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Director(s) Kapil Kapoor Non-Executive Director & ChairmanAs on 31 May, 2012 V D Wadhwa Managing Director

Daya Dhaon Non-Executive & Independent DirectorGagan Singh (Ms.) Non-Executive & Independent DirectorPradeep Mukerjee Non-Executive & Independent DirectorBijou Kurien Non-Executive & Independent DirectorArthur Joseph Morissette Non-Executive Director

Company Secretary Shilpa Verma

Bankers The Hongkong & Shanghai Banking Corporation LimitedHDFC Bank Limited

Auditors BSR & Co.,Chartered Accountants

Registered Office 117 G.F. World Trade Centre,Babar Road, New Delhi – 110001.

Works Plot No.10Baddi Industrial AreaKatha BhatoliBaddi, Distt. Solan (H.P)

Share Registrar & Alankit Assignment LimitedTransfer Agent 2E/21 Alankit House

Jhandewalan ExtensionNew Delhi-110 055Tel.: 011-42541234Fax: 011-42541967Email.: rta@alankit.comWebsite : www.alankit.com

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NOTICE

Notice is hereby given that the Twenty-fourth Annual General Meeting of the Members of TIMEX GROUP INDIA LIMITEDwill be held on Friday, 3 August 2012 at 10.00 A.M. at the Air Force Auditorium, Subroto Park, New Delhi - 110010, to transactthe following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Balance Sheet as at 31 March 2012, the Profit and Loss Account for the yearended on that date and the Report of the Auditors’ and Directors’ thereon.

2. To declare dividend on Redeemable Preference Shares for the financial year 2011-12.

3. To appoint a Director in place of Ms. Gagan Singh who retires by rotation and being eligible, offers herself for re-appointment.

4. To appoint Auditors to hold office from the conclusion of this Annual General Meeting until the conclusion of thenext Annual General Meeting and to fix their remuneration and to pass the following resolution thereof.

“RESOLVED THAT M/s. BSR & Co., Chartered Accountants (Firm Registration No. 101248W), be and are herebyre-appointed as the Auditors of the Company to hold office from the conclusion of this Annual General Meeting tothe conclusion of the next Annual General Meeting of the Company at remuneration to be fixed by the Board ofDirectors in consultation with the Auditors in addition to reimbursement of all out of pocket expenses.”

SPECIAL BUSINESS

5 Appointment of Mr. Bijou Kurien as a Director, liable to retire by rotation:

To consider and, if thought fit, to pass with or without modification(s), the following resolution as an ORDINARYRESOLUTION.

“RESOLVED THAT Mr. Bijou Kurien, who was appointed as an Additional Director of the Company pursuant toSection 260 and other relevant provisions of the Companies Act, 1956 and Article 103(a) of the Articles of Associationof the Company with effect from 29 July 2011, holds office up to the date of this Annual General Meeting and inrespect of whom, the Company has received a notice in writing pursuant to Section 257 of the Companies Act,1956,proposing his candidature for the office of Director, be and is hereby appointed as a Director of the Company, liableto retire by rotation.

6 Appointment of Mr. Arthur Joseph Morissette as a Director, liable to retire by rotation :

To consider, and if thought fit, to pass with or without modification(s), the following resolution as an ORDINARYRESOLUTION.

“RESOLVED THAT Mr. Arthur Joseph Morissette, who was appointed as an Additional Director of the Companypursuant to Section 260 and other relevant provisions of the Companies Act 1956 and Article 103(a) of the Articlesof Association of the Company with effect from 27 January 2012, holds office up to the date of this Annual GeneralMeeting and in respect of whom, the Company has received a notice in writing pursuant to Section 257 of theCompanies Act,1956 , proposing his candidature for the office of Director, be and is hereby appointed as a Directorof the Company, liable to retire by rotation.

7 Re-Appointment of Mr. V.D. Wadhwa as the Managing Director of the Company.

To consider, and if thought fit, to pass with or without modification(s), the following resolution as a SPECIALRESOLUTION.

“RESOLVED THAT pursuant to the provisions of Section 198,269,309,311 read with Schedule XIII and all otherapplicable provisions of the Companies Act, 1956, and subject to the approval of Central Government, if necessary,and such other approvals as may be required, the consent of the Company be and is hereby accorded for the re-appointment of Mr. V D Wadhwa as the Managing Director of the Company for a period of two years with effectfrom 29 April, 2012, upon the terms and conditions mentioned in the explanatory statement attached herewith andas set out in the draft agreement to be executed between the Company and Mr. Wadhwa which is hereby specificallyapproved with the liberty to the Board of Directors to alter and vary the terms and conditions of the said reappointment

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and / or Agreement in such manner as may be agreed to between the Board of Directors and Mr. Wadhwa within theparameter as provided in the Explanatory Statement and that the Company also accords its approval for theaction(s) taken / to be taken by Board of Directors in this regard.

Registered Office : By Order of the117, Ground Floor, Board of DirectorsWorld Trade Centre, Sd/Babar Road, Shilpa VermaNew Delhi – 110 001 Company SecretaryDated: 31 May 2012

NOTES1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE

INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. A blank Proxy Form isenclosed with this notice and if intended to be used, the form duly completed should be deposited at the RegisteredOffice of the Company not later than 48 hours before the commencement of the Annual General Meeting. Proxiessubmitted on behalf of Companies, societies etc. must be supported by appropriate resolution/ authority as applicable.

2. The Members/ Proxies attending the meeting are requested to bring the enclosed Attendance Slip and deliver the sameafter filling in their folio number at the entrance of the meeting hall. Admission to the Annual General Meeting venue willbe allowed only on verification of the signature(s) on the Attendance Slip.

3. Duplicate attendance slip shall not be issued at the Annual General Meeting venue. The same shall be issued at theRegistered Office of the Company up to a day preceding the day of the Annual General Meeting.

4. Corporate Members are requested to send a duly certified copy of the Board resolution/ Power of Attorney authorizingtheir representative to attend and vote at the Annual General Meeting.

5. In case of joint holders attending the meeting, only such joint holders who are higher in the order of names will beentitled to vote.

6. As a measure of economy, copies of the Annual Report will not be distributed at the venue of the Annual GeneralMeeting. The Members are, therefore requested to bring their copies of the Annual Report to the meeting. Thosemembers who have not received copies of Annual Report can collect their copies from the Corporate/ Registered Officeof the Company.

7. The Register of Members and Share Transfer Books of the Company will remain closed from Thursday, 28 June 2012 toFriday, 29 June 2012, both days inclusive.

8. The Explanatory Statement pursuant to Section 173 of the Companies Act, 1956, in respect of the business under ItemNo. 5 to 7 is annexed hereto. Relevant details, in terms of Clause 49 of the Listing Agreement, in respect of Directorretiring by rotation and proposed to be re-appointed and other Directors proposed to be appointed are disclosed in theCorporate Governance Report.

9. The dividend declared by Board of Directors on 1,57,00,000 Cumulative Redeemable Non-Convertible Preference Sharesissued on 27 March 2004 and 2,29,00,000 issued on 21 March 2006 and also 25,00,000 Non-cumulative RedeemablePreference shares issued on 25 March 2003 in favour of Timex Group Luxury Watches BV (formerly known as TimexWatches BV) will be paid/ distributed within the statutory period of 30 days after declaration by Members in this AnnualGeneral Meeting.

10. The members are requested to inform changes, if any, in their Registered Address along with Pin Code Number to theCompany at the following Address:TIMEX GROUP INDIA LIMITED(Investors Relation Department)117, Ground Floor, World Trade CentreBabar Road, New Delhi – 110 001

11. The Register of Directors’ shareholding maintained under section 307 of the Companies Act, 1956, will be available forinspection by the members at the Annual General Meeting.

12. The Members desirous of seeking any information on the Accounts are requested to write to the Company at least aweek before the meeting to enable the management to keep the information ready.

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13. All documents referred to in the accompanying notice and the Explanatory Statement are available for inspection at theRegistered Office of the Company during working hours between 10.00 A.M. to 1.00 P.M. except holidays up to the dateof Annual General Meeting.

14. The Non Resident members are advised to provide their correspondence address in India and to give mandate forremittance of dividend directly to their bank account(s) in future.

15. Important Communication to MembersThe Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Governance” by allowing paperlesscompliances by the Companies and has issued circulars stating that service of notices/ documents including AnnualReport can be sent by e-mail to its members. To support this green initiative of the Government in full measure, memberswho have not registered their e-mail addresses, so far, are requested to register their e-mail addresses, in respect ofelectronic holdings with the Depository through their concerned Depository Participants. Members who hold shares inphysical form are requested to fill the appropriate column in the members business reply form (refer page 55 of theAnnual Report) and register the same with Alankit Assignment Limited. Postage for sending the business reply formwill be borne by the Company.

EXPLANATORY STATEMENT UNDER SECTION 173 (2) OF THE COMPANIES ACT, 1956Item No 5In terms of the provisions of Section 260 and other relevant provisions of the Companies Act, 1956 and Article 103(a) of theArticles of Association of the Company, Mr. Bijou Kurien was appointed as an Additional Director of the Company by theBoard of Directors at their meeting held on 29 July 2011. Mr. Kurien holds office up to the date of this Annual GeneralMeeting.The Company has received a notice from a member signifying his intention to propose the appointment of Mr. Kurien as aDirector of the Company along with a deposit of Rs.500/-(Rupees Five Hundred only) which shall be refunded to the member,if Mr. Kurien is elected as a Director.Mr. Bijou Kurien has 30 years of experience in the Consumer Products Industry. He is currently President & CE of RelianceRetail Limited. Prior to this he has worked with Titan Industries and Hindustan Unilever Limited. He has also held theposition of Chairman of the India Retail Forum, Member of CII National Retail Committee and Member of Advisory Board ofthe World Retail Congress. He is a science graduate and also did PG Diploma in Business Management from XLRI, Jamshedpur.The Directors commend the Resolution for acceptance by the Members.None of the Directors, other than Mr. Kurien himself, are deemed to be concerned or interested in this resolution, as it relatesto his appointment.Item No 6In terms of the provisions of Section 260 and other relevant provisions of the Companies Act, 1956 and Article 103(a) of theArticles of Association of the Company, Mr. Arthur Joseph Morissette was appointed as an Additional Director of theCompany by the Board of Directors at their meeting held on 27 January 2012. Mr. Morissette holds office up to the date ofthis Annual General Meeting.The Company has received a notice from a member signifying his intention to propose the appointment of Mr. Morissette asa Director of the Company along with a deposit of Rs.500/-(Rupees Five Hundred only) which shall be refunded to themember, if Mr. Morissette is elected as a Director.Mr. Arthur Joseph Morissette is a seasoned financial executive with more than 30 years of hands-on senior managementexperience most recently as Chief Financial Officer of Timex Group USA Inc. He is experienced in cash flow forecasting,managing internal costing systems, internal and external financial reporting, implementing cost reduction initiatives, andrationalization of headcount and plant facilities. Mr. Morissette has also handled business acquisitions with responsibilityfor integrating all accounting and financial operations.The Directors commend the Resolution for acceptance by the Members.None of the Directors, other than Mr. Morissette himself, are deemed to be concerned or interested in this resolution, as itrelates to his appointmentItem No 7Mr. V D Wadhwa was appointed as Managing Director of the Company w.e.f. 29 April 2010 for a period of two years up to 28April 2012.In view of his vast experience and valuable contribution towards the growth of the Company, the Board of Director of theCompany, on the recommendation of the Remuneration Committee approved the re-appointment of Mr. V D Wadhwa as a

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Managing Director of the Company for a further period of two years commencing from 29 April, 2012 on the terms andconditions set out in the Agreement between the Company and Mr. V D Wadhwa. Such re-appointment is subject to theapproval of members of the Company and Central Government, if necessary.The Agreement between the Company and Mr. Wadhwa contains the following main terms and conditions;

(A) Period of Appointment : Two years with effect from 29 April 2012(B) Terms of Appointment:1. As Managing Director of the Company, Mr. Wadhwa shall exercise such powers to manage the day to day affairs

of the Company as may be delegated to him by the Board of Directors from time to time. Mr. Wadhwa will servediligently and faithfully and will comply with all applicable laws and regulations and with all business policies andstandards of the Company in his performance of services under this Agreement. Mr. Wadhwa will perform suchservices personally at such reasonable times and places as the Company may direct in connection with thebusiness.

2. During the term of this Agreement, Mr. Wadhwa will not engage in or accept any other assignment or employmentexcept the responsibilities entrusted upon him as Director of Timex Group Precision Engineering Limited.Mr. Wadhwa shall devote sufficient time and attention to and exert his best efforts in the performance of his dutieshereunder, so as to promote the business of the Company.

3. Mr. Wadhwa shall perform his obligations subject to the supervision, control and direction of the Board ofDirectors and to regularly report to the Board of Directors on the activities of the Company in respect of thematters delegated to him by the Board.

(C ) Terms of Remuneration1. The following terms of remuneration shall be applicable to Mr. Wadhwa, effective 29 April 20122. The Board of Directors of the Company is empowered to fix the remuneration payable to Mr. Wadhwa in the slab

of Rs. 1,00,00,000 to Rs. 2,00,00,000 per annum, with the base salary in the scale of Rs. 40,00,000 to Rs. 75,00,000 perannum, subject, however to deduction of all applicable taxes and / or levies etc.

3. Remuneration payable to Mr. Wadhwa, shall be fixed by the Board of Directors of the Company in accordance withthe approval given by the shareholders of the Company which shall constitute the minimum remuneration payableto him irrespective of the fact that the Company has inadequate profits/ or has losses. Further, Mr. Wadhwa shallbe eligible for compensation for loss of office for the purposes of Section 318 of the Act.

4. Mr. Wadhwa’s performance shall be reviewed by the Board annually and his remuneration shall be revised withinthe overall range as mentioned above.

5. Mr. Wadhwa shall also be entitled to all other employee benefits with respect to Provident Fund, SuperannuationFund, Gratuity, leave rules, Club Membership etc. as per Company’s policy. In addition, he shall be entitled toreimbursement of all business related expenses incurred by him on actual basis as per Company’s policy, practiceand procedure as is in effect from time to time, as an employee in continuation of his employment with theCompany.

6. The draft of agreement between the Company and Mr. Wadhwa is available for inspection at the Registered Officeof the Company between 11.00 A.M. and 1.00 P.M. on any working day of the Company.The Statement pursuant to Schedule –XIII of the Companies Act, 1956 for the appointment of Mr. V D Wadhwa asManaging Director is attached in the Notice.This Explanatory Statement together with the accompanying Notice may also be regarded as an abstract underSection 302 of the Companies Act, 1956.The Board recommends the Special Resolution set fourth at Item No. 7 of the Notice for approval of the members.None of the Directors, other than Mr. Wadhwa himself, are deemed to be concerned or interested in this resolution,as it relates to his appointment.

