timex group india ltd Directors report

To the Members of Timex Group India Limited

The Directors are pleased to present the Thirty fifth Annual Report and Audited Statement of Accounts for the year ended 31^st March 2023.

FINANCIAL RESULTS AND PERFORMANCE

(Rs. in Lakhs)

FINANCIAL RESULTS	2022-23	2021-22
Revenue from operations (including other income)	38,378	26,554
Profit before Interest and Depreciation	3859	869
Less: Interest	532	190
Less: Depreciation	360	357
Profit before tax	2967	322
Tax expense [Deferred Tax] *	(1685)	-
Profit after tax	4652	322
Total comprehensive income	4656	302

*The Company has recognised one-time deferred tax assets as at March 31, 2023 in the financial results for the year ended March 31, 2023 as it is considered probable that future taxable profits will be available.

Financial year 2022-23 has been the best ever year for the company. The business continued to move ahead on its high growth trajectory and as a result various operational and financial parameters were at their best ever. The Revenue from Operations (including other income) and the profit before tax have grown by 44.5% and 821% over the previous year.

During the year, all sales channels, except defence and institutional sales, have grown well over the previous year. Trade channel, including distribution, dealers, showroom and key accounts, continues to be the largest revenue contributor. This channel has shown remarkable growth over the last year supported by successful new product launches from Timex brand, tactical marketing initiatives and return of consumer back to retail after end of covid impact. E-commerce and OEM channels also have shown good growth over the last year and have supported profitability and cash flow well. Luxury segment has also grown significantly over the last year. Addition of significant fashion brands such as Guess and Gc, focussed approach of E-commerce channel growth supported by exclusive products and improved marketing initiatives including exciting social media influencer campaigns, growth in OEM segment and higher consumer traction for Timex brand watches have really helped achieving this growth.

The business continued to witness challenges including global geo-political factors including Russia-Ukraine conflict which resulted in currency depreciation, steep increase in raw material cost, shortage and cost increase of electronic components for smart watches etc. However, the impact of these challenges was managed well with tactful planning and execution.

We continued to move ahead with our defined strategy of focussing on analog watches as the core with smart technology products driving growth. The core analogue business will grow with the strong product portfolio with popular brands across the value chain. While Timex will continue to be our prime focus, Helix and TMX will grow exponentially at the bottom of the pyramid. The strong array of brands in fashion segment including Guess, Gc, Nautica, Furla, Ted Baker, Adidas Originals, Philipp Plein and UCB, will help in increasing our market share and give ample choice to the consumer. Versace and Salvatore Ferragamo will cater to the consumer in the luxury segment.

During the year, we continued to offer new product launches, developed innovative new product lines and introduced new international brands for the Indian market. New products were launched at higher price points thereby increasing the average price point. Timex continues to be relevant for consumer with our diverse range of watches with traditional and contemporary designs to cater to different preferences and budgets, providing consumers with exceptional craftsmanship, unique design elements, and innovative features.

One of the fastest growing collections, the Timex Fria collection features feminine and organic shapes, with an emphasis on exploring new crystal cuts and bracelet designs. The watches balance functionality with fashion, serving as both a timepiece and a statement piece of jewellery. The Fria collection received an overwhelmingly positive response from the market, which is a testament to its innovative design and attention to detail. Overall, the Timex Fria collection showcases the companys commitment to offering a diverse range of products that cater to different tastes and preferences, while also incorporating the latest trends and styles in the watch industry.

The Timex Groups international range of watches were very well received by the market and had positive feedback from the users. The Timex Group partnered with #tide to create the Waterbury Ocean Collection as a sustainability initiative, transforming single-use plastic into a durable watch, using ocean material collected by fishermen, sorted, cleaned, shredded, and recrafted in a Swiss facility using carbon-neutral transport and solar power. The collections timepieces commit to reducing the consumption of fossil fuels, creating employment for local communities, improving the underwater habitat, and more.

Timex Groups collaboration with Fortnite created the Race Against TimeX, a watch-infused virtual world where watches symbolize empowerment, providing players with additional speed and powers that give them a competitive edge. Timex Group also entered Web3 with the Bored Ape Yacht Club, the worlds largest and most profitable NFT project to date, offering a collection of single-edition watches and corresponding digital twin NFTs, exclusively available to members of the Bored Ape and Mutant Ape community.

In collaboration with Stranger Things, Timex Group created a spine-chilling collaboration that features otherworldly inspiration across three of the companys most iconic cult classics—Timex Camper, Timex T80, and Timex Atlantis.

Our youth fashion brand Helix continued to offer stylish and affordable watches for young adults. Helix watches are designed to be functional yet fashionable, with a variety of styles and colors to choose from. The brands collection includes watches for both men and women, with features such as water resistance, multi-functions, and colorful dials. Helix watches are perfect for everyday wear or for adding a touch of style to any outfit.

Our budget brand TMX performed well in Tier2/3 towns and will continue to be a pillar of success for the company in these markets. With introduction of new segments such as kids, fashion, and workwear, TMX has carved a good trajectory for itself and is poised to grow well.

