The Company uses expected credit loss model to assess the impairment loss or gain. The Company has used a practical expedient by computing the allowance for bad and doubtful debts for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The allowance for bad and doubtful debts is based on the ageing of the days the receivables are due and the rates as given in provision matrix and Company’s historical experience for customers.

Notes

(i) The credit period allowed generally varies on sales, on case to case basis, channel to channel and on market conditions.

Terms/ rights attached to equity shares :

‘The Company has only one class of equity shares having a par value of Re. 1 (absolute amount) per share. Each holder of equity shares is entitled to one vote per share. All equity shareholders rank equally with regard to dividends and share in the Company’s residual assets. The equity shareholders are entitled to receive dividend as declared by the Company subject to payment of dividend to preference shareholders.

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

Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital:

Preference shares of all classes carry a preferential right as to dividend over equity shares. Where dividend on cumulative preference shares is not declared for a financial year, the entitlement thereto is carried forward whereas in the case of noncumulative preference shares, the entitlement for that year lapses. The preference shares are entitled to one vote per share at meetings of the Company on any resolutions of the Company directly affecting their rights. In the event of liquidation, preference shareholders have a preferential right over equity shareholders to be repaid to the extent of capital paid-up and dividend in arrears on such shares.

Also refer Note 26.A.b for arrears of fixed cumulative dividends on redeemable non-convertible preference shares.

The preference shareholders, vide their letter dated March 31, 2020, have relinquished their voting rights accrued/accruing on the preference shares in terms of second proviso to section 47(2) of the Companies Act, 2013 due to non-payment of dividend till date or during the remaining tenure of preference shares.

During the year 2017-2018, the holders of preference share capital had waived off the dividend for the financial years 201617 and 2017-2018. The Company had obtained relevant approval from the holders of preference shares and regulatory authority for the waiver of dividend up to FY 2017-18 and extension of maturity of above preference shares.

(a) The original maturity date for redemption of 1,57,00,000 13.88% cumulative redeemable non-convertible preference shares amounting Rs. 1,570 lakhs was ten years from the date of allotment i.e. March 27, 2004, with an option to the Company of an earlier redemption after March 27, 2006. These shares were due for redemption on March 26, 2014 which pursuant to the provisions of Section 106 of the erstwhile Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years i.e. till March 26, 2019 and were further extended by another five years, i.e. till March 26, 2024 (the date of maturity).

The Company has accumulated losses and does not have sufficient distributable profits for redemption of the 13.88% cumulative redeemable non-convertible preference shares (“13.88% CRNCPS”) and accumulated/unpaid dividend thereon. Accordingly, for the purpose of redemption of these preference shares aggregating Rs. 1,570 lakhs along with accumulated/ unpaid dividend of Rs. 1,304 lakhs thereon till the date of maturity (subject to deduction of withholding tax of Rs. 142 lakhs), the Board of Directors has, in its meeting held on July 14, 2023, approved the issuance of up to 2,73,15,264, 10.75% Cumulative Redeemable Non-Convertible Preference shares of Rs.10/-each at par aggregating Rs. 2,732 lakhs (“10.75% CRNCPS”), on private placement basis to M/s Timex Group Luxury Watches B.V., the holding company of the Company, in terms of Section 55(3) of the Companies Act, 2013 subject to approval of equity shareholders, Hon’ble National Company Law Tribunal, Reserve Bank of India and other authorities, as may be required. The tenure of the 10.75% CRNCPS would be 20 years, with an option with either party for an early redemption anytime. The Members of the Company have approved this matter in their Annual General Meeting held on August 23, 2023 and the Company has filed an application dated October 19, 2023 with Hon’ble National Company Law Tribunal, Delhi Bench for their approval on the above matter. Hon’ble National Company Law Tribunal has completed the hearing on this matter on February 2, 2024 and reserved the Order on this matter. The Order is still awaited. Further, the Company has filed an application with Reserve Bank of India for approval of issuance of 10.75% CRNCPS as External Commercial Borrowings and is awaiting further communication on the same.

