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U(lHe new ttMEX (E-Tide-(Temp-Compass watch
enhance the outdoor experience with a btendof
timefess design and advanced features.
(By finding an internalsensor to a dedicated fourth hand
this unique anafog watch detiver on-demand-information
andciassic styfing that's perfect
for today's active [ifestyk.
fit the-press of a buttonffie new (E-(Ti(fe-(Temp-Compass watch
transforms from an eiegant timepiece to a marvetof
advanced tecfmobgy.
Inside the stainfess steetcase Res a miniaturized sensors that,
when activated, emptoy a dedicated fourth hand-
to indicate the temperature, tide or point north."
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Director(s)as of 31st March 2008
Frank ShererKapil KapoorDaya DhaonChittaranjan DuaRaghu PillaiMauro Antonio CalcanoGagan Singh (Ms.)
Non-Executive Director & ChairmanExecutive Director & Managing DirectorNon-Executive & Independent DirectorNon-Executive DirectorNon-Executive & Independent DirectorNon-Executive DirectorNon-Executive & Independent Director
Sr. V.P. General Counsel& Company Secretary
V.D.Wadhwa
Bankers The Hongkong and Shanghai Banking Corporation LimitedHDFC Bank Limited
Auditors BSR & Co.Chartered Accountants
Registered Office 117, G.F. World Trade CentreBabar Road, New Delhi -110 001
Works Plot No. 10Baddi Industrial AreaKatha BhatoliBaddi, Distt. Solan (H.P.)
C-35, Sector-59Noida-201301Distt. Gautam Budh NagarUttar Pradesh
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1M3EX
hereby given that the Twenteith Annual General Meeting of the Members of TIMEX GROUP INDIA_ _ D will be held on 23 August 2008 at 10.00 A.M. at the Air Force Auditorium, Subroto Park,Delhi - 110 010 to transact the following business:
ORDINARY BUSINESS1. To receive consider afid adopt the Balance Sheet as at 31 March, 2008, Profit and Loss Account for the
year ended on that date and the report of the Auditors and Directors thereon.
2. To appoint a Director in place of Mr. Raghu Pillai, who retires by rotation and being eligible, offers himselffor re-appointment.
3. To appoint Auditors from the conclusion of this Annual General Meeting until the conclusion of the nextAnnual General Meeting.
M/s BSR & Co., the retiring Auditors, being eligible, offer themselves for reappointment on a remunerationto be fixed by the Board of Directors of the Company in addition to reimbursement of all out of pocketexpenses.
*" BUSINESS
To consider and if thought fit, to pass with or without modification(s), the following resolution as anORDINARY RESOLUTION.
"RESOLVED THAT Mt Hans Kristian Hoejsgaard, who was appointed as an Additional Director of theCompany pursuant fWfcetion 260 of the Companies Act, 1956 and Article 103 (a) of the Articles ofAssociation of the Cc«ipany with effect from 23 May, 2008 holds office up to the date of this AnnualGeneral Meeting and in respect of whom the Company has received a notice in writing pursuant toSection 257 of the Companies Act, 1956, proposing his candidature for the office of Director, be and ishereby appointed as a Director of the Company liable to retire by rotation."
RESOLVED FURTHER THAT pursuant to Article 106 of the Article of Association of the Company, Mr.Hans-Kristian Hoejsgaard be and is hereby appointed as Chairman of the Company in place of Mr.Frank Sherer.
5. To consider and if thought fit, to pass with or without modification(s), theORDINARY RESOLUTION.
following resolution as an
«*.
I
"RESOLVED THAT subject to the provisions of Section 198,269,309,311, Schedule XIII and all otherapplicable provisions cf the Companies Act, 1956, the Company hereby accords its approval for the
•i reappointment of Mr.Jfcpil Kapoor as Managing Director of the Company for a period of two years withT*.; effect from 03 OctoPB-,2008, upon the terms and conditions mentioned in the explanatory statement
attached heretvitn and as set out in the draft agreement to be executed between the Company and Mr.Kapoor which is hereby specifically approved with the liberty to the Board of Directors to alter and varythe terms and conditions of the said reappointment and / or Agreement in such manner as may beagreed to bfctwe^n the fioard of Directors and Mr. Kapoor.
RESOLVED FURTHER THAT the Company also accords its approval for the action(s) taken / to be takenby Board of Directors in this regard.
NOTES
1. The Explanatory Statement pursuant to section 173 (2) of the Companies Act, 1956 in respect of theSpecial Business stated above is annexed.
2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTENDAND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER.
3. Mr. Raghu Pillai, Director, retire by rotation at the ensuing Annual General Meeting and being eligibleoffer himself for reappointment. Brief resume of Mr. Raghu Pillai, nature of his expertise and names ofCompanies in which he holds Directorship and membership / chairmanship of Board Committee asstipulated under Clause 49 of the Listing Agreement with the Bombay Stock Exchange is provided in theReport on Corporate Governance forming part of the Annual Report. The Board of Director of theCompany commend his re-appointment.
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4. The proxy form duly completed in all respects should reach the Registered Office of the Company notlater than 48 hours before the commencement of the meeting.
5. The Register of Members and the Register of Share Transfers of the Company have remained closedfrom 28 July 2008 & 29 July 2008 both days inclusive.
6. The members are requested to inform changes, if any, in their Registered Address alongwith Pin CodeNumber to the Company at the following Address:TIMEX GROUP INDIA LIMITED(Investors Relation Department)117, Ground Floor, World Trade CentreBabar Road, New Delhi - 110 001
7. The Company has transferred Full & Final unpaid / unclaimed interest-cum-redemption amount dueand payable up to 12 October 2000 to the Investor Education and Protection Fund (IEPF) established bythe Central Government.
8. The Members attending the meeting are requested to bring the enclosed attendance slip and deliverthe same after filling in their folio number at the entrance of the meeting hall. Admission at the AnnualGeneral Meeting venue will be allowed only on verification of the signarure(s) on the Attendance Slip.Duplicate attendance slip shall not be issued at the Annual General Meeting venue. The same shall beissued at the Registered Office of the Company up to a day preceding the day of the Annual GeneralMeeting.
9. As a measure of economy, copies of the Annual Report will not be distributed at the venue of the AnnualGeneral Meeting. The Members are, therefore requested to bring their copies of the Annual Report tothe meeting.
10. The Members desirous of any information on the Accounts are requested to write to theCompany at least a week before the meeting so as enable the management to keep the informationready.
11. The Non Resident members are advised to provide their correspondence address in India and to givemandate for remittance of dividend directly to their bank account(s) in future.
Registered Office: By Order of the117, Ground Floor, Board of DirectorsWorld Trade Centre,Babar Road,New Delhi-110 001
V D WadhwaSr. VP, General Counsel
Dated: 29 July 2008 & Company Secretary
EXPLANATORY STATEMENT UNDER SECTION 173 (2) OF THE COMPANIES ACT, 1956.
Item No 4
In terms of the provisions of Section 260 of the Companies Act, 1956 and Article 103(a) and 106of the Articles of Association of the Company, Mr. Hans Kristian Hoejsgaard was appointedan Additional Director and Chairman of the Board of Directors by the Board of Directors at theirmeeting held on 23 May 2008. Mr. Hoejsgaard 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 appointmentof Mr. Hoejsgaard as a Chairman and Director of the Company alongwith a deposit of Rs. 500/- (RupeesFive Hundred only) which shall be refunded to the member, if Mr. Hoejsgaard is elected as a Director.
Mr. Hoejsgaard is President and Chief Executive of Timex Group, USA currently. Mr. Hoejsgaard hasextensive international management experience and prior to joining Timex Group in February 2008, hehas been associated with Georg Jensen, a leading luxury goods Company as its President and ChiefExecutive Officer, Lancaster Group (a division of Coty Inc) as President. Earlier in his career, he wasManaging Director- Asia Pacific, based in Hong Kong, for Guerlain, a division of LVMH Moet HennesseyLouis Vuitton, and held senior management positions with Joseph E. Seagram & Sons in Rome,
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TDMiXHong Kong and Bangkok. He holds a BA in Economics and Strategic Planning from Southern DenmarkBusiness School and has undertaken executive education at Harvard Business School, INSEAD andWharton.
The Directors commend the Resolution for acceptance by the Members.
Item No 5
In accordance with the" provisions of the Companies Act, 1956, and subject to the approval of theshareholders and other regulatory authorities, as applicable, the Board of Directors of the Companyhave decided to renew the term of appointment of Mr. Kapil Kapoor as Managing Director of theCompany for a further period of two years effective 3 October, 2008 i.e the date when his. present termis coming to an end. The details of the proposed reappointment are as below and also as given in itemNo.5 of the accompanying Notice, which may also be treated as an abstract u/s 302 of the CompaniesAct, 1956.
Mr. Kapoor is a graduate in Economics and has Masters in Business Administration from IIM, Ahmedabad,he is also an alumnus of the Ashridge Management School. Mr. Kapoor has been associated with theCompany as Managing Director since October 2000. Since August 2003, he has been entrusted with theadditional responsibilities of the markets in the Asia Pacific region and currently designated as Sr. VicePresident based in Hongkong. He is also a Director on the Board of Infoedge India Limited.
The Agreement between the Company and Mr. Kapoor contains the following main terms and conditions;
i) Period of Appointment : Two years with effect from 03 October 2008
ii) Terms of Appointment and Remuneration:1. As Managing Director of the Company , Mr. Kapoor 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 totime. Mr Kapoor will serve diligently and faithfully and- will comply with all applicable laws andregulations and with all business policies and standards of the Company in his performance ofservices under this Agreement. Mr. Kapoor will perform such services personally at such reasonabletimes and places as the Company may direct in connection with the business
2. During the term of this Agreement, Mr. Kapoor will not engage in or accept any other assignment oremployment except the responsibilities entrusted upon him as Regional Director for Asia Pacific /India region for the parent company. Mr. Kapoor shall devote sufficient time and attention to andexert his best efforts in the performance of his duties hereunder, so as to promote the business ofthe Company.
3. Mr. Kapoor shall perform his obligations subject to the supervision, control and direction of theBoard of Directors and to regularly report to the Board of Directors on the activities of the Companyin respect of the matters delegated to him by the Board.
4. Mr. Kapoor shall not be drawing any remuneration from the Company during his tenure as itsManaging Director.
In Compliance with the provisions of Section 309 of the Companies Act, 1956, the terms ofremuneration specified above are now being placed before the Members in General Meeting orapproval.The draft of Agreement to be executed between the Company and Mr. Kapil Kapoor is available forinspection at the Registered Office of the Company between 11.00 A.M. and 1.00 P.M. on anyworking day of the Company.
None of the Directors, other than Mr. Kapoor himself, are deemed to be concerned or interested inthis resolution.
Registered Office: By Order of the117, Ground Floor, Board of DirectorsWorld Trade Centre,Babar Road,New Delhi - 110 001 V D Wadhwa
Sr. VP, General CounselDated: 29 July 2008 & Company Secretary
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DIRECTORS' REPORT
To the Members of Timex Group India Limited
The Directors are pleased to present the Twentieth Annual Report and Audited Statement of Accountsfor the year ended 31 March 2008.
FINANCIAL RESULTS Rs. in Thousands2007- 08 2006 - 07
Income 1328976 1158668Expenditure 1226812 1093745Gross Profit/ (Loss) 102164 64923Interest 6956 9747Depreciation 25860 23123Profit/(Loss) before taxes 69348 32053Provision for Taxes 14825 6857Profit/ (Loss) after Taxes 54523 25196
OPERATIONS
The Company achieved significant growth during the financial year 2007-08 with sales income atRs 132 Cr growing by 16% over the previous year and Profit Before Tax at Rs. 6.93 Crore up by 117 %over the previous year. Net Profit for the year is at Rs 5.45 Crore The watch business registered agrowth of 16 % and Precision Engineering Division registered a growth of 31%.
Your Company continues to pursue its retail strategy of opening state of the art "The Time FactoryStores" across the country. The total number of The Time Factory Stores (TTF) has gone up to 61 acrossthe country and shall further increase to 100 in the next twelve months.
Your Company is contemplating and developing the strategic plan to bring in more of fashion watchbrands in the Country, which are currently available in the portfolio of its parent organization. "Nautica"was launched successfully during 2007, besides; Ferragamo and Valentino are die other two brands,which are planned to be launched during the current fiscal year. With the introduction of these brandsthe Company would cater to all the price points at consumer level.
