Financial Overview

(in million JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	Rate of Change (%)	Factors
Overall
Sales	263,725	252,008	4.6	-
Operating income	9,204	12,815	(28.2)	-
Ordinary income	9,226	13,041	(29.3)	-
Net income	3,003	6,089	(50.7)	-
Automotive parts
Sales	210,267	193,728	8.5	-In Japan, the volume of new-vehicle production surpassed the actual volume recorded for the prior fiscal year, supported by the recovery in production after the Great East Japan Earthquake and the benefit coming from eco-car sales incentives. Outside Japan, sales were strong in Asian developing countries and the U.S.A.
Operating income	7,080	9,056	(21.8)	-

Acquisitions

<Brazil>
-The Company will acquire Produflex Minas Industria de Borrachas Ltda., which manufactures and sells anti-vibration rubber products in Brazil. Produflex will be owned by Tokai Rubber's new Brazilian subsidiary, TRI Brazil, to be formed in April 2013. This is the first time for Tokai Rubber's anti-vibration rubber parts division to launch into South America. With this move, the group aims to gain a firm foothold in the market by leveraging Produflex' extensive production network and a wide customer base, which includes major European automakers such as Fiat of Italy. The new facility will also serve as an important supply hub to Toyota and other Japanese automakers, starting in fiscal year 2015. (From an article in the Nikkan Jidosha Shimbun on Mar. 14, 2013)

<Italy>
-The Company completed the acquisition of all shares in Dytech Dynamic Fluid Technologies S.p.A., an Italian automotive hose manufacturer. As a result of this acquisition, Tokai Rubber has expanded its hose production facilities, which previously were located in eight countries, to 15 countries. In addition to creating a local-supply network for automotive hoses in Europe, which is a major market for Japanese OEMs; and in South America, where vehicle production volumes are forecast to grow; the Company will fully utilize both the R&D and sales expertise of Dytech, aiming to win more new business from non-Japanese OEMSs.

<Germany>
-The Company will acquire the entire share capital of Anvis Group GmbH, a Germany-based manufacturer of automotive anti-vibration systems. The share purchase agreement is scheduled to be signed on January 28, 2013. Anvis Group has 13 manufacturing sites in 9 countries and generated sales of approximately 305 million euros, approximately 36 billion yen, in 2011. (From a press release on January 25, 2013)

Joint Ventures

<China>
-The Company announced that it has conducted an opening ceremony for Tokai Tianpu Auto Parts (Shanghai) Co., Ltd. (TTAS) that manufactures and distributes automotive hose products. This new company is a joint venture with Shanghai Tianpu Auto Parts Co., Ltd. (Shanghai TIP). By using Shanghai TIP's plant, TTAS produces various hose products such as those for automobile air conditioners. With an investment of 33 million Chinese yuan, about 410 million yen, the new plant has a total floor area of approximately 19,000 square meters. In fiscal year 2016, TTAS is expected to generate sales of some 300 million Chinese yuan, approximately 3.7 billion yen. (From a press release on January 8, 2013)

<Germany>
-The Company announced on December 21 that it has established a joint venture "Tokai Rubber de Mexico, S.A.P.I. de C.V." with the Anvis Group, a Germany-based anti-vibration systems supplier, to produce automotive anti-vibration rubber products in Mexico. Tokai Rubber Industries has a 51% stake and the Anvis Group has a 49% stake in the new company. A new plant will be built on the premises of Anvis' existing facility in Mexico, and is scheduled to start operations in October 2013. It will supply its products to automakers, including Honda, Nissan and Mazda. (From an article in the Nikkan Jidosha Shimbun on Dec. 22, 2012)

Business Partnership

-The Company and Toyota Boshoku will form collaborative relationship in terms of development and production of automobile interior components. Toyota Boshoku will acquire partial stake in Tokai Chemical Industries, Ltd., an interior parts supplier of the Tokai Rubber Group. Toyota Boshoku has been purchasing headrests from Tokai Chemical for more than 30 years. Toyota Boshoku values Tokai Chemical's high technology in urethane foam molding, and also has aspirations of enhancing its product development capabilities in the interior system. The three companies will jointly pursue development of interior components by integrating technologies and expertise owned by each company. Toyota Boshoku as a system supplier, Tokai Chemical with its urethane foaming technology and Tokai Rubber with high damping technology will jointly engage in development of interior parts. Toyota Boshoku and Tokai Rubber will also discuss increasing efficiency in production by mutually utilizing global facilities they possess. (From an article in the Nikkan Jidosha Shimbun on August 30, 2012)