(b) The original maturity date for redemption of 2,29,00,000 13.88% cumulative redeemable non-convertible preference shares amounting Rs. 2,290 lakhs was ten years from the date of allotment i.e. March 21, 2006, with an option to the Company of an earlier redemption after March 21, 2008. These shares were due for redemption on March 21, 2016 which pursuant to the provisions of Section 106 of the erstwhile Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years i.e. till March 21, 2021 and were further extended by another five years, i.e. till March 20, 2026.

(c) The Company has issued 3,50,00,000 5% cumulative redeemable non-convertible preference shares amounting Rs. 3,500 lakhs with maturity period of 10 years from the date of allotment i.e. February 16, 2017, with an option to the Company of an earlier redemption after February 15, 2022.

(i) 25,00,000 0.09% Non-cumulative redeemable non-convertible preference shares (0.09% NCR-NCPS) issued and allotted on November 22, 2022 on private placement basis for the purpose of redemption of 25,00,000 0.1% Non-Cumulative Redeemable Non-Convertible Preference Shares of Rs.10/- each (0.1% NCR-NCPS), which were due for redemption on March 24, 2023.

The original maturity date for redemption of 0.1% NCR-NCPS was ten years from the date of allotment i.e. March 25, 2003, with an option to the Company of an earlier redemption after March 24, 2005. These shares were due for redemption on March 24, 2013 which pursuant to the provisions of section 106 of the erstwhile Companies Act, 1956 was extended by the Company with the consent of preference shareholders by five years, i.e. till March 24, 2018 and further extended by another five years, i.e. till March 24, 2023. These 0.1% NCR-NCPS were redeemed on November 23, 2022.

The maturity date for redemption of 0.09% NCR-NCPS is five years from the date of allotment i.e. November 22, 2027, with an option with either party for an early redemption at any time. The Company has designated these preference shares as financial liabilities at FVTPL as permitted by Ind AS 109. As on date of issuance, the present value of differential between the market interest rate and actual interest rate amounting Rs. 89 lakhs are classified as deemed equity contribution.

During the year, no dividends was paid on these redeemable non-cumulative preference shares.

(ii) Cash credit facilities from banks carry interest ranging between 9.11% to 10.54% p.a (PY: 6.14% to 10.54% p.a)., computed on a monthly basis on actual amount utilised, and are repayable on demand. The cash credit facilities are backed through Standby Letter of Credit (SBLC) by Tanager Group B.V. (formerly known as Timex Group B.V.), an intermediate holding company.

Dues To micro enterprises and small enterprises

Trade payables include the following dues to micro and small enterprises covered under “The Micro, Small and Medium Enterprises Development Act, 2006” (MSMED) to the extent such parties have been identified on the basis of intimation received from the “suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006.

(i) The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

(ii) On March 31, 2023, considering the fact that the Company was making taxable profits in the recent years owing to improvements in business conditions and financial performance, the Company recognised deferred tax assets amounting Rs. 1,684 lakhs (including Rs. 1,010 lakhs in respect of unabsorbed depreciation) in the financial statements for the year ended March 31, 2023 as it is considered probable that future taxable profits will be available

(iii) On 29^th November 2019 the Company has signed Unilateral Advance Pricing Agreement (APA) with the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India wherein the Company has agreed on the methodology to be followed for determining the Arm’s Length Price of the transactions covered by the agreement. The Company has complied with the details mentioned in the agreement and has filed compliance report with the authorities on 26 ^th February 2020. The above disclosure has been considered after effect of APA, however the compliance report filed by the Company are yet to be audited / verified by the authorities.