Registered Office : By Order of the117, Ground Floor, Board of DirectorsWorld Trade Centre, Sd/Babar Road, Shilpa VermaNew Delhi – 110 001 Company SecretaryDated: 31 May 2012

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GENERAL INFORMATION1. Nature of Industry: Manufacturing of Wrist Watches2. Date or expected date of Commencement of Commercial Production: The Company commenced its business from 4

October 1988.3. In case of new companies, expected date of commencement of activities as per project approved by financial institutions

appearing in the prospectus:Not Applicable

4. Financial Performance of the Company based on given indicatorsThe Financial Performance of the Company for the year 2010 – 2011 & 2011-12 are as follows:

Particulars F.Y. 2010-11 F.Y.2011-12Amount Amount

(Rs. in lakhs) (Rs. in lakhs)Sales and other Income 17,391 18,391Less:- Total Expenditure 15,633 17,786Profit (Loss) Before Tax 1,758 605Profit(Loss) After Tax 1,401 453

5. Export Performance and Net Foreign Exchange Collaborations: -Earnings in foreign currency (Rs. In Lakh) Particulars Year ended Year ended

31 March 2012 31 March 2011 Exports on F.O.B basis 564 527 Service income 177 261

741 788

6. Foreign Investment or Collaborators, if any:-Out of Rs.10,09,50,000/-(10,09,50,000 Equity shares of Re. 1/- each) Paid up capital, Rs.7,56,45,100/-(7,56,45,100 EquityShares of Re. 1/- each) is held by Timex Group Luxury Watches B.V.II. Information about Mr. V. D. Wadhwa, :1. Background details

Mr. V D Wadhwa is an alumnus of Harvard Business School & a fellow member of the Institute of CompanySecretaries of India. Mr. Wadhwa has over 25 years of working experience in various industries/business. He hasbeen associated with the Company since the year 1992 in various capacities and largely credited with the re-establishment of the entire distribution and retail base after the Company ceased to be the Timex JV with Tata’s.Subsequently he played a major role in the profitable turnaround of the Company’s operations through businessand financial restructuring

2. Past Remuneration:Organization Designation Duration Total cost to the Company (In Rs.)

Timex Group India Limited Managing Director W.e.f. 29 April, 2010 1,07,74,525/-per annum for a period of two years

3. Recognition or awards:Mr. Wadhwa has been awarded with two of the Most Prestigious Awards-”Movers of Time Award” and “TheMan of the Year Award” by the Trade Post Journal of India at the opening ceremony of India International WatchClock Fair ‘Samay Bharati 2012’

4. Job Profile & his Suitability:As Managing Director of the company, Mr. V.D. Wadhwa is responsible for the overall performance of the company.Since his joining, Mr. Wadhwa has very ably handled many challenges and helps stabilize the company’s growth& the team. Because of his advice and interventions, the Company was able to solve all the challenges of company’s

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working. He put in rigorous systems & processes in place to regularly review performance of the company,generate timely MIS, fulfil all compliance & related obligations, etc. He set up internal controls & processes anddelegated responsibilities effectively to his teams.In addition, his advice and counsel was found to be very valuable by the management of Timex Group India Ltd invarious organizational matters ranging from managing & improving profitability to investment decisions to employeedevelopment & assessment of their performance.Keeping in view of his contribution to the Company since his appointment, the Board considers his re-appointmentto be in the best interests of the Company. The Board is confident that Mr. V.D. Wadhwa’s management capabilitieswill enable the Company progress further.

5. Remuneration Proposed: As set out in the above Notice.

6. Comparative remuneration profile with respect to industry, size of the Company, profile of the position and person(in case of expatriates the Relevant details would be w.r.t. the country of his origin):The Company conducts the annual compensation bench marking exercise for determining the industry norms andfinalizes the remuneration basis the same. The Company takes a conservation approach while finalization ofremuneration.Taking into account Mr. V.D. Wadhwa invaluable contribution to the Company, his role in placing the Company ineminent position in the Industry, his strategic role in turning around the Company from its difficult position, theremuneration paid to the appointee was found to be reasonable and in parlance with the remuneration levels in theIndustry, across the country and befits his position.

7. Pecuniary relationship, directly or indirectly, with the Company or relationship with the managerial personnel,if any:Mr. V.D. Wadhwa has no pecuniary relationship with the company, except to the extent of the remuneration asproposed to be paid to him.Further he has no relationship with any of the managerial personnel of the company

III. Other Information• Reasons of loss or inadequate profits:

The Company has been operating successfully and earning profits since past few years. Since the Company is inthe growth mode, it has been ploughing back the profits and making investments in the marketing front. Spendshave gone up on Brand building and expansion of retail front for betterment of long term profitability.In the year 2010-2011, the Company delivered its highest ever volume, revenue and profitability performance withsales revenue up by 25% at Rs. 174 crores and profit after tax grew by 203% at Rs. 14 crores.In the year 2011-12, the economy witnessed a sharp depreciation of Indian Rupee during the year, which in turn hassignificantly impacted the operating margins for the business. However, the Company grew marginally over the lastyear on overall business but our trade channel, which is a better barometer for business equity witnessed approx20% growth over the last year.

• Steps taken or proposed to be taken for improvement:Going forward the Company has set clear goals and objectives to ensure the sales and profit evolution is in linewith the Company’s strategic plan. The Company intends to continue making investments on marketing and brandbuilding to improve the future profitability.

• Expected Increase in productivity and profits in measurable terms:The performance of the Company is expected to improve in the year ahead in terms of higher turnover, betterproductivity and profitability as a result of above measures taken for improvement in performance.

IV. DisclosuresThe Remuneration package of the managerial personnel has been provided in the Notice and the Company shallmake appropriate disclosures as required under Schedule XIII of the Companies Act, 1956 in the Corporate GovernanceReport forming part of the Directors’ Report of the Company every year.

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DIRECTORS’ REPORT

To the Members of Timex Group India Limited

Your Directors are pleased to present the Twenty-fourth Annual Report and Audited Statement of Accounts for the yearended 31 March 2012.

FINANCIAL RESULTS

Rs. in Lakhs

2011-12 2010- 11

Income 18,391 17,391Expenditure 17,786 15,633EBIDTA 911 1,927Interest 109 0.47Depreciation 197 169Profit before tax (PBT) 605 1,758Provision for Taxes 152 357Profit 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 borrowingcosts 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 significantlyimpacted the operating margins for the business. Your Company had taken aggressive price increases across brands tominimize the impact of adverse exchange rate; however the full benefit of these price changes will only be seen in the nextyear. 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 termgrowth drivers for the business. The year 2011-12 saw the Company growing marginally over the last year on overall businessbut 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 Indianeconomy shall continue to be strong over the longer term. Going forward the Company has set itself clear goals andobjectives 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 andinnovations 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 ahigher 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

MANAGEMENT DISCUSSION AND ANALYSIS

THE INDIAN WATCH MARKET

The present size of the Indian time industry is currently estimated at INR 4,600 crore. The industry has witnessed a growthof 8-10 percent in the past few years. The watch industry has a promising future as it is expected to grow at 12-15 percent inthe next few years. A large part of this growth is expected from youth, women and luxury segment of the consumers. Whilethe unit growth is driven by low price unbranded products, the growth at the mid and higher price points is driven bycreating higher value through improved styling and technology. The growth in the market has been led by marketing

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investments made by several Indian and global brands (including the launch of several new brands) which are increasingtheir focus on the Indian market. It is estimated that the watch penetration in India is 27 per cent only with just 3.5 per cent ofthe Indian population owning multiple watches.

The economy and mass segments form close to 80 per cent of the market by volume and contribute only 40 per cent of themarket by value. Whereas affordable luxury and luxury segments are estimated to contribute around 20 per cent of the marketby value and have a small volume of around one lakh pieces. Around 60 per cent of the market by value is controlled byorganized players. The gender segmentation shows a bent towards men with 60 per cent of the market catering to them.

The growth factors are changing consumer dynamics, increase in disposable income, growth of organized retail and entry ofinternational brands. The emerging trends show youth and women consumers as the primary growth segments in the watchindustry. Additionally on account of increasing maturity of the Indian consumer and on account of the concerted effort of theorganized sector branded Time wear has been growing rapidly at the expense of the unorganized sector.

Currently, the major challenges faced by the industry are stringent government regulations, slower than anticipated changein the consumer behavior in terms of channels where they shop being quite undercapitalized, and a large unorganized market.

OUTLOOK/ OPPORTUNITIES AND CHALLENGESThe economic growth of India and the changing life style of the Indian consumers who are aspiring to a more internationalway of life on account of the growing awareness of the global fashion trends bode well for the growth of the watch industry.Your company is well positioned to take advantage of this.

The factors like growing economy in the long term, increasing consumerism, favorable demographics, 300 million strongmiddle class and more than a million high net worth individuals, hold a lot of promise for the Time wear industry in near future.

The new rule which allows 100% foreign direct investment in single brand retail trading will further open up the Indian marketfor foreign investments and accelerate retail market growth.

The new age watch buyer is a young, aspiring individual with a high disposable income. The consumer does not see thewatch merely as an instrument for keeping time; a watch is now considered a fashion accessory and the brand name a fashion& style statement, and a reflection of his or her personality. This has created a trend of multiple watch ownership “A differentwatch for different occasions.” This encouraging development for the industry could propel industry growth significantly infuture years and Timex Group India Limited (TGIL) with its wide array of brands and styles, ranging from Fashion to Classicsand Sports to Jewellery can take full advantage of this.

The Company has a unique advantage of having several international brands and domestic manufacturing capabilities. Thisallows international products to be sold in India at prices which offer tremendous “Value for Money” to the consumer. Thecompany also boasts of a portfolio of seven brands and the presence of its own franchised retail chain, “The Time Factory”,comprising of 100 stores. This allows TGIL to participate at all ends of the value chain which in turn enhances margins. Bydoing so, the company is also better positioned to control its own destiny more effectively and this provides a sustainablegrowth platform for the business in the years ahead.

In addition, your Company continues to leverage the skills reposed at the Timex Group Global Design Centre located in Milanand also Global Supply Chain organization to support the business in India which has resulted in improved technology andstyling of the products.

TGIL has been recognized by the industry for its commitment to the Indian Time wear Industry. It has been selected twice ina row in the last 2 years in the Brand Equity’s most trusted brands list in the consumer durables segment.

RISKS/ THREATSThe slowing down of the economy, high inflation, high borrowing costs and depreciation of Indian rupee and their resultantimpact on the consumer sentiments are major risk for the future consumer demand for the products across all categories.

Indian Time wear industry is not devoid of bottlenecks and there are key challenges owing to the government policies andregulations. Economic growth slowdown coupled with rising inflation continues to be great challenge. High duties andcomplex & varied taxation structure are proving to be key impediments to its growth. The latest revision of Excise Duty from10% to 12% is a new challenge. Taxes such as VAT, Octroi fall under the jurisdiction of the state government and many of thesestates have imposed a different rate of tax. The current import duty structure is also impacting the operations and profitabilityof both Indian and international watch companies, posing as hindrances to the growth of the Indian Time wear industry.

The increase in the commodities prices, increased cost of sourcing from China and limited vendor capacity for the criticalwatch parts in India are resulting in the increase in the sourcing costs of key components. The rising input costs shall havean adverse impact on the operating margins, unless mitigated through various measures to cut costs (without compromisingquality). Several initiatives are being developed to address this risk.

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Organized retail in India is still in the nascent stage and watches need a very high service led customer interface to close thetransaction with the customer. High rentals and unavailability of skilled sales staff is a big challenge that the industry isfacing. Unorganized sector also poses a big challenge to the organized watch retailers. Counterfeiting is a major issue thatbrands in the mass market and economy watch segment face in the country. Watches as an instrument for time keeping deviceis facing threat from increasing penetration and use of mobile phones.

INDIA AS A MANUFACTURING HUB: STRENGTHS & OPPORTUNITIESIndia is one of the few countries that have watch manufacturing capabilities. Competitive Prices and Quality of products, increasedentry of new brands and rising cost of sourcing from China, accounts for increased opportunities for making India the manufacturingbase of time-keeping devices. Allotting SEZ’s, promoting skill development amongst labor and infrastructural development couldbe a boon as it would also mean availability of raw materials such as stainless steel, metals at a relatively lower prices.

External Factors

Although labor wage in China is increasing, the component of wage in total cost of a watch being less, shifting of manufacturingfrom China to India will take time. India imports most of the raw material used in watch component manufacturing such asstainless steel, leather and synthetics.

Internal Factors

The capacity of the existing manufacturers is not enough even to cater to the requirement of existing watch companies. It willrequire huge investments to ramp up capacities to cater to global demand. Achieving the required quality standards with thecurrent set up is a great challenge for the current manufacturers

At Timex, a concentrated global sourcing initiative is in place with the world looking to develop a sustainable vendor base inIndia. Higher lead time is required to cater to global needs from a single location. There is a need to diversify production riskamongst different locations.

GOVERNMENT POLICYYour Company has been actively involved with the “All India Federation of Horological Industries” (AIFHI), an apex bodyof Horological Industry in India. Your Company together with AIFHI has been taking up issues concerning the WatchIndustry and your Company in particular, with the various government agencies. With the active participation by majority ofbrands in the Category, AIFHI has released a white paper on the industry, highlighting the key issues for which a change inGovernment Policy is recommended and taken up with the respective authorities for the overall growth of the industry. Weshall continue our efforts to represent the interests of the Industry and your own Organisation.

FINANCEThe Company does not hold any fixed deposits from the public, shareholders & employees. There were no overdue /unclaimed deposits as on 31 March 2012.

During the year under review, the Company made payment aggregating to Rs. 41.96 Crore by way of Central, State and localsales taxes and duties as against Rs. 32.58 Crore in the previous year.

Your Company is paying dividend on its Preference Shares at the agreed coupon rate.

SEGMENT WISE REPORTINGThe segment wise information for watches and other activities are provided in the Notes to the Accounts.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACYYour 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 theirfindings 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 andimplementation. The Statutory Auditors of the Company also attend these meetings and convey their views on the adequacyof internal control systems as well as financial disclosures. The Audit Committee also issues directives for enhancement inscope 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 andgrowth. Your Company provide a challenging work environment that encourages meritocracy at all levels and has believed inan environment that fosters accomplishment, ownership, creativity and mutual respect. Over the last few years, your company

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has sharpened its bell curve to improve the differentiation between high and low performers and inculcated a performancedriven culture which will help drive more profitable growth.