New Company

-The Company announced that it held an opening ceremony for its new Indonesian subsidiary PT. Tokai Rubber Indonesia (TRID), which will produce and sell anti-vibration rubber for automobiles. While, automotive anti-vibration rubber products in Indonesia have been supplied by PT. Fukoku Tokai Rubber (Indonesia) (FTR), a joint venture with Fukoku Co., Ltd. since 2004, the Company set up TRID in August 2011 responding to the market expansion. TRID is capitalized at 18.5 million USD, approximately 1.44 billion yen, wholly owned by the Company. Full production will be initiated in October 2012, and the deliveries are slated to start in December of the same year. The new subsidiary has a land area of some 50,000 square meters and a floor area of about 7,680 square meters. In the fiscal year 2015, the Company expects to employ some 300 associates and generate approximately 310 billion Indian rupees, approximately 2.6 billion yen. (From a press release on October 12, 2012)

Major Contracts

-The Company has won its first anti-vibration rubber business with Germany-based Volkswagen, Audi and BMW. Delivery of the products is scheduled to start in the second half of FY2013. In order to step up its engineering and production operations to support its European customers, the Company is going to establish a second plant and a development base in Poland. (From an article in the Nikkan Jidosha Shimbun on Sep. 26, 2012)

Recent Development Outside Japan

<Germany>
-The Company announced that it has decided to locally incorporate its representative office in Germany in order to strengthen sales expansion activities for automotive parts in Europe. The Company established the representative office in May 2011 to conduct various surveys to understand European customer needs and development trends and also to have a contact office in Europe. The Company recently won an order from a European automotive manufacturer, and being encouraged by this, has decided to locally incorporate the representative office to further expand business with overseas automotive manufacturers. The locally-incorporated company will support to strengthen the functions of the organization as a development and sales expansion base in Europe. The new company, TRI Europe GmbH, will be capitalized at 120,000 euros, approximately 12 million yen. (From a press release on July 3, 2012)

Restructuring

<Thailand>
-The Company would turn Inoac Tokai (Thailand) Co., Ltd. (ITTC) into its consolidated subsidiary by March 2014. ITTC, which is a joint venture company between Tokai Rubber and Inoac Corporation, produces and sells automotive rubber hoses in Thailand. By acquiring a majority share in the joint venture, Tokai Rubber is looking to enhance its sales operations and accelerate development of high quality products that meet strict environmental requirements in the competitive market. (From an article in the Nikkan Jidosha Shimbun on Mar. 25, 2013)

Outlook for FY ending Mar. 31, 2014

(in million JPY)

	FY ending Mar. 31, 2014 (Forecast)	FY ended Mar. 31, 2013 (Actual Results)	Rate of Change (%)
Sales	360,000	263,725	36.5
Operating income	12,000	9,204	30.4
Ordinary income	11,000	9,226	19.2
Net income	5,000	3,003	66.5

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

Mid-term Management Plan

-The Company is conducting its business based on its mid-term plan it formed in November 2011, the 2015 TRI-Group Vision, which is scheduled to end at the close of the 2015 fiscal year. The following figures are the targets set under the plan.

• Operating revenue: 420 billion yen
• Operating income: 34 billion yen
• Profit margin: 8%
• ROE: 10%
• ROA: 8%

-Activities and developments in fiscal year ended Mar. 2013:

• Along with expanding its global development, manufacturing, and sales network, the Company actively implemented initiatives to cut costs such as by revising the way it procures raw materials, focusing on developing a very profitable and strong management structure.
• In its global operations, the Company acquired (or has decided to acquire) the following companies, enabling it to create a truly global supply structure:
• Dytech-Dynamic Fluid Technologies S.p.A., an automotive hose manufacturer based in Italy, in February 2013 (Acquired)
• Anvis Group GmbH, a German company engaged in manufacturing automotive anti-vibration rubber (Acquired)
• Produflex Minas Industria de Borrachas Ltda. based in Brazil.
• The Company launched operations in November 2012 at Tokai Rubber Compounding (Thailand) Ltd. that will supply low-priced but high-quality kneaded rubber to the Tokai Group's production plants in Asia such as in China. With the new company in Thailand, the Company hopes to ensure stable procurement of raw materials and raise efficiencies from the perspective of cutting costs.

R&D Expenditure

(in million JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	9,698	8,660	8,182
-Automotive parts	7,442	6,770	6,596

R&D Structure

-The Company's R&D activities are being conducted by its R&D center, called Technopia, which works together with the Materials R&D Center and New Business R&D Center. In March 2011, the Company set up its New Business Coordination Center and Automotive Coordination Center that work on establishing new lines of businesses and develop new products.

-The Company held an opening ceremony for its automotive rubber and resin products development subsidiary Tokai Rubber Technical Center (China) Co., Ltd. (TRTC), which is based in Jiaxing, Zhejiang Province, China. With a total investment of approximately 72 million Chinese yuan (approximately 940 million yen), the new plant has a total floor space of 6,200 square meters. TRTC is Tokai Rubber's fourth development site, following Japan, the United States, and Thailand. In addition, the company is going to add development capabilities to its European subsidiary in Poland. (From a press release on January 11, 2013)

Production Technology

Established New Production Method That Increases Material Yield Rate
-The Company developed a new processing technique to raise yield rate of materials to almost 100 percent in production of anti-vibration rubber for automotive applications. The new production process will be introduced to the company's Komaki Plant by early 2013 to commence volume production. Processing methods and die patterns have been redesigned on application of adhesive agent to a clasp and vulcanizing for rubber injection molding. The Company has now achieved the prospect of raising the utilization rate of materials from under 90 percent at present up to 95-96 percent. The new scheme will be initially introduced to domestic production facilities for cost reduction. In the midterm run, it will be deployed to overseas facilities in a bid to increase efficiency in processes for rework or reuse of materials, thus enhancing a competitive edge in the global market. (From an article in the Nikkan Jidosha Shimbun on Sep. 4, 2012)

Capital Expenditure

(in million JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	25,295	20,191	14,938
-Automotive parts	19,240	17,237	12,530

-The Rubber Products Business invested both in Japan and overseas mainly to upgrade equipment used for producing anti vibration rubber and hoses.

Investment Outside Japan

<Poland>
-The Company announced that TRI (Poland) Sp. Zo. o, its subsidiary headquartered in Wolbrom, Poland, will establish its second plant in the country in 2013. The expansion will allow the subsidiary to supply anti-vibration rubber and noise insulating materials to European companies, while the existing first plant has been delivering these products mainly to Japanese manufacturers. At the same time, Tokai Rubber will add development functions to TRI (Poland) to promote technical communications with local customers. The Company is investing approximately 1,050 million yen in the new plant, which is expected to be completed in May 2013. Its production launch is scheduled for August 2013. By stepping up local operations, the Company aims to raise its yearly sales at TRI (Poland) by 76.7 percent from the current level to some 7.6 billion yen by the term ending March 2016. (From an article in the Nikkan Jidosha Shimbun on Oct. 11, 2012)

<Indonesia>
-The Company will establish a new plant in Indonesia by fall 2013 to produce automotive hoses. Its production and sales subsidiary, PT. Tokai Rubber Auto Hose Indonesia (TRHI), has been manufacturing hoses for motorcycles at a leased plant in Bekasi, West Java. The subsidiary will set up its own plant in the city to add automobile hoses to its product portfolio. After fall in 2013, TRHI will move to the new plant location and return the facility it is now leasing. It now produces automobile anti-vibration rubber and fuel hoses. The new plant for hoses for automotive applications, which will be built with an investment of around 1.9 billion yen (approximately $24.2 million). It has a land area of about 38,000 square meters and a building space of about 11,000 square meters. (From an article in the Nikkan Jidosha Shimbun on Sep. 20, 2012)

<India>
-The Company will establish a new plant in India to produce anti-vibration rubber as early as the fall of 2013. The Company is investing approximately 1.4 billion in the new facility, which will be located in the suburbs of Delhi and begin production in November 2013. Products made at the new plant will be supplied to Japanese automakers such as Honda Motor and Suzuki Motor. The plant establishment in northern India follows the opening of Tokai Rubber's new vibration rubber plant in Karnataka, southern region of India. By ensuring stable production capacity in both north and south, the Company is poised to gain a solid foothold in the country. The Company aims to increase its yearly sales of anti-vibration rubber in India to 2 billion yen by the business year 2015 and 6 billion yen by the business year 2020. (From an article in the Nikkan Jidosha Shimbun on April 5, 2012)