The dividend liability on 15,700,000 2.9% cumulative redeemable non-convertible preference shares of Rs. 10 each and 22,900,000 5.4% cumulative redeemable non-convertible preference shares of Rs. 10 each, payable until 31 March 2009, was waived off as per the consent of the holders of these preference shares vide their letter dated 15 March 2009. The coupon rate applicable to these series of preference shares was revised to 7.1% effective 1 April 2009 till the date of maturity. The holders of these preference shares have further waived the dividend for the years 2012-13, 2013-14, 2014-15 and 2015-16, subject to the condition that the coupon rate for these series shall be revised from 7.1% to 13.88%. During the financial year 2016-17, the Company obtained relevant approvals from the regulatory authorities and the coupon rate applicable to these series of preference shares was revised to 13.88% effective 1 April 2016 till the date of maturity. Further, the holders of these preference shares have waived the dividend for the financial years 2016-17 and 2017-18. The dividend liability on 35,000,000 5% cumulative redeemable non-convertible preference shares of Rs. 10 each payable until 31 March 2018, was waived off as per the consent of the holders of these preference shares vide their letter dated 22 February 2018.

Thus there is no outstanding dividend on cumulative preference shares as at March 31, 2018. Also refer Note 11.B. c. The amounts shown above represents the best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately or relate to a present obligations that arise from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate cannot be made. The Company engages reputed professional advisors to protect its interests and has been advised that it has strong legal positions against such disputes.

B Commitments

a. The estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 3 Lakhs (2023: Rs. 30 Lakh).

C The Company has other commitments, for purchases / sales orders which are issued after considering requirements as per operating cycle for purchase / sale of goods and services, employee benefits. The Company does not have any long term contracts including derivative contracts for which there will be any material foreseeable losses.

D There are no amount due for payment to the Investor Education and Protection Fund under Section 125(1) of the Companies Act, 2013

E The Hon’ble Supreme Court of India vide its judgement dated February 28, 2019 and subsequent review petition has ruled in respect of compensation for the purpose of Provident Fund contribution under the Employee’s Provident Fund Act, 1952.

There is significant uncertainty as to how the liability, if any, should be calculated for the period up to February 28, 2019 as it is impacted by multiple variables, including the period of assessment, the application with respect to certain current and former employees and whether the interest and penalties may be assessed. The Management have determined that on account of the practicality of application of the judgement, the Company would not be in a position to determine the liability as of now, The Company is of the opinion that the amount cannot be reasonably estimated.

As a matter of caution, the Company has made a provision on prospective basis from the date of such ruling i.e. March 1, 2019.

1. Sale and purchase of goods and services to and from related parties and other transactions with related parties were made at arms length price.

2. All outstanding balances are unsecured and are repayable in cash. No expense has been recognised in the current or prior years for bad and doubtful debts in respect of amounts owed by related parties.

3. Tanager Group B.V. (formerly known as Timex Group B.V.), an intermediate holding company, has provided Standby Letter of Credit (SbLc) amounting to Rs. 3,780 lakhs as on March 31, 2024 (2023: Rs. 4,780 lakhs) (including unfunded limit) to the bankers of the Company for use of cash credit and overdraft facilities (including working capital loans).

The expenses incurred on account of the above defined contribution plans have been included in Note 21 “Employee Benefits Expenses” under the head “Contribution to provident and other funds

(i) Superannuation fund

The Company’s contribution paid/ payable under the scheme to the Superannuation Fund Trust, as administered by the Company is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The trustees of the scheme have entrusted the administration of the trust scheme to Life Corporation of India Limited (LIC).

(ii) Provident fund

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Provident Fund to Timex Watches Providend Fund and Recognised Providend Fund. The contributions are charged to the statement of Profit and Loss as they accrue.

(iii) Employee State Insurance fund

The Company’s contribution paid/ payable under the scheme to the Employee State Insurance is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

28.2 Defined benefit plans

Gratuity- The Company provides for gratuity for employees as per the Payment of Gratuity Act 1972. The Company operates a post-employment defined benefit plan that provides for gratuity. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half month’s salary for each year of completed service at the time of retirement/ exit. The Scheme is not funded by plan assets.

