Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	49,168	47,411	3.7	-
Operating income	3,847	4,195	(8.3)	-
Ordinary income	3,336	3,298	1.2	-
Current net income	4,118	1,666	147.2	-
Automotive Parts Division
Sales	42,532	41,768	1.8	-Even though the Company was impacted by the Great East Japan Earthquake and the flooding in Thailand, financial performance year-on-year improved due to the recovery in automotive production after the Earthquake and flooding.
Operating income	3,447	3,736	(7.7)	-

Recent Development Outside Japan

-The Company is going to increase production of engine valve seats by 50 percent to 25 million units a month by the year ending March 2015. With a total investment of about 3 billion yen, it will establish a new production company in India, while raising the production capacity of its existing facilities in the U.S.A. and China. The Company has decided on the expansion, since orders for valve seats, especially those that are compatible with various vehicles such as biofuel engine vehicles, has been increasing on a global basis. By ensuring a more stable supply system to meet the growing demand, the Company aims to increase its sales. The new company in India, NPR Manufacturing India Private Limited, will start producing and selling valve seats in January 2013. It will take over part of the production operations now handled at Siam NPR in Thailand for the Indian market. It will be producing about 3 million valve seats a month. The transfer will allow the Thai Plant to meet new orders, while maintaining production at full capacity. The Company's U.S. subsidiary, NPR Manufacturing Michigan, will add a new production line, which will double its monthly output from 2 million units to 4 million units. NPR Auto Parts Manufacturing (Yizheng) Co., Ltd. (NAMY) in China, which is producing 700,000 to 1 million valve seats a month, will step up production in increments with a view to tripling its capacity by 2014. (From an article in the Nikkan Jidosha Shimbun on December 27, 2011)

Recent Development in Japan

-The Company is going to produce some products not based on actual orders, but in anticipation of an increasing demand from automakers, which are expected to boost output this fall. NPR now produces every production item based on orders received. The Company is, however, concerned about the possibility of failing to respond to orders adequately even at full capacity at its all domestic production facilities, in case it receives as many orders as notified in advance by customers. As such, NPR has decided to produce some products based on actual order and some on their prospect. (From an article in the Nikkan Jidosha Shimbun on June 23, 2011)

New Company

-The Company announced that it will establish a new subsidiary in Tamil Nadu, India for manufacture and sales of auto parts focused on sintered alloy valve seats as early as December this year. This is to increase sales of sintered alloy valve seats, core engine components, in the Indian market where automobile production is expanding. A new company, which is temporarily called "NPR Manufacturing India Private Limited" will be formed in Chennai with a registered capital of 600 million rupees (approximately 1.1 billion yen), provided 99 percent by NPR and 1 percent by its subsidiary NPR Fukushima Works Co., Ltd. Furthermore, the new company will spend about 1.8 billion yen on construction of a new plant so that it will be able to start operations in January 2013. It plans to hire about 80 employees and produce about 3 million valve seat inserts per month in 2015. (From an article in the Nikkan Jidosha Shimbun on October 5, 2011)

Restructuring

-The Company announced that it has decided at its board meeting on Jan. 26 to merge with its two wholly owned subsidiaries, NPR Kawaguchi Works and NPR distribution center on March 1. The operation of NPR Kawaguchi Works, processing piston rings, has already been consolidated into NPR Iwate Co., Ltd. The control center of NPR Tochigi plant is currently responsible for product management and shipment, previously performed by the NPR distribution center. As both subsidiaries are thus dormant, the parent company has decided to consolidate their assets to achieve more efficient operations of the Group. (From an article in the Nikkan Jidosha Shimbun on January 28, 2012)

-The Company and TPR Co., Ltd. said that they have reached a basic agreement to dissolve their joint-venture contract in Indonesia. The two companies have been conducting piston ring business through their joint-venture unit, NT Piston Ring Indonesia (NTRI). NPR will now acquire all NTRI shares, making it its wholly owned subsidiary, while TPR will create a new production company, TPR Indonesia. By separating their operations and establishing independent businesses in the country, each company aims to respond to growing local demand more efficiently and thereby increase sales. TPR Indonesia will manufacture and sell piston rings for vehicles and motorcycles, starting in March 2013. Its production volume is expected to reach 24 million units in 2014. (From an article in the Nikkan Jidosha Shimbun on January 5, 2012)

-The Company announced on December 26 that it will merge its two wholly owned subsidiaries located in Jiangsu Province, China. NPR Auto Parts Manufacturing (Yizheng) Co.,Ltd. (NAMY), which manufactures and sells piston rings and supplies valve seats, will absorb NPR Auto Parts Manufacturing (Zhenjiang) Co.,Ltd. (NAMZ), which produces valve seats. The merger will be effective March 31, 2012, leaving NAMY as a surviving company. Production operations in Zhenjiang will be maintained after the integration. The Group intends to improve its customer services and increase its management efficiency through the consolidation. (From an article in the Nikkan Jidosha Shimbun on December 28, 2011)