The fashion and luxury segment forms a significant part of the overall watch market and is growing well driven by factors like rising disposable income, increasing exposure to international brands, and growing demand for high-value products etc. With addition of new international fashion brands in our portfolio last year, the focus has been on growing this segment and increase our market share. We moved ahead in this direction with a focussed approach on network expansion, business development with dutyfree outlets, product launch events, influencer collaborations and investment in visual merchandising. These efforts coupled with new product introductions and product lifecycle management supported by attractive consumer offers and promotions have helped increasing our reach to the relevant consumer.

Guess brand watches continued to establish its fashion authority through introduction of pathbreaking iridescent plating for both men and women, disruptive designs in new royalty collection for men and continuously elevating the collection architecture through new product introduction in already loved Phoenix Watches which continue to contribute significantly in Guess business from mens category. Gc saw introduction of radically new case designs. Similarly, other new products were launched considering the tastes and preferences of Indian consumers, while maintaining the Brand DNA and design directions.

We have seen increasing demand for tech wearables across the country. We believe that this segment will help in faster growth. The Company offered a robust tech product portfolio to meet the demand of the fitness conscious Indian consumer at a variety of price points and feature concepts which were well received in the market. With the right mix of performance and style, the Companys tech portfolio presents compelling product choices for the Indian consumer of today. As a ‘Future Fit Company, made in India technology products will remain a focus of the Supply Chain strategy. Going forward, the Company plans to completely move the smart watch assembly to India, increase the frequency of new products launches and lower the price points to be more competitive and relevant in this segment.

Marketing initiatives, packed with out-of-the-box narrative and execution heralded this years brand campaigns. Given the constant evolution in the marketing landscape post pandemic, we increased our efforts towards digital marketing and newer marketing formats like influencer marketing. Top of the funnel activities led by Digital, PR and influencer marketing were supported with continuous effort to deliver delightful in-store shopping experience. During the financial year, we extended the global association of the Netflix series "Stranger Things" in India and launched the "Given For Generations" campaign across digital, outdoor and in-store branding. Timex was also supported with long term brand affinity driving activities like a visit of select journalist to the Baddi Factory so they can experience the charm of Timex watch making expertise first-hand. Timex Annual showcase event was conducted successfully in New Delhi. We also sponsored key fashion events like Mysore India Fashion week and India Beach Fashion Week (IBFW) to drive relevant brand association. Further, E-commerce and E-tail performance marketing saw a renewed focus given the consumer behavior shift. We invested in high ROI marketing spends across Tata Cliq Luxury, Myntra, Amazon and Flipkart. Recognition of Timex as the best watch brand in the world by Rolling Stones re-affirmed the high quality product and service offerings over the last 169 years across the world.

IPL is a festival of cricket with over half a billion viewership. This is an ideal event to associate with in order to achieve wide publicity in a short span of time. As a part of increasing our share of voice, we sponsored the defending champions of IPL, the Gujarat Titans. This association is further being amplified across marketing and media initiatives in the form of our campaign - "Timex - Choice Of The Titans". The campaign is running across mediums including television (sponsorship of Indias Best Dancer on Sony TV), Radio City - Cricket Ka Blockbuster, Jio Cinema OTT ads during match live streaming, Outdoor hoardings across 10 cities including IGI airport and sports page road block print ads in Times Of India. This is also supported with GT collab social media posts, inorganic boosting of posts and influencer activation. This has also helped to create excitement among trade partners by sponsoring free match tickets and other memorabilia for them.

The OEM business vertical has grown well during the year and has become a significant revenue contributor. The Company is currently working as an OEM partner with Flipkart and Myntra for some of the most prestigious consumer brands in the industry. Growth and business development of OEM vertical is an important focus area. We are sure that with our state-of-the-art facilities coupled with our expertise in product design, supply chain, after sales services etc., all available at a single point, we provide a very good business model as an OEM partner.

Dividend

In view of the accumulated losses, the Board of Directors has not recommended any dividend for this year. The Company does not propose to transfer any amount to General Reserve on account of accumulated losses.

CHANGES IN SHARE CAPITAL

There was no change in the equity share capital during the year under review.

The Company issued fresh 25,00,000, 0.09% Non Cumulative Redeemable Non Convertible Preference shares of Rs.10/- each for an aggregate amount of Rs. 2,50,00,000 to the Holding Company for the purpose of redemption of existing 25,00,000,

0.1% Non Cumulative Redeemable Non Convertible Preference shares of Rs. 10/- each aggregating to Rs. 2,50,00,000 held by the Holding Company. Consequent to these transactions, there was no change in the paid up amount of the preference share capital.

MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC CONDITIONS AND OUTLOOK

The Indian economy has been growing at the fastest pace among the major economies irrespective of the global headwinds. The growth has been majorly backed by private sectors spending, and intensified government efforts to improve the countrys infrastructure. As per National Statistical Organisation (NSO), Indias strong economic performance is expected to be 7% by the end of 2022-23.

With the Reserve Bank of India (RBI) adopting stricter policy stance since the beginning of the FY 2022-23 in view of the inflationary pressures, the Indian economy has started to experience the easing of the inflationary grip while the inflation stood moderate during the third quarter. This positive transformation in the economy is aiding the demand scenario in the domestic market and enabling the countrys economic wheel to roll in a geared momentum. The nations demand situation is improving with control of inflation and helping the economy grow faster.

