary confirming compliance is set out in the Annexure forming part of this report.
CONSERVATION OF ENERGY
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is
provided in Annexure B to this Report forming an integral part of this report.
DEMATERIALISATION
The equity shares of the Company are being compulsorily traded in dematerialized form. As on 31st March 2022, 27,396 shareholders representing 97.58% of the Equity Share Capital are holding shares in dematerialized form.
COST RECORDS
Maintenance of cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013, is not applicable on the Company. Accordingly, such records are not made and maintained.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance towards sexual harassment at the workplace and has formed committees called Internal Committee at Baddi Plant, Corporate Office and at all regional offices for prevention and prohibition of sexual harassment and redressal against complaints of sexual harassment of working women at the workplace as per Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013 read with Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Rules, 2013. These Committees have the power/jurisdiction to deal with complaints of sexual harassment of working women as per the rules specified therein. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.
During the financial year 2021-22, no such complaint was received across the organisation. Also, there was no pending complaints either at the beginning or at end of the financial year. During the year, the Company has complied with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013 read with Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Rules, 2013 and has formed necessary committees at all locations.
APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016
The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during the financial year 2021-22.
DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF
The Company has not made any such valuation during the financial year 2021-22.
DIRECTORSâ RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the directors to the best of their knowledge and ability confirm that:â
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) the directors 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;
(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a going concern basis;
(e) the directors have laid down proper internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and;
(f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CAUTIONARY STATEMENT
Statements in the Boardâs Report and the Management Discussion & Analysis Report describing the Companyâs objectives, expectations or forecasts may be forward looking within the meaning of applicable laws. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply conditions affecting selling prices, raw material availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
ACKNOWLEDGEMENTS
The Directors wish to place on record their appreciation for the support and cooperation, which the Company continues to receive from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governments of Uttar Pradesh and Himachal Pradesh, the Banks / Financial Institutions and other stakeholders such as - shareholders, customers and suppliers, among others, and its employees. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Companyâs success. The Directors look forward to their continued support in future.
For and on behalf of the Board of Directors
Sd/-
Place: Middlebury, Connecticut, USA David Thomas Payne Date: May 26, 2022 Chairman
DIN: 07504820
Mar 31, 2018
The Directors are pleased to present the Thirtieth Annual Report and Audited Statement of Accounts for the year ended 31st March 2018.
FINANCIAL RESULTS AND PERFORMANCE
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017, in terms of the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs. Accordingly, financial statements for the year ended and as at March 31, 2017 have been restated to conform to Ind AS. More details on transition to Ind AS have been given in Note no. 34 to the financial statement.
Rs. in Lakhs
|
Particulars |
2017-18 |
2016-17 |
|
Revenue from operations |
21,015 |
20,062 |
|
(including other income) |
||
|
Profit before Interest and |
1,107 |
109 |
|
Depreciation |
||
|
Less: Interest |
210 |
277 |
|
Less: Depreciation |
167 |
207 |
|
Profit/ Loss for the year |
730 |
(375) |
The year 2017-18 saw many challenges and surprises including subdued consumer demand due to impact of demonetisation, end of excise holiday period for the Companyâs plant at Baddi, uncertainties due to introduction of Goods and Services Tax (GST), change in GST rate on watches in November 2017 from 28% to 18%, increase in custom duty on imported watches and consequent impact on the product pricing etc. Inspite of all these challenges, the Company has witnessed robust performance during the year 2017-18. The Revenue from Operations (including other income) during the year 2017-18 stood at INR 21,015 Lakh. The reported revenue growth figures are understated as the erstwhile excise duty equivalent also gets subsumed in the revenue component hence reducing the revenue growth. The revenue has grown by 14%, if the figures are re-stated for excise duty and GST. The net profit for the year was Rs. 730 Lakhs as against loss of Rs. 375 Lakhs in the previous year.
The difficult conditions were managed with meticulous planning and the focus was totally on long term thinking rather than short term gains. The Company passed on the benefits of GST rate reduction to the consumer with minimum disruption to the trade. The production and purchase teams rose to the occasion and managed the transitions proactively. The finance team supported in educating the vendor base and helped in getting the IT infrastructure ready.
The sales team showed resourcefulness to manage changes with minimum impact to the trade and consumers. While the watch market trend was to liquidate Companyâs inventory by heavy discounting, our sales team focused on sell out of trade inventory and maximising Companyâs profits.
All sales channels, except Canteen Stores Dept. (CSD) and B2B, continued their improved performance and contributed to the revenue growth during the year. Distribution channel continued to be the main contributor to the revenue. The new age channels, E-commerce and Omni Channel, are growing as per the plans. The Company followed its two-pronged product strategy of sustaining its traditional product portfolio and strengthening its fashion portfolio by launching premium stainless steel watches and technology products. The new collections developed by the Company have been well accepted both in Indian and international markets which have helped in improving the average selling price as well as increasing the sales to Group Companies globally. The Company also added new premium brands i.e. Gant, Cerruti 1881 and Nautica, in its traded brand portfolio which has also further strengthened the fashion portfolio in the price range of INR 10,000 - 25,000.
The Company, in collaboration with an Indian technology start up, developed a fitness band, which is a combination of fitness, safety and fashion and has several distinguished features including stainless steel case, premium mesh, leather and sports straps, SOS feature etc. This product saw a huge success and was highly appreciated. More such tech products will be rolled out in near future in line with the expectations of the young and tech oriented consumer segment.
During the year, the Company started online sales of its products through its website www.timexindia.com, a direct sales channel for sale of Companyâs products to the ultimate consumer.
The Company has also forayed into distribution of writing instruments, under premium âVersaceâ brand, which will enjoy the synergies of well established distribution channel of the Company.
To support the sluggish consumer demand due to impact of demonetisation and GST, an impactful multimedia advertising campaign and tactical seasonal campaign was used throughout the year. The launch of new Timex l Blink fitness band witnessed remarkable success and was one of the best advertising campaigns of the year. Other licensed watch brands like Versus, Versace and Salvatore Ferragamo also grew significantly, backed by in-store presence and selective advertising and PR campaigns.
The Company continued to focus on increasing operational efficiencies, better working capital management, increased supply chain capability and efficiency and control costs. Closure of 11 warehouses, with the introduction of GST, contributed to cost saving and improving operational efficiencies.
On the people front, the company continued to invest in employee development and enhancement of skills. Various employee engagement activities were organised at all locations throughout the year to keep the employees fully engaged and motivated. Salary benchmarking and revision was done for the critical positions. In order to ensure seamless availability of strong leadership, the Company has decided to embark upon a succession planning journey for critical roles at the senior leadership.
We kick started the calendar year 2018 by organising a meeting with trade partners to share our vision for the next three years. Global Chairperson, CEO, CFO and other senior executive attended the event and shared their confidence in the India market and their continued support for the India team.
Dividend
In view of the accumulated losses, the Board of Directors has not recommended any dividend for this year.
MANAGEMENT DISCUSSION AND ANALYSIS INDIAN ECONOMY
Reserve Bank of India expects the Indian economy to grow at 6.6% during the FY 2017-18 and 7.2% during 2018-19 as the roll-out of GST stabilises and credit off take improves. Good monsoon, inflation at sub 5%, buoyant consumer confidence, lower tax rates post GST, significant number of consumer promotions are the tailwinds that have helped the economy grow. There are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports. The process of recapitalisation of public sector banks has gone underway and large distressed borrowers are being referenced for resolution under the IBC. Export growth is expected to improve further on account of improving global demand.
As per International Monetary Fundâs (IMF) latest forecast, Indiaâs economy is forecast to grow 7.4% in the FY19 from 6.7% in FY18 and accelerate further in FY20 to 7.8%. There will be a gradual increase in Indiaâs growth rate as structural reforms raise potential output.
It is expected that the higher economic growth will be coupled with increased purchasing power and strong private consumption which will boost the demand for watches as well as writing instruments going forward.
OVERVIEW OF WATCH INDUSTRY The fiscal 2017-18 has been a good year for the watch industry despite the impact of demonetisation and introduction of GST, changes in GST rate and custom duty on imported watches. Demonetisation and PAN disclosure for watches above Rs. 2,00,000 has impacted the luxury watch market. However, with the new international brands coming to India, industry is witnessing innovative distribution practices and realignment of market share.
The watch industry is expected to grow at a healthy rate on account of factors such as increasing purchasing power, introduction of new brands and wearable technology, improved distribution in Tier 3 and Tier 4 markets, increased activity of online e-commerce players etc. Fashion oriented young customer is increasingly buying watches which suit their lifestyles. This category of watches has been the fastest growing segment in the watch industry with the support of large format department store, boutique and mall led distribution and larger advertising spends.
Counterfeit and infringement of brands and intellectual property rights has posed a big problem for the industry and the industry as a whole has to deal with it. This is not only harmful for the brand owners but also for the customer who get the fake products and involves in unsolicited litigation. For protection of Companyâs IPR and customers, the Company has been taking various measures including civil action and raids at the premises of such unscrupulous operators, customer awareness about fake products etc.
GROWTH DRIVERS OF THE COMPANY
The Company has been growing at a faster rate than the industry and is focused at maintaining this growth while ensuring returns for all its stakeholders. With a view to achieve sustained growth in the fast-changing business environment and the growing competition, the Company has laid down well thought plans and has identified the following key growth drivers:
Product portfolio:
The Company continues to focus on all consumer segments by bringing innovative products with cutting edge design and globally renowned brands to the Indian consumer.
The two growth drivers in the Indian watch industry are fashion and youth segments.
We launched Versus by Versace in the fashion segment in the previous years and we are now strengthening the segment by introducing fashion brands Nautica, Gant and Cerruti 1881 in the Rs. 10,000 to 25,000 price segment.
Youth brand Helix continues to appeal to the millennials and Gen Z of India, with its refreshingly unique design language. The Company is focused on enhancing the brand through investments in innovative marketing and retail execution.
We also see growth coming from the technology segment and will be enhancing our existing offering to further strengthen our tech oriented products. The launch of Timex Blink was an industry first at its price point with a stainless steel body, and fashionable variants such as rose gold.
In addition to the above, the Company is addressing the ethnic women segment with the launch of its high end âFriaâ collection. Enhancing the distribution footprint and increasing points of Sale:
Increasing the distribution footprint has been a key focus area for the Company. Strengthening Companyâs presence in Tier 2 and Tier 3 markets will drive the growth. Growth will also come from improvement in our counter share in large format stores and opening new showrooms.
In sync with the new way of working of the CSD channel, our focus will be to refresh and enhance our product portfolio to drive increased contribution from this channel. To increase sell through, we will be investing in better presentation of our products in the canteens.
The E-commerce market is expected to grow exponentially with the increased penetration of internet and smart phone. To seize the opportunity in the growing E-commerce market, Timex will continue its collaboration with all the key players in E-commerce channel to grow the Timex product portfolio. The Company also has in place an omni channel strategy to reap benefits of e-commerce. It started online sales of its products through its website www.timexindia.com which provides a direct sales channel to ultimate consumer.
Increasing Marketing initiatives:
To take the brand to the next level, we will invest further to increase the visibility and aspiration for our different brands. Innovative methods will be used to win the battle at the shop floor with the world class display and promoters. Digital marketing and Social media will engage with consumers directly. Press /TV advertisement will be used to make announcements about new launches or consumer promotions.
Strengthening our manufacturing capability:
With the increase in custom duty on imported watches, the India manufacturing facility has become more important to drive growth. We will be assembling Versus brand of watches in India and also looking at assembling other traded brands. The manufacturing facility in India has become an important manufacturing hub for India as well as group companies globally. This will support the growth of both the top line and bottom line of the Company.
Internal and External stakeholder support:
The Company enjoys the support of highly engaged and motivated employees with very low attrition rate which will continue to take the Company to the next level of growth. Suppliers and trade and institutional sales partners have always contributed their best for the Companyâs growth.
Managing Regulatory changes:
We are fully equipped with the IT infrastructure to comply with all regulatory changes. Trade partners as well as vendors will continue to be supported by us to adapt to the new regulatory requirements as well as Timex Groupâs global requirements. The Company has well designed systems and processes in place to ensure updation and compliance with all regulatory changes.
OPPORTUNITIES AND CHALLENGES
The Indian watch industry has strong growth potential which is substantiated by the following factors:
1. Only 35% of population wear wrist watches and only 5% of them own multiple watches.
2. Emerging middle class with the growing disposable income and purchasing power is expected give a boost to the watch industry.
3. Increased demand in fashion brands and premium priced watches by young population with improved education will improve the average prices and product margins.
4. E-commerce, online and omni channels will bring the next
level of growth for watch industry.
5. New technology and advance hi-tech products including fitness trackers and smart watches will create excitement and grow the market.
6. The Company will continue to grow in double digit with its strong product portfolio, brand perception and customer service.
RISKS & THREATS
A well-defined risk management framework has been put in place to identify, evaluate and assess the potential risks and challenges and determine the processes to mitigate and manage the same. A Committee comprising of senior management executives has been constituted to periodically review and assess the key risks in consultation with the functional managers. Detailed exercise has been carried out to identify, evaluate, manage and monitor the potential risks to the operations of the Company. The Board periodically reviews the risks and suggests steps to be taken to mitigate and manage the same.
The below specific key risks have been identified by the Company:-
- Financial Risk
1. The accumulated losses have eroded substantial part of net worth of the Company. However, the Company has improved its operational performance significantly over the last couple of years and as a result has reported profits in the year 2017-18. Accumulated losses will be wiped off from profits over a period of time. As per Companyâs business plans, its funding requirements will be comfortably met through internal accruals and borrowings from Banks.
2. There is a risk on the Companyâs margins due to adverse fluctuation in the foreign exchange as the Company imports substantial amount of inputs. Continued efforts to indigenise will help protect the Company from any adverse exchange rate fluctuations.
- External Environment
1. Fashion category is the fastest growing watch category. Fitness trackers and smart watches, though at a nascent stage of development, will continue to grow. To cater to fashion segment, the Company has added more international brands, such as Cerruti 1881, Gant and Nautica, into its product range. The launch of Timex l Blink fitness watch cum tracker with SOS feature has been a great success.
2. With the increase of internet usage, online sales will grow faster than the distribution channel. The Company has adopted omni channel sales model and started online sales through its website www.timexindia.com to tap the online consumers.
3. Mobile handset manufacturers and technology companies are investing on wearable technology. Wellness companies also are launching bands which are an extension to their health apps. Technology companies are tying up with various watch manufacturers to integrate technology with watches. The Company believes that continuous innovation is key to success. Timex Group Global Design Centre located in Milan, and the Global Supply Chain organization supports the Company to create differentiation and bring cutting edge technology and designs to a highly competitive marketplace. By thinking and acting both locally and globally, we are constantly challenging ourselves to look at the future.
4. Fake / counterfeit products have posed a big problem for the industry. The Industry needs to counter this collectively. The Company has been regularly taking legal action against counterfeiters.