Your Company comprises a small team of professionals, who are result oriented, committed and loyal. As on 31 March 2012,your Company had 312 employees on the Company rolls.

Attracting and retaining the bright talent and improvement in the quality of manpower at retail stores are identified as keychallenges and being addressed accordingly through various training initiatives and retention tools.

The information required as prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particularsof 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 statementof particulars of employees under Section 217 (2A) of the Act. Any shareholder interested in obtaining a copy of the saidstatement may write to the Company Secretary at the Registered Office address of the Company.

CAUTIONARY STATEMENTStatements 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 thoseexpressed or implied in the statements. The important factors that could influence the Company’s operations include demand andsupply 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.

DEMATERIALISATIONSince 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.

DIRECTORSIn accordance with Section 255 and 256 of the Companies Act, 1956 and Articles of Association of the Company, Ms. GaganSingh 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 twoyears up to 28 April 2012. The Board of Directors on the recommendation of the Remuneration Committee approved re-apointment of Mr. V.D. Wadhwa as the Managing Director of the Company for a further period of two years commencing from29 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 shareholdersmeeting. Your Company has received a notice from shareholder seeking his appointment as a Director of your Companypursuant 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 forthcomingshareholders meeting. Your Company has received a notice from shareholder seeking his appointment as a Director of yourCompany 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 appreciationfor the valuable guidance provided by Mr. Sherer during his Directorship

DIRECTORS RESPONSIBILITY STATEMENTPursuant 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 accountingstandards 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 estimatesthat 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 thefinancial 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 accordancewith the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing anddetecting 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 witha certificate from the practicing Company Secretary confirming compliance is set out in the Annexure forming part of this report.

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CONSERVATION OF ENERGYInformation required as per Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particularsin the Report of Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption and foreignexchange earnings and outgo is given in the Annexure forming part of this report.

AUDITORSThe auditors, M/s BSR & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmedtheir eligibility and willingness to accept office, if re-appointed.

AUDITORS’ REPORTYour Board has duly examined the Report issued by the Statutory Auditor’s of the Company on the Accounts for thefinancial year ended 31 March 2012 and their comment about the managerial remuneration. The Company’s application forapproval of the excess remuneration paid to the Managing Director of the Company is pending before the Central Government.

ACKNOWLEDGEMENTSYour Directors wish to place on record their appreciation for the support and cooperation, which the Company continues toreceive from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governments of UttarPradesh 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 Kapoor31 May 2012 Chairman

ANNEXURE TO THE DIRECTOR’S REPORT

(Additional Information given in terms of notification no.1029 of 31 December, 1988 issued by the Department of Company Affairs)

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

POWER AND FUEL CONSUMPTION

Particulars 2011-12 2010-11

UPSEB/ HPSEB Power purchase (units) 664224 650084Total Amount (in Rs.) 3587468 3289479Rate per unit (in Rs.) 5.40 5.06Own generation (units) 67139 81902Cost per unit (in Rs.) 10.12 9.95Units per litre of diesel 3.91 3.62

TECHNOLOGY ABSORPTIONResearch and Development (R&D)Areas in which R&D carried out by the CompanyDevelopment -1) Conversion of Movements VX3N/ VX3P/ VX3S from open-type toolings to line toolings.2) Automation of threaded case back closing tool3) New fixture development for temporary crown and stem removal from fit-up, standardized as per movements.Future plan of action1) Automation of E-testers for 930/ 905/ 916 movements2) Installation of timer and auto pressure release circuit on Aquavac3) Installation of conveyor system for empty watch head carrier.Technology Absorption, Adoption and Innovation BenefitsUpgraded process automations will help improve productivity and quality and reduce assembly costs.Foreign Exchange EarnedThe Company has earned Rs. 7.42 Crores in Foreign exchange and used Rs. 55.15 Crores.

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REPORT ON CORPORATE GOVERNANCE

Your Company appreciates the need of upholding highest standard of Corporate Governance in its Operation. It has alwaysbeen an endeavor of the Company to adopt & implement best Practices of Corporate Governance, disclosure standards andenhancing shareholder value while protecting the interests of other stakeholders, clients, suppliers and its employees.

As mandatory under Clause 49 of the Listing Agreement, the Company has complied with the conditions of CorporateGovernance by establishment of a framework for compliance with SEBI Regulations.

A. MANADATORY REQUIREMENTS

CORPORATE GOVERNANCE PHILOSOPHYCorporate Governance assumes a significant role in the business life of Timex. The driving forces of Corporate Governanceat Timex are its vision and core values, as described hereunder:

VISION

The Timex Group vision is anchored in our rigorous focus on long lasting relationships with our customers and ourcommitment to build the power of our brands, underpinned by our peoples will to win.By transforming ourselves into a truly Global Company and intent on globalizing the mindset of our people, we arebuilding one of the most powerful portfolios of brands in the watch and jewelry industry.Our vision for the future goes way beyond timekeeping. We will delight and surprise our customers through innovationin design, technology and application of our brands and deliver a superior customer experience. This will lead toenhanced values for our shareholders and increase returns on investments and assets.Deeply committed to our Corporate Social Responsibility and our values, we will build pride in our people and win thebest future talent for our Group.

VALUES

• The customer is our most important asset,• Corporate Social Responsibility is our foundation,• Truth, transparency and respect for our differences are our pillars of strength,• We work together to achieve Group goals,• Our core values encompass integrity, responsibility and courage,• We reward performance and results and we value a culture of discipline,• We are fair and listen to our people and we expect them to always look for a better way,• We protect our assets,• We want to win.

BOARD OF DIRECTORS(a) Composition of the Board

The Board of Directors of the Company consists of seven Directors. The Directors are well qualified professionals inbusiness, finance and corporate management and the Company is in compliance with the Clause 49 of the ListingAgreement as regards composition of the Board. The number of Independent Directors is more than one half of the totalstrength of the Board. The composition and the category of Directors on the Board of the Company as on 31 March 2012was as under:Names of the Directors CategoryMr. Kapil Kapoor Chairman and Non-Executive – DirectorMr. V.D. Wadhwa Managing DirectorMr. Arthur Joseph Morissette* Non-Executive DirectorMr. Daya Dhaon Non- Executive- Independent DirectorMs. Gagan Singh Non- Executive- Independent DirectorMr. Pradeep Mukerjee Non- Executive- Independent DirectorMr. Bijou Kurien Non- Executive- Independent Director

*Mr. Ryan Todd Roth is an Alternate Director to Mr. Arthur Joseph Morissette.

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(b) Appointment/ Re-appointment of Director(s)

In terms of the provisions of the Companies Act, 1956 (the “Act”) and the Articles of Association of the Company,Ms. Gagan Singh retire by rotation as Director of the Company at the ensuing Annual General Meeting and beingeligible, offers herself for re-appointment. Mr. V.D. Wadhwa is proposed to be re-appointed as Managing Director of theCompany with effect from 29 April 2012 for a further period of two years. Further, Mr. Bijou Kurien and Mr. Arthur JosephMorissette appointed as Additional Directors of the Company with effect from 29 July 2011 and 27 January 2012respectively are proposed to be appointed as Directors at the ensuing Annual General Meeting.

The Brief Profile of the above named Directors seeking appointment/ re-appointment is given below:

Ms. Gagan Singh

Ms. Gagan Singh is an Independent Director on the Board of Timex Group India Limited. She has more than 30 years ofexperience across several industries. She is currently the Chief Executive Officer - Business of Jones Lange Lasalle India.Ms. Singh is a Trustee of Salaam Baalak Trust and Founder Member and Vice President of Youth reach. She served asManaging Director of Benetton India Private Limited until May 2007. In this position, she played a key role in thetransition of Benetton India Private Ltd from a joint venture to a 100% subsidiary of Benetton Group.

Ms. Gagan Singh does not hold any shares in the Company as on date.

Other Directorship/Committee Membership

Directorship in other Companies

Private Limited Companies

1. Gamma Pizzakraft Pvt Ltd

2. Gamma Brand Mgmt. Services Pvt Ltd

3. Jones Lang Lasalle Residential Private Limited

4. Gama Pizzakraft (Overseas) Pvt Ltd

Foreign Companies

1. Jones Lang Lasalle Lanka Private Limited

Mr. V. D. Wadhwa

Mr. V. D. Wadhwa is an alumnus of Harvard Business School and a fellow member of the Institute of Company Secretariesof India. Mr. Wadhwa has over 25 years of working experience in various industries/business. He has been associatedwith the Company since its inception in various capacities and largely credited with the re-establishment of the entiredistribution and retail base after the Company ceased to be the Timex JV with Tata’s. Subsequently he played a major rolein the profitable turnaround of the Company’s operations through business and financial restructuring.

Mr. Wadhwa holds 600 shares of Timex Group India Limited

Other Directorship/Committee Membership

Directorship in other Companies

Public Limited Companies

1. Timex Group Precision Engineering Limited

Private Limited Companies1. Time Master India Private Limited2. Jumbo Securities and Finlease Private Limited

Companies registered under Section 25 of the Companies Act, 19561. All India Federation of Horological Industries

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Committee Membership1. Timex Group Precision Engineering Limited

Member - Audit CommitteeMr. Bijou KurienMr. Bijou Kurien has 30 years of experience in the Consumer Products Industry. He is currently President & CE ofReliance Retail Limited. Prior to this he has worked with Titan Industries and Hindustan Unilever Limited. He has alsoheld the position of Chairman of the India Retail Forum, Member of CII National Retail Committee and Member ofAdvisory Board of the World Retail Congress. He is a science graduate and also did PG Diploma in Business Managementfrom XLRI, Jamshedpur.He holds 3800 shares of Timex Group India Limited.Other Directorship/Committee MembershipDirectorship in other CompaniesPublic Limited Companies

1. Reliance Gems and Jewels Limited2. Reliance Leisures Limited3. Reliance Lifestyle Holdings Limited4. Reliance-Grand Optical Private Limited

Private Limited Companies1. Marks and Spencer Reliance India Private Limited2. Office Depot Reliance Supply Solutions Private Limited3. Reliance-GrandVision India Supply Private Limited4. Reliance-Vision Express Private Limited5. Stella Treads Private Limited6. Oceanic Rubber Works Private Limited7. Oriental Tapes Private Limited

Companies registered under Section 25 of the Companies Act, 19561. Retailers Association’s Skill Council of India

Mr. Arthur Joseph MorissetteMr. Arthur Joseph Morissette is a seasoned financial executive with more than 30 years of hands-on senior managementexperience most recently as Chief Financial Officer of Timex Group USA Inc. He is experienced in cash flow forecasting,managing internal costing systems, internal and external financial reporting, implementing cost reduction initiatives, andrationalization of headcount and plant facilities. Mr. Morissette has also handled business acquisitions with responsibilityfor integrating all accounting and financial operations.Mr. Morissette does not hold any shares in the Company as on date.Other Directorship/Committee MembershipDirectorship in other CompaniesForeign Companies

1. Sequel AG2. Sequel International, Inc.3. Timex Group USA, Inc.4. Vincent Berard S.A.5. Timex Trustee Corporation

(c) Board MeetingsThe Board met five times during financial year 2011-2012 on 14 April 2011, 26 May 2011, 29 July 2011, 31 October 2011 and27 January 2012 to consider amongst other business matters, the quarterly performance of the Company and financialresults. Directors attending the meeting actively participated in the deliberations at these meetings.

(d) Composition and Category of Directors

The details of the composition and category of Directors as on 31 March 2012 are given in the table below:

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Name Category Designation No. of No of No. of No. of No. of AttendanceShares Meetings Meetings Director- Membership/ at last AGMHeld held attended ships Chairmanship

during in other of the otherthe last public Boardfinancial Companies Commitees (2)year (1) Member Chair

ship manship

Mr. Kapil Kapoor Non-Executive Director Chairman 2100 5 5 2 1 1 Yes

Mr. V D Wadhwa Executive Director Managing 600 5 5 1 1 - YesDirector

Mr. Daya Dhaon Independent Director Director - 5 5 - - - Yes

Ms. Gagan Singh Independent Director Director - 5 4 - - - No

Mr.Pradeep Mukerjee Independent Director Director - 5 5 1 - 1 Yes

Mr. Bijou Kurien (3) Independent Director Director 3800 5 2 4 - - N/A

Mr. Arthur Joseph Non-Executive Director Director - 5 1 - - - N/AMorissette (4)

Mr. Ryan Todd Roth (5) Non-Executive Director Alternate - 5 - - - - N/ADirector

Mr. Frank Sherer (6) Non-Executive Director Director - 5 0 - - - No

1. Does not include directorships / committee position in Companies incorporated outside India, Private Limited Companiesand the Companies registered under Section 25 of the Companies Act, 1956.

2. Only Audit Committee and Shareholders/ Investors Grievance Committee have been considered for the purpose ofascertaining no. of membership & Chairmanship of Committee across all the public companies.

3. Mr. Bijou Kurien was appointed as an Additional Director of the Company with effect from 29 July 2011

4. Mr. Arthur Joseph Morissette was appointed as an Additional Director of the Company with effect from 27 January,2012.

5. Mr. Ryan Todd Roth was appointed as an Alternate Director to Mr Arthur Joseph Morissette with effect from 27 January,2012

6. Mr. Frank Sherer had resigned with effect from 27 January, 2012

Code of Conduct

The Company has formulated and adopted a Code of Conduct for its Board of Directors and senior management and has putthe same on the Company’s website www.timexindia.com. The Code has been circulated to all members of the Board andSenior Management and they have affirmed the compliance of the same. A declaration signed by the Managing Director ofthe Company is annexed hereto.

Policy on Prevention of Insider Trading

The Company has formulated a Code of Conduct for Prevention of Insider Trading (Code) in accordance with the guidelinesspecified under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992. The Company’scode, inter alia, prohibits purchase and/or sale of shares of the Company by an insider, while in possession of unpublishedprice sensitive information in relation to the Company and also during certain prohibited periods. The Company’s updatedCode is available on the Company’s website.

Audit Committee

The Audit Committee of the Company was constituted in July 1999 in line with the provisions of Clause 49 of the ListingAgreement with the Bombay Stock Exchange read with Section 292A of the Companies Act, 1956. The Company Secretary ofthe Company acts as the Secretary of the Committee.