The new facility in the state of Himachal Pradesh is working on full stream. 'Indigenization Strategy' isbeing persued to produce all fast moving styles in house which are currently being imported fromparent organization. This will enable your company to offer these products to the consumers at lowerprices and further improve its margins.
Your Company is also working towards venturing in the Jewelry Business and work is underway tofinalize the entry strategy in this regard. In order to give thrust to different business segments, yourCompany has divided its business in to three divisions namely 'Timex & Fashion Watch Division','Luxury Watch Division' and 'Jewelry Division', which will be looked after by Independent businessheads for each division.
Your Directors are confident that the initiatives taken by the Company in creating separate businessdivisions together with thrust on developing the retail channel and indigenization of internationalstyles are likely to further improve its business and operating margins in the coming years.
CHANGE IN NAME OF THE COMPANY
With effect from 13th October 2007 the name of your Company has been changed to TIMEX GROUPINDIA LIMITED' in line with global strategy of its parent organisation. The new name would enableyour Company to realign with the worldwide organization, reflect the global image of the Company
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1MEXand facilitate the implementation of global portfolio strategy of multiple watch brands under oneumbrella.
MANAGEMENT DISCUSSION AND ANALYSIS
ECONOMY - OVERVIEW
Indian Economy recorded a significant growth during the Tenth Plan Period - GDP grew 8.5% CAGRagainst a target of 8% due to booming manufacturing and service sectors and a reasonable growth inthe agricultural sector. This GDP growth triggered an increase in the country's per capita income, whilelow interest rates fuelled increased demand, which is reflected in the increased top line for most consumerdurable Companies.
The Economic Survey has projected growth rate of 8.7% during 2008-9, as against 9.6% in the year 2006-07. The decline is attributed to a general slowdown in most of the sectors except electricity,communication, trade, hotels and transport. It is a matter of concern and may have negative impact onthe discretionary purchases by the consumers. There is, however, a big concern due to inflation, whichhas risen to a level of over 11% in the recent months, due to unprecedented increase in the prices of crudeoil globally. The government has taken a serious view of the situation and initiated various measures tocurb inflation but it is expected to remain at high levels for next one year or so before easing out. On thebalance of payments front, there is a considerable uncertainty arising out of the US sub-prime mortgagecrisis though there has been a 150% increase in net foreign direct investment.
The Indian Capital market also attained greater depth and width during 2007, the BSE Sensex scaled apeak of 20,000 towards the close of the year, and the market capitalization doubled. Significant correctionin the capital markets since has reflected a more realistic situation but, in the overall context, thesituation appears healthy.
The generally upbeat scenario has affected the consumer market significantly. India has emerged as thesecond largest market for Nokia, ahead of the United States and just behind China. The total number oftelephone subscribers in India has crossed 250 million and wireless subscription is the highest in theworld.
INDUSTRY STUCTURE AND DEVELOPMENT
The size of the Indian Watch Market is currently estimated at 40 million watches, representing a growthof approx 12% over the previous year. The growth of premium sector is estimated to be 20% reflected inthe overall growth of the Industry. The industry growth is expected to be in double digit in the nearfuture, which augurs well for the business of your Company.
The growth is predominantly driven by increase in the overall retail activity and higher marketingspends by all the major players, including your Company. Your Company believe that the overallcategory spend for the watch industry will continue to increase significantly in the coming years due toentry of many more brands ancl retail expansion which shall be beneficial for growth of the Industry,particularly the premium end of the market.
The industry growth continues to be hampered by the presence of the large un-organized sector, whichaccounts for nearly 60% of the total market, with no accountability to either the government or theconsumer.
OUTLOOK & KEY CHALLENGES
2007-08 has been one of the most profitable years in the history of the Company's watch business inIndia. The current economic trends and changing life style of the consumers are indicative of a sustainableoverall double-digit growth of the watch industry in India in the next 3-4 years mainly skewed at thefashion and luxury end of the watches. The key challenge and opportunity ahead is to stimulate consumer
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demand and strengthen our brands & retail network to ensure sustainable strong growth and increasein the profitability for the Company in an increasing competitive market.
The luxury segment of the watch industry is growing by over 30% on YOY basis, as a result, theindustry is likely to witness entry of new high end luxury and fashion brands. Your company is takingfull advantage of the changing business environment and pursuing its retail strategy through openifljjof exclusive stores titled "The Time Factory".
OPPORTUNITIES AND THREATS
The consistent growth of the Indian Economy, increasing purchasing power, consumerisation andemergence of organized retailing are indicative of high growth of the life style category products in thenear future of which your Company is one of the key players. We are well poised to reap the benefitsthrough pursuing our retail and portfolio strategy. Your Company is also contemplating diversifying into branded Jewelry business both at national and international level being a related life style categoryproduct and personal accessory, which would allow it to leverage its organizational strengths andgrow its business further in the Country. The large format retailers are pursuing 'private label' strategy.While the private label business is likely to improve the overall penetration level for the industry, it willnegatively affect the business of brands, which are operating predominantly in sub Rs 1000/- pricepoints.
RISKS
Your Company envisages that increased cost of the real estate and retailing as risks, which are j^pressure on the operating margins. In addition, levy of service tax on the le«#e rentals and imposition"!CVD of 4% on the imported products have a negative impact and the operating margins. Your Complyintends to mitigate the incremental levies through various cost savings initiative undertaken by it forimprovement in operational efficiencies. The interest costs have already gone up significantly and wedo not expect it to go up further from its present level. The weakening rupee has a negative impact pn theprofitability of the Company being a net importer. We believe that the rupee would continue to be at itscurrent level with some fluctuations through out the next twelve months and intend to mitigate theexchange risk through price increases and increase in operating efficiencies.
GOVERNMENT POLICY
Your Company has been actively involved with the "All India Federation of Horological Industries", anapex body of the Horological Industry in India. Your company together with AIFHI has been taking upthe issues concerning the watch industry and your Company in particular with the various governmentagencies. We have made several representations to the Government for reduction in Basic CustomDuties & Excise increase in the abatement factor, rationalization of duty structure and for streamliningof various procedural formalities. In the Union Budget presented this year, the Government has lowere jthe basic excise increase, duty from 16% to 14% but increased the abatement factor from 35% to 37%,which has resulted in only a marginal relief. We shall continue to endeavour our efforts to represent thfinterest of Industry and our own Organization.
FINANCE
Your Company has been able to manage its cash flow through improved trade collections and also useda part of the preference capital issue proceeds to retire a substantial part of its term loan liability, whichhas resulted in significant reduction in the interest costs despite increasing rate of interest. We do notanticipate further increase in the interest rates from its existing level and shall mitigate such risksthrough corresponding reduction in the term loans.
The Company does not hold any fixed deposits from the public, shareholders & employees. There wereno overdue / unclaimed deposits as on 31 March 2008.
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wDuring the year under review, the Company made payment aggregating to Rs. 28.09 Crore by way ofCentral, State and local sales taxes and duties as against Rs. 29.72 Crore in the previous year.
SEGMENT WISE REPORTING
The Company has identified segments taking into account the nature of products and services, thedifferent risks and returns, the organizational structure and the internal financial reporting system.The main business of the Company is manufacturing and trading of watches. The other segments areless than 10% of the business. The segment wise information for watches and other activities are providedin the Notes to the Accounts.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has endeavoured to continuously improve the internal controls both relating to financialreporting and Operations. Your Company has well established procedures for internal control whichare commensurate with its size and operations.
The internal control mechanism comprises a well-defined organization structure, documented policyguidelines, predetermined authority levels and processes.
The systems and operations are regularly reviewed by the Audit Committee to ensure and review theireffectiveness and implementation. The Statutory Auditors of the Company also attend these meetingsand convey their views on the adequacy of internal control systems as well as financial disclosures. TheAudit Committee also issues directives for enhancement in scope and coverage of specific areas, whereverfelt necessary.
HUMAN RESOURCES
Your Company is proud to have result oriented, committed & loyal employees, who are the key resourcefor the growth of its business. Your Company provide a challenging work environment that encouragesnovelty and meritocracy at all levels and has believed in an environment that fosters accomplishment,ownership, creativity and mutual respect.
The Company continues to benchmark its Key HR Processes - Compensation, Productivity, PerformanceManagement Systems and employee friendly policies etc with the best in class and is aligned to businessneeds. The Company's structure is organized to provide the necessary support and resources for thescale up of business in organic, in-organic or new business categories.
The information required as prescribed under Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975 is annexed herewith forming part of this report.However as per provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, only the report andaccounts are being sent to all the shareholders excluding the statement of particulars of employeesunder Section 217 (2A) of the Act. Any shareholder interested in obtaining a copy of the said statementmay write to the Company Secretary at the Registered Office address of the Company.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis outlining the Company's objective, expectationsor predictions may be 'forward looking statements' within the meaning of applicable, laws andregulations. Actual results could differ materially from those expressed or implied'in the statements.
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The important factors that could influence the Company's operations include global and domestic supplyand demand conditions affecting selling prices of finished goods, input availability and prices, changesin government regulation, tax laws, economic developments within the country and abroad and suchother factors such as litigation and industrial relation.
DEMATERIALISATION
Effective the year 2000, the equity shares of your Company are being compulsorily traded indematerialization form. As on date, 34105 no. of shareholders representing 21.68% of the Equity Shareare holding shares in the dematerialized form.
DIRECTORS
Mr. Raghu Pillai retires by rotation and is eligible for reappointment.
Mr. Hoejsgaard was appointed additional director during the year to hold office up the date of theforthcoming shareholders meeting. Your Company has received notice from a shareholder seeking hisappointment as Director of your Company pursuant to Section 257 of the Companies Act 1956.
Mr. Kapil Kapoor is proposed to be reappointed as Managing Director of the company for a further termof 2 years w.e.f. 03 October, 2008.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm as under:
(i) That in preparation of the Balance Sheet and the Profit & Loss Account of the Company, theapplicable accounting standards has been followed along with proper explanation relatingto material departures.
(ii) The Directors had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of the profit ofthe Company for that period.
(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956, for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.
(iv) That the Directors have prepared the annual accounts on a going concern basis.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on CorporateGovernance together with a certificate from the Company's Auditors confirming compliance is set outin the Annexure forming part of this report.
CONSERVATION OF ENERGY
Information required as per Section 217 (1) (e) of the Companies Act, 1956, read with the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding conservation ofenergy, technology absorption and foreign exchange earnings and outgo is given in the Annexure formingpart of this report.
AUDITORS
M/s BSR & Co., Chartered Accountants and Statutory Auditors of the Company retire and are eligiblefor reappointment.
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ACKNOWLEDGEMENTS
Lastly, your Directors wish to place on record their appreciation for the support and cooperation,which the Company continues to receive from its customers, the watch trade, the NOIDA, the Governmentof Uttar Pradesh and Himachal Pradesh, the Company's bankers and finally the Members of the Companyand its employees.
New Delhi29th July, 2008
ANNEXURE TO THE DIRECTORS' REPORT
For and on behalf of the Board of Directors
Chairman
(Additional Information given in terms of notification no. 1029 of 31 December, 1988 issued by theDepartment of Company Affairs)
PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGYPOWER AND FUEL CONSUMPTION
UPSEB/ HPSEB Power purchase (units)Total Amount (in Rs.)Rate per unit (in Rs.)Own generation (units)Cost per unit (in Rs.)Units per litre of diesel
2007-08
20338049250524
4.55542727
10.753.11
2006-07
12349215320961
4.31368850
10.273.20
TECHNOLOGY ABSORPTIONResearch and Development (R&D)
Areas in which R&D carried out by the Company
Development of -
1) Implemented in-house manufacturing of Retrograde and Dual-time watches.2) Upgradation of Hand-driving assembly tool from 3-in-l configuration to 8-in-l rotary type to
enhance productivity.3) Fibre technology based Laser Marking machine to inprove Caseback printing quality.4) Introduction of Vacuum Tunnel for movement of components from Receiving stores to Central
store.
Future plan of action
Development -
1) Internationalization assembly of E-tide watches.2) Conversion of Offline toolings for Seiko movements to online toolings for bulk production.
Technology Absorption, Adoption and Innovation Benefits
The above mentioned upgradation of processes will help us deliver to the customer a differentiatedtechnology product of high quality and with optimised resource utilisation.