- Internal Environment
Import of raw material may get affected due to external environment. The Company is integrating with Timex Global supply chain to develop alternate indigenous vendors.
- Other Risks
Risks relating to information technology (IT), business continuity and disaster management, retention of key personnel, compliance of various laws, contractual obligations, risks relating to the general macroeconomic environment including risks associated with political and legal changes, changes in tax structures, commercial rules & laws are analyzed regularly and measures are taken to mitigate the same.
DIRECTORS
Composition
The Board of Directors comprises eight (8) Directors consisting of four (4) Independent Directors, three (3) Non-Executive Directors and One (1) Managing Director.
Appointment/ Resignation from the Board of Directors/Key Managerial Personnel
Mr. Tobias Reiss Schmidt was appointed as an additional director of the Company with effect from January 31, 2018. He holds the office until the forthcoming Annual General Meeting. The Company has received requisite notice pursuant to Section 160 of the Companies Act, 2013 from a member proposing the candidature of Mr. Tobias Reiss Schmidt as Director of the Company. The Board recommends his appointment as Director of the Company, liable to retire by rotation.
Mr. David Thomas Payne resigned from the position of director with effect from January 30, 2018. He was again appointed as an Additional Director and Chairman of the Company with effect from April 20, 2018. He holds the office until the forthcoming Annual General Meeting. The Company has received requisite notice pursuant to Section 160 of the Companies Act, 2013 from a member proposing the candidature of Mr. David Thomas Payne as Director of the Company. The Board recommends his appointment as Director of the Company, liable to retire by rotation.
Ms. Sharmila Sahai has been re-appointed as the Managing Director of the Company for a term of one year with effect from November 18, 2017 which has been approved by the shareholders through postal ballot on April 13, 2018.
Mr. Colin Davis Arsenault resigned from the position of director and Chairman of the Company with effect from April 16, 2018. In accordance with Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Anil Malhotra retires by rotation as a Director, and being eligible, offers himself for re-appointment. The Board recommends his re-appointment as a Director.
There was no change in the Key Managerial Personnel during the year.
Declaration by the Independent Directors
All Independent Directors have submitted declarations confirming that they meet the criteria of independence, as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Independent Directors have also confirmed compliance with the Companyâs code of conduct during the FY 2017-18.
Number of meetings of Board of Directors
Four Board meetings were held during the financial year 20172018 on May 25, 2017, September 11, 2017, November 6, 2017 and January 31, 2018. All directors attending the meeting actively participated in the deliberations at these meetings. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. More details of the Board meetings have been provided in the âReport on Corporate Governanceâ.
COMMITTEES OF THE BOARD
The Board has constituted the following Committees pursuant to the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013.
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholdersâ Relationship Committee
4. Corporate Social Responsibility Committee
5. Share Allotment and Transfer Committee
More details with respect to the composition, powers, roles, terms of reference, etc. of these Committees are given in the âReport on Corporate Governanceâ of the Company which forms part of this Annual Report.
REMUNERATION POLICY
The Board of Directors has adopted a Policy on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes and independence of the Directors and other matters as per sub-section (3) of Section 178 of the Companies Act, 2013. This Policy is attached as Annexure A and forms an integral part of this Report.
EMPLOYEE REMUNERATION
Pursuant to the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report, which forms part of this Report.
Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this Report.
Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
FORMAL ANNUAL EVALUATION
The Board has carried out performance evaluation of itself, its Committees and each of the Directors (without participation of the concerned director). Independent Directors collectively evaluated the Boardâs performance, performance of the Chairman and other non-independent Directors. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors.
The performance evaluation concluded on the note that each of the individual directors, Committees and the Board as a whole, were performing efficiently and effectively and shared a common vision to turn organization goals into reality.
VIGIL MECHANISM
The Company has in place a Whistle Blower Policy which provides a mechanism for employees / Board Members and others to raise good faith concerns about violation of any applicable law/ Code of Conduct of the Company, gross wastage or misappropriation of funds, substantial or specific danger to public health and safety, abuse of authority or unethical behaviour and to protect the individuals who take such actions from retaliation or any threat of retaliation and also provides for direct access to the Chairman of the Audit Committee. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time.
The Whistle Blowers are not denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are given in the Report on Corporate Governance and are also available on the website of the Company at the link www.timexindia.com.
POLICY ON PREVENTION OF INSIDER TRADING
In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has framed a) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders and b) Code of Fair Disclosure. The Companyâs Code, inter alia, prohibits dealing in the shares of the Company by an insider, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.
RELATED PARTY TRANSACTIONS
The Board has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties. This Policy is in compliance with the applicable provisions of the Companies Act 2013, the Rules there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This Policy has been uploaded on the website of the Company at www.timexindia.com.
All related party transactions entered during the year under review were in the ordinary course of business, on armâs length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. For transactions which are foreseen and repetitive in nature, omnibus approval of Audit Committee is obtained at the beginning of the financial year. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.
No material related party transaction was entered during the financial year. Accordingly, the disclosure required under section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company. The details of the related party transactions entered during the year are given in the financial statements of the Company.
FINANCE
The Company has not invited nor holds any fixed deposits. There were no overdue / unclaimed deposits as on 31st March 2018. During the year under review, the Company made payment, net of credits, aggregating to Rs. 3,684 Lakh by way of Central, State and local sales taxes and duties as against Rs. 4,356 Lakh in the previous year.
SEGMENT WISE REPORTING
The segment wise information is provided in the Notes to the Accounts.
LISTING
The Equity Shares of the Company are listed on the BSE Ltd. The annual listing fee for the year 2018- 2019 has been paid to the Exchange.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
Adequate internal control systems, commensurate with size, scale and complexity of Companyâs operations have been put in place to ensure compliance with policies and procedures. The Company has also adopted policies and procedures for ensuring the orderly and efficient conduct of its business, 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 disclosures.
The internal control mechanism comprises a well-defined organization, which undertakes time bound audits and reports its findings to the Audit Committee, documents policy guidelines and determines authority levels and processes.
The Audit Committee regularly reviews the systems and operations to ensure their effectiveness and implementation. The Internal Auditors and Statutory Auditors regularly attend Audit Committee meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee is briefed about the corrective actions taken by the management on the audit observations. The Audit scope is regularly reviewed by the Audit Committee for enhancement/ modification of scope and coverage of specific areas. The Statutory Auditors review the internal financial controls periodically.
AUDITORS AND AUDITORSâ REPORT
a. Statutory Auditors
M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), were appointed as the Statutory Auditors of the Company by the shareholders in their 29th annual general meeting, to hold office for a period of 5 years from the conclusion of 29th Annual General Meeting till the conclusion of 34th Annual General Meeting.
The Board of Directors has, in its meeting held on May 24, 2018, on the recommendations of the Audit Committee, recommended to the shareholders the ratification of appointment of M/s Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company. The Company has received their written consent and a certificate that they satisfy the criteria provided under section 141 of the Act and that the ratification of appointment, if made, shall be in accordance with the applicable provisions of the Act and the rules framed thereunder.
During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
The Report given by M/s Deloitte Haskins & Sells LLP, Statutory Auditors on the financial statement of the Company for the year 2017-18 is part of the Annual Report. There is no qualification, reservation or adverse remark or disclaimer in their Report.
b. Secretarial Auditors and Secretarial Audit Report
M/s NKJ and Associates, Company Secretaries (Certificate of Practice No. 5233) have carried out the Secretarial Audit of the Company for the financial year 2017-18. The Report given by the Secretarial Auditors is annexed as Annexure B and forms integral part of this Report. There is no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Secretarial Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
In terms of Section 204 of the Companies Act, 2013, the Audit Committee recommended and the Board of Directors appointed M/s. NKJ & Associates, Company Secretaries (Certificate of Practice No. 5233) as the Secretarial Auditors of the Company in relation to the financial year 2018-19. The Company has received their consent for appointment.
HUMAN RESOURCES
The Company continued its efforts to attract, develop and retain the right talent. In this direction, salary benchmarking and revision was done for the critical positions. To ensure seamless availability of strong leadership, the Company has decided to embark upon a succession planning journey for critical roles at the senior leadership.
Training calendar has been developed to enhance the skills of the employees at all levels. Various training programmes including product training, Global Online Learning Management Solution etc. were conducted during the year. The Company also focused on conducting various employee engagement activities at all locations throughout the year to keep the employees fully motivated and aligned.
In order to imbibe and strengthen the culture of performance and meritocracy at all levels of the organisation, the employees continued to focus on smart KRAs and KPIs in line with the Companyâs growth strategy and plan. The online performance management system, âWorkdayâ, has been put in place for setting up of smart goals and objectives of all employees and thereby tracking it on a regular basis. Appraisals are also linked with these smart goals and objectives.
The Company comprises a small team of professionals, who are result oriented, committed and loyal. As on 31st March 2018, the Company had 381 employees on its rolls.
SECRETARIAL STANDARDS
The Directors state that applicable secretarial standards, i.e. SS-1 and SS-2, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, have been duly followed by the Company.
MATERIAL CHANGES
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year of the Company i.e. 31st March, 2018 and the date of Directorsâ Report i.e. 24th May, 2018.
Further, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company is annexed herewith as Annexure C and forms an integral part of this Report.
CORPORATE GOVERNANCE
As per Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a separate section on Corporate Governance together with a certificate from the practicing Company Secretary confirming compliance is set out in the Annexure forming part of this report.
CONSERVATION OF ENERGY
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided in Annexure D to this Report forming an integral part of this report.
DEMATERIALISATION
The equity shares of the Company are being compulsorily traded in dematerialized form. As on 31st March 2018, 24627 shareholders representing 97.24% of the Equity Share Capital are holding shares in dematerialized form.
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the directors to the best of their knowledge and ability confirm that:â
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) the directors 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 and loss of the company for that period;
(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a going concern basis; and
(e) the directors have laid down proper internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
(f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CAUTIONARY STATEMENT
Statements in the Boardâs Report and the Management Discussion & Analysis Report describing the Companyâs objectives, expectations or forecasts may be forward looking within the meaning of applicable laws. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply conditions affecting selling prices, raw material availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
ACKNOWLEDGEMENTS
The Directors wish to place on record their appreciation for the support and cooperation, which the Company continues to receive from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governments of Uttar Pradesh and Himachal Pradesh, the Banks / Financial Institutions and other stakeholders such as - shareholders, customers and suppliers, among others, and its employees. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Companyâs success. The Directors look forward to their continued support in future.
For and on behalf of the Board of Directors
Sd/-
Place : Noida, U.P. David Thomas Payne
Date : May 24, 2018 Chairman
DIN: 07504820
Mar 31, 2017
To the Members of Timex Group India Limited
The Directors are pleased to present the Twenty-Ninth Annual Report and Audited Statement of Accounts for the ended 31st March 2017.
Rs. In Lakh
|
FINANCIAL RESULTS |
2016-17 |
2015-16 |
|
Revenue from operations (including other income) |
9,995 |
7338 |
|
Profit before Interest and Depreciation |
1G5 |
(292) |
|
Less: Interest |
277 |
357 |
|
Less: Depreciation |
2G9 |
278 |
|
Add: Exceptional item |
- |
- |
|
Profit/ Loss for the year |
(381) |
(927) |
The year 2016-17 was another year of improved operating performance, financial growth and new initiatives for Timex Group. The Revenue from Operations (including other income) during the financial year 2016-17 has increased by 5% over the previous year, and the loss for the year has reduced by 59% over the previous year. With the issuance Cumulative Redeemable Non-Convertible Preference Shares amounting to Rs. 3500 Lakh to the Holding Company, the net worth of the Company has become positive.
The growth has been driven by increased sales to all sales channels. Timex has been one of the few brands register in double digit growth consistently. The new products developed by the Company have been well accepted, not only in the domestic market but also in the international markets. The Company has received good orders from group companies globally.
During the year, the Company reinforced the American heritage of the brand by a high decibel TV advertising campaign, supported by digital and social media, PR and local promotions. The Timex Metropolitan collection heralded the advertising campaign for the year. This was followed by the in-movie placement and association with the Salman Khan blockbuster Sultan, which won rave reviews and created impact in India and abroad. The sales campaign for the festival season was supported by an impactful multimedia advertising campaign. Other licensed watch brands like Versus, Versace and Salvatore Ferragamo grew significantly, backed by in-store presence and selective advertising and PR campaigns. All these efforts resulted in creating more salience for Timex and licensed brands, expanding distribution and increased sales.
With continued focus on increasing operational efficiencies, better working capital management, increased supply chain capability and efficiency and cost control efforts resulted in improved performance metrics. Driving low cost manufacturing helped the Company become a leading supplier of Timex watches to other group companies across the World.
Employees continue to remain the Companyâs most important assets. Several efforts were undertaken to improve employee capability, build greater engagement with the company and provide opportunities for growth. These resulted in industry leading benchmarks for attrition and performance.
The dealer, distributor, retail and institutional network partners showed greater commitment and support to which resulted in retail commitment, increased market share and positive share of mind.
Dividend
In view of the losses for the year ended March, 2017 and accumulated losses, the Board of Directors has not recommended any dividend for this year.
CHANGES IN CAPITAL STRUCTURE
The Authorized Share Capital of the Company was re-classified and now stands at Rs. 17,000 Lakh, divided into 9,000 Lakh Equity Shares of Re. 1- each and 800 Lakh preference shares of Rs. G/- each.
During the year, the Company issued and allotted 5% Cumulative Redeemable Non-Convertible Preference Share: amounting to Rs. 3,500 Lakh to its Holding Company i.e. Timex Group Luxury Watches B.V., Nederland for working capital requirements. Pursuant to the above allotment, the issued and paid-up share capital of the Company has increase to Rs. 8,619.5 Lakh, divided into 1009.5 Lakh Equity Shares of Re. 1- each and 761 Lakh Preference Shares 10/ Rs. each.
MANAGEMENT DISCUSSION AND ANALYSIS
INDIAN ECONOMY
Despite demonetization impact, the Indian economy has performed well during the year 2016-17 as compared to other countries. The World Bank expects Indian economic growth rate to be 7% during the financial year 2016-17. However, the International Monetary Fund expects the Indian economy to grow at 6.8% during this year due to the temporal disruptions caused by demonetization. The growth is expected to rebound quickly to 7.2% in 2017-18. Tailwinds from favourable monsoon, low oil prices and continued progress in resolving supply-side bottlenecks, as well as robust consumer confidence, will support near-term growth and ease cash shortages.
Goods and Services Tax (GST) is expected to be introduced from 1st July, 2017. Industry will have to reorganize its business as the country switches to the GST regime, which will bring more small companies into the tax net. While low GST may lead to a decline in inflation, the transition to the new GST system will affect economic growth in the short term even though it will benefit both industry and the government in the medium term.