The Company has adequately qualified and independent Audit Committee. The Committee comprises of six Non-ExecutiveDirectors: Mr. Kapil Kapoor, Mr. Daya Dhaon, Ms. Gagan Singh, Mr. Pradeep Mukerjee, Mr. Bijou Kurien and Mr. ArthurJoseph Morissette. Four of the six members on the Committee are independent. The Committee is chaired by Ms. GaganSingh, who is an Independent Director having vast experience and expertise in the area of finance and accounts.

The charter of role and responsibilities of the Audit Committee includes the following major areas;

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� Reviewing the adequacy of internal control system and the Internal Audit Reports, and their compliance thereof.

� Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure thatthe financial statements are correct, sufficient, and credible.

� Recommending the appointment of external auditors and fixation of their audit fee, and also approval for payment forany other services.

� Reviewing with Management the quarterly and annual financial statements before submission to the Board, focusingprimarily on:

� Any changes in accounting policies and practices.

� Major accounting entries based on exercise of judgment by management.

� Significant adjustments arising out of audit.

� Qualifications in draft audit report.

� The going concern assumption.

� Compliance with accounting standards.

� Compliance with stock exchange and legal requirements concerning financial statements.

� Any related party transactions i. e. transactions of the Company of material nature, with promoters or the management,their subsidiaries or relatives etc, which may have potential Conflict with the interests of Company at large.

During the year under review, the Audit Committee met four times on 26 May 2011, 29 July 2011, 31 October, 2011 and 27January 2012. The details of member’s attendance at the Audit Committee Meetings are as under;

Name of Director Designation Total no of Meetings held No of meetingsin 2011-12 attended

Ms. Gagan Singh Chairman & Independent Director 4 3

Mr. Frank Sherer* Non-Executive Director 4 0

Mr. Daya Dhaon Non-Executive Independent Director 4 4

Mr. Pradeep Mukerjee Non-Executive Independent Director 4 4

Mr. Bijou Kurien** Non-Executive Independent Director 4 2

Mr. Kapil Kapoor** Non-Executive Director 4 2

Mr. Arthur Joseph Morissette*** Non-Executive Director 4 0

* Mr. Frank Sherer had resigned with effect from 27 January, 2012** Mr. Bijou Kurien and Mr. Kapil Kapoor were appointed members of Audit Committee with effect from 29 July 2011*** Mr. Arthur Joseph Morissette was appointed as a Member of Audit Committee with effect from 27 January 2012.

The Chief Financial Officer, Head of Internal Audit function/ Internal Auditor and the Statutory Auditors were invited andthey duly attended the Audit Committee meetings. The Committee held discussions with the management of the Companyand with the Statutory Auditors to review the quarterly, half-yearly and annual audited financial statements and to recommendits views to the Board of Directors of the Company. The Committee also reviewed the internal control systems and theeffectiveness of Internal Audit function.

REMUNERATION COMMITTEE

The Remuneration Committee was constituted in May 2003, to decide and recommend the remuneration of Directors includingthe Managing Director of the Company. The remuneration of all the Senior Management of the Company with directreporting to the Managing Director of the Company is also reviewed and recommended by the Remuneration Committee.The Committee comprises of four Non- Executive Directors, namely Mr. Daya Dhaon, Ms. Gagan Singh, Mr. Pradeep

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Mukerjee and Mr. Kapil Kapoor. Mr. Daya Dhaon, an Independent Director is the Chairman of the Committee. The Committeemeets periodically as and when required. None of the Directors, except Managing Director draws remuneration from theCompany.

The details of member’s attendance at the Remuneration Committee Meetings are as under;

Name of Director Designation Total no. of Meetings held No of meetingsin 2011-12 attended

Mr. Daya Dhaon Chairman & Independent Director 2 2

Mr. Frank Sherer* Non-Executive Director 2 0

Ms. Gagan Singh Non-Executive Independent Director 2 2

Mr. Pradeep Mukerjee Non-Executive Independent Director 2 2

Mr. Kapil Kapoor** Non-Executive Director 2 0

* Mr. Frank Sherer had resigned with effect from 27 January, 2012

** Mr. Kapil Kapoor was appointed as member of Remuneration Committee with effect from 29 July 2011.

SHAREHOL DERS/INVESTORS GRIEVANCE COMMITTEE

A Shareholders / Investors Grievance Committee headed by a Non-Executive Director was formed in January 2002 which wassubsequently merged with the Share Transfer Committee on 31 July 2002 in view of the commonalities of area of work andwas renamed as Share Transfer & Shareholders / Investors Grievance Committee, to approve all matters pertaining to sharetransfers, transmissions, issuance of duplicate shares, transposition etc and also to provide the shareholders of the Companywith additional assurance that sufficient information is being provided to enable them to form a reasoned opinion on theworking of the Company and to ensure speedy redressal of their grievances pertaining to share related issues.

Constitution and Composition

The Committee comprises of six Non-Executive Directors namely Mr. Daya Dhaon, Ms. Gagan Singh, Mr. Pradeep Mukerjee,Mr. Bijou Kurien, Mr. Kapil Kapoor and Mr. Arthur Joseph Morissette. The Chairman of the meeting is elected by majority ateach meeting. The Company Secretary is the Secretary of the Committee and attends its meetings. She/He addressesshareholders complaints, monitors share transfer process and liaisons with the regulatory authorities, as required.

The details of member’s attendance at the Investor Grievance Committee Meetings are as under;

Name of Director Designation Total no of Meetings held No of meetings in 2011-12 attended

Mr. Daya Dhaon Chairman & Independent Director 4 4

Mr. Frank Sherer* Non-Executive Director 4 0

Ms. Gagan Singh Non-Executive Independent Director 4 3

Mr. Pradeep Mukerjee Non-Executive Independent Director 4 4

Mr. Kapil Kapoor** Non-Executive Director 4 2

Mr. Bijou Kurien ** Non-Executive Independent Director 4 2

Mr. Arthur Joseph Morissette*** Non-Executive Director 4 0

* Mr. Frank Sherer has resigned w.e.f. 27 January, 2012** Mr. Bijou Kurien and Mr. Kapil Kapoor were appointed member of Investor Grievance Committee with effect from

29 July 2011*** Mr. Arthur Joseph Morissette was appointed as a Member of the Investor Grievance Committee effective 27

January 2012.

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The Committee was formed specifically to look into the redressal of shareholders & investors grievances pertaining to:

1) Transfer of shares and its timelines2) Transmission of shares3) Issuance of duplicate shares4) Investors / shareholders grievance(s) pertaining to all type of matters concerning their dealing with the Company with

respect to their investment in the securities of the Company, more specifically pertaining to non-receipt of AnnualReports, delay in transfers, non redressal of complaints, non receipt of dividend, dematerialization related issues etc.

5) All other day-to-day matters governing the relationship between the Company and its shareholders.

Designated e-mail address for investor services

In terms of Clause 47 (f) of the Listing Agreement designated email address for investor complaints isinvestor.relations@timex.com

DISCLOSURES

(a) Related Party Transactions: The Audit Committee has been reviewing the disclosure of Related Party Transactionsperiodically. There is a cross charge of expenses which is established between your Company and Timex GroupPrecision Engineering Limited (Group Company) on account of Manpower Cost and Rentals respectively. Beside thistransaction, the Company does not have any related party transactions, which are material in nature that would have apotential conflict with the interests of the Company at large.

(b) Details of Non-compliance: There have been no cases of penalties, strictures imposed on the Company by Stockexchange or SEBI or any other statutory authority, on any matter relating to capital markets, during the last three years.

(c) Risk Management: The Company has laid down procedures so as to ensure that the executive management controlsrisk through means of a properly defined framework and to inform the Board members about the same and has engagedthe services of a leading Chartered Accountant’s firm to carry out this activity on a regular basis and inform the Boardmembers about the risk assessment and minimization procedures.

(d) Secretarial Audit : Pursuant to Clause 47( c ) of the Listing Agreement with the Stock Exchanges, certificates on half-yearly basis, have been issued by a Company Secretary-in-Practice for due compliance of share transfer formalities bythe Company. Pursuant to SEBI (Depositories and Participants) Regulations, 1996 certificates have also been receivedfrom a Company Secretary-in-Practice reconciling the total shares held in both the depositories, viz. NSDL and CDSLand in physical form with the total issued / paid-up capital of the Company and submitted the same to the StockExchanges where the securities of the Company are listed within 30 days of the end of each quarter.

(e) Disclosure of Accounting Treatment: The Company follows Accounting Standards issued by the Institute of CharteredAccountants of India and in the preparation of financial statements, the Company has not adopted a treatment differentfrom that prescribed in any Accounting Standard.

(f) Proceeds from Issue of Preference Shares: The Company has raised funds through issues of preference shares duringfinancial year 2002 -2003, 2003-2004, and 2005 -2006. The proceeds of the preference share issue have been fully utilizedtowards the object for which it was raised.

(g) CEO/CFO Certification : The Managing Director (CEO) and Chief Financial Officer(CFO) have placed before the Boardof Directors a certificate relating to the financial statements, in accordance with clause 49 (V) of the Listing Agreementfor the financial year ended 31 March 2012 which is annexed hereto.

DIRECTORS’ REMUNERATION

Non-Executive Directors including Independent Directors do not have any pecuniary relationship or transactions with theCompany. However, they were paid only the sitting fees for attending the meetings of the Board of Directors or Committeeswithin the limits as prescribed under the Companies Act, 1956. Further, there were no other pecuniary relationships ortransactions of the Non-Executive Directors vis-à-vis the Company.

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Remuneration of Executive Director is decided by the Board based on recommendation of Remuneration Committee.Remuneration paid to the Managing Director for the year ended 31 March 2012 and the disclosure as per the requirement ofSchedule XIII of the Companies Act, 1956, are as follows:

Break up of Annual Remuneration INR Per AnnumEffective from 29 April,2011

Basic Salary 40,87,392HRA @ 50% of Basic Salary 20,43,696Annual Reimbursements towards Car Lease, Fuel & Maintenance,Leave Travel Allowance and Medical Exp. 14,94,996Performance Bonus 18,48,336Contribution to Provident fund as applicable 4,90,487Gratuity Fund as applicable 1,96,509Superannuation Fund as applicable 6,13,109

Total 1,07,74,525

MEANS OF COMMUNICATION

Website, where results are displayed : The financial results are displayed onwww.timexindia.com

Quarterly/Annual Results : Financial Results are published in the Newspapers as requiredunder the Listing Agreement.

Newspaper in which results are normally Published : The Business Standard, Business Standard, Vernacularpublished (Hindi) Newspaper.

Whether Management Discussion & Analysis is a part of the Annual Report : Yes

All Financial Results and other material information about the Company are promptly sent through fax to the Bombay StockExchange and the same is then either hand delivered or sent by courier to the Stock Exchange.

GENERAL SHAREHOLDERS’ INFORMATION

AGM: Date, time and venue : Friday, 3 August 2012 at 10:00 a.m. at Air Force Auditorium,Subroto Park New Delhi -110010.

Financial Year : 1 April, 2011 to 31 March, 2012

Directors seeking appointment/re-appointment : As required under Clause 49(IV) (G), particulars of Directorsseeking appointment/re-appointment are given in the Reporton Corporate Governance forming part of the Annual Report.

Tentative calendar of events for the financial : To review and approve unaudited Financial Results for the quarter year 2012-13 (April – March) First quarter - ended July 2012

Second quarter - ended October 2012Third quarter - ended January 2013Fourth quarter - ended May 2013

Book closure Date : 28 June 2012 and 29 June 2012 (both days inclusive)

Listing of shares on Stock Exchanges : Bombay Stock Exchange, Phiroze Jeejeebhoy Towers, DalalStreet, Mumbai – 400001

Registered Office : 117, Ground Floor, World Trade Centre, Babar Road, NewDelhi-110001.

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Listing Fees : Listing fees as prescribed has been paid to the Stock Exchangeup to 31 March 2012

Share Registrar & Transfer Agents : Alankit Assignment Limited 2E/21 Alankit House, JhandewalanExtension, New Delhi – 110055 of the Company for bothphysical and electronic mode of share transfers.

Contact Person : Mr. J K Singla: Phones 011-42541234,

Fax : 011-23552001Email : rta@alankit.com

info@alankit.comWebsite : www.alankit.com

SHARE TRANSFER SYSTEM

The Company has appointed Alankit Assignment Limited, as Registrar and Shares Transfer Agent. Shares sent fortransfer in physical form are registered by the Registrar and Share Transfer Agents within fifteen days of receipt of thedocuments, if found in order. Shares under objection are returned within two weeks. All requests for dematerialization ofshares are processed, if found in order and confirmation is given to the respective depositories i.e. National SecuritiesDepository Limited (NSDL) and Central Depository Services Limited (CDSL) within twenty-one days.

All the transfers received are processed and approved by the Share Transfer & Shareholders / Investors GrievanceCommittee at its meetings. For redressal of transfer related grievances, shareholders may contact Ms. Shilpa Verma -Company Secretary at the registered office address of the Company

INVESTOR SERVICES

Number of Complaints received, not solved & shares pending transfer

Complaints outstanding as on 1 April, 2011 0Complaints received during the year ended 31 March, 2012 3Complaints resolved during the year ended 31 March, 2012 3Complaints pending as on 31 March, 2012 0

OTHERS

Name and designation of compliance officer: Ms. Shilpa Verma - Company Secretary.

Venue and Time of the Last Three General Body Meetings

Date Category Venue Time No. of Members Representative ofSpecial present by Body CorporateResolutions

Person Proxy

30.07.2009 AGM FICCI 10.00 - 2447 51 1Auditorium, AMTansen Marg,New Delhi

22.07.2010 AGM Air Force 10.00 - 2506 1 1Auditorium, AMSubroto Park,New Delhi

29.07.2011 AGM Sri Fort 11.00 - 3140 8 1Auditorium AMAugust KrantiMarg, New Delhi

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The resolutions were (including special resolution) passed on show of hands with requisite majority. The venue of theGeneral Meeting of the Company has been chosen for its location, prominence, and capacity.

Postal Ballots

No Special Resolution was required to be put through a Postal Ballot during last financial year

STOCK PERFORMANCE

Market price data : The monthly high and low stock quotations during the last financial year at the Bombay StockExchange and performance in comparison to BSE Sensex are given below:

Month High Low

Apr-11 40.80 31.50May-11 39.25 33.40Jun-11 47.75 36.60Jul-11 45.80 38.60Aug-11 45.60 27.90Sep-11 31.15 26.50Oct-11 28.75 25.80Nov-11 28.00 21.80Dec-11 25.95 18.00Jan-12 24.75 17.50Feb-12 29.00 22.65Mar-12 27.85 21.75

STOCK CODE

The stock code of the Company at BSE : 500414

ISIN allotted by National Securities Depository Limited andCentral Depositories Securities Limited for Equity Shares : INE064A01026

The Company’s shares are covered under the compulsory dematerialization list and are transferable through the depositorysystem. Shares received for physical transfers are registered within a maximum period of two weeks from the date of receipt,if the documents are clear in all respects.

