FAIRFIELD ATLAS LIMITED · Managing Director of Graziano Trasmissioni (India) Pvt.Ltd., (GTIL) which is an affiliate of the company in the Oerlikon Group and has been leading the

FAIRFIELD ATLAS LIMITEDBOARD OF DIRECTORS : Jeffrey Potrzebowski

Chairman (with effect from 1st February 2011)

Clement L. Strimel Jr.Chairman (upto 31st January 2011)

D. E. JacobManaging Director

Gary J. Lehman (upto 31st January 2011)

Riad Fyzee

J. M. Mapgaonkar

Avinash P. Gandhi

Ravi Kathpalia

Rakesh Chopra

Vivek Prakash (with effect from 1st February 2011)

COMPANY SECRETARY : Marcel Rebello

BANKERS : AXIS Bank Ltd.

HDFC Bank Ltd.

AUDITORS : B S R and Co

Chartered Accountants

Mumbai

REGISTERED OFFICE : Survey No. 157,

AND DOMESTIC UNIT Devarwadi Village, Post Shinoli, Chandgad Taluka,

Dist. Kolhapur, Maharashtra � 416 507.

Tel.: (02320) 236605/6

Email : [email protected]

EXPORT ORIENTED UNIT : Survey No. 116 and 119,

Shinoli (Budruk), Chandgad Taluka,

Dist. Kolhapur, Maharashtra � 416 507.

Tel.: (02320) 236605/6

CORPORATE OFFICE : 202/3 Maruti Mansion,

17, R. Dadaji Street,

Fort, Mumbai � 400 001.

Tel.: 2266 6003, 2270 9025 Fax : 2266 6164


REGISTRARS AND : Sharex Dynamic (India) Pvt. Ltd.

SHARE TRANSFER AGENTS Unit - 1, Luthra Industrial Premises,

Andheri Kurla Road, Safed Pool,

Andheri (East), Mumbai � 400 072.

Tel. : 2851 5606, 2851 5646 Fax : 2851 2885


156

FAIRFIELD ATLAS LIMITED

55

21st Annual Report 2010�2011

2


3


NOTICE

NOTICE is hereby given that the Twentyfirst Annual General Meeting of shareholders of Fairfield Atlas Limited(the �Company�) will be held on Tuesday, 9th August, 2011 at 4 P.M. at the Registered Office of the Company at SurveyNo 157, Devarwadi, Chandgad Taluka, Dist Kolhapur, Maharashtra 416507 to transact the following business :

1. To receive, consider and adopt the Profit and Loss Account for the year ended 31st March, 2011, the Balance Sheetas at that date and the Reports of the Directors and the Auditors thereon.

2. To appoint a Director in place of Mr. Ravi Kathpalia who retires by rotation and, being eligible, offers himself forre-election.

3. To appoint a Director in place of Mr. Rakesh Chopra, who retires by rotation and being eligible, offers himself forre-election.

4. To appoint B S R & Associates, Chartered Accountants (Firm�s Registration Number116231W) as Statutory Auditorsof the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the nextAnnual General Meeting and to fix their remuneration.

5. To appoint a Director in place of Mr. Jeffrey Potrzebowski who holds office only upto the date of this AnnualGeneral Meeting and in respect of whom a notice has been received by the Company from a member signifyinghis intention to propose Mr. Jeffrey Potrzebowski as a candidate for the office of a director liable to retire byrotation.

6. To appoint a Director in place of Mr. Vivek Prakash who holds office only upto the date of this Annual GeneralMeeting and in respect of whom a notice has been received by the Company from a member signifying hisintention to propose Mr. Vivek Prakash as a candidate for the office of a director liable to retire by rotation.

7. To consider and if thought fit to pass with or without modifications the following resolution as a Special Resolution:

�RESOLVED that subject to the provisions of Sections 198, 269, 309 and other applicable provisions if any, of theCompanies Act, 1956 and limits laid down therein read with Schedule XIII thereof as amended and subject to such otherapprovals as may be necessary, the approval of the company be and is hereby accorded to the appointment ofMr. Devanand E. Jacob, as Managing Director of the Company for the period commencing from 24th October 2010and ending on 31st October, 2013 upon terms and conditions set out in the Agreement dated 15th November, 2010entered into between Mr. Devanand E. Jacob and the Company.

�FURTHER RESOLVED that, subject to the limits, if any, specified in the Act for payment and provision of remuneration,perquisites and benefits, the Board of Directors be and is hereby authorised to approve any changes or amendments tothe aforesaid Agreement and to review the remuneration, perquisites and benefits payable to Mr. Devanand E. Jacobfrom time to time.�

NONONONONOTESTESTESTESTES:::::

a) The relative Explanatory Statement as required by Section 173 of the Companies Act, 1956 in regard to item nos.5 to 7 is annexed hereto.

b) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTENDAND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. PROXY FORMS MUST REACH THECOMPANY�S REGISTERED OFFICE NOT LESS THAN 48 HOURS BEFORE THE MEETING.

c) The Register of Members and Share Transfer Books of the Company will be closed from Friday, 29th July 2011 toTuesday, 9th August 2011 both days inclusive.

d) Members are requested to:

i Intimate to the Company�s Registrars and Share Transfer Agents change if any, in their registered address at anearly date for shares held in physical form and to their Depository Participant for shares held in electronic form.

ii. Quote Folio Numbers in all their correspondence.

e) Members who hold shares in dematerialised form are requested to bring their Client ID and DP ID numbers for easyidentification of attendance at the meeting.

Place : MumbaiDated : 26th April, 2011

Registered office :Survey No. 157, Devarwadi Village,Post Shinoli, Chandgad Taluka,Dist. Kolhapur, Maharashtra � 416 507

By Order of the Board of Directors

Marcel RebelloCompany Secretary

54


53


FAIRFIELD ATLAS LIMITEDRegd. Office : Survey No. 157, Devarwadi Village, Post Shinoli, Chandgad Taluka, Dist. Kolhapur, Maharashtra � 416 507.

ATTENDANCE SLIP

Registered Folio / Client ID ........................................

Name of the Member / Proxy / Representative ........................................................................................................................

...........................................................................................................................................................................................

I hereby record my presence at the 21ST ANNUAL GENERAL MEETING of the Company held on Tuesday 9th August, 2011

at 4.00 p.m. at Survey No. 157, Devarwadi Village, Post Shinoli, Chandgad Taluka, Dist. Kolhapur, Maharashtra

_____________________________________________________________

Signature of Attending Member / Proxy / Representative

NOTE : A Shareholder / Proxy Holder / Representative desiring to attend the meeting must complete the Attendance Slip and hand

it over at the entrance of the meeting hall.

........................................ CUT HERE AND BRING THIS ATTENDANCE SLIP AT THE MEETING .......................................

I / We ..............................................................................................................................................................

of .............................................................................................................................. being a member / members of the

above named company hereby, appoint ....................................................................................................................... of

...................................................................................or failing him .................................................................................

....................................................................................... of ..........................................................................................

............................................................as my / our proxy to vote for me /us on my / our behalf at the 21ST ANNUAL GENERAL

MEETING of the Company to be held on Tuesday 9th August, 2011, and at any adjournment thereof.

Signed this ......................................... day of ............................................2011

Reference Folio / Client ID No.

No. of Shares

Signature

NOTE : This Proxy form must be returned so as to reach the Registered Office of the Company, Fairfield Atlas Limited,

Survey No. 157, Devarwadi Village, Post Shinoli, Chandgad Taluka, Dist. Kolhapur, Maharashtra not less

than FORTY EIGHT HOURS before the time for holding the aforesaid meeting

FAIRFIELD ATLAS LIMITEDRegd. Office : Survey No. 157, Devarwadi Village, Post Shinoli, Chandgad Taluka, Dist. Kolhapur, Maharashtra � 416 507.

PROXY FORM

Re. 1

Revenue

Stamp!

!

4


EXPLANATORY STATEMENT

As required by Section 173 of the Companies Act, 1956 the following Explanatory Statement sets out all the material facts

relating to the above item of business

ITEM NOITEM NOITEM NOITEM NOITEM NO.5.5.5.5.5

The Board of Directors at the meeting held on 28th January 2011 appointed Mr. Jeffrey Potrzebowski as Additional

Director with effect from 1st February 2011 and accordingly he would hold office till the ensuing Annual General Meeting.

Mr. Potrzebowski has been nominated on the Board by Fairfield Manufacturing Co. Inc., USA the company�s Principals.

Mr. Jeffrey Potrzebowski holds a Bachelor of Administration Degree with Accounting major. Mr. Potrzebowski is a Certified

Public Accountant (CPA). Mr. Potrzebowski is presently the Chief Financial Officer of the Oerlikon Group � Drive Systems

segment. Mr. Potrzebowski has worked extensively in the global market leading teams in America, Italy, China and India.

Earlier as Chief Financial Officer of Fairfield Manufacturing Co., Inc., he was advising the company on financial matters

and coordinating the financial reporting of the company.

In view of his vast experience the Directors have appointed him as Chairman of the Board. Mr. Potrzebowski does not

hold any shares in the Company.

The Board considers that it would be in the interest of the company to have the benefit of his experience and advice and

accordingly commends his appointment to the members. Mr. Potrzebowski has filed his consent with the company to act

as Director.

The company has received notice from a shareholder pursuant to section 257 of the Companies Act, 1956 along with

requisite deposit amount, proposing the candidature of Mr. Potrzebowski for appointment as director of the Company.

Mr. Potrzebowski may be deemed to be concerned or interested in the resolution relating to his appointment. None of

the other directors is concerned or interested in this item of business.


The Board of Directors at their meeting held on 28th January, 2011 appointed Mr. Vivek Prakash as Additional Director

with effect from 1st February, 2011 and accordingly he would hold office till the ensuing Annual General Meeting.

Mr. Prakash graduated from University of Roorkee presently called IIT Roorkee. Since January 2009 he is the CEO and

Managing Director of Graziano Trasmissioni (India) Pvt.Ltd., (GTIL) which is an affiliate of the company in the Oerlikon

Group and has been leading the company since then. Before joining GTIL he was Chief Operating Officer with automotive

component group � Sandhar Technologies. Later he was business head for AK Minda Group die-casting business and

prior to that worked for more than two decades in various capacities, locations and functions viz. production, quality

control, projects, materials, sales and service in the Tractor, Commercial vehicles and Gear business of Eicher Group in

India.

He has been named as Business Unit Head � India by OC Oerlikon Corporation AG and is responsible for all business

of Drive Systems in India. His appointment on the Board will therefore facilitate exploring the different synergies between

the two companies and implementing the same.

In view of his experience in the industry and in similar line of activity the Board considers that it would be in the interest

of the company to have the benefit of his experience and advice and accordingly commends his appointment to the

members. Mr. Prakash has filed his consent with the company to act as Director.

The company has received notice from a shareholder pursuant to section 257 of the Companies Act, 1956 alongwith

requisite deposit amount, proposing the candidature of Mr. Prakash for appointment as director of the Company.

Mr. Prakash may be deemed to be concerned or interested in the resolution relating to his appointment. None of the

other directors is concerned or interested in this item of business.

5



The Board of Directors at their meeting held on 22nd October, 2010 re-appointed Mr. Devanand E. Jacob as Managing

Director of the Company for the period commencing from 24th October, 2010 and ending 31st October, 2013 on terms

and conditions set out in the Agreement dated 15th November, 2010 the salient features of which are mentioned below:

1. Subject to the approval of the General Meeting and other necessary approvals, if any, Mr. Devanand E. Jacob be

appointed Managing Director of the Company for the period commencing from 24th October, 2010 and ending 31st

October, 2013.

The following additional information as required by Schedule XIII to the Companies Act 1956 is given below.

I. General Information :

i. Nature of industry

The Company�s core business operations fall in the broad categories of agriculture, construction, automotive,

energy, mining and more specifically the on-off highway power transmission sector.

ii. Date or expected date of commencement of commercial production.

The company was incorporated on 1st February 1990 as a private company and commenced commercial

production in the year 1993. The export oriented unit of the company commenced operations in the year 2003.

iii. In case of new companies, expected date of commencement of activities as per project approved by financial

institution appearing in the prospectus.

NOT APPLICABLE

iv. Financial performance based on given indicators � as per Audited Financial results for the year ended 31st March

2011.

PPPPParticularsarticularsarticularsarticularsarticulars Rs. in lakhsRs. in lakhsRs. in lakhsRs. in lakhsRs. in lakhs

Turnover and other income 16490.27

Profit before Depreciation and Finance Charges 2717.99

Depreciation 693.79

Interest and other Finance Charges 79.82

Profit before taxation 1944.37

Provision for taxation 395.28

MAT Credit Entitlement (375.83)

Deferred Tax 163.88

Profit after taxation 1761.03

v. Export performance and net foreign exchange collaborations.

The Company�s earnings in foreign exchange were Rs.6698.18 lakhs for the financial year ended 31st March

2011.

vi. Foreign investments of collaborators, if any.

TH Licensing Inc., USA, a wholly owned subsidiary of Fairfield Manufacturing Co.Inc. USA, presently holds

22924796 equity shares of Rs.10/- each constituting 83.91% of the paid up share capital of the Company.

52


I Registration Details

CIN No.