Business Partnership

-The Company is stepping up joint business with KS Kolbenschmidt, its collaboration partner in Germany with the aim of achieving the sales target of 2 billion yen in 2015. The two companies have been yielding solid results, including winning orders for mass production products in Europe and China since they formed a business tie-up in 2009. They will continue to pursue product development activities aggressively at the R&D center they have jointly set up with an aim of getting new business with overseas automakers mainly in Europe and the U.S. (From an article in the Nikkan Jidosha Shimbun on June 29, 2011)

Outlook for FY ending Mar. 31, 2013

(in millions JPY)

	FY ending Mar. 31, 2013 (Forecast)	FY ended Mar. 31, 2012 (Actual Results)	Rate of Change (%)
Sales	49,000	49,168	(0.3)
Operating income	3,500	3,847	(9.0)
Ordinary income	3,000	3,336	(10.1)
Net income	2,300	4,118	(44.1)

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

R&D Expenses

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	1,361	1,280	1,290
Automotive Parts Division	1,306	1,229	1,238

R&D Activities

Piston-ring for next-generation thermal spraying bore cylinder
-The Company is developing piston-rings for thermal spraying bore cylinders with European customers. It is also working with both European and Japanese customers to develop optimum product-specifications for all types of next-generation thermal spraying bore cylinders, making use of the technical knowledge that it has gained through its hands-on experience of producing piston-rings.

Diesel-engine piston-rings demonstrating a superior level of durability
-In response to exhaust-gas emission regulations such as Euro- VI, US10, and others; and in response to 2015 Heavy-duty-vehicle Fuel-consumption Regulation, the Company is developing diesel-engine piston-rings demonstrating a superior level of durability. For example, it has completed development of a top-ring with a PVD membrane that provides superior performance in terms of wear and abrasion resistance and peeling resistance by applying technology it has gained on membrane control that reaches the nano-level. It has completed developing a new-shaped oil-ring that has low tension but high-performance in terms of adjusting lubrication. The Company is starting to launch sales of products like these that contribute to reducing exhaust-gas emissions and lowering fuel-consumption.

Valve seats
-In working in the area of gasoline engines, the Company completed development of a wear-and-abrasion-resistant-material that makes it possible to reduce fuel consumption (expanding the range of the air-fuel ratio to λ=1). The Company improved it so that it works with multi-fuel-engines (gasoline, ethanol, etc.) that are becoming more popular around the world. Products such as this one are being equipped on more and more vehicles being manufactured in the U.S.A., Japan, and other parts of the globe.

Assembled sintered camshafts
-In the area of direct-injection engines, which are recently increasing in numbers, customers are demanding camshafts for high-pressure fuel pumps with cam-lobes attached that have improved anti-pitching properties and anti-abrasion properties, and that are furthermore lighter in weight. Since the product specifications of the Company's knockdown sintered camshafts squarely meet these needs, the Company is not only developing these for direct-injection gasoline engines but also for the same kinds of pump-driven diesel engine systems as well, offering a wider product selection. Currently, the Company, in order to further raise the competitive advantages of its products, is working on improving production processes and making near-net-shaped materials.

New sintered-products
-The Company is researching and already marketing highly functional porous metals that offer excellent performance in terms of insulation and heat dissipation. It has already begun actual solutions to various market needs including the non-automotive-engine sector.

Cylinder liners
-In responding to the post, post-new long term regulations in Japan, the Company is currently conducting R&D activities so as to mass-produce cylinder liners for diesel engines, which are means to combat high-temperature erosion, a serious issue of concern. Also, in order to comply with the 2015 Heavy-duty-vehicle Fuel-consumption Regulation, the Company is currently developing technology to reduce fuel consumption based on its proprietary tribology technology.

Technology Licensing-out Agreement

(As of Mar. 31, 2012)

Name of the licensed company	Country	Date	Details	Term of contract
Sejion Cam Co., Ltd.	Korea	Jul. 01, 2000	Sintered camshaft production methods	Contract renewal is currently under negotiation
Henan Zhongyuan Engine Fitting Co., Ltd.	China	Sep. 02, 2005	Cylinder liner production methods	Until the Company no longer supplies the products
Yizheng Shuang Huan Piston Ring Co., Ltd	China	Dec. 27, 2005	Piston ring production methods	Seven years
IP Rings Ltd.	India	Dec. 01, 2003	Oil ring assembly production methods	Contract renewal is currently under negotiation
		Feb. 21, 2008	Steel ring production methods	Five years
		Apr. 01, 2008	Manufacturing methods of chrome plated rings	Five years
		Dec. 22, 2008	Steel ring production methods	Six years
		Mar. 01, 2010	Nitrogenous ring production methods	Five years
		Apr. 01, 2010	Oil ring production methods	Five years

Capital Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	2,169	1,642	1,519
Automotive Parts Division	1,963	1,466	1,404

-The Automotive Parts Division made a capital investment in order to maintain and/or upgrade existing facilities.

Planned Capital Investments

(As of Mar. 31, 2012)

Name	Location	Type of facility	Planned total investment (in millions of JPY)	Construction start month	Planned completion month	Capacity upon completion
NPR Auto Parts Manufacturing India Pvt. Ltd.	Tamil Nadu, India	New production facility	1,800	From around July 2012	Jun. 2013	3 million a month