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Director(s) Frank Sherer Non-Executive Director & ChairmanAs on 27 May, 2010 Kapil Kapoor Non-Executive Director & Vice –Chairman

V.D. Wadhwa Managing DirectorDaya Dhaon Non-Executive & Independent DirectorRaghu Pillai Non-Executive & Independent DirectorGagan Singh (Ms.) Non-Executive & Independent DirectorPradeep Mukerjee Non-Executive & Independent Director

Bankers The Hongkong & Shanghai Banking Corporation LimitedHDFC Bank Limited

Auditors BSR & Co.,Chartered Accountants

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

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

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

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

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NOTICE

Notice is hereby given that the Twenty-second Annual General Meeting of the Members of TIMEX GROUP INDIA LIMITEDwill be held on Thursday, 22nd July, 2010 at 10.00 A.M. at the Air Force Auditorium, Subroto Park, New Delhi 110010 totransact the following business:

ORDINARY BUSINESS

1. To receive consider and adopt the Balance Sheet as at 31 March, 2010, Profit and Loss Account for the year endedon that date and the report of the Auditors and Directors thereon.

2. To declare and pay of Dividend on Preference Shares.

3. To appoint a Director in place of Mr. Daya Dhaon who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint Statutory 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 remuneration to be fixed bythe Board of Directors of the Company in addition to reimbursement of all out of pocket expenses.

SPECIAL BUSINESS

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

“RESOLVED THAT Mr. Frank A Sherer, who was appointed as an Additional Director of the Company pursuant toSection 260 and other relevant provisions of the Companies Act 1956 and Article 103(a) of the Articles of Associationof the Company with effect from 29 October,2009, holds office up to the date of this Annual General Meeting andin respect of whom, the Company has received a notice in writing pursuant to Section 257 of the CompaniesAct,1956 , proposing his candidature for the office of Director, be and is hereby appointed as Director of theCompany, liable to retire by rotation.

RESOLVED FURTHER THAT pursuant to Article 106 of the Articles of Association of the Company, Mr. FrankA Sherer is also appointed as Chairman of the Company, not liable to retire by rotation, in place of Mr. Hans-KristianHoejsgaard with effect from 29th October 2009.

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

“RESOLVED THAT Mr. Pradeep Mukerjee who was appointed as an Additional director of the Company pursuantto Section 260 and other relevant provisions of the Companies Act 1956 or any statutory modification(s) or re-enactment thereof and Article 103(a) of the Articles of Association of the Company with effect from 30 July,2009,holds office up to the date of this Annual General Meeting and in respect of whom, the Company has received anotice in writing pursuant to Section 257 of the Companies Act,1956 , proposing his candidature for the office ofDirector, be and is hereby appointed as Director of the Company, liable to retire by rotation.”

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

“RESOLVED THAT Mr. V D Wadhwa, who was appointed as an Additional Director of the Company pursuant toSection 260 and other applicable provisions of the Companies Act 1956 and Article 103 of the Article of Associationof the Company with effect from 29 April, 2010, holds office up to the date of this Annual General Meeting and inrespect of whom, the Company has received a notice in writing pursuant to section 257 of the Companies Act,1956proposing his candidature for the office of Director, be and is hereby appointed as Director of the Company, notliable to retire by rotation”

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

“RESOLVED THAT Mr. V D Wadhwa who was appointed as the Managing Director of the Company by Board ofDirectors of the Company in the meeting held on 29 April, 2010 subject to the approval of shareholders and pursuantto the Article 123 and 124 of Articles of Association of the Company, provisions of Sections 198,269,302,309,311,Schedule XIII and all other applicable provisions of the Companies Act, 1956 and subject to the approval of the

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Central Government if any, subject to compliance with the provisions as stated above, the Company hereby accordsits approval for the appointment of Mr. V D Wadhwa as the Managing Director of the Company for a period of twoyears with effect from 29 April, 2010, he being a director not liable to retire by rotation, on the terms and conditionsmentioned in the Explanatory Statement attached herewith and as setout in the draft agreement between the Companyand Mr. Wadhwa, which is hereby specifically approved with the liberty to the Board of Directors to alter and varythe terms and conditions of the said appointment and/or agreement in such manner, as may be agreed between theBoard of Directors and Mr. Wadhwa within the parameters as provided in the Explanatory Statement and that theCompany also accords its approval for the actions taken or to be taken by the Board of Directors’ in this regard”.

NOTES

1. The Explanatory Statement pursuant to section 173 (2) of the Companies Act, 1956 in respect of the SpecialBusiness 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. Daya Dhaon, retires by rotation at the ensuing Annual General Meeting and being eligible offer himself forreappointment. Brief resume of Mr. Daya Dhaon, nature of his expertise and names of Companies in which he holdsDirectorship and membership / Chairmanship of Board Committee as stipulated under Clause 49 of the ListingAgreement with the Bombay Stock Exchange is provided in the Report on Corporate Governance forming part ofthe Annual Report. The Board of Director of the Company commends his re-appointment

4. The proxy form duly completed in all respects should reach the Registered Office of the Company not later than 48hours before the commencement of the meeting.

5. The Register of Members and the Register of Share Transfers of the Company have remained closed during 24 June2010 & 25 June 2010 both days inclusive.

6. The members are requested to inform changes, if any, in their Registered Address along with Pin Code Number to theCompany at the following Address:

TIMEX GROUP INDIA LIMITED,(Investors Relation Department)117, Ground Floor, World Trade CentreBabar Road, New Delhi – 110 001

7. The dividend declared by the Board of Directors on 1, 57, 00,000 Cumulative redeemable non-convertible PreferenceShares issued on 27th March 2004 and 2, 29, 00,000 issued on 21st March 2006 and also 25, 00,000 Non-cumulativeRedeemable Preference shares issued on 25th March 2003 in favour of Timex Group Luxury Watches BV (formerlyknown as Timex Watches BV) will be paid/distributed within the statutory period of 30 days after declaration bymembers in this Annual General Meeting.

8. The Members attending the meeting are requested to bring the enclosed attendance slip and deliver the same afterfilling in their folio number at the entrance of the meeting hall. Admission at the Annual General Meeting venuewill be allowed only on verification of the signature(s) on the Attendance Slip.

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

9. As a measure of economy, copies of the Annual Report will not be distributed at the venue of the Annual GeneralMeeting. The Members are, therefore requested to bring their copies of the Annual Report to the meeting.

10. The Members desirous of any information on the Accounts are requested to write to the Company at least a weekbefore the meeting so as enable the management to keep the information ready.

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

Registered Office : By Order of the117, Ground Floor, Board of DirectorsWorld Trade Centre,Babar Road, New Delhi – 110 001 Kapil Kapoor

Vice - ChairmanDated: 27 May 2010

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EXPLANATORY STATEMENT UNDER SECTION 173 (2) OF THE COMPANIES ACT, 1956

Item No 5

In terms of the provisions of Section 260 and other relevant provisions of the Companies Act, 1956 and Article 103(a) and106 of the Articles of Association of the Company, Mr. Frank A Sherer was appointed an Additional Director and Chairmanof the Board of Directors by the Board of Directors at their meeting held on 29 October, 2009. Mr. Sherer holds office up tothe date of this Annual General Meeting.

The Company has received a notice from a member signifying his intention to propose the appointment of Mr. Sherer as aChairman and Director of the Company along with a deposit of Rs. 500/-(Rupees Five Hundred only) which shall berefunded to the member, if Mr. Sherer is elected as a Director.

Mr. Sherer is a Legal Professional who is associated with Timex Group , U.S.A for over twenty-five years and currentlyheading Legal & Human Resources functions for the Timex Group’s worldwide operation. Your Directors believe that hisappointment as a Director would be in the best interest of the Company.

The Directors commend the Resolution for acceptance by the Members.

None of the Directors, other than Mr. Sherer himself, are deemed to be concerned or interested in this resolution, as it relatesto his appointment

Item No 6

In terms of the provisions of Section 260 and other relevant provisions of the Companies Act, 1956 and Article 103(a) of theArticles of Association of the Company, Mr. Pradeep Mukerjee was appointed an Additional Director of the Company bythe Board of Directors at their meeting held on 30 July, 2009. Mr. Mukerjee holds office up to the date of this AnnualGeneral Meeting.

The Company has received a notice from a member signifying his intention to propose the appointment of Mr. Mukerjee asa Director of the Company along with a deposit of Rs. 500/-(Rupees Five Hundred only) which shall be refunded to themember, if Mr. Mukerjee is elected as a Director..

Mr. Mukerjee has 29 years of experience. He is presently the Founder –Director of Confluence Coaching & Consultancyand prior to this, he was associated with Citigroup as Human Resource Director & VP, India, Sri Lanka and Bangladesh.Your Directors believe that his appointment as a Director would be in the best interest of the Company

The Directors commend the Resolution for acceptance by the Members.

None of the Directors, other than Mr. Mukerjee himself, are deemed to be concerned or interested in this resolution, as itrelates to his appointment

Item No 7 & 8

In terms of the provisions of Section 260, 198, 269, 302, 309,311, Schedule XIII and other applicable provisions of theCompanies Act, 1956 (“Act”) and Article 103(a) of the Articles of Association of the Company and subject to approval byshareholders of the Company, Mr. V D Wadhwa was appointed an Additional Director and also as Managing Director of theCompany by the Board of Directors at their meeting held on 29 April 2010.

The Company has received a notice from a member in writing pursuant to Section 257 of the Act signifying his intentionto propose the appointment of Mr. Wadhwa as a Director on the Board of the Company along with a deposit of Rs. 500/-(Rupees Five Hundred only) which shall be refunded to the member, if Mr. Wadhwa is elected as a Director.

In accordance with the relevant provisions of the Act, and subject to the approval of the shareholders and other regulatoryauthorities, as applicable, the Board of Directors of the Company has appointed Mr. Wadhwa as Managing Director of theCompany for a period of two years effective 29 April, 2010. The details of the proposed appointment are given hereunderand also in the resolution at Item No 8 of this notice, seeking approval of the members of the Company, which may also betreated as an abstract u/s 302 of the Act.

Mr. Wadhwa is an Alumni of Harvard Business School and a Fellow Member of the Institute of Company Secretariesof India. Mr. Wadhwa has over 25 years of work experience in various industries/ businesses. He has been associatedwith the Company since its inception in various capacities and largely credited with the re-establishment of the entiredistribution and retail base after the Company ceased to be the Timex JV with Tata’s. Subsequent he played a majorrole in the profitable turnaround of Company’s operations through business and financial restructuring. Prior to his

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elevation as the Managing Director of the Company, he was holding the position of Senior Vice President, BusinessDevelopment & Corporate affairs in the Company.

The darft Agreement between the Company and Mr. Wadhwa contains the following main terms and conditions:

(A) Period of Appointment : Two years with effect from 29 April, 2010

(B) Terms of Appointment

1. As Managing Director of the Company, Mr. Wadhwa shall exercise such powers to manage the day to day affairs ofthe Company as may be delegated to him by the Board of Directors from time to time. Mr. Wadhwa will servediligently and faithfully and will comply with all applicable laws and regulations and with all business policies andstandards of the Company in his performance of services under this Agreement. Mr. Wadhwa will perform suchservices personally at such reasonable times and places as the Company may direct in connection with the business.

2. During the term of this Agreement, Mr. Wadhwa will not engage in or accept any other assignment or employment.Mr. Wadhwa shall devote sufficient time and attention to and exert his best efforts in the performance of hisduties hereunder, so as to promote the business of the Company.

