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TIMEANNUAL REPORT - 2008


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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


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.


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,


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


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


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


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.


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.


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.


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


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:

11


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.

12


•:• 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

13


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.

14


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

15


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.

16


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.

17


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.

18


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

19


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

20


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

21


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 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

22


(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.


Kaushal KishorePlace: New Delhi PartnerDate: 23 May 2008 Membership No.: 090075

23


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.


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

24


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


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.



Place: New DelhiDate : 23 May 2008



VDWadhwaSr. V.P. - General Counsel& Company Secretary

KapilKapoorManaging Director

Ananda MukherjeeVice President - Finance

25


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

26


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

27


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


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


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.

28


I


(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

29


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).

30


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.

31


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.

32


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.

33


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

34


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


1,685

169

1,685

1,056

731

381

5,707


1,684

168

1,684

758

849

487

5,630

35


10. Capacity and production"1

Class of goods

Watches 'Plastic componentsTools and moulds

Unit of Quantity

Nos. (thousand)Nos. (thousand)Nos.


Installedcapacity '"

1,714tttt

Actual' production

1,44763,535

230


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.


Quantity

1,634

64,087230

ValueRs. thousands *

1,144,59854,26037,53540,437

1,276,830


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)


Quantity

1,448

1,447

ValueRs. thousands

124,305

130,252

307,645

562,202


Quantity

1,495

1,492

ValueRs. thousands

141,235

103,753

272,807

517,795

36


14. Details of purchases of trading goods

Class of goods

Watches

Alarm Clocks

Unit of Quantity

Nos. (thousands )

Nos. (thousands )


Quantity

87

120

ValueRs. thousands

73,343

17,857

91,200


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


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


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


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


4751,0774,323

595

6,470


5211,2395,6471,004

8,411

Earnings in foreign currency (on accrual basis)(Rs. in thousands)

Exports on F.O.B basisService income


22,06950,030

72,099


8,21847,997

56,215

37


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

38


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


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


8,61419,577

(13,751)

14,440


4,91415,821

(12,121)8,614

39


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

40


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.

41


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


Place: New DelhiDate: 23 May 2008


V.D. WadhwaSr. V.P.- General Counsel& Company Secretary


42


CASH FLOW STATEMENTFor the year ended 31 March 2008

(Rs. in Thousands)

Schedule Year ended31 March 2008


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



Place: New DelhiDate : 23 May 2008



V D WadhwaSr. V.P. - General Counsel &Company Secretary



43


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


Place: New DelhiDate: 23 May 2008


V.D. WadhwaSr. V.P.- General Counsel& Company Secretary

44


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