The underlying economic fundamentals of the Indian economy are strong, and it is expected to continue its movement on the high growth trajectory irrespective of the short-term turbulence caused by global factors. Governments the growth-enhancing policies and schemes, such as Production-Linked Incentive and the Governments push towards self-reliance, and increased infrastructure spending are gradually leading to a stronger multiplier effect on jobs and income, higher productivity, and more efficiency, thereby, leading to accelerated economic growth. Also, the emphasis on manufacturing in India, various Government incentives such as rising services exports on the back of stronger digitisation and technology transformation drive across the world are anticipated to aid the economys growth. Moreover, India is expected to take the centre stage as a preferred alternate investment destination consequent to the geopolitical conflicts between Russia and Ukraine. India is now a preferred choice of increased number of global inhouse centres and multinationals over Eastern European markets to shift their current operations or open new facilities.

RBI is anticipating inflation to move closer to the moderate level in the first half of 2023-24 with the inflationary forces coming under control and the domestic demand more likely to increase during the period. With the impact of external headwinds, the growth might decline to 6.1% in 2022-23 and is anticipated

to move up to 6.8% in 2023-24. With increased Government spending announced in Union Budget 2023-24 and rise in private consumption and investment, economic activity will further boost demand.

OVERVIEW OF WATCH INDUSTRY

The financial year 2022-23 has been a good year for the overall watch industry where the industry recovered well from the impact of COVID-19 and low consumer demand. The consumer returned back to the retail markets and the increasing demand was visible across the channels.

The overall watch market size is expected to grow well with the increasing share of fashion and luxury segment. The smart wearable product market is growing at an exponential rate. The E-commerce channel is expected to have a larger pie in the overall channel build-up.

GROWTH DRIVERS OF THE COMPANY

The financial year 2022-23 has seen the best ever performance for the Company. The Company is focussed to maintain the growth momentum and achieve sustainable growth with its strategic projects both for organic and inorganic growth. In line with the growth plan and to keep pace with the fast-changing business environment, the Company has identified the following key growth drivers:

Growing E-commerce channel and increasing points of Sale in other channels:

The E-Commerce channel has emerged as the preferred shopping channel and has been growing at a fast pace over the years. The factors such as increasing internet users, growing online shopper base, growing comfort for online shopping, enhanced shopping experience and e-com platforms serving majorly the whole of the country have been contributing to its growth and will help it grow faster than other channels.

The Company has focus on increasing its market share in e-commerce segment through launch of exciting products through all key portals in E-commerce channel, omni channel, direct online sales through brand website, increasing and improving presence on all major e-commerce portals, offering more fashion and luxury brand products and international range of products on this channel, engaging with consumer through exciting marketing initiatives alongwith special range of products, new launches, exciting co-lab products etc. in addition to e-commerce on third party portals, the Company will also continue its focus on growing the business through its brand website as it has its own long term advantages such as brand authenticity and consumer loyalty.

Trade channel, including distribution, dealers, showroom and key accounts continues to be our largest and profitable channel. Our focus will be on increasing our market share by increasing our reach along the length and breadth of the country. This channel will be grown by increasing the points of sale, increasing and improving the product line at shop floors, introduction of exciting new products range, international product range, giving consumer more choice with fashion and luxury brand products, better and improved marketing initiatives alongwith improved shop floor fixtures and furniture to give better shopping experience to the consumer etc. We will continue to grow Tier II / III markets with exciting range of affordable brands and products alongwith localised marketing interventions. Our wide variety of products ranging from mass to fashion to luxury and from Indian to international brands will help grow this segment. We plan to completely revamp our retail business model which will help growing our business through exclusive stores. Improved marketing initiatives, branding, consumer engagement and international range of products will help growing our business in the large format stores.

In a significant development and in line with our strategy of increasing our retail footprint in the country, Timex Group has acquired "Justwatches" brand which is a renowned watch retail brand known for its unmatched multi brand watch retailing services. Under this deal, we will be taking over all Justwatches stores across the country and also the online webstore www. justwatches.com and will run them to reach to our consumer through our authorised franchisees. These premium stores located in luxury malls across the country will offer watches of all Timex Group Brand at one place giving ample choice to the consumer. This deal fits perfectly in Timexs mission to stay close to its consumer. More than a decade old, Justwatches has been a favourite destination for watch lovers for years. It has successfully delivered an excellent retailing ambiance, constant innovation, and service to its strong consumer base over all these years. Supported by its online shopping platform, Justwatches has been able to truly provide its consumers with an omnichannel shopping experience.

Product portfolio:

The Company boasts one of the most formidable portfolios of watch brands in the Indian market, bolstered by its global organizational structure and an extensive depth of knowledge and experience in design and manufacturing.

The Companys impressive range of products spans a diverse array of categories, from luxurious statement timepieces to practical and functional everyday watches, as well as cutting- edge tech wearables. This comprehensive product portfolio is not only compelling but also purposefully designed to facilitate sustained growth in an ever-evolving business environment.

The Company will continue to launch heritage products and trend-based collections under the Timex brand, including such celebrated collections as the Waterbury, Marlin, and Q series. These sought-after collections have rapidly gained consumer favour and acclaim, and the Company remains dedicated to launching more such captivating collaborations.