Foreign Exchange Earned
The company has earned Rs. 72,099 thousands in foreign exchange and used Rs. 6,470 thousands
10
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CORPORATE GOVERNANCE
The report on Corporate Governance is pursuant to Clause 49 of the Listing Agreement entered into with theStock Exchanges and forms a part of the report of the Board of Directors. The Company has complied with theapplicable requirements of the revised Clause 49 of the Listing Agreement.
A. MANADATORY REQUIREMENTS
CORPORATE GOVERNANCE PHILOSOPHY
Corporate Governance assumes a significant role in the business life of Timex. The driving forces ofCorporate Governance at Timex are its vision and core values as described hereunder :
VISION
The Timex Group vision is anchored in our rigorous focus on long lasting relationship with our customersand our commitment 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 ourpeople, we are building one of the most powerful portfolio of brands in the watch and jewellery industry.
Our vision for the future goes way beyond timekeeping. We will delight and surprise our customersthrough innovation in design, technology and application of our brands and delivery a superior customerexperience. This will lead to enhanced values for our shareholders and Increase returns on investmentsand assets.
Deeply committed to our Corporate Social responsibility and our values, we will built pride in our peopleand win the best future talent for our Group.
VALUES
The custoer is our most important asset,Corporate Social responsibility is our foundation,Truth and transparency and respect for our difference are our pillars of strength,We work together to achieve group goals,Our core value 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 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 comprises of six Non Executive Directors (including threeIndependent Directors) and only one Executive Director as on 31 March,2008. A Non ExecutiveDirector heads the Company as the Chairman. The non- executive Directors do not have anypecuniary relationship and transactions with the Company. The Directors are qualifiedprofessionals in business, finance and corporate management.
(b) Number of Board Meetings
The Board met five times during financial year 2007-2008 on 26 April,2007, 31 May,2007, 26 July,2007, 26"October,2007 and 28 January, 2008 to consider amongst other business matters, thequarterly performance of the Company and financial results. Directors attending the meetingactively participate in the deliberations at these meetings.
(c) Composition and Category of Directors
The details of the composition and category of Directors as on 31 March 2008 are given in the tablebelow:
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Name
Frank Sherer
Kapil Kapoor
Dava Dhaon
M M Rao(3)
Chittranjan Dua
Raghu Filial
Mauro AntonioCalcano
Gagan Singh (Ms.)
Category
Non-ExcutiveDirector
Executive Director
Non ExecutiveIndependent Director
Non ExecutiveIndependent Director
Non-ExecutiveDirector
Non-ExecutiveIndependent Director
Non-ExecutiveDirector
Non-ExecutiveIndependentDirector
Designation
Chairman
ManagingDirector
Director
Director
Director
Director
Director
Director
No. ofSharesHeld
2100
100
10000
No. ofMeetingsheld duringthe lasrfianancialyear
5
5
5
5
5
5
5
5
No. ofMeetingsattended
1
5
4
2(held off. for asartof the year)
4
5
2
4
No. ofMembershipin Boards ofotherCompanies (1)
1
6
13
No. ofMemberships inCommittiesof otherpubliccompanies (2)
2
"
3
Attendanceof eachal ias! ACM
.
Yes
Yes
"
Yes
Yes
Yes
1. Does not include directorships / committee position in Companies incorporated outside India.2. Only Audit Committee and Shareholders Grievance Committee has been considered.3. Mr. M M Rao resigned from the Board on 26lh Ju Iy,2007.
CODE OF CONDUCT
The Board of Directors at their meeting held on 25 January 2005 adopted the Code of Conduct and hasput up the same on the Company's website www.timexindia.com. The Code has been circulated to all themembers of the Board and Senior Management and the compliance of the same has been affirmed bythem. A declaration signed by the Managing Director of the Company is annexed hereto,
AUDIT COMMITTEE
The Company has an Audit Committee since 27 July 1999 to ensure greater transparency and controlsin the operations of the Company.
The Audit Committee of the Company comprises of five Non-Executive Directors with majority of thembeing independent. At present the committee consists of Mr. Daya Dhaon, Mr. M M Rao,Mr. FrankSherer, Mr. Raghu Pillai and Ms. Gagan Singh and is chaired by Mr. Daya Dhaon, who is an independentDirector having vast experience in the area of finance and accounts.
The charter of role and responsibilities of the Audit Committee includes the following major areas;
• Reviewing the adequacy of internal control system and the Internal Audit Reports, and theircompliance thereof.
• Oversight of the Company's financial reporting process and the disclosure of its financial informationto ensure that the financial statements are correct, sufficient, and credible.
• Recommending the appointment of external auditors and fixation of their audit fee, and also approvalfor payment for any other services
• Reviewing with Management the quarterly and annual financial statements before submission tothe Board, focusing primarily on:
* Any changes in accounting policies and practices.
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•:• 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, withpromoters or the management, their subsidiaries or relatives etc, which may have potentialconflict with the interests of Company at large.
During the year under review, the Audit Committee met Four times on 31 May 2007, 26 July 2007, 26October 2007 and 28 January 2008. The details of Director's attendance at the Audit Committee Meetingsare as under;
Name of Director
Mr. Daya DhaonMr. M M Rao
Mr. Frank ShererMr. Raghu PillaiMs. Gagan Singh
Designation
Chairman & Independent DirectorIndependent Director
Non-Executive Promoter-DirectorIndependent DirectorIndependent Director
Total no of Meetingsheld in 2007-08
4
4
4
4
4
No of meetingsattended
4
1(Held office
for a part of the year)1
4
3
The Chief Financial Officer and Head of Internal Audit function and the Statutory Auditors were invitedto attend the Audit Committee meetings. The Committee held discussions with the management of theCompany and with the Statutory Auditors to review the quarterly, half yearly and annual audited financialstatements and to recommend its views to the Board of Directors of the Company. The committee alsoreviewed the internal control systems and the effectiveness of Internal Audit function.
OTHER SUB-COMMITTEE OF BOARD OF DIRECTORS
(a) Remuneration Committee
The Company has constituted a committee of the Directors titled as "Remuneration Committee" on the30 May 2003, to decide the remuneration of directors including the Managing Director of the Company.The Committee comprises of 3 non- executive directors, namely Mr. Daya Dhaon, , Mr. Frank Sherer andMr. Raghu Pillai. Mr Raghu Pillai, an independent Director is Chairman of the Committee. The Committeemeet periodically as and when the Remuneration of the Managing Director is to be fixed. None of thedirectors, including the Managing Director draws remuneration from the Company.
(b) Share Transfer & Shareholders / Investors Grievance Committee
A Shareholders / Investors Grievance Committee headed by a Non-Executive Director was formed on29 January 2002 which was subsequently merged with the Share Transfer Committee on 31 July 2002 inview of the commonalities of area of work and renamed as Share Transfer & Shareholders / InvestorsGrievance Committee, to approve all matters pertaining to share transfers, transmissions, issuance ofduplicate shares, transposition etc and also to provide the shareholders of the Company with additionalassurance that sufficient information is being provided to enable them to form a reasoned opinion on
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the working of the Company and to ensure speedy redressal of their grievances pertaining to sharerelated issues.
The Committee was formed specifically to look into the redressal of shareholders & investors grievancespertaining to:
1) Transfer of shares and its timeliness
2) Transmission of shares
3) Issuance of duplicate shares
4) Investors / shareholders grievance(s) pertaining to all type of matters concerning their dealingwith the Company with respect to their investment in the securities of the Company, morespecifically pertaining to non-receipt of Annual Reports, delay in transfers, non redressal ofcomplaints, non receipt of dividend, dematerialization related issues etc.
5) All other day-to-day matters governing the relationship between the Company and itsshareholders.
DISCLOSURES
(a) Related Party Transactions: The Audit Committee of Directors has been reviewing the disclosure ofRelated Party Transaction periodically. The Company does not have any related party transactions
which are material in nature that would have a potential conflict with the interests of the Company atlarge.
(b) Details of Non-compliance : There have been no cases of penalties, strictures imposed on the Companyby Stock exchange or SEBI or any statutory authority, on any matter relating to capital markets, duringthe last three years.
(c) Risk Management: The Company has laid down procedures so as to ensure that the executivemanagement controls risk through means of a properly defined framework and to inform the Boardmembers about the same and engaged the services of a leading Chartered Accountant's firm to carryout this activity on a regular basis and inform the Board members about the risk assessment andminimization procedures.
(e) 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 sharetransfer formalities by the Company. Pursuant to SEBI (Depositories and Participants) Regulations, 1996certificates have also been received by a Company Secretary-in-Practice for timely dematerializationof share of the Company and for conducting a secretarial audit on a quarterly basis for reconciliation ofthe share capital of the Company.
(f) Disclosure of Accounting Treatment: The Company follows Accounting Standards issued by the instituteof Chartered Accountants of India and in the preparation of financial statements, the Company has notadopted a treatment different from that prescribed in any Accounting Standard.
(g) Proceed from Preferential Issues : The Company raised money through preferential issues during financialyear 1 April,2002 to 31 March,2003, 1 April,2003 to 31 March,2004, 1 April,2005 to 31 March,2006
The Board/ Audit Committee Meeting review the Utilization details periodically.
(h) CEO/CFO Certification : The Managing Director (CEO) and Chief Financial Officer(CFO) have certifiedthe Board in accordance with clause 49 (V) of the Listing Agreement pertaining CEO/CFO Certificationfor the financial year ended March,31,2008 which is annexed hereto.
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DIRECTORS' REMUNERATION
Pecuniary Relationships
None of the Directors' of your Company have any pecuniary relationships or transactions with the Company except forattending Board meetings or Committee Meetings thereof. The Director's of the Company are only paid sitting fees,however the Managing Director of the Company does not draw any remuneration from the Company.
MEANS OF COMMUNICATION
Website , where results are displayed
Quarterly Results :
Annual Results :
Newspaper in which results are normally :published
Whether Management Discussion &Analysis is a part of the Annual Report :
All Financial Results and other material information about theStock Exchange and the same is then either hand delivered or
GENERAL SHAREHOLDERS' INFORMATION
The financial results are displayed onwww. timexindi a. com
Financial Results are published in TheNewspaper as required under the ListingAgreements.
-do-
The Financial Express, Jan Satta, the vernacular(Hindi) Newspaper.
Yes
Company is promptly sent through fax to the Bombaysent by courier to the respective Stock Exchange.
AGM:Date,time and venue
Financial Year
Directors seeking appointment/re-appointment
Tentative calendar of events for the financialyear 2008-09 (April - March)
Book closure Date
Listing of shares on Stock Exchanges
Registered Office
Listing Fees
Share Registrar & Transfer Agents
: Saturday,23 August, 2008 10:00 p.m. at Air Force Auditorium, SubrotoPark, New Delhi - 110 010.
: April 1, 2007 to March 31,2008
: As required under Clause 49(IV)(G), particulars of Directors seekingappointment/re-appointment are given in the Explanatory Statement andAnnexure to the Notice of the Annual General Meeting to be held on23 August,2008
: To review and approve Unaudited Financial Resultsfor the quarter:First quarter - end July 2008Second quarter - end October 2008Third quarter - . end January 2009Fourth quarter - end May /June 2009
: 28 July & 29th July, 2008 (both days inclusive)
: Bombay Stock Exchange, Phiroze Jeejeebhoy Towers, Dalai Street,Mumbai - 400001
: 117, Ground Floor, World Trade Centre, Babar Road, New Delhi-110001.
: Listing fees as prescribed have been paid to the Stock Exchange uptoMarch,31, 2008
: Alankit Assignment Limited2E/21 Alankit House, Jhandewalan Extension, New Delhi - 110055 ofthe Company for both physical and electronic mode of share transfers.Contact Person : Mr. Y K Singhal, Vice President.Phones : : 011-42541234 Fax: 011-23552001Email: : [email protected], [email protected] : www.alankit.com
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SHARE TRANSFER SYSTEM
The Company has appointed Alankit Assignment Limited as a Registrar and Share Transfer Agent. Share sentfor transfer in physical form are registered by the Registrar and Share Transfer Agents within fifteen days ofreceipt of the documents, if found in order. Snares under objection are returned within two. weeks. All requestsfor dematerialization of shares are processed, if found in order and confirmation is given to the respectivedepositories i.e. National Securities Depository Ltd.(NSDL) and Central Depository Securities Limited (CDSL)within twenty one days.