OVERVIEW OF WATCH INDUSTRY
Watch industry has seen sluggish growth due to lower than expected performance of bigger players. The luxury watch market has been affected on account of demonetization and PAN card disclosure for purchase of watches of value above Rs. 200,000 New introductions of luxury watch brands has seen innovative distribution practices and realignment of market share within the industry.
Future of watch industry looks bright as the economy is expected to regain its consumption momentum. This will be function of new brand introductions and wearable technology supporting larger customer needs. Improved distribution in 3 and 4 markets is helping the Industry to acquire new customers. This is supported by the increased of online e-commerce players who offer deep distribution and significant discounts to create greater excitement for the watch category.
The young customer who is driven by fashion considerations is increasingly buying watches which suit their lifestyles Supported by large format department store, boutique and mall led distribution and larger advertising spends, this category has shown resilience and is the fastest growing segment in the watch industry.
GROWTH DRIVERS OF THE COMPANY
The Company has put in place plans for achieving sustained growth, keeping in view the fast-changing business environment and the growing competition. The industry is growing at a modest pace while the Companyâs growth is faster. The Company is focused at maintaining this growth while ensuring returns for all its stakeholders. The Comp has identified the key growth drivers as:
Strengthening the Product portfolio:
The Company believes that a good product is the most important way to approach, acquire and retain the consumer. T( this end, the Company has adopted two-pronged approach viz. refreshing the existing product portfolio by introduction of new products in terms of design, technology and innovation that match the ever-changing taste and trends of the consumer and launch of new products for the fashion oriented consumer segment.
The new products launched by the Company have been well appreciated, both in the Indian and international markets. Brand Versus from the house of Versace, priced between Rs.120000, has been doing well among the fashion conscious consumer segments. The Company has also been introducing international products in the Indian market to offer more choice to the consumer. The Company has recently launched IQ Move in the connected style segment which combines the benefits of an activity tracker with beauty of a traditional analog quartz watch. In the past, the Company had also introduced activity trackers for the tech savvy consumer, such as the Runx 20 and Metropolitan . The Company believes that the market for the wearable products is growing and has drawn up a robust and exciting technology to cater to this segment.
Enhancing the distribution footprint and increasing points of Sale:
The Company continues to focus on growth by further increasing its distribution footprint. Special focus on Tier 2 and 3 markets has yielded better than expected results. Franchisee led expansion will increase Showrooms in their 2 cities. The Company is investing significantly in retail fixtures and visual merchandising to improve retail presence and increase consumer shopping experience. Increased brand perception amongst consumers has helped increase market share in large retail formats like department stores.
E-commerce business has seen exponential growth. In order to strengthen this business, the Company plans to introduce exclusive products for the E-commerce channel. The Company is also working on an channel strategy to unlock greater value.
Increasing Marketing initiatives:
The Company plans to introduce new marketing campaigns in 207 to become the preferred choice of consumers. The company will continue to use traditional media like print & TV and also leverage new media vehicles to smartly connect with the core target group.
The in-store visibility of Timex Group brands is a key focus area to help improve brand presence. The Company will innovative consumer campaigns, without diluting brands perceived value.
Strengthening our manufacturing capability:
The Company continues to improve upon domestic manufacturing capability as part of the Make in India effort of the Government. Improved productivity and efficiency have resulted in higher production of watches per day. The Company has been able to export watches to other Group companies. There is growing recognition within the Global Supply Chain that India can become an important supplier in the future and efforts to support this drive are being undertaken.
Internal and External stakeholder support:
Employees have supported the building of the Company and will continue to drive its performance improvement. Suppliers and trade and institutional sales partners are committed to building this Company further.
Managing Regulatory changes:
The Company has taken steps to maintain business continuity despite introduction of new regulations like GST an transition from Excise exemption at Baddi. Vendors have been educated on documentation requirements and trained in new laws such as GST to ensure that there is no disruption in supplies. Key vendors have also been taken to Cebu, Philippine a key manufacturing centre for Timex Global, to sensitize them to global manufacturing and supply chain practices.
OPPORTUNITIES AND CHALLENGES
The Indian watch industry has strong growth potential which is substantiated by the following factors:
1 With increasing disposable income and purchasing power of Indian population, the watch industry is expected to grow at a higher rate. With the increase in number of millionaires and high net worth individuals (HNI), the demand f consumer products including watches is expected to increase.
2. The watch industry in India has potential to grow, with only 35% of our population wearing wristwatches and only 5% of them owning multiple watches.
3. Premium priced and Fashion categories are the fastest growing categories, which are expected to help the Company achieve better prices and product margins.
4. Online and Omni channels will fuel the growth of watch industry
5. Fitness trackers and Smart watches, though at a nascent stage in development, will continue to aid the growth of the Watch industry.
6. Timex is one of the few brands registering consistent double digit revenue growth, and this is expected to continue.
7. Entry of new brands including international brands, and their marketing efforts are attracting new customers to the Industry.
The Excise benefit from the Companyâs Baddi plant has ceased in May 2017. The Company has taken efforts to maintain its margins despite this change. The proposed GST rates can also impact prices adversely, but the Company is taking to ensure that margins will not be affected despite these changes.
RISKS & THREATS
The Company has set up a well-defined risk management mechanism to identify and assess the potential risks and determine the processes to mitigate the same. A Committee comprising of senior management executives has been constituted to periodically review and assess the key risks in consultation with the functional managers. Detailed exercise has been carried out to identify, evaluate, manage and monitor the potential risks to the operations of the Company. T! Board periodically reviews the risks and suggests steps to be taken to mitigate the same.
The Company has recognized the below specific key risks -
- Financial Risk
The Company has increased capital by issuing Cumulative Redeemable Non-Convertible Preference Shares amounting to Rs. 3,500 Lakh to the Parent Company, thereby addressing the concern of negative net worth.
The Company has taken various measures to improve its operational efficiency and growth rate. As per the business plans of the Company, the funding requirements of the company will be met through internal accruals, borrowings from Bank and affiliate Companies. With growth in revenue, the Company is confident of achieving breakeven.
While the Indian Rupee has strengthened against the US Dollar, and a bulk of the Companyâs imports designated US Dollars, there has been an improvement in product margins. Continued efforts to indigenize will help protect the Company from any adverse exchange rate fluctuations.
- External Environment
Wearable technology is the buzzword in watch industry. Mobile handset manufacturers and technology companies are investing on wearable technology. Wellness companies also are launching bands which are an extension to their health apps. Technology companies are tying up with various watch manufacturers to integrate technology with watches. The Company believes that continuous innovation is key to success. Timex Group Global Design Centre located in Milan, and the Global Supply Chain organization supports the Company to create differentiation and bring cutting edge technology and designs to a highly competitive marketplace. By thinking and acting both locally and globally, we are constantly challenging ourselves to look at the future.
- Internal Environment
Dependency on China, which is a procurement hub for raw material, may get affected due to external environment. To combat this risk, the Company is integrating with Timex Global supply chain to develop alternate vendors.
- Other Risks
Risks relating to retention of key personnel, compliance to various laws, contractual obligations, risks relating to the general macroeconomic environment including risks associated with political and legal changes, changes in tax structures, commercial rules & laws, information technology, business continuity and disaster management are analyzed regularly and measures taken to mitigate the same.
DIRECTORS
Composition
The Company has eight (8) Directors consisting of four (4) Independent Directors, three (3) Non-Executive Director and One (1) Managing Director.
Appointment/ Resignation from the Board of Directors/Key Managerial Personnel
Mr. David Thomas Payne was appointed as a Director by the shareholders in their annual general meeting held o August 3, 2016.
In accordance with Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Anil Malhotra retires by rotation as a Director of the Company, and being eligible, offers himself for re-appointment. The Directors recommend his re-appointment.
There was no change in the Key Managerial Personnel during the year.
Declaration by the Independent Directors
The Company has received declarations from all Independent Directors of the Company confirming that they continue to meet the criteria of independence, as prescribed under Section1 49(6) of the Companies Act, 2013 and Regulation B(l) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 The Independent Directors have confirmed that they have complied with the Companyâs code of conduct.
Number of meetings of Board of Directors
The Board met six times during the financial year 2016-2017 on 26th May, 2016, 1st July, 2016;, 3rdAugust, 2016, 24th August, 2016, 10th November, 2016 and 2nd February, 2017. Directors attending the meeting actively participated in the deliberations at these meetings. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. More details of the Board meetings have been provided in the Report on Corporate Governance.
COMMITTEES OF THE BOARD
The Company has constituted various Committees pursuant to the requirements of SEBI (Listing Obligations a Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. Presently, the Company has following Committees of the Board in place-1 Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
5. Share Allotment and Transfer Committee
The details with respect to the composition, powers, roles, terms of reference, etc. of these Committees are given in t Report on Corporate Governance )of the Company which forms part of this Annual Report.
REMUNERATION POLICY
The Policy on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes and independence of the Directors and other matters provided under sub-section (3) of Section 78 of the Companies Act, 2013 adopted by the Board, is attached Annexure A and forms an integral part of this Report.
EMPLOYEE REMUNERATION
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report, which forms part of this Report.
Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this Report.
Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection a the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
FORMAL ANNUAL EVALUATION
The Board has carried out performance evaluation of itself, its Committees and each of the Directors (without participate of the concerned director).Independent Directors collectively evaluated the Boards performance, performance of the Chairman and other non-independent Directors. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors.
The performance evaluation concluded on the note that each of the individual directors, Committees and the Board as a whole, were performing efficiently and effectively and shared a common vision to turning organization goals into reality.
VIGIL MECHANISM
The Whistle Blower Policy of the Company provides a mechanism for employees / Board Members and others t( raise good faith concerns about violation of any applicable law/ Code of Conduct of the Company, gross wastage or misappropriation of funds, substantial or specific danger to public health and safety, abuse of authority or unethical behavior and to protect the individuals who take such actions from retaliation or any threat of retaliation and al provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Vig mechanism is reviewed by the Audit Committee from time to time.
The Whistle Blowers are not denied access to the Audit Committee of the Board. The details of the Whistle Blower are given in the Report on Corporate Governance and are also available on the website of the Company at the following link: www.timexindia.com.
POLICY ON PREVENTION OF INSIDER TRADING
In terms of the SEBI (Prohibition of Insider Trading) Regulations, 205, the Company has framed a) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders and b) Code of Fair Disclosure The Companyâs Code, inter alia, prohibits dealing in the shares of the Company by an insider, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
There were no loans, guarantees or investments made by the Company under Section B6 of the Companies Act, 20B during the year under review and hence the said provision is not applicable.
RELATED PARTY TRANSACTIONS
The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This Policy has been uploaded on the website of the Companyvatw.timexindia.com.
All related party transactions entered into during the year under review were in the ordinary course of business, arms length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. For transactions which are foreseen and repetitive in nature, omnibus approval of Audit Committee is obtained at the beginning of the financial year. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the value and terms and conditions of the transactions.
The Company has issued preference shares to Timex Group Luxury Watches B.V., its Holding Company, at arms-lengt terms and conditions. As this transaction does not fall in the ambit of Section 188(l) of the Companies Act, 2013 and there is no other material related party transaction, the disclosure required under section 134(3) (h) of the Companies A 2013 in Form AOC-2 is not applicable to the Company. The details of the related party transactions entered during the year are given in the financial statements of the Company.
FINANCE
The Company has not invited nor does it hold any fixed deposits. There were no overdue / unclaimed deposits as on 31st March 2017.
During the year under review, the Company made payment aggregating to Rs. 4356 Lakh by way of Central, State and local sales taxes and duties as against Rs. 4,555 Lakh in the previous year.
SEGMENT WISE REPORTING
The segment wise information for watches and other activities are provided in the Notes to the Accounts.
LISTING
The Equity Shares of the Company are listed on the BSE Ltd. The annual listing fee for the year 2017- 2018 has been paid to the Exchange.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has put in place adequate internal control systems, commensurate with size, scale and complexity of its operations, to ensure compliance with policies and procedures. The Company has also adopted policies and procedures for ensuring the orderly and efficient conduct of its business, 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 disclosures.
The internal control mechanism comprises a well-defined organization, which undertakes time bound audits and reports its findings to the Audit Committee, documents policy guidelines and determines authority levels and processes.
With a view to ensure and review the effectiveness and implementation of the systems and operations, the Audit Committee regularly reviews them. The Internal Auditors and Statutory Auditors regularly attend Audit Committee meetings a convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee is briefed about the corrective actions taken by the management on the audit observations. The Audit scope is regular reviewed by the Audit Committee for enhancement/ modification of scope and coverage of specific areas.
The Company has implemented internal financial controls with the help of M/s Deloitte Haskins & Sells LLP. These systems have also been checked by M/s BSR & Co., LLP, the Statutory Auditors.
AUDITORS AND AUDITORSâ REPORT
a. Statutory Auditors
The Statutory Auditors of the Company, M/s BSR & Co. LLP, Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting of the Company. In terms of the provisions of the Companies Act, 2013 relating to rotation of Auditors, the Company is required to appoint a different firm of Chartered Accountants as Statutory Auditors of the Company.
The Board of Directors has, in its meeting held on May 25, 2017, on the recommendations of the Audit Committee, recommended to the shareholders the appointment of M/s Deloitte Haskins & Sells LLP, Chartered Accountant (Firm Registration No. 1173 66W/W-10018), as the Statutory Auditors of the Company for a term of 5 consecutive years from the conclusion of âAnnual General Meeting till the conclusion of Annual General Meeting. The Company has received their written consent and a certificate that they satisfy the criteria provided under section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and the rules framed there under.
During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act. The Report given by M/s BSR & Co. LLP, Statutory Auditors on the financial statement of the Company for the year 2016-17 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.
b. Secretarial Auditors and Secretarial Audit Report
The Secretarial Audit was carried out by M/s. NKJ and Associates, Company Secretaries (Certificate of Practice No. 5233) for the financial year 2016-17. The Report given by the Secretarial Auditors is annexed as Annexure B and forms integral part of this Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Secretarial Auditors had not reported any matter under Section 143 (12) c the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
In terms of Section 2014 of the Companies Act 2013, the Audit Committee recommended and the Board of Directors appointed M/s.NKJ & Associates, Company Secretaries (Certificate of Practice No. 5233) as the Secretarial Auditors of the Company in relation to the financial year 2017-18. The Company has received their consent for appointment.
HUMAN RESOURCES
The Company considers its employees as most valuable resource and ensures strategic alignment of Human Resource practices to business priorities and objectives. Our constant Endeavour is to invest in people and processes to improve human capital for the organization and service delivery to our customers. Attracting, developing and retaining the talent will continue to be a key strategic initiative and the organization continues its undivided attention towards the Given growth plans of the Company, an important strategic focus of the Company is to continue to not only nurture : human capital, but also proactively focus on preparing all employees for the challenges of the future. The Company strive to provide a conducive and competitive work environment to help the employees excel and create new benchmarks of productivity, efficiency and customer delight.
The Company comprises a small team of professionals, who are result oriented, committed and loyal. As March 23rd 2017 the Company had 367 employees on its rolls.
