Financial overview

In million JPY	FY2006	FY2005	Rate of Change (%)	Factors
Sales	24,472	20,948	16.8	Sales of automobile parts, the Company's main products, increased steadily, backed by strong demand for mini-vehicles. As a result, the sales increased 17.5% to 24,472 million yen, compared to the previous year.
Ordinary income	1,101	1,052	4.7	Ordinary income increased as a result of the Company's efforts to increase its sales and reduce costs, although some factors put pressure on the Company's profit. These included an increase in depreciation charges, rental fees, and labor costs, which were associated with the construction of its new facilities; and outsourcing costs which reduced the costs of its workforce.
Net income	656	497	31.9	-Net income increased because the Company no longer needed to post a loss on the retirement of fixed assets; and did not post an extraordinary loss such as for demolition and transfer costs involved with the relocation of its facilities, which it had posted in the previous fiscal year.

Strengthening ties with Daihatsu Motor
The Company announced that it will increase its capital and reinforce ties with Daihatsu Motor Co., Ltd. through a third-party allocation of new shares to the carmaker. After the share transactions on January 9, 2007, Daihatsu will hold a 23.3 percent ownership in the Company, becoming the largest shareholder. The Company will then be added to the consolidated statements of Daihatsu. (From an article in the Nikkan Jidosha Shimbun on Dec.21 2006)

Challenges for FY2007
The Company started to implement its seventh mid-term, three-year business plan in April 2006.
By leveraging its facilities, on which the Company had finished making capital investments the previous year, the Company will strengthen the TPM activities, and improve productivity and quality as well as costs.
- The Company will strengthen integrating its production line, from acceptance of forged raw materials up to machining at its subsidiary. The Company will also work on developing its business in order to increase the value of the Group companies.
As for the corporate social responsibility (CSR), the Company will work on environmental protection, taking the natural environment at large and the local environment into consideration. Also it will stay more aware to comply with environmental laws and regulations, and improve its internal control system.

R&D activities

The Company, based on the theme of "Forging World Class Products", conducts R&D activities to establish leading technical capabilities in terms of manufacturing technology and technology that improves product quality; as well as activities to improve its product-development capabilities, aiming to have the best technical capabilities in the world.

<Product development capability >
By introducing a three-dimensional digital engineering system, the Company built a database, which stores data history, from product design up to exact product measurements in a consistent manner. It also established a system which can verify the various stages of product development, virtually. It also is focusing on developing its human resources, building an HR system that they can be leveraged company-wide.

<Product manufacturing capability >
Based on its wealth of experience gained from integrating ideas to produce quality products faster and more precisely, the Company worked on developing manufacturing facilities such as the two new automatic stamping machines (2000-ton and 3800-ton), which started operating in September 2006 and March 2007, respectively.

<Quality improvement capability >
The Company works on improving its product quality and producing non-defective products by conducting research activities involved in the area of quality, using the latest measuring techniques such as thermography, and getting a better of idea of quality issues using scientific approaches based on numerical data.

Technical Agreements (Exported) as of March 2007

Partners	Country	Technology	The term of a contract
Bharat Forge Ltd.	India	Manufacturing technology for forged products	Nov. 2003-Oct. 2009
PT Menara Terus Makmur	Indonesia	Manufacturing technology for forged products	Oct. 1996- (Automatic renewal)

In fiscal 2006, the Company invested 2,049 million yen mainly on hot-forging press machines at the Company's headquarters plant.

New equipment installation

Company Name (Location)	Segment	Facilities	Planned total investment (million yen)	Project period		Planned increase in production capacity
				From	To
MetalartCorop. and Metaltex Corp. (Shiga Pref. Japan)	Forging plant	Machining facility for automotive parts	3,300	Jun, 2007	Mar. 2008	Note 1)

Note1: Specific production capacity is not given because the capacity varies greatly depending on the types of orders won, making it difficult to exactly calculate the capacity.