Over the last few years, the Company has built a strong portfolio in the international fashion and luxury brands. With Guess, Gc, Nautica, Furla, Ted Baker, Adidas Originals, Philipp Plein, Plein Sports and UCB, this segment is well-positioned to capitalize

on the growing demand for fashion and luxury brands in India and is expected to continue to be a significant contributor to the companys growth in the years to come. The Company will continue to further strengthen up its brand portfolio by launching popular international lifestyle and fashion brands in India to cater to the high demand in the Premium Fashion and Bridge to Luxury segments driven by upper middle-class customers and the continued affinity for international brands. The enhanced fashion brand portfolio will help gain better visibility and counter share in retail formats.

Womens statement watch collection, Fria, will be further enhanced with fresh, innovative, and attractive designs. This segment remains a focus area for the Company and will be strengthened with product and marketing in the seasons to come.

Demand for Tech Wearables is growing exponentially. The Company has its presence in this segment with a robust product pipeline across the brands Timex and Helix to meet the demands of the fitness conscious Indian consumer at a variety of price points and feature concepts. The Company will further boost its technology product road map with more value for money products and additional technological features at competitive price points.

With the emergence of Generation Z as a driving force behind digital and market trends, the Company continues to expand its youth portfolio with on-trend seasonal launches that are bolstered by targeted social media marketing campaigns, ensuring that it remains top-of-mind among digitally-savvy young consumers.

In our view, Tier-2 and smaller towns are emerging as the new centres of economic revival and growth, and as such, are expected to fuel sustainable growth. The Company has recognized this trend and is poised to expand its mass brand, TMX, with a flurry of exciting new product launches.

The initiatives in product are driven by key insights on consumer and market and enabled by the deep technological and infrastructure strength of the Company. Projects to segment the companys offerings into distinct categories based on specific characteristics or attributes are underway. With the goal of creating a more targeted marketing strategy that addresses the unique needs and preferences of each segment, allowing for more effective communication and product development, this strategic project will drive the new product introductions in the seasons to come.

Innovation remains one of the cornerstones of the Companys growth strategy, with a steadfast focus on delivering products that leave a mark on the minds of consumers at a variety of price points. Looking ahead, the Company will continue to drive innovation while keeping a keen eye on emerging trends, all the while maintaining a strong connection with its rich heritage and legacy.

Increasing Marketing initiatives:

Timex is an authentic American watch brand known for innovation, craftsmanship and a heritage of par excellence. All the marketing initiatives will continue to reinforce these perceptions of the brand in India as well. The brand has remained relevant for ages, and we will continue to position it for a newer and evolving consumer base for future relevance. We will continue to leverage digital channels in order to portray the brands uniqueness through iconic global products. We will continue to focus on smart digital strategies to increase customer engagement.

The company is on a growth path and we will look to increase our share of voice in media to support the new launches planned through the year. On one hand we will look at high decibel media visibility through associations like IPL, and celebrity endorsement to help drive top of funnel objectives. On the other hand, we will drive relevant point of sale messaging and Visual Merchandising excellence to ensure that our bottom of funnel objectives and conversions continue to grow. We will continue to keep the brand top of mind of consumers through ATL, digital marketing, visual merchandising, tactical consumer initiatives and in-store visibility.

Sponsoring the defending champions of Indian Premier League (IPL), the Gujarat Titans, will go a long way in increasing our share of voice in a short span of time. Our campaign - "Timex - Choice Of The Titans" will further amplify this association across marketing and media initiatives. The campaign is running across mediums including television (sponsorship of Indias Best Dancer on Sony TV), Radio City - Cricket Ka Blockbuster, Jio Cinema OTT ads during match live streaming, Outdoor hoardings across 10 cities including IGI airport and sports page road block print ads in Times Of India every weekend till. This is also supported with GT collab social media posts, inorganic boosting of posts and influencer activation.

We will follow this up with launch of a global marketing campaign that is targeted at a newer audience and Gen Z and has a radical thought that will differentiate and position Timex in a unique way for the coming years. We will be looking to support this campaign with celebrity endorsement to ensure mass acceptability. These initiatives will ensure a strong media momentum for the brand thus paving the way for supporting newer launches and global ranges in India. We will be launching Timex UFC collection, Sports Collection and new ranges from Fria apart from global lines like Waterbury, Marlin and Q Timex.

We will also use seasonal consumer demand affinity to plan campaigns on both online and offline channels. Festive and gifting periods for offline will continue to be drivers of spikes in revenue while market place led big event days will support the spikes in online channels.

Through our strategic marketing initiatives, we will continue to keep the brand relevant for a new age audience and build a consumer pipeline for the future. Apart from the focus on Timex, we will also improve the imagery of our mass access brands and work towards ensuring they gain a larger share of the market. TMX will be promoted basis sharper consumer insights to ensure it resonates even more strongly with the consumers in our target segment. More initiatives would be taken to build awareness of fashion brands amongst target segment to take advantage of growing demand for fashion brands and drive future sales. Further, re-launching of ‘iConnect brand supported with strong marketing initiatives will help targeting and growing our tech segment with renewed energy.

Strengthening our manufacturing capability:

Our assembly facility in Baddi, Himachal Pradesh is one of the most advanced, well-equipped and sophisticated manufacturing facility. This facility is fully capable to fulfil all our product requirements. Baddi facility is fully equipped with advanced state of the art technology and equipment and well experienced watch makers to produce high quality watches. The facility has best of the class certifications such as SA 8000:2014 and ISO 45001:2018. It can assemble a wide array of exciting products ranging from basic Quartz Analog and Digital models including Ana-Digi watches to the technically advanced watches including the Automatic , Intelligent Quartz , Activity trackers and connected products ( Smart watches) and some of them having the Indiglo night light feature also.

