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5. NGK SPARK PLUG CO., LTD. Business Report FY ended Mar. 2019

NGK SPARK PLUG CO., LTD. Business Report FY ended Mar. 2019

Joint Venture

-On July 5 NGK Spark Plug Co., Ltd. (NGK Spark Plug) and Mitsubishi Hitachi Power Systems, Ltd. (MHPS) announced that they have agreed to establish a joint venture to manufacture and sell cylindrical cell (single cell) stacks for fuel cells on October 1, 2019. The fuel cells to be manufactured will be sold for industrial and business use. The joint venture will be set up with a capital of JPY 300 million after the review of the anti-trust law authority. It will be located in Komaki Plant of NGK Spark Plug in Komaki City, Aichi Prefecture, central Japan. The investment ratio is 70% for NGK Spark Plug and 30% for MHPS. The name of the JV and its representative are yet to be determined. NGK Spark Plug and MHPS concluded a business partnership agreement in June 2014 for the development of cylindrical cell stacks for solid oxide fuel cells (SOFC) that generate electricity using reformed town gas or other sources. Cylindrical fuel stacks are structures of elements on the outer surface of a ceramic substrate tube, which produce a power-generating reaction. The elements are serially connected by a conductive ceramic interconnector, allowing for efficient generation of low current, high voltage electricity. (From an article in the Nikkan Jidosha Shimbun on July 8, 2019)

7th Mid-term Management Plan (from FY ending in March 2017- FY ending in March 2021)

-Objectives to be achieved by the FY ending in March 2021 (121st term, final year of the plan): sales of JPY 520 billion, operating profit of JPY 100 billion; three basic strategies of the plan: further strengthening of the existing businesses, creation of new businesses, and establishing a firm management base.

-Present state and future initiatives of the automotive components business are:

＜Further strengthening of the existing businesses＞

1. Plug repair
   -Sales in emerging markets grew steadily.
   -Aims to expand sales in China and India.
2. Automotive sensors
   -The Company expects that the demand of sensors, mainly value-added products, will remain strong.
   -The Company will continue production of sensors in Thailand and India.
3. Automotive repair business
   -Increase sales of automotive products by taking advantage of the expertise of its subsidiary Wells Vehicle Electronics, L.P.

R&D Structure

-The Company's R&D functions include Technology Development Headquarters at the head office and the engineering functions at each business.

-The Company has technical centers in the U.S., Europe, Brazil, and Korea.

R&D Activities

Spark plugs
-The Company is working to increase the performance of spark plugs by improving their resistance to high heat and high voltage, as well as enhance their high-ignition capability. This is in addition to reducing the size of their diameters and elongating them. This involves seamless R&D activities, from developing materials, up to designing products and developing new production methods.

Glow plugs for diesel engines
-The Company is developing spark plugs that meet exhaust-gas regulations, offer better performance against rising temperatures, and have longer product lives. It is also developing control systems that control spark plug temperatures.

Sensors
-The Company is developing energy-saving and resource-saving sensors that need to comply with exhaust-gas regulations, making them more environmentally efficient by improving their performance in terms of coping with high temperatures, thermal shock, vibration, and moisture.

Others
-While developing plugs and sensors, the Company promotes the development of NGK brand ignition coils, easy-to-use and selective compact multi gas meters.