(i) These plans typically expose the company to actuarial risks such as investment risk, interest rate risk, longevity risk and salary risk.

Investment

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Risk

The present value of defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan’s liability.

Interest Risk

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in value of the liability.

Longevity Risk

The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plans liability.

The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. An actuarial valuations involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at each reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.

(viii) The average duration of the defined benefit obligation is 8 years. The expected cash out flow during the next financial year is Rs. 111 Lakhs.

(ix) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of reporting period, while holding all other assumptions constant.

28.4 Long Term incentive

On July 04, 2022, pursuant to the approval by the Board of Directors, the Company has approved Long Term Incentive Plan (LTIP) to eligible employees of the Company dependent on the Company performance over next 3 years. The Company has considered the same as Other long term employee benefits and accordingly has recorded the liability through actuarial valuation. The Discount rate used is 7.11%.

29 SEGMENT REPORTING

The Company is primarily in the business of manufacturing and trading of watches and rendering of related after sales service (“Watches”). The other activities of the Company comprises of providing information & technology support services to the group companies. The income from these other activities is not material in financial terms. The Managing Director of the Company, who has been identified as being the chief operating decision maker (CODM), evaluates the Company’s performance, allocate resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore there is no reportable segment of the Company.

31 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 31.1 Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern and provide reasonable return to the shareholders through maintaining reasonable balance between debt and equity. The capital structure of the Company consists of net debt (borrowings net of cash and cash equivalents) and total equity of the Company. Holding Company has infused capital by way of preference shares as and when needed. The Company’s management reviews the capital structure of the Company on a periodic basis. As part of review, the management considers the cost of capital and risk associated with each class of capital {refer note l.B.(xviii)}.

31.3 Financial Risk Management

The Board of directors has approved risk management policy which provides framework to identify, evaluate business risk and challenges across the company. The company has constituted risk management committee of senior management team. These policies and guidelines cover foreign currency risk, credit risk and liquidity risk. The objective of financial risk management is to contain, where deemed appropriate, exposures on net basis to the various types of financial risks mentioned above in order to limit any negative impact on the Company’s results and financial position.

31.3.1 Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The company is exposed to foreign exchange risk arising through its sales and purchases denominated in various foreign currencies.

Foreign Currency Risk Management

Foreign currency risk also known as Exchange Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Foreign currency risk in the Company is attributable to Company’s operating activities and financing activities.

In the operating activities, the Company’s exchange rate risk primarily arises when revenue / costs are generated in a currency that is different from the reporting currency (transaction risk). The information is monitored by the Audit committee and the Board of Directors on a quarterly basis. This foreign currency risk exposure of the Company are mainly in U.S. Dollar (USD). The Company’s exposure to foreign currency changes for all other currencies is not material.

Foreign currency risk exposure

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting periods expressed in Rs., are as follows:

The Company does not enter into or trade financial instrument including derivative financial instruments for speculative purpose. Foreign currency sensitivity analysis The Company is mainly exposed to USD.

The following table details the Company’s sensitivity to a 1% increase and decrease in the Rs. against the relevant foreign currency. The sensitivity analysis includes only outstanding foreign currency denominated monetary items as tabulated above and adjusts their translation at the period end for 1% change in foreign currency rates. A positive number below indicates an increase in profit before tax or vice-versa.

31.3.2 Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. Refer note 8 for the disclosures for trade receivables.

31.3.3 Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and by matching the maturity profiles and realisation of financial assets with the liabilities. The company expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.

32 LEASES

DISCLOSURES AS REQUIRED UNDER IND AS 116:

The Company has entered into various lease agreements for acquiring space to do its day to day operations. Such lease contracts include monthly fixed payments for rentals. The lease contracts are generally cancellable at the option of lessee during the lease tenure. The Company also have a renewal option after the expiry of contract terms. There are no significant restrictions imposed under the lease contracts.