The Company has reinforced a culture of performance and meritocracy by deploying transparent and agreed upon smart KRAs and KPIs. These KRAs and KPIs cascade from the Companyâs growth strategy and plans. The Company has implemented an online performance management system i.e. Workday â for setting up of goals and objectives of all employees and thereby tracking it on a regular basis. Appraisals are also completed based on these goals and objectives filled by the employees. The Company has also introduced a rewards and recognition policy for all employees i.e. Employee of the Month Award.
Attracting and retaining bright talent and improvement in the quality of manpower at retail stores are identified as key challenge and being addressed accordingly through product training and retention initiatives.
MATERIAL CHANGES
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year of the Company i.e. 31st March, 2017 and the date of Directors )Report i.e.20th May, 2017.
Further, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and companyâs operations in future.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company is annexed and forms an integral part of this Report.
CORPORATE GOVERNANCE
As per Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 205, a separate section on Corporate Governance together with a certificate from the practicing Company Secretary confirming compliance is set out in the Annexure forming part of this report.
CONSERVATION OF ENERGY
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided in Annexure D to this Report forming an integral part of this report.
DEMATERIALISATION
The equity shares of the Company are being compulsorily traded in dematerialized form. As March 31st 2017, 26145 shareholders representing 97.18% of the Equity Share Capital are holding shares in dematerialized form.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the directors to the best of their knowledge and ability confirm that-
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) the directors have selected such accounting policies and applied 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 and loss of the company for that period;
(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud a other irregularities;
(d) the directors have prepared the annual accounts on a going concern basis; and
(e) the directors have laid down proper internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
(f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
CAUTIONARY STATEMENT
Statements in the Boardâs Report and the Management Discussion & Analysis Report describing the Company^ objectives, expectations or forecasts may be forward looking within the meaning of applicable laws. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply conditions affecting selling prices, raw material availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
ACKNOWLEDGEMENTS
The Directors wish to place on record their appreciation for the support and cooperation, which the Company continue to receive from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governments Uttar Pradesh and Himachal Pradesh, the Banks / Financial Institutions and other stakeholders such as - shareholding customers and suppliers, among others, and its employees. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Companyâs success. The Directors look forward to their continued support in future.
For and on behalf of the Board of Directors
Sd/-
Place : Noida, U.P Colin Davis Arsenault
Date: May 25, 207 Chairman
DIN: 07156629
Mar 31, 2016
To the Members of Timex Group India Limited
The Directors are pleased to present the Twenty-eighth Annual Report and Audited Statement of Accounts for the year ended March 20)6.
Rs. in Lakh
|
FINANCIAL RESULTS |
2015-16 |
2014-15 |
|
Revenue from operations (including other income) |
7,338 |
4,243 |
|
Profit before Interest and Depreciation |
(292) |
(792) |
|
Less: Interest |
357 |
253 |
|
Less: Depreciation |
278 |
224 |
|
Add: Exceptional item |
- |
171 |
|
Profit/ Loss for the year |
(927) |
(1098) |
Fiscal 205-6 was a year of improved performance, recovery, consolidation and new explorations for Timex Group. The Revenue from Operations (including other income) has increased during the financial year 2015-16 by 22% over the previous year and the Loss for the year has reduced by 16% over the previous year.
The revenue growth is contributed by improvement in both traditional distribution channel and the new upcoming E-Commerc business. A good institutional order also helped. This financial year we have introduced a new brand Versus from the house of Versace, which is positioned at the fastest growing price segment of 10,000/- to 15,000/-. Versus watches are urban, youthful, dynamic and confident.
The Company is in line of its defined strategic direction of providing financial stability through rigorous management of credit facility, accounts receivables, inventory management, product margin management and cost control.
The Company has invested in the ERP package Oracle in its front end [order to sales] to help it make faster decisions and pro complete transparency and accountability.
Employees continue to be the most important assets and the Company continues to invest in their development and growth. Dividend
In view of the losses for the year ended 3tt March, 206 and accumulated losses, the Board of Directors has not recommended any dividend for this year.
MANAGEMENT DISCUSSION AND ANALYSIS INDIAN ECONOMY
The Indian economy has performed well during the year 205-6 as compared to other parts of the World. The World Bank expects the Indian economyâs growth rate at 7.5% during the financial year 2015-16. However, the International Monetary Fund expects the Indian economy to grow at 7.3% during this year. The GDP growth is driven by private consumption and low energy prices. Weak exports and delayed economic reforms weigh down the economy. The one significant upside possibility is a good monsoon. This would increase rural consumption and improve consumer sentiments.
OVERVIEW OF WATCH INDUSTRY
The watch industry has witnessed an average CAGR of 7-8% due to the factors including increasing disposable income; internet penetration, technologically advanced electronic gadgets and smart phones and tablets bringing in a new set of consumers into th fore; wearable technology and smart watches offering benefits such as ease of use, mobility and robust fitness-tracking acquiring new consumers across demography, increased spending from top e-commerce portals etc.
Amongst various segments, lifestyle & entry fashion segment is growing the fastest due to increasing aspiration to own brand timepieces as lifestyle accessory. Brands operating in this segment are increasing spends to improve brand visibility.
Luxury watch segment which was previously struggling for growth has taken a turn for the worse on account of the new manda'' PAN card disclosures for purchase above INR 2 Lakh. Poor retail has led to rethink of business model in India.
GROWTH DRIVERS OF THE COMPANY
The Company has well adapted itself to the changing dynamics of the watch industry owing to the increased consumption an disposable income, coming from Tier 2 cities. The Company has identified the key growth drivers as:
Product Offering:
The Company will protect and grow its existing consumer base by continuously refreshing the product portfolio, in terms design, technology and innovation to cater to the changing consumer taste and trends and offer the right âvalue of the product to the consumers.
The Company is also increasing its consumer base by offering products for the growing fashion âconscious consumer at the pric point of 10000/- to 15000/-. The Company has introduced âVersus âfrom the house of Versace to cater to this market.
In the past year, the Company has successfully introduced activity trackers for the tech savvy consumer, for example: the R 20 and Metropolitan^ Going forward the Company has a robust and exciting technology roadmap to cater to the growing markel for wearable products.
Strengthening Companyâs traditional distribution channel and growing the E-Commerce channel:
The Company will grow by increasing its point of sales in the growing Tier 2 cities by strengthening its distribution in th markets. The Company is also investing in opening company owned showrooms in these markets. The Company ended the last fiscal year with 64 showrooms and is targeting to add 20 new showrooms this year. In the modern retail channel, the Company has grown with large format retailers and is making significant investments to improve its retail visibility.
The Company will continue to invest and grow in the E-commerce space along with all the key players in this space.
Increased Investment in Marketing:
In line with its strategic intent, the Company will be investing in improving its market share. The Company has defined its target market and will be communicating with them through television commercials and digital advertising. The objective is to be th preferred brand choice for consumers.
The Company plans to achieve double digit growth in the year ahead with investments in increasing brand pull and marks share.
OPPORTUNITIES AND CHALLENGES
The following factors show that there is a strong growth potential in the Indian watch industry:
1. Wrist watch penetration is under 35% in India.
2. Ownership of multiple watches is lagging at less than 5%.
3. Purchasing power of Indian population is increasing, thereby fuelling the growth of watch industry. With the increase number of millionaires and high net worth individuals (HNI), the demand for consumer products including watches i increasing.
4. Average selling price in fashion and lifestyle segment has been increasing continuously thereby improving the margins.
5. E-commerce has made the products more accessible to consumers. It ensures cost effective reach to consumers.
6. Increased number of brands including foreign brands and marketing activity is attracting consumers.
7. As a result of innovation and new technologies, advanced hi tech products are hitting the market and luring new customer Multipurpose products like wearables are an attraction as well as useful products.
The watch industry is expected to witness significant growth in future years and the Company with its wide array of brands and styles, ranging from Fashion to Classics and Sports, can take full advantage of these consumer trends by addressing their specific needs. The Company shall continue to invest in its product portfolio and strengthen the communication of its brand attributes
With constant product and marketing innovation becoming the need of the hour and most brands raising their game in agility a customer insight, these potent engagement initiatives from the house of Timex clearly signals the watch makers corporate inti to embrace the ongoing retail revolution.
RISKS & THREATS
The Company has in place a well defined Risk Management Policy and Risk Assessment and Minimization Committee comprising of senior management to periodically review and assess the key risks. A detailed exercise is carried out to identify, evaluating manage and monitor the potential risks to the strategy of the Company. The Board periodically reviews the risks and surge steps to be taken to mitigate the same.
Based on detailed review, the Company has recognized the below specific key risks relating to the Company-
- Financial Risk
The net worth of the Company has fully eroded with the accumulated losses sitting at Rs. 784 Lakh as at 31 March 206. However, the Company has taken various measures to improve its operational efficiency and growth trajectory. As per the business plans of the Company, the funding requirements of the company will be met through funds from operations, operational efficiency, bank borrowings, borrowing from affiliate Company and the proposed issuance of the preference shares. With the consistent double digit growth in revenue by increasing market share, the Company is confident of achieving breakeven soon.
Dollar is expected to be range bound from here on. However, any adverse movement in exchange rate can seriously impact th margin of the Company in the short and medium term. However, the Company is working towards localization of imported'' parts/ goods.
- External Environment
Various segments of the industry are focusing on wearable technology. Handset/IT/Telecom/CD companies as part of their convergence strategy are investing heavily on wearable technology & Watches are the primary device on which a majority of the investments are being made. Wellness companies also are launching bands which are an extension to their health app Technology companies are tying up with various watch manufactures to integrate handsets to provide unparalleled consume experience across walks of life.
Innovation is a key and to be profitable there has to be continuous improvement. Timex Group Global Design Centre located in Milan and also Global Supply Chain organization renders support to the business in India in terms of improved technology a styling of the products. Our global resources give Timex Group India a true advantage in a highly competitive marketplace By thinking and acting both locally and globally, we are constantly challenging ourselves to look at the future.
The Company has already forayed into wearable technology through Timex Ironman Move x2Q and Timex Ironman Run x20 in Q1 of FY 2015-2016 to cater to the current age of fitness enthusiasts and tech-savvy audience. The Company has also entered smart watch market through Metropolitan-h
III. Internal Environment
Other players in the industry are setting up their own manufacturing base. This may impact the economies of scale of w industry vendors and may lead to increase in the cost of procurement. To combat this risk, the Company is integrating with glc supply chain to develop alternate vendors.
IV. Other Risks
Other risks including the risks relating to retention of key personnel, compliance to various laws, contractual obligations, ri; relating to the general macroeconomic environment including risks associated with political and legal changes, changes in tax structures, and commercial rules & laws are analyzed and measures are taken to mitigate the same, if required.
KEY INITIATIVES BY TIMEX
The Company has laid down the growth strategy for the current year which includes the following key initiatives:
- The Company continues to invest in brand building to reposition Timex as an Authentic, Iconic, and American brand through advertising and marketing initiatives.
- With a view to bring consumers closer to the international trends, the Company has been introducing its international range of products. The Company will also focus on local product development to meet market specific requirements. New product launches, improved quality and service levels shall be the core focus.
The company has forayed into wearable technology with the successful launch of Ironman fitness tracker bands last year followed by successful launch of Metropolitanâ this year.
- Offer value for money to the consumers and build solid brand perception by executing effective marketing.
The Company recently launched some the international best sellers in India and the Company has planned to launch its late exciting international collection for Indian consumers.
- City centric demand generation marketing campaigns and sometimes seasonal & regional sales led promo-off campaigns.
Use international imagery; focus on growing lifestyle of consumers. The company has increased investment on marketing; driving brand imagery through global best sellers and harping on truly the American connect.
- On the Channel segmentation front, e-commerce was the focused channel to reach-out to larger consumer base across cities.
Modern trade & showrooms drive imagery. Distribution lead mass markets will drive volumes and share.
The Companies visibility and sales are increasing on each channel, especially online & retail. The Company has planned to expand further to untapped segments.
- The Company has invested in the ERP package Oracle in front end [order to sales] to help make faster decisions and provide complete transparency and accountability.
DIRECTORS Composition
The Company has eight (8) Directors consisting of four (4) Independent Directors, three (3) Non Executive Directors and ( () Managing Director.
Appointment/ Resignation from the Board of Directors
Mr. David Thomas Payne was appointed as an additional director of the Company with effect from May 12, 206. He holds the office until the forthcoming Annual General meeting. The Company has received requisite notice pursuant to Section 160 of the Companies Act, 23B from a member proposing candidature of Mr. David Thomas Payne as the Director of the Company. Th Directors recommend his appointment as Director of the Company, liable to retire by rotation.
Ms. Sharmila Sahai has been re-appointed as the Managing Director of the Company for a term of two years with effect from November, 205 which has been approved by the shareholders through postal ballot on 5th April, 206.
Mr. Ryan Todd Roth resigned from the directorship with effect from 2ht March, 206.
Further, in accordance with Section 52 of the Companies Act, 20B and Articles of Association of the Company, Mr. Colin Davis Arsenault retires by rotation as a Director of the Company, and being eligible, offers himself for re-appointment. The Direct recommend his re-appointment.
Appointment / Resignation of Key Managerial Personnel
Mr. Dhiraj Kumar Maggo has been appointed as the General Manager - Legal & Company Secretary and Compliance Officer of the Company with effect from 30th March, 2016 in place of Ms. Shilpa Verma who resigned from this position with effect from 28th March, 206.
Declaration by the Independent Directors
Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 203 and the relevant rules.
Number of meetings of Board of Directors
The Board met five times during the financial year 2015-2016 on 21st May, 2015, 6th August, 2015, 3rd November, 2015, 4th February, 206 and 30th March, 206. Directors attending the meeting actively participated in the deliberations at these meetings. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 203 and the SEB] (Listing Obligations and Disclosure Requirements) Regulations, 2015. More details of the Board meetings have been provided in the Report on Corporate Governance.
COMMITTEES OF THE BOARD
The Company has constituted various Committees pursuant to the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013. Presently, the Company has following Committees in place-1 Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Share Transfer Committee
5. Corporate Social Responsibility Committee
The details with respect to the compositions, powers, roles, terms of reference, etc. of relevant Committees are given in Report on Corporate Governance âof the Company which forms part of this Annual Report.
REMUNERATION POLICY
The Policy on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes and independence of the Directors and other matters provided under sub-section (3) of Section 78 of the Companies Act, 203 adopted by the Board, is attached as Annexure A.
EMPLOYEE REMUNERATION
Statement pertaining to remuneration and other details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 () and (2) of Companies (Appointment and Remuneration of Managerial personnel) Rules, 204 is attached as Annexure B.
FORMAL ANNUAL EVALUATION
Nomination and Remuneration Committee of the Board had prepared draft parameterized feedback forms for evaluation of t Board, Board Committees, Directors and Chairman.