All the transfers received are processed and approved by the Share Transfer & Shareholders / InvestorsGrievance Committee at its meetings. For redressal of transfer related grievances, shareholders may contactVikram Bhardwaj, Senior Manager - Legal and / or V D Wadhwa, Sr. V.P.- General Counsel & CompanySecretary at the registered office address of the Company
INVESTOR SERVICES
Number of Complaints received, not resolved & shares pending transfer
Complaints outstanding as on April,!, 2007
Complaints received during the year ended March 31,2008
Complaints resolved during the year ended March 31,2008
Complaints pending as on March 31, 2008
2
205
206
1
CONSTITUTION AND COMPOSITION
The Committee comprises of 5 non-executive Directors namely, Mr. Frank Sherer, Mr. Daya Dhaon, Mr. M MRao or Mr. Mauro Antonio Calcano, Mr. Raghu Pillai and Ms. Gagan Singh. The Chairman of the meeting iselected by majority at each meeting. The Company Secretary is the Secretary of the Committee and hasattended all its meetings. He addresses shareholders complaints, oversees share transfer process and liaisonswith the regulatory authorities.
OTHERS
Name and designation of compliance officer: Mr. V D Wadhwa, Sr. V.P. - General Counsel & Company Secretary.
Appointment Of Directors
Pursuant to the provisions of Section 260 of the Companies Act 1956 and Article 103(a) and 106 of the Articlesof Association of the Company, Mr. Hans Kristian Hoejsgaard is being appointed as a Director on the Board ofTimex Group India Limited .
Mr. Hoejsgaard is President and Chief Executive of Timex Group, USA currently. Mr. Hoejsgaard has extensiveinternational management experience and prior to joining Timex Group in February 2008, he has been associatedwith Georg Jensen, a leading luxury goods Company as its President and Chief Executive Officer, LancasterGroup ( a division of Coty Inc) as President. Earlier in his career, he Was Managing Director- Asia Pacific,based in Hong Kong, for Guerlain, a division of LVMH Moet Hennessey Louis Vuitton, and held seniormanagement positions with Joseph E. Seagram & Sons in Rome, Hong Kong and Bangkok. He holds a BA inEconomics and Strategic Planning from Southern Denmark Business School and has undertaken executiveeducation at Harvard Business School, INSEAD and Wharton.
Mr. Kapil Kapoor is associated with the Company as Managing Direcor since October,2000 and his term asManaging Director was last renewed on 03 October,2006 for a period of 2 years.
In accordance with the provision of Companies Act 1956 and subject to the approval of Share Holders, Boardof the Company have decided to renew the term of appointment of Mr. Kapil Kapoor as Managing Director ofthe Company for a further period of 2 years effective 03 October, 2008 i.e the date when his present termcoming to an end.
Mr. Kapoor is a graduate in Economics and has Masters in Business Administration from IIM, Ahmedabad, heis also an alumnus of the Ashridge Management School. Since August,2003, he has been entrusted with theadditional responsibilities of the markets in the Asia Pacific region and currently designated as Sr. Vice Presidentbased in Hongkong. He is also a Director on the Board of Infoedge India Limited.
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Mr. Raghu Pillai retire by rotation and are eligible for reappointment.
Mr. Raghu Pillai is an Alumni of Shri Ram College of Commerce, University of Delhi and also an Alumni of IIMA(MEP Programme 1986) and Harvard Business School (AMP 155,1997). He has over 25 years of experience incorporate roles, including early stints in sales, marketing and product management positions, and leadershiproles for the last 15 years across diverse industries like consumer goods, IT, entertainment and retail. His lastassignment was as President & CEO( retail sector) for RPG Enterprises, and in that role he was responsible forbuilding from inception four Companies viz., Food World Super Markets Ltd, Music World, Health & Glow andSpencer Giant Hyper Markets over a period of 7 years. Mr Pillai was also a Member of the Main Board of RPGEnterprises which is an 8000 Crore conglomerate operating in various industries across India.
Venue and Time of the Last Three General Body Meetings
Date
28.09.2005
28.09.2006
25.09.2007
Category
AGM
AGM
AGM
Venue
FICCIAuditorium,Tansen Marg,New Delhi
-Do-
Air ForceAuditoriumSubroto ParkNew Delhi
Time
10.00AM
10.00AM
10.00AM
No. of SpecialResolutions
-
3
Members present by
Person
1277
1754
1600
Proxy
42
37
60
Representative ofBody Corporates
2
1
1
The resolutions were (including special resolution ) passed on show of hands with requisite majority. Thevenue of the General Meeting of the Company has been chosen for its location, prominence, and capacity.
No Special Resolution was required to be put through a Postal Ballot during the last financial year.
STOCK PERFORMANCE
Market price data : The monthly high and low stock quotations during the last financial year at the BombayStock Exchange and performance in comparison to BSE Sensex are given below:
Month High • Low
Apr-07 26.70 22.10May-07 29.90 24.40Jun-07 27.90 23.70Jul-07 32.95 25.10Aug-07 37.55 27.25Sep-07 37.90 29.00Oct-07 37.50 28.15Nov-07 47.40 29.65Dec-07 40.85 32.80Jan-08 48.25 28.35Feb-08 31.50 24.85Mar-08 29.70 17.10
, ,g
I"'1™ >rtfi! """" \ '''H* 1Bl8lt*' .rtf***^-***' *"'"" ••**"' "*--* ai{ 31 «
MJKI- »w-*w""" *'"""' j \I21 |
Aprf? M^O? Jun-OT JuMJ? Aug-W Sep-07 Oc's-0? N»07 Dec-07 Jan-OS Feb-OB Har-08
j » High Sensex -A- High Stars pncfl
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 throughthe depository system. Share received for physical transfers are registered within a maximum period of twoweeks from the date of receipt, if the documents are clear in all respects.
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As on 31 March 2008, the distribution of Company's shareholding was as follows:
No. of Shares
UPTO - 25002501 - 50005001- 10000
10001 - 20000' 20001 - 30000
30001 - 4000040001 - 5000050001 - 100000
100001 AND ABOVETOTAL
No. of Share holders
584315342391084916122310
59422
% of Shareholders
98.3320.8990.4020.1820.0820.0270.0200.0390.017
100.00
Share Amount
132927552079437186442016468191186317556313554491
155297078216478
100950000
% of Amount
13.1682.0591.8471.6311.1750.5510.5491.538
77.480100.00
DEMATERIALISATION OF SHARES
Dematerialization of shares: The Company appointed M/s Alankit Assignments Limited as depository registrarand signed tripartite agreements with NSDL/CDSL to facilitate dematerialization of shares. Shares receivedfor dematerialization are generally confirmed within a maximum period of two weeks from the date of receipt,if the documents are clear in all respects. There are 34105 no. of shareholders holding their shares indematerialized form, which represent 21.68% of the paid up capital of the Company.
PLANT LOCATION
Timex Group India Limited,- Plot # 47, Sector-1, Parwanoo, Himachal Pradesh - 173 220 and- C-35, Sector 59, Noida, Dist. Gautam Budh Nagar, Uttar Pradesh.- Plot No-10, Baddi, Ind. Area Katha, Near Fire Station Baddi, Nalagarh, Solan, Himachal Pradesh.
Address for correspondence:
Timex Group India Limited, 117, Ground Floor, 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 company has a Corporate Policy Manual outlining the policies applicable to the group Companiesso that it promotes ethical and moral behavior in all its business activities. Employees are free to reporta violation of any law, mismanagement, gross waste or misappropriation of funds, a substantial andspecific danger to public health and safety, or an abuse of authority without fear of retribution or evencan request advice when in doubt about the propriety of some action. Employees also may, if they wish,make anonymous reports of violations or other irregularities. Employees may also call the complianceline, toll free 24 hours a day. The Corporate Policy Mannual is available on Timex Group Website
The Company also has in place a "Women's Committee" since 01 October 2003, to.take care of cases ofsexual harassment in workplace. This committee is chaired by a woman running an independent NGOand is assisted by a team of women employees.
AUDIT QUALIFICATIONS
During the year under review, there was no audit qualification in the Company's financial statements.The Company continues to adopt best practices to ensure a regime of unqualified financial statements.
TRAINING OF BOARD MEMBERS
The Company's Boad of Directors consists of professionals with expertise and the respective fields.They endeavour to keep themselves updated with the changes and global economic and legislation.They attend various workshop and seminars to keep themselves abreast with the changing businessenvironment.
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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 DelhiCERTIFICATION TO THE BOARD PURSUANT TO CLAUSE 49(V) OF THE LISTING AGREEMENTThis 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 knowledge and belief:i) these statements do not contain any materially untrue statement or omit any material fact or
contain statements that might be misleading;ii) these statements together present a true and fair view of the company's affairs and are in
compliance with existing 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 year which are fraudulent, illegal or violative of the company's code ofconduct.
c) We accept responsibility for establishing and maintaining internal controls for financial reportingand we have evaluated the effectiveness of the internal control systems of the company pertainingto financial reporting and we have disclosed to the auditors and the Audit Committee, deficienciesin the design or operation of internal controls, if any, of which we are aware and the steps we havetaken 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 notes to the financial statements; andiii) instances of significant fraud of which we have become aware and the involvement therein,
if any, of the management or an employee having a significant role in company's internalcontrol system over financial reporting.
Sd/- Sd/-Kapil Kapoor Ananda MukherjeeManaging Director CFODated: 23 May,2008
DECLARATION BY THE CEO UNDER CLAUSE 491 (D) OF THE LISTING AGREEMENT REGARDINGADHERENCE TO THE CODE OF CONDUCTI hereby confirm that:
The Company has obtained from all the members of the Board and Senior Management, Affirmationthat they have complied with the Code of Conduct in respect of the financial year 2007 -2008.
Sd/-Kapil Kapoor
Managing DirectorCERTIFICATE
To the Members of Timex Group India LimitedWe have examined the comliances of conditions of Corporate Governance by Timex Group India Limited, for thefinancial year ended on March 31, 2008 as stipulated in Clause 49 of the Listing Agreement of the said Company withStock Exchanges.The Compliance of conditions of corporate governance is the responsibility of the management. Our examinationwas limited to procedures and implementations thereof, adopted by the Company for ensuring the compliance ofconditions of corporate governance. It is neither an audit nor an expression of opinion on the financial statements ofthe Company.In our opinion and to the best of our information and according to the explanations given to us and the representationsmade by the Directors and management, we certify that the Company has complied with the conditions of corporategovernance as 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
dadadaaPlace: New Delhi K.K. MALHOTRADate: 29 July, 2008 C.P. No: 446
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Auditors' ReportTo the Members of
Timex Group India Limited (formerly Timex Watches Limited)
1. We have audited the attached Balance Sheet of Timex Group India Limited (formerly Timex WatchesLimited) ('the Company') as at 31 March 2008 and also the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date, annexed thereto. These financial statementsare the responsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. ThoseStandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 ('the Order') issued by the CentralGovernment of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclosein the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that:
(a) we have obtained all the information and explanations, which to the best of our knowledge andbelief 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 faras appears from our examination of those books;
(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by thisreport are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report comply with the accounting standards referred to in sub-section (3C) of Section211 of the Companies Act, 1956, to the extent applicable;
£e) on the basis of the written representations received from the directors as on 31 March 2008, andtaken on record by the Board of Directors, we report that none of the directors of the Company isdisqualified as on 31 March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
(f) in our opinion and to the best of our information and according to the explanations given to us, thesaid accounts give the information required by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accounting principles generally accepted inIndia:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2008;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year endedon that date.
For BSR & Co.Chartered Accountants
Kaushal KishorePlace: New Delhi PartnerDate: 23 May 2008 Membership No.: 090075
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Annexure referred to in para 3 of the Auditors' report to the members of Timex Group India Limited(formerly Timex Watches Limited) on the financial statements for the year ended 31 March 2008.(i) (a) The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets.
(b) As explained to us, the Company has a regular programme of physical verification of its fixedassets by which all fixed assets are verified in a phased manner over a period of two years. In ouropinion, this periodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us, fixed assets disposedoff during the year are not substantial and, therefore, do not affect the going concern assumption.
(ii) (a) According to the information and explanations given to us, the inventories, except goods-in-transit and stocks lying with third parties, have been physically verified by the managementduring the year. In our opinion, the frequency of such verification is reasonable. For stocks lyingwith third parties at the year-end, written confirmations have been obtained.
(b) In our opinion and according to the information and explanations given to us, the procedures forthe physical verification of inventories followed by the management are reasonable and adequatein relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the records of inventories, we are of the opinion that theCompany is maintaining proper records of inventories. The discrepancies noticed on physicalverification of inventories as compared to book records were not material and have been properlydealt with in the books of account.
