Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	Rate of Change (%)	Factors
Overall
Sales	125,205	127,026	(1.4)	1)
Operating income	10,377	12,767	(18.7)	-
Ordinary profit	10,677	12,705	(16.0)	-
Net income	4,432	9,185	(51.7)	-

Factors
1）
-There were several negative factors outside Japan that affected business operations, including the deepening European financial crisis, the stagnating U.S. economy, the continued high evaluation of the yen, the slowdown in the Chinese economy, and the flooding in Thailand. In Japan, business was affected by the Great East Japan Earthquake. In spite of this, there were signs of a revival in business due to an early recovery in the supply chain.

<Japan>
-In Japan, operating revenue fell in the first half of the year as a result of lower production volumes by the Company's customers due to the Great East Japan Earthquake. However, in the second half of the year, sales rose along with the increased production volume by its customers. As a result, operating revenue slightly increased year-on-year, by 0.9%, to 35,465 million yen. The operating profit in the Japan Region rose significantly year-on-year, to 2,845 million yen, which was a 49.4% increase, as a result of greater sales of facilities that were sold to subsidiary companies.

<North America>
-Operating revenue, which was 20,306 million yen, decreased 11.6% year-on-year due to a drop in sales of products designed for four-wheel vehicles. The region recorded an operating loss of 105 million yen, which was in contrast to the 326 