State Code

Balance Sheet Date

II Capital raised during the year (Amount in Rs. Thousands)

Public Issue Right Issue

Bonus Issue Private Placement

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities # Total Assets

# Including Shareholders� Funds

Sources of Funds

Paid�Up Capital Reserves and Surplus

Secured Loans Unsecured Loans

Deferred tax Liabilities Unsecured Loans

ANNEXURE

ADDITIONAL INFORMATION PURSUANT TO PART IV OF SCHEDULE VI TO THE ACTBalance Sheet Abstract and Company�s General Business Profile:

L 3 4 3 0 0 M H 1 9 9 0 P L C 0 5 5 3 0 0

1 1

3 1 0 3

N I L N I L

N I L N I L

1 4 0 9 1 1 5 1 4 0 9 1 1 5

4 0 6 1 9 0 N I L

2 0 1 1

For and on behalf of the Board of Directors

Jeffrey Potrzebowski D. E. JacobChairman Managing Director

Vikram Nagar Marcel RebelloChief Financial Officer Company Secretary

Place : MumbaiDate : 26th April 2011

2 7 3 2 0 5 2 7 9 1 2 1

Application of Funds

Net Fixed Assets + � Net Current Assets

Miscellaneous Expenditure Accumulated Losses

IV Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

+ � Profit/Loss Before Tax@ + � Profit/Loss After Tax

(Please tick 3 appropriate box + for Profit, � for Loss)

+ � Earning per Share (Basic and Diluted) (in Rs.) Dividend Rate %

V Generic Names of Three Principal Products/Services of the Company (as per monetary terms)

Item Code No. (ITC Code) Product Description

Transmission Gears

5 2 4 9 3 7 4 4 9 9 6 7

N I L N I L

1 6 4 9 0 2 6 1 4 5 4 5 8 9

1 9 4 4 3 7 1 7 6 1 0 3

8 4 8 3 4 0 . 0 0

3 3

3

N I L6 . 4 53

1 6 3 8 8

51


18.19 Fairfield Manufacturing Company Inc., U.S.A. (FMC) had paid a sum of USD 11,967,023 (equivalent Rs.

543,792,583) to GE Capital services India (GECSI) in fulfillment of its obligation under the corporate

guarantee executed to secure the loan availed by the Company from GECSI. FMC had agreed to treat the said

sum as External commercial loan to the Company, subject to the terms and conditions set forth in the letter of

intent date January 15, 2004. Reserve Bank of India (RBI) and Ministry of Finance had not approved the

application made by the Company to treat the payment as external commercial loan. Further, RBI has not

approved the payment of interest on the amount paid by FMC and repayment of principal amount exceeding

Rs. 543,792,583. During 2005-06, 2006-07, 2009-10 and 2010-11, the Company had repaid USD 5,967,023

(Rs. 264,471,470) USD 200,000 (Rs. 9,344,000), USD 300,000 (Rs. 13,744,500) and USD 1,500,000 (Rs.

69,278,750) respectively, to FMC.

As at the year end, the Company owes USD 4,000,000 equivalent Rs 179,250,000 (maximum liability restricted

by RBI to Rs 186,954,772) to FMC towards the said loan.

The said loan is secured by creation of hypothecation charge on all the fixed and current assets, excluding land

and building.

18.20 The Company was entitled to a deferred sales tax benefit under the package scheme of incentives, 1993 of the

government of Maharashtra for its plant at Sr. no. 157, Devarwadi, Shinoli, dist. Kolhapur. During the previous

year, the Company had settled the entire liability at lower amount in pursuance of the option granted to it by

the Bombay Sales Tax Act, 1959 and the difference between the amount payable and the amount paid on

discounting the liability, aggregating Rs. 34,195,164 was credited to the profit and loss account for the previous

year and shown in the profit and loss account as an exceptional item.

18.21 Previous year figures have been regrouped / rearranged wherever necessary to conform to current year�s

presentation.

For B S R and Co For and on behalf of the Board of DirectorsChartered AccountantsFirm�s Registration No.: 128510WSadashiv Shetty Jeffrey Potrzebowski D. E. JacobPartner Chairman Managing DirectorMembership No.: 048648


Place : Mumbai Place : MumbaiDate : 26th April 2011 Date : 26th April 2011

SCHEDULES TO THE FINANCIAL STATEMENTS (Contd.)for the year ended 31st March 2011 (Currency : Indian Rupees)

6


II. Information about the appointee.

i. Background details

Mr. Jacob is an Engineer by profession and has been stationed at the company�s plant for the past 18 years.

He was the Managing Director of the Company for a period of two years from 24th October, 2008 to 23rd

October, 2010 and in view of his capability in successfully steering the operations of the company the Board

of Directors has reappointed him as the Managing Director till 31st October 2013. In his present capacity as

the Managing Director of the Company he oversees the entire plant operations both of the DTA Unit and EOU

Unit. Mr. Jacob has received training at the Plant of the Company�s Principals, Fairfield Manufacturing Co., Inc.,

USA and the company�s other foreign suppliers.

ii. Past remuneration during financial year ended 31st March 2011.

The total remuneration drawn by Mr. D. E. Jacob as Managing Director for the year ended 31st March 2011

was Rs.36.89 lakhs including perquisites.

iii. Recognition or Awards

Not applicable

iv. Job Profile and their suitability.

Mr. D. E. Jacob is the Managing Director of the Company since 24th October 2008. The Board has delegated

substantial powers of management of the Company to Mr. D. E. Jacob, in his capacity as Managing Director

of the Company. Mr. Jacob is an Engineer by profession and has been stationed at the Company�s plant for

the past 18 years and hence has acquired indepth knowledge of the functioning of the various departments. He

has received training at the Plant of the Company�s Principals, Fairfield Manufacturing Co., Inc., USA and the

Company�s other foreign suppliers. Mr. Jacob is responsible interalia for development of the business of the

Company. In his present capacity he overseas the entire Plant Operations both of the Domestic and Export Units.

Apart from Plant Operations he also oversees the purchase, sales and HRD functions. Since Mr. Jacob is the sole

Managing Director he is required to shoulder substantial responsibilities of the company�s growing business

which includes both domestic and export business. In view of his ably handling the business operations of the

Company during his previous tenure the Board of Directors has reappointed him for a further period from 24th

October, 2010 till 31st October, 2013. Therefore, in view of his long association and experience with the

Company, Mr. Jacob is best suited for the position he occupies.

v. Remuneration proposed.

Mr. D. E. Jacob

Salary of Rs. 1,40,000 per month and perquisites, allowances and amenities mentioned at IV below and as set

out in item No.7 of the Notice.

vi. Comparative remuneration profile with respect to industry, size of the company profile of the position and person

(in case of expatriates the relevant details would be with respect of the country of his origin).

Considering the size of the company and volume of its operations both in the domestic and export fields, the

background experience and profile of Mr. D. E. Jacob and the responsibilities shouldered by him, the remuneration

proposed to be paid is commensurate with remuneration packages given to similar senior level executives in

other companies.

vii. Pecuniary relationship directly or indirectly with the company or relationship with the managerial personnel if any.

Apart from the proposed remuneration, Mr. Jacob does not have any other pecuniary relationship with the

Company or relationship with any managerial personnel. However, Mr. Jacob holds 2 fully paid up equity shares

in the Company.

7


III. Other information

1. Reason of loss or inadequate profits.

Not Applicable as the company has posted a net profit after tax of Rs.1761.03 lakhs during the year ended

31st March, 2011

2. Steps taken or proposed to be taken for improvement and

3. Expected increase in productivity and profits in measurable terms.

Not applicable as the Company has adequate profits.

IV. Disclosures

Remuneration package of Mr. D. E. Jacob, Managing Director as approved by the Remuneration Committee and

the Board of Directors is as follows:

1. Salary:

Basic Salary Rs. 1,40,000/- per month

2. Bonus:

Variable Income (Bonus Plan) in accordance with Corporate Policy and achievement of Target objectives set by

top Management details and amount of which will be communicated annually to Mr. Jacob as participant, but

not exceeding Rs.20 lakhs in any financial year.

3. Perquisites:

Provision of perquisites and benefits classified into three Categories A, B, C, as appearing hereinafter:

Category A

a. Housing:

HRA to be paid at 40% of Basic Salary

b. Medical Reimbursements and Hospitalisation:

Expenses incurred for self and the family, subject to a ceiling of Rs. 15,000/- per year. The amount can be

carried forward in accordance with the Company Policy upto a period of 3 years.

c. Leave Travel Allowance:

For self and the family, once in a year, incurred in accordance with the Company Policy and limited to

Rs. 35,000/- per year. This amount can be carried forward up to 3 years.

d. Attire Allowance:

Attire Allowance of Rs.25,000 per annum to be drawn in accordance with the Rules of the Company.

e. Personal Accident Insurance :

Payment of premium for personal accident insurance cover, in accordance with the Rules of the Company.

f. Reimbursement of any other expenses properly incurred by him in accordance with the Rules and Policies of

the Company.

Explanation:

For the purpose of Category A, �family� shall mean and include his spouse, dependent children and

dependent parents.

50


(vi) Expenses recognized in the Profit and Loss Account

Particulars 2011 (Rupees) 2010 (Rupees)

Current service cost 1,839,858 1,682,080

Interest cost 1,740,493 1,450,251

Expected return on plan assets (800,000) -

Net actuarial (gain)/ loss to be recognized (2,956,417) 1,738,258

Total (income)/ expense recognised in the (176,066) 4,870,589profit and loss account **

** Included in employee costs �gratuity� (refer Schedule �15�)

(vii) Balance sheet reconciliation


Net liability/ (assets) as at 1 April 2010 11,756,166 17,176,087

(Income)/Expenses as above (176,066) 4,870,589

Employers contribution 14,215,327 10,000,000

Benefits directly paid by Company - 290,510

Net (asset)/liability recognized as at 31 March 2011 (2,635,227) 11,756,166

(viii) Experience Adjustment

Particulars 2011 (Rupees) 2010 (Rupees) 2009 (Rupees)

Experience adjustment on (1,425,264) 2,730,125 (408,323)liabilities (gain)/loss

Experience adjustment on 848,831 Nil Nilplan assets gain/(loss)


(ix) Broad category of plan assets relating to Gratuity as a percentage of total planassets

The Company's gratuity fund is managed by its insurer, Life Insurance Corporation of India (LIC).The plan assets under the fund are deposited under approved securities.

(x) Compensated absenses

The liability for leave encashment and compensated absences as at year end is Rs. 7,610,214(Previous year Rs. 7,433,208).

(xi) The estimates of future salary increases, considered in actuarial valuation, take in to accountinflation, seniority, promotion and other relevant factors, such as supply and demand in theemployment market.

49


II Defined Benefit Plan

A. Gratuity

In accordance with Accounting Standard15, actuarial valuation was done in respect of the aforesaiddefined benefit plan of gratuity based on the following assumptions:-

(i) Actuarial Assumptions for the year

Assumptions 2011 2010

Discount rate (per annum) 8.25% 8.00%

Rate of increase in compensation levels 7.5% 7.50%

Rate of return on plan assets 8.00% 8.00%

(ii) Changes in the Present Value of Obligation


Present value of obligation as at 1 April 2010 21,756,166 17,176,087

Interest cost 1,740,493 1,450,251

Current service cost 1,839,858 1,682,080

Benefits paid (484,871) (290,510)

Actuarial (gain)/ loss (a) (2,107,586) 1,738,258

Present value of obligation as at 31 March 2011 22,744,060 21,756,166


(iii) Fair value of plan assets


Fair value of plan assets as at 1 April 2010 10,000,000 -

Expected return on plan assets 800,000 -

Contributions 14,215,327 10,000,000

Benefits paid (484,871) -

Actuarial gain/ (loss) on plan assets (b) 848,831 -

Fair value of plan assets as at 31 March 2011 25,379,287 10,000,000

Net actuarial gain/(loss) to be recognised on 2,956,417 ( 1 , 7 3 8 , 2 5 8 )obligation and plan assets (a+b)

(iv) Actual return of plan assets


Expected return on plan assets 800,000 -

Actuarial gain/ (loss) on plan assets (b) 848,831 -

Actual return on plan assets 1,648,831 -

* Included in advances �gratuity� (refer Schedule �12�)

(v) Amount recognized in the Balance Sheet


Present value of obligation as at 31 March 2011 22,744,060 21,756,166

Fair value of plan assets as at 31 March 2011 25,379,287 10,000,000

Net liability/(asset) recognized as at 31 March 2011* (2,635,227) 11,756,166

8


Category B

During the term of this Agreement, Mr. Jacob shall be entitled to the following perquisites, which shall not be

included in the computation of the ceiling on the remuneration as specified in the preceding paragraph:

a. Contribution by the Company to Provident Fund and Superannuation Fund or Annuity Fund to the extent these

either singly or put together are not taxable under the Income Tax Act, 1961.

b. Gratuity payable at a rate not exceeding one month�s salary for each completed year of service, and

c. Encashment of leave at the end of the tenure of service with the Company.

Category C

Provision of Chauffeur driven car for use on Company�s business and telephone at residence. These will not be

considered as perquisites.

4. The aggregate remuneration shall not exceed the limits specified in Sections 198, 309 and other applicable

provisions of the Companies Act, 1956.

5. In the event of absence or in adequacy of profits in any financial year, the above remuneration shall be payable

to Mr. Jacob as minimum remuneration subject to limits, if any, specified in the Companies Act, 1956.

Inspection of Documents

The Agreement referred to in this Explanatory Statement will be available for inspection by shareholders at the

Registered Office of the Company between 10 a.m. to 12 noon on any working day prior to the date of the meeting.