(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies,firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.Accordingly, paras 4(iii)(b) to (g) of the Order are not applicable.
(iv) In our opinion and according to the information and explanations given to us, and having regard to theexplanation that purchases of certain items of inventories and fixed assets are for the Company'sspecialised requirements and similarly certain goods and services sold are for the specialisedrequirements of the buyers and suitable alternative sources are not available to obtain comparablequotations, there is an adequate internal control system commensurate with the size of the Companyand the nature of its business with regard to purchase of inventories and fixed assets and with regard tothe sale of goods and services. Further, on the basis of our examination and according to the informationand explanations given to us, we have neither come across nor have been informed of any instances ofmajor weaknesses in the aforesaid internal control system.
(v) (a) In our opinion and according to the information and explanations given to us, the particulars ofcontracts or arrangements referred to in section 301 of the Companies Act, 1956 have beenentered in the register required to be maintained under that section.
(b) In our opinion, and according to the information and explanations given to us and having regardto the explanation in para (iv) above, the transactions made in pursuance of contracts andarrangements referred to in para v(a) above and exceeding the value of Rs 5 lakh with any partyduring the year have been made at prices which are reasonable having regard ,to the prevailingmarket prices at the relevant time.
(vi) The Company has not accepted any deposits from public during the year.
(vii) In our opinion and according to the information and explanations given to us, the Company has aninternal audit system commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rulesprescribed by the Central Government for maintenance of cost records under Section 209(l)(d) of theCompanies Act, 1956 in respect of the products covered and are of the opinion that, prima facie, theprescribed accounts and records have been made and maintained. However, we have not made adetailed examination of the records with a view to ensure whether they are adequate or complete.
(ix) (a) According to the information and explanations given to us and on the basis of our examination ofthe records of the Company, amounts deducted/accrued in the books of account in respect of
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undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax,Sales-tax, Service tax, Customs duty, Excise duty, Wealth tax, Cess and other material statutorydues have generally been regularly deposited during the year by the Company with the appropriateauthorities except for dues to Investor Education and Protection Fund where there have been certain delays.
According to the information and explanations given to us, no undisputed amounts payable inrespect of Provident Fund, Employees' State Insurance, Income tax, Sales tax, Service tax, Customsduty, Excise duty, Investor Education and Protection Fund, Wealth tax, Cess and other materialstatutory dues were in arrears as at 31 March 2008 for a period of more than six months from thedate they became payable.
(b) According to the information and explanations given to us, there are no dues in respect of Income-tax, Service tax, Wealth tax, Cess and Customs duty which have not been deposited with theappropriate authorities on account of any dispute. According to the information and explanationsiven to us, the following dues of Sales tax and Excise duty have not been deposited by theCompany on account of disputes:
Name of theStature
Central ExciseAct, 1944
Central ExciseAct, 1944
Central ExciseAct, 1944
Central ExciseAct, 1944
Central ExciseAct, 1944
Central SalesTax Act, 1956
Kerala SalesTax Act
Tamil NaduGeneral SalesTax Act
Andhra PradeshSales Tax Act
Karnataka SalesTax Act
Tamil NaduGeneral SalesTax Act
Nature ofthe dues
Excise duty(Cenvat credit)Penalty
Excise dutyPenalty
Excise duty
Excise duty
Excise duty
Sales Tax
Sales Tax
Sales Tax
Sales Tax
Cess
Sales Tax
Amounts(Rs. Thousand)
4,2534,253
1,63050
632
2.18 (excludinginterest andpenalty theamount of whichis presently notascertainable)
1.51 (excludinginterest andpenalty theamount of whichis presently notascertainable)
5,898
84
818
44
69
941
Amounts paidunder protest(Rs. Thousand)
700
-
550
~
"
-
"
Period towhich theamount relates
1995-96 to1998-99
1999-2000 to2000-01
1992-93 and1996-97
2004-05 and2005-06
2003-04 and2004-05
1994-95
1995-96
1992-93 to1993-94
1995-96
1995-96
2002-03
Forum wheredispute ispending
CESTAT,New Delhi
SupremeCourt
DeputyCommissioner,Central Excise
Commissioner(Appeals), CentralExcise
AssistantCommissioner,Central Excise
DeputyCommissioner -Commercial tax
AssistantCommissioner -Sales Tax
Commercialtaxation officer
Commercialtaxation officer
DeputyCommissioner —Commercial taxes
High Court,Chennai
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(x) The accumulated losses of the Company are not more than fif ty percent of its net worth as at31 March 2008. The Company has not incurred cash losses in the financial year and in the immediatelypreceding financial year.
(xi) According to the information and explanations given to us, the Company has not defaulted in repaymentof dues to its bankers. The Company did not have any outstanding dues to any financial institutions ordebentures holders during the year.
(xii) According to the information and explanations given to us, the Company has not granted any loans andadvances on the basis of security by way of pledge of shares, debentures and other securities.
(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/ society,
(xiv) According to the information and explanations given to us, the Company is not dealing or trading inshares, securities, debentures and other investments.
(xv) According to the information and explanations given to us, the Company has not given any guaranteesfor loans taken by others from banks or financial institutions.
(xvi) According to the information and explanations given to us, the Company did not have any term loansoutstanding during the year.
(xvii) According to the information and explanations given to us and on an overall examination of the balancesheet of the Company, we are of the opinion that the funds raised on short-term basis have not beenused for long-term investment.
(xviii) The Company has not made any preferential allotment of shares to companies/firms/parties covered inthe register maintained under Section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the year,
(xx) The Company has not raised any money by public issues during the year.
(xxi) Based on the audit procedures performed and according to the information and explanations given tous, no fraud on or by the Company has been noticed or reported during the year.
For BSR & Co.Chartered Accountants
Kaushal KishorePlace: New Delhi PartnerDate: 23 May 2008 Membership No.: 090075
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BALANCE SHEETAS AT 31 MARCH 2008
Schedule
SOURCES OF FUNDSShareholders' fundsShare capital 1Reserves and surplus 2
Loan fundsUnsecured loans 3
APPLICATION OF FUNDSFixed assets 4Gross blockAccumulated depreciationNet blockCapital work-in-progress (including capital advances)
Current assets, loans and advancesInventories 5Sundry debtors 6Cash and bank balances 7Loans and advances 8
Current liabilities and provisions 9Current liabilitiesProvisionsNet current assets
Balance in Profit and loss account
Significant accounting policies 15Notes to the accounts 16
As at31 March 2008
511,95035,125
547,075
4,453
551,528
612,647(414,158)
198,489-
198,489
199,925495,84692,21567,727
855,713
486,57349,065
320,075
32,964
551,528
(Rs. in Thousands)
As at31 March 2007
511,95035,125
547,075
90,583
637,658
.
598,302(462,172)
136,13048,924
185,054
205,078460,820
55,85463,131
784,883
390,30629,460
365,117
87,487
637,658
The Schedules referred to above form an integral part of the financial statements.
As per our report attached.
For BSR & Co.Chartered Accountants
Kaushal KishorePartnerMembership No. 090075
Place: New DelhiDate : 23rd May, 2008
For and on behalf of the Board
Frank ShererChairman
VDWadhwaSr. V.P. - General Counsel& Company Secretary
Kapil KapoorManaging Director
Ananda MukherjeeVice President - finance
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PROFIT AND Loss ACCOUNTFOR THE YEAR ENDED 31 MARCH 2008
(Rs. in Thousands)
Schedule
INCOMESalesLess: Excise dutyNet salesService incomeNet income from operationsOther income 10
EXPENDITUREMaterials consumed etc. 11Personnel cost 12Other expenses 13Depreciation and amortisation 4Interest 14Voluntary retirement expenses (Refer to note 6 of schedule
Profit for the year before tax
Less: Frings benefit tax
Less: Minimum alternate tax
Profit for the year
Loss brought forward
Add: Transitional liability on account of employee benefits(refer to note 26 of schedule 16)
Loss carried forward
Basic and diluted earning/doss) per share (Rs.)
Year ended31 March 2008
1,276,830(18,242)
1,258,58856,056
1,314,64414,332
1,328,976
657,579153,306415,92725,8606,956
16)
1,259,628
69,348
6,248
8,577
54,523(87,487)
(87,487)
(32,964)
0.34
Year ended31 March 2007
1,098,671(16,387)
1,082,28453,495
1,135,77922,889
1,158,668
609,856132,565348,31623,1239,7473,008
1,126,615
32,053
5,736
1,121
25,196
(110,765)
(1,918) (112,683)
(87,487)
(0.06)(Refer to note 7 of schedule 16)
Significant accounting policiesNotes to the accounts
15
16
The Schedules referred to above form an integral part of the financial statements.
As per our report attached.
For BSR & Co.Chartered Accountants
Kaushal KishorePartnerMembership No. 090075
Place: New DelhiDate : 23 May 2008
For and on behalf of the Board
Frank ShererChairman
VDWadhwaSr. V.P. - General Counsel& Company Secretary
KapilKapoorManaging Director
Ananda MukherjeeVice President - Finance
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SCHEDULES FORMING PART OF THE ACCOUNTS
As at 31 March 2008
(Rs. in Thousands)
As at 31 March 2007
1. Share capital
Authorised1,250,000,000 (previous year 1,250,000,000) equity shares of Re. 1 each45,000,000 (previous year 45,000,000) preference shares of Rs. 10 each
Issued, subscribed and paid-up100,950,000 (previous year 100,950,000) equity shares ofRe. 1 each, fully paid up.
2,500,000 (previous year 2,500,000), 0.1% non cumulative redeemablenon convertible preference shares of Rs. 10 each, fully paid up*
15,700,000 (previous year 15,700,000), 2.9% cumulative redeemablenon convertible preference shares of Rs. 10 each, fully paid up**
22,900,000 (previous year 22,900,000), 5.4% cumulative redeemablenon convertible preference shares of Rs. 10 each, fully paid up***
1,250,000450,000
1,700,000
100,950
25,000
157,000
229,000
511,950
1,250,000450,000
1,700,000
100,950
25,000
157,000
229,000
511,950
* Maturity period for redemption of preference shares is ten years from the date of allotment i.e. 25 March 2003, with an optionto the Company of an earlier redemption after 24 March 2005.
** Maturity period for redemption of preference shares is ten years from the date of allotment i.e. 27 March 2004, with an optionto the Company of an earlier redemption after 27 March 2006.
*** Maturity period for redemption of preference shares is ten years from the date of allotment i.e. 21 March 2006, with an optionto the Company of an earlier redemption after 21 March 2008.
Of the above:75,645,100 (previous year 75,645,100) equity shares of Re. 1 each are held by Timex Croup Luxury Watches B.V. (formerlyTimex Watches B.V.), the holding company.All preference shares issued by the Company are held by Timex Group Luxury Watches B.V. (formerly Timex Watches B.V.),the holding company.
2. Reserves and surplusShare premium account - 35,125 ' 35,125
3. Unsecured LoansLoans from banks:- Cash credit and overdraft facilities 4,453 15,583- Other short term loans ;_ 75,000
4. Fixed assets 4,453 90,583(Rs. in thousands)
Description
Tangible assets
Leasehold land
Buildings
Leasehold improvements
Plant and Machinery
Office equipment
Furniture and Fixtures
Computer equipment
Total tangible assets
Intangible assetsComputer software
Total intangible assets
Grand Total
Previous Year
Gross Block
As at31-3-2007
1 5, 1 1 0
14,917
494,756
8,356
28,392
35,125
596,656
1,646
1,646
598,302
695,950
Additions
480
33,278
4,218
36,499
2,630
8,074
3,331
88,510
390
390
88,900
25,429
Deletions
72,989
237
1,329
74,555
-
74,555
123,077
As at31 March 2008
15,590
33,278
19,135
458,266
10,749
35,137
38,456
610,611
2,036
2,036
612,647
598,302
Depreciation /amortisatiobn
Up to31-3-2007
150
9,676
417,110
3,436
12,283
18,885
461,540
632
632
462,172
555,102
For theperiod
161
986
3,452
10,543
479
5,849
3,991
25,461
399
399
25,860
23,123
Deletionsadmustments
72,475
167
1,232
73,874
-
73,874
116,053
Up to31 March 2008
311
986
13,128
355,178
3.74S
1 6,900
22,876
413,127
1,031
1,031
414,158
462,172
Net Block
As at31 March 2008
15,279
32,292
6,007
103,088
7,001
18,237
15,580
197,484
1,005
1,005
As at31-3-2007
14,960
5,241
77,646
4,920
16,109
16,240
135,116
1,014
1,014
198,489
136,130
Qipital work in process (including capital advances) - 48,924198,489 185,054
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As at 31 March 2008
5. Inventories(at lower of cost and net realisable value)
Raw materials and components [including goods-in-transitRs. 1,804 thousand (previous year Rs. 833 thousand)]Work-in-progressFinished goods [including goods-in-transit Rs. 3,488 thousand(previous year Rs. 19 thousand)]Stores and consumables
6. Sundry debtors*
(Unsecured and considered good, unless otherwise stated)
Debts outstanding for a period exceeding six months
- Considered good 19,423- Considered doubtful 30,210
Other debts, considered good 476,423
Provision for doubtful debts
- Refer to note 19 of schedule 16
7. Cash and bank balances
Cash in hand
Cheques in hand
Balances with scheduled banks:
- Current accounts- Fixed deposit account
[includes Rs. 155 thousand (previous year Rs. 125 thousand) pledged with sales tax authorities}
8. Loans and advances
Secured, considered goodVehicle loans to employees*
Unsecured, considered goodLoans and advances to employeesAdvances recoverable in cash or in kind or for valueto be received**Balances with customs and excise authoritiesAdvance tax
* Secured by hypothecation of respective vehicles.