Independent Directors evaluated the Boards performance, performance of the Chairman and other non-independent Directors. The Board subsequently evaluated performance of the Board as a whole, the Committees and Independent Directors (without participation of the concerned director).
VIGIL MECHANISM
The Company has implemented a Whistle Blower Policy to provide a mechanism for employees / Board Members and others to raise good faith concerns about violation of any applicable law/ Code of Conduct of the Company, gross wastage or misappropriation of funds, substantial or specific danger to public health and safety, abuse of authority or unethical behavior and to protect the individuals who take such actions from retaliation or any threat of retaliation and also provides for direct ac to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time.
None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The details of the Whistle Blow'' Policy are explained in the Report on Corporate Governance and also available on the website of the Company at the following link: www.timexindia.com.
POLICY ON PREVENTION OF INSIDER TRADING
Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 20)5, the Company has framed a) Code of Internal Procedure and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders and b) Code of Fair Disclosure. The Company Code, inter alia, prohibits dealing in the shares of the Company by an insider, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.
FAMILIARISATION PROGRAMME
The details of familiarization programmes arranged for the Independent Directors have been disclosed on the website of t company and are available at the following link-www.timexindia.com.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
There were no loans, guarantees or investments made by the Company under Section )86 of the Companies Act, 203 during the year under review and hence the said provision is not applicable.
RELATED PARTY TRANSANCTIONS
All related party transactions entered into during the year under review were in the ordinary course of business, on arms length 1 and were in compliance with the applicable provisions of the Companies Act, 203 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. No material related party transactions was entered during the financial year. Accordingly, the disclosure required under section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company. The details of the related party transactions entered during the year are given in the financial statements of the Company.
The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Ac 2013, the Rules made there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This Policy has been uploaded on the website of the Company at www.timexindia.com.
FINANCE
The Company does not hold any fixed deposits. There were no overdue / unclaimed deposits as on 31st March 2016.
During the year under review, the Company made payments aggregating to Rs. 45.55 Crore by way of Central, State and local sales taxes and duties as against Rs 35.35 Crore in the previous year.
SEGMENT WISE REPORTING
The segment wise information for watches and other activities are provided in the Notes to the Accounts.
LISTING
The Equity Shares of the Company are listed on the BSE Ltd. The annual listing fee for the year 2016- 2017 has been paid to the Exchange.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companies policies, 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 disclosures.
The internal control mechanism comprises of a well-defined organization, which undertakes time bound audits and reports its findings to the Audit Committee, documents policy guidelines and determines authority levels and processes.
The systems and operations are regularly reviewed by the Audit Committee to ensure and review their effectiveness a implementation. The Statutory Auditors of the Company also regularly attend these meetings and convey their views on t adequacy of internal control systems as well as financial disclosures. The Audit Committee, Statutory Auditors and the Function Heads are periodically apprised of the internal audit findings. Corrective actions taken by the management on the audit observations are presented to the Audit Committee. The Audit Committee also issues directives for enhancement in scope and coverage specific areas, wherever felt necessary.
In order to further strengthen the internal controls, the Company has implemented an ERP package-Oracle in front end [ore sales] at all its locations during the year. Further, the Company has also implemented internal financial controls with the help of M/s Deloitte Haskins & Sells. These systems have also been checked by M/s BSR & Co., LLP, the Statutory Auditors.
AUDITORS AND AUDITORSâ REPORT a. Statutory Auditors
M/s BSR & Co. LLP, Chartered Accountants, Statutory Auditors of the Company shall hold office till the conclusion of the ensuing Annual General Meeting of the Company and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Companies Act, 203 an âthat they are not disqualified for re-appointment. It is recommended that they may be re-appointed as Statutory Auditors of the Company from the conclusion of the ensuing Annual General meeting of the Company till the conclusion of next Annual General meeting.
The Board has examined the Report issued by the Statutory Auditors of the Company on the Accounts for the financial year ended 3ht March 206 and their comment about the managerial remuneration. The Company is taking necessary steps for recovery of this amount from the erstwhile Managing Director.
b. Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Companies Act, 203 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 204, the Board of Directors had appointed M/s. NKJ and Associates, Company Secretaries, as the Secretary: Auditors of the Company to carry out Secretarial Audit for the Financial Year 2315-6. The report of Secretarial Auditor: annexed to this Report a Annexure- C. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Board has re-appointed M/s. NKJ & Associates as Secretarial Auditors for the Financial Year 206-7.
HUMAN RESOURCES
The Company believes that experienced, talented and motivated manpower is an essential pre-requisite for successful operations as well as achieving the growth plans of the Company. Employees of all ranks contribute towards the Companies growth in the form of leading, thinking, working, creating, processing, dealing, motivating, and encouraging the workforce to meet work challenges. The management is committed to strengthen this human force by providing it with better tools, technology, techniques, and terms as well as a conducive ambiance at the work place. Given growth plans of the Company, an important strategic foci of the Company is to continue to not only nurture its human capital, but proactively focus on preparing all employees for t challenges of the future.
The Company comprises a small team of professionals, who are result oriented, committed and loyal. As on 3 kt March 206, the Company had 363 employees on its rolls.
The Company has reinforced a culture of performance and meritocracy by deploying transparent and agreed upon smart KRAs t KPIs. These KRAs and KPIs cascade from the Companies growth strategy and plans. The Company has implemented an online performance management system i.e. Workday â for setting up of goals and objectives of all employees and thereby tracking it on a regular basis. Appraisals are also completed basis these goals and objectives filled by the employees. The Company has also introduced a rewards and recognition policy for all employees i.e. Employee of the Month Award.
Attracting and retaining bright talent and improvement in the quality of manpower at retail stores are identified as key challenges and being addressed accordingly through product training and retention initiatives.
MATERIAL CHANGES
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year of the Company i.e. 3 feet March, 206 and the date of Directors âReport i.e. 26th May, 206.
Further, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and companies operations in future.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company under the provisions of Section 92 of the Companies Act, 203 read with t Companies (Management and Administration) Rules, 20)4, is annexed herewith as Annexure- D.
CORPORATE GOVERNANCE
As per Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a separate section on Corporate Governance together with a certificate from the practicing Company Secretary confirming compliance is set out in the Annexure forming part of this report.
CONSERVATION OF ENERGY
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 34 (3)(m) of the Companies Act, 203 read with Rule 8 of the Companies (Accounts) Rules, 204, is provided in Annexure E to this Report.
DEMATERIALISATION
The equity shares of the Company are being compulsorily traded in dematerialization form. As on 31st March 2016, 27536 no. of shareholders representing 97.13% of the Equity Share Capital are holding shares in the dematerialized form.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the directors to the best of their knowledge and ability confirm that-
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that ar 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 and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with
the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and ot] irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors had laid down proper internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with the provision of all applicable laws and that such system were adequate and operating effectively.
CAUTIONARY STATEMENT
Statements in the Boardâs Report and the Management Discussion & Analysis Report describing the Companies objectives, expectations or forecasts may be forward looking within the meaning of applicable laws. Actual results may differ materially fri those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply conditions affecting selling prices, raw material availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
ACKNOWLEDGEMENTS
The Directors wish to place on record their appreciation for the support and cooperation, which the Company continues to race from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governments of Uttar Pradesh Himachal Pradesh, the Banks / Financial Institutions and other stakeholders such as, shareholders, customers and supplied among others, and its employees. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Companies success. The Directors look forward to their continued support in future.
For and on behalf of the Board of Directors
Sd/-
Place : Noida U.P. Colin Davis Arsenault
Date : May 26, 2016 Chairman DIN: 07156629
Mar 31, 2015
Dear Members,
The Directors are pleased to present the Twenty-seventh Annual Report
and Audited Statement of Accounts for the year ended 31 March 2015.
FINANCIAL RESULTS Rs. in Lakh
2014-2015 2013-2014
Revenue from operations (including 14,243 12,367
other income)
Profit before Interest and Depreciation (792) (2,947)
Less: Interest 253 117
Less: Depreciation 224 234
Add: Exceptional item 171 -
Profit/ Loss for the year (1,098) (3,298)
Your Company has grown during the financial year 2014-2015 by 15% over
the previous year and the losses have reduced by 66% over the previous
year. This has been possible due to the initiatives taken in the
previous years to reposition its brand, rationalizing the spends,
improving the product portfolio, improvement in merchandising and
retailing presence and improved employee productivity.
Your Company continues to pursue its strategy to reposition TIMEX as
American, Iconic brand. The Company celebrated group''s 160th
anniversary during the year. On the occasion, the Company felicitated
Indian football icon Mr. Bhaichung Bhutia and World and Olympic
champion Mr. Abhinav Bindra with its exclusive limited Waterbury
collection.
The Company also forayed into the wearable segment in Q1 of the current
financial year with the launch of its smart watch and fitness band-Move
x20 and Run x20 GPS to cater to the current age of fitness enthusiasts
and tech-savvy audience.
The Company laid great emphasis to connect well with the consumers
during the year by establishing brand stores on various e-commerce
platforms besides setting up its franchisee stores ''Timex World'' and
ensuring its presence in NTO/ MBO''s. Your Company started the Timex
Call centre to address consumer queries.
Your Company won Gold in highly acclaimed POPAI awards held in February
2015 for its Indiglo retail concept. POPAI is a global platform to
promote world-class retail practices. Incorporated in the USA in 1936,
POPAI has now more than 1700 members worldwide covering 40 countries.
The Company continues to focus on the improvement of top and bottom
line financial growth performance and to tap the overall optimism in
the Indian economy with a renewed vigour and enthusiasm while ensuring
good corporate governance practices.
Dividend
In view of the losses for the year ended March 31, 2015 and accumulated
losses, the Board of Directors of your Company is constrained not to
recommend any dividend for the year under review.
DIRECTORS
Composition
Your Company has eight (8) Directors consisting of four (4) Independent
Directors, three (3) Non Executive Directors and One (1) Managing
Director.
In terms of the provisions of Section 149 of the Companies Act, 2013
and Clause 49 of the Listing Agreement, a company shall have at least
one Woman Director on the Board of the company. Your Company has two
woman Directors on the Board of the Company - Ms. Gagan Singh since 31
January 2007 and Ms. Sharmila Sahai since 18 November 2013.
Appointment/ Resignation from the Board of Directors
Mr. Ryan Todd Roth was appointed as an Additional Director and Vice
Chairman with effect from 13 November, 2014.
Further, Mr. Colin Davis Arsenault was appointed as an Additional
Director and Chairman of the Company with effect from 21 May 2015.
They hold the office until the forthcoming Annual General Meeting. The
Company has received requisite notice pursuant to Section 160 of the
Companies Act, 2013 from the members of the Company proposing Mr. Ryan
Todd Roth and Mr. Colin Davis Arsenault as Directors of your Company.
Mr. M K Bandyopadhyay and Mr. Robert Obed Barberi resigned from the
directorship with effect from 20 November, 2014 and 27 February, 2015
respectively.
Further, in accordance with Section 152 of the Companies Act, 2013 and
Articles of Association of the Company, Mr. Anil Malhotra retires by
rotation as a Director of the Company, and being eligible, offers
himself for re-appointment.
Appointment / Resignation of Key Managerial Personnel
Mr. Amit Jain has been appointed as Chief Financial Officer of the
Company with effect from 2 March, 2015.
Mr. M.K. Bandyopadhyay, whole time director resigned with effect from
20 November, 2014.
Declaration by the Independent Director
Independent Directors have submitted their disclosures to the Board
that they fulfill all the requirements as stipulated in Section 149(6)
of the Companies Act, 2013 so as to qualify themselves to be appointed
as Independent Directors under the provisions of the Companies Act,
2013 and the relevant rules.
Number of meeting of Board of Directors
The Board met five times during financial year 2014-2015 on 29 May,
2014, 14 August, 2014, 13 November, 2014, 29 January, 2015 and 2 March,
2015 to consider amongst other business matters, the quarterly
performance of the Company and financial results. Directors attending
the meeting actively participated in the deliberations at these
meetings.
COMMITTEES OF THE BOARD
Your Company has constituted various committees pursuant to the
requirement of Listing Agreement and Companies Act 2013. Your Company
has the following committees of the Board-
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Share Transfer Committee
5. Corporate Social Responsibility Committee
The details with respect to the compositions, powers, roles, terms of
reference, etc. of relevant committees are given in detail in the
''Report on Corporate Governance'' of the Company which forms part of
this Annual Report.
REMUNERATION POLICY
The policy of the Company on Director appointments and remunerations,
including interest for determining qualification positive atribute
independence of the directors and other matter provided under
sub-section (3) of section 178 of the Companies Act 2013 adopted by the
board, is attached as Annexure A.
EMPLOYEE REMUNERATION
Statement pursuant to the requirement of Section 197 (12) read with
Rule 5 of Companies (Appointment and Remuneration) Rules, 2014 is
attached as Annexure B.
FORMAL ANNUAL EVALUATION
1. Nomination and Remuneration Committee of the Board had prepared
draft parameterized feedback forms for evaluation of the Board, Board
Committees, Directors and Chairman.
2. Independent Directors at a meeting without anyone from the non
independent directors and management, considered/ evaluated the Board''s
performance, performance of the Chairman and other non-independent
Directors.
3. The Board subsequently evaluated performance of the Board, the
Committees and Independent Directors (without participation of the
relevant director)
VIGIL MECHANISM
Your Company has implemented a Whistle Blower Policy to provide a
mechanism for employees / Board Members and others to raise good faith
concerns about violation of any applicable law/ Code of Conduct of the
Company, gross wastage or misappropriation of funds, substantial or
specific danger to public health and safety, abuse of authority or
unethical behavior and to protect the individuals who take such actions
from retaliation or any threat of retaliation and also provides for
direct access to the Chairman of the Audit Committee, in exceptional
cases. The functioning of the Vigil mechanism is reviewed by the Audit
Committee from time to time.
None of the Whistle Blowers have been denied access to the Audit
Committee of the Board. The details of the Whistle Blower Policy are
explained in the Report on Corporate Governance and also available on
the website of the Company at the following link: www.timexindia.com
POLICY ON PREVENTION OF INSIDER TRADING
Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015,
the Company has framed a) Code of Internal Procedures and Conduct for
Regulating, Monitoring and Reporting of Trading by Insiders and b) Code
of Fair Disclosure. The Company''s Code, inter alia, prohibits purchase
and/or sale of shares of the Company by an insider, while in possession
of unpublished price sensitive information in relation to the Company
and also during certain prohibited periods.
FAMILIARISATION PROGRAMME
The details of familiarization programmes arranged for the Independent
Directors have been disclosed on the website of the company and are
available at the following link-www.timexindia.com
LOANS AND GUARANTEE U/S 186
There were no loans, guarantees or investments made by the Company
under Section 186 of the Companies Act, 2013 during the year under
review and hence the said provision is not applicable
PARTICULAR OF CONTRACT AND ARRANGEMENT U/S 188
Related party transactions that were entered during the financial year
were on an arm''s length basis and were in the ordinary course of
business. There were no materially significant related party
transactions except the transactions that were approved by the
shareholders of the Company at the last Annual General Meeting and
disclosed in the Form AOC- 2 enclosed herewith as Annexure C.