Place : MumbaiDated : 26th April, 2011

Registered office :Survey No. 157, Devarwadi Village,Post Shinoli, Chandgad Taluka,Dist. Kolhapur, Maharashtra � 416 507

By Order of the Board of Directors

Marcel RebelloCompany Secretary

9


DIRECTORS� REPORT

The Directors are pleased to present their Twentyfirst Annual Report together with the audited accounts of Fairfield AtlasLimited (the �Company�) for the year ended 31st March, 2011.

i.i.i.i.i. FFFFFinancial Resultsinancial Resultsinancial Resultsinancial Resultsinancial Results Rs. in lakhs

2010�2011 2009�2010

Gross Income 16490.2716490.2716490.2716490.2716490.27 9818.89

Profit before depreciation, Interest and tax 2717.992717.992717.992717.992717.99 2003.19

Interest and other finance charges 79.8279.8279.8279.8279.82 71.32

Depreciation and Amortisation 693.79693.79693.79693.79693.79 637.19

Exceptional item ----- 341.95

Profit before Tax 1944.371944.371944.371944.371944.37 1294.68

Provision for tax

- Current tax 395.28395.28395.28395.28395.28 232.78

- MAT Credit entitlement (375.83)(375.83)(375.83)(375.83)(375.83) (447.03)

- Deferred Tax (credit) 163.88163.88163.88163.88163.88 -

Profit after tax 1761.031761.031761.031761.031761.03 1508.93

Balance in Profit & Loss Account 975.17975.17975.17975.17975.17 (533.76)

Balance in Profit & Loss Account 2736.212736.212736.212736.212736.21 975.17Carried forward to Balance Sheet

ii.ii.ii.ii.ii. DividendDividendDividendDividendDividendThe Directors did not recommend dividend for the year ended 31st March, 2011.

iii.iii.iii.iii.iii. PPPPPerformanceerformanceerformanceerformanceerformance

The Company was in a position to maintain its profitability trend due to robust and consistent growth of theautomobile and construction sectors in the domestic business of the company. There was also a revival in the exportbusiness of the Company due to the increase in demand from the overseas customers particularly during the latterhalf of the financial year. Judicious choice of product mix for domestic customers together with managing input costsalong with tight expense control helped to improve profits. Sales turnover and other Income increased toRs. 16490.27 lakhs as against Rs.9818.89 lakhs registering an increase of 68%. The company is consistentlystrengthening its market position in existing and certain niche segments which offer good contribution and wherecompetition is minimal.

iviviviviv..... Directors Responsibility StatementDirectors Responsibility StatementDirectors Responsibility StatementDirectors Responsibility StatementDirectors Responsibility Statement

Pursuant to the provisions of sub-section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directorsconfirm:

(i) that in the preparation of the Annual Accounts, the applicable accounting standards had been followed alongwithproper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgements andestimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Companyat the end of the financial year as on 31st March, 2011 and of the profit of the Company for that period;

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

(iv) that the Director�s had prepared the annual accounts on a going concern basis.

vvvvv..... FFFFFinanceinanceinanceinanceinance

Subject to the approval of the Reserve Bank of India repayment of the Term Loan of US$ 5 million from TH LicensingInc USA has been extended by a period of 60 months with interest @ 400 basis points over six months LIBOR tobe repaid in equated yearly installment of minimum of US$ 5,00,000 and if any balance left over then in a singlebullet payment on due date.

Repayment of the outstanding interest free loan of US$ 4 million from Fairfield Manufacturing Co., Inc. USA has alsobeen extended by a period of 60 months to be repaid in equated yearly installment of minimum of US$ 5,00,000and if any balance left over then in a single bullet payment on due date.

48


(c) Particulars of transactions of fellow subsidiaries during the year ended 31st March 2011 andbalances as at 31st March 2011

(in Rupees)

Name of theRelated party

Receivable /(Payable)

at31st March

2010

Transactionvalue

during theyear ended31st March

2010

Receivable /(Payable)

at31st March

2011

Transactionvalue

during theyear ended31st March

2011

Description

(Cr)/Dr (Cr)/Dr

Purchase of - - 14,396 -Raw Material

Payables - - - (14,684)

Purchase of Job work 13,331,303 - 7,238,954 -

Payables - (5,747,137) - (2,436,121)

Sales - - - -

Receivables - 81,913 - 78,418

Sales 15,650,197 - - -

Receivable - 9,391,711 - -

Graziano Transmission India(Private) Ltd

Oerlikon Balzers CoatingIndia Ltd

Graziano Transmission SPA

Oerlikon (China) TechnologyCo. Ltd.

18.17 The Company has disclosed the turnover as net of total excise duty (excluding difference of excise duty on closingstock and opening stock). The excise duty related to the difference between the closing stock and opening stockis recognized separately in the profit and loss account.


18.18 The Company has adopted Accounting Standard 15 on �Employee Benefits� with effect from 1 April 2007.Pursuant to the adoption, the company has classified various benefits provided to employees as under:-

I Defined contribution plans

a. Provident fund

b. State defined contribution plans

i. Employer�s contribution to labour welfare fund

ii. Employer�s contribution to employee�s pension scheme 1995

During the year, the company has recognized the following amounts in the profit and loss account:

2011 2010

- Employer�s contribution to provident fund * 7,963,263 6,385,048[Includes EDLI charges and employer�s contribution toemployee's pension scheme 1995]

- Employer�s contribution to labour welfare fund* 49,878 41,580

* Included in contribution to provident and other funds (refer schedule �15�)

(Cr)/Dr (Cr)/Dr

47


(b) Transactions with related parties

(in Rupees)

(Cr)/Dr (Cr)/Dr (Cr)/Dr (Cr)/Dr (Cr)/Dr

Purchase of fixed assets - 17,519,769 - - -

- 7,822,457 - - -

Purchase of raw materials, Stores and - 19,409,767 - 13,331,303 -

spare parts & job work# - 14,874,351 - 7,253,350 -

Trade mark fees 9,735,942 - - - -

7,217,588 - - - -

Interest expense - - 6,266,583 - -

- - 6,295,653 - -

Sale of goods ( net ) - (610,604,516) - (15,650,197) -

- (152,994,385) - - -

Development tooling income - (4,459,839) - - -

- (16,879,609) - - -

Remuneration to key management personnel* - - - - 3,689,019

- - - - 1,509,200

Loan repayment - 69,278,750 - - -

- 13,744,500 - - -

Receivables from related parties - 198,602,636 - 9,473,625 -

- 114,388,014 - 78,418 -

Payables to related parties (2,409,857) (50,339,179) - (5,747,137) -

(1,851,592) (24,234,459) - (2,450,805) -

Secured loan outstanding - (179,250,000) (224,062,500) - -

- (248,820,001) (226,200,000) - -

Interest payable - - 731,364- - -

- - - - -

Subsidiary ofUltimateHolding

Company

ParticularsUltimateHolding

Company

HoldingCompany

FellowSubsidiaries

KeyManagement

Personnel

Note : Figures in italics pertain to the previous year.* Refer Note 3 of schedule 18 for remuneration to Key management personnel# Includes Goods in transit Rs. 55,71,465


10


Place : Mumbai

Date : 26th April, 2011


JEFFREY POJEFFREY POJEFFREY POJEFFREY POJEFFREY POTRZEBOWSKITRZEBOWSKITRZEBOWSKITRZEBOWSKITRZEBOWSKI

Chairman

vi.vi.vi.vi.vi. Corporate GovernanceCorporate GovernanceCorporate GovernanceCorporate GovernanceCorporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange a section titled �Corporate Governance� hasbeen included in this Annual Report along with Management Discussion and Analysis report and ShareholderInformation report. Certificate from a Practising Company Secretary regarding compliance of conditions of CorporateGovernance is annexed to the report.

vii.vii.vii.vii.vii. PPPPParticulars of Employeesarticulars of Employeesarticulars of Employeesarticulars of Employeesarticulars of Employees

The Company does not have any employee of the category specified in Section 217 (2A) of the Companies Act, 1956,read with the Companies (Particulars of Employees) Rules, 1975, as amended.

viii.viii.viii.viii.viii. Conservation of energyConservation of energyConservation of energyConservation of energyConservation of energy, technology absorption and foreign exchange earnings and outgo, technology absorption and foreign exchange earnings and outgo, technology absorption and foreign exchange earnings and outgo, technology absorption and foreign exchange earnings and outgo, technology absorption and foreign exchange earnings and outgo

The information required in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in the annexure forming partof this Report.

ix.ix.ix.ix.ix. DirectorsDirectorsDirectorsDirectorsDirectors

Mr. Ravi Kathpalia and Mr. Rakesh Chopra retire by rotation at this Annual General Meeting and being eligible offerthemselves for reappointment as Directors.

Mr. Jeffrey Potrzebowski was appointed Additional Director of the Company with effect from 1st February, 2011.He ceases to hold office on the date of this Annual General Meeting and being eligible offers himself for reappointmentas Director.

Mr. Vivek Prakash was appointed Additional Director of the Company with effect from 1st February 2011. He ceasesto hold office on the date of this Annual General Meeting and being eligible offers himself for reappointment asDirector.

Mr. Clement Strimel ceased to be a Director of the company with effect from 31st January, 2011 consequent uponwithdrawal of this nomination by Fairfield Manufacturing Co.Inc. The Board placed on record its appreciation of theguidance and advice received from Mr. Clement Strimel during his tenure of more than a decade as Chairman ofthe Board.

Mr. Gary Lehman ceased to be a director of the company consequent upon his resignation with effect from 31stJanuary, 2011. The Board also placed on record its appreciation of the valuable contribution made and advice givenby him during the tenure of his office.

None of the Directors of the Company is disqualified as on 31st March, 2011 for being appointed as Directors asspecified in Section 274(1)(g) of the Companies Act, 1956.

x.x.x.x.x. CEO and CFO CertificationCEO and CFO CertificationCEO and CFO CertificationCEO and CFO CertificationCEO and CFO Certification

The CEO and CFO have certified to the Board of Directors in respect of review of the financial statement and cashflow statement for the year in terms of the requirement of Clause 49(V) of the Listing Agreement.

xi.xi.xi.xi.xi. AuditorsAuditorsAuditorsAuditorsAuditors

B S R and Co Chartered Accountants the current Statutory Auditors of the Company have expressed their unwillingnessto be reappointed. Accordingly, the Company proposes to appoint B S R & Associates, Chartered Accountants asStatutory Auditors of the Company. B S R & Associates being eligible offer themselves for appointment as Auditorsand have further confirmed that the said appointment would be in conformity with the provisions of section 224(1B)of the Companies Act, 1956.

xiixiixiixiixii Cost AuditCost AuditCost AuditCost AuditCost Audit

Pursuant to the directions from the Department of Company Affairs for appointment of Cost Auditors, the Companyhas appointed M/s. M.P. Turakhia & Associates, Cost Accountants as the Cost Auditor for the financial year 2011-2012 subject to the approval of the Central Government.

xiii.xiii.xiii.xiii.xiii. Auditors� ReportAuditors� ReportAuditors� ReportAuditors� ReportAuditors� Report

The notes on Accounts, referred to in the Auditors� Report are self-explanatory.

xivxivxivxivxiv..... AcknowledgementAcknowledgementAcknowledgementAcknowledgementAcknowledgement

The Directors express their sincere thanks for the continued support and co-operation given by the Holding Companyand Employees of the Company.

11


ANNEXUREANNEXUREANNEXUREANNEXUREANNEXURE

STATEMENT UNDER SECTION 217(1)(e) OF THE COMPANIES ACT 1956, READ WITH THE COMPANIES (DISCLOSURE

OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS), RULES 1988 AND FORMING PART OF THE

DIRECTORS� REPORT FOR THE YEAR ENDED 31ST MARCH 2011.

AAAAA..... CONSERVCONSERVCONSERVCONSERVCONSERVAAAAATION OF ENERGTION OF ENERGTION OF ENERGTION OF ENERGTION OF ENERGYYYYY

During the year the company carried out Energy Audit by TUV, SUD South Asia Pvt.Ltd., to ascertain saving in Power

Cost. As per the recommendations in their Audit Report the company implemented various conservation of energy

measures like changes in compressor pressure, air receiver outputs, air leakage and installation of temperature

controller of cooling tower.

BBBBB..... TECHNOLTECHNOLTECHNOLTECHNOLTECHNOLOGOGOGOGOGY ABSORPTIONY ABSORPTIONY ABSORPTIONY ABSORPTIONY ABSORPTION

There was no significant Technology Absorption in the Company during the year.

C.C.C.C.C. FOREIGN EXFOREIGN EXFOREIGN EXFOREIGN EXFOREIGN EXCHANGE EARNINGS AND OUTGOCHANGE EARNINGS AND OUTGOCHANGE EARNINGS AND OUTGOCHANGE EARNINGS AND OUTGOCHANGE EARNINGS AND OUTGO

The information on foreign exchange earnings and outgo is furnished in the Notes to the Accounts at Item No. 18.11.

Place : Mumbai



JEFFREY POJEFFREY POJEFFREY POJEFFREY POJEFFREY POTRZEBOWSKITRZEBOWSKITRZEBOWSKITRZEBOWSKITRZEBOWSKI

Chairman

46


18.16 Related party transactions

(a) Names of related parties and nature of relationship where control exists

Sr. No. Category of related parties Names

1 Ultimate holding company OC Oerlikon Corporation A. G. Pfaffikon2 Subsidiary of ultimate holding company Fairfield Manufacturing Company Inc., U. S. A.3 Holding company TH Licensing Inc., U. S. A.

Names of parties with whom transactions have taken place

4 Fellow subsidiaries Graziano Transmissioni India (Private) Ltd (GTIPL)Oerlikon Balzers Coating India Ltd (Balzers)Graziano Transmissioni Czech S R O (GTC)Graziano Transmissioni SPA (GTS)Oerlikon (China) Technology Co. Ltd. (OCTL)

5 Key Management personnel Mr. D. E. Jacob - Managing Director


45


18.13 Details of lease as lessee:

Operating Lease

The Company leases office and guest house facilities under cancellable operating lease agreements that arerenewable on a periodic basis at the option of both the lessor and the lessee. Rental payments under such leasesare Rs. 818,185 (Previous year Rs. 883,048).