As on 31 March 2012, the distribution of Company’s shareholding was as follows: -

No. of Shares No. of Share % of Share Share Amount % of Amountholders holders

UPTO - 2500 54691 98.11 11492651 11.384

2501 - 5000 525 0.942 2015538 1.997

5001 - 10000 288 0.517 2220424 2.2

10001 - 20000 123 0.221 1844030 1.827

20001 - 30000 50 0.09 1269522 1.258

30001 - 40000 15 0.027 507787 0.503

40001 - 50000 21 0.038 1003306 0.994

50001 - 100000 20 0.036 1401726 1.389

100001 AND ABOVE 13 0.023 79195016 78.45

TOTAL 55746 100.00 100950000 100.00

23

DEMATERIALISATION OF SHARES

Dematerialization of shares: The Company appointed M/s Alankit Assignments Limited as depository registrar and signedtripartite agreements with NSDL/CDSL to facilitate dematerialization of shares. Shares received for dematerialization aregenerally confirmed within a maximum period of two weeks from the date of receipt, if the documents are clear in all respects.There are 30988 no. of shareholders holding their shares in dematerialized form, which represent 96.97% of the paid upcapital of the Company.

PLANT LOCATION

Timex Group India Limited,

Plot No-10, Baddi, Ind. Area Katha, Near Fire Station Baddi, Nalagarh, Solan, Himachal Pradesh.

Address for correspondence:

Timex Group India Limited, 117, GF, World Trade Centre, Babar Road, New Delhi -110 001

B. NON MANDATORY

REMUNERATION COMMITTEE

The details are given under the heading “Other Sub-Committee of Board of Directors”

CORPORATE POLICY MANUAL

The Timex Group has a Corporate Policy Manual outlining the policies applicable to the Group Companies so that itpromotes ethical and moral behavior in all its business activities. Employees are free to report a violation of any law,mismanagement, gross waste or misappropriation of funds, a substantial and specific danger to public health and safety, oran abuse of authority without fear of retribution or even can request advice when in doubt about the propriety of someaction. Employees also may, if they wish, make anonymous reports of violations or other irregularities. Employees may alsocall the compliance line, toll free 24 hours a day. The Corporate Policy Manual is available on Timex group website at belowstated link.

http://intranet.timexgroup.com/

The Company also has in place a “Women’s Committee” since 01 October 2003, to take care of cases of sexual harassmentin workplace. This Committee is chaired by a woman running an independent NGO and is assisted by a team of womenemployees.

TRAINING OF BOARD MEMBERS: The Company’s Board of Directors consists of professionals with expertise in therespective fields. They endeavor to keep themselves updated with the global economic changes and various legislations.They attend various workshops and seminars to keep themselves abreast with the changing business environment.

24

Chief Executive Officer (CEO) and Chief Financial Officer (CFO)Certification as per Clause 49(V) of the Listing Agreement

The Board of DirectorsTimex Group India LimitedNew Delhi

This is to certify that;

a) We have reviewed financial statements and the cash flow statement for the year and that to the best of our knowledgeand belief:

i) these statements do not contain any materially untrue statement or omit any material fact or contain statementsthat might be misleading;

ii) These statements together present a true and fair view of the Company’s affairs and are in compliance withexisting accounting standards, applicable laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the yearwhich are fraudulent, illegal or violative of the Company’s Code of Conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we haveevaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting and wehave disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls,if any, of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

(d) We have indicated to the auditors and Audit Committee;

i) significant changes in internal control during the year over financial reporting during the year;

ii) significant changes in accounting policies during the year and that the same have been disclosed in the notesto the financial statements; and

iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of themanagement or an employee having a significant role in Company’s internal control system over financialreporting.

Sd/- Sd/-V.D.Wadhwa Amit JainManaging Director Head Accounts

Dated: 31 May, 2012

DECLARATION BY THE CEO UNDER CLAUSE 49 I (D) OF THE LISTING AGREEMENT REGARDINGADHERENCE TO THE CODE OF CONDUCT

I hereby confirm that:

The Company has obtained from all the members of the Board and Senior Management, affirmation that they have compliedwith the Code of Conduct in respect of the financial year 2011-2012.

Sd/V.D.Wadhwa

Managing Director

25

CERTIFICATE

To the Members of Timex Group India Limited

We have examined the compliances of the conditions of Corporate Governance by Timex Group of India Limited, for thefinancial year ended on 31 March 2012 as stipulated in Clause 49 of the Listing Agreement of the said Company entered withBombay Stock Exchange Limited

The Compliances of the conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to procedure and implementation thereof, adopted by the Company for insuring the compliances of the conditions ofCorporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representation madeby the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governanceas stipulated in the above mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the management has conducted the affairs of the Company.

For K. K. MALHOTRA & CO.Company Secretaries

Sd/-31 May 2012 K.K. MALHOTRANew Delhi C. P. No. : 446

26

Auditors’ ReportTo the Members of

Timex Group India Limited1. We have audited the attached Balance Sheet of Timex Group India Limited (‘the Company’) as at 31 March 2012, the

Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinionon these financial statements based on our audit.

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

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

4. Further to our comments in the Annexure referred to above, we report that:(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary

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

our examination of those books;(c) the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in

agreement with the books of account;(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this

report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act,1956, to the extent applicable;

(e) on the basis of written representations received from the directors as on 31 March 2012, and taken on record by theBoard of Directors, we report that none of the directors is disqualified as on 31 March 2012 from being appointed asa director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(f) Managerial remuneration of Rs 7.46 lakhs provided by the Company in the current year is in excess of the limitsspecified in the relevant provisions of the Companies Act,1956 and the amount approved by the Central Government.Further, we are informed that as required by the relevant provisions of the Act, the Company is taking necessarysteps to seek approval from the Central Government for such excess remuneration. Pending approval from theCentral Government in this regard, the impact thereof on the profit of the Company for the current year, to the extentof amount of excess remuneration that may be disallowed by the Central Government, if any, is presentlyunascertainable;

(g) subject to our comments in paragraph (f) above, the impact of which in absence of Central Government decisionis not ascertainable, in our opinion, and to the best of our information and according to the explanations given tous, the said accounts give the information required by the Companies Act, 1956, in the manner so required and givea true and fair view in conformity with the accounting principles generally accepted in India:(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2012;(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For B S R & Co.Chartered Accountants

Firm Registration No.: 101248W

Rakesh DewanPlace: Gurgaon PartnerDate: 31 May, 2012 Membership No.: 092212

27

Annexure referred to in para 3 of the Auditors’ report to the members of Timex Group India Limited on the financialstatements for the year ended 31 March 2012

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

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

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

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

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

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

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

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation thatpurchases of certain items of inventories and fixed assets are for the Company’s specialised requirements and similarly certaingoods and services sold are for the specialised requirements of the buyers and suitable alternative sources are not availableto obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company andthe nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods andservices. Further, on the basis of our examination and according to the information and explanations given to us, we haveneither come across nor have been informed of any instances of major weaknesses in the aforesaid internal control system.

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

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

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

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

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

28

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

According to the information and explanations given to us, no undisputed amounts payable in respect ofProvident Fund, Employees’ State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty,Investor Education and Protection Fund and other material statutory dues, as applicable, were in arrears as at31 March 2012 for a period of more than six months from the date they became payable.

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

Name of the Nature of Amounts Amounts paid Period to Forum whereStatute the dues (Rs. lakhs) under protest which the dispute is pending

(Rs. lakhs) amountrelates(Financial year)

Central Excise Excise duty 43 7 1995-96 to CESTAT, New DelhiAct, 1944 (Cenvat credit) 1998-99

Penalty 43Central Excise Excise duty 16 - 1999-2000 to Supreme CourtAct, 1944 Penalty 1 2000-01Central Excise Excise duty 6 5 1992-93 and Deputy Commissioner,Act, 1944 1996-97 Central ExciseCentral Sales Sales Tax 59 - 1994-95 Deputy Commissioner –Tax Act, 1956 Commercial taxThe Kerala Sales Sales Tax 1 - 1995-96 Assistant Commissioner –Tax Act, 1963 Sales TaxTamil Nadu General Sales Tax 8 - 1992-93 to CommercialSales Tax Act, 1959 1993-94 taxation officerAndhra Pradesh Sales Tax 1 - 1995-96 CommercialSales Tax Act, 1957 taxation officerKarnataka Sales Cess 1 - 1995-96 Deputy Commissioner –Tax Act, 1957 Commercial taxesTamil Nadu General Sales Tax 9 9 2002-03 High Court, ChennaiSales Tax Act, 1959Customs Act,1962 Customs duty 8 8 1995-96 Commissioner, Customs

(Appeals)Income Tax Act, 1961 * Income Tax 610 - 2001-02 Income tax

Appellate TribunalIncome Tax Act, 1961 * Income Tax 658 - 2002-03 Income tax

Appellate TribunalIncome Tax Act, Income Tax 397 - 2003-04 Income tax1961 */ ** Appellate TribunalIncome Tax Act, 1961 * Income Tax 329 - 2004-05 Commissioner of Income

Tax, (Appeals)Income Tax Act, 1961 * Income Tax 341 - 2005-06 Commissioner of Income

Tax, (Appeals)Income Tax Act, 1961 * Income Tax 75 - 2006-07 Commissioner of Income

Tax, (Appeals)Income Tax Act, 1961 * Income Tax 2,000 - 2007-08 Commissioner of Income

Tax, (Appeals )

29

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

** Total addition of Rs. 397 lakhs made to the total income of the Company for the financial year 2003-04, out of whichCommissioner of Income Tax, (Appeals) has passed an order dated 23 March 2012 allowing a partial relief in favour of theCompany and has directed the Assessing Officer (AO) / Transfer Pricing Order (TPO) to make necessary adjustments. Asinformed to us, the Company has not received the amended tax order from the AO/TPO after incorporation of the abovechanges. Further, we have been informed that subsequent to the year end, neither the Company nor the tax department havepreferred an appeal in Income tax Appellate Tribunal against the order of Commissioner of Income Tax, (Appeals).

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

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

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

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

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

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

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

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

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

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

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

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

For B S R & Co.Chartered AccountantsFirm Registration No.: 101248W

Rakesh DewanPlace: Gurgaon PartnerDate: 31 May, 2012 Membership No.: 092212

30

BALANCE SHEET

as at 31 March 2012(Rs. in lakhs)

Notes Year ended Year ended31 March 2012 31 March 2011

Equity and liabilitiesShareholders’ fundsShare capital 3 5,120 5,120Reserves and surplus 4 2,123 1,989

7,243 7,109Long-term provisions 5 275 255

275 255Current liabilitiesShort-term borrowings 6 865 -Trade payables 7 5,990 4,880Other current liabilities 8 1,810 1,544Short-term provisions 5 674 841

9,339 7,265TOTAL 16,857 14,629AssetsNon-current assetsFixed assetsTangible assets 9 1,419 1,280Intangible assets 10 17 14Capital work-in-progress - 55

1,436 1,349Long-term loans and advances 11 392 408Trade receivables 14 324 230Other non-current assets 12 2 -

718 638Current assetsInventories 13 4,131 3,366Trade receivables 14 9,928 7,520Cash and bank balances 15 326 1,267Short-term loans and advances 11 318 488Other current assets 12 - 1

14,703 12,642TOTAL 16,857 14,629Significant accounting policies 2

The accompanying notes are an integral part of the financial statementsAs per our report attached

For and on behalf of the Board of Directors of Timex Group India Limited

For B S R & Co.Chartered AccountantsFirm Registration No.: 101248W

Rakesh Dewan Kapil Kapoor V D Wadhwa Shilpa Verma Amit JainPartner Chairman Managing Director Company Secretary Head AccountsMembership No.: 092212

Place: Gurgaon Place : Noida Place : Noida Place : Noida Place : NoidaDate: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012

31

Statement of Profit and Loss for the year ended 31 March 2012

(Rs. in lakhs)

Notes Year ended Year ended31 March 2012 31 March 2011

Income

Revenue from operations (gross) 16 18,586 17,568Less: Excise duty 235 252Revenue from operations (net) 18,351 17,316Other income 17 40 75Total revenue 18,391 17,391

ExpensesCost of raw materials and components consumed 18 9,896 9,227Purchase of traded goods 19 471 156(Increase)/decrease in inventories of finishedgoods, work in progress and traded goods 20 (630) (72)Employee benefits expense 21 1,887 1,618Finance costs 22 109 -Depreciation and amortisation expense 23 197 169Other expenses 24 5,856 4,535

Total expenses 17,786 15,633

Profit before tax 605 1,758

Tax expenseCurrent tax (Minimum Alternate Tax) 155 357Fringe benefit tax for prior years written back (3) -

Profit for the year 453 1,401

Basic and diluted earnings per equity sharefully paid up Re.1 each. 28 0.13 1.07

Significant accounting policies 2

The accompanying notes are an integral part of the financial statements

As per our report attached

For and on behalf of the Board of Directors of Timex Group India Limited

For B S R & Co.Chartered AccountantsFirm Registration No.: 101248W

Rakesh Dewan Kapil Kapoor V D Wadhwa Shilpa Verma Amit JainPartner Chairman Managing Director Company Secretary Head AccountsMembership No.: 092212

Place: Gurgaon Place : Noida Place : Noida Place : Noida Place : NoidaDate: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012

32

Cash Flow Statement for the year ended 31 March 2012(Rs. in lakhs)

Year ended Year ended31 March 2012 31 March 2011

Cash flows from operating activitiesProfit before tax 605 1,758

Non cash adjustments :Depreciation and amortisation 197 169Assets written off 1 -Loss on sale of assets (net) 3 -Unrealised foreign exchange loss 348 35Advances written off - 16Interest expense 109 - #Liabilities/provisions no longer required written back (24) (10)Interest income (10) (39)

Operating profit before working capital changes 1,229 1,929Movements in working capital:

Increase/(decrease) in trade payables 632 361Increase/(decrease) in long term provisions 20 71Increase/(decrease) in short term provisions 24 19Increase/(decrease) in other current liabilities 254 278Decrease/(increase) in inventories (765) (129)Decrease/(increase) in trade receivables (2,253) (1,242)Decrease/(increase) in non-current trade receivables (94) (230)Decrease/(increase) in long term loans and advances 18 (3)Decrease/(increase) in short term loans and advances 170 (216)Decrease/(increase) in other current assets - # -Cash generated from/(used) in operations (765) 838Income taxes paid (net of refunds) (351) (161)

Net cash generated from/(used in) operating activities (A) (1,116) 677Cash flows from investing activities

Purchase of fixed assets (270) (246)Proceeds from sale of fixed assets - # -Interest received 11 39Tax on interest received - # (3)Investment in fixed deposits with original maturity period exceeding 3 months (1) -

Net cash generated from/(used in) investing activities (B) (260) (210)Cash flows from financing activities

Increase in short term bank borrowings 865 -Interest paid (109) -Dividend paid on preference shares (274) (274)Tax paid on preference dividend (46) (47)

Net cash generated from/(used in) financing activities ( C) 436 (321)Net increase/ (decrease) in cash and cash equivalents (A+B+C) (940) 146Cash and cash equivalents at the beginning of the year 1,266 1,120Cash and cash equivalents at the end of the year 326 1,266Notes :Component of cash and cash equivalents :

Cash on hand 5 8Cheques on hand 285 288Balances with banks:

On current accounts 36 270Deposits with original maturity of less than 3 months - 700

Cash and cash equivalents at the end of the year 326 1,266# Amount is below rounding off threshold adopted by the Company.Note: The Cash Flow Statement has been prepared in accordance with the ‘Indirect Method’ specified in Accounting Standard 3, Cash Flow Statement, notifiedby Central Government in the Companies (Accounting Standard) Rules, 2006.