The Board of Directors of the Company has, on the recommendation of the
Audit Committee, adopted a policy to regulate transactions between the
Company and its Related Parties, in compliance with the applicable
provisions of the Companies Act 2013, the Rules there under and the
Listing Agreement. This Policy as considered and approved by the Board
has been uploaded on the website of the Company at www.timexindia.com.
FINANCE
The Company does not hold any fixed deposits from the public,
shareholders & employees. There were no overdue / unclaimed deposits as
on 31 March 2015.
During the year under review, the Company made payment aggregating to
Rs. 35.35 Crore by way of Central, State and local sales taxes and
duties as against Rs30.35 Crore in the previous year.
SEGMENT WISE REPORTING
The segment wise information for watches and other activities are
provided in the Notes to the Accounts.
LISTING
The Equity Shares of the Company are listed on Bombay Stock Exchange
Limited. The annual listing fee for the year 2015- 2016 has been paid
to the Exchange.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has endeavoured to continuously improve the internal
controls both relating to financial reporting and operations. Your
Company has established procedures for internal control, which are
commensurate with its size and operations.
The internal control mechanism comprises of a well-defined
organization, who undertake time bound audits and report their findings
to the Audit Committee, documented policy guidelines, predetermined
authority levels and processes.
The systems and operations are regularly reviewed by the Audit
Committee to ensure and review their effectiveness and implementation.
The Statutory Auditors of the Company also regularly attend these
meetings and convey their views on the adequacy of internal control
systems as well as financial disclosures. The Audit Committee,
Statutory Auditors and the Function Heads are periodically apprised of
the internal audit findings. Corrective actions taken by the management
on the audit observations are presented to the Audit Committee. The
Audit Committee also issues directives for enhancement in scope and
coverage of specific areas, wherever felt necessary.
AUDITORS and AUDITORS'' REPORT
a. Statutory Auditors
Your Board has duly examined the Report issued by the Statutory
Auditor''s of the Company on the Accounts for the financial year ended
31 March 2015 and their comment about the managerial remuneration. The
Company is in the process of recovering the excess remuneration paid to
a former Managing Director of the Company.
The auditors, M/s BSR & Co., LLP Chartered Accountants, retire at the
ensuing Annual General Meeting and have confirmed their eligibility and
willingness to accept office, if re-appointed.
b. Secretarial Auditors and Secretarial Audit Report
Pursuant to the Companies Act, 2013, M/s NKJ and Associates were
appointed as the Secretarial Auditors to conduct Secretarial Audit for
the Financial Year 2014 - 2015. The report of the Secretarial Auditor
for the FY 2014-2015 is attached as Annexure D.
There were no qualifications, reservations or adverse remarks made by
the Secretarial Auditors in their report.
HUMAN RESOURCES
Your company believes that its People are its most critical assets. To
keep them challenged and motivated your Company provides a challenging
and remunerative work environment that encourages high performance,
ownership and team work. Your Company believes that a winning culture
is essential to its success. This begins with the way employees are
treated, protecting their health and safety, rewarding their
performance, developing their potential, seeking their counsel and
promoting diversity and inclusiveness. To support this, the Company has
established the principles of good labor standards, equal opportunity
for employment, ethical work environment, respect and health regard for
diversity and believes in following a code of conduct in order to
further cultivate a culture of social responsibility at all levels.
Your Company comprises a small team of professionals, who are result
oriented, committed and loyal. As on 31 March 2015, your Company had
345 employees on the Company rolls.
Attracting and retaining the bright talent and improvement in the
quality of manpower at retail stores are identified as key challenges
and being addressed accordingly through product training and retention
initiatives.
MATERIAL CHANGES
No material changes and commitments affecting the financial position of
the Company occurred between the end of the financial year of the
Company i.e. 31 March 2015 and the date of Directors'' Report i.e. 21
May 2015.
Further, there were no significant and material orders passed by the
regulators or courts or tribunals impacting the going concern status
and company''s operations in future.
EXTRACT OF ANNUAL RETURN U/S 92
The extracts of Annual Return pursuant to the provisions of Section 92
of Companies Act, 2013 read with Rule 12 of the Companies (Management
and Administration) Rules, 2014 is furnished in Annexure E and is
attached to this Report
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance together with a certificate
from the practicing Company Secretary confirming compliance is set out
in the Annexure forming part of this report.
CONSERVATION OF ENERGY
Information required as per Section 134 (3)(m) read with Companies
(Accounts) Rules, 2014, regarding the conservation of energy,
technology absorption, foreign exchange earnings and outgo is given in
Annexure F forming part of this report.
DEMATERIALISATION
Since year 2000, the equity shares of your Company are being
compulsorily traded in dematerialization form. As on 31 March 2015,
28764 no. of shareholders representing 97.09% of the Equity Share are
holding shares in the dematerialized form.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, your directors
confirm as underÂ
(a) In the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) the directors had 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 and
loss of the company for that period;
(c) The directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(d) The directors had prepared the annual accounts on a going concern
basis; and
(e) The directors, in the case of a listed company, had laid down
internal financial controls to be followed by the company and that such
internal financial controls are adequate and were operating
effectively.
(f) the directors had devised proper systems to ensure compliance with
the provision of all applicable laws and that such systems were
adequate and operating effectively.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis, outlining the
Company''s objectives, expectations or predictions may be ''forward
looking statements'' within the meaning of applicable laws and
regulations. Actual results could differ materially from those
expressed or implied in the statements. The important factors that
could influence the Company''s operations include demand and supply
conditions affecting sale price of finished goods, input availability
and prices, changes in government regulation, tax laws, economic
developments within the country and abroad and such other factors such
as litigation and industrial relations etc.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
support and cooperation, which the Company continues to receive from
its customers, the watch trade, the New Okhla Industrial Development
Authority, the Governments of Uttar Pradesh and Himachal Pradesh, and
finally the Members of the Company and its employees.
For and on behalf of the Board of Directors
Sd/-
Chairman
Annexure-F
Mar 31, 2014
To the Members of Timex Group India Limited
The Directors are pleased to present the Twenty-sixth Annual Report
and Audited Statement of Accounts for the year ended 31 March 2014.
FINANCIAL RESULTS Rs. in Lakhs
2013-2014 2012-2013
Income 12,367 12,168
Less: Expenditure 15,665 16,364
EBIDTA (2,948) (3,875)
Less: Interest 117 98
Less: Depreciation 234 223
profit Before Tax (PBT) (3,298) (4,196)
Provision for Taxes
profit after Tax (3,298) (4,196)
As per our plans and as mentioned in the last year Annual Report,
2013-2014 has been a transition year wherein significant progress has
been achieved in terms of liquidation of slow moving inventory and
improvement in overall trade collection.
Although, the revenues improved marginally, the losses have declined by
21% as compared to previous year. The losses were driven by combination
of factors including weaker economic environment and sharp devaluation
of Rupee.
The transition towards healthier & profitable business is still
continuing through greater focus on top and bottom line financial growth
performance by focusing on the following agenda: 1) Generate positive
cash to reinvest in profitable growth, 2) Grow revenues by more closely
aligning product offerings with consumer demand, 3) Rationalize and
realign spending to drive profitable growth, 4) Improve the brand
imagery, and 5) Improve the employee productivity.
In line with your Company''s Product strategy , many new international
products have been launched in the recent past with many more in the
pipeline. Your Company has launched its largest-ever marketing and
rebranding initiative entitled "WEAR IT WELL". Watches of your Company
allow people to express their true personal style. Unpretentious and
timeless, our passion for style, fashion and sport comes across in a
clear, conversational tone as if we''re talking amongst friends. These
efforts will lead to improved domestic brand equity which will have a
positive impact on market share and revenue growth.
TIMEX ranked 76th in the list of brands featured in Brand Equity''s Most
Exciting Brands in 2014. Further, your Company has also re-branded its
franchisee stores under the title ''Timex World''. With the new identity
of the stores as ''Timex World'', the brand hopes to achieve a compelling
repositioning in the watch industry vis-Ã -vis the constantly evolving
market. The new name will not only serve to reposition and reinforce
the brand as one of the prominent players in the watch industry but
also further enhance its retail imagery.
During fiscal 2013-2014, Ms. Sharmila Sahai was appointed as the
Managing Director of the Company.
DEMATERIALISATION
Since year 2000, the equity shares of your Company are being
compulsorily traded in dematerialization form. As on 31 March 2014,
31338 no. of shareholders representing 97.04% of the Equity Share are
holding shares in the dematerialized form.
DIRECTORS
Mr. Robert Obed Barberi was appointed Additional Director during the
year to hold office upto the date of forthcoming shareholders meeting.
Mr. Barberi has been subsequently appointed as Chairman of the Board of
Directors pursuant to the provisions of Articles of Association of the
Company. Your Company has received a requisite notice from a member
proposing Mr. Barberi as a a Director of your Company.
Mr. Anil Malhotra was appointed Non-Executive Additional Director
during the year to hold office upto the date of forthcoming shareholders
meeting. Your Company has received a requisite notice from a member
proposing Mr. Malhotra as a Director of your Company.
Ms. Sharmila Sahai was appointed Additional Director during the year to
hold office upto the date of forthcoming shareholders meeting. She was
also appointed as a Managing Director of your Company. Your Company
has received a requisite notice from a member proposing Ms. Sahai as a
Director of your Company
Mr. M.K. Bandyopadhyay was re-appointed as Managing Director-Operations
and Supply Chain of the Company with effect from 1 February 2014 for a
period of six months. The Board of Directors, on the recommendation of
Remuneration Committee and subject to the approval of shareholders and
such other approvals as may be required, approved the appointment of
Mr. Mandyopadhyay as Whole time Director with effect from 1 August
2014 until 20 November 2014.
The Company had, pursuant to the provisions of clause 49 of the Listing
Agreements entered with the Stock Exchanges, appointed Mr. Pradeep
Mukerjee, Ms. Gagan Singh, Mr. Bijou Kurien and Mr. Daya Dhaon, as
Independent Directors at various times, in compliance with the
requirements of the clause.
Pursuant to the provisions of section 149 of the Act, which came in to
effect from April 1, 2014, every listed public company is required to
have at least one-third of the total number of directors as independent
directors, who are not liable to retire by rotation.
In terms of Section 149 and other applicable provisions of the
Companies Act, 2013, and Clause 49 of the Listing Agreement, Mr.
Pradeep Mukerjee, Ms. Gagan Singh, Mr. Bijou Kurien and Mr. Daya Dhaon,
are proposed to be appointed as Independent Directors of the Company
for a term of five years.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm as under:
(i) That in preparation of the Balance Sheet and the profit & Loss
Account of the Company, the applicable accounting standards have been
followed along with proper explanation relating to material departures.
(ii) The Directors 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) The Directors have taken proper and suffcient care 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.
(iv) That the Directors have prepared the Annual Accounts on a going
concern basis.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance together with a certifcate
from the practicing Company Secretary confirming compliance is set out
in the Annexure forming part of this report.
CONSERVATION OF ENERGY
Information required as per Section 217 (1) (e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given
in the Annexure forming part of this report.
AUDITORS
The auditors, M/s BSR & Co., LLP Chartered Accountants, retire at the
ensuing Annual General Meeting and have confirmed their eligibility and
willingness to accept office, if re-appointed.
AUDITORS'' REPORT
Your Board has duly examined the Report issued by the Statutory
Auditor''s of the Company on the Accounts for the financial year ended 31
March 2014 and their comment about the managerial remuneration. The
Company is in the process of fling an application for seeking waiver of
excess remuneration paid to a former Managing Director of the Company.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
support and cooperation, which the Company continues to receive from
its customers, the watch trade, the New Okhla Industrial Development
Authority, the Governments of Uttar Pradesh and Himachal Pradesh, and
finally the Members of the Company and its employees.
For and on behalf of the Board of Directors
Sd/-
Chairman
Mar 31, 2013
To the Members of Timex Group India Limited
The Directors are pleased to present the Twenty-ffth Annual Report and
Audited Statement of Accounts for the year ended 31 March 2013.
FINANCIAL RESULTS Rs. in Lakhs
2012-13 2011-12
Income 12,168 18,391
Expenditure 16,364 17,786
EBIDTA (3,875) 911
Interest 98 109
Depreciation 223 197
Proft before tax (PBT) (4,196) 605
Provision for Taxes 152
Proft after Tax (4,196) 453
2012-13 was a very diffcult fnancial year. Revenues and proft declined
34% and 46 crores, respectively. These declines were driven by a
combination of a weaker economic climate and higher costs due to the
devaluation of the Rupee. Additionally, revenues were reduced as we
implemented improved credit controls and new strategies against some of
our trade channels. These changes were necessary to ensure a healthy
long term business and we are already beginning to show positive
results.
The Company is committed to improving its top and bottom line fnancial
performance through three focused and simple strategies. In the
near-term, the Company''s focus will be on the following: 1) Generate
positive cash to reinvest in proftable growth, 2) Grow revenues by more
closely aligning product offerings with consumer demand, and 3)
Rationalize and realign spending to drive proftable growth
As part of its focus on cash, over the past two quarters the Company
instituted more stringent Credit Management policies as well as efforts
aimed at eliminating unproductive investments in Working Capital. While
the Credit Management policies tempered revenues somewhat, they were
necessary in order to balance revenues with collection of accounts
receivable to generate cash. And within Operations, a more closely
integrated sales forecasting and production process was implemented to
ensure maximum productivity of investments in inventory. These
initiatives will be a critical enabler to provide the cash necessary to
permit business-critical investments in new products, advertising and
store openings going forward.
In terms of leadership, during fscal 2012-2013, Mr. M.K. Bandyopadhyay
was appointed Acting Managing Director, replacing Mr. V.D. Wadhwa who
resigned on January 31, 2013.
By placing greater focus on the above short-term objectives, the
Company expects future fnancial performance to improve substantially.
However, fscal 2013-2014 will be a transition year. While it is
expected that signifcant progress will be achieved in fscal 2013-2014,
it is also expected to be a year of depressed fnancial performance as
comparatively weak economic conditions persist and as the costs
associated with the transition to a healthier business continue.
DEMATERIALISATION
Since year 2000, the equity shares of your Company are being
compulsorily traded in dematerialization form. As on 31 March 2013,
32359 no. of shareholders representing 97.02% of the Equity Share are
holding shares in the dematerialized form.
DIRECTORS
In accordance with Section 255 and 256 of the Companies Act, 1956 and
Articles of Association of the Company, Mr. Daya Dhaon retires by
rotation as a Director of the Company, and being eligible,offers
himself for re-appointment.
Mr. Gary Piscatelli was appointed as an Additional Director during the
year to hold offce up the date of forthcoming shareholders meeting. Mr.
