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4. Nissin Kogyo Co., Ltd.
5. Nissin Kogyo Co., Ltd. Business Report FY ended 2015

Factors
Sales
1) <Japan>
-Sales decreased by 4.4% year-on-year. Although sales of regenerative energy braking systems were high, sales of automobile products were low.

2) <North America>
-Sales increased by 14.7% year-on-year, thanks to higher sales of mechatronics products and motorcycle products, in addition to positive currency translation.

3) <Asia>
-Sales increased by 0.9% year-on-year, thanks to growth in the Indonesian motorcycle market and high production volumes by automotive customers, as well as favorable currency translation. However, sales performance was negatively affected by a slowdown in the Thai economy due the end of the sales-incentive tax reductions.

4) <South America, Europe>
-Sales decreased by 1.9% year-on-year, due to a slowdown in the automotive market in Brazil and negative currency translation, even though sales of motorcycle products in Europe were higher.

Recent Development Outside Japan

<China>
Opening of New Branch in Chongqing, China
-The Company announced that its Chinese subsidiary, Zhongshan Nissin Industry Co., Ltd., will establish a new branch in Chongqing. The branch, Nissin R&D China-Chongqing, will be engaged in research and sales operations, in order to enhance marketing activities targeting existing customers and to develop new customers. In addition, Nissin Kogyo plans to close its Guangzhou branch and integrate the branch into Nissin R&D China-Zhongshan, the development and sales division of Zhongshan Nissin Industry. The integration will allow Zhongshan Nissin Industry to enhance its R&D capability. (From a press release on July 31, 2014)

Contracts

-Major contracts made in FY ended March 2015;

New Mid-term Management Plan (FY March 2015 - FY March 2017)

-Sales & Operating profit target: for FY March 2017, Sales JPY 253,000 million (14.5% increase from FY March 2014) and Operating profit ratio 10%.

-Automotive brakes: strengthen capabilities for product promotions and sales as a general systems maker.

• Developing high level of technological and developmental capabilities in the area of advanced safety systems, focusing on ESC technology.
• Strengthening reliability in terms of ensuring function as a system.
• Strengthening R&D capabilities to win new sales contracts
• Strengthening organization to maintain its superior competitiveness
• Major product focus: environmental products for cooperative regenerative systems in 2014, light-weight calipers in 2015, and advanced safety products in 2016

-The Company will increase capital investment in China and Mexico. To meet growing demands in these countries, the Company will increase production capacity of vehicle brake systems. The Company will also start full-scale production of electronic stability control systems in China. The Company plans to invest JPY 15 billion to JPY 16 billion annually during the three years between FY March 2015 and FY March 2017. Total planned investment will be more than 20% of the invested amount between FY March 2012 and FY March 2014. (From an article in the Nikkan Jidosha Shimbun on April 9, 2014)

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

-For FY ending Mar. 31, 2016, JPY 8,550 million is planed for R&D expenditure.

R&D Structure

-R&D facilities: Tochigi Development Center (Nasukarasuyama City, Tochigi Pref.), Nagano Development Center (Tomi City, Nagano Pref.) and Hokkaido Development Center (Asahikawa City, Hokkaido)

<Japan>
-With a global perspective in mind, the Company is developing products, materials, and manufacturing methods in the pursuit of making its products designed mainly for two- and four-wheel vehicles lighter, smaller, more fuel efficient, safer and more comfortable. These include basic brake systems, mechatronics-based automatic control-systems, and aluminum products, which form the backbone of its product range.

-The Company is working to develop products, materials, and manufacturing methods that contribute to reducing CO2 emissions.

-In November 2014, the Company has opened a new winter test track, which will extend over Asahikasa City and Kamikawa District, Hokkaido, Japan for development of brake systems used in two- and four-wheel vehicles. The new track will cover approximately 480,000 square meters. The Company is investing some JPY 700 million in the first phase.

<North America>
-The Company focused on developing products that meet the market needs in North America, such as basic braking systems, mechatronic automatic control systems, and aluminum products.

<Europe>
-In December 2013, the Company opened a new branch in Germany, which is the second office of Nissin R&D Europe, S.L.U. that is located in Spain. The new branch, Nissin R&D Europe, S.L.U., Niederlassung Deutschland, began work in order to understand traffic conditions in the EU, as well as to further respond to customer needs in the EU.

<China>
-The Company announced that its Chinese subsidiary, Zhongshan Nissin Industry Co., Ltd., will establish a new branch in Chongqing. The branch, Nissin R&D China-Chongqing, will be engaged in research and sales operations, in order to enhance marketing activities targeting existing customers and to develop new customers. Operation will start in July 2014.  (From a press release on July 31, 2014)

-In addition, the Company plans to close its Guangzhou branch and integrate the branch into Nissin R&D China-Zhongshan, the development and sales division of Zhongshan Nissin Industry. The integration will allow Zhongshan Nissin Industry to enhance its R&D capability. Operation will start in September 2014. (From a press release on July 31, 2014)

Major R&D Achievements in Automobile Parts

Development of an automatic control mechatronics system
-The compact and light ESC (Electronic Stability Control) is being equipped on 7 vehicle models, especially on new models launched in China and other Asian countries, as well as in South America.
-The regenerative braking system for EVs and hybrid vehicles is being equipped on 3 vehicle models.

Foundation brake development
-To respond to the requirement for lower fuel consumption, the Company optimized and expanded the development of products for brakes, such as a plunger master cylinder that is more compact, lighter in weight, and has less drag torque. Also, the Company is lowering costs and producing more products locally at its global sites.
-The Company further expanded the applicable sizes of its series of new-design, low-drag, disk brake systems, including new, 12 inch front brakes, as well as a complete product range of rear brakes.
-In the rear-brake product range, the Company developed an aluminum caliper rear-brake that includes a built-in parking mechanism. It is being equipped on two models.
-The Company launched commercial production of a plunger-type master cylinder in Brazil and Mexico, building its global supply-structure.

Development of weight reduction technology
-In addition to making its iron made engine mounting brackets and knuckles lighter in weight, the Company developed aluminum chassis parts that are approximately 40% lighter. In addition, the Company is further working on developing parts that are thin-walled by using high-strength aluminum that has a particular characteristic of being easily stretched. The aluminum-cast engine mounting brackets are being equipped on 7 vehicle models, while the aluminum-cast rear knuckles are being equipped on 4 vehicle model.

-In FY ended Mar. 2015, the Company invested more than it did in the past year in four countries (Japan, Mexico, China, and India).
-In FY ending Mar. 2016, the Company plans to invest JPY 16,000 million in facilities and equipment.

-The Company will increase capital investment in China and Mexico. To meet growing demands in these countries, the Company will increase production capacity of vehicle brake systems. The Company will also start full-scale production of electronic stability control systems in China. The Company plans to invest JPY 15 billion to JPY 16 billion annually during the three years between FY March 2015 and FY March 2017. Total planned investment will be more than 20% of the invested amount between FY March 2012 and FY March 2014. (From an article in the Nikkan Jidosha Shimbun on April 9, 2014)