Significant accounting policies (refer note 2)The accompanying notes are an integral part of the financial statementsAs per our report attached

For and on behalf of the Board of Directors of Timex Group India LimitedFor B S R & Co.Chartered AccountantsFirm Registration No.: 101248W

Rakesh Dewan Kapil Kapoor V D Wadhwa Shilpa Verma Amit JainPartner Chairman Managing Director Company Secretary Head AccountsMembership No.: 092212

Place: Gurgaon Place : Noida Place : Noida Place : Noida Place : NoidaDate: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012

33

Notes to the financial statements for the year ended 31 March 20121. General information

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

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

2. Basis of preparation of financial statements

The financial statements are prepared and presented under the historical cost convention, on accrual basis of accountingin accordance with the Generally Accepted Accounting Principles (‘GAAP’) in India and comply with the accountingstandards prescribed by the Companies (Accounting Standards) Rules, 2006 and the presentational requirements ofthe Companies Act, 1956, to the extent applicable

All the assets and liabilities have been classified as current and non-current as per the Company’s normal operatingcycle and other criteria set out in the revised schedule VI to the Companies Act, 1956.Based on the nature of productsand the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, theCompany has ascertained its operating cycle being a period within 12 months for the purpose of classification of assetsand liabilities as current and non-current.

2.1 Significant accounting policies

a. Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilitieson the date of the financial statements and the reported amounts of revenues and expenses during the reportingperiod. Examples of such estimates include estimated provision for doubtful debts, warranties, future obligationsunder employee retirement benefit plans and estimated useful life of fixed assets, classification of assets/liabilitiesas current or non current in certain circumstances etc. Differences between actual results and estimates arerecognised in the year in which the actual results are known or materialised. Any revision to accounting estimatesis recognised in accordance with the requirements of the respective accounting standard.

b. Fixed assets and depreciation

Fixed assets are carried at cost of acquisition less accumulated depreciation. Cost is inclusive of freight, duties,taxes and any other directly attributable costs to bring the assets to their working condition for intended use.

Depreciation on tangible assets other than leasehold land and leasehold improvements is provided under thestraight line method over the useful life as estimated by the management or the derived useful life as per ScheduleXIV of the Companies Act, 1956, whichever is lower. Depreciation on the following categories of fixed assets isprovided at rates that are higher than the corresponding rates prescribed in Schedule XIV:· Plant and machinery (including office equipment) at rates ranging from 4.75% per annum to 100% per annum

based on technical evaluation.· Furniture and fixtures at the rate of 20% per annum.· Tools and moulds are fully depreciated in the year of manufacture / purchase.

Depreciation on additions is provided on a pro-rata basis from the date of acquisition/installation.Depreciation on sale/deduction from fixed assets is provided for upto the date of sale/adjustment, as the casemay be.Leasehold land is amortised over the period of lease.Leasehold improvements are depreciated under the straight line method over the lowest of the following:

· period of the lease· useful life as estimated by management

· derived useful life as per Schedule XIV.

Assets costing upto Rs. 5,000 are fully depreciated in the year of purchase.

34

Gain or loss arising from derecognition of fixed assets are measured as the difference between the net disposalproceeds and the carrying amount of the assets and are recognised in the Statement of Profit and Loss when assetsare derecognised.

Fixed assets under construction are disclosed as capital work in progress.

c. Intangible assets and amortisation

Intangible assets comprising software are carried at cost of acquisition less accumulated amortisation. Cost isinclusive of freight, duties, taxes and any other directly attributable costs to bring the assets to their workingcondition for intended use.

Software is amortised over their estimated useful life of 5 years.

Assets costing upto Rs. 5,000 are fully depreciated in the year of purchase.

Gain or loss arising from derecognition of intangible assets are measured as the difference between the net disposalproceeds and the carrying amount of the assets and are recognised in the Statement of Profit and Loss when assetsare derecognised.

d. Impairment

The carrying amounts of assets are reviewed at each balance sheet date in accordance with Accounting Standard– 28 on ‘Impairment of Assets’ to determine whether there is any indication of impairment. If any such indicationexists, the recoverable amount of the asset is estimated. An impairment loss is recognised whenever the carryingamount of an asset or cash generating unit exceeds its recoverable amount. Impairment losses are recognised in theStatement of Profit and Loss. An impairment loss is reversed if there has been a change in the estimates used todetermine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carryingamount does not exceed the carrying amount that would have been determined net of depreciation or amortisation,if no impairment loss had been recognised.

e. Inventories

Inventories are valued at the lower of cost and net realisable value. Cost of inventories includes all costs incurredin bringing the inventories to their present location and condition.

In determining the cost, the weighted average cost method is used. Fixed production overheads are allocated onthe basis of normal capacity of production facilities. Finished goods and work-in-progress include appropriateshare of allocable overheads.

Finished goods held for the purpose of demonstration are amortised over a period of three years after deductingestimated residual value.

f. Employee benefits

The Company’s obligations towards various employee benefits have been recognised as follows:

Short term benefits

All employee benefits payable/available within twelve months of rendering the service are classified as short-termemployee benefits. Benefits such as salaries, wages and bonus etc., are recognised in the Statement of Profit andLoss in the period in which the employee renders the related service.

Post employment benefits

In respect of the defined contribution plan in the form of Superannuation, the Trustees of the Scheme haveentrusted the administration of the Scheme to the Life Insurance Corporation of India (LIC). Annual contribution tothe LIC is recognised as an expense in the Statement of Profit and Loss.

Charge for the year in respect of unfunded defined benefit plan in the form of gratuity has been ascertained basedon actuarial valuation carried out by an independent actuary as at the year end using the Projected Unit CreditMethod, which recognises each period of service as giving rise to additional unit of employee benefit entitlementand measures each unit separately to build up the final obligation. The obligation is measured at the present valueof the estimated future cash flows. The discount rate used for determining the present value of the obligation underdefined benefit plans, is based on the market yields on Government securities as at the valuation date havingmaturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognised

35

immediately in the Statement of Profit and Loss.

Provident Fund (PF): The Company deposits certain portion of the Provident Fund contribution with the RegionalProvident Fund Commissioner and will have no obligation to pay further amounts. Accordingly, this plan isconsidered as a defined contribution plan.

For the remaining portion of Provident Fund, the Company contributes to the PF Trust which is administered bytrustees of an independently constituted Trust recognised by the Income-tax Act, 1961. Contributions, includingshortfall, if any, to the Trust are charged to the Statement of Profit and Loss on an accrual basis. As the providentfund scheme has a guaranteed return linked with that under EPF Scheme, 1952, the same has been considered as adefined benefit plan. The present value of obligation has been determined based on actuarial valuation done byindependent actuary using the Projected Accrued Benefit Method. Under this method, the Defined Benefit Obligationis calculated based on deterministic approach in respect of all accrued and accumulated provident fund contributionsas at the valuation date. The cost of interest rate guarantee, if any, in respect of future provident fund contributionsis not taken into consideration. This approach determines the present value of the interest rate guarantee underthree interest rate scenarios: base case scenario, rising interest rate scenario and falling interest rate scenario. TheDefined Benefit Obligation of the interest rate guarantee is set equal to the average of the present values determinedunder these scenarios in respect of accumulated provident fund contributions as at the valuation date.

Gains or losses on the curtailment or settlement of any defined benefit plan are recognised when the curtailment orsettlement occurs.

Other long term benefits

Compensated absences are in the nature of other long term employee benefits. Cost of long term benefit by way ofaccumulating compensated absences that are expected to be availed after a period of 12 months from the year endare recognised when the employees render the service that increases their entitlement to future compensatedabsences. The liability in respect of compensated absences is provided on the basis of an actuarial valuation doneby an independent actuary at the year end. Actuarial gains and losses are recognized immediately in the Statementof Profit and Loss.

g. Revenue recognition

Revenue from sale of goods is recognised on delivery of goods to the buyer which coincides with transfer of allsignificant risks and rewards of ownership. The amount recognised as sale is inclusive of excise duty and excludessales tax and trade and quantity discounts.

Revenue from services is recognised on rendering of services to customers on accrual basis.

Interest income is recognised on a time proportion basis considering the rate of interest and amount invested.

h. Foreign currency transactions

Foreign exchange transactions are recorded using the exchange rate prevailing on the date of the transaction.Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statementof Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies remaining unsettled as at the balance sheet dateare translated at the exchange rates on that date and the resultant exchange differences are recognised in theStatement of Profit and Loss.

i. Warranties

Warranty costs are estimated by the management on the basis of past experience. Provision is made for theestimated liability in respect of warranty costs in the year of sale of goods.

j. Taxation

Income tax expense comprises current tax (i.e amount of tax for the year determined in accordance with the Income-tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timing difference between accountingincome and taxable income for the period). The deferred tax charge or credit and the corresponding deferred taxliability or deferred tax asset is recognised using the tax rates that have been enacted or substantially enacted as atthe balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty ofrealisation. Such assets are reviewed at each balance sheet date to reassess realisation. However, where there are

36

carried forward losses or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only ifthere is virtual certainty of realisation of such assets.

The credits arising from Minimum Alternate Tax paid are recognised as receivable only if there is reasonablecertainty that the Company will have sufficient taxable income in future years in order to utilize such credits.

k. Leases

Lease rentals in respect of assets taken on operating lease are charged on a straight-line basis to the Statement ofProfit and Loss.

Lease income from operating leases is recognised in the Statement of Profit and Loss on a straight line basis overthe lease term.

l. Other Provisions and Contingent Liabilities

A provision arising from claims, litigation, assessment, fines, penalties, etc. is recognised when the Company hasa present obligation as a result of a past event and it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.These are reviewed at each balance sheet date and adjusted to reflect current management estimates. Contingentliabilities are disclosed in respect of possible obligations that have risen from past events and the existence ofwhich will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events notwholly within the control of the enterprise. When there is a possible obligation or present obligation where thelikelihood of an outflow is remote, no disclosure or provision is made.

m. Provision for sales returns

Provision for sales returns is recognised to the extent of estimated margin on expected returns based on pasttrends.

n. Cash and cash equivalents

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank and in hand and shortterm investments with original maturity of less than three months.

o. Earnings per share

Basic earnings per share are computed using the weighted average number of equity shares outstanding duringthe year. Diluted earnings per share are computed using the weighted average number of equity and dilutivepotential equity shares outstanding during the year, except where the results would be anti- dilutive.

37

(Rs. in lakhs)Year ended Year ended

31 March 2012 31 March 20113. Share capital

Authorised (No. lakhs)12,500 (previous year 12,500) equity shares of Re. 1 each 12,500 12,500450 (previous year 450) preference shares of Rs. 10 each 4,500 4,500

17,000 17,000

Issued, subscribed and paid up (No. Lakhs)

1,009.5 (previous year 1,009.5), equity shares of Re. 1 each, fully paid up 1,010 1,010

25 (previous year 25), 0.1% Non cumulative redeemable nonconvertible preference shares of Rs. 10 each fully paid up 250 250

157 (previous year 157), 7.1% Cumulative redeemable nonconvertible preference shares of Rs. 10 each fully paid up 1,570 1,570

229 (previous year 229), 7.1% Cumulative redeemable nonconvertible preference shares of Rs. 10 each fully paid up 2,290 2,290

5,120 5,120a. Reconciliation of the shares outstanding at the beginning

and at the end of the reporting periodAs at 31 March 2012 As at 31 March 2011

No. lakhs Amount No. lakhs AmountRs. in lakhs Rs. in lakhs

Equity sharesAt the beginning and end of the year 1,010 1,010 1,010 1,010

1,010 1,010 1,010 1,010

As at 31 March 2012 As at 31 March 2011No. lakhs Amount No. lakhs Amount

Rs. in lakhs Rs. in lakhsPreference shares

At the beginning and end of the year0.1%, Non cumulative redeemable non convertible preferenceshares of Rs. 10 each fully paid up 25 250 25 250

7.1%, Cumulative redeemable non convertible preferenceshares of Rs. 10 each fully paid up 157 1,570 157 1,570

7.1%, Cumulative redeemable non convertible preferenceshares of Rs. 10 each fully paid up 229 2,290 229 2,290

411 4,110 411 4,110

b. Terms / rights attached to equity sharesThe Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity sharesis entitled to one vote per share.

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

c. Terms / rights attached to preference shares- 0.1% Non-cumulative redeemable non-convertible preference shares shall be entitled to dividend at the rate of 0.1%

38

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

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

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

d. Terms of redemption of preference shares- Maturity period for redemption of 0.1% preference shares amounting to Rs. 250 (Previous year Rs. 250) is ten

years from the date of allotment i.e. 25 March 2003, with an option to the Company of an earlier redemption after24 March 2005.