** Refer to note 20 of schedule 16.
74,880
17,727106,978
340
199,925
526,056
(30,210)
495,846
758
22,260
29,04240,155
92,215
1,235
944
51,3514,5969,601
67,727
(Rs. in Thousands)
As at 31 March2007
71,852
7,320124,927
979
49,64526,996
411,175
205,078
487,816
(26,996)
460,820
681
26,278
28,645250
55,854
1,422
1,575
54,8572,3122,965
63,131
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As at 31 March 2008
(Rs. in Thousands)
As at 31 March 2007
9. Current liabilities and provisions
Current liabilitiesSundry creditors - others *#Voluntary retirement schemeOther current liabilities
* Refer to note 18 of schedule 16 ====== ==tt Transfer during the year to investor education and protection fund with respect to debentures redeemedin 2000-01 aggregates Rs. 6,250 thousand (previous year Rs. Nil). There are no amounts outstanding to bedeposited with Investor Education and Protection Fund as at year-end.
464,9681,853
19,752
486,573
367,1856,589
16,532
390,306
ProvisionsGratuityLeave encashmentWarrantiesMinimum alternate taxFringe benefit tax [net of advance tax of Rs. 14,999 thousand(previous year Rs. 10,296 thousand)]Sale return
7,4579,2056,1349,6982,131
14,440
49,065
7,5708,3333,2561,121
566
8,614
29,460
Year ended31 March 2008
10. Other income
Interest income- on dues from customers 592- on deposits with banks (gross) 760
[tax deducted at source Rs. 152 thousand (previous year Rs. 1,058 thousand)]- Others 322Exchange gain 6,626Liabilities/Provisions no longer required written back 590Rental income 2,145Miscellaneous income*# 3,297
Year ended31 March 2007
534,009
5563,6711,8543,2969,450
14,332 22,889
* Previous year figure includes Rs. 2,144 thousand on account of certain expenses incurred in 2005-06 andcharged off, although recovered from the holding company during the year 2006-07.
# Also includes custodian fees of Rs. Nil (previous year Rs. 3,500 thousand). Refer to note 5-of schedule 16.
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I
Year ended31 March 2008
(Rs. in
31
11. Materials consumed and movements in finished goods and work-in-progressRaw materials and components consumed** 562,202Excise duty
Less: excise duty recoveredPurchase of watches for resaleDecrease/increase) in inventories of finished goodsand work-in-progressOpening stock- Work in progress- Finished goods
Closing stock- Work in progress- Finished goods
**Refer to note 13 of schedule 16
12. Personnel costsSalaries, wages and bonusContribution to provident and other fundsWorkmen and staff welfareGratuity
13. Other expensesAdvertising and sales promotionWarrantySelling and distributionPower and fuelRepairs and maintenance:
- buildings- plant and machinery- others
RentRates and taxesInsuranceTravellingCommunicationBank chargesLegal and professional(includes prior period expense of Rs. 1,910 thousand (previousCommissionPurchased servicesProvision for doubtful debtsBad debts written offAdvances written off*Loss on sale/retirement of fixed assetsStores and consumablesMiscellaneous expenses**
14,87718,242 (3,365)
91,200
7,320124,927132,247
17,727106,978124,705 7,542
657,579
126,7058,011
17,3531,237
153,306
137,25814,93740,75715,131
1,7634,4425,310
32,19815,8952,594
44,52212,0521,846
16,382year Rs. Nil)
15,68911,75610,127
-867663
5,04526,693
415,927
19,77416,387
8,302112,980121,282
7,320124,927132,247
Thousands)
Year endedMarch 2007
517,795
3,38799,639
(10,965)609,856
109,9316,865
13,0432,726
132,565
107,0528,663
38,80012,189
1,5963,0055,662
26,22414,0792,700
38,40210,9482,516
12,352
12,8186,9474,1934,2887,165
843,424
25,209
348,316
* includes Rs. Nil (previous year Rs. 6,333 thousand) of service tax credit receivable written off on the basis ofclarifications received from the department.
** includes director sitting fees Rs. 860 thousand (previous year Rs. 600 thousand).
14. InterestInterest on bank overdrafts and short term loans 6,956
6,956
9,747
9,747
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SCHEDULE -15SIGNIFICANT ACCOUNTING POLICES
1. Background
Timex Group India Limited (TGIL or the Company), a subsidiary of Timex Group Luxury Watches B.V.(formerly Timex Watches B.V.), is a limited liability company incorporated on 4 October 1988 under theprovisions of the Companies Act, 1956. The Company is listed on Mumbai Stock Exchange in India.The Company's business consists of manufacture and trade of watches and rendering of related aftersales service. The Company also manufactures tools, moulds and plastic components for other partiesand provides accounting and information and technology support to group companies.
2. Basis of preparation of financial statementsThe financial statements are prepared and presented under the historical cost convention, on accrualbasis of accounting in accordance with the Generally Accepted Accounting Principles ('GAAP') in Indiaand comply with the accounting standards prescribed by the Companies (Accounting Standards) Rules,2006, to the extent applicable, and the presentational requirements of the Companies Act, 1956, asadopted consistently by the Company.
3. Use of estimatesThe preparation of financial statements in conformity with GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities, disclosure ofcontingent liabilities on the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Examples of such estimates include estimated provision fordoubtful debts, future obligations under employee retirement benefit plans and estimated useful life offixed assets. Differences between actual results and estimates are recognised in the year in which theactual results are known or materialised. Any revision to accounting estimates is recognised inaccordance with the requirements of the respective accounting standard.
4. Fixed assets and depreciationFixed assets are carried at cost of acquisition less accumulated depreciation/amortisation. Cost isinclusive of freight, duties, taxes and any other directly attributable costs to bring the assets to theirworking condition for intended use.Depreciation on tangible assets other than leasehold improvements is provided under the straight linemethod 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 fixedassets is provided 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, asthe case may be.Leasehold improvements are depreciated under the Straight Line method over the lowest of the following:(i) period of the lease(ii) useful life as estimated by management(iii) derived useful life as per Schedule XIV.Intangible assets are amortised over their estimated useful life of 5 years.Assets costing upto Rs. 5,000 are fully depreciated in the year of purchase.During the year, the Company has revised its estimate of residual values of certain items of plant andmachinery and office equipment and provided accelerated depreciation thereon amounting toRs. 2,320 thousand (previous year Rs. 2,449 thousand).
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5. Impairment
The carrying amounts of assets are reviewed at each balance sheet date in accordance with AccountingStandard - 28 on 'Impairment of Assets' to determine whether there is any indication of impairment. Ifany such indication exists, the recoverable amount of the asset is estimated. An impairment loss isrecognised whenever the carrying amount of an asset or cash generating unit exceeds its recoverableamount. Impairment losses are recognised in the profit and loss account. An impairment loss isreversed if there has been a change in the estimates used to determine the recoverable amount. Animpairment loss is reversed only to the extent that the asset's carrying amount does not exceed thecarrying amount that would have been determined net of depreciation or amortisation, if no impairmentloss had been recognised.
6. Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of inventories includes allcosts incurred in bringing the inventories to their present location and condition.
In determining the cost, the weighted average cost method is used. Fixed production overheads areallocated on the basis of normal capacity of production facilities. Finished goods and work-in-progressinclude appropriate share of allocable overheads.
Finished goods held for the purpose of demonstration are amortised over a period of three years afterdeducting 10% residual value.
7. Employee benefits
The Company's obligations towards various employee benefits have been recognised as follows:
Short term benefit
All employee benefits payable/available within twelve months of rendering the service are classified asshort-term employee benefits. Benefits such as salaries, wages and bonus etc., are recognised in theprofit and loss account in the period in which the employee renders the related service.
Cost of accumulating compensated absences that are expected to be availed within a period of 12months from the year-end are recognised when the employees render the service that increases theirentitlement to future compensated absences. Cost is computed based on past trends and is notdiscounted.
Cost of non-accumulating compensated absences continues to be recognised when absences occur.Cost of other short term employee benefits continues to be recognised on accrual basis based on theterms of employment contract and other relevant compensation policies followed by the company.
Post employment benefits
In respect of the defined contribution plan in the form of Superannuation, the Trustees of the Schemehave entrusted the administration of the Scheme to the Life Insurance Corporation of India (LIC).Annual contribution to the LIC is recognised as an expense in the profit and loss account.
Charge for the year in respect of unfunded defined benefit plan in the form of gratuity has been ascertainedbased on actuarial valuation at the year end using the Projected Unit Credit Method, which recogniseseach period of service as giving rise to additional unit of employee benefit entitlement and measureseach unit separately to build up the final obligation. The obligation is measured at the present value ofthe estimated future cash flows. Actuarial gains and losses are recognised immediately in the profit andloss account.
The Provident Fund is administered by trustees of an independently constituted Trust recognised by theIncome-tax Act, 1961. Contributions, including shortfall, if any, to the Trust are charged to the profit andloss account on an accrual basis. As the provident fund scheme has a guaranteed return linked with thatunder EPF Scheme, 1952, the same has been considered as a defined benefit plan.
Other long term, benefits
Cost of long term benefit by way of accumulating compensated absences that are expected to beavailed after a period of 12 months from the year end are recognised when the employees render theservice that increases their entitlement to future compensated absences.
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8. Revenue recognition
Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownershipto the buyer. The amount recognised as sale is inclusive of excise duty and excludes sales tax and tradeand quantity discounts. Revenue from services is recognised on rendering of services to customers.
9. Foreign currency transactions
The Company accounts for effects of differences in foreign exchange rates in accordance with AccountingStandard - 11 on "The Effects of Changes in Foreign Exchange Rates" notified by the Companies(Accounting Standards) Rules, 2006. Foreign exchange transactions are recorded using the exchangerate prevailing on the date of the transaction. Exchange differences arising on foreign exchangetransactions settled during the year are recognised in the profit and loss account of the year.Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date aretranslated at the exchange rates on that date and the resultant exchange differences are recognised inthe profit and loss account.
10. Warranties
Warranty costs are estimated by the management on the basis of past experience. Provision is madefor the estimated liability in respect of warranty costs in the year of sale of goods.
11. Taxation
Income tax expense comprises current tax (that is amount of tax for the year determined in accordancewith the Income-tax Act, 1961) and deferred tax charge or credit (reflecting the tax effects of timingdifference between accounting income and taxable income for the period). The deferred tax charge orcredit and the corresponding deferred tax liability or deferred tax asset is recognised using the tax ratesthat have been enacted or substantially enacted as at the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty of realisation. Such assets are reviewed ateach balance sheet date to reassess realisation. However, where there are carried forward losses orunabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtualcertainty of realisation of such assets. (Also refer to note 21 of schedule 16).The credits arising from Minimum Alternate Tax paid are recognised as receivable only if there is virtualcertainty that the Company will have sufficient taxable income in future years in order to utilize suchcredits.
12. Leases
Lease rentals in respect of assets taken on operating lease are charged on a straight-line basis to theprofit and loss account.