Piscatelli has been subsequently appointed as Chairman of the Board of
Directors pursuant to the provisions of Articles of Association of the
Company. Your Company has received a notice from shareholder seeking
his appointment as a Director of your Company pursuant to section 257
of the Companies Act 1956.
Mr. M.K. Bandyopadhyay was appointed as an Additional Director of the
Company to hold offce up to the date of the forthcoming shareholders
meeting. Mr. Bandyopadhyay was subsequently appointed as Acting
Managing Director of the Company in place of Mr. V D Wadhwa who
resigned from the directorship and the post of Managing Director with
effect from 31 January 2013. Your Company has received a notice from a
shareholder seeking his appointment as a Director of your Company
pursuant to section 257 of the Companies Act 1956.
Mr. Kapil Kapoor and Mr. Arthur Morissette resigned from the
directorship of the Company with effect from 30 May 2013 and 1 March
2013 respectively.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confrm as under:
(i) That in preparation of the Balance Sheet and the Proft & Loss
Account of the Company, the applicable accounting standards has been
followed along with proper explanation relating to material departures.
(ii) The Directors had 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 fnancial year and of the proft of the
Company for that period.
(iii) The Directors had taken proper and suffcient care 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.
(iv) That the Directors have prepared the Annual Accounts on a going
concern basis.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance together with a certifcate
from the practicing Company Secretary confrming compliance is set out
in the Annexure forming part of this report.
CONSERVATION OF ENERGY
Information required as per Section 217 (1) (e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given
in the Annexure forming part of this report.
AUDITORS
The auditors, M/s BSR & Co., Chartered Accountants, retire at the
ensuing Annual General Meeting and have confrmed their eligibility and
willingness to accept offce, if re-appointed.
COST AUDITORS
Pursuant to the Order as notifed by the Ministry of Corporate Affairs
(Cost Audit Branch) vide circular dated 6 November 2012 read with Cost
Audit Report Rules 2011, the Company has appointed, M/s H. Tara and
Company, Cost Accountants, as the Cost Auditor of the Company for the
fnancial year 2013-14 for conducting the audit of the Cost Records of
the Company.
AUDITORS'' REPORT
Your Board has duly examined the Report issued by the Statutory
Auditor''s of the Company on the Accounts for the fnancial year ended 31
March 2013 and their comment about the managerial remuneration. The
Company''s application for approval of the excess remuneration paid to
the Managing Director of the Company is pending before the Central
Government.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
support and cooperation, which the Company continues to receive from
its customers, the watch trade, the New Okhla Industrial Development
Authority, the Governments of Uttar Pradesh and Himachal Pradesh, and
fnally the Members of the Company and its employees.
For and on behalf of the Board of Directors
Chairman
Mar 31, 2012
To the Members of Timex Group India Limited
The Directors are pleased to present the Twenty-fourth Annual Report
and Audited Statement of Accounts for the year ended 31 March 2012.
FINANCIAL RESULTS
Rs. in Lakhs
2011-12 2010- 11
Income 18,391 17,391
Expenditure 17,786 15,633
EBIDTA 911 1,927
Interest 109 0.47
Depreciation 197 169
Profit before tax (PBT) 605 1,758
Provision for Taxes 152 357
Profit after Tax 453 1,401
The year under review had been a tough year due to slowdown of the
economic growth. The GDP growth projection of 9% fell short of
expectations and the year closed with GDP growth of under 7%. This
coupled with high inflation and borrowing costs adversely impacted the
consumer demand in most categories and your Company was no exception.
In addition, the economy witnessed a sharp depreciation of Indian Rupee
during the year, which in turn had significantly impacted the operating
margins for the business. Your Company had taken aggressive price
increases across brands to minimize the impact of adverse exchange
rate; however the full benefit of these price changes will only be seen
in the next year. The rupee continues to be weak and necessary steps
are being taken to mitigate the future risk in this regard.
Regardless of these challenges, the focus of the Company had been to
deliver results and continue to invest in the long term growth drivers
for the business. The year 2011-12 saw the Company growing marginally
over the last year on overall business but our trade channel, which is
a better barometer for business equity witnessed approx 20% growth over
the last year.
The year 2012-2013 shall continue to be a challenging year. However, we
have no doubt that the fundamentals of the Indian economy shall
continue to be strong over the longer term. Going forward the Company
has set itself clear goals and objectives to ensure the sales and
profit evolution is in line with the Company's strategic plan.
In the last year, your Company had initiated synchronized action on
multiple fronts - people leadership, brand presence and innovations in
terms of products. Some of the key initiatives taken were as under:
- Improved Brand salience by building a stronger consumer connects
through a multimedia Communication program.
- Key positions in the Company were filled in to help address some of
the competency gaps.
- Revamped the product portfolio and introduced new styles with
improved aesthetics and at the same time generated a higher gross unit
margin for the business. This will serve us well in future
- Launched iconic Timex products such as Intelligent Quartz - the
world's smartest analog watch & Heart Rate Monitor.
- Partnered with 3 Gold Label Marathons (SCMM-Mumbai, ADHM-Delhi & TCS
Bangalore 10K) as "Official Timekeeper".
- Visual Merchandising development: Introduced new VM concepts and
techniques to amplify brand visibility across verticals.
- Expanded retail chain and launched 100th "Time Factory" store.
- Started E-Commerce and Face book fan page for our youth brand - HELIX
DEMATERIALISATION
Since year 2000, the equity shares of your Company are being
compulsorily traded in dematerialization form. As on date, 30988 number
of shareholders representing 96.97% of the Equity Share are holding
shares in the dematerialized form.
DIRECTORS
In accordance with Section 255 and 256 of the Companies Act, 1956 and
Articles of Association of the Company, Ms. Gagan Singh retires by
rotation as a Director of the Company and being eligible offer herself
for re-appointment.
Mr. V D. Wadhwa was appointed as the Managing Director of the Company
with effect from 29 April 2010 for a period of two years up to 28 April
2012. The Board of Directors on the recommendation of the Remuneration
Committee approved re- appointment of Mr. VD. Wadhwa as the Managing
Director of the Company for a further period of two years commencing
from 29 April 2012 subject to the approval of shareholders and such
other approval as may be required.
Mr. Bijou Kurien was appointed Additional Director during the year to
hold office up the date of forthcoming shareholders meeting. Your
Company has received a notice from shareholder seeking his appointment
as a Director of your Company pursuant to section 257 of the Companies
Act, 1956.
Mr. Arthur Joseph Morissette was appointed Additional Director during
the year to hold office up the date of forthcoming shareholders
meeting. Your Company has received a notice from shareholder seeking
his appointment as a Director of your Company pursuant to section 257
of the Companies Act, 1956.
Mr. Frank Sherer, Director of the Company resigned on 27 January 2012.
The Board wishes to place on record their appreciation for the valuable
guidance provided by Mr. Sherer during his Directorship
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm as under:
(i) That in preparation of the Balance Sheet and the Profit & Loss
Account of the Company, the applicable accounting standards has been
followed along with proper explanation relating to material departures.
(ii) The Directors had 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) The Directors had taken proper and sufficient care 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.
(iv) That the Directors have prepared the Annual Accounts on a going
concern basis.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance together with a certificate
from the practicing Company Secretary confirming compliance is set out
in the Annexure forming part of this report.
CONSERVATION OF ENERGY
Information required as per Section 217 (1) (e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given
in the Annexure forming part of this report.
AUDITORS
The auditors, M/s BSR & Co., Chartered Accountants, retire at the
ensuing Annual General Meeting and have confirmed their eligibility and
willingness to accept office, if re-appointed.
AUDITORS' REPORT
Your Board has duly examined the Report issued by the Statutory
Auditor's of the Company on the Accounts for the financial year ended
31 March 2012 and their comment about the managerial remuneration. The
Company's application for approval of the excess remuneration paid to
the Managing Director of the Company is pending before the Central
Government. ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
support and cooperation, which the Company continues to receive from
its customers, the watch trade, the New Okhla Industrial Development
Authority, the Governments of Uttar Pradesh and Himachal Pradesh, and
finally the Members of the Company and its employees.
For and on behalf of the Board of Directors
Sd/-
Noida Kapil Kapoor
31 May 2012 Chairman
Mar 31, 2011
To the Members of Timex Group India Limited
The Directors are pleased to present the Twenty-third Annual Report
and Audited Statement of Accounts for the year ended 31 March 2011.
FINANCIALRESULTS Rs. in Thousands
2010-11 2009- 10
Income 1739082 1400709
Expenditure 1563321 1341958
EBIDTA 192734 83311
Interest 47 1679
Depreciation 16926 22881
Profit before tax (PBT) 175761 58751
Provision for Taxes 35663 12518
Profit after Tax 140098 46233
The economic environment for the domestic business continued to remain
conducive for most part of the year and all major players in the watch
industry witnessed strong growth, which was largely driven by fashion
and youth segment and expansion of the retail footprint. The high
inflation rate and rising cost of commodities prices, if not contained,
is likely to adversely impact the consumer sentiment and the overall
economic growth environment in the year ahead.
The year 2010-11 has been a year of major transformation, during which,
your Company has delivered its highest ever volume, revenue and
profitability performance. Sales Revenue grew by 25% at Rs 174 Crore
and Profit before tax grew by 203% at Rs 14 Crore.
The year begun with a leadership change in the management team and the
subsequent finalization of your Company's three years strategic plan.
Under the new leadership, several key initiatives were taken to drive
efficiencies across the organization and also align all stakeholders of
the Company with the goals to create a strong sense of vision and focus
for the business.
Some of the key marketing initiatives taken were as under;
- Revamped the product portfolio and introduced new styles with
improved aesthetics and at the same time generated a higher gross
margin for the business.
- Launched New Brands - to target different consumer segments and widen
the appeal of the Timex Group Portfolio. The brands launched this year
were;
- Mark Ecko : in the fashion segment
- Versace : in Luxury fashion segment
- Tarun Tahiliani : in the premium women's segment
- Helix : in the fast growing youth segment
- Partnered with "ICC Cricket World Cup 2011" event as the "Official
Product Licensee"
- Increased media spend with a focus on Television Advertising. A new
brand television commercial was developed for the Timex brand during
the year to reinforce the "conversation starters" theme. This campaign
was well received by trade and consumers.
- Visual Merchandising development. A marketing toolkit was
conceptualized and executed across points of sale in the different
store formats. This has helped build a consistent image for the
different brands across the country.
- Expanded the number of franchised retail stores, "The Time Factory",
to 76 during the last year.
MANAGEMENT DISCUSSION AND ANALYSIS
THE INDIAN WATCH MARKET
The size of Indian watch market is estimated to be at Rs 5000 Crores of
which 60% of the business is contributed by the organized sector. The
brands at the premium end of the market and in the fashion and youth
segments continue to grow significantly faster than other brands. While
the unit growth is driven by low price unbranded products, the growth
at the mid and higher price points is driven by creating higher value
through improved styling and technology features. The growth in the
market has been led by marketing investments made by several Indian and
Global brands (including the launch of several new brands) which are
increasing their focus on the Indian market. This increased competition
and marketing investment is a good sign; since we believe this will
drive the growth of the industry, which is still in a nascent stage
when compared to penetration in developed countries.
The entry of several brands especially in the Fashion and Luxury
segments of the market has resulted in increased competition for the
rather limited retail space available in the multi brand watch retail
environment. And in turn this has led to further investment and
development of "modern retail" channels to meet the increased demand.
The industry has overall witnessed an increase in the contribution of
"modern retail" to the overall business. The development of this
channel, while enhancing the consumer buying experience in terms of an
international environment to shop in, is leading to an increase in
margin expectations from the branded companies. In view of this,
companies which are in a position to offer a portfolio of brands are
better positioned for faster and profitable growth.
OUTLOOK/OPPORTUNITES & KEY CHALLENGES
The economic growth of India and the changing life style of the Indian
consumers (especially the relatively younger consumers) who are
aspiring to a more international way of life on account of the growing
awareness of the global fashion trends, bodes well for the growth of
the watch industry. And your company is well positioned to take
advantage of this.
The company has an unique advantage of having several international
brands with domestic manufacturing capabilities. This allows
international products to be sold in India at prices which offer
tremendous "Value for Money" to the consumer. The company also boasts
of a portfolio of seven Global brands and the presence of its own
franchised retail chain, "The Time Factory", comprising of 76 stores.
This allows TGIL to participate at all ends of the value chain which in
turn enhances margins. By doing so, the company is also better
positioned to control its own destiny more effectively and this
provides a sustainable growth platform for the business in the years
ahead.
In addition, your Company continues to enjoy the support of the Timex
Group Global Design Centre located in Milan and also Global Supply
Chain organization to support the business in India which has resulted
in improved technology and styling of the products.
The watch industry has changed significantly over the last few years
and watches are being used as a fashion accessory more than a time
telling device. This has resulted in a trend for multiple watch
ownership;" A different watch for different occasions". This is an
encouraging trend for the industry and could propel industry growth
significantly in future years and TGIL with its wide array of brands
and styles, ranging from Fashion and Classics to Sports can take full
advantage of this.
In addition, India continues to be a key strategic market for the Timex
Group and therefore enjoys easy access to its global resources across
all functional areas, which should help improve our operational
efficiencies due to the scale of the Group's global operations.
Finally, at TGIL, we are benefiting from the operating leverage we now
enjoy as a business and this means that future growth will be more
profitable.
RISKS /THREATS
The increase in the commodities prices, increased cost of sourcing from
China and limited vendor capacity for the critical watch parts in India
are resulting in the increase in the sourcing costs of key components.
The rising input costs shall have an adverse impact on the operating
margins, unless mitigated through various measures to cut costs
(without compromising quality). Several initiatives are being developed
to address this risk.
The 'Tsunami' in Japan has severely impacted the supply of watch
movements in the last few months, which has since improved.
Re-occurrence of such disasters in future could cause a supply chain
risk for the Category.
In addition to this, increasing consumer preference for usage of mobile
phones as a time keeping device instead of watches also pose a major
threat especially with the category of consumers who still use a watch
to tell time. This is being suitably addressed by several marketing
initiatives by promoting watches as a fashion accessory as indicated in
the section above.
GOVERNMENT POLICY
Your Company has been actively involved with the "All India Federation
of Horological Industries", an apex body of Horological Industry in
India. Your Company together with AIFHI has been taking up issues
concerning the Watch Industry and your Company in particular, with the
various government agencies. With the active participation by majority
of brands in the Category, AIFHI has released a white paper on the
industry, highlighting the key issues for which a change in Government
Policy is recommended and taken up with the respective authorities for
the overall growth of the industry. We shall continue our efforts to
represent the interests of the Industry and your own Organisation.
FINANCE
Your Company has been able to manage its cash flow through improved
collections and utilized the surplus cash to reduce the borrowings and
accounts payable, which has resulted in savings in Interest costs
despite firming up of Interest Rates.