- Maturity period for redemption of 7.1% preference shares amounting to Rs. 1,570 (previous year Rs. 1,570) is tenyears from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after27 March 2006. (Refer note 27)

- Maturity period for redemption of 7.1% preference shares amounting to Rs. 2,290 (previous year Rs. 2,290) is tenyears from the date of allotment i.e. 27 March 2004, with an option to the Company of an earlier redemption after27 March 2006. (Refer note 27)

e. Shares held by holding / ultimate holding company and /or their subsidiaries/associatesAs at 31 March 2012 As at 31 March 2011Amount % holding Amount % holding

Rs. in lakhs Rs. in lakhsTimex Group Luxury Watches B.V., the holding Company *- Equity shares [756 (previous year 756 )of Re. 1 each fully paid up] 756 74.93 756 74.93- Preference shares0.1% non cumulative redeemable non convertiblepreference shares of Rs. 10 each fully paid up 250 100 250 1007.1% cumulative redeemable non convertible preferenceshares of Rs. 10 each fully paid up 1,570 100 1,570 1007.1% cumulative redeemable non convertible preferenceshares of Rs. 10 each fully paid up 2,290 100 2,290 100

* There is no other shareholders holding more than 5% shares in the company.(Rs. in lakhs)

Year ended Year ended31 March 2012 31 March 2011

4. Reserves and surplusSecurities premium account

Balance at the beginning and at the end of the year 351 351351 351

Surplus in the Statement of Profit and LossBalance at the beginning of the year 1,638 557Add: Profit for the year 453 1,401Less: Appropriations - Dividend on preference shares 274 274 - Tax on dividend 45 46Balance at the end of the year 1,772 1,638

2,123 1,989

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5. Provisions Long-term Short-termYear ended Year ended Year ended Year ended

31 March 2012 31 March 2011 31 March 2012 31 March 2011(Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs)

Provision for employee benefitsProvision for gratuity (refer note 40) 147 133 7 3Provision for compensated absences (refer note 40) 128 122 10 9

275 255 17 12Other provisionsProvision for warranties (refer note 38) - - 69 96Proposed preference dividend - - 274 274Provision for tax on proposed preference dividend - - 45 46Provision for sales returns (refer note 38) - - 216 182Provision for income tax [net of advance tax - - 10 200of Rs.203 lakhs (previous year Rs. 203 lakhs)]Provision for litigations (refer note 38) - - 43 31

- - 657 829275 255 674 841

Year ended Year ended31 March 2012 31 March 2011

(Rs. in lakhs) (Rs. in lakhs)6. Short-term borrowings

Cash credit from banks (unsecured)* 865 -865 -

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

Year ended Year ended31 March 2012 31 March 2011

(Rs. in lakhs) (Rs. in lakhs)7. Trade payable

- total outstanding dues to micro and small enterprises (refer note 26) - -- others 5,990 4,880

5,990 4,880

Year ended Year ended31 March 2012 31 March 2011

(Rs. in lakhs) (Rs. in lakhs)8. Other current liabilities

Discount, selling and other expenses 985 923Unearned income - 29Security deposits received from dealers 18 18Advance received from customers 174 115Dues to employees 154 130Statutory dues payable 463 284Book overdraft 1 42Capital creditors 15 3

1,810 1,544

40

9. Tangible Assets

As at 31 March 2012 (Rs. in lakhs)

Gross block Accumulated depreciation/amortisation Net blockDescription As at Additions Deletions As at Up to For the year Deletions/ Up to As at As at

31 March 2011 31 March 2012 31 March 2011 adjustments 31 March 2012 31 March 2012 31 March 2011

Leasehold land 155 - - 155 8 2 - 10 145 147

Buildings* 334 - - 334 43 11 - 54 280 291

Leasehold improvements 155 - - 155 149 2 - 151 4 6

Plant and machinery # 2,066 23 92 1,997 1,566 43 88 1,521 476 500

Furniture and fixtures 410 272 2 680 232 94 2 324 356 178

Office equipment 96 5 - ** 101 33 4 - ** 37 64 63

Computer equipment 406 36 - ** 442 311 37 - ** 348 94 95

Total 3,622 336 94 3,864 2,342 193 90 2,445 1,419 1,280

* Building is constructed on leasehold land# Plant and machinery includes machinery given on operating lease

Gross block Rs. 853 (previous year Rs. 853)Depreciation charge for the year Rs. 25 (previous year Rs. 25)Accumulated depreciation Rs. 729 (previous year Rs. 704)

Net block Rs. 124 (previous year Rs. 149)

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

As at 31 March 2011 (Rs. in lakhs)

Gross block Accumulated depreciation/amortisation Net blockDescription As at Additions Deletions As at Up to For the year Deletions/ Up to As at As at

31 March 2010 31 March 2011 31 March 2010 adjustments 31 March 2011 31 March 2011 31 March 2010

Leasehold land 155 – – 155 6 2 – 8 147 149

Buildings* 334 – – 334 32 11 – 43 291 302

Leasehold improvements 155 – – 155 140 9 – 149 6 15

Plant and machinery # 2,036 30 – 2,066 1,524 42 – 1,566 500 512

Furniture and fixtures 287 123 – 410 173 59 – 232 178 114

Office equipment 86 10 – ** 96 30 3 –** 33 63 56

Computer equipment 389 24 7 406 279 39 7 311 95 110

Total 3,442 187 7 3,622 2,184 165 7 2,342 1,280 1,258

* Building is constructed on leasehold land# Plant and machinery includes machinery given on operating lease

Gross block Rs. 853 (previous year Rs. 853)Depreciation charge for the year Rs. 25 (previous year Rs. 32)Accumulated depreciation Rs. 704 lakhs (previous year Rs. 679)Net block Rs. 149 (previous year Rs. 174)

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

10. Intangible AssetsAs at 31 March 2012 (Rs. in lakhs)

Gross block Accumulated amortisation Net blockDescription As at Additions Deletions As at Up to For the year Deletions/ Up to As at As at

31 March 2011 31 March 2012 31 March 2011 adjustments 31 March 2012 31 March 2012 31 March 2011

Computer Software 25 7 – 32 11 4 – 15 17 14

Total 25 7 – 32 11 4 – 15 17 14

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As at 31 March 2011 (Rs. in lakhs)

Gross block Accumulated amortisation Net blockDescription As at Additions Deletions As at Up to For the year Deletions/ Up to As at As at

31 March 2010 31 March 2011 31 March 2010 adjustments 31 March 2011 31 March 2011 31 March 2010

Computer Software 25 – – 25 7 4 – 11 14 18

Total 25 – – 25 7 4 – 11 14 18

11. Loans and advances Non current CurrentYear ended Year ended Year ended Year ended

31 March 2012 31 March 2011 31 March 2012 31 March 2011(Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs)

Capital advancesUnsecured, considered good 22 27 - -

22 27 - -

Security depositsUnsecured, considered good 342 359 - -Unsecured, considered doubtful 31 - - -

373 359 - -Less: Provision for doubtful security deposits 31 - - -

342 359 - -Other loans and advances

Unsecured, considered good, unless stated otherwiseAdvance income-tax [net of provision for tax 27 20 - -Rs. 620 lakhs (previous year Rs. 107 lakhs)]Prepaid expenses - - 42 30Advances to employees (refer note 34) - - 10 12Vehicle loans to employees * 1 2 1 1Balances with government authorities - - 148 169Advances to vendors - - 110 257Others - - 7 19

28 22 318 488392 408 318 488

* Secured by hypothecation of respective vehicles

12. Other assets Non current CurrentUnsecured, considered good, unless stated otherwise Year ended Year ended Year ended Year ended

31 March 2012 31 March 2011 31 March 2012 31 March 2011(Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs)

Fixed deposits with original maturity of more 2 - # - -than 12 months *Interest accrued on fixed deposits - - - # 1

2 - - 1

*Pledged with bank as security for guarantees issued on behalf of the Company.# Amount is below rounding off threshold adopted by the Company.

42

As at 31 As at 31March 2012 March 2011

13. Inventories (valued at lower of cost and net realizable value)Raw materials and components [includes goods in transit Rs. 26 lakhs 1,329 1,191(previous year Rs. 38 lakhs)]Work-in-progress 224 111Finished goods [includes goods in transit Rs. Nil 2,557 2,037(previous year Rs. 66 lakhs)]Traded goods 21 23Stores and consumables - 4

4,131 3,366

14. Trade receivables Non-current CurrentYear ended Year ended Year ended Year ended

31 March 2012 31 March 2011 31 March 2012 31 March 2011(Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs)

Debts outstanding for a period exceedingsix months from the date they are due for payment

Debts due from related parties, unsecured(refer note 29) - - 151 8Unsecured, considered good 324 230 87 52Unsecured, considered doubtful - - 403 323

324 230 641 383Less: Provision for doubtful debts - - 403 323

324 230 238 60Other debts

Debts due from related parties, unsecured (refer note 29) - - 315 184Unsecured, considered good - - 9,375 7,276

- - 9,690 7,460Less: Provision for doubtful debts - - - -

- - 9,690 7,460324 230 9,928 7,520

15. Cash and bank balances Non-current CurrentYear ended Year ended Year ended Year ended

31 March 2012 31 March 2011 31 March 2012 31 March 2011(Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs) (Rs. in lakhs)

Cash and cash equivalentsBalances with banks:On current accounts - - 36 270Deposits with original maturity of less than 3 months - - - 700

Cheques on hand - - 285 288Cash on hand - - 5 8

- - 326 1,266Other bank balances

Margin money deposits* 2 - # - 1Amount disclosed under non current assests (refer note 12) (2) - # - -

- - 326 1,267*Pledged with bank as security for guarantees issued on behalf of the Company.# Amount is below rounding off threshold adopted by the Company.

43

Year ended Year ended31 March 2012 31 March 2011

(Rs. in lakhs) (Rs. in lakhs)16. Revenue from operations

Sale of productsFinished goods 17,696 16,984Traded goods 532 142

18,228 17,126Sale of services 305 383Other operating revenue

- Scrap sales 3 3- Dealers signing fees 15 11- DEPB income 1 26- Lease rent 10 9- Liabilities/provisions no longer required written back 24 10

Revenue from operations (gross) 18,586 17,568Less: Excise duty 235 252Revenue from operations (net) 18,351 17,316Details of products soldFinished goods

- Watches 16,914 16,315- Components and others 782 669

17,696 16,984Traded goods

- Watches 532 142

532 142

Details of services rendered- Support charges 274 353- Customer services 31 30

305 383

17. Other incomeInterest income on

- bank deposits 2 34- dues from customers 8 5

10 39Foreign exchange gain (net) - 34Profit on sale of assets (net) - - #Miscellaneous income 30 2

40 75# Amount is below rounding off threshold adopted by the Company.

18. Cost of raw materials and components consumedInventory at the beginning of the year 1,191 1,133Add: Purchases 10,034 9,285

11,225 10,418Less: Inventory at the end of the year 1,329 1,191Cost of raw material and components consumed 9,896 9,227

44

Year ended Year ended31 March 2012 31 March 2011

(Rs. in lakhs) (Rs. in lakhs)Details of raw materials and components consumed

Movements 1,879 1,928Straps 1,328 2,000Others materials 6,689 5,299

9,896 9,227Details of inventoryRaw materials and components

Movements 170 204Straps 381 295Others materials 778 692

1,329 1,19119. Purchase of Traded goods

Watches 471 156471 156

Details of purchasesTraded goods 471 156

471 15620. (Increase)/decrease in inventories

Inventory at the end of the yearTraded goods 21 23Work-in-progress 224 112Finished goods 2,557 2,037

2,802 2,172Inventory at the beginning of the year

Traded goods 23 858Work-in-progress 112 293Finished goods 2,037 949

2,172 2,100(Increase)/decrease during the year (630) (72)Details of inventoryTraded Goods

Watches 21 2321 23

Work in progressWatches 224 112

224 112Finished goods

Watches 2,557 2,0372,557 2,037

21. Employee benefit expenseSalaries, wages and bonus* 1,584 1,320Contribution to provident and other funds 118 100Gratuity expense 24 54Staff welfare expenses 161 144

1,887 1,618*Employee cost for the year ended 31 March 2012 include prior periodexpense amounting to Rs. 20 lakhs (previous year Rs. Nil).

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Year ended Year ended31 March 2012 31 March 2011

(Rs. in lakhs) (Rs. in lakhs)22. Finance cost

Interest on borrowings 90 - #Interest on delayed payment of statutory dues 19 -

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

23. Depreciation and amortization expenseDepreciation on tangible assets 193 165Amortization on intangible assets 4 4(refer note 9 and 10) 197 169

24. Other expensesAdvertising, marketing and brand building expenses* 2,367 2,076Warranty 157 122Selling and distribution 473 411Power and fuel 51 50Repairs and maintenance

- Building 23 26- Machinery 29 20- Others 24 30

Rent 357 337Rates and taxes, excluding taxes on income 195 179Insurance 25 24Travelling 455 413Communication 83 87Bank charges 12 14Director’s sitting fees 9 10Legal and professional (refer note 30) 187 127Commission 153 169Advances written off - 16Purchased services 344 191Consumption of stores and spare parts 15 14Excise duty expense 11 1Provision for doubtful debts 81 -Provision for doubtful advances 31 -Provision for contingencies 11 -Assets written off (net) 1 -Loss on sale of assets (net) 3 -Margin loss on sale return 34 33Foreign exchange loss (net) 422 -Miscellaneous expenses 303 185

5,856 4,535

*Advertising and marketing expenses for the year ended 31 March 2012 include prior period expense amountingRs. 6 lakhs (previous year Rs. Nil).

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25. (a) Capital and other commitments (Rs. in lakhs)As at As at

Particulars 31 March 2012 31 March 2011Estimated amount of contracts remaining to be executed on capitalaccount and not provided for (net of advances) 1 5

(b) Contingent liabilities (Rs. in lakhs)As at As at

Particulars 31 March 2012 31 March 2011Claims against the Company not acknowledged as debtsa) Sales tax 79 79b) Excise duty 92 92c) Customs duty 8 8d) Income tax - 67e) Others 144 128*Bills discounted 462 457

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

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

27. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10 each and22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009,was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. Thecoupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2010 till the date ofmaturity.

28. Earnings per shareThe computation of basic/diluted earnings per share is set out below:

(Rs. in lakhs)Year ended Year ended

Particulars 31 March 2012 31 March 2011Profit as per Statement of Profit and Loss 453 1,401Less: Preference dividend and tax thereon 319 320Net profit attributable to equity shareholders – (A) 134 1,081Basic/weighted average no. of equity shares outstandingduring the year – (No. in lakhs.) – (B) 1,010 1,010Nominal value of equity shares (Rs.) 1.00 1.00Basic/diluted earnings per share (Rs.) – (A)/(B) 0.13 1.07

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

Description of Relationship Name of the Party Ultimate Holding Company Timex Group B.V. Holding Company Timex Group Luxury Watches B.V (formerly

Timex Watches B.V)

47

b. Other related parties with whom transactions have taken place: Description of Relationship Name of the Party Fellow Subsidiaries Timex Group B.V. T/A Mersey Manufacturers

Fralsen Horlogerie S.A.TMX Limited NVTMX Limited NV (International Sales Division)*Timex Corporation (Germany)

Timex Limited NV Timex Group UK *

Timex Nederland B.V. Timex Group USA Inc.