13. Other Provisions and Contingent Liabilities
The Company recognises a provision when there is a present obligation as a result of a past event andit is probable that it would involve an outflow of resources and a reliable estimate can be made of theamount of such obligation. Such provisions are not discounted to their present value and are determinedbased on the management's estimation of the obligation required to settle the obligation at the balancesheet date. These are reviewed at each balance sheet date and adjusted to reflect management'scurrent estimates.Provision for sales returns is recognised to the extent of estimated mark up on expected returns basedon past trends.A disclosure for a contingent liability is made where it is more likely than not that a present obligation orpossible obligation may result in or involve an outflow of resources. When no present or possibleobligation exists and the possibility of an outflow of resources is remote, no disclosure is made.
14. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-terminvestments with an original maturity of three months or less.
15. Earnings per shareBasic earnings per share are computed using the weighted average number of equity shares outstandingduring the year. Diluted earnings per share are computed using the weighted average number of equityand dilutive potential equity shares outstanding during the year, except where the results would be anti-dilutive.
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SCHEDULE -16NOTES TO THE ACCOUNTS
1. (a) Capital commitments(Rs. in thousands)
(i) Estimated amount of contracts remainingto be executed on capital account and notprovided for (net of advances)
As at 31 March 2008
Nil
As at 31 March 2007
7,106
(b) Contingent liabilities(Rs. in thousands)
(i) Claims against the Company not acknowledged as debtsa) Sales taxb) Excisec) Customsd) Others
(ii) Arrears of dividend on cumulative preference shares:- 2003-04- 2004-05- 2005-06- 2006-07- 2007-08
(iii) Corporate dividend tax on cumulative preference shares :- 2003-04- 2004-05- 2005-06- 2006-07- 2007-08
(iv) Bills discounted
As at 31 March 2008
7,90310,333
7798,242
624,5534,926
16,91916,919
11774837
2,8752,875
Nil
As at 31 March 2007
7,96811,515
77917,429
624,5534,926
16,919-
11774837
2,875-
4,842
2.
3.
The Timex Global Services Division of the Company renders information technology and finance supportservices to its overseas group companies. The expenditure incurred by the Division is recovered fromthe group companies at a mark up of 10% on costs, with reimbursement of specified expenses and formspart of the service income.
The shareholders of the Company in their meeting held on 19 August 2003 approved the capitalrestructuring scheme to wipe out all losses upto 30 June 2003 amounting to Rs. 1,277,670 thousandsagainst the total net worth on that date. The Capital Restructuring plan approved by the shareholderscomprised:
a) Decrease in equity share capital by Rs. 908,550 thousands on account of reduction in the face valueof equity shares from Rs. 10 per share to Re 1 per share;
b) Decrease in preference share capital by Rs. 225,000 thousands on account of reduction in the facevalue of preference shares from Rs. 100 per share to Rs. 10 per share; and
c) Utilisation of share premium account to the extent of Rs. 144,120 thousands.
The above plan was approved by the Honourable High Court of Delhi vide its order dated 24 December2003 and the necessary accounting adjustments were incorporated in the financial statements forthe year ended 31 March 2004.
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4. a) The Managing Director of the Company is not resident in India. During the previous year, theCompany had filed an application with the Central Government for obtaining its approval to suchappointment for a period of two years commencing 3 October 2006. The approval has been receivedduring the year.
b) In accordance with the terms of employment agreed with the Managing Director, no remunerationis payable to him by the Company.
5. Other income for the previous year included Rs. 3,500 thousand received as custodian fee for holdingsecurity deposit on behalf of another group company for a prospective transaction between the groupcompany and a third party, which has since been repaid.
6. Expenditure aggregating Rs. Nil (previous year Rs. 3,008 thousands) on Voluntary Retirement Scheme(the Scheme) offered by the Company to its employees has been charged off to the profit and lossaccount. Under the terms of the Scheme, the Company retains the right to decide the date of cessationof service.
7. Earnings per share
The computation of basic/diluted earnings per share is set out below:
Year ended Year ended31 March 2008 31 March 2007
Profit as per profit and loss account (Rs. in thousands)
Less: Preference dividend and tax thereon (Rs. in thousands)
Net Profit / (loss) attributable to equity shareholders (Rs. in thousands) - (A)
Basic/weighted average no of equity shares outstanding during the year -(No. in thousands.) - (B)
Nominal value of equity shares - Re.
Basic /diluted Earning per share (Rs.) - (A)/(B)
54,523
19,823
34,700
100,950
1.00
0.34
25,196
30,956
(5,760)
100,950
1.00
(0.06)
8. Related parties
a. Related parties and nature of related party relationship where control exists:Description of Relationship Name of the PartyUltimate Holding Company
Holding Company
Timex Group B.V.
Timex Group Luxury Watches B.V. (formerlyTimex Watches B.V)
b. Other related parties with whom transactions have taken place:
Description of Relationship Name of the Party
Fellow Subsidiaries
Key Management Personnel
Timex Group B.V. T/A Mersey ManufacturersFralsen Horlogerie S.A.TMX Limited NVTMX Limited NV(International Sales Division)Timex Corporation (Germany)Timex Corporation (Middlebury)Opex S.A.Timex Limited NVTimex Group UKTimex Nederland B.V.Callanen International Inc.Sequel InternationalSequel AGVertime S.A.Time Master, MauritiusKapil Kapaor , Managing Director
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c. Transactions with related parties:
(Rs. in thousands)
Party
Ultimate
holding
company
Timex Group
B.V.
Holding
company
Timex Group
Luxury Watches
B.V.
Fellow sub-
sidiaries
Callanen
International
Inc.
Mersey
Manufacturers
Limited
Timex
Corporation
(Middlebury)
TMX Limited
NV
Timex
Nederland B.V.
Timex Group
UK
Time Master,
Mauritius
Others
rrSupportexpenses
-
-
-
-
721604
-
354
594
41
Purchaseof Capital
goods
-
-
422
-
140
Purchaseof Goods
-
-
7,587
4,354
3,316
913
27
63,989
83,968
-
157
1,850
1,461
317
ReimbursementsPaid
-
191
-
313
55
127
-
177
212
74
Received
-
2,144
39
107
231
205
32
682
-
ServiceIncome
4,150
4,352
813
1,154
1,434
2,528
36,626
35,049
-
830
1,839
6,126
3,077
Misc.Income
-
-
3,500
Sale ofGoods
-
-
-
7
ShareApplication
moneyreceived /
(refunded)
-
(10,378)
-
-
-
-
Payable
-
81
2,343
2,378
20
101
2,528
1,519
227,393
185,744
1,430
1,172
60
89
-
3,500
1,386
2,064
Receiveable
1.049
6,045
631
-
199
140
12
101
7,062
20,568
4,590
4,959
89
179
1,295
1,191
Current year figures are in bold.
Note:Timex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amountingto Rs. 178,000 thousand (previous year Rs. 276,000 thousand) to the bankers of the Company as a guaranteefor use of cash credit and overdraft facilities.
9. Payment to auditors (including service tax):(Rs. in thousands)
(a)(b)
(c)
(d)
(e)
(0
Statutory Audit
Tax audit
Limited review
Taxation matters
Other services
Reimbursement of out of pocket expenses
Total
Year ended31 March 2008
1,685
169
1,685
1,056
731
381
5,707
Year ended31 March 2007
1,684
168
1,684
758
849
487
5,630
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10. Capacity and production"1
Class of goods
Watches 'Plastic componentsTools and moulds
Unit of Quantity
Nos. (thousand)Nos. (thousand)Nos.
Year ended31 March 2008
Installedcapacity '"
1,714tttt
Actual' production
1,44763,535
230
Year ended31 March 2007
Installedcapacity "'
1,714##
Actualproduction
1,49245,713
196
products of the Company are delicenced.includes production at Noida in Uttar Pradesh and Parwanoo and Baddi in Himachal Pradesh.excludes plastic components, tools and moulds produced for captive consumption.installed capacities are as certified by management and have not been verified by the auditors, being atechnical matter.In view of the items of varying size and nature that can be manufactured by the Company's facilities, the installedcapacity is not ascertainable.
11. Details of sales
Class of goods
WatchesPlastic componentsTools and moulds
Components and others
Unit of Quantity
Nos. (thousand)Nos. (thousand)
Nos.
Year ended31 March 2008
Quantity
1,634
64,087230
ValueRs. thousands *
1,144,59854,26037,53540,437
1,276,830
Year ended31 March 2007
Quantity
1,570
41,069-196
ValueRs. thousands *
996,879
36,98029,35135,461
1,098,671
* values are inclusive of excise duty
12. Details of inventories of finished and traded goods
Class of goods
WatchesPlastic components
Unit of Quantity
Nos. (thousand)Nos. (thousand)
As at31 March 2008
Quantity ValueRs. thousands
264 106,480 .2,375 498
106,978
As at31 March 2007
Quantity ValueRs. thousands
244 123,999. 2,927 928
124,927
13. Details of raw materials and components consumed
Class of goods
Movements
Straps
Other materials
Unit of Quantity
Nos. (thousand)
Nos. (thousand)
Year ended31 March 2008
Quantity
1,448
1,447
ValueRs. thousands
124,305
130,252
307,645
562,202
Year ended31 March 2007
Quantity
1,495
1,492
ValueRs. thousands
141,235
103,753
272,807
517,795
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14. Details of purchases of trading goods
Class of goods
Watches
Alarm Clocks
Unit of Quantity
Nos. (thousands )
Nos. (thousands )
Year ended31 March 2008
Quantity
87
120
ValueRs. thousands
73,343
17,857
91,200
Year ended31 March 2007
Quantity
120
ValueRs. thousands
99,639
99,639
15. Details of imported and indigenous raw materials, components, spares and consumables consumed
Class of Goods
Raw materials and componentsImportedIndigenous
Total
Stores and consumablesImportedIndigenous
Total
Year ended31 March 2008
Value(Rs. thousand)
225,668336,534
562,202
1,6773,368
5,045
% of totalconsumption
40.1459.86
100.00
33.2566.75
100.00
Year ended31 March 2007
Value(Rs. thousand)
195,908304,907
500,815
1513,273
3,424
% of totalconsumption
39.1260.88
100.00
4.0096.00
100.00
Value of imports on CIF basis(Rs. in thousands)
Raw materialsComponents and sparesPurchase of watchesConsumablesCapital goods
Total
Year ended 31 March 2008256
168,03556,328
1,6785,059
231,356
Year ended 31 March 2007302
147,38256,625
1514,315
208,775
17. Expenditure and earnings in foreign currencya. Expenditure in foreign currency (on accrual basis)
(Rs. in thousands)
TravellingSoftware license feesSales and marketingOthers
Year ended 31 March 2008
4751,0774,323
595
6,470
Year ended 31 March 2007
5211,2395,6471,004
8,411
Earnings in foreign currency (on accrual basis)(Rs. in thousands)
Exports on F.O.B basisService income
Year ended 31 March 2008
22,06950,030
72,099
Year ended 31 March 2007
8,21847,997
56,215
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18.
19.
The Company has initiated the process of obtaining relevant information from its suppliers about their coverage underthe Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October 2006.Based on the information presently available with the management, there are no dues outstanding to micro and smallenterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.
Sundry debtors include the following, which are due from bodies corporate under the same management, as definedunder Section 370 (IB) of the Companies Act, 1956.
Timex Group ,B.V.Timex Group Luxury Watches B. V.Timex Deutschland G.M.B.HOpex S.ATimex Do Brasil Comercio E Industria Ltd.Timex Group B.V. T/A Mersey ManufacturersTimex Hong Kong LimitedTimex CorporationTMX Limited NVTimex Hungary LimitedCallanen InternationalTimex Group UKSequel InternationalSequel AG
As at 31 March 2008
1,049631
9737
12705
7,0624,590
2219989
320159
14,927
As at 31 Mar 2007
6,045-9
1398
101705
20,5684,959
22140179308
-
33,183
20. Loans and advances include:
a) dues from an Officer of the Company Rs. Nil (previous year Rs. 10 thousand). The maximum amount outstandingduring the year was Rs. 10 thousand (previous year Rs. 20 thousand).
b) dues from Timex Group Luxury Watches B.V. Rs. Nil (previous year Rs. Nil), a body corporate under the samemanagement as defined under Section 370 (IB) of the Companies Act, 1956. The maximum amount outstandingduring the year was Rs. Nil (previous year Rs. 9,571 thousand).