(b) Earnings:

2011 (Rupees) 2010 (Rupees)

FOB value of exports 669,817,678 183,923,632

Development tooling income 4,459,839 16,879,609

18.14 Earnings per share

Computation of Earning Per Share (Basic and Diluted) 2011 (Rupees) 2010 (Rupees)

Net profit attributable to equity share holders (A) 176,103,464 150,893,369

Weighted average number of equity shares of Rs. 10 eachoutstanding during the year (B) 27,320,540 27,320,540

Basic and diluted earnings per share (Rs per equity share ofRs 10 each) (A/B) 6.45 5.52

18.15 Segment reporting:

(a) Primary Segment:

In accordance with the requirements of Accounting Standard 17, segmental reporting, the Company has determinedits business segment i.e., automotive transmission gears as its primary segment and geographical segment asits secondary segment. Since 100% of the Company�s business is from automotive transmission gears, there areno other primary reportable segments. Thus, the segment revenue, segment result, total carrying amount ofsegment assets, total carrying amount of segment liabilities, total cost incurred to acquire segment assets, the totalamount of charge for depreciation during the year are all as reflected in the financial statements as of and forthe year ended 31 March 2011.

(b) Secondary Segments (Geographical Segment): (in Rupees)


18.12 Debtors under the same management

2011 (Rupees)

Max. Outstanding Amount Max. Outstanding Amount

Fairfield Manufacturing 198,602,636 198,602,636 114,644,502 114,388,014Company Inc., U. S. A.

Oerlikon (China) 10,715,469 9,391,711Technology Co. Ltd. (OCTL)

Graziano Transmissioni 81,913 81,913 - -SPA (GTS)

2010 (Rupees)

Particulars India Outside India Total

Revenue from external customers 957,030,030 669,817,678 1,626,847,708(708,650,982) (183,923,632) (892,574,614)

Carrying amount of segment assets 1,164,661,050 223,729,541 1,388,390,591(948,734,502) (123,563,853) (1,072,298,355)

Additions to fixed assets during the year 107,889,351 - 107,889,351(11,130,069) - (11,130,069)

Figures in brackets pertain to the previous year.

12


Management Discussion and Analysis

(a) Industry Structure and Developments

The Company�s core business operations fall in the broad categories of agriculture, construction, automotive,

energy, mining and more specifically the on-off highway power transmission sector. Indian Manufacturers of

gears for these markets/industries can be classified on the basis of being an original equipment supplier or

a replacement market supplier or a combination of both. Currently, leading manufacturers in these industries

source their gear requirements through their captive in-house facilities, if any, or from suppliers approved by

them. Fairfield Atlas Ltd., is one such approved and preferred supplier to OEM�s in the markets mentioned

above. The demand for the Company�s product is a derived demand and hence is dependent upon growth

rate of its OEM customers. In the recent past the automobile industry has shown a positive growth rate, the

tractor industry has also witnessed growth owing to a strong rural demand and liquidity. With the government

focus and thrust on infrastructure development the construction industry is poised to reap the benefits of the

Government�s policy. There is also a revival in the export business of the company due to a gradual decline

in the recessionary conditions prevailing in the company�s export markets.

(b) Opportunities and Threats

The Company is in the category of supplier to original equipment manufacturers both for its domestic and

international business. It has therefore built up a reputation in respect of the quality standards of its products.

Moreover it has procured an internationally acclaimed quality management certificate for establishing its

quality management system. Apart from its inherent reputation and capability the company being a unit in

the Oerlikon Group which includes Oerlikon Fairfield in USA and Oerlikon Graziano in Italy its international

strategic partners presents opportunities for broadening the offering of its products. Oerlikon Graziano Italy

has a presence in India viz. Graziano Trasmissioni (India) Pvt.Ltd. Consequently there are opportunities for

exploring the various synergies between the two companies so as to augment and strengthen the ability to serve

its domestic and international customers by making optimum use of its resources. A low level of vehicle

ownership in India as compared with the world average implies an opportunity for growth of the Automobile

industry which will benefit the domestic business of the company. However the company also faces competition

from the presence of other auto component manufacturers in the country. The Company proposes to provide

diverse services in the field of engineering and consulting and has accordingly initiated action for altering the

objects clause in the Memorandum of Association of the company. The Company�s assessment has revealed

that there are significant opportunities in these areas which would facilitate growth and increase the area of

operation of the company.

(c) Segment-Wise Performance

The company has determined it business segments as on-highway (select applications), agriculture, mining,

energy and construction related transmission gears. There are no other primary reportable segments since

100% of the Company�s business is from transmission-type gears. As indicated above, the company will

evaluate and establish strategic investment and growth initiatives in these segments that will yield appropriate

returns on investment.

(d) Outlook

As the Indian economy is projected to grow it will drive greater demand for the Company�s products in the

domestic market as well as exports globally. With the synergy that would be developed with Graziano Trasmissioni

India Pvt.Ltd., on various aspects of the business, there is a potential for widening the scope of the company�s

business which could lead to expanding its footprint in India. The outlook of the company as regards to the

new business proposed to be commenced in the field of engineering and consulting is encouraging and in the

long run could be a potential revenue earner for the company. With these developments the outlook for the

company�s business continues to be positive.

13


(e) Internal Control System

The Company�s internal control system is an intrinsic part of the overall Governance process and is exercised

within a framework of appropriate checks and balances. It ensures an effective internal control environment

that provides assurance on the security of assets and efficacy of its operations. The internal control system

is further strengthened by the ERP mechanism.

In addition to statutory audit, the financial and operating controls are reviewed by the Internal Auditors. The

company has appointed a reputed and experienced Chartered Accountancy firm to conduct the Internal Audit

and their Internal Audit Report is forwarded to the Audit Committee of the Board for discussions. The

company�s cost records are subject to Cost Audit as prescribed by the Government. Compliance with various

laws and regulations pertaining to the company are also monitored by placing compliance reports at every

Audit Committee meeting.

(f) Human Resources / Industrial Relations

Industrial relations at the Plant continued to be cordial and harmonious during the year. The Company is

committed to maintain good industrial relations through a process of dialogue and negotiations. Various

training programmes were conducted at outstation locations for employees at all levels. These training

programmes covered a wide range of topics like development of communication skill, stress management and

interpersonal relations. These programmes were well attended by the employees.

The company has a strength of 544 permanent employees as on 31st March, 2011.

(g) Risks and Concerns

Since export revenues continue to be a significant contributor to the Company�s turnover a slackening of the

export markets can have an impact on the overall profitability. Further as the export business of the Company

is billed in foreign currency it is exposed to currency fluctuations and volatility against the Indian Rupee and

would therefore impact the foreign earnings of the Company. The spiraling cost of raw materials and

petroleum products and rising inflation are matter of concern although the company is taking steps on an

ongoing basis to mitigate the adverse effects by resorting to cost saving measures as well as recovering the

impact of cost increases from its customers. The recent trend amongst business enterprises in India of acquiring

auto component plants abroad could be a matter of concern particularly when these plants have gear

manufacturing facilities.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

FINANCIAL INFORMATION

FIXED ASSETS

Company�s gross block has gone up by Rs. 932 lakhs over the previous year in keeping with the budget made

by the company at the beginning of the year. Out of Rs. 932 lakhs, net increase of Rs. 846 lakhs is towards plant

and machinery to enhance the plant capacity so that the company could cater better to its existing and potential

customers.

INVENTORIES

As compared to previous year Inventory level has gone up by Rs. 569 lakhs which is approximately a 24% increase.

The average increase in Raw material, Work in progress and Finished goods is 35% over the previous year because

of significant change in demand from Domestic and Overseas customers which can be seen in Finished goods

inventory which has gone down by 37%.

44


18.9 Consumption of raw materials, packing material and stores, spare parts and tools:

(a) Quantity of raw material and packing material

(b) Value of imported and indigenous raw material and packing material consumed andpercentage thereof to total consumption:

(c) Details of stores, spare parts and tools consumed comprising of:

2011

Particulars Qty in pieces Value (Rupees) Qty in pieces Value (Rupees)

Forgings and assemblycomponents 10,732,613 804,505,176 3,250,745 443,714,614

Round bars 785,196 43,314,119 330,524 18,457,380

Packing materials 22,418,640 10,506,823

Freight inward 13,294,502 7,447,045

Total 883,532,437 480,125,862

2011

Value (Rupees) Percentage Value (Rupees) Percentage

Imported 3,557,326 5.27 9,212,566 17.33

Indigenous 63,941,878 94.73 43,936,745 82.67

Total 67,499,204 100.00 53,149,311 100.00

2010

2011

Value (Rupees) Percentage Value (Rupees) Percentage

Imported 37,038,244 4.19 11,081,332 2.31

Indigenous 846,494,193 95.81 469,044,530 97.69

Total 883,532,437 100.00 480,125,862 100.00

2010

2010

18.10 Value of Imports on CIF basis:


Raw materials, stores and spare parts 45,787,313 22,052,136

Capital goods 38,541,994 8,149,857

18.11 Expenditure and earnings in foreign currency (on accrual basis):(a) Expenditure:


Travelling 669,495 94,018

Trade mark fees 9,735,942 7,217,588

Interest 6,266,583 6,295,653

Others 8,474 5,678


43


(in Rupees)

Particulars 2011 2010

Deferred tax liabilities

Depreciation on fixed assets 27,599,626 26,697,263

Unrealised exchange fluctuation 803,549 7,966,534

Total deferred tax liabilities 28,403,176 34,663,797

Deferred tax assets

Accrual for expenses/retirement benefits allowable on payment basis 11,278,344 8,417,680

Provision for doubtful debts/advances 736,493 654,147

Allowance for carry forward loss and unabsorbed depreciation - 37,398,780

Total deferred tax assets 12,014,837 46,470,607*

Net deferred tax liability/(asset) (net) 16,388,500 -

Note: *On consideration of prudence, the deferred tax assets was recognized only to the extent of deferred taxliabilities due to carried forward tax losses as at 31 March 2010.

18.7. Deferred taxes, netThe significant components of deferred tax asset and liability consist of the following:

Note: Installed capacity has been certified by the Management and this has been accepted by the Auditors withoutverification, this being a technical matter.

Class of GoodsAutomotive Transmission Gears Unit of Measurement 2011 2010

Licensed capacity No. of Pieces Not Applicable Not Applicable

Installed capacity No. of Pieces 4,159,167 4,425,000

18.8 Details of licensed and installed capacity

(a) Production, Purchases, Sales and Stocks of Finished Goods:

(b) Quantitative Information

Automotive Transmission Gears

2011

Particulars Qty in pieces Value (Rupees) Qty in pieces Value (Rupees)

Opening stock 116,984 40,626,009 128,063 42,902,281

Production 2,231,769 1,614,577

Sales * 2,259,178 1,599,848,087 1,626,196 874,591,096

Closing stock 89,575 25,573,794 116,984 40,626,009

2010

* Net of adjustment of shortage/excess.


14


SUNDRY DEBTORS

Although the amount of Sundry Debtors as on 31st March, 2011 is higher than the previous year, the debtors

turnover ratio has improved due to quicker collection of debtors dues.

RESULTS OF OPERATIONS

Rs. in lakhs

Expenditure FYFYFYFYFY-2011-2011-2011-2011-2011 FY-2010

Cost of Goods Sold (COGS) 8643.178643.178643.178643.178643.17 4580.04

Employee costs 1698.431698.431698.431698.431698.43 1197.96

Manufacturing and other Expenses 3430.673430.673430.673430.673430.67 2379.65

Finance Cost 79.8279.8279.8279.8279.82 71.32

Depreciation 693.79693.79693.79693.79693.79 637.19

Cost of Goods Sold :

As compared to previous year COGS as percentage of sales remains at par mainly due to compensation of

increase in steel prices received from the Company�s customers on timely basis.

Employee Costs :

The total employee cost has gone up by 41.7% due to settlement of Worker�s wage agreement and Annual staff

increments along with Bonus.

Manufacturing Costs :

Manufacturing Costs have gone up by Rs. 1051.03 lakhs on account of increase in Power cost by Rs. 385.46

lakhs, Repairs to Plant & Machinery, Building and others by Rs. 104.08 lakhs, Job work charges Rs. 182.64 lakhs

and Rs. 224.2 lakhs in consumption of stores and labour charges. The said increase is in line with higher revenue

for the year. As a percentage of sales it has gone down by 5.5% as compared to previous year which helped to

increase the company�s Profit before tax.

Finance Cost :

Inspite of higher capital requirements the Company could manage the same through better control on receivables,

payables and CAPEX funding through its own internal generation of funds during the year. Hence, the finance

cost has gone up by a minimal Rs.8 lakhs only as compared to previous year.

Depreciation : Depreciation has gone up by Rs. 56.6 lakhs mainly due to purchase of equipment during the year

and running of the Plant in three shifts.

Certain statements in the Management Discussion and Analysis describing the Company�s objectives, projections,

estimates, expectations or predictions may be �forward � looking statements� within the meaning of applicable

securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that

could make a difference to the Company�s operations include raw material availability and prices. Cyclical demand

and pricing in the Company�s principal markets, changes in Government regulations, tax regimes, economic

developments within India and the countries in which the Company conducts business and other incidental factors.

15


Name Category Attendance Particulars No. of No. of No. ofother Committee # Chairmanship

Board Last AGM Directorships Membership of Committee #

Meeting held held

Jeffrey Potrzebowski @ Chairman 1 NA - - -Non Executive Director

Clement L. Strimel * Past-Chairman 2 No - - -Non Executive Director

Gary J. Lehman ** Non Executive Director 1 No - - -

Riad Fyzee Non Executive 3 Yes - 1 1Independent Director

Devanand E. Jacob Managing Director 5 Yes - 1 -

Vivek Prakash *** Non Executive Director 2 NA - - -

J. M. Mapgaonkar Non Executive Director 5 Yes 1 1 -

Avinash P. Gandhi Non Executive 3 No 11 4 2Independent Director

Ravi Kathpalia Non Executive 5 Yes 4 1 2Independent Director

Rakesh Chopra Non Executive 4 Yes 1 3 -Independent Director

Corporate Governance:

1. Company�s philosophy on Corporate Governance:

Fairfield Atlas Limited (�the Company�) is committed to adhere to the Corporate Governance Code as prescribed by

the Stock Exchange and has accordingly implemented various aspects of the code for the year ended 31st March,2011.