Timex Group Luxury Watches B.V. (Ferragamo)Timex Group Precision Engineering Limited (TGPEL)Timex Hong Kong Limited*Timex Portugal *Timex Hungary Limited*Verstime S.A.

Key Management Personnel V.D. Wadhwa, Managing Director(w.e.f. 29 April 2010)Gopalratnam Kannan (upto 28 April 2010)

* No transactions during the current year.c. Transactions and outstanding balances with related parties (Rs. in lakhs)

Party Name IT Purchase Reimbursement Service Service Sale Payable ReceivableSupport of goods income charges of goodsexpenses paid

Paid ReceivedUltimate holding companyTimex Group B.V - - - - 119 - - - 262

- - - 2 123 - - - 122

Holding companyTimex Group Luxury 2 - - - - - - 2 -Watches B.V. - # - - - - - - - # -

Fellow SubsidiariesTimex Group B.V. T/A - 125 - 1 - - - 61 -Mersey Manufacturers - 133 - 9 - - - 50 9

Timex Group USA 38 172 - 18 58 - - 361 11918 166 - # 32 138 - -- 357 38

TMX Limited NV - 1,707 - - - - 55 4,243 55- 1,192 3 - - - - 2,963 --#

Timex Nederland B.V. - - - - - 39 - 70 -- - - - - 8 - 24 --

Timex Group UK - - - - - - - - -

- -# 1 - - - - - -

Timex Group Luxury - 82 - - - - - - -#Watches B.V. (Ferragamo) - 53 - # - - - 14 18 15

TMX Limited NV - - - - - - - - -

(International Sales Division) - - - - - - 49 -

Timex Group Precision - 10 - - 85 - - 1 -

Engineering Limited - 30 - - 101 - - -# -

Timex Hong Kong Limited - - - - - - - - 7

- - - - - - - - 7

Others - 127 - - - - - 30 23

- 105 - - - - - 22 1

Note: Current year figures are in bold# Amount is below rounding off threshold adopted by the Company.

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Besides the above, the Company has paid Rs. 274 lakhs (previous year Rs. 274 lakhs) to Timex Group Luxury WatchesB.V. as dividend during the year.Timex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amounting to Rs. 1,780lakhs (previous year Rs. 1,780 lakhs) to the bankers of the Company as a guarantee for use of cash credit and overdraftfacilities.

(Rs. in lakhs)

Year ended Year endedTransactions with key management personnel: 31 March 2012 31 March 2011Remuneration*Gopalratnam Kannan - 34V. D Wadhwa 105 83

Advances given:V. D Wadhwa - 2

Amount repaid during the yearV. D Wadhwa 2 -

* Excludes gratuity and leave encashment as the same is determined for the Company as a whole and is not separatelyascertainable for any individual.

30. Payment to auditors (including service tax):(Rs. in lakhs)

Year ended Year ended Patrticulars 31 March 2012 31 March 2011 a. Statutory audit 18 17 b. Tax audit 2 2 c. Limited review 18 17 d. Other services 8 7 e. Reimbursement of out of pocket expenses 3 2 Total 49 45

31. Details of imported and indigenous raw materials, components, spares and consumables consumed

Year ended Year ended31 March 2012 31 March 2011

Value % of total Value % of total(Rs. lakhs) consumption (Rs. lakhs) consumption

Raw materials and componentsImported 5,717 58 4,523 49Indigenous 4,179 42 4,704 51

Total 9,896 100 9,227 100

Stores and consumablesImported - # 2 - # 3Indigenous 15 98 14 97Total 15 100 14 100

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

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32. Value of imports on CIF basis(Rs. in lakhs)

Year ended Year endedParticulars 31 March 2012 31 March 2011Raw material and components 4,274 3,094Purchase of watches 1,143 831Consumables - # 1Total 5,417 3,926

# Amount is below rounding off threshold adopted by the Company.33. Expenditure and earnings in foreign currency

a. Expenditure in foreign currency (Rs. in lakhs)

Year ended Year endedParticulars 31 March 2012 31 March 2011Travelling 19 17Software license fees 40 19Sales and marketing - 31Others 39 5

98 72

b. Earnings in foreign currency

Year ended Year endedParticulars 31 March 2012 31 March 2011Exports on F.O.B basis 564 527Service income 177 261

741 788

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

35. TaxationThe Company has significant unabsorbed depreciation. In view of the absence of virtual certainty of realisation ofcarried forward tax losses and unabsorbed depreciation allowance, deferred tax assets are recognised only to theextent of deferred tax liabilities.The major components of deferred tax assets and liabilities are as follows:

(Rs. in lakhs)As At As At

Particulars 31 March 2012 31 March 2011Deferred tax liabilitiesDepreciation 43 55Total deferred tax liability 43 55

Deferred tax assetsGratuity 50 44Leave encashment 45 42Provision for doubtful debts and advances 141 105Provision for warranty 23 31Provision for sales returns 70 59Provision for litigations 14 -Disallowance under section 40(a) of the Income tax Act, 1961 6 -Carried forward depreciation 640 1,583Total deferred tax asset 989 1,864Deferred tax asset recognised(to the extent of deferred tax liability recognised above) 43 55

Net deferred tax asset/(liability) Nil Nil

50

36. The Company has taken land and building, office premises, showrooms, other business premises and residentialaccommodation for some of its employees under operating lease arrangements, with an option of renewal at the end ofthe lease term and escalation clause in some of the cases. Lease payments charged during the year to the Statement ofProfit and Loss aggregate Rs. 309 lakhs (previous year Rs. 296 lakhs). The future minimum lease payments under non-cancellable operating leases are as follows:

(Rs. in lakhs)As at As at

Future lease payments due 31 March 2012 31 March 2011Within one year 200 224Later than one year and not later than five years 61 256

Total 261 480

37. The Company has given certain items of plant and machinery on operating lease, with an option of renewal at the endof the lease term. However, the lease agreements entered into with the lessees do not provide for any escalation. Leaserentals recognised during the year in the Statement of Profit and Loss account amount to Rs.10 lakhs (previous year Rs.9 lakhs). The future lease payments receivable under non-cancellable operating leases are as follows:

(Rs. in lakhs)As at As at

Future lease payments receivable 31 March 2012 31 March 2011Within one year 4 5Later than one year and not later than five years - 4Total 4 9

38. a. Provision for warranties has been recognised for expected warranty claims on products sold during the year. Theprovision has been created based on estimates and past trend. Following is the movement of the provision duringthe year:

(Rs. in lakhs)Year ended Year ended

Particulars 31 March 2012 31 March 2011Opening provision 96 128Add: Provision for the year 157 122Less: Utilised/reversal during the year (184) (154)Closing provision 69 96

b. Provision for sales returns has been created for estimated loss of margin on expected sales returns in future periodagainst products sold during the year. The provision has been created based on management’s estimates and pasttrends. Following is the movement in the provision during the year:

(Rs. in lakhs)Year ended Year ended

Particulars 31 March 2012 31 March 2011Opening provision 182 149Add: Provision for the year 34 42Less: Utilised/reversal during the year - (9)Closing provision 216 182

c. Provision for litigations has been recognised for various litigations with the tax authorities. Although the Companyis contesting the cases at the relevant forum, the management believes that the outflow of resources embodyingeconomic benefits is probable and has accordingly, created a provision towards the obligations that may arise. Thetable below gives information about movement in the provision for litigations:

(Rs. in lakhs)Year ended Year ended

Particulars 31 March 2012 31 March 2011Opening provision 31 31Add: Provision for the year 12 -Less: Utilised/reversal during the year - -Closing provision 43 31

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39. Segment informationThe Company’s business segment comprises:- Watches: Manufacturing and trading of watches;- Others: Providing IT and finance related back office support to other group companies.Segment revenue in the geographical segments considered for disclosure are as follows:- Revenues within India (Domestic) includes sale of watches and spares to consumers located within India; and- Revenues outside India (Overseas) includes sale of watches manufactured in India and service income earned from

customers located outside India.Segments have been identified in line with the Accounting Standard 17 on “Segment Reporting” notified by theCompanies (Accounting Standards) Rules, 2006, taking into account the nature of products and services, the risks andreturns, the organisation structure and the internal financial reporting system.

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

Primary segment reporting (by business segment):(Rs. in lakhs)

Watches Others Total2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

Segment revenues External sales (gross) 18,356 17,248 177 261 18,533 17,509Excise duty (235) (252) - - (235) (252)External sales (net) 18,121 16,996 177 261 18,298 17,257Other business related income 83 62 - - 83 62Total revenue 18,204 17,058 177 261 18,381 17,319

Results Segment results 1,214 1,845 23 18 1,237 1,863Unallocated income - 32Unallocated expenses (533) (177)Profit before interest and tax 1,214 1,845 23 18 704 1,718Interest expense (109) - #Interest income 10 40Profit before tax 1,214 1,845 23 18 605 1,758Income taxes - Minimum alternate tax 152 357Net profit 453 1,401

Other information Assets Segment assets 15,985 12,611 388 142 16,373 12,753Unallocated corporate assets 484 1,876Total assets 16,857 14,629

# Amount is below rounding off threshold adopted by the Company.(Rs. in lakhs)

Watches Others Total2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

LiabilitiesSegment liabilities 8,406 6,473 13 13 8,419 6,486Unallocated corporate liabilities 1,195 1,034Share capital (including sharepremium amount and balance inStatement of Profit and Loss) 7,243 7,109

Total liabilities 16,857 14,629

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Watches Others Total2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

OthersCapital expenditure 304 188 - - 304 188Unallocated capital expenditure 39 28Total capital expenditure 343 216

Depreciation 157 128 4 6 161 134Unallocated depreciation 36 35Total depreciation 197 169

Secondary segment reporting (by geographical location of customer): (Rs. in lakhs)

India Outside India Total2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

Segment revenue 17,559 16,538 822 781 18,381 17,319 Segment assets 16,379 14,353 478 276 16,857 14,629 Capital expenditure 343 216 - - 343 216

Segment accounting policiesBesides the normal accounting policies followed as described in note 2, segment revenues, results, assets and liabilitiesinclude the respective amounts directly identified to each of the segments and amounts allocated on a reasonable basis. Thedescription of segment assets and liabilities and the accounting policies in relation to segment accounting are as under:a) Segment assets and liabilities

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

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

40. Employee benefits The Company primarily provide the following benefits to its employees:(a) Gratuity(b) Provident fund

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

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

(Rs. in lakhs)

Particulars 2011-12 2010-11Change in defined benefit obligations during the yearPresent value of obligation at beginning of the year 136 86Service cost 20 13Interest cost 14 8Actuarial (gain)/loss (9) 2Past Service Cost (1) 31Benefit paid (6) (4)Present value of obligation at end of the year 154 136Present value of unfunded obligation and liability recognised in Balance SheetPresent value of defined benefit obligation as at the end of the year and liabilityrecognised in the Balance Sheet 154 136

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(Rs. in lakhs)

Particulars 2011-12 2010-11

Net liability is bifurcated as follows:Current 7 3Non Current 147 133

Gratuity cost recognised in the statement of profit and loss for the year

Current service cost 20 13Interest cost 14 8Actuarial (gain)/loss (9) 2Past service costs (1) 31Net gratuity cost 24 54

AssumptionsDiscount rate- For Timex Global Services 8.70% 8.30%- Others 8.70% 8.30%Expected rate of salary increase- For Timex Global Services 10% 10%- Others 8% 8%

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotionsand other relevant factors. Discount rate is based on market yields prevailing on government securities for the estimatedterm of the obligations.Demographic assumptions:

Particulars As at31 As at31March 2012 March 2011

Retirement age 58 years 58 yearsMortality table LIC (1994-96) LIC (1994-96)

Experience Adjustments:(Rs. in lakhs)

Particulars 31 March 31March 31 March 31 March 31March2008 2009 2010 2011 2012

Defined Benefit obligation at the end of the year 71 79 86 136 154Experience adjustments on plan liabilities (7) 6 (12) 2 1

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

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

Other long term benefits:The amount recognised in the Statement of Profit and Loss in respect of compensated absences is Rs. 23 lakhs (previousyear Rs. 40 lakhs).

54

For and on behalf of the Board of Directors of Timex Group India Limited

For B S R & Co.Chartered AccountantsFirm Registration No.: 101248W

Rakesh Dewan Kapil Kapoor V D Wadhwa Shilpa Verma Amit JainPartner Chairman Managing Director Company Secretary Head AccountsMembership No.: 092212

Place: Gurgaon Place : Noida Place : Noida Place : Noida Place : NoidaDate: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012 Date: 31 May 2012

41. The Company’s foreign currency exposure on account of payables/ receivables not hedged is as follows:

(Rs. in lakhs)

Particulars As at 31 March 2012 As at 31 March 2011

(in original (in Rupees) (in original (in Rupees)currency) currency)

Payables- USD 94 4,900 77 3,474- EURO 29 20 -# 14- HKD 8 55 7 43- CHF - - - # 18

Receivables- USD 9 468 6 265- CHF - - - # 15

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

42. Amount remitted during the year ended 31 March 2012 in foreign currency on account of dividend was Rs. 274 lakhs(previous year Rs. 274 lakhs).

Non Resident shareholders Number of shares on which Year to which dividend relates(numbers) dividend was due

One 41,100,000 2010-2011

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

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

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

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Timex Group India Limited

Name & Joint Name s : ………………………………………………………………………………....................

Address:…………………….........………………………………………………………………………..............…

DPID. : …………………………………………….……………………………………………………….................

Client ID :………………………………………………………………………………………………….................

Folio No.:………………………………………………………………………………………………….................(in case of physical holding)

No.of equity shares held :…………………………………………(the period for which held)

e-mail id for registration under “________________________________”.

Note : In case you hold shares in demat mode, kindly get your email id updated with the depositoryparticipant where you are maintaining the demat account

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Members are requested to send this Business Reply Form to the address given overleaf.

Signature of member(s)

56

To,Legal & Secretarial DepartmentTimex Group India LimitedRegistered Office : 117 Ground Floor,World Trade Centre, Babar Road,New Delhi – 110001.

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