21. Taxation
The Company has significant carried forward tax losses. 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 thousands)
Deferred tax liabilitiesAccelerated depreciation
Deferred tax assetsGratuityLeave encashmentProvision for doubtful debtsProvision for warrantyProvision for sales returnsDisallowance under section 35DD of the Income-tax Act, 1961Carried forward depreciationCarried forward tax losses
Total
Deferred tax asset recognised (to the extent of deferred tax liability above)
Net deferred tax asset/ (liability)
As at31 March 2008
16,551
2,5353,129
10,2692,0854,9083,688
164,228156,540
347,382
16,551
Nil
As at31 March 2007
14,322
2,5732,8329,1761,1072,9285,393
164,228181,149
369,386
14,322
Nil
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22. 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 endof the lease term and escalation clause in some of the cases. Lease payments charged during the year to the profit andloss account aggregate Rs. 26,324 thousand (previous year Rs. 24,395 thousand). The future minimum lease paymentsunder non-cancellable operating leases are as follows:
(Rs. in thousands)
Future lease payments dueWithin one year
Later than one year and not later than five years
Total
As at 31 March 200812,748
6,826
19,574
As at 31 March 2007
16,45617,692
34,148
23. 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 escalationclauses. Lease rentals recognised during the year in the profit and loss account amount to Rs. 2,145 thousands(previous year Rs. 3,296 thousand). The future lease payments receivable under non-cancellable operating leases areas follows:
(Rs. in thousands)
Future lease payments receivableWithin one yearLater than one year and not later than five years
Total
As at 31 March 20081,278
92
1,370
As at 31 March 2007
1,639
769
2,408
The gross block, accumulated depreciation and depreciation charge for the year on plant and machinery given underoperating lease arrangements are as under:
(Rs. in thousands)
Gross blockAccumulated depreciation
Depreciation charge for the year
As at 31 March 200885,327
60,7963,272
As at 31 March 200785,327
57,524
3,325
24. 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 thousands)
Opening provision
Add: provision created during the yearLess: utilised during the year
Closing provision
Year ended 31 March 20083,256
14,937
(12,059)6,134
Year ended 31 March 2007
3,0608,663
(8,467)
3,256
b) Provision for sales return has been created for estimated loss of margin on expected sales return in future periodagainst products sold during the year. The provision has been created based on management's estimates and pasttrciT^Hc P(-»11r»TA7inrr ic triA m r^w^m pn f ITI tV»«» nmiHcinn Hiirintr f Vif* \rf*ar'
(Rs. in thousands)trends. Following is the movement in the provision during the year:
Opening provisionAdd: provision created during the year
Less: utilised during the yearClosing provision
Year ended 31 March 2008
8,61419,577
(13,751)
14,440
Year ended 31 March 2007
4,91415,821
(12,121)8,614
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25. i) Segment informationThe Company has the following business segments:
Watches : Manufacturing and trading of watches;Tools and moulds : Manufacture of tools, moulds and plastic components; andTimex Global Services : Providing IT and finance related back office support to other group
companies.Segment revenue in the geographical segments considered for disclosure are as follows:
Revenues within India (Domestic) include sale of watches and spares to consumers locatedwithin India; andRevenues outside India (Overseas) include sale of watches manufactured in India and serviceincome earned from customers located outside India.
Segments have been identified in line with the Accounting Standard 17 on "Segment Reporting" notifiedby the Companies (Accounting Standards) Rules, 2006, taking into account the nature of products andservices, the risks and returns, the organisation structure and the internal financial reporting system.Besides the normal accounting policies followed as described in Schedule 15, segment revenues, results,assets and liabilities include the respective amounts directly identified to each of the segments andamounts allocated on a reasonable basis.
Primary segment reporting (by business segment):(Rs. in thousands)
Segment revenuesExternal sales (gross)Excise dutyExternal sales (net)Other business related incomeTotal revenue
ResultsSegment resultsUnallocated incomeUnallocated expensesProfit before interest and taInterest expenseInterest incomeNet profit before taxIncome taxes- Minimum alternate tax- Fringe benefit taxNet profit
Other informationAssetsSegment assetsUnallocated corporate assetsBalance in profit andloss accountTotal assetsLiabilitiesSegment liabilitiesUnallocated corporateliabilitiesShare capital (includingshare premium)Total liabilitiesOthersCapital expenditureUnallocated capitalexpenditureTotal capital expenditureDepreciationUnallocated depreciationTotal depreciation
Watches2007-08
1,187,8086,719
1,181,0893,824
1,184,913
71,350
-
71,350
-
850,487--
486,243
--
30,995
16,014
2006-07
1,034,5987,337
1,027,2615,758
1,033,019
37,649-
-
31,891
-
782,141
376,901
-
64,316
-
11,200-
Tools and Moulds2007-08 '
95,04711,52383,524
-83,524
12,537--
-12,537
--
72,261
14,602
6,211
5,544-
2006-07
69,5719,050
60,521-
60,521
7,206
-7,206
-
62,822
13,672
--
7,092
-
7,435-
Timex Global Services2007-08
50,031-
50,031-
50,031
5,990
5,990
-
10,316
4,499
--
849.
888
2006-07
47,997-
47,997
47,997
4,106
4,106
28,642-
6,033
--
1,163
-
664-
Total2007-08
1,332,88618,242
1,314,6443,824
1,318,468
89,8779,748
24,08175,544
6,956760
69,348
8,5776,248
54,523
933,064121,13832,964
1,087,166
505,344
34,747547,075
1,087,166
38,055
1,92139,97622,446
3,41425,860
2006-07
1,152,16616,387
1,135,7795,758
1,141,537
48,96113,12124,29237,790
9,7474,009
32,053
1,1215,736
25,196
873,60596,33287,487
1,057,424
396,606
113,743547,075
1,057,424
72,571
1,78274,35319,299
3,82423,123
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Secondary segment reporting (by geographical location of customers):(Rs. in thousands)
Segment revenue
Segment assets
Capital expenditure
India
2007-08
1,246,369
1,036,424
39,976
2006-07
1,079,564
934,838
74,353
Outside India
2007-08
72,099
17,778
-
2006-07
56,215
34,023
-
Total
2007-08
1,318,468
1,054,202
39,976
2006-07
1,135,779
968,861
74,353
26. Employee benefits
Effective 1 April 2006, the Company adopted Accounting Standard 15 on "Employee Benefits". Pursuant to theadoption, the additional transitional provision amounting to Rs. 1,918 thousand was adjusted to the opening debitbalance in the profit and loss account in the previous year. The details of employee benefits with regard to provision/charge for the year on account of gratuity, which is in the nature of an unfunded defined benefit are as under:
(Rs. in thousands)
As At 31 March 2008 As At 31 March 2007
Change in defined benefit obligations during the yearPresent value of obligation at beginning of the yearService costInterest costActuarial (gain)/lossBenefit paidPresent value of obligation at end of the year
Present value of unfunded obligation and liabilityrecognised in Balance SheetPresent value of defined benefit obligation as at the endof the year and liability recognised in the Balance Sheet
Gratuity cost recognised in the profit and loss accountfor the yearService costInterest costActuarial (gain)/loss
Net gratuity cost
AssumptionsDiscount rate- For Timex Global Services- Others
Expected rate of salary increase- For Timex Global Services- Others
7,5701,827
617(1,207)(1,350)
7,457
7,457
1,827617
(1,207)
1,237
8.30%8.75%
10%8%
5,7511,041
4341,251(906)7,570
7,570
1,041434
1,251
2,726
8.25%8.25%
10%8%
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority,promotions and other relevant factors. Medical cost trend rates have no impact on actuarial valuation of the abovedefined benefit plan. Discount rate is based on market yields prevailing on government securities as at 31 March 2008for the estimated term of the obligations.
The guidance on implementing AS-15 issued by Accounting Standards Board (ASB) of the Institute of CharteredAccountants of India states that benefit involving employer established provident funds, which require interestshortfalls to be recompensed are to be considered as defined benefits plans. Pending the issuance of the guidancenote from Actuarial Society of India, the Company's actuary has expressed an inability to reliably measure providentfund liabilities. Accordingly, the Company is unable to exhibit the related information.
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27. The Company's foreign currency exposure on account of payables/ receivables not hedged is as follows:(Amounts in thousands)
Payables- USD
- GBP
- Euro-HKD
Receivables
-USD-HKD
As at 31 March 2008(in original
currency)
5,9041
11
155
432
-
(in Rupees)
235,79360
724
796
17,387
-
As at 31 March 2007(in original)
currency)
4,3871
21
-
755108.
(in Rupees)
191,767
89
1,195
-
32,486
617
28. Previous year's figures have been re-grouped / reclassified, wherever necessary, to conform to current year'sclassification.
29. Schedules 1 to 16 form an integral part of the financial statements.
For Timex Group India Limited
Frank ShererChairman
Place: New DelhiDate: 23 May 2008
Kapil KapoorManaging Director
V.D. WadhwaSr. V.P.- General Counsel& Company Secretary
Ananda MukherjeeVice President - Finance
42
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CASH FLOW STATEMENTFor the year ended 31 March 2008
(Rs. in Thousands)
Schedule Year ended31 March 2008
Year ended31 March 2007
A. Cash flows from operating activitiesNet profit before taxAdjustments for :
- Depreciation and amortisation- Interest income- Interest expenses- Loss on sale/retairement of fixed assets
Operating profit before working capital changesAdjustments, for:
- (IncreaseJ/decrease in sundary debtors- (Increase)/decrease in loans and advances- (Increase)/decrease in inventories- Increase/(decrease) in current liabilities and provisions
Cash generated from operations- Income tax paid (Net)- Fringe benefit tax paid
Net cash from operating activities
B. Cash flows from investing activitiesPurchase of fixed assets (including CWIP)Proceeds from sale of fixed assetsInterest received
Net cash used in investing activities
C. Cash flows frnmJinanclngactiyitiesProceeds from short-term borrowingsRepayment of short-term borrowingsInterest paid
Net cash used in financing activities
Net Cash Flows [increase/ (decrease)] during the year (A+B+C)Cash and cash equivalents- opening balanceCash and cash equivalents- closing balance*
Significant accounting policiesNotes to the accounts
69,348
25,860(1,674)6,956
663101,153
(35,026)2,1115,153
105,730179,121(6,636)
(4,683)
167,802
(39,976)18
1,603
(38,355)
(86,130)(6,956)
(93,086)
36,36155,85492,215
1516
32,053
23,123(4,618)
9,74784_
60,389
(74,435)11,315(6,367)54,42545,327(1,853)
(6,775)
36,700
(74,353)6,9405,324
(62,089)
(219,228)
(10,889)
(230,117)
(255,506)311,36055,854
*Of the above, an amount of Rs. 155 thousand (previous year Rs. 125 thousand) is pledged with sales tax authorities and isnot available for use by the Company.
As per our report attached to the balance sheet
For BSR & Co.Chartered Accountants
Kaushal KishorePartnerMembership No. 090075
Place: New DelhiDate : 23 May 2008
For and on behalf of the Board
Frank ShererChairman
V D WadhwaSr. V.P. - General Counsel &Company Secretary
Kapil KapoorManaging Director
Ananda MukherjeeVice President - Finance
43
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BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE
I. Registration details
Registration No. 3 4 State Code [ 5 | 5 |
Balance sheet date | 3 | 1 | | Q | 3 | | 2 | 0 \ 0 \ 8\
Date Month YearII. Capital raised during the year (Amount in rupees thousands)
Public issue Rights issue
N I L N I LBonus issue Private placement
I | N | I | L | N I
III. Position of mobilisation and deployment of funds (Amount in rupees thousands)Total liabilities Total assets
0 0 8 7 1 6
Sources of fundsPaid-up capital Reserves & surplus
5 1 1 9 5 0 3 5 1 2 5Secured loans Unsecured loans
NApplication of Funds
Net fixed assets *
I I I I4H5
Investments
N I
including capital work in progressNet current assets
3 2 0 Miscellaneous expenditure
Accumulated losses N I
3 2 9 6 4IV. Performance of Company (Amount in rupees thousands)
Turnover Total expenditure
Profit before tax
1 2 5 9 6 2
Profit after tax
5 4 5 2 3
Earning per share in rupees Dividend rate %
0.34 Not applicable
V. Generic names of three principle products/services of the company (as per monetary terms)
Item Code No. (ITC Code) I I T 9 1 0
Product Description | W| R| 11 S | T [ |w [ A | T | C | H| E |S |
For Timex Group India Limited
Frank ShererChairman
Place: New DelhiDate: 23 May 2008
Kapil KapoorManaging Director
V.D. WadhwaSr. V.P.- General Counsel& Company Secretary
44
Ananda MukherjeeVice President - Finance