2. Board of Directors :

The names and categories of Directors are given below. The Board consists of 8 Directors out of which 7 are nonExecutive Directors including 4 Independent Directors among them. No Director of the Company is related to eachother.

3. Board Procedure :

A detailed Agenda and papers for consideration at the Board/Committee Meetings are circulated to each Directorin advance of Board and Committee Meetings. The Managing Director briefs the Board on the overall performanceof the Company and clarifies queries raised by the Board Members on any item of the Agenda as well as presentationsmade by Senior Executives of the Company.

4. Attendance of Directors at Meetings of Board and Members :

During the year the Board met 5 times on 11th May, 2010, 31st July, 2010, 22nd October, 2010, 28th January, 2011and 18th March, 2011. The maximum time gap between any 2 meetings was not more than 4 calendar months.

The following table gives details of Directors, attendance of Directors at the Board meetings and at the last AnnualGeneral Meeting, held on September 23, 2010, number of memberships held by Directors in the Board/Committeeof various public companies. None of the Directors on the Board was a member of more than 10 Committees andChairman of more than 5 Committees (as specified in Clause 49 of the Listing Agreement) across all the companiesin which he is a Director:

@ Nominee Director � Fairfield Manufacturing Co., Inc, U.S.A. Appointed Director with effect from 1st February,2011.* Nominee Director � Fairfield Manufacturing Co., Inc, U.S.A. Nomination withdrawn with effect from

31st January, 2011.** Nominee Director � Fairfield Manufacturing Co., Inc, U.S.A. Resigned as Director with effect from

31st January, 2011.*** Appointed Director with effect from 1st February, 2011# Committees considered are Audit Committee and Shareholders/Investors Grievance Committee including Fairfield

Atlas Ltd.

42


18.5. Un hedged foreign currency exposureThe Company uses forward exchange contracts to hedge against its foreign currency exposures relating to movementin foreign exchange rate in account receivables. The Company does not enter into any forward contracts for tradingor speculative purposes.

The following are the outstanding forward contracts entered by the Company as at 31 March 2011.

Foreign currency payables- representing creditors USD 1,149,980 550,435 51,533,481 24,901,690

Euro 21,600 Nil 1,375,488 NilCHF 49,201 43,516 2,409,857 1,851,592

- representing advances USD 94,726 21,699 4,206,775 972,820Euro 61,923 7,929 3,871,581 474,590

- Loan from T H Licensing Inc. USD 5,000,000 5,000,000 224,062,500 226,200,000U.S.A. [(External commercialborrowing (�ECB�)]

- Interest on ECB USD 16,320 - 731,364 -

- Loan from FMC* USD 4,000,000 5,500,000 179,250,000 248,820,001

Foreign currency receivables

- representing debtors USD 4,854,071 2,722,088 215,569,272 122,038,025Euro 1,310 1,310 81,913 78,418

ParticularsForeignCurrency

Amount inForeign Currency

Amount equivalent in Rupees

2011 2010 2011 2010

* - amounts have been restricted to maximum rupee equivalent. Refer Note 19 to schedule 18.

18.6. Transfer pricing

The Company�s management is of the opinion that its international transactions are at arm�s lengthso the transfer pricing legislation under Section 92-92F of the Income tax Act, 1961 will not have anyimpact on the financial statements, particularly on the amount of tax expense and that of provision fortaxation.


Forward Contracts INR USD 5 900,000 Sell Hedging

Category CurrencyCross

Currency

Numberof

contracts

Amount inUSD

Buy/Sell

Purpose

The following foreign currency exposures have not been hedged by derivative instruments or otherwise as at thebalance sheet date.

41


Note:1. The above remuneration does not include contribution to Gratuity fund and leave encashment /entitlement as

this contribution is a lump sum amount based on actuarial valuation.2. Computation of net profit in accordance with Section 349 of the Companies Act, 1956 has not been given,

as commission by way of percentage of profits is not payable for the year to the directors.

18. NOTES TO THE ACCOUNTS

18.1. Capital commitments

Estimated amount of contracts, net of capital advances of Rs. 10,220,081 (previous year Rs. 4,537,894),

remaining to be executed on capital account and not provided for Rs. 32,766,098 (previous year Rs.

12,593,180).

18.2. Contingent liabilities not provided for:

(a) Bills discounted with banks and remaining outstanding which are yet to mature Rs.9,869,639

(previous year Rs. 18,489,976);

(b) Demands raised by sales tax authorities against the Company not acknowledged as debts and

not provided for Rs.3,910,545 (previous year Rs. 3,910,545);

(c) Demands raised by service tax authorities against the Company not acknowledged as debts and

not provided for on technical know how in respect of which the company is in appeal aggregating

Rs. 2,479,821 (previous year Rs. 2,479,821).

18.3. Managerial remuneration:


2011 2010

Salaries, bonus and allowances 3,533,484 1,394,000

Contribution to pension and provident fund (refer note below) 155,535 115,200

Total 3,689,019 1,509,200

18.4 Outstanding Dues to micro, small and medium enterprises

Sundry creditors as at the year end include outstanding dues amounting Rs. 1,915,383 (previous year: Rs. Nil) tomicro, small and medium enterprises.

The following disclosures are made for amounts due to micro, small and medium enterprises:

Particulars 2011 2010

Principal amount and interest due thereon remaining unpaid to any supplieras at the year end 1,915,383 Nil

Amount of interest paid by the Company in terms of Section 16 of the MSMED Act,along with the amount of the payment made to the supplier beyond the appointedday during the accounting year Nil Nil

Amount of interest due and payable for the period of delay in making payment(which have been paid but beyond the appointed day during the year) but withoutadding the interest specified under the MSMED Act. Nil Nil

Amount of interest accrued and remaining unpaid at the end of the accounting year Nil Nil

On the basis of information and records available with the Company, the above disclosures are made in respectof amounts due to the micro, small and medium enterprises, who have registered with the relevant competentauthorities. This has been relied upon by the auditors.

16


5. Directors seeking reappointment:

At the ensuing Annual General Meeting Mr. Ravi Kathpalia and Mr. Rakesh Chopra retire by rotation and being

eligible offer themselves for reappointment.

Mr. Ravi Kathpalia, 73 years, holds Post Graduation degrees in English Literature and Public Administration. He has

passed the All India Civil Services Examination and has held important and responsible positions in the Accounts and

Finance Department of the Ministry of Finance as an Adviser/Consultant. Post retirement he is engaged in consultancy

work on financial management and corporate affairs. He is also on the Board of Directors of U-Flex Ltd., UTech

Developers Ltd., Alchemist Asset Reconstruction Co., Ltd., etc.

Mr. Kathpalia is one of the Independent Directors on the Board of Directors of the Company. He is a member of

the Audit and Remuneration Committees. Mr. Kathpalia does not hold any shares in the Company nor is he related

to any Director of the Company.

Mr. Rakesh Chopra, 60 years, is a Fellow Member of the Institute of Chartered Accountants of England & Wales and

also holds a Master Degree in Business Administration from Cranfield London. At present Mr. Chopra is a Senior

Director in an International Firm of Management Consultants. Mr. Chopra has worked in various capacities in the

Escorts Group, including 18 years as CEO, first as Executive Director, Escorts JCB Ltd., and thereafter as Business

Head of its largest Divisions, Agri Machinery Group. He is presently on the Board of Bharat Gears Ltd and Founder

member on the Governing Council of the Rajiv Gandhi Cancer Institute & Research Centre, New Delhi. Mr. Chopra

is one of the Independent Director inducted on the Board of Directors of the company and is a member of the Audit

and Remuneration Committees. Mr. Chopra does not hold any shares in the company nor is he related to any

Director of the Company.

Mr. Jeffrey Potrzebowski, 58 years, holds a Bachelor of Administration Degree with Accounting major. He is a

Certified Public Accountant (CPA). Mr. Potrzebowski is presently the Chief Financial Officer for the Oerlikon Group

Drive Systems Segment. Mr. Potrzebowski has worked extensively in the global market leading teams in America, Italy,

China and India. His career in senior positions in the field of Finance and Accounting spans more than three

decades. Earlier as Chief Financial Officer of Fairfield Manufacturing Co., Inc., he was advising the company on

financial matters and coordinating the financial reporting of the company. Mr. Potrzebowski does not hold any shares

in the Company nor is he related to any Director of the Company.

Mr. Vivek Prakash, 51 years, graduated from University of Roorkee presently called IIT Roorkee. Since January 2009

he is the CEO and Managing Director of Graziano Trasmissioni (India) Pvt.Ltd., (GTIL) which is an affiliate of the

company in the Oerlikon Group and has been leading the company since then. Before joining GTIL he was Chief

Operating Officer with automotive component group � Sandhar Technologies. Later he was business head for AK

Minda Group die-casting business and prior to that worked for more than two decades in various capacities, locations

and functions viz. production, quality control, projects, materials, sales and service in the Tractor, Commercial vehicles

and Gear business of Eicher Group in India. Mr. Prakash does not hold any shares in the Company nor is he related

to any Director of the Company.

Mr. D.E. Jacob, 42 years, is the Managing Director of the Company since 24th October 2008. The Board has

delegated substantial powers of management of the Company to Mr. D. E. Jacob, in his capacity as Managing

Director of the Company. Mr. Jacob is an Engineer by profession and has been stationed at the company�s plant for

the past 18 years and hence has acquired indepth knowledge of the functioning of the various departments. He has

received training at the Plant of the Company�s Principals, Fairfield Manufacturing Co., Inc., USA and the Company�s

other foreign suppliers. Mr. Jacob is responsible interalia for development of the business of the Company. In his

present capacity he overseas the entire Plant Operations both of the Domestic and Export Unit. Apart from Plant

Operations he also oversees the purchase, sales and HRD functions. Mr. Jacob holds two equity shares in the

company and is not related to any director of the company.

17


Committee Members Meetings Attended

Mr. Riad Fyzee, Chairman 3

Mr. J. M. Mapgaonkar, Member 3

Mr. D. E. Jacob, Member 4

6. Code of Conduct

The Board has laid down Code of Conduct for Directors and Senior Executives of the Company. All Board Members

and Senior Management Personnel have affirmed compliance with the Code of Conduct. A declaration signed by Mr.

Devanand E. Jacob, Managing Director is enclosed at the end of the report.

7. Stock Options :

No scheme for grant of stock options to Directors or employees.

8. Committees of the Board:

i. Audit Committee:

The members of the Audit Committee are Mr. Avinash P. Gandhi, Mr. Ravi Kathpalia and Mr. Rakesh Chopra.

Mr. Avinash P. Gandhi is the Chairman of the Committee. The Company Secretary acts as Secretary to the

Committee. The terms of reference of the Audit Committee covers the matters enumerated in Clause 49 of the

Listing Agreement.

The Audit Committee held 4 meetings during the year on 11th May, 2010, 31st July, 2010, 22nd October, 2010

and 28th January, 2011 and reviewed with the Statutory Auditors the financial statement for the year ended 31st

March 2010 and Unaudited Financial statements for the quarters ended 30th June, 2010, 30th September, 2010

and 31st December, 2010. The attendance at the meeting is as under:

The attendance at the meetings was as under:

Committee Members Meetings Attended

Mr. Avinash P. Gandhi, Chairman 2

Mr. Ravi Kathpalia, Member 4

Mr. Rakesh Chopra, Member 3

ii. Shareholders/Investors Grievance Committee:

The present Committee consists of Mr. Riad Fyzee, Mr. J. M. Mapgaonkar and Mr. D. E. Jacob. Mr. Riad Fyzee

is the Chairman of the Committee. The Committee looks into redressing of shareholders complaints like transfer

of shares, non-receipt of Balance Sheet, dividend etc. The work of the Registrar and Transfer Agent is overseen

by the Committee. Mr. Marcel Rebello, Company Secretary is the Compliance Officer. No complaints were

received from the shareholders during the year. The Committee had 4 meetings till date. The attendances at these

meetings were as under:

The attendance at these meetings was as under:

40


Schedule 16 : Manufacturing and other expenses

Stores, spare parts and tools consumed 4.22% 67,499,204 53,149,311

Labour charges for resharpening tools 1.23% 19,748,157 11,676,982

Power and fuel 6.52% 104,330,828 65,791,255

Job work charges 3.46% 55,355,381 37,090,921

Insurance 0.22% 3,541,566 2,916,739

Lease rentals charges 0.01% 148,748 144,000

Excise duty 18.17 (2,848,500) 1,611,996

Rent 818,185 883,048

Rates and taxes 0.40% 6,399,032 4,815,076

Repairs and maintenance:

� Building 0.35% 5,640,541 1,599,175

� Plant and machinery 1.39% 22,208,597 17,709,239

� Others 0.36% 5,688,935 3,821,433

Legal and professional fees 0.31% 4,963,059 4,040,390

Hire charges 0.07% 1,134,300 714,807

Printing and stationery 0.12% 1,914,445 1,614,585

Travelling and conveyance 0.52% 8,346,684 4,347,328

Communication 0.13% 2,103,908 2,262,744

Freight outward and forwarding expenses 1.11% 17,784,489 10,568,726

Brokerage charges 0.02% 377,527 155,836

Directors� sitting fees 0.03% 550,000 450,000

Auditors� remuneration (excluding service tax)