The Baddi facility has very well supported the OEM business vertical with high quality watches. These watches have been well appreciated by partners and ultimate consumer. We will continue to explore more such opportunities to leverage the Baddi facility.

Internal and External stakeholder support:

We are confident of maintaining our growth momentum with our team of highly skilled, experienced and motivated employees. The Company provides best of the class facilities, professional work culture and a friendly and fully engaged work place to its employees which has resulted in low attrition rate and retention of experienced manpower. The Company has a strong network of partners for both backend and frontend integration. These resources are crucial for our growth and we will continue to invest / improve them further.

OPPORTUNITIES AND CHALLENGES

The Indian watch industry has strong growth potential which is substantiated by the following factors:

1. The macro-economic factors including growth outlook of Indian economy, inflation coming under control, governments boost for increasing demand and per capita income, Indian demography, urbanization, and increasing fashion spends of Indian population, are all assuring long term growth of the country. This will boost overall consumer demand and specifically demand for more discretionary goods including watches.

2. The Indias consumption story led by the young (Millennial & Gen Z), digital savvy, low median-age (<30 years) and rising middle class consumers will help growing watch industry too.

3. Lower tier cities have huge growth potential. Consumer demand in these cities has recovered comparatively faster in the post COVID-19 pandemic times. This segment would help growing the business at faster pace.

4. Traditional analogue watch segment has ample room to grow ad majority of the Indian consumers still like to wear them compared with smart wearables.

5. New age digital sales channels such as e-commerce, online and omni channels are growing the overall watch market size exponentially.

6. With the surge in aspirational consumer with high disposable income and premiumizing across categories and the availability of international fashion and luxury brands, the watch industry is bound to grow. This will also help in improving the average prices and margins.

7. With the low wrist watch penetration in India, there is a huge untapped potential to cover.

8. With the innovative marketing and consumer engagement initiatives, smart wearables, watches and bands have been growing at an exponential pace and are expected to further grow at a fast pace and will increase the overall size of watch market.

9. The Private Labels providing affordable products, capturing gap between unbranded and branded products and high retailer margin will support in further growth of the watch industry.

10. Strategic initiatives including OEM business will focus on boosting revenue, higher capacity utilisation and reduction in overheads.

RISKS & THREATS

The Company has in place a well-defined risk management framework to identify, evaluate and assess the potential risks and challenges and determine the processes to mitigate and manage the same. The Risk Management Committee comprising of senior management executives periodically reviews and assesses the key risks in consultation with the functional managers. The potential risks to the operations are identified, evaluated, managed and monitored regularly. The Board periodically reviews the risks and suggests steps to be taken to mitigate and manage the same. The Company has identified the below specific key risks:-

• Financial Risk

1. Substantial part of the net worth of the Company has been eroded by the accumulated losses of the past years. However, the operational performance of the Company has significantly improved during the year under review and is expected to improve further with the focussed approach to strengthen the bottom line. While accumulated losses will be wiped off from profits over a period of time, the Company continues to recognize and monitor this risk closely.

2. Foreign exchange fluctuations with a falling rupee pose a risk for the Companys margins as the Company imports significant amount of material. The Company is integrating with the Timex Global supply chain and taking measures to indigenise and develop indigenous vendors which will reduce the impact of adverse exchange rate fluctuations on the Companys margins.

• External Environment

1. Baddi facility provides over 90% of the Timex watches sold by the Company. The Baddi facility in turn is dependent upon continuous supply of material from its vendors in and outside the country. Non-availability of material from these vendors may pose short term imbalance and disturbance in the supply chain. The supply chain team is regularly working on diversifying the vendor base to mitigate this risk.

2. Technology and fashion products are witnessing fast growing demand. Fitness trackers and smart watches will also continue to grow. Growth of this segment might impact analogue business. To mitigate this risk, the Company has made a solid technology product roadmap and has introduced series of such products which have seen huge success. The Company will be coming out with more technology products for the users of this category. Further, the Company has added highly renowned international fashion brands in its portfolio and will continue to add more.

3. With the increased penetration of internet, digital sales channel will grow faster. E-commerce sales, omni channel sales and online sales through the brand websites and e-retail venture are the focus areas for next level of growth. Currently, the retail channel including distribution, dealers, showroom and key accounts constitute major part of our revenue. The Company will increase its share in the online sales with its increased presence over all e-commerce portals and brand website.

4. Competition is increasing its investment in brand campaigns and is adopting price reduction techniques to disrupt the market. The Company believes that continuous innovation is key to success. Timex Group Global Design Centre located in Milan, and the Global Supply Chain organization supports the Company in creating differentiation and bringing cutting edge technology and designs to a highly competitive marketplace. By thinking and acting both locally and globally, we are constantly challenging ourselves to look at the future.

5. For OEM business, the Company is majorly dependent upon Flipkart and this business has other risks including high quantity and short lead time, low margins, pressure on production lines/ vendor capacities, impact on Timex main business on backend as well as frontend etc. This risk will be mitigated with OEM business development with other partners in apparel and retail category.