The Company does not hold any fixed deposits from the public,
shareholders & employees. There were no overdue / unclaimed deposits as
on 31 March 2011.
During the year under review, the Company made payment aggregating to
Rs.32.58 Crore by way of Central, State and local sales taxes and
duties as against Rs. 30.06 Crore in the previous year.
Your Company is also paying dividend on its Preference Shares at the
agreed coupon rate.
SEGMENT WISE REPORTING
The segment wise information for watches and other activities are
provided in the Notes to the Accounts.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has endeavoured to continuously improve the internal
controls both relating to financial reporting and Operations. Your
Company has well established procedures for internal control, which are
commensurate with its size and operations.
The internal control mechanism comprises of a well-defined
organization, who undertake time bound audits and report their findings
to the Audit Committee, documented policy guidelines, predetermined
authority levels and processes.
The systems and operations are regularly reviewed by the Audit
Committee to ensure and review their effectiveness and implementation.
The Statutory Auditors of the Company also attend these meetings and
convey their views on the adequacy of internal control systems as well
as financial disclosures. The Audit Committee also issues directives
for enhancement in scope and coverage of specific areas, wherever felt
necessary.
HUMAN RESOURCES
"Human Resources" continues to be a major thrust area in Your Company,
which is highly critical for business expansion and growth. Your
Company provides a challenging work environment that encourages
meritocracy at all levels and has believed in an environment that
fosters accomplishment, ownership, creativity and mutual respect.
Your Company comprises a small team of professionals, who are result
oriented, committed and loyal.
Attracting and retaining the bright talent and improvement in the
quality of manpower at retail stores are identified as key challenges
and being addressed accordingly through various training initiatives
and retention tools.
The information required as prescribed under Section 217 (2 A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975 is annexed herewith forming part of this report. However as
per provisions of Section 219 (1) (b) (iv)
of the Companies Act, 1956, only the report and accounts are being sent
to all the shareholders excluding the statement of particulars of
employees under Section 217 (2A) of the Act. Any shareholder interested
in obtaining a copy of the said statement may write to the Company
Secretary at the Registered Office address of the Company.
CAUNONARYSTATEMENT
Statements in the Management Discussion and Analysis, outlining the
Company's objective, expectations or predictions may be 'forward
looking statements' within the meaning of applicable laws and
regulations. Actual results could differ materially from those
expressed or implied in the statements. The important factors that
could influence the Company's operations include demand and supply
conditions affecting sale price of finished goods, input availability
and prices, changes in government regulation, tax laws, economic
developments within the country and abroad and such other factors such
as litigation and industrial relation etc.
DEMATERIALKATION
Since year 2000, the equity shares of your Company are being
compulsorily traded in dematerialization form. As on date, 31802 no. of
shareholders representing 21.96% of the Equity Share are holding shares
in the dematerialized form.
DIRECTORS
In accordance with Section 255 and 256 of the Companies Act, 1956 and
Articles of Association of the Company, Mr. Frank A Sherer and
Mr.Pradeep Mukerjee retire by rotation as Director of the Company and
being eligible, offers themselves for reappointment.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm as under:
(i) That in preparation of the Balance Sheet and the Profit & Loss
Account of the Company, the applicable accounting standards has been
followed along with proper explanation relating to material departures.
(ii) The Directors had 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) The Directors had taken proper and sufficient care 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.
(iv) That the Directors have prepared the Annual Accounts on a going
concern basis.
(v) That due to sudden demise of Mr. Raghu Pillai on 10lh April, 2011,
who was one of the Director on the Board, representation u/s 274 (1)
(g) was not received prior to the date of Audit Report, however, later
representations u/s 274 (1) (g) have been received from two Companies,
where he was a Director.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance together with a certificate
from the Company's Auditors confirming compliance is set out in the
Annexure forming part of this report.
CONSERVATION OFENERGY
Information required as per Section 217 (1) (e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given
in the Annexure forming part of this report.
AUDITORS
M/s BSR & Co., Chartered Accountants and Statutory Auditors of the
Company retire and are eligible for reappointment.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the
support and cooperation, which the Company continues to receive from
its customers, the watch trade, the New Okhla Industrial Development
Authority, the Governments of Uttar Pradesh and Himachal Pradesh, and
finally the Members of the Company and its employees.
For and on behalf of the Board of Directors
New Delhi KapilKapoor
26 May, 2011 Chairman
Mar 31, 2010
The Directors are pleased to present the Twenty Second Annual Report
and Audited Statement of Accounts for the year ended 31 March 2010.
FINANCIAL RESULTS Rs. in Thousands
2009-10 2008- 09
Income 1400709 1319639
Expenditure 1341958 1293229
EBIDTA 83311 56471
Interest 1679 6646
Depreciation 22881 23415
Profit before tax (PBT) 58751 26410
Profit on sale of PED Business - 63533
Provision for Taxes 12518 15401
Profit after Tax 46233 74542
The year 2009-10 witnessed a slow but definite sign of recovery in
retail sentiment across most segments, after the slowdown of economy
during 2008-9. For the year ended 31 March 2010, the sales revenue grew
to Rs. 140 crores increasing by a modest 7% from Rs 131 crores. Profit
before taxes grew by 122% to Rs 5.87 crores from Rs 2.64 crores during
previous year and Net profit for the year was Rs 4.62 crore compared to
Rs 7.45 crore in previous year, which was inclusive of one time profit
of Rs 6.35 crore due to sale of PED business.
Your Company continues to drive its strategy of retail expansion
through opening of "The Time Factory" stores and internalization of
fast moving international styles for driving business growth in
profitable segments, which is reflected in the increased profitability.
Your Company is also finalizing its plan for launching "Versace" and
"Marc Ecko" watch brands from its International portfolio in the Indian
Market to drive its portfolio strategy and offer multiple choices of
brands across price points to the Indian Consumers.
MANAGEMENT DISCUSSION AND ANALYSIS THE INDIAN WATCH MARKET
The size of Indian watch market is estimated at 45 million watches. The
brands at the premium end of the market and in the fashion segments
continues to grow significantly faster than other brands. While the
volume growth is driven by low price point products, the growth of most
brands is driven by value and not volume. The growth has been led by
marketing investments by several Indian and Global players including
your Company. This augurs well for the growth of overall Industry.
The watch industry witnessed the entry of several luxury and fashion
brands during the year, which resulted in increasing the competition
for retail space in the multi brand outlets across the country.
Companies, which are expanding their retail footprint and offering a
portfolio of brands continue to grow faster. Your Company has the
unique advantage of being the only international brand with its own
domestic manufacturing capabilities, a portfolio of eleven
international brands and the presence of its own retail chain, "The
Time Factory", comprising of 69 stores.
OUTLOOK/OPPORTUNITES & KEY CHALLENGES
The current economic environment, the growing awareness of global
fashion trends and the changing life style of the Indian consumers are
indicative of high growth for life style brands with emphasis on
outdoor & technology, fashion and luxury segments. Over the last
several decades, the Timex Brand has come to be known for its
technological superiority and large offering of outdoor and fashion
products.
Your Company shall continue to invest in its product portfolio and
strengthen the communication of its brand attributes of "Superior
Technology", "Sporty" and "Fashionable". The younger segment has also
been identified as a segment poised for high growth, which shall be
largely addressed through product differentiation and offering an
exclusive range crafted by International designers following the global
trends.
The Timex Group now offers a portfolio of eleven international brands
including Timex, i.e. Salvatore Ferragamo, Versace, Guess, Gc, Nautica,
Marc Ecko, TX, Valentino, Versus and OPEX. During the year, your
Company intends to introduce Salvatore Ferragamo, Versace and Marc Ecko
to the Indian Consumers to pursue its portfolio strategy and, further
strengthen its retail presence through expansion of "The Time Factory"
stores and gain share in the Multi Brand Retail outlets. Your Company
has identified these as key action points for driving business growth
in the coming years.
RISKS/THREATS
Your Company is expanding its retail network through franchisees at the
front end. This is an efficient way to expand rather than having
Company owned/managed showrooms which is a costlier option. The
relationships have to be actively managed to pre-empt shifting of
loyalties of these franchisees to other product category/Brands.
The Company is addressing this risk by initiating a high level of
engagement with the franchisees and addressing their reasonable
business requirements in an empathetic manner, through both contractual
arrangements and day to day interface with these business associates.
The increasing operating costs of retailing also pose as risk to the
maintenance of operating margins.
The weakening rupee had a negative impact on the profitability of your
Company being a net importer. Your Company continues to drive operating
efficiencies to overcome and mitigate such risks.
GOVERNMENT POLICY
Your Company has been actively involved with the "All India Federation
of Horological Industries", an apex body of Horological Industry in
India. Your Company together with AIFHI has been taking up issues
concerning the Watch Industry and your Company in particular, with the
various government agencies. We have made several representations to
the government for reduction and rationalization of duties, increase in
the rate of abatement on watches, and enhancement of DEPB credit rates
relating to export of Quarts Analogue Watches including other export
benefits etc. We shall continue our efforts to represent the interests
of the Industry and your own Organisation.
FINANCE
Your Company has been able to manage its cash flow through improved
collections and utilized the surplus cash to reduce the borrowings and
accounts payable, which has resulted in savings in Interest costs
despite firming up of Interest Rates.
The Company does not hold any fixed deposits from the public,
shareholders & employees. There were no overdue / unclaimed deposits as
on 31 March 2010.
During the year under review, the Company made payment aggregating to
Rs.30.06 Crore by way of Central, State and local sales taxes and
duties as against Rs. 27.39 Crore in the previous year.
Your Company is also paying dividend on its Preference Shares at the
agreed coupon rate. The dividend liability on preference shares until
March 2009 was waived by the Preference Share Holders.
SEGMENT WISE REPORTING
The segment wise information for watches and other activities are
provided in the Notes to the Accounts.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has endeavoured to continuously improve the internal
controls both relating to financial reporting and Operations. Your
Company has well established procedures for internal control, which are
commensurate with its size and operations. *
The internal control mechanism comprises of a well-defined organization
structure, documented policy guidelines, predetermined authority levels
and processes.
The systems and operations are regularly reviewed by the Audit
Committee to ensure and review their effectiveness and implementation.
The Statutory Auditors of the Company also attend these meetings and
convey their views on the adequacy of internal control systems as well
as financial disclosures. The Audit Committee also issues directives
for enhancement in scope and coverage of specific areas, wherever felt
necessary.
HUMAN RESOURCES
Your Company is proud to have result oriented, committed & loyal
employees, who are the key resource for the growth of its business.
Your Company provide a challenging work environment that encourages
meritocracy at all levels and has believed in an environment that
fosters accomplishment, ownership, creativity and mutual respect.
One of the key challenges in this area is to increase manpower
productivity, through training and motivational programmes. The
efforts are on to impart training to sales staff at our TTF Stores.
The information required as prescribed under Section 217 (2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975 is annexed herewith forming part of this report. However as
per provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956,
only the report and accounts are being sent to all the shareholders
excluding the statement of particulars of employees under Section 217
(2A) of the Act. Any shareholder interested in obtaining a copy of the
said statement may write to the Company Secretary at the Registered
Office address of the Company.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis, outlining the
Companys objective, expectations or predictions may be forward
looking statements within the meaning of applicable laws and
regulations. Actual results could differ materially from those
expressed or implied in the statements. The important factors that
could influence the Companys operations include demand and supply
conditions affecting sale price of finished goods, input availability
and prices, changes in government regulation, tax laws, economic
developments within the country and abroad and such other factors such
as litigation and industrial relation etc.
DEMATERIALISATION
Since year 2000, the equity shares of your Company are being
compulsorily traded in dematerialization form. As on date, 33977 no. of
shareholders representing 21.86% of the Equity Share are holding shares
in the dematerialized form.
DIRECTORS
Mr. Daya Dhaon retires by rotation as Director of the Company and being
eligible, offers himself for reappointment.
Mr. .Hans-Kristian Hoejsgaard resigned from directorship of the
Company. The Company wishes to place on record its appreciation for the
valuable guidance and support provided by Mr. Hoejsgaard during his
tenure as Director and Chairman of the Board of Directors of the
Company.
Mr. Sherer was appointed an Additional Director to hold office up to
the date of the forthcoming shareholders meeting. Mr. Sherer has been
subsequently appointed as Chairman of the Board of Directors pursuant
to Articles of Association of the Company. Your Company has received
notice from a shareholder seeking his appointment as Director of your
Company pursuant to Section 257 of the Companies Act 1956.
Mr. Pradeep Mukerjee was appointed as an Additional Director during the
year to hold office up the date of the forthcoming shareholders
meeting. Your Company has received notice from a shareholder seeking
his appointment as Director of your Company pursuant to Section 257 of
the Companies Act 1956.
Mr. V.D.Wadhwa was appointed an Additional Director to hold office up
the date of the forthcoming shareholders meeting. Mr. Wadhwa was
subsequently appointed Managing Director of the Company in place of Mr.
G. Kannan, who resigned from the directorship and the post of Managing
Director effective 29 April 2010.Your Company has received notice from
a shareholder seeking Mr. Wadhwas appointment as Director of your
Company pursuant to Section 257 of the Companies Act 1956.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your
Directors confirm as under:
(i) That in preparation of the Balance Sheet and the Profit & Loss
Account of the Company, the applicable accounting standards has been
followed along with proper explanation relating to material departures.
(ii) The Directors had 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) The Directors had taken proper and sufficient care 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.
(iv) That the Directors have prepared the Annual Accounts on a going
concern basis.
(v) The Directors are pleased to recommend payment of dividend on
3,86,00,000 Cumulative Redeemable Preference Shares ( both the series)
of Rs Ten each at the rate of Rs.0.71/- per share and on 25,00,000 Non-
Cumulative Redeemable Preference Shares of Rs Ten each at the rate of
Rs 0.01 per preference share, subject to approval by the shareholders
at the Annual General Meeting,
As per Section 217 of the Companies Act, the Directors take note of the
Auditors Report (Clause 4f) and share that the decision of the Central
Government on the request made is awaited and the Company shall abide
by the due legal process.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance together with a certificate
from the Companys Auditors confirming compliance is set out in the
Annexure forming part of this report.
CONSERVATION OF ENERGY
Information required as per Section 217 (1) (e) of the Companies Act,
1956, read with the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, regarding conservation of energy,
technology absorption and foreign exchange earnings and outgo is given
in the Annexure forming part of this report.
AUDITORS
M/s BSR & Co., Chartered Accountants and Statutory Auditors of the
Company retire and are eligible for reappointment.
ACKNOWLEDGEMENTS
Lastly, your Directors wish to place on record their appreciation for
the support and cooperation, which the Company continues to receive
from its customers, the watch trade, the New Okhla Industrial
Development Authority, the Governments of Uttar Pradesh and Himachal
Pradesh, the Companys bankers and finally the Members of the Company
and its employees.
For and on behalf of the
Board of Directors
Kapil Kapoor
Vice-Chairman
New Delhi
27 May, 2010
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