� Statutory audit 2,250,000 1,750,000

� Tax audit 250,000 250,000

� Out - of - pocket expenses 112,052 86,965

Trade mark fees 0.61% 9,735,942 7,217,588

Loss on sale of fixed assets (net) 0.02% 251,593 -

Bad debts written off 0.00% - 21,968

Provision for doubtful debts 0.01% 236,572 617

Provision for doubtful advances 0.00% 5,694 -

Miscellaneous expenses 0.28% 4,520,914 3,274,249

343,067,853 237,964,978

Schedule 17 : Finance cost

Interest on

- Loans 6,436,629 6,349,238

- Others 431,700 -

Bill discounting charges 750,808 592,336

Bank charges 362,720 190,253

7,981,857 7,131,827


2010-2011 2009-2010Rupees Rupees

39



2010-2011 2009-2010Rupees Rupees

Schedule 13 : Other income

Interest on deposits 1,963,338 4,819,627[(Net of tax deducted at source Rs. 308,312 (previous year: Rs. 395,811)]Foreign exchange gain (net) 2,018,713 36,200,877Provision for doubtful advances/debts no longer required written-back - 2,731,297Sales tax and excise refund 3,390,651 10,422,239Liabilities/ provisions no longer required written - back 445,016 5,772,670Development tooling income 10,525,608 26,803,609Profit on sale of fixed assets (net) - 297,269Miscellaneous income 3,835,753 2,267,183

22,179,079 89,314,771

Schedule 14 : Cost of goods sold

A) Raw materials and packing materials consumed

Opening stock 85,620,762 103,511,604Purchases 874,950,136 444,281,152

960,570,898 547,792,756Less : Closing stock 112,751,603 85,620,762

847,819,295 462,171,994Packing material consumed 22,418,640 10,506,823Freight inwards 13,294,502 7,447,045

883,532,437 480,125,862

B) (Increase)/ decrease in work-in-progress and

finished goods

Opening stock� Work-in-progress 78,080,072 53,681,773� Finished goods 40,626,009 42,902,281

118,706,081 96,584,054Closing stock� Work-in-progress 112,347,152 78,080,072� Finished goods 25,573,794 40,626,009

137,920,946 118,706,081

(19,214,865) (22,122,027)

(A+B) 864,317,572 458,003,835

Schedule 15 : Employee costs

Salaries, wages, bonus and allowances 150,555,615 99,188,555Contribution to provident fund and other funds 8,013,141 6,426,628Gratuity (176,066) 4,870,589Leave encashment 742,279 1,602,446Staff welfare expenses 10,707,692 7,708,033

169,842,661 119,796,251

18


iv. Committee Meeting:

A meeting of the Committee of directors was held on 23rd September, 2010 to approve Cost Audit report for

the year 2009-2010.

Names andDesignation

Salary HouseRent Allowance

SpecialAllowance

(Rs.)

Commission(Performance

Linked)

(Rs.)

Company�scontribution toProvident andPension Fund

(Rs.)

Perquisites

(Rs.)

Total

(Rs.)

Remuneration paid during 2010�2011

Service Contract,notice period,severance fees

* Mr. Riad Fyzee holds 45230 equity shares of Rs.10/- each and Mr. D. E. Jacob holds 2 equity shares of Rs.10/- each inthe company. None of the other Directors holds any shares in the company.Above Non Executive Directors are only entitled to sitting fees of Rs.15,000/- per Board Meeting attended and Rs.15,000/-per Committee meetings attended (increased from Rs.10,000/- per Committee Meeting with effect from 1st October, 2010).None of the other Non Executive Directors has been paid any remuneration including sitting fees during the year.

Mr. Devanand E. 3,533,484 - 155,535 - 3,689,019Jacob *Managing Director

Mr. Riad Fyzee * - - - - 80,000Non Executive /Independent Director

Sitting fees for attending Boardand Committee Meetings

Mr. Rakesh Chopra - - - - 1,20,000Non Executive /Independent Director


Avinash Gandhi - - - - 80,000Non Executive /Independent Director


Ravi Kathpalia - - - - 1,35,000Non Executive /Independent Director


J. M.-Mapgaonkar - - - - 1,35,000Non ExecutiveDirector


The appointment is for the periodfrom 24th October, 2010 till 31stOctober, 2013 subject totermination by three monthsnotice in writing on either side orpayment of remuneration for threemonths in lieu of notice. IfAgreement terminated withoutcause company to paycompensation subject toprovisions of section 318 of theCompanies Act 1956 calculatedin accordance with Section 318(4)of the Companies Act 1956.

iii. Remuneration Committee:

The Remuneration Committee comprises of Mr. Ravi Kathpalia, Mr. Avinash P. Gandhi and Mr. Rakesh Chopra.

Mr. Kathpalia is the Chairman of the Committee. The Committee recommends to the Board the remuneration

package of the Managing/Whole Time Director and other Directors considering the performance of the company,

current trends in the industry, experience of Directors, past performance and other relevant factors. A meeting

of the Committee was held on 18th October, 2010 at which all Directors of the Committee were present.

19


GENERAL INFORMATION FOR SHAREHOLDERS :

Annual General Meeting:

The Twentyfirst Annual General Meeting of the Company will be held on Tuesday 9th August 2011 at 4 p.m.

at the Registered Office situated at Survey No. : 157, Devarwadi Village, Chandgad Taluka, Dist. Kolhapur,

Maharashtra - 416 507.

Financial Calendar of the Company:

The financial year covers the period 1st April to 31st March.

Financial Reporting for

Quarter ending June 30, 2011 Mid August 2011

Half Year ending September 30, 2011 Mid November 2011

Quarter ending December 31, 2011 Mid February 2012

Year ending March 31, 2012 End May 2012

Note: The above dates are indicative.

Dates of Book Closure:

Friday, 29th July, 2011 to Tuesday, 9th August, 2011 (both days inclusive)

Dividend payment date:

Not Applicable

Listing of securities:

The Company�s securities are listed only on the Stock Exchange, Mumbai. The Depositories for the Company�s

shares are National Securities Depository Ltd., and Central Depository Services (India) Ltd. The listing fees

of the Exchange and custodial fees of Depositories for the year 2011-2012 have been paid.

1. Scrip Code: Stock Exchange Mumbai: 520145

2. As per SEBI notification, the Company�s shares are being compulsorily traded in the Demat form. Demat

identification number in NSDL and CDSL is ISIN INE 922C01013.

Shareholders complaints redressal email ID

As required by Clause 47(f) of the Listing Agreement the Company has designated a new email ID

[email protected] for the purpose of attending to shareholders complaints.

Company�s Website

As per Clause 54 of the Listing Agreement the Company has maintained a Website: www.falworld.com for

publishing information as required by the said Clause.

Registrar and Transfer Agents :

Sharex Dynamic (India) Pvt. Ltd.Sharex Dynamic (India) Pvt. Ltd.Sharex Dynamic (India) Pvt. Ltd.Sharex Dynamic (India) Pvt. Ltd.Sharex Dynamic (India) Pvt. Ltd.

Unit-1, Luthra Industrial Premises,

Andheri Kurla Road, Safed Pool,

Andheri (East), Mumbai 400 072.

Tel : 28515606, 28515646 Fax : 28512885

38


SCHEDULES TO THE FINANCIAL STATEMENTS (Contd.)as at 31st March 2011 (Currency : Indian Rupees)

As at As atMarch 31, 2011 March 31, 2010

Rupees RupeesSchedule 10 : Other current assets

(Unsecured and considered good)

Interest accrued on deposits 703,339 3,363,496

703,339 3,363,496

Schedule 11 : Loans and advances

(Unsecured and considered good, unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received- Considered good 11,481,837 3,072,968- Considered doubtful 603,554 597,860

12,085,391 3,670,828Less: Provision for doubtful advances 603,554 597,860

11,481,837 3,072,968

Prepaid expenses 3,484,472 2,429,903MAT Credit entitlement 82,285,500 44,703,000Balances with excise, customs and sales tax authorities 24,663,292 11,543,589Deposits 5,539,806 4,861,505

127,454,907 66,610,965

Schedule 12 : Current liabilities and provisions

Current liabilities

Bills payable 27,051,518 20,796,774Sundry creditors- Due to Micro, Small and Medium Enterprises 1,915,383 -[Refer Note 4 to schedule 18]- Other sundry creditors 379,185,440 196,207,648Other liabilities 8,456,229 10,388,743Advances received from customers 4,608,185 8,620,660

(A) 421,216,755 236,013,825

Provisions

Taxation 5,383,103 5,608,813[Net of tax deducted at source and advance tax Rs 80,761,968(previous year: Rs 40,851,811)]Gratuity - 11,756,166Leave encashment 7,610,214 7,433,208

(B) 12,993,317 24,798,187

(A+B) 434,210,072 260,812,012

37




Rupees RupeesSchedule 7 : Inventories

Stores and spare parts 46,181,293 35,755,950Raw materials [including goods in transit Rs. 5,571,465 112,751,603 85,620,762(previous year: Rs. Nil)Packing materials 289,752 133,256Work-in-progress 112,347,152 78,080,072Finished goods 25,573,794 40,626,009

297,143,594 240,216,049

Schedule 8 : Sundry debtors(Unsecured)Debts outstanding for a period exceeding six months- Considered good 34,892 1,369,202- Considered doubtful 1,563,240 1,326,668

1,598,132 2,695,870Other debts- Considered good 411,664,625 270,233,387

413,262,757 272,929,257Less: Provision for doubtful debts 1,563,240 1,326,668

411,699,517 271,602,589

Debtors includes Rs. 207,994,347 (previous year : Rs 114,388,014)due from the various Companies under the same management asdefined under Section 370 (1B) of the Companies Act, 1956 (Referschedule 18.12)

Schedule 9 : Cash and bank balancesCash on hand 294,279 392,235Balances with scheduled banks- In current accounts 4,493,680 21,093,672- In fixed deposit accounts (refer notes below) 20,021,392 51,520,000- In exchange earners foreign currency account 22,366,772 -

47,176,123 73,005,907

Notes:

a) Fixed deposit of Rs. Nil (previous year: Rs. 32,000,000) is lying under lien with bank towards demandloan availed by the Company amounting Rs. Nil (previous year: Rs. 28,400,000).

b) Fixed deposit of Rs. 21,392 (previous year: Rs. 20,000) is lying under lien with bank towards MaharashtraPollution Control Board.

20


Market Price Data:

High/low during each month of the last financial year:

Foreign Promoters 22924796 83.91

FI / Bank / FII / Mutual/ Venture Funds 2040968 7.49

Bodies Corporate 451729 1.65

NRI/OCBs Foreign Companies 36584 0.13

Public 1866463 6.82

Total Equity Capital 27320540 100.00

Number of Equity sharesof Rs.10/� each

% to SubscribedCapital

Category

Shareholding Pattern as on March 31, 2011:

High Rs. Low Rs.

April 2010 51.95 36.80

May 2010 53.00 42.10

June 2010 77.85 47.00

July 2010 77.80 65.00

August 2010 68.40 59.00

September 2010 74.00 55.00

October 2010 89.40 65.00

November 2010 83.30 64.10

December 2010 74.00 57.50

January 2011 72.20 58.00

February 2011 61.95 48.70

March 2011 59.00 48.15

21


Distribution of shareholding as on March 31, 2011:

Shareholding No. of % of No. of % of

Holders Holders Shares Shareholding

Upto 100 2994 59.55 260766 0.95

101 to 200 640 12.73 120123 0.44

201 to 500 774 15.40 299924 1.10

501 to 1000 295 5.87 248458 0.91

1001 to 5000 262 5.21 592686 2.17

5001 to 10000 36 0.72 274191 1.00

10001 to 100000 24 0.48 572428 2.10

100001 to above 2 0.04 24951964 91.33

TTTTTotalotalotalotalotal 50275027502750275027 100.00100.00100.00100.00100.00 2732054027320540273205402732054027320540 100.00100.00100.00100.00100.00

Dematerialization of shares and liquidity:

98.78% of the total equity comprising 26986620 equity shares of Rs. 10 each is held in a dematerialized form with

National Securities Depository Ltd. and Central Depository Services (India) Ltd. as on March 31, 2011.

Share Transfer System :

Trading in equity shares of the Company is permitted only in dematerialized form. Share transfers in physical form received

by the Registrar and Share Transfer Agents are registered and share certificate(s) returned within a period of 30 days from

the date of receipt of the documents provided all documents are valid and complete in all respects. A committee

consisting of a Non Executive Director and Company Secretary approves such transfer of shares.

Plant Location:

i) The Company�s Domestic Tariff Area Unit is located at Survey No. : 157, Devarwadi Village, Chandgad Taluka, Dist.

Kolhapur, Maharashtra � 416 507.

ii) The Company�s Export Oriented Unit is located at Survey No. 116 and 119, Shinoli (Budruk), Chandgad Taluka, Dist.

Kolhapur, Maharashtra- 416 507.

Address for Correspondence :

Correspondence can be addressed to the Registered/Corporate office of the company or the office of Share Transfer

Agents for the attention of the Company Secretary. Shareholders would have to correspond with respective Depository

Participants for shares held in demat mode.

Other Disclosures :

1. Details of Annual / Extra-ordinary General Meetings:

Annual General Meetings held during last three years:

Year Date Time

2008 September 10, 2008 3 PM

2009 September 17, 2009 3 PM

2010 September 23, 2010 3 PM

No Extra-ordinary General Meetings held during last three years

All Annual General Meetings were held at the registered office. No postal ballots were required to be used at these

meetings. The Company will use postal ballots when required under the provisions of the Companies Act, 1956.