6. The world is moving towards digitization. Data has become the most important asset and has the potential to grow the business exponentially. For sustainable future growth, it is important to drive digital and encourage innovation across all functions. If the Company fails to adapt to digitalization, it may be left behind the competition and may lose business opportunities.

7. Fake / counterfeit products continue to pose challenge for the watch industry. The Industry needs to counter this collectively. The Company keeps a close watch on counterfeit products and has been regularly taking legal action against counterfeiters.

• Labour risk at Baddi plant

The labour risks at Baddi facility such as loss of trained manpower, labour movement, labour unrest, strike etc. are inherent as the facility is located in Baddi Industrial area. With more watch assembly units being set up by competition in the country, we face risk of losing our technically trained manpower. Further, it is also important to upgrade the skill set of our labour in line with the rapidly changing nature of work and skills.

We believe that our employees are our biggest asset and we need to always keep them motivated and engaged to enable them to contribute to Companys growth. We have set up well defined policies and systems for recruitment and appraisal of employees at factory. With regular on-the-job training and job rotation, we ensure that we have seamless availability of trained and skilled manpower. Employees are motivated with reward and recognition programs, employee engagement activities, welfare activities etc. The Companys environment, health and safety policies have been certified by world class certifications such as SA-8000 and ISO 45001:2018. All labour related issues are handled proactively and prompt action is taken to avoid any adverse situation.

• Other Risks

Other risks include the usual risks relating to information technology (IT), business continuity and disaster management, retention ofkey personnel, compliance of various laws, contractual obligations, risks relating to the general macroeconomic environment including risks associated with political and legal changes, changes in tax structures, commercial rules & laws. These are analyzed regularly and measures are taken to mitigate the same.

DIRECTORS

Composition

The Board of Directors comprises six (6) Directors consisting of three (3) Independent Directors, two (2) Non-Executive Directors and One (1) Managing Director.

Appointment/ Resignation from the Board of Directors/Key Managerial Personnel

Pursuant to the provisions of Section 160, 196, 197 and 198 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Deepak Chhabra was appointed as an Additional Director as well as Managing Director of the Company for a term of 3 years with effect from March 28, 2022. The Shareholders of the Company have also approved the said appointment vide postal ballot dated June 4, 2022.

Further, in accordance with Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. David

Thomas Payne retires by rotation as a Director, and being eligible, offers himself for re-appointment. The Board recommends his reappointment as a Director.

Apart from change in the Managing Director of the Company being a key managerial person, as provided above, there was no other change in the Key Managerial Personnel during the year.

Declaration by the Independent Directors

Pursuant to the provisions of Section 149(6) of the Companies Act, 2013 and Regulation 16(1 )(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Company has received declaration from all Independent Directors confirming their compliance with the criteria of independence and their independence from the management. In the opinion of the Board, the Independent Directors, fulfil the conditions of independence specified in Section 149(6) of the Act and Regulation 16(1) (b) of the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

In the opinion of the Board all Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of retail, sales and marketing, manufacturing, finance and tax, governance and risk, human resources, strategy etc. and that they hold highest standards of integrity.

All Independent Directors of the Company have registered themselves with the Independent Directors Database maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.

The Company has also received confirmation from all Independent Directors regarding their compliance with the Companys Code of Conduct during the FY 2022-23.

Number of meetings of Board of Directors

Four Board meetings were held during the financial year 2022-23 on May 26, 2022, August 4, 2022, November 1, 2022 and February 2, 2023. All directors attending the meeting actively participated in the deliberations at these meetings. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. More details of the Board meetings have been provided in the ‘Report on Corporate Governance.

COMMITTEES OF THE BOARD

The Board has constituted the following Committees pursuant to the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

4. Risk Management Committee

5. Share Allotment and Transfer Committee

More details with respect to the composition, powers, roles, terms of reference, etc. of these Committees are given in the ‘Report on Corporate Governance of the Company which forms part of this Annual Report.

NOMINATION AND REMUNERATION POLICY

The Board of Directors has, on the recommendations of the Nomination and Remuneration Committee, adopted a Nomination and Remuneration Policy which contains the process and guidelines to be followed for identification, evaluation and fixation of remuneration of directors, key managerial personnel and other employees and other matters as prescribed under the Companies Act, 2013 and Listing Regulations.

The Policy has been drafted mainly to deal with the following matters, falling within the scope of the NRC:

• to institute processes which enable the identification of individuals who are qualified to become Directors and who may be appointed as KMP and/or in senior management/ other employees and recommend to the Board of Directors their appointment and removal from time to time;

• to formulate the criteria for determining qualifications, positive attributes and independence of Directors;

• to establish evaluation criteria of Board, its Committees, individual Directors, key managerial personnel, senior management and other employees;

• to establish processes for fixation of remuneration of Directors, key managerial personnel, senior management and other employees.

The Nomination and Remuneration Policy is available on the website of the Company i.e. www.timexindia.com. It is affirmed that the remuneration paid to Directors, key managerial personnel and all other employees of the Company is in accordance with the Nomination and Remuneration Policy of the Company.

EMPLOYEE REMUNERATION

Pursuant to the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules is provided in the Annual Report, which forms part of this Report.

Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report, which forms part of this Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members ofthe Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

FORMAL ANNUAL EVALUATION

The Board has carried out performance evaluation of itself, its Committees and each of the Directors (without participation of the concerned director). Independent Directors collectively evaluated the Boards performance, performance of the Chairman and other non-independent Directors.