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

(C) Terms of Remuneration

1. The following terms of remuneration shall be applicable to Mr. Wadhwa, effective 29th April 2010.

2. The Board of Directors of the Company is empowered to fix the remuneration payable to Mr. Wadhwa in the slabof Rs 63,00,000 to Rs 150,00,000 per annum, with the base salary in the scale of Rs 2,00,000 – Rs 5,00,000 permonth, subject, however to deduction of all applicable taxes and / or levies etc.

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

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

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

6. In compliance with the provisions of Section 309 of the Act, the terms of remuneration specified above asapproved by the Board of Directors of the Company are now being placed before the shareholders of theCompany in Annual General Meeting for their approval.

7. The draft of agreement between the Company and Mr. Wadhwa is available for inspection at the RegisteredOffice of the Company between 11.00 A.M. and 1.00 P.M. on any working day of the Company.

None of the Directors, other than Mr. Wadhwa himself, are deemed to be concerned or interested in this resolution,as it relates to his appointment.

Registered Office : By Order of the117, Ground Floor, Board of DirectorsWorld Trade Centre,Babar Road, New Delhi – 110 001 Kapil Kapoor

Vice-ChairmanDated: 27th May 2010

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DIRECTORS’ REPORT

To the Members of Timex Group India Limited

The Directors are pleased to present the Twenty Second Annual Report and Audited Statement of Accounts for the yearended 31 March 2010.

FINANCIAL RESULTS Rs. in Thousands

2009-10 2008- 09

Income 1400709 1319639Expenditure 1341958 1293229EBIDTA 83311 56471Interest 1679 6646Depreciation 22881 23415Profit before tax (PBT) 58751 26410Profit on sale of PED Business - 63533Provision for Taxes 12518 15401Profit after Tax 46233 74542

The year 2009-10 witnessed a slow but definite sign of recovery in retail sentiment across most segments, after the slowdownof economy during 2008-9. For the year ended 31 March 2010, the sales revenue grew to Rs. 140 crores increasing by amodest 7% from Rs 131 crores. Profit before taxes grew by 122% to Rs 5.87 crores from Rs 2.64 crores during previous yearand Net profit for the year was Rs 4.62 crore compared to Rs 7.45 crore in previous year, which was inclusive of one timeprofit of Rs 6.35 crore due to sale of PED business.

Your Company continues to drive its strategy of retail expansion through opening of “The Time Factory” stores andinternalization of fast moving international styles for driving business growth in profitable segments, which is reflected inthe increased profitability.

Your Company is also finalizing its plan for launching “Versace” and “Marc Ecko” watch brands from its Internationalportfolio in the Indian Market to drive its portfolio strategy and offer multiple choices of brands across price points to theIndian Consumers.

MANAGEMENT DISCUSSION AND ANALYSISTHE INDIAN WATCH MARKET

The size of Indian watch market is estimated at 45 million watches. The brands at the premium end of the market and in thefashion segments continues to grow significantly faster than other brands. While the volume growth is driven by low pricepoint products, the growth of most brands is driven by value and not volume. The growth has been led by marketinginvestments by several Indian and Global players including your Company. This augurs well for the growth of overallIndustry.

The watch industry witnessed the entry of several luxury and fashion brands during the year, which resulted in increasingthe competition for retail space in the multi brand outlets across the country. Companies, which are expanding their retailfootprint and offering a portfolio of brands continue to grow faster. Your Company has the unique advantage of being theonly international brand with its own domestic manufacturing capabilities, a portfolio of eleven international brands andthe presence of its own retail chain, “The Time Factory”, comprising of 69 stores.

OUTLOOK/OPPORTUNITES & KEY CHALLENGES

The current economic environment, the growing awareness of global fashion trends and the changing life style of the Indianconsumers are indicative of high growth for life style brands with emphasis on outdoor & technology, fashion and luxurysegments. Over the last several decades, the Timex Brand has come to be known for its technological superiority and largeoffering of outdoor and fashion products.

Your Company shall continue to invest in its product portfolio and strengthen the communication of its brand attributes of“Superior Technology”, “Sporty” and “Fashionable”. The younger segment has also been identified as a segment poisedfor high growth, which shall be largely addressed through product differentiation and offering an exclusive range craftedby International designers following the global trends.

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The Timex Group now offers a portfolio of eleven international brands including Timex, i.e. Salvatore Ferragamo, Versace,Guess, Gc, Nautica, Marc Ecko, TX, Valentino, Versus and OPEX. During the year, your Company intends to introduceSalvatore Ferragamo, Versace and Marc Ecko to the Indian Consumers to pursue its portfolio strategy and, further strengthenits retail presence through expansion of “The Time Factory” stores and gain share in the Multi Brand Retail outlets. YourCompany has identified these as key action points for driving business growth in the coming years.

RISKS / THREATS

Your Company is expanding its retail network through franchisees at the front end. This is an efficient way to expand ratherthan having Company owned/managed showrooms which is a costlier option. The relationships have to be activelymanaged to pre-empt shifting of loyalties of these franchisees to other product category/Brands.

The Company is addressing this risk by initiating a high level of engagement with the franchisees and addressing theirreasonable business requirements in an empathetic manner, through both contractual arrangements and day to day interfacewith these business associates.

The increasing operating costs of retailing also pose as risk to the maintenance of operating margins.

The weakening rupee had a negative impact on the profitability of your Company being a net importer. Your Companycontinues to drive operating efficiencies to overcome and mitigate such risks.

GOVERNMENT POLICY

Your Company has been actively involved with the “All India Federation of Horological Industries”, an apex body ofHorological Industry in India. Your Company together with AIFHI has been taking up issues concerning the WatchIndustry and your Company in particular, with the various government agencies. We have made several representations tothe government for reduction and rationalization of duties, increase in the rate of abatement on watches, and enhancementof DEPB credit rates relating to export of Quarts Analogue Watches including other export benefits etc. We shall continueour efforts to represent the interests of the Industry and your own Organisation.

FINANCE

Your Company has been able to manage its cash flow through improved collections and utilized the surplus cash to reducethe borrowings and accounts payable, which has resulted in savings in Interest costs despite firming up of Interest Rates.

The Company does not hold any fixed deposits from the public, shareholders & employees. There were no overdue /unclaimed deposits as on 31 March 2010.

During the year under review, the Company made payment aggregating to Rs.30.06 Crore by way of Central, State andlocal sales taxes and duties as against Rs. 27.39 Crore in the previous year.

Your Company is also paying dividend on its Preference Shares at the agreed coupon rate. The dividend liability onpreference shares until March 2009 was waived by the Preference Share Holders.

SEGMENT WISE REPORTING

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

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has endeavoured to continuously improve the internal controls both relating to financial reporting andOperations. Your Company has well established procedures for internal control, which are commensurate with its size andoperations.

The internal control mechanism comprises of a well-defined organization structure, documented policy guidelines,predetermined authority levels and processes.

The systems and operations are regularly reviewed by the Audit Committee to ensure and review their effectiveness andimplementation. The Statutory Auditors of the Company also attend these meetings and convey their views on the adequacyof internal control systems as well as financial disclosures. The Audit Committee also issues directives for enhancement inscope and coverage of specific areas, wherever felt necessary.

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HUMAN RESOURCES

Your Company is proud to have result oriented, committed & loyal employees, who are the key resource for the growth ofits business. Your Company provide a challenging work environment that encourages meritocracy at all levels and hasbelieved in an environment that fosters accomplishment, ownership, creativity and mutual respect.

One of the key challenges in this area is to increase manpower productivity, through training and motivational programmes.The efforts are on to impart training to sales staff at our TTF Stores.

The information required as prescribed under Section 217 (2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975 is annexed herewith forming part of this report. However as per provisions ofSection 219 (1) (b) (iv) of the Companies Act, 1956, only the report and accounts are being sent to all the shareholdersexcluding the statement of particulars of employees under Section 217 (2A) of the Act. Any shareholder interested inobtaining a copy of the said statement may write to the Company Secretary at the Registered Office address of the Company.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis, outlining the Company’s objective, expectations or predictionsmay be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results could differmaterially from those expressed or implied in the statements. The important factors that could influence the Company’soperations include demand and supply conditions affecting sale price of finished goods, input availability and prices,changes in government regulation, tax laws, economic developments within the country and abroad and such other factorssuch as litigation and industrial relation etc.

DEMATERIALISATION

Since year 2000, the equity shares of your Company are being compulsorily traded in dematerialization form. As on date,33977 no. of shareholders representing 21.86% of the Equity Share are holding shares in the dematerialized form.

DIRECTORS

Mr. Daya Dhaon retires by rotation as Director of the Company and being eligible, offers himself for reappointment.

Mr. Hans-Kristian Hoejsgaard resigned from directorship of the Company. The Company wishes to place on record itsappreciation for the valuable guidance and support provided by Mr. Hoejsgaard during his tenure as Director and Chairmanof the Board of Directors of the Company.

Mr. Sherer was appointed an Additional Director to hold office up to the date of the forthcoming shareholders meeting. Mr.Sherer has been subsequently appointed as Chairman of the Board of Directors pursuant to Articles of Association of theCompany. Your Company has received notice from a shareholder seeking his appointment as Director of your Companypursuant to Section 257 of the Companies Act 1956.

Mr. Pradeep Mukerjee was appointed as an Additional Director during the year to hold office up the date of the forthcomingshareholders meeting. Your Company has received notice from a shareholder seeking his appointment as Director of yourCompany pursuant to Section 257 of the Companies Act 1956.

Mr. V.D.Wadhwa was appointed an Additional Director to hold office up the date of the forthcoming shareholders meeting.Mr. Wadhwa was subsequently appointed Managing Director of the Company in place of Mr. G. Kannan, who resignedfrom the directorship and the post of Managing Director effective 29 April 2010.Your Company has received notice froma shareholder seeking Mr. Wadhwa’s appointment as Director of your Company pursuant to Section 257 of the CompaniesAct 1956.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors confirm as under:

(i) That in preparation of the Balance Sheet and the Profit & Loss Account of the Company, the applicableaccounting standards has been followed along with proper explanation relating to material departures.

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(ii) The Directors had selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Companyat the end of the financial year and of the profit of the Company for that period.

(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.

(iv) That the Directors have prepared the Annual Accounts on a going concern basis.(v) The Directors are pleased to recommend payment of dividend on 3,86,00,000 Cumulative Redeemable

Preference Shares ( both the series) of Rs Ten each at the rate of Rs.0.71/- per share and on 25,00,000 Non-Cumulative Redeemable Preference Shares of Rs Ten each at the rate of Rs 0.01 per preference share, subject toapproval by the shareholders at the Annual General Meeting.

As per Section 217 of the Companies Act, the Directors take note of the Auditor’s Report (Clause 4F) and share that thedecision of the Central Government on the request made is awaited and the Company shall abide by the due legal process.

CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance togetherwith a certificate from the Company’s Auditors confirming compliance is set out in the Annexure forming part of this report.

CONSERVATION OF ENERGY

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

AUDITORS

M/s BSR & Co., Chartered Accountants and Statutory Auditors of the Company retire and are eligible for reappointment.

ACKNOWLEDGEMENTS

Lastly, your Directors wish to place on record their appreciation for the support and cooperation, which the Companycontinues to receive from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governmentsof Uttar Pradesh and Himachal Pradesh, the Company’s bankers and finally the Members of the Company and its employees.

For and on behalf of the Board of Directors

New Delhi Kapil Kapoor 27 May, 2010 Vice-Chairman

ANNEXURE TO THE DIRECTOR’S REPORT

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

PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGYPOWER AND FUEL CONSUMPTION

2009-10 2008-09UPSEB/ HPSEB Power purchase (units) 691056 1988586Total Amount (in Rs.) 2921900 10334018Rate per unit (in Rs.) 4.23 5.20Own generation (units) 84100 255750Cost per unit (in Rs.) 8.00 9.81Units per litre of diesel 3.65 3.50

TECHNOLOGY ABSORPTIONResearch and Development (R&D)Areas in which R&D carried out by the CompanyDevelopment -

1) Localised development of Swing arms for hand driving assembly tool.2) Localised development of Diamond Grinding wheel used for stem cutting in assembly.

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3) Internalized assembly of watches with Seiko VD57 Chrono movement using locally developed4) Tools and assembly fixtures.5) Automation of glue application process in Tigemaster machines for Crown and Stem Assembly

Future plan of action

1) Development of Conveyorised line for 905/ 930/ 916 Movements2) E-tester automation for 930/905/916 movements3) Semi-automation of Caseback Closing Press

Technology Absorption, Adoption and Innovation Benefits

Upgraded process automations will help improve productivity and quality and reduce assembly costs.

Foreign Exchange Earned

The Company has earned Rs.7.15 Crore in Foreign exchange and used Rs.0.92 Crore.

REPORT ON CORPORATE GOVERNANACE

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

The Directors present the following report on Corporate Governance pursuant to Clause 49 of the Listing Agreement andit forms a part of the report of the Board of Directors.

A. MANADATORY REQUIREMENTS

CORPORATE GOVERNANCE PHILOSOPHY

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

VALUES

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

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BOARD OF DIRECTORS

(a) Composition of the Board

The Board of Directors of the Company was reconstituted on 29th April 2010 and comprises seven members, whichincludes six Non-executive directors. The day-to- day management of the Company is conducted by Mr. V.D.Wadhwa,Managing Director of the Company subject to the supervision and control of the Board of Directors of the Company.Mr. Frank Sherer a Non-Executive Director is Chairman of the Board and the Company and Mr. Kapil Kapoor a Non-Executive Director is Vice - Chairman of the Board of the Company. Mr Daya Dhaon, Mr. Raghu Pillai, Ms. GaganSingh and Mr. Pradeep Mukerjee are Independent Directors on the Board of the Company, presently. The number ofIndependent Directors is more than one half of the total strength of the Board. The Directors are well qualifiedprofessionals in business, finance and corporate management and the Company is in compliance with the Clause 49 ofthe Listing Agreement as regards composition of the Board.

(b) Appointment of Director(s)/Managing Director

Pursuant to the provisions of Section 260 and other applicable provisions of the Companies Act, 1956 and Article 103and 106 of the Articles of Association of the Company and subject to approval of the members of the Company, theBoard of Directors have appointed Mr. V.D.Wadhwa as an Additional Director and Managing Director of the Companyeffective 29 April, 2010.

Mr. Wadhwa is an Alumni of Harvard Business School & a fellow member of the institute of Company Secretaries ofIndia. Mr. Wadhwa has over 25 years of working experience in various industries/ businesses. He has been associatedwith the Company since its inception in various capacities and largely credited with the re-establishment of the entiredistribution and retail base after split of Timex JV with Tata’s. Subsequent he played a major role in the profitableturnaround of Timex India Operations through business and financial restructuring.

Pursuant to the provisions of Section 260 and other applicable provisions of the Companies Act, 1956 and Article103(a) and 106 of the Articles of Association of the Company, the Board of Directors have appointed Mr. Frank Shereras an Additional Director and Chairman of the Company effective 29 October,2009.

Mr. Sherer is a Legal Professional who is associated with Timex Group, U.S.A for over twenty years and currentlyheading Legal & Human Resources functions. Your Directors believe that his appointment as a Director would be in thebest interest of the Company.

Pursuant to the provisions of Section 260 and other applicable provisions of the Companies Act, 1956 and Article103(a) of the Articles of Association of the Company, the Board of Directors have appointed Mr. Pradeep Mukerjee asan Additional Director of the Company effective 30 July,2009.

Mr. Mukerjee has 29 years of experience. He is presently the Founder –Director of Confluence Coaching and Consulting,he was associated with Citigroup as Human Resource Director & VP India, Sri Lanka and Bangladesh. Your Directorsbelieve that his appointment as a Director would be in the best interest of the Company.

Mr. Hans-Kristian Hoejsgaard resigned as Director & Chairman of the Company effective 29th October, 2009.

Mr.Daya Dhaon retires by rotation as Director of the Company and being eligible, offers himself for reappointment atthis meeting.

(c) Board Meetings

The Board met four times during financial year 2009-2010 on 28 May, 2009, 30 July, 2009, 29 October, 2009 and 28January, 2010 to consider amongst other business matters, the quarterly performance of the Company and financialresults. Directors attending the meeting actively participated in the deliberations at these meetings.

(d) Composition and Category of Directors

The details of the composition and category of Directors as on 31 March 2010 are given in the table below:

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Name Category Designation No. of No. of No. of No. of No. of AttendanceShares Meetings Meetings Memberships Memberships of eachHeld held During attended in Boards of in Committees Director

the last other of other Public at lastfinancial Companies Companies (2) AGMyear (1)

Hans-Kristian Non- Chairman - 4 1 - - YesHoejsgaard (3) Executive

Director

Kapil Kapoor Non- Vice- 2100 4 4 2 2 YesExecutive ChairmanDirector

Gopalratnam ExecutiveKannan Director Managing 200 4 4 - - -

Director

Daya Dhaon Independent Director - 4 4 - - YesDirector

Raghu Pillai Independent Director - 4 3 1 - YesDirector

Gagan Singh Independent Director - 4 3 - - Yes(Ms.) Director

Frank Sherer Non- Chairman - 4 0 1 1 -Executive and DirectorDirector

Chitranjan Dua Non- Alternate 10000 4 0 - - yes(4) Executive Director

Director

Pradeep Non- Director - 4 1 - - -Mukerjee (5) Executive

Director

1. Does not include directorships / committee position in Companies incorporated outside India.2. Only Audit Committee and Shareholders Grievance Committee have been considered for the purpose of ascertaining

no. of membership & Chairmanship of Committee across all the public companies.3. Mr. Hans-Kristian Hoejsgaard resigned as Chairman & Director from the board on 29 October, 2009 and Mr. Frank

Sherer has been appointed as a Chairman and Director in place of Mr. Hanskristian Hoejsgaard4. Mr. Chitaranjan Dua ceased from Alternate Director w.e.f. 30 July, 20095. Mr. Pradeep Mukerjee has been appointed on 30 July, 2009

Code of Conduct

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

Audit Committee

The Audit Committee of the Company was constituted in July 1999 in line with the provisions of clause 49 of the listingagreement with the Bombay stock exchange read with section 292A of the Companies act, 1956. The Company Secretaryof the Company acts as the Secretary of the Committee.

The Company has an adequately qualified and independent Audit Committee. The committee comprises of five Non-Executive Directors: Mr.Daya Dhaon, Mr. Frank Sherer, Mr. Raghu Pillai, Ms. Gagan Singh and Mr. Pradeep Mukerjee.Four of the five members on the committee are independent. The committee is chaired by Mr. Daya Dhaon, who is anindependent Director having vast experience and expertise in the area of finance and accounts.

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

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� Reviewing the adequacy of internal control system and the Internal Audit Reports and their compliance thereof.� Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that

the financial statements are correct, sufficient and credible.� Recommending the appointment of external auditors, fixation of their audit fee and also approval for payment for any

other services� Reviewing with Management the quarterly and annual financial statements before submission to the Board, focusing

primarily on:

� Any changes in accounting policies and practices.� Major accounting entries based on exercise of judgment by management.� Significant adjustments arising out of audit.� Qualifications in draft audit report.� The going concern assumption.� Compliance with accounting standards.� Compliance with stock exchange and legal requirements concerning financial statements.� Any related party transactions i. e. transactions of the Company of material nature, with promoters or the

management, their subsidiaries or relatives etc, which may have potential Conflict with the interests of Companyat large.

During the year under review, the Audit Committee met four times on 28 May 2009, 30 July 2009, 29 October, 2009 and 28January 2010. The details of member’s attendance at the Audit Committee Meetings are as under;

Name of Director Designation Total no of Meetings No of meetingsheld in 2009-10 attended

Mr. Daya Dhaon Chairman &Independent Director 4 4

Mr. Hans-Kristian Non-Executive – 1 (Resigned w.e.f. 29Hoejsgaard Director 4 October,2009)

Mr. Frank Sherer Non-Executive 4 0 (Appointed w.e.f. 29Director October,2009)

Mr. Raghu Pillai Non-ExecutiveIndependent Director 4 3

Ms. Gagan Singh Non-ExecutiveIndependent Director 4 3

Mr. Pradeep Mukerjee Non-Executive 4 1(Appointed w.e.f. 30Independent Director July,2009)

The Chief Financial Officer, Head of Internal Audit function and the Statutory Auditors were invited and they dulyattended the Audit Committee meetings. The Committee held discussions with the management of the Company and withthe Statutory Auditors to review the quarterly, half-yearly and annual audited financial statements and to recommend itsviews to the Board of Directors of the Company. The committee also reviewed the internal control systems and theeffectiveness of Internal Audit function.

REMUNERATION COMMITTEE

The Remuneration Committee was constituted in May 2003, to decide and recommend the remuneration of directorsincluding the Managing Director of the Company. Effective 29 January 2009, the remuneration of all the Sr Managementof the Company with direct reporting to the Managing Director of the Company shall also be reviewed and recommendedby the Remuneration Committee.The Committee comprises of five Non- executive Directors, namely Mr. Daya Dhaon, Mr.Raghu Pillai, Ms. Gagan Singh, Mr. Frank Sherer and Mr. Pradeep Mukerjee. Mr. Daya Dhaon, an independent Director isChairman of the Committee. The Committee meets periodically as and when required. None of the directors, exceptManaging Director draws remuneration from the Company.

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

Name of Director Designation Total no of Meetings No of meetingsheld in 2009-10 attended

Mr. Daya Dhaon Chairman & 2 2Independent Director

Mr. Hans-Kristian Non-Executive – 2 0 (Resigned w.e.f. 29Hoejsgaard Director October,2009)

Mr. Frank Sherer Non-Executive 2 0 (Appointed w.e.f.Director 29 October,2009)

Mr. Raghu Pillai Non-ExecutiveIndependent Director 2 2

Ms. Gagan Singh Non-ExecutiveIndependent Director 2 1

Mr. Pradeep Mukerjee Non-Executive 2 0(Appointed w.e.f.Independent Director 30 July,2009)

SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

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

Name of Director Designation Total no of Meetings No of meetingsheld in 2009-10 attended

Mr. Daya Dhaon Chairman & 4 4Independent Director

Mr. Hans-Kristian Non-Executive – 4 1 (Resigned w.e.f.Hoejsgaard Director 29 October,2009)

Mr. Frank Sherer Non-Executive 4 0 (Appointed w.e.f.Director 29 October,2009)

Mr. Raghu Pillai Non-Executive 4 3Independent Director

Ms. Gagan Singh Non-Executive 4 3Independent Director

Mr. Pradeep Mukerjee Non-Executive 4 1(Appointed w.e.f.Independent Director 30 July,2009)

The Committee was formed specifically to look into the redressal of shareholders & investors grievances pertaining to:1) Transfer of shares and its timeliness2) Transmission of shares3) Issuance of duplicate shares4) Investors / shareholders grievance(s) pertaining to all type of matters concerning their dealing with the Company

with respect to their investment in the securities of the Company, more specifically pertaining to non-receipt of

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Annual Reports, delay in transfers, non redressal of complaints, non receipt of dividend, dematerialization relatedissues etc.

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

DISCLOSURES

(a) Related Party Transactions: The Audit Committee has been reviewing the disclosure of RelatedParty Transactions periodically. There is a cross charge of expenses which is established between yourCompany and Timex Group Precision Engineering Limited (Group Company) on account of Manpower Cost andRentals respectively. Beside this transaction, the Company does not have any related party transactions, which arematerial in nature that would have a potential conflict with the interests of the Company at large.

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

(c) Risk Management: The Company has laid down procedures so as to ensure that the executive management controlsrisk through means of a properly defined framework and to inform the Board members about the same and hasengaged the services of a leading Chartered Accountant’s firm to carry out this activity on a regular basis and informthe Board members about the risk assessment and minimization 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 share transfer formalities bythe Company. Pursuant to SEBI (Depositories and Participants) Regulations, 1996 certificates have also been receivedby a Company Secretary-in-Practice for timely dematerialization of share of the Company and for conducting asecretarial audit on a quarterly basis for reconciliation of the share capital of the Company.

(f) Disclosure of Accounting Treatment: The Company follows Accounting Standards issued by the institute of CharteredAccountants of India and in the preparation of financial statements; the Company has not adopted a treatmentdifferent from that prescribed in any Accounting Standard.

(g) Proceeds from Issue of Preference Shares : The Company has raised funds through issues of preference sharesduring financial year 2002 -2003, 2003-2004, 2005 -2006. The proceeds of the preference share issue have beenlargely utilized towards repayment of the term loan, pending full utilization allocated for the retail venture. TheBoard/ Audit Committee reviews the Utilization details periodically.

(h) CEO/CFO Certification : The Managing Director (CEO) and Chief Financial Officer(CFO) have placed before theBoard of Directors a certificate relating to the financial statements, in accordance with clause 49 (V) of the ListingAgreement for the financial year ended March,31,2010 which is annexed hereto.

DIRECTORS’ REMUNERATION

Pecuniary Relationships

None of the Directors’ of your Company except Managing Director has any pecuniary relationships ortransactions with the Company except for attending Board meetings or Committee Meetings thereof. The Directors of theCompany are only paid sitting fees. However, the Managing Director of the Company draws remuneration from the Company.

MEANS OF COMMUNICATION

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

Quarterly Results : Financial Results are published in the Newspapers asrequired under the Listing Agreement.

Annual Results : - do -

Newspaper in which results are normally : The Business Standard, Business Standard,published Vernacular published (Hindi) Newspaper.

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

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

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GENERAL SHAREHOLDERS’ INFORMATION

AGM:Date,time and venue : Thursday, 22 July, 2010 10:00 a.m. at Air Force Auditorium, Subroto Park, New

Delhi – 110 010.

Financial Year : April 1, 2009 to March 31,2010

Directors seeking appointment/ : As required under Clause 49(IV)(G), particulars of Directors seeking appointment/

re-appointment re-appointment are given in the Explanatory Statement and Annexure to the

Notice of the Annual General Meeting to be held on 22 July,2010

Tentative calendar of events for : To review and approve unaudited Financial Results for the quarter First quarter

the financial year 2010-11 : First quarter - ended July 2010

(April – March) Second quarter - ended October 2010

Third quarter - ended January 2011

Fourth quarter - ended May/June 2011

Book closure Date : 24 June to 25 June,2010 (both days inclusive)

Listing of shares on Stock : Bombay Stock Exchange, Phiroze Jeejeebhoy Towers,

Exchanges Dalal Street, Mumbai – 400001

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

Listing Fees : Listing fees as prescribed has been paid to the Stock Exchange up to

March 31,2010

Share Registrar & Transfer Agents : Alankit Assignment Limited 2E/21 Alankit House, Jhandewalan Extension,

New Delhi – 110055 of the Company for both physical and electronic mode of

share transfers.

Contact Person : Mr. Y K Singhal, Vice President

Phones : 011-42541234

Fax : 011-23552001

Email : rta@alankit.com

info@alankit.com

Website : www.alankit.com

SHARE TRANSFER SYSTEM

The Company has appointed Alankit Assignment Limited as Registrar and Shares Transfer Agent. Shares

sent for transfer in physical form are registered by the Registrar and Share Transfer Agents within fifteen days of

receipt of the documents, if found in order. Shares under objection are returned within two weeks. All requests

for dematerialization of shares are processed, if found in order and confirmation is given to the respective

depositories i.e. National Securities Depository Ltd.(NSDL) and Central Depository Services Limited (CDSL) within

twenty-one days.

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CORPORATE POLICY MANUAL

All the transfers received are processed and approved by the Share Transfer & Shareholders / Investors Grievance

Committee at its meetings. For redressal of transfer related grievances, shareholders may contact Mr. Vikram Bhardwaj,

Senior Manager – Legal and Secretarial at the registered office address of the Company

INVESTOR SERVICES

Number of Complaints received, not solved & shares pending transfer

Complaints outstanding as on April,1, 2009 0

Complaints received during the year ended March 31, 2010 103

Complaints resolved during the year ended March 31, 2010 103

Complaints pending as on March 31, 2010 0

Constitution and Composition

The Committee comprises of five non-executive Directors namely, Mr. Frank Sherer, Mr. Daya Dhaon, Mr. Raghu Pillai,Ms. Gagan Singh and Mr. Pradeep Mukerjee. The Chairman of the meeting is elected by majority at each meeting. TheCompany Secretary is the Secretary of the Committee and has attended all its meetings. He addresses shareholders complaints,monitors share transfer process and liaisons with the regulatory authorities, as required.

OTHERS

Name and designation of compliance officer: Mr. Vikram Bhardwaj, Sr Manager – Legal & Secretarial.

Venue and Time of the Last Three General Body Meetings

Date Category Venue Time No. of Special Members present by Representative ofResolutions Body Corporate

Person Proxy

25.09.2007 AGM Air Force 10.00 3 1600 60 1Auditorium, AMSubroto Park,New Delhi

23.08.2008 AGM Air Force 10.00 2 2099 31 1Auditorium, AMSubroto Park,New Delhi

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

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

Postal Ballots

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

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STOCK CODE

The stock code of the Company at BSE : 500414

ISIN allotted by National Securities Depository Limited and Central Depositories

Securities Limited for Equity Shares : INE064A01026

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

As on 31 March 2010, the distribution of Company’s shareholding was as follows: -

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

UPTO - 2500 57345 98.325 12922978 12.801

2501 - 5000 517 0.886 1971721 1.953

5001 - 10000 254 0.436 1965680 1.947

10001 - 20000 96 0.165 1429847 1.416

20001 - 30000 54 0.093 1339062 1.326

30001 - 40000 14 0.024 477556 0.473

40001 - 50000 11 0.019 503610 0.499

50001 - 100000 14 0.024 952490 0.944

100001 AND ABOVE 17 0.029 79387056 78.64

TOTAL 58322 100.00 100950000 100.00

STOCK PERFORMANCE

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

Month High Low

Apr-09 12.90 8.02

May-09 22.15 10.45

Jun-09 23.10 14.80

Jul-09 16.80 14.00

Aug-09 17.50 14.15

Sep-09 18.70 15.45

Oct-09 22.10 16.10

Nov-09 20.70 17.20

Dec-09 21.90 18.00

Jan-10 31.50 20.00

Feb-10 27.40 21.25

Mar-10 31.10 22.55

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DEMATERIALISATION OF SHARES

Dematerialization of shares: The Company appointed M/s Alankit Assignments Limited as depository registrar and signedtripartite agreements with NSDL/CDSL to facilitate dematerialization of shares. Shares received for dematerialization aregenerally confirmed within a maximum period of two weeks from the date of receipt, if the documents are clear in allrespects. There are 33977 no. of shareholders holding their shares in dematerialized form, which represent 21.86% of thepaid up capital of the Company.

PLANT LOCATION

Timex Group India Limited,

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

Address for correspondence:

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

B. NON MANDATORY

REMUNERATION COMMITTEE

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

CORPORATE POLICY MANUAL

The Timex Group has a Corporate Policy Manual outlining the policies applicable to the Group Companies so that it

promotes ethical and moral behavior in all its business activities. Employees are free to report a violation of any law,

mismanagement, gross waste or misappropriation of funds, a substantial and specific danger to public health and safety, or

an abuse of authority without fear of retribution or even can 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 compliance line, toll free 24 hours a day. The Corporate Policy Manual is available on Timex group website

at below stated link.

http://intranet.timexgroup.com/

The Company also has in place a “Women’s Committee” since 01 October 2003, to take care of cases of sexual harassment in

workplace. This committee is chaired by a woman running an independent NGO and is assisted by a team of women employees.

AUDIT QUALIFICATIONS

During the year under review, there were no audit qualifications 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 Board of Directors consists of professionals with expertise in the respective fields. They endeavor to keep

themselves updated with the global economic changes and various legislations. They attend various workshops and

seminars to keep themselves abreast with the changing business environment.

20

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

The Board of DirectorsTimex Group India LimitedNew Delhi

CERTIFICATION TO THE BOARD PURSUANT TO CLAUSE 49(V) OF THE LISTING AGREEMENT

This is to certify that;

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

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

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

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

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

(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 tothe financial statements; and

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

V.D.Wadhwa Ananda MukherjeeManaging Director CFODated: 27 May, 2010

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

I hereby confirm that:

The Company has obtained from all the members of the Board and Senior Management, Affirmation that they havecomplied with the Code of Conduct in respect of the financial year 2009 -2010.

Sd/-V.D.WadhwaManaging Director

21

CERTIFICATE

To the Members of Timex Group India Limited

We have examined the compliance of the conditions of Corporate Governance by Timex Group of IndiaLimited, for the financial year ended on 31 March , 2010 as stipulated in Clause 49 of the Listing Agreement ofthe said Company entered with Bombay Stock Exchange.

The Compliane of the conditions of Corporate Governance is the responsibility of the management. Ourexamination was limited to procedures and implementation thereof, adopted by the Company for insuring thecompliances of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion onthe financial statements of the Company.

In out opinion and to the best of our information and according to the explanations given to us and therepresentation made by the Directors and the management, we certify that the Company has complied with theconditions of Corporate Governance 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 efficencyor effectiveness with which the management has conducted the affairs of the Company.

For K.K. MALHOTRA & CO.Company Secretaries

Date: 27 May, 2010 K.K. MALHOTRAPLACE: NEW DELHI C.P. No: 446

22

Auditors’ Report

To the Members of

Timex Group India Limited

1. We have audited the attached Balance Sheet of Timex Group India Limited (‘the Company’) as at 31 March 2010,the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 (‘the Order’) issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure astatement 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 and belief werenecessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appearsfrom our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are inagreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with bythis report comply with the accounting standards referred to in sub-section (3C) of Section 211 of theCompanies Act, 1956, to the extent applicable;

(e) on the basis of written representations received from the directors as on 31 March 2010 and taken on recordby the Board of Directors, we report that none of the other directors of the Company is disqualified as on 31March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956;

(f) managerial remuneration of Rs.1,019 thousands paid by the Company is in excess of the amount approvedby the Central Government. The application of the Company to the Central Government for the necessaryapproval in this regard is pending. In the absence of Central Government approval, we are unable tocomment on the impact of this payment on the profit for the year and on the reserves and surplus as at the endof the year. (Refer to note 7 of Schedule 17)

(g) subject to our comments in para (f) above, in our opinion, and to the best of our information and accordingto the explanations given to us, the said accounts give the information required by the Companies Act, 1956,in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2010;

(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 ended on thatdate.

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

Kaushal KishorePlace: New Delhi PartnerDate: 27 May 2010 Membership No.: 090075

23

Annexure referred to in para 3 of the Auditors’ report to the members of Timex Group India Limited on the financialstatements for the year ended 31 March 2010

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details andsituation of fixed assets.

(b) As explained to us, the Company has a regular programme of physical verification of its fixed assets by whichall fixed assets are verified in a phased manner over a period of two years. According to this programme, theCompany has verified a portion of its fixed assets during the year. In our opinion, this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of its assets. As informedto us, no material discrepancies were noticed on such verification.

(c) In our opinion, and according to information and explanations given to us, the fixed assets disposed offduring 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 andstocks lying with third parties, have been physically verified by the management during the year. In ouropinion, the frequency of such verification is reasonable. For stocks lying with 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 for the physicalverification of inventories followed by the management are reasonable and adequate in relation to the size ofthe 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 the Company ismaintaining proper records of inventories. As confirmed to us, the discrepancies noticed on physicalverification of inventories as compared to book records were not material and have been properly dealt within the books of account.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans,secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section301 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 the explanationthat purchases of certain items of inventories and fixed assets are for the Company’s specialised requirements andsimilarly certain goods and services sold are for the specialised requirements of the buyers and suitable alternativesources are not available to obtain comparable quotations, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business with regard to purchase of inventories and fixed assetsand with regard to the sale of goods and services. Further, on the basis of our examination and according to theinformation and 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 of contracts orarrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register requiredto be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us and having regard to theexplanation in para (iv) above, the transactions made in pursuance of contracts and arrangements referred toin para v(a) above and exceeding the value of Rs 5 lakh with any party during the year have been made atprices which are reasonable having regard to the prevailing market 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 an internal auditsystem commensurate with the size and nature of its business.

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

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records

24

of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory duesincluding Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service tax, Customs duty,Excise duty, Investor Education and Protection Fund, Wealth tax and other material statutory dues havegenerally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect ofProvident Fund, Employees’ State Insurance, Income tax, Sales tax, Service tax, Customs duty, Excise duty,Investor Education and Protection Fund, Wealth tax and other material statutory dues were in arrears as at31 March 2010 for a period of more than six months from the date they became payable.

There were no dues on account of cess under section 441A of the Companies Act, 1956 since the date fromwhich the aforesaid section comes into force has not yet been notified by the Central Government.

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

Name of the Nature of Amounts Amounts paid Period to Forum where Statute the dues (Rs. under protest which the dispute

Thousand) (Rs. Thousand) amount relate is pending

Central Excise duty 4,253 700 1995-96 to CESTAT,Act, 1944 (Cenvat Credit) 1998-99 New Delhi

Penalty 4,253

Central Excise Excise 1,630 - 1999-2000 to Supreme CourtAct, 1944 duty 2000-01

Penalty 50

Central Excise Excise duty 632 550 1992-93 and Deputy Commissioner,Act, 1944 1996-97 Central Excise

Central Sales Sales Tax 5,898 - 1994-95 Deputy CommissionerTax–Act, 1956 Commercial tax

The Kerala Sales Sales Tax 84 - 1995-96 Assistant CommissionerTax Act,1963 – Sales Tax

Tamil Nadu Sales Tax 818 - 1992-93 to CommercialGeneral Sales 1993-94 taxation officerTax Act, 1959

Andhra Pradesh Sales Tax 44 - 1995-96 Commercial taxationSales Tax officerAct, 1957

Karnataka Sales Cess 69 - 1995-96 Deputy Commissioner –Tax Act, 1957 Commercial taxes

Tamil Nadu Sales Tax 941 941 2002-03 High Court, ChennaiGeneral SalesTax Act, 1959

In respect of cess, refer to our comment in para (ix) (a).

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

(xi) According to the information and explanations given to us, the Company has not defaulted in repayment of dues toits bankers. The Company did not have any outstanding dues to any financial institutions or debenture holdersduring the year.

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

25

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

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

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

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

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

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

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

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

(xxi) According to the information and explanations given to us, In relation to a sales transaction for the year ended 31March 2009, the Company has during the year noticed misappropriation of Rs. 625 thousand by an ex-employee.The Company has taken appropriate action and has recovered the amount from the ex-employee. (Refer to note 27of schedule 17). Based on the audit procedures performed and according to the information and explanations givento us, no other fraud on or by the Company has been noticed or reported during the year

For B S R & Co.

Chartered Accountants

Registration No: 101248W

Kaushal Kishore

Place: New Delhi PartnerDate: 27 May 2010 Membership No.: 090075

26

The Schedules referred to above form an integral part of the financial statements.

As per our report attached

For B S R & Co. For and on behalf of the Board

Chartered Accountants

Firm Registration No: 101248W

Kaushal Kishore Kapil Kapoor V D Wadhwa Ananda MukherjeePartner Vice-Chairman Managing Director CFO & Vice PresidentMembership No.: 090075 (Finance & IT)

Place: New DelhiDate: 27 May 2010

BALANCE SHEET

as at 31 March 2010(Rs. in thousands)

Schedule As at As at31 March 2010 31 March 2009

SOURCES OF FUNDSShareholders’ fundsShare capital 1 511,950 511,950Reserves and surplus 2 90,842 76,702

602,792 588,652Loan fundsUnsecured loans 3 - 60,260

602,792 648,912APPLICATION OF FUNDSFixed assets 4Gross block 346,832 355,371Accumulated depreciation (219,173) (209,727)Net block 127,659 145,644Capital work-in-progess 2,624 2,102

130,283 147,746Current assets, loans and advancesInventories 5 323,679 248,686Sundry debtors 6 628,092 603,012Cash and bank balances 7 112,038 56,963Other current asset 8 - 9,238Loans and advances 9 99,773 96,206

1,163,582 1,014,105Current liabilities and provisions 10

Current liabilities 579,822 455,734Provisions 111,251 57,205Net current assets 472,509 501,166

602,792 648,912Significant accounting policies 16

Notes to the accounts 17

27

The Schedules referred to above form an integral part of the financial statements.

As per our report attached

For B S R & Co. For and on behalf of the BoardChartered Accountants

Firm Registration No: 101248W

Kaushal Kishore Kapil Kapoor V D Wadhwa Ananda MukherjeePartner Vice-Chairman Managing Director CFO & Vice PresidentMembership No.: 090075 (Finance & IT)

Place: New DelhiDate: 27 May 2010

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2010 (Rs. in thousands)

Schedule Year ended Year ended31 March 2010 31 March 2009

INCOMESales 1,341,051 1,273,798Less: Excise duty (20,787) (23,515)Net sales 1,320,264 1,250,283Service income 35,589 50,798Net income from operations 1,355,853 1,301,081Other income 11 44,856 18,557

1,400,709 1,319,638EXPENDITUREMaterials consumed and movements infinished goods and work-in-progress . 12 745,113 608,218Personnel cost 13 148,486 150,475Other expenses 14 423,799 504,475Depreciation and amortisation 4 22,881 23,415Interest 15 1,679 6,646

1,341,958 1,293,229

Profit for the year before tax and exceptional items 58,751 26,409Exceptional item*-Profit from sale of business (Refer to note 5 of schedule 17) - 63,533

Profit for the year before tax 58,751 89,942Less: Fringe benefit tax - 5,773Less: Minimum alternate tax* 12,518 9,628

Profit for the year 46,233 74,541Balance brought forward 41,577 (32,964)Profit available for appropriation 87,810 41,577Less: Proposed dividend 27,431 -Less: Tax on proposed dividend 4,662 -

Profit carried forward 55,717 41,577

Basic and diluted earning per share before exceptionel items 0.14 0.18(net of tax) (Rs.) (face value Rs.1)Basic and diluted earning per share after execeptionel items (Rs.) 0.14 0.74(face value Rs.1)(Refer to note 6 of schedule 17)*Information on discontinued business 17 (5,24)Precision Engineering DivisionProfit before taxation from operations - 5,298Income tax expense relating to the above - 600Profit on disposal of discontinued business (pre-tax) - 63,533Income tax expense relating to the above disposal - 7,198

Significant accounting policies 16Notes to the accounts 17

28

Schedules forming part of the accounts

(Rs. in thousands)

As at As at31 March 2010 31 March 2009

1 . Share capital

Authorised

1,250,000,000 (previous year 1,250,000,000) equity shares of Re. 1 each 1,250,000 1,250,000

45,000,000 (previous year 45,000,000) preference shares of Rs. 10 each 450,000 450,0001,700,000 1,700,000

Issued, subscribed and paid-up

100,950,000 (previous year 100,950,000) equity shares of Re. 1 each,fully paid up. 100,950 100,950

2,500,000 (previous year 2,500,000), 0.1% non cumulative redeemable 25,000 25,000non convertible preference shares of Rs. 10 each, fully paid up*

15,700,000 (previous year 15,700,000), 2.9% cumulative redeemable non 157,000 157,000convertible 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*** 229,000 229,000

511,950 511,950

* Maturity period for redemption of preference shares is ten years from the date of allotment i.e. 25 March 2003,with an option to 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 option to the Company of an earlier redemption after 27 March 2006. The coupon rate has beenrevised to 7.1% with effect from April 1, 2009.(Refer to note 4 of schedule 17).

*** Maturity period for redemption of preference shares is ten years from the date of allotment i.e. 21 March 2006,with an option to the Company of an earlier redemption after 21 March 2008. The coupon rate has beenrevised to 7.1% with effect from April 1, 2009.(Refer to note 4 of schedule 17).

Of the above:

- 75,645,100 (previous year 75,645,100) equity shares of Re. 1 each are held by Timex Group Luxury Watches B.V.,the holding company.

- All preference shares issued by the Company are held by Timex Group Luxury Watches B.V., the holding company.

2 . Reserves and surplus

Share premium account 35,125 35,125

Balance in profit and loss account 55,717 41,577

90,842 76,702

3 . Unsecured loans

Loans from banks:

- Cash credit and overdraft facilities * - 10,260

- Other short term loans - 50,000

- 60,260

* Timex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amounting toRs. 178,000 thousand (previous year Rs. 178,000 thousand) to the bankers of the Company as a guarantee foruse of cash credit and overdraft facilities.

29

As at As at31 March 2010 31 March 2009

5. Inventories

(at the lower of cost and net realisable value)

Raw materials and components [including goods-in-transit Rs.7,845thousand (previous year Rs. 2,233 thousand)] 113,273 91,782Work-in-progress 29,324 12,095Finished goods [including goods-in-transit Rs. 6,617 thousand(previous year Rs.11,564 thousand)] 180,662 144,466Stores and consumables 420 343

323,679 248,686

6. Sundry debtors *(Unsecured and considered good, unless otherwise stated)

Debts outstanding for a period exceeding six months- Considered good 88,861 62,178- Considered doubtful 34,966 28,709

Other debts, considered good 539,231 663,058 540,834 631,721Provision for doubtful debts (34,966) (28,709)

628,092 603,012

* Refer to note 18 of schedule 17.

7 . Cash and bank balancesCash in hand 324 360Cheques in hand 9,022 42,946Balances with scheduled banks:

- Current accounts 60,037 13,502

4: Fixed assets

(Rs. in thousands)

Gross block Depreciation/amortisation Net block

Description As at 31 Additions Deletions* As at 31 Upto 31 For the Deletions Upto 31 As at 31 As at 31 March 2009 March 2010 March 2009 Period /adjustment* March 2010 March 2010 March 2009

Tangible assets

Leasehold land 15,480 - - 15,480 476 165 - 641 14,839 15,004

Buildings 33,402 - - 33,402 2,105 1,116 - 3,221 30,181 31,297

Leasehold improvements 17,960 268 2,754 15,474 12,739 3,061 1,781 14,019 1,455 5,221

Plant and machinery 212,490 88 8,957 203,621 154,807 5,786 8,247 152,346 51,275 57,683

Office equipment 8,503 349 234 8,618 1,567 1,412 21 2,958 5,660 6,936

Furniture and fixtures 29,583 4,721 5,585 28,719 13,466 6,987 3,109 17,344 11,375 16,117

Computer equipment 37,149 2,107 313 38,943 23,928 4,215 277 27,866 11,077 13,221

Total tangible assets 354,567 7,533 17,843 344,257 209,088 22,742 13,435 218,395 125,862 145,479

Intangible assets

Computer softwares 803 1,772 - 2,575 639 139 - 778 1,797 165

Total intangible assets 803 1,772 - 2,575 639 139 - 778 1,797 165

Grand Total 355,370 9,305 17,843 346,832 209,727 22,881 13,435 219,173 127,659 145,644

Previous Year 612,647 24,422 281,698 355,371 414,158 23,415 227,846 209,727 145,644 198,489

Capital Work in Progress 2,624 2,102

130,283 147,746

(Rs. in thousands)* Also refer to note 5 of schedule 17.

30

As at As at31 March 2010 31 March 2009

- Fixed deposit accounts 42,655 155

[includes Rs. 155 thousand (previous year Rs. 155 thousand)pledged with sales tax authorities] 112,038 56,963

8 . Other current asset

Dues relating to sale of business # - 9,238

- 9,238

# Refer to note 5 of schedule 17.

9 . Loans and advances

Secured, considered good- Vehicle loans to employees* 442 576

Unsecured, considered good- Loans and advances to employees** 933 994- Advances recoverable in cash or in kind or for 52,874 59,458value to be received**

- Balances with customs and excise authorities 12,205 13,229- Advance tax 33,319 21,949

99,773 96,206

* Secured by hypothecation of respective vehicles.

** Refer to note 19 of schedule 17.

10 . Current liabilities and provisions

Current liabilitiesSundry creditors - others* 565,423 439,030Other current liabilities 14,399 16,704

579,822 455,734* Refer to note 3 of schedule 17.ProvisionsGratuity 8,612 7,901Leave encashment 10,787 9,884Warranties** 12,723 4,698Minimum alternate tax 31,844 19,326Fringe benefit tax [net of advance tax of Rs. 22,628 thousand (previousyear Rs. 22,340 thousand)] 275 563Proposed dividend 27,431 -Tax on proposed dividend 4,662 -Sales return** 14,917 14,833

111,251 57,205** Refer to note 23 of schedule 17.

11 . Other incomeInterest income

- on dues from customers 969 933- on deposits with banks (gross) 635 27[Tax deducted at source Rs. 57 thousand (previous year Rs. 8 thousand)]- others - 23

Exchange gain (net) 21,064 -

31

As at As at31 March 2010 31 March 2009

Liabilities/provisions no longer required written back 17,500 10,381Rental income 1,540 1,878Miscellaneous income 3,148 5,316

44,856 18,55812 . Materials consumed and movements in finished

goods and work-in-progress *Raw materials and components consumed * 787,700 545,678Excise duty 18,939 29,502Less: Excise duty recovered 20,787 (1,848) 23,515 5,987Purchase of watches for resale 12,686 100,743Decrease/(increase) in inventories of finishedgoods and work-in-progressOpening stock

- Work in progress 12,095 17,727- Finished goods 144,466 106,978

156,561 124,705Less: Stock transferred on divestment of Precision

Engineering Division- Work in progress - 659- Finished goods - 11,675

- 12,334Closing stock

- Work in progress 29,324 12,095- Finished goods 180,662 144,466

209,986 (53,425) 156,561 (44,190)745,113 608,218

* Refer to note 13 of Schedule 1713 . Personnel cost

Salaries, wages and bonus 126,601 124,147Contribution to provident and other funds 8,492 8,579Workmen and staff welfare 12,620 14,526Gratuity 773 3,223

148,486 150,475

14 . Other expenses

Advertising, marketing and brand building expenses 179,321 183,227Warranty 19,463 8,245Selling and distribution 37,386 41,740Power and fuel 6,077 12,077Repairs and maintenance:

- buildings 852 1,133- plant and machinery 1,873 3,796- others 3,195 4,217

Rent 33,201 37,440Rates and taxes 13,696 16,307Insurance 2,073 2,100Travelling 33,995 41,048Communication 8,453 12,804Bank charges 1,516 2,050

32

As at As at31 March 2010 31 March 2009

Legal and professional 16,277 17,077Commission 16,066 15,810Purchased services 14,687 15,126Provision for doubtful debts 8,739 6,000Bad debts written off 1,673 6,086Less: Provision held (1,673) - (6,086) -Advances written off - 456Loss on sale/retirement of fixed assets 3,454 2,288Stores and consumables 764 3,574Exchange loss (net) - 48,119Miscellaneous expenses * 22,711 29,841

423,799 504,475* includes director’s sitting fees Rs. 760 thousand(previous year Rs. 900 thousand)

15 . InterestInterest on bank overdrafts and short term loans 1,679 6,646

1,679 6,646

SCHEDULE - 16SIGNIFICANT ACCOUNTING POLICIES

1. Background

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

The Company’s business consists of manufacture and trade of watches and rendering of related after sales service.The Company provides Technology and International Taxation support services to certain group companies.

2. Basis of preparation of financial statements

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

3. Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities on the dateof the financial statements and the reported amounts of revenues and expenses during the reporting period. Examplesof such estimates include estimated provision for doubtful debts, warranties, future obligations under employeeretirement benefit plans and estimated useful life of fixed assets. Differences between actual results and estimatesare recognised prospectively in the year in which the actual results are known or materialised. Any revision toaccounting estimates is recognised in accordance with the requirements of the respective accounting standards.

4. Fixed assets and depreciation

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

Depreciation on tangible assets, other than leasehold improvements, is provided under the straight line methodover the useful life as estimated by the management or the derived useful life as per Schedule XIV of the Companies

33

Act, 1956, whichever is shorter. Depreciation on the following categories of fixed assets is provided at rates that arehigher than the corresponding rates prescribed in Schedule XIV:

• Plant and machinery (including office equipment) at rates ranging from 4.75% per annum to 100% perannum based on technical evaluation.

• Furniture and fixtures at the rate of 20% per annum.

• Tools and moulds are fully depreciated in the year of manufacture / purchase.

Depreciation on additions is provided on a pro-rata basis from the date of acquisition/installation.

Depreciation on sale/deduction from fixed assets is provided for upto the date of sale/adjustment, as the casemay be.

Leasehold 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 office equipment,leasehold improvement, IT equipment and furniture and fixture and provided accelerated depreciation thereonamounting to Rs. 3,230 thousand (previous year Rs. 281 thousand).

5. Impairment

The carrying amounts of assets are reviewed at each balance sheet date in accordance with Accounting Standard –28 on ‘Impairment of Assets’ to determine whether there is any indication of impairment. If any such indicationexists, the recoverable amount of the asset is estimated. An impairment loss is recognised whenever the carryingamount of an asset or cash generating unit exceeds its recoverable amount. Impairment losses are recognised in theprofit and loss account. An impairment loss is reversed if there has been a change in the estimates used to determinethe recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does notexceed the carrying 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 all costs incurredin bringing the inventories to their present location and condition.

In determining the cost, the weighted average cost method is used. Fixed production overheads are allocated on thebasis of normal capacity of production facilities. Finished goods and work-in-progress include appropriate share ofallocable overheads.

Finished goods held for the purpose of demonstration are amortised over a period of three years after deducting 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 as short-termemployee benefits. Benefits such as salaries, wages and bonus, etc. are recognised in the profit and loss account inthe period in which the employee renders the related service.

Cost of accumulating compensated absences that are expected to be availed within a period of 12 months from theyear-end are recognised when the employees render the service that increases their entitlement to future compensatedabsences. Cost is computed based on past trends and is not discounted.

34

Cost of non-accumulating compensated absences continues to be recognised when absences occur. Cost of othershort term employee benefits continues to be recognised on accrual basis based on the terms of employmentcontract 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 Scheme have entrustedthe administration of the Scheme to the Life Insurance Corporation of India (LIC). Annual contribution to the LICis 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 ascertained based onactuarial valuation at the year end using the Projected Unit Credit Method, which recognises each period of serviceas giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up thefinal obligation. The obligation is measured at the present value of the estimated future cash flows. Actuarial gainsand losses are recognised immediately in the profit and loss account.

The Provident Fund is administered by trustees of an independently constituted Trust recognised by the Income-taxAct, 1961. Contributions, including shortfall, if any, to the Trust are charged to the profit and loss account on anaccrual basis. As the provident fund scheme has a guaranteed return linked with that under EPF Scheme, 1952, thesame has been considered as a defined benefit plan. (Also refer to note 25 of schedule 17)

Other long term benefits

Cost of long term benefit by way of accumulating compensated absences that are expected to be availed after aperiod of 12 months from the year end are recognised when the employees render the service that increases theirentitlement to future compensated absences.

8. Revenue recognition

Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer.The amount recognised as sale is inclusive of excise duty and excludes sales tax and trade and quantity discounts.Revenue from services is recognised on rendering of services to customers, on an accrual basis.

Interest income is recognised on a time proportion basis.

9. Foreign currency transactions

The Company accounts for effects of differences in foreign exchange rates in accordance with Accounting Standard– 11, “The Effects of Changes in Foreign Exchange Rates”, notified by the Companies (Accounting Standards)Rules, 2006. Foreign exchange transactions are recorded using the exchange rate prevailing on the date of thetransaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised inthe profit and loss account of the year.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at theexchange rates on that date and the resultant exchange differences are recognised in the profit and loss account.

10. Warranties

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

11. Taxation

Income tax expense comprises current tax/fringe benefit tax (that is amount of tax for the year determined inaccordance with 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 or credit and thecorresponding deferred tax liability or deferred tax asset is recognised using the tax rates that have been enacted orsubstantially enacted as at the balance sheet date. Deferred tax assets are recognised only to the extent there isreasonable certainty of realisation. Such assets are reviewed at each balance sheet date to reassess realisation.However, where there are carried forward losses or unabsorbed depreciation under taxation laws, deferred tax assetsare recognised only if there is virtual certainty of realisation of such assets. (Also refer to note 20 of schedule 17).

35

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

12. Leases

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

13. Other Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event and it is probablethat it would involve an outflow of resources and a reliable estimate can be made of the amount of such obligation.Such provisions are not discounted to their present value and are determined based on the management’s estimationof the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheetdate and adjusted to reflect management’s current estimates.

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

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possibleobligation may result in or involve an outflow of resources. When no present or possible obligation exists and thepossibility of an outflow of resources is remote, no disclosure is made.

14. Earnings per share

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

SCHEDULE - 17NOTES TO THE ACCOUNTS

(Rs. in thousands)

As at31 March 2010 As at 31 March 2009

1. (a) Capital commitments

(i) Estimated amount of contracts remaining to beexecuted on capital account and not provided for(net of advances) 781 144

(b) Contingent liabilities

(Rs. in thousands)

As at 31 March 2010 As at 31 March 2009(i) Claims against the Company not

acknowledged as debtsa) Sales tax 7,854 7,903b) Excise duty 10,333 10,333c) Customs duty 779 779d) Income tax 6,676 -e) Others 12,081 2,742

(ii) Bills discounted 38,719 4,074

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2. The Timex Global Services Division of the Company renders information technology and finance support servicesto its overseas group companies. The expenditure incurred by the Division is recovered from the group companiesat a mark up of 10% on costs, with reimbursement of specified expenses, and forms part of the service income.

3. Based on the information presently available with the management, there are no dues outstanding to micro andsmall enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006 as at 31 March2010 (previous year Rs. Nil).

4. The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs.10each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until31 March 2009 was waived off as per the consent of the holders of these preference shares vide their letter dated 15March 2009. The coupon rate applicable to these series of preference shares have been revised to 7.1% effective 1April 2009 till the date of maturity.

5. Pursuant to shareholders’ approval via Postal Ballot, the Precision Engineering Division of the Company wasdivested on a slump sale basis to Timex Group Precision Engineering Limited, a fellow subsidiary Company w.e.f.1 November 2008 for a consideration of Rs. 130,438 thousand, including Rs. 9,238 thousand for working capitaladjustment as on date of transfer of risk and reward i.e. 1 November 2008 (‘effective transfer date’) of the business.Profit on sale of above (shown as an exceptional item in Profit and Loss Account of the previous year) amounted toRs 63,533 thousand. The balance consideration receivable amounting to Rs. 9,238 thousand as at the end of March,31 2009 were included in Other Current Asset in Schedule 8. The related operations of the Division upto October31, 2008 were included in the financial statements as “discontinued business”.

6. Earnings per share

The computation of basic/diluted earnings per share is set out below:

Year ended Year ended31 March 2010 31 March 2009

Profit as per profit and loss account (Rs. in thousands) 46,233 74,541

Less: Preference dividend and tax thereon (Rs. in thousands) 32,093 29

Net profit for the period from ordinary activities attributable toequity shareholders (Rs. in thousands) – (A) 14,140 74,512

Exceptional item:Profit from sale of business(Net of Tax) - 56,335

Net profit for the period (before exceptional items) ( net of tax)attributable to equity shareholders(Rs. in thousands) – (B) 14,140 18,177

Basic/weighted average no of equity shares outstanding duringthe year – (No. in thousands.) – (C) 100,950 100,950

Nominal value of equity shares – Rs: 1.00 1.00

Basic /diluted Earning per share (Rs.)

- From ordinary activities (including exceptional items)- (A)/(C) 0.14 0.74

- Before exceptional items - (B)/(C) 0.14 0.18

7. Managerial Remuneration *

(Rs. in thousand)

Particulars Year ended 31 March 2010 Year ended 31 March 2009

Salaries and other allowances 5,463 776

Perquisites 720 159

Sitting fees 760 900

Total 6,943 1,835

37

* Does not include expenses towards gratuity and leave encashment since the same are based on actuarialvaluation carried out for the Company as a whole. Includes Rs. 1,019 thousand as managerial remuneration inthe current year which is subject to approval by the Central Government.

8. Related parties

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

Description of Relationship Name of the Party

Ultimate Holding Company Timex Group B.V.Holding Company Timex Group Luxury Watches B.V (formerly Timex

Watches B.V).

b. Other related parties with whom transactions have taken place:

Description of Relationship Name of the Party

Fellow Subsidiaries Timex Group B.V. T/A Mersey ManufacturersFralsen Horlogerie S.A.TMX Limited NV

TMX Limited NV(International Sales Division) Timex Corporation (Germany)

Timex Corporation (Middlebury)Opex S.A.Timex Limited NVTimex Group UKTimex Nederland B.V.Timex Group USA Inc.Timex Group Luxury Watches B.V.(Ferragamo)Tiempo, S.A. de. C.VTimex Group Precision Engineering Limited (TGPEL)

Key Management Personnel Gopalratnam Kannan, Managing Director (Resignedw.e.f 29 April, 2010

38

c. Transactions with related parties:(Rs. in thousands)

Party IT Purchase Reimbursements Service Sale of Sale of Sale of Payable ReceivableSupport of goods Paid Received Income Capital goods businessexpenses goods unit

UltimateholdingcompanyTimex - - - - 162 - - - - 6,284Group B.V. - - - - 4,371 - - - - 6,927

HoldingcompanyTimex Group - - - - - - - - - 1,181Luxury - - - - 391 - - - - 1,335Watches B.V.

FellowsubsidiariesTimex - 2,600 - - - - - - 472 -Group USA Inc. - 14,432 - - 782 - - - 8,291 1,066

Timex Group - 1,029 - 19 - - - - 28 18B.V. T/A - 693 12 - - - - - 414 -MerseyManufacturers

Timex 6,065 478 - 176 23,987 - - - 17,316 71,551Corporation 8,598 - 55 56 30,783 - - - 12,552 48,334(Middlebury)

TMX Limited - 149,258 326 155 - - - - 218,346 6,846NV - 67,270 - - - - 1,027 - 173,759 7,039

Timex Nederl - - - - - - - - 1,621 -and B.V. - - - - - - - - 1,832 -

Timex - 80 - - - - - - 13 -Group UK - 79 - - 479 - - - 25 -

Timex Group - 2,871 - - - - - - 98 -Luxury Watches - 3,789 - - - - - - 4,354 -B.V.(Ferragamo)

TMX Limited - 7 573 - - - 2,831 - 550 5,348NV - 72 - 794 - - 2,106 - - 3,024(internationalsales division)

Timex Group - 2,339 4,107 - 9,782 - - - 5 -Precision - 906 33,470 25,677 2,131 6,883 - 130,438 488 10,459EngineeringLimited

Others - 274 - - - - - - 1,974 767- 626 - - 7,219 - 31 - 2,210 780

Current year figures are in bold.

39

(Rs. in thousands)Transactions with key management personnel: Year ended Year ended

31 March 2010 31 March 2009Remuneration (refer to note 7 also) 6,183 935Loan given during the year - 311Loan refunded during the year 178 133Receivable as at year end - 178Note:Timex Group Luxury Watches BV, the holding company, has provided a standby letter of credit amounting to Rs.178,000 thousand (previous year Rs. 178,000 thousand) to the bankers of the Company as a guarantee for use ofcash credit and overdraft facilities.

9. Payment to auditors (including service tax):(Rs. in thousands)

Year ended Year ended31 March 2010 31 March 2009

(a) Statutory audit 1,655 1,655(b) Tax audit 193 193(c) Limited review 1,741 1,741(d) Other services 727 727(e) Reimbursement of out of pocket expenses 160 160

Total 4,476 4,47610. Capacity and production

Class of goods Unit of Quantity Year ended Year ended31 March 2010 31 March 2009

Installed Actual Installed Actualcapacity *** production capacity *** production

Watches * Nos. (thousand) 1,714 1,661 @ 1,714 1,456Plastic components ** Nos. (thousand) - - # 27,952(Refer note below)

Tools and moulds ** Nos. - - # 87(Refer note below)

* include production at Parwanoo and Baddi in Himachal Pradesh.** excludes plastic components, tools and moulds produced for captive consumption. (Refer to note 5 also)*** Installed capacities are as certified by management and have not been verified by the auditors, being a

technical matter.# in view of the items of varying size and nature that can be manufactured by the Company’s facilities, the

installed capacity is not ascertainable.@ includes 163 thousand watches valued at Rs 117,605 thousand on account of watches received at Baddi for

repackaging which are liable for excise duty.

11. Details of salesClass of goods Unit of Quantity Year ended Year ended

31 March 2010 31 March 2009Quantity Value Quantity Value

Rs. Thousands* Rs.thousands*Watches Nos. (thousand) 1,632 1,282,081 1,546 1,165,667Plastic components Nos. (thousand) - - 27,292 ** 22,813Tools and moulds Nos. - - 87 36,334Components and others 58,970 48,984

1,341,051 1,273,798* Values are inclusive of excise duty ** Does not include 3,035 thousands (Nos) of plastic components transferred on sale of Precision Engineering

Division.

40

12. Details of inventories of finished and traded goodsClass of goods Unit of Quantity Year ended Year ended

31 March 2010 31 March 2009Quantity Value Quantity Value

Rs. Thousands Rs.thousandsWatches Nos. (thousand) 338 180,662 303 144,466Plastic components Nos. (thousand) - - - -

180,662 144,46613. Details of raw materials and components consumed

Class of goods Unit of Quantity Year ended Year ended31 March 2010 31 March 2009

Quantity Value Quantity Value Rs. Thousands Rs.thousands

Movements Nos. (thousand) 1,510 157,003 1,456 141,688Straps Nos. (thousand) 1,508 145,740 1,457 136,273Other materials * 484,957 267,716

787,700 545,678* No individual items account for 10 per cent or more of the total value of the raw material consumed. Itsimpracticable to provide quantity information in view of varying items diverse in size and nature.

14. Details of purchases of trading goodsClass of goods Unit of Quantity Year ended Year ended

31 March 2010 31 March 2009Quantity Value Quantity Value

Rs. Thousands Rs.thousandsWatches Nos. (thousands ) 6 12,686 53 86,942Alarm Clocks Nos. (thousands ) - - 76 13,801

12,686 100,74315. Details of imported and indigenous raw materials, components, spares and consumables consumed

Class of Goods Year ended Year ended31 March 2010 31 March 2009

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

Raw materials and componentsImported 392,390 49.81 248,784 45.59Indigenous 395,310 50.19 296,894 54.41Total 787,700 100.00 545,678 100.00Stores and consumablesImported 11 1.49 1,884 52.71Indigenous 753 98.51 1,690 47.29Total 764 100.00 3,574 100.00

16. Value of imports on CIF basis(Rs. in thousands)

Year ended Year ended31 March 2010 31 March 2009

Components and spares 311,746 204,838Purchase of watches 83,514 53,115Consumables 9 1,885Total 395,269 259,838

41

17. Expenditure and earnings in foreign currencya. Expenditure in foreign currency (on accrual basis)

(Rs. in thousands)

Year ended Year ended31 March 2010 31 March 2009

Traveling 1,385 49Software license fees 6,065 8,598Sales and marketing 1,799 3,108Others - - 1,760

9,249 13,515

b. Earnings in foreign currency (on accrual basis)

(Rs. in thousands)

Year ended Year ended31 March 2010 31 March 2009

Exports on F.O.B basis 47,382 41,946Service income 24,149 44,026

71,531 85,972

18. Sundry debtors include the following, which are due from bodies corporate under the same management, as definedunder Section 370 (1B) of the Companies Act, 1956.

(Rs. in thousands)

As at As at31 March 2010 31 Mar 2009

Timex Group, B.V. 6,284 6,927Timex Group Luxury Watches B. V. 1,181 1,335Timex Deutschland G.M.B.H 9 9Timex Do Brasil Comercio E Industria Ltd. 7 7Timex Hong Kong Limited 705 705Timex Corporation 71,551 48,334TMX Limited NV 6,846 7,039Timex Hungary Limited 22 22Timex Group USA, Inc. - 1,066TMX Limited NV (International Sales Division) 3,024 3,024Tiempo, S.A. de C.V. 32 37Timex Group Precision Engineering Limited - 1,221

19. Loans and advances include dues from Managing Director of the Company Rs. Nil thousand (previous year Rs. 178thousand). The maximum amount outstanding during the year was Rs. 178 thousand (previous year Rs. 311 thousand)

20. 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.

42

The major components of deferred tax assets and liabilities are as follows:(Rs. in thousands)

As at As at31 March 2010 31 March 2009

Deferred tax liabilitiesDepreciation 10,930 18,105

Deferred tax assetsGratuity 2,861 2,685Leave encashment 3,583 3,360Provision for doubtful debts 11,616 9,758Provision for warranty 4,227 1,597Provision for sales returns 4,995 5,042Disallowance under section 35DD of the Income-tax Act, 1961 200 1,208Carried forward depreciation 153,334 159,730Carried forward tax losses 74,152 136,179Total 254,968 318,329Deferred tax asset recognised (to the extent of deferred tax 10,930 18,105liability above)Net deferred tax asset/ (liability) Nil Nil

21. 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. 30,450 thousand (previous year Rs. 33,088 thousand). The future minimum lease paymentsunder non-cancellable operating leases are as follows:

(Rs. in thousands)Future lease payments due As at As at

31 March 2010 31 March 2009Within one year 24,371 28,504Later than one year and not later than five years 44,899 75,903

Total 69,270 104,407

22. The Company has given certain items of plant and machinery on operating lease, with an option of renewal at theend of the lease term. However, the lease agreements entered into with the lessees do not provide for any escalation.Lease rentals recognised during the year in the profit and loss account amount to Rs. 1,540 thousands (previousyear Rs. 1,878 thousand). The future lease payments receivable under non-cancellable operating leases are asfollows:

(Rs. in thousands)

Future lease payments receivable As at As at

31 March 2010 31 March 2009

Within one year 780 693

Later than one year and not later than five years 869 -

Total 1,649 693

The gross block, accumulated depreciation and depreciation charge for the year on plant and machinery givenunder operating lease arrangements are as under:

43

(Rs. in thousands)As at As at

31 March 2010 31 March 2009Gross block 85,327 85,327Accumulated depreciation 6,7252 64,068Depreciation charge for the year 3,184 3,272

23. 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 provisionduring the year:

(Rs. in thousands)

Year ended Year ended31 March 2010 31 March 2009

Opening provision 4,698 6,134

Add: provision created during the year 19,462 8,245

Less: utilised during the year (11,437) (9,681)

Closing provision 12,723 4,698

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

(Rs. in thousands)

Year ended Year ended31 March 2010 31 March 2009

Opening provision 14,833 14,440

Add: provision created during the year 3,678 22,609

Less: utilised during the year (3,594) (22,216)

Closing provision 14,917 14,833

24. i) Segment information

Following divestment of Precision Engineering Division in 2008-09 (Refer to note 5), the Company’s businesssegment comprises of :

- Watches : Manufacturing and trading of watches;

- Timex 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 located within India; and

- Revenues outside India (Overseas) include sale of watches manufactured in India and service income earnedfrom customers located outside India.

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

Besides the normal accounting policies followed as described in Schedule 16, segment revenues, results, assets andliabilities include the respective amounts directly identified to each of the segments and amounts allocated on areasonable basis.

44

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

Watches Timex Global Discontinued Total Services business *

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09

Segment revenues

External sales (gross) 1,352,492 1,217,397 24,149 44,026 - 60,460 1,376,641 1,321,883

Excise duty 20,787 18,016 - - - 5,499 20,787 23,515

External sales (net) 1,331,705 1,199,381 24,149 44,026 - 54,961 1,355,854 1,298,368

Other business related income 22,188 18,166 - - - - 22,188 18,166

Total revenue 1,353,892 1,217,547 24,149 44,026 - 54,961 1,378,042 1,316,534

Results

Segment results 57,730 51,171 1,683 1,798 - 5,298 59,413 58,267

Unallocated income - - - - - - 21,064 3,077

Unallocated expenses - - - - - - 21,651 28,316

Profit before interest, taxand exceptional items 58,826 33,028

Interest expense - - - - - - 1,679 6,646

Interest income - - - - - - 1,604 27

Profit before taxand exceptional items 57,730 51,171 1,683 1,798 - 5,298 58,751 26,409

Exceptional items - - - - - - - 63,533

Profit before tax 57,730 51,171 1,683 1,798 - 5,298 58,751 89,942

Income taxes

- Fringe benefit tax - - - - - - - 5,773

- Minimum alternate tax - - - - - - 12,518 9, 628

Net profit 46,233 74,541

Other information

Assets

Segment assets 10,55,969 1,011,335 80,499 60,399 - - 1,136,468 1,071,734

Unallocated corporate assets - - - - - - 157,397 90,117

Total assets 1,293,865 1,161,851

Liabilities

Segment liabilities 625,370 489,679 1,412 2,283 - - 626,782 491,962

Unallocated corporate liabilities - - - - - - 64,291 81,238

Share capital (including share - - - - - - 602,792 588,651premium amount and balance inprofit and loss account)

Total liabilities 1,293,865 1,161,851

Others

Capital expenditure 5,426 17,121 - - - 43,93 5,426 21,514

Unallocated capital expenditure - - - - - - 3,879 2,908

Total capital expenditure 9,305 24,422

Depreciation 18,835 16,778 1005 878 - 2,394 19840 20,050

Unallocated depreciation - - - - - - 3,041 3,365

Total depreciation 22,881 23,415

* Precision Engineering Business (Refer note 5 of schedule 17)

45

Secondary segment reporting (by geographical location of customers):(Rs. in thousands)

India Outside India Total

2009-10 2008-09 2009-10 2008-09 2009-10 2008-09Segment revenue 1,302,013 1,230,262 74,489 86,272 1,376,501 1,316,534Segment assets 1,197,779 1,038,298 96,086 123,553 1,293,865 1,161,851Capital expenditure 9,305 24,422 - - 9,305 24,422

25. Employee benefits

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

(Rs. in thousands)2009-10 2008-09

Change in defined benefit obligations during the yearPresent value of obligation at beginning of the year 7,901 7,108Service cost 1,309 1,280Interest cost 720 724Actuarial (gain)/loss (1,177) 1,490Liabilities transferred on divestment of business - (1,977)Benefit paid (140) (724)Present value of obligation at end of the year 8,612 7,901

Present value of unfunded obligation and liability recognisedin Balance Sheet

Present value of defined benefit obligation as at the end of the yearand liability recognised in the Balance Sheet 8,612 7,901

Gratuity cost recognised in the profit and loss account for the year

Service cost 1,309 1,281Interest cost 720 724Actuarial (gain)/loss (1,177) 1,490Net gratuity cost 851 3,495

Assumptions

Discount rate- For Timex Global Services 8.30% 7.85%- Others 8.30% 7.90%Expected rate of salary increase- For Timex Global Services 10% 10%- Others 8% 8%The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority,promotions and other relevant factors. Discount rate is based on market yields prevailing on government securitiesfor 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 its inability to reliably measure providentfund liabilities. Accordingly, the related information has not been disclosed.

46

26. The Company’s foreign currency exposure on account of payables/ receivables not hedged is as follows:(Amounts in thousands)

As at As At31 March 2010 31 March 2009

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

Payables- USD 5,402 244,540 3,967 204,614- GBP 0.2 13 0.3 25- Euro 20 1,254 20 1,396- HKD 1,272 7,571 332 2,193- CHF 2 98 97 4,354Receivables- USD 2,097 92,397 1,645 82,472

27. In relation to a sales transaction for the year ended 31 March 2009, the Company has during the year noticedmisappropriation of Rs. 625 thousand by an ex-employee. The Company has taken appropriate action and hasrecovered the amount from the ex-employee.

28. Previous year’s figures have been re-grouped / reclassified, wherever necessary, to conform to current year’sclassification. The previous year figures are not comparable as those include tool room business operation till 31October 2008.

29. Schedules 1 to 17 form an integral part of the financial statements.

For Timex Group India Limited

Kapil Kapoor V.D. Wadhwa Ananda MukherjeeVice-Chairman Managing Director CFO & Vice President

(Finance & IT)

Place: New DelhiDate : 27 May 2010

47

CASH FLOW STATEMENT

for the year ended 31 March 2010(Rs. in thousands)

Schedule Year ended Year ended31 March 2010 31 March 2009

A. Cash flows from operating activitiesNet profit before tax and exceptional items 58,751 26,409

Adjustments for:

- Depreciation and amortisation 22,881 23,415

- Interest income (1,604) (983)

- Interest expense 1,679 6,646

- Loss on sale/retirement of fixed assets 3,454 2,288

Operating profit before working capital changes 85,161 57,775Adjustments for:

- (Increase)/decrease in sundry debtors (25,080) (111,566)

- (Increase)/decrease in other current assets - (9,238)

- (Increase)/decrease in loans and advances 7,882 (20,212)

- (Increase)/decrease in inventories (74,993) (61,095)

- Increase/(decrease) in current liabilities and provisions 133,940 (22,442)

Cash generated from operations 126,910 (166,778)

- Income taxes paid (net) (11,369) (12,348)

- Fringe benefit tax paid (288) (7,341)

Net cash from operating activities 115,253 (186,467)B. Cash flows from investing activities

Purchase of fixed assets (9,827) (26,524)

Proceeds from sale of fixed assets 954 6,341

Proceeds from sale of business (refer to note 5 of schedule 17) 9,238 121,200

Interest received 1,525 1,038

Net cash used in investing activities 1,890 102,055C. Cash flows from financing activities

Net proceeds from short-term borrowings - 55,677

Net repayment of short-term borrowings (60,260) -

Interest paid (1,808) (6,517)

Net cash used in financing activities (62,068) 49,160Net cash flows [increase/(decrease)] during the year (A+B+C) 55,075 (35,252)Cash and cash equivalents - opening balance 56,963 92,215Cash and cash equivalents - closing balance * 112,038 56,963Significant accounting policies 16

Notes to the accounts 17

The above cash flow statement has been prepared under the Indirect method set out in Accounting Standard 3 “Cash Flow Statement”specified in the Companies (Accounting Standard) Rules, 2006.

* Of the above, an amount of Rs. 155 thousand (previous year Rs. 155 thousand) is pledged with sales tax authorities and is notavailable for use by the Company.

As per our report attached

For B S R & Co. For and on behalf of the Board

Chartered Accountants

Firm Registration No: 101248W

Kaushal Kishore Kapil Kapoor V D Wadhwa Ananda MukherjeePartner Vice-Chairman Managing Director CFO & Vice PresidentMembership No.: 090075 (Finance & IT)

Place: New DelhiDate: 27 May 2010

48

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. Registration detailsRegistration No. 3 3 4 3 4 State Code 5 5

Balance Sheet date 3 1 0 3 1 0Date Month Year

II. Capital raised during the year (Amount in rupees thousands)Public issue Rights issue

N I L N I LBonus issue Private placement

N I L N I LIII. Position of mobilisation and deployment of funds(Amount in rupees thousands)

Total liabilities Total assets1 2 9 3 8 6 5 1 2 9 3 8 6 5

Sources of fundsPaid up capital Reserve & surplus

5 1 1 9 5 0 9 0 8 4 2

Secured loans Unsecured loansN I L N I L

Application of fundsNet fixed assets* Investments

1 3 0 2 8 3 N I L

** including capital work in progressNet current assets Miscellaneous expenditure

4 7 2 5 0 9 N I L

Accumulated lossesN I L

IV. Performance of Company (Amount in rupees thousands)Turnover Total expenditure

1 4 0 0 7 0 9 1 3 4 1 9 5 8

Profit before tax Profit after tax5 8 7 5 1 4 6 2 3 3

Earning per share in rupees Dividend rate %0.14 7.1% for cummulative preference share

0.1% for non cummulative preference shareV. Generic names of three principle products/services of the company (as per monetary terms)

Item code No.(ITC Code) 9 1 0 2 1 9

Product description W R I S T W A T C H E S

For Timex Group India Limited

Kapil Kapoor V.D. Wadhwa Ananda MukherjeeVice-Chairman Managing Director CFO & Vice President

(Finance & IT)

Place: New DelhiDate : 27 May 2010