36



SCHEDULE 6 : FIXED ASSETSRupees

INTANGIBLE ASSETSTechnical know - how 88,507,364 - - 88,507,364 88,507,364 - - 88,507,364 - -

Software - 625,000 - 625,000 - 3,606 - 3,606 621,394 -

TANGIBLE ASSETS

Freehold land 9,751,561 - - 9,751,561 - - - - 9,751,561 9,751,561

Borewell 388,116 - - 388,116 65,579 6,291 - 71,870 316,246 322,537

Factory building 100,597,289 2,142,711 - 102,740,000 28,775,261 3,377,083 - 32,152,344 70,587,656 71,822,028

Plant and machinery 995,052,799 98,362,365 13,690,836 1,079,724,328 611,961,146 64,283,709 11,755,111 664,489,744 415,234,584 383,091,653

Office equipments 4,078,039 904,153 - 4,982,192 1,179,216 223,324 - 1,402,540 3,579,652 2,898,822

Furniture and fittings 5,928,471 1,223,191 923,122 6,228,540 3,580,146 316,418 740,625 3,155,939 3,072,601 2,348,326

Computers 13,613,113 1,791,248 - 15,404,361 11,173,482 821,617 - 11,995,099 3,409,262 2,439,631

Vehicles 4,134,105 2,840,683 - 6,974,788 2,674,509 347,332 - 3,021,841 3,952,947 1,459,596[Refer note (a)]

Total 1,222,050,857 107,889,351 14,613,958 1,315,326,250 747,916,703 69,379,380 12,495,736 804,800,347 510,525,903 474,134,154

Previous year 1,218,576,822 11,130,069 7,656,034 1,222,050,857 691,561,495 63,719,497 7,364,289 747,916,703 474,134,154

Capital work-in-progress [including capital advances Rs. 10,220,081 (previous year Rs. 4,537,894)] 14,411,939 11,575,425

524,937,842 485,709,579

GROSS BLOCK DEPRECIATION NET BLOCK

PARTICULARS As at Additions Deletions/ As at As at Charge Deductions/ As at As at As at

April 1, during Adjustments March 31, April 1, For Adjustments March 31, March 31, March 31,

2010 the year during the year 2011 2010 the Year during the year 2011 2011 2010

Note:a) Vehicles costing Rs.2,840,683 (previous year Rs Nil) are under lien with banks towards the vehicle

loans.

35


SCHEDULE 3 : SHARE CAPITAL

Authorised:28,000,000 (previous year Rs. 28,000,000)equity shares of Rs. 10 each. 280,000,000 280,000,000

�� 280,000,000 280,000,000

�� Issued, Subscribed and Paid-up:27,320,540 (previous year Rs. 27,320,540)equity shares of Rs. 10 each, fully paid-up. 273,205,400 273,205,400

�� 273,205,400 273,205,400��

Note:1) Of the above, 22,924,796 ( previous year: 22,924,796) equityshares of Rs. 10 each, fully paid-up, are held by T-H Licensing Inc.,U. S. A., a wholly owned subsidiary of Fairfield ManufacturingCompany Inc., U.S.A. The ultimate holding company is OC OerlikonCorporation A.G. Pfaffikon.

SCHEDULE 4 : RESERVES AND SURPLUS

Capital ReserveSpecial Capital Incentive (refer note below) 5,500,000 5,500,000

Profit and Loss Account 273,621,052 97,517,588�� 279,121,052 103,017,588��

Note:The Company had received cash subsidy from State Industrial and Investment Corporation of MaharashtraLimited (SICOM) under the 1988 package scheme of incentives in the nature of promoters' contribution.

SCHEDULE 5 : SECURED LOANS

Other LoansFrom T- H Licensing Inc., U. S. A., the holding company[Refer Note (a) below] 224,793,864 226,200,000[Interest accrued and due Rs 731,364 (previous year Rs. Nil)]

From Fairfield Manufacturing Company Inc., U. S. A. 179,250,000 248,820,001[Refer Note 19 of schedule 18]

From bankDemand Loan from Axis Bank Limited - 28,453,585[Refer Note (b) below][Includes interest accrued and due Rs Nil (previous year Rs.53,585]

Vehicle loans 2,146,434 -[Refer Note (c) below] ��

406,190,298 503,473,586��



Rupees Rupees

Notes:

a) External commercial borrowing of USD 5,000,000 (previous year: USD 5,000,000) from T-H Licensing Inc., U. S. A. is secured by creation of hypothecation chargeon all the fixed and current assets, excluding land and building. The entire Loan was originally repayable on 28 February 2011. On 21 January 2011, the Companyreceived letter of intent from T-H Licensing Inc., U. S. A. for extension of period of repayment of said loan by another 60 months, with all other terms and conditionsremaining unchanged. Based on the letter of intent, the Company has filed an application with Reserve Bank of India (RBI) through an Authorised Dealer(AD).Necessary approvals from RBI/AD are awaited. The Company's management is confident of receiving said approvals in due course.

b) During the previous year, the Company availed short term loan of Rs. 28,400,000 against Fixed Deposit of Rs. 32,000,000.c) Vehicle loans are secured by a specific charge on respective vehicle purchased.

22


Special Resolutions passed

1. Modification of the Employment Agreement dated 5th August, 2005

entered into between the Company and Mr. A.K. Kaul, Whole Time

Director upon terms and conditions set out in the Supplemental

Agreement dated 24th January, 2008 entered into between the

company and Mr. A.K. Kaul, Whole Time Director�.

2. Appointment of Mr. Lalit K. Chaudhary as Managing Director and

CEO for a period of 5 years commencing from 1st January, 2008

upon terms and conditions set out in the Agreement dated 7th February,

2008 entered into between Mr. Lalit K. Chaudhary and the Company.

No Special Resolutions were passed at the Annual General Meeting held for the Financial Year 2009-2010.

2. Related Party Transactions Disclosures:

During the year under review, besides the transactions reported elsewhere in the Annual Report, there were no other

related party transactions with the promoters, directors, management and subsidiaries or relatives etc. that had a

potential conflict with the interest of the Company at large.

Transactions with related parties are disclosed in Note No. 18.16 of Schedule 18 to the Accounts in Annual Report.

3. Details of non-compliance:

There was no non compliance by the Company on any matter related to capital market during the last three years.

4. Means of communication:

The Quarterly, Half yearly and Yearly results are published in Free Press Journal, Mumbai and Navshakti (Marathi),

Mumbai. These are not sent individually to shareholders.

5. Management Discussion and Analysis

The Management Discussion and Analysis has been included in the Directors� Report and forms part of this Annual

Report.

Declaration by the Managing Director pursuant to Clause 49 of the Listing Agreement

To,

The Members of Fairfield Atlas Limited

I, Mr. Devanand E. Jacob, Managing Director of Fairfield Atlas Limited declare that all the members of the Board

of Directors and Senior Executives of the Company have affirmed compliance with the Code of Conduct for the financial

year 2010-2011.

The following Special Resolutions were passed at the previous three Annual General Meetings:

Financial Year Date of Meeting

2007-2008 10.09.2008

1. Appointment of Mr. Devanand E. Jacob, as Managing Director of the

Company for a period of 2 (two) years commencing from 24th October

2008 and ending 23rd October, 2010 upon terms and conditions set

out in the Agreement dated 5th December, 2008 entered between

Mr. Devanand E. Jacob and the Company.

2008-2009 17.09.2009

D. E. JACOBManaging Director

Place : MumbaiDate : 26th April, 2011

23


Auditors� Certificate regarding compliance with the conditions of Corporate Governance

TO THE MEMBERS OF FAIRFIELD ATLAS LIMITED

We have examined the compliance of the conditions of Corporate Governance procedures implemented by Fairfield Atlas

Limited, for the year ended on March 31, 2011, as stipulated in Clause 49 of the Listing Agreement of the said Company

with the Stock Exchange in India.

The Compliance of the conditions of Corporate Governance is the responsibility of the Management. Our examination

has been limited to a review of the procedures and implementations thereof, adopted by the Company for ensuring

compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion of the

financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and the representations

made by the Directors and Management, we certify that the Company has complied with the conditions of Corporate

Governance as stipulated in Clause 49 of the above mentioned Listing Agreement :

As required by the Guidance Note issued by the Institute of Chartered Accountants of India we have to state that based

on the report given by the Registrars of the Company to the Investors� Grievance Committee, as on March 31, 2011 there

were no valid investor grievance matters against the Company remaining unattended/pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency

or effectiveness with which the Management has conducted the affairs of the Company.

CS MAHESH SONI

Practising Company Secretary

FCS : 3706 COP : 2324

Place : Mumbai


34


2.10 Employee benefits

(a) Short term employment benefits

All employee benefits payable wholly within twelve months of rendering the service are classifiedas short-term employee benefits. Benefits such as salaries, wages, and short term compensatedabsences, etc. and the expected cost of ex-gratia are recognized in the period in which theemployee renders the related service.

(b) Post employment benefits

Defined contribution plan:

The Company contributes to the statutory provident fund, administered by the government, at theprescribed rates and has no further obligation beyond making its contribution. Provident funddues are recognized when the liability to contribute to the provident fund arises under theEmployees� Provident Fund Act, 1952 and charged to revenue.

Defined benefit plan:

The Company�s gratuity benefit scheme is a defined benefit plan funded with Life InsuranceCorporation of India (�LIC�) defined benefit plan (partly unfunded up to previous year). TheCompany�s obligation in respect of the gratuity benefit scheme is determined by an independentactuary by estimating the amount of future benefit that employees have earned in return for theirservice in the current and prior periods, that benefit is discounted to determine its present value.

The present value of the obligation under such defined benefit plan is determined based onactuarial valuation using the projected unit credit method, which recognizes each period ofservice as giving rise to additional unit of employee benefit entitlement and measures each unitseparately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discountrates used for determining the present value of the obligation under defined benefit plan, arebased on the relevant market yields on Government securities as at the balance sheet date.

(c) Long term employment benefits :

The Company�s net obligation in respect of long-term employment benefits, other than gratuity,is the amount of future benefit that employees have earned in return for their service in thecurrent and prior periods. The obligation is based on actuarial valuation using the projected unitcredit method and is discounted to its present value. The discount rates used for determiningthe present value of the obligation under defined benefit plan, are based on the relevant marketyields on Government securities as at the balance sheet date.

Actuarial gains and losses are recognized immediately in the profit and loss account.

2.11 Earnings per share

The basic earnings per share is computed by dividing the net profit attributable to the equity shareholdersfor the period by the weighted average number of equity shares outstanding during the reportingperiod. The Company does not have any dilutive potential equity shares during the reporting period.

2.12 Provisions and contingencies

The Company creates a provision where there is present obligation as a result of a past event thatprobably requires an outflow of resources and a reliable estimate can be made of the amount of theobligation. A disclosure for a contingent liability is made when there is a possible or a presentobligation that may, but probably will not, require an outflow of resources. When there is a possibleobligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosureis made. Loss contingencies arising from claims, litigations, assessments, fines, penalties etc are recordedwhen it is probable that a liability has been incurred and the amount can be reasonably estimated.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.If it is no longer probable that an outflow of resources would be required to settle the obligation, theprovision is reversed.


33


loss account. If at the balance sheet date there is an indication that a previously assessed impairment

loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable

amount subject to a maximum of depreciated historical cost.

Value in use is the present value of estimated future cash flows expected to arise from the continuing

use of assets and from its disposal at the end of its useful life.

2.5 Borrowing costs

Borrowing costs directly attributable to the acquisition/construction of a qualifying asset are apportionedto the cost of the fixed assets upto the date on which the asset is put to use/commissioned.

2.6 Inventory

Inventories are valued at the lower of cost and net realisable value. Cost includes raw material cost,conversion costs and all expenses incurred to bring the inventory to its present location and condition.

Cost is determined on first in first out basis for raw materials, work-in-progress, finished goods andstores and spare parts.

2.7 Taxation

Income tax expense comprises current income tax and deferred tax charge or credit (reflecting the taxeffects of timing differences between accounting income and taxable income for the year).

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognizedusing the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferredtax assets are recognized only to the extent there is reasonable certainty that the assets can be realizedin future.

However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferredtax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred taxassets are reviewed at each balance sheet date and written down or written up to reflect the amountthat is reasonably/ virtually certain (as the case may be) to be realized.

In accordance with the guidance note issued by the Institute of Chartered Accountants of India (�ICAI�)on accounting for credit available in respect of Minimum Alternate Tax (MAT) under the Income-tax Act,1961, the Company recognises MAT credit as an asset only when and to the extent there is convincingevidence for reasonable certainty that the Company will be liable to pay normal income tax during thespecified period.

2.8 Leases

Operating lease

Lease rentals in respect of assets acquired under operating lease are charged off to the profit and lossaccount on a straight line basis over the period of lease.

Finance lease

Assets acquired under finance leases are recognised at the lower of the fair value of the leased assetsat inception and the sum of the present value of minimum lease payments.

2.9 Foreign currency transactions

Transactions in foreign currency are recorded at the exchange rate prevailing on the date of thetransaction. Foreign currency denominated monetary assets and liabilities at the balance sheet dateare translated at the exchange rate prevailing on the date of the balance sheet. Exchange ratedifferences resulting from foreign exchange transactions settled during the period, including period-endtranslation of assets and liabilities are recognised in the profit and loss account

In respect of transactions covered by forward exchange contracts, discounts/premiums on forwardexchange contracts are amortised over the period of the contract. Exchange differences arising due tochange in exchange rates on forward exchange contracts are recognized in the profit and loss account.


