Financial Overview

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	Rate of Change (%)	Factors
Overall
Sales	36,807	34,591	6.4	-
Operating income	1,224	1,287	(4.9)	-
Ordinary income	1,245	1,374	(9.4)	-
Net income	717	1,218	(41.1)	-
Powder metallurgy product business
Sales	34,784	32,629	6.6	-
Operating profit	2,310	2,411	(4.2)	-

Production Operations

Raise the average operating capacity by renewing production lines and installing next-generation ones
-The Company will raise its average domestic operation rate from 60% to 80% by fiscal 2017. To meet this target, the Company will streamline and consolidate redundant lines at its four plants in the Chubu, Kinki and Kanto regions of Japan. The manufacturer will also introduce new-generation molding and sintering lines so that they are economically viable, even when production volume is low. A decrease in the domestic demand for engine and transmission parts is anticipated in the medium- and long-term as Japanese automakers shift their production overseas. Simultaneous line realignment and production reform will allow the Company to build a highly efficient production system that can cope with such decreases in demand. (From an article in the Nikkan Jidosha Shimbun on July 17, 2013)

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

Outlook for FY ending Mar. 31, 2015

(in million JPY)

	FY ending Mar. 31, 2015 (Forecast)	FY ended Mar. 31, 2014 (Actual Results)	Rate of Change (%)
Sales	36,700	36,807	(0.3)
Operating income	1,190	1,224	(2.8)
Ordinary income	1,240	1,245	(0.4)
Net income	720	717	0.4

R&D Expenditures

(in million JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	191	208	241

R&D Structure

Powder metallurgy product business
-The Company conducts research and development activities mainly in Technical Development and Production Engineering Division within headquarters.

-The Company and Toyota Motor launched a technical liaison team, which is setting the direction for developing sintered products and clarifying the individual roles and responsibilities in starting R&D activities.

-In the product sector for next-generation hybrid vehicles and electric vehicles, the Company is conducting joint-development activities with companies within the Toyota Group such as Toyota Motor, Toyota Central R&D Labs., Inc., Daihatsu, and Aishin Seiki.

R&D Activities

Materials
-The Company is working to begin mass-producing low-cost materials (without the use of rare earth metals) that it completed developing, and also MIM parts that it developed based on a short-time sintering method.

Facilities
-The Company is preparing to launch mass-production of shock absorber parts and valve sheets on seamless, revolutionary production lines both in and outside Japan. Also, it is in the midst of designing an advanced production line to produce transmission hubs, on which it developed a new production method.

Investment Expenditures

(in millions of JPY)

	FY ended Mar. 31, 2014	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012
Overall	5,949	2,593	2,297
-Powder metallurgy product business	5,756	2,584	2,229

Powder metallurgy product business
-Invested to mainly renew aging facilities in Japan; install more facilities at its subsidiaries in Thailand, China, and North America; and make a second investment at its subsidiary in Indonesia.

Investments in Japan

Next generation production line for valve seats
-The Company developed an advanced production line for engine valve seats. The Company developed a series of highly efficient and compact manufacturing equipment for each process of forming, sintering, processing and grinding. This equipment will allow the Company to transfer semi-finished products directly to the next process without creating stocks of semi-finished products. The streamlined process allows the Company to halve the production line to approximately 20 meters. In addition, this line can halve the amount of investment and installation costs. The Company will first introduce the new line at its plant in Shiga Prefecture in the summer of 2014. It then plans to install this line at other facilities to expand its global production capability. (From an article in the Nikkan Jidosha Shimbun on November 27, 2013)

Planned Capital Investments

(As of Mar. 31, 2014)

Company Name	Location	Business	Planned investment	Start	Completion	Production capacity increase on completion
Thai Fine Sinter Co., Ltd.	Rayong, Thailand	Facilities and equipment to produce powder metallurgy products	THB 700 million	Jul. 2011	Jun. 2014	20%
Precision Sintered Products (Wuxi) Co., Ltd.	Wuxi, China	Facilities and equipment to produce powder metallurgy products	CNY 66 million	Dec. 2012	Dec. 2014	120-ton increase in production capacity per year