The Company has entered into a lease agreement of 95 years for its factory land located in Baddi which is operational. The lease contract amount is fully paid and there are no significant restrictions imposed under the lease contracts. Earlier these contracts were recorded as operating lease and now these have been accounted as Right of Use assets under Ind AS 116.

Lease commitments

Where the Company is a lessee/licensee

The Company has entered into various lease/license agreements for leased/licensed premises, which expire at various dates over the next nine years. There are no contingent lease/license fees payments. The details of the contractual maturities of lease liabilities as at March 31, 2024 on an undiscounted basis are as follows :

Expense relating to short term leases with lease term of less than 1 year during the financial year is Rs. 24 Lakhs (year ended March 31, 2023: 24 lakhs).

Expense relating to low value assets with long term lease period during the financial year is Rs. NIL.

There are no sale and lease back transactions. There are no sub leases of right of use assets

(1) Debt represents only short-term borrowings

(2) Earnings available for debt service = Net Profit after taxes Non-cash operating expenses Interest other adjustments like loss on sale of Fixed assets etc.

(3) Debt Service = Short-term debts and Interest on borrowings

(4) Working Capital = Current Assets - Current Liabilities

(5) Capital Employed = Tangible net worth Debts

34 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

35 The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.”

36 Transfer Pricing

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

37 The Code on Social Security 2020 has been notified in the Official Gazette on September 29, 2020. The effective date from which the changes are applicable is yet to be notified and the rules are yet to be framed. Impact if any of the change will be assessed and accounted in the period in which said Code becomes effective and the rules framed thereunder are published.

38 The Company does not have any immovable properties [other than properties (including buildings constructed there on included in Property, plant and Equipment disclosed in the financial statement) where the Company is the lessee, and the lease agreements are duly executed in favour of the lessee].

39 No proceedings have been initiated during the year or are pending against the Company as at 31 March 2024 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

40 The Company is not a declared wilful defaulter by any bank or financial institution or other lender.

41 The Company has no borrowings from banks or financial institutions on the basis of security of current assets.

42 There are no charges or satisfaction yet to be registered by the Company with ROC beyond the statutory period..

43 The Company has not entered into transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 2013.

44. Ministry of Corporate Affairs (MCA) vide its notification number G.S.R. 206(E) dated March 24, 2021 (amended from time to time) in

reference to the proviso to Rule 3 (1) of the Companies (Accounts) Amendment Rules, 2021, introduced the requirement of only using such accounting software w.e.f. April 01, 2023 which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled. The Institute of Chartered Accounts of India (“ICAI”) issued an “Implementation guide on reporting on audit trail under rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (Revised 2024 edition)” in February 2024 relating to feature of recording audit trail.

The Company uses Oracle R12 EBS as its primary accounting software for recording all the accounting transactions and maintaining its books of account for the year ended March 31, 2024. Oracle R12 EBS has a feature of recording audit trail (edit log) facility which has not been enabled throughout the year.

In respect of maintaining payroll records, the Company uses an accounting software operated by a third party software service provider. Based on the independent service auditor’s report which includes the requirements of audit trail, the said software has a feature of recording audit trail (edit log) facility and the same has operated throughout the year. Further, no instance of audit trail feature being tampered with has been reported in such auditor’s report.

The Management has adequate internal controls over financial reporting which were operating effectively for the year ended March 31, 2024. The Management is in the process of evaluating the options to ensure compliance with the requirements of proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 referred above in respect of audit trail.

45. “As per the MCA notification dated August 05, 2022, the Central Government has notified the Companies (Accounts) Fourth Amendment Rules, 2022. As per the amended rules, the Companies are required to maintain back-up on daily basis of such books of account and other relevant books and papers maintained in electronic mode that should be accessible in India at all the time. Also, the Companies are required to create backup of accounts on servers physically located in India on a daily basis.

The books of account along with other relevant records and papers of the Company are maintained in electronic mode. These are readily accessible in India at all times however backup is not maintained in India and is presently maintained in servers in Singapore.”