24


FFFFFor or or or or B S R and CoChartered Accountants

Firm�s Registration No.: 128510W

Sadashiv ShettySadashiv ShettySadashiv ShettySadashiv ShettySadashiv ShettyPlace : Mumbai PartnerDate : 26th April, 2011 Membership No: 048648

AUDITORS� REPORT

TO THE MEMBERS OF FAIRFIELD ATLAS LIMITED

We have audited the attached balance sheet of Fairfield Atlas Limited (�the Company�), as at 31 March 2011 and the

related profit and loss account and the cash flow statement for the year ended on that date, annexed thereto. These

financial statements are the responsibility of the Company�s management. Our responsibility is to express an opinion on

these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements. An audit also includes assessing the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

1. As required by the Companies (Auditor�s Report) Order, 2003 (�the Order�) issued by the Central Government of

India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, (�the Act�) we enclose in the Annexure

a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to above, we report that:

(i) we have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(ii) in our opinion proper books of account as required by law have been kept by the Company so far as appears

from our examination of those books;

(iii) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement

with the books of account;

(iv) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report

comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(v) on the basis of written representations received from the directors as on 31 March 2011 and taken on record

by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2011 from being

appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and

(vi) in our opinion, and to the best of our information and according to the explanations given to us, the said

accounts give the information required by the Act in the manner so required and give a true and fair view in

conformity with the accounting principles generally accepted in India:

a. in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2011;

b. in the case of the profit and loss account, of the profit of the Company for the year ended on that date;

and

c. in the case of the cash flow statement, of the cash flows for the year ended on that date.

25


Annexure to the AUDITORS� REPORT

- 31st March 2011

With reference to the Annexure referred to in paragraph 1 of the Auditors� Report to the members of Fairfield Atlas Limited

(�the Company�) on the financial statements for the year ended 31 March 2011, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation

of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are

verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification

is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies

were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern

assumption.

(ii) (a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the

management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying

with third parties at the year-end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and

adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, except for pending updation of inventory

records of work in progress, the Company is maintaining proper records of inventory. Closing balance of work in

progress has been valued based on physical verification at year end. Accordingly, the closing balance of work in

progress as per books can not be ascertained. The discrepancies noticed on physical verification of inventory

(except for work in progress) as compared to book records were not material.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other

parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation

that purchases of certain items of inventories and fixed assets are for the Company�s specialised requirements and

similarly certain goods sold and services rendered are for the specialised requirements of the buyers and suitable

alternative sources are not available to obtain comparable quotations, there is an adequate internal control system

commensurate with the size of the Company and the nature of its business with regard to purchase of inventories

and fixed assets and with regard to the sale of goods and services. In our opinion and according to the information

and explanations given to us, except for pending updation of inventory records of work in progress, there is no

continuing failure to correct major weaknesses in internal control system.

(v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements

the particulars of which need to be entered into the register maintained under Section 301 of the Act.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii)We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the

Central Government for maintenance of cost records under section 209(1)(d) of the Act, in respect of products and

are of the opinion that prima facie, the prescribed accounts and records have been made and maintained except

32


1 BACKGROUND

Fairfield Atlas Limited ('the Company'), a subsidiary of T-H Licensing Inc., USA, (�the holding company�),

a wholly owned subsidiary of Fairfield Manufacturing Company Inc., USA was incorporated on

1 February 1990. The ultimate holding company is OC Oerlikon Corporation A.G. Pfaffikon. The

Company is primarily engaged in manufacturing and selling of automative transmission gears and

gear boxes.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, on the accrual basis of

accounting in accordance with the accounting principles generally accepted in India (�Indian GAAP�)

and comply with the companies (accounting standards) rules, 2006 issued by the Central Government,

in consultation with National Advisory Committee on accounting standards (�NACAS�) and relevant

provisions of Companies Act, 1956 (�the Act�) to the extent applicable.

2.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires management to

make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure

of contingent liabilities as of the date of financial statements. Although these estimates are based upon

management�s best knowledge of current assets and liabilities, actual results may differ from those

estimates. Any revision to accounting estimates is recognised prospectively in current and future

periods.

2.3 Revenue recognition

Revenue from sale of transmission gears and gear boxes is recognized on transfer of all significant risks

and rewards of ownership to the buyer. Related services are recognised once the services are rendered.

Sales are recorded net of trade discounts, rebates, sales tax, excise duty and sales return.

Interest income is recognized using the time proportion method based at the underlying interest rates.

2.4 Fixed assets and depreciation

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation, amortisation

and impairment loss, if any. Cost includes inward freight, duties, taxes and direct expenses relating to

acquisition and installation of the asset.

Depreciation on fixed assets has been provided using straight line value method in the manner and

at the rates prescribed by Schedule XIV of the Companies Act, 1956, except for material handling

equipments which have been depreciated on straight line method over a period of three years and

technical know how fees is amortized over a period of eighteen months from the date of technology

being put to use.

Depreciation is charged on pro-rata basis for assets purchased / disposed off during the period.

Individual assets costing less than Rs. 5,000 are depreciated fully in the year of purchase.

Impairment of fixed assets

The Company assesses at each balance sheet date whether there is any indication that an asset may

be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.

The recoverable amount is the greater of the net selling price and value in use. In assessing value in

use, the estimated future cash flows are discounted to their present value based on an appropriate

discount factor. If such recoverable amount of asset or the recoverable amount of the cash generating

unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its

recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and

SCHEDULES TO THE FINANCIAL STATEMENTSfor the year ended 31st March 2011 (Currency : Indian Rupees)

31


Cash Flow Statement for the Year Ended March 31, 2011

(Currency : Indian Rupees) 2011 2010

Rupees Rupees

The Schedules referred to above form an integral part of this cash flow statement.As per our report attached

For B S R and Co For and on behalf of the Board of DirectorsChartered AccountantsFirm�s Registration No.: 128510WSadashiv Shetty Jeffrey Potrzebowski D. E. JacobPartner Chairman Managing DirectorMembership No.: 048648



1. The above Cash Flow Statement has been prepared under the "Indirect Method" as set out in theAccounting Standard - 3 on Cash flow statement issued by the Companies (Accounting Standard) Rules,2006.

2. Previous year's figures have been regrouped/ rearranged wherever necessary.

Cash and cash equivalents at the beginning of the year 73,005,907 113,499,269

Cash and cash equivalents at the end of the year 47,176,123 73,005,907

(25,829,784) (40,493,362)

2011 2010

Cash and cash equivalents comprise:

Cash on hand 294,279 392,235

Balances with scheduled banks

- In current accounts 4,493,680 21,093,672

- In fixed deposit accounts 20,021,392 51,520,000

- In Exchange Earners Foreign Currency (EEFC) Account 22,366,772 -

Cash and cash equivalents at year-end 47,176,123 73,005,907

26


for pending updation of inventory records of work in progress. However, we have not made a detailed examination

of the records.

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

of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues

including Provident Fund, Professional tax, Income-tax, Wealth tax, Sales-tax, Service tax, Customs duty, Excise

duty, Cess and other material statutory dues have been generally regularly deposited during the year by the

Company with the appropriate authorities. As explained to us, the Company did not have any dues on account

of Investor Education and Protection Fund and Employee�s State Insurance.

There were no dues on account of cess under Section 441A of the Act, since the date from which the aforesaid

section comes into force has not yet been notified by the Central Government.

According to the information and explanations given to us, no undisputed amounts payable in respect of

Provident Fund, Professional tax, Income tax, Sales tax, Service tax, Customs duty, Excise duty, Cess and other

material statutory dues were in arrears as at 31 March 2011 for a period of more than six months from the date

they became payable.

(b) According to the information and explanations given to us, there are no dues of Income tax, Wealth tax, Customs

duty and Excise duty which have not been deposited with the appropriate authorities on account of any dispute.

According to the information and explanations given to us, the following dues of Sales tax and Service tax have

not been deposited by the Company on account of disputes:

Name of the Nature of the Amount (Rs) Period to which Forum where disputeStatute Dues the amount relates is pending

Central Excise Act, 1944 Service Tax 2,479,821 April 2003 to Custom, Excise andJune 2005 Service Tax Appellate

Tribunal

Bombay Sales Tax Act, Levy of 1,523,773 1998-1999 Appellate Tribunal1959 Purchase Tax Sales Tax

Bombay Sales Tax Act, Levy of 2,386,772 1999-2000 Appellate Tribunal1959 Purchase Tax Sales Tax

(x) The Company did not have any accumulated losses at the end of the financial year, and has not incurred cash losses

in the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in

repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institution and

debenture holders during the year.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares,

debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or

a nidhi/ mutual benefit fund/ society.

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

securities, debentures and other investments.

27


FFFFFor or or or or B S R and CoChartered Accountants

Firm�s Registration No.: 128510W

Sadashiv ShettySadashiv ShettySadashiv ShettySadashiv ShettySadashiv ShettyPlace : Mumbai PartnerDate : 26th April, 2011 Membership No: 048648

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken

by others from banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company

have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of

the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term

investment.

(xviii)The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register

maintained under Section 301 of the Act.

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

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

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or

reported during the course of our audit.

30


Cash Flow Statement for the Year Ended March 31, 2011

(Currency : Indian Rupees) 2011 2010

Rupees Rupees

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax 194,437,464 129,468,161

Adjustments for:

Depreciation and amortisation 69,379,380 63,719,497

Finance cost 7,981,857 7,131,827

Interest received (1,963,338) (4,819,627)

Increase/ (decrease) in provision for gratuity (176,066) (5,419,921)

Increase / (decrease) in provision for leave encashment 742,279 (58,856)

Unrealised foreign exchange (gain)/ loss (2,278,619) (47,368,775)

Provision for doubtful debts/advances no longer required written back 242,266 (2,731,297)

Loss / (profit) on sale of fixed assets 251,593 (297,269)

Liabilities/ provisions no longer required written back (445,016) (5,772,670)

Gain on sales tax deferral loan repayment - (34,195,164

Operating profit before working capital changes 268,171,800 99,655,906

(Increase)/ Decrease in working capital

Inventories (56,927,545) 1,502,820

Trade and other receivables (200,940,870) (77,276,809)

Trade payables 211,485,209 (17,518,012)

Net change in working capital (46,383,206) (93,292,001)

Cash generated from operations 221,788,594 6,363,905

Direct taxes paid (39,910,157) (13,691,597)

Net cash generated/(used) by operating activities A 181,878,437 (7,327,692)

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets (110,725,865) (18,496,028)

Sale of fixed assets 1,866,629 589,014

Interest received 4,623,495 1,932,658

Net cash used by investing activities B (104,235,741) (15,974,356)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from borrowings 2,146,434 28,453,585

Repayment of borrowings (98,314,836) (37,766,752)

Interest paid (7,304,078) (7,878,147)

Net cash used by financing activities C (103,472,480) (17,191,314)

Net decrease in cash or cash equivalents (A+B+C) (25,829,784) (40,493,362)

29


(Currency : Indian Rupees) Schedules 2010�2011 2009�2010 Rupees Rupees

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011

The Schedules referred to above form an integral part of this profit and loss account.As per our report attached

For B S R and Co For and on behalf of the Board of DirectorsChartered AccountantsFirm�s Registration No.: 128510W

Sadashiv Shetty Jeffrey Potrzebowski D. E. JacobPartner Chairman Managing DirectorMembership No.: 048648



Significant accounting policies 2

Notes to the accounts 18

INCOMESales and related services

Sales (gross)- Domestic sales 1,010,961,682 740,695,000- Export sales 669,817,678 183,923,632

1,680,779,360 924,618,632

Less: Excise duty 80,931,273 50,027,536

Sales (net) 1,599,848,087 874,591,096Scrap sales 24,173,654 16,025,993Job work charges 2,825,967 1,957,525

1,626,847,708 892,574,614

Other income 13 22,179,079 89,314,771

1,649,026,787 981,889,385

EXPENDITURE

Cost of goods sold 14 864,317,572 458,003,835Employee costs 15 169,842,661 119,796,251Manufacturing and other expenses 16 343,067,853 237,964,978Finance cost 17 7,981,857 7,131,827Depreciation and amortisation 6 69,379,380 63,719,497

1,454,589,323 886,616,388

Profit before taxation and exceptional items 194,437,464 95,272,997

Exceptional items 18.20 - 34,195,164

Profit before taxation 194,437,464 129,468,161

Provision for taxation

- Current tax 39,528,000 23,277,792- MAT credit entitlement (37,582,500) (44,703,000)- Deferred tax charge 16,388,500 -

Profit after taxation 176,103,464 150,893,369Balance in profit and loss account brought forward 97,517,588 (53,375,781)

Balance in profit and loss account carried forward 273,621,052 97,517,588

Earnings per equity share of Rs. 10 each

Basic and diluted earnings per share 18.14 6.45 5.52

28


(Currency : Indian Rupees) As at As atSchedules March 31 2011 March 31 2010

Rupees Rupees

BALANCE SHEET AS AT MARCH 31, 2011

SOURCES OF FUNDSShareholders� funds:Share capital 3 273,205,400 273,205,400Reserves and surplus 4 279,121,052 103,017,588

552,326,452 376,222,988Loan funds:Secured loans 5 406,190,298 503,473,586

Deferred tax liability (net) 18.7 16,388,500 -

TOTAL 974,905,250 879,696,574

APPLICATION OF FUNDSFixed assets:Gross block 6 1,315,326,250 1,222,050,857Less: Accumulated depreciation and amortisation 804,800,347 747,916,703

Net block 510,525,903 474,134,154Capital work-in-progress (including capital advances) 14,411,939 11,575,425

524,937,842 485,709,579Current assets, loans and advances:Inventories 7 297,143,594 240,216,049Sundry debtors 8 411,699,517 271,602,589Cash and bank balances 9 47,176,123 73,005,907Other current assets 10 703,339 3,363,496

Loans and advances 11 127,454,907 66,610,965

884,177,480 654,799,007

Less : Current liabilities and provisions: 12Current liabilities 421,216,755 236,013,825Provisions 12,993,317 24,798,187

434,210,072 260,812,012

Net current assets 449,967,408 393,986,995

TOTAL 974,905,250 879,696,574

The Schedules referred to above form an integral part of this Balance Sheet.As per our report attached

For B S R and Co For and on behalf of the Board of DirectorsChartered AccountantsFirm�s Registration No.: 128510W

Sadashiv Shetty Jeffrey Potrzebowski D. E. JacobPartner Chairman Managing DirectorMembership No.: 048648



Significant accounting policies 2

Notes to the accounts 18