The performance evaluation concluded on the note that each of the individual directors, Committees and the Board as a whole, were performing efficiently and effectively and shared a common vision to turn organization goals into reality.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy which provides a mechanism for employees / Board Members and others to raise good faith concerns about violation of any applicable law/ Code of Conduct of the Company, gross wastage or misappropriation of funds, substantial or specific danger to public health and safety, abuse of authority or unethical behaviour and to protect the individuals who take such actions from retaliation or any threat of retaliation and also provides for direct access to the Chairman of the Audit Committee. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time.

Any incidents that are reported are investigated and suitable action is taken in line with the Whistle Blower Policy.

The Whistle Blowers are not denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are given in the Report on Corporate Governance and are also available on the website of the Company at the link www.timexindia.com.

POLICY ON PREVENTION OF INSIDER TRADING

In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended, the Company has framed, a) Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders, b) Code of Fair Disclosure and c) Policy on investigation in case of leak / suspected leak of unpublished price sensitive information. The Companys Code, inter alia, prohibits dealing in the shares of the Company by an insider, while in possession of unpublished price sensitive information in relation to the Company and also during certain prohibited periods.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has not given any loans or guarantees or made any investments covered under Section 186 of the Companies Act, 2013 during the year under review.

RELATED PARTY TRANSACTIONS

Pursuant to the provisions of the Companies Act 2013, the Rules there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has, on the recommendation of the Audit Committee, adopted a Policy to regulate transactions between the Company and its Related

Parties. This Policy has been uploaded on the website of the Company at www.timexindia.com.

All the related party transactions executed by the Company during the year were in the ordinary course of business, on arms length basis and in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Omnibus approval of Audit Committee is obtained at the beginning of the financial year for the related party transactions which are foreseen and repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.

No material related party transaction was entered during the financial year. Accordingly, the disclosure required under section 134(3) (h) of the Companies Act, 2013 in Form AOC-2 is not applicable to the Company. The details of the related party transactions entered during the year are given in the financial statements of the Company.

FINANCE

The Company has not invited nor holds any fixed deposits. There were no overdue / unclaimed deposits as on 31st March, 2023.

During the year under review, the Company made payment, net of credits, aggregating to Rs. 6,985 Lakh by way of Central, State and local sales taxes and duties as against Rs. 3,553 Lakh in the previous year.

SEGMENT WISE REPORTING

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

LISTING

The Equity Shares of the Company are listed on the BSE Ltd. The annual listing fee for the financial year 2023-24 has been paid to the Exchange.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has put in place adequate internal control systems, commensurate with size, scale and complexity of Companys operations to ensure compliance with policies and procedures. The Company has also adopted policies and procedures for ensuring the orderly and efficient conduct of its business, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The internal control mechanism comprises a well-defined organization, which undertakes time bound audits and reports its findings to the Audit Committee, documents policy guidelines and determines authority levels and processes.

The Audit Committee regularly reviews the systems and operations to ensure their effectiveness and implementation. The Internal Auditors and Statutory Auditors regularly attend Audit

Committee meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee is briefed about the corrective actions taken by the management on the audit observations. The Audit scope is regularly reviewed by the Audit Committee for enhancement/ modification of scope and coverage of specific areas. The Statutory Auditors review the internal financial controls periodically.

AUDITORS AND AUDITORS REPORT

a. Statutory Auditors

M/s Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), have been appointed as the Statutory Auditors of the Company by the shareholders in their 34th annual general meeting, to hold office for the second term of 5 years from the conclusion of 34th Annual General Meeting till the conclusion of 39th Annual General Meeting.

During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

The Report given by M/s Deloitte Haskins & Sells LLP, Statutory Auditors on the financial statement of the Company for the year 2022-23 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.

b. Secretarial Auditors and Secretarial Audit Report

M/s NKJ and Associates, Company Secretaries (Certificate of Practice No. 5233) have carried out the Secretarial Audit of the Company for the financial year 2022-23. The Report given by the Secretarial Auditors is annexed as Annexure A and forms integral part of this Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.

They have undertaken the audit considering all the applicable compliances as per the Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by the Secretarial Auditors has been submitted to the Stock Exchanges within 60 days of the end of the Financial Year.

During the year under review, the Secretarial Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

In terms of Section 204 of the Companies Act, 2013, the Audit Committee recommended, and the Board of Directors appointed M/s NKJ & Associates, Company Secretaries (Certificate of Practice No. 5233) as the Secretarial Auditors of the Company in relation to the financial year 2023-24. The Company has received their consent for appointment.

HUMAN RESOURCES

At Timex, we believe that our employees are our most important assets. Our experienced, talented and motivated manpower is our key to successful operations and achieving our growth plans. We are committed to hiring and retaining the best talent. Our efforts and initiatives are driven towards promoting a collaborative, transparent and participative organization culture, and rewarding individual contribution and innovation. Growth and development of the manpower is a regular focus area and we will continue to invest in this. We regularly organise training programmes to sharpen employee skills and conduct employee engagement activities to keep the employees fully motivated and engaged.

We provide good work culture and regular growth opportunities to our employees which is the main reason for low attrition rate. Our succession planning roadmap for critical roles at the senior leadership ensures seamless availability of competent talent.

Our policies are driven towards the culture of performance and meritocracy at all levels of the organisation. Smart KRAs and KPIs are agreed in the beginning of the year in line with the Companys growth strategy and plan. The goals and objectives are defined and tracked in an online performance management system. Performance appraisals are also linked with these smart goals and objectives.

As on 31st March, 2023, our team consists of 353 very efficient and dedicated employees across the country.

SIGNIFICANT CHANGE IN KEY FINANCIAL RATIOS

The Net Profit Margin was at 12.1% for the financial year ended March 31, 2023 as compared to 1.2% for the previous financial year. The ratio has improved by 896% due to improvement in operating leverage of the company with increase in revenue by 45% and PBT by 821%. Further, one-time recognition of deferred tax assets of Rs. 1684 lakhs as positively impacted this ratio.

The Operating Profit Margin of the Company was at 10.06% for the financial year ended March 31, 2023 as compared to 3.27% for the previous financial year. The ratio has improved by 207% due to improvement in operating leverage of the company with increase in revenue by 45% and Expenses increased by 35%.

The interest coverage ratio was at 6.58 for the financial year ended March 31, 2023 as compared to 2.69 for the previous financial year. The ratio has improved by 144% due to increase in the earnings before interest by 583%.

The current ratio was at 1.47 for the financial year ended March 31, 2023 as compared to 1.17 for the previous financial year. The ratio has improved by 26% due to increase in inventory and receivables as compared to previous year.

The Debt Equity ratio was at 0.41 for the financial year ended March 31, 2023 as compared to 1.53 for the previous financial year. The ratio has improved by 73% due to improvement in profitability of the company during the year. Further, onetime recognition of deferred tax assets of INR 1684 lacs as positively impacted this ratio.

The Debtors turnover ratio was at 7.60 for the financial year ended March 31, 2023 as compared to 6.11 for the previous financial year. An increase in the ratio is mainly caused due to increase of 45% in Sales of the Company, Sales in the previous year was adversely impacted due to Covid-19 Pandemic as compared to the current year.

The Inventory turnover ratio was at 2.91 for the financial year ended March 31, 2023 as compared to 3.41 for the previous financial year. An improvement in the ratio is mainly caused by sharp increase of total cost of goods sold in line with increase in sales of the company.

The return on net worth has increased from 19.4% to 77% due to improvement in profitability of the company. Further, one-time recognition of deferred tax assets of Rs. 1684 lakhs as positively impacted this ratio.

SECRETARIAL STANDARDS

The Directors state that applicable secretarial standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively, have been duly followed by the Company.

MATERIAL CHANGES

There have been no material changes and commitments affecting the financial position of the Company that occurred between the end of the financial year and the date of Directors Report of the Company i.e. May 23, 2023.

Further, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134 (3)(a) of the Act, the Annual Return as on March 31,2023 is available at the web link - https://www.timexindia.com/pdf/Timex_Draft%20Annual_ Return%202022-23.pdf

CORPORATE GOVERNANCE

As per Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a separate section on Corporate Governance together with a certificate from the practicing Company Secretary confirming compliance is set out in the Annexure forming part of this report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

As required under Regulation 34 of the Listing Regulations, the Business Responsibility & Sustainability Report is provided in a separate section and forms part of the Annual Report.

CONSERVATION OF ENERGY

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided in Annexure B to this Report forming an integral part of this report.

DEMATERIALISATION

The equity shares of the Company are being compulsorily traded in dematerialized form. As on 31st March 2023, 24,393 shareholders representing 97.64% of the Equity Share Capital are holding shares in dematerialized form.

COST RECORDS

Maintenance of cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013, is not applicable on the Company.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

With zero tolerance towards sexual harassment at the workplace, the Company has formed Internal Committees at Baddi Plant, Corporate Office, warehouse and all regional offices for prevention and prohibition of sexual harassment and redressal against complaints of sexual harassment of working women at the workplace as per Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013 read with Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Rules, 2013. These Committees have the power/jurisdiction to deal with complaints of sexual harassment of working women as per the rules specified therein. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the financial year 2022-23, no such complaint was received across the organisation. Also, there was no pending complaints either at the beginning or at end of the financial year.

During the year, the Company has complied with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013 read with Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Rules, 2013 and has formed necessary committees at all locations.

APPLICATION UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

The Company has not made any application under the Insolvency and Bankruptcy Code, 2016 during the financial year 2022-23.

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

The Company has not made any such valuation during the financial year 2022-23.

DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the directors to the best of their knowledge and ability confirm that:-

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down proper internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and;

(f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CAUTIONARY STATEMENT

Statements in the Boards Report and the Management Discussion & Analysis Report describing the Companys objectives, expectations or forecasts may be forward looking within the meaning of applicable laws. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices, raw material availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation for the support and cooperation, which the Company continues to receive from its customers, the watch trade, the New Okhla Industrial Development Authority, the Governments of Uttar Pradesh and Himachal Pradesh, the Banks / Financial Institutions and other stakeholders such as - shareholders, customers and suppliers, among others, and its employees. The Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Companys success. The Directors look forward to their continued support in future.

For and on behalf of the Board of Directors

	David Thomas Payne
Place: Connecticut, USA	Chairman
Date: 23 May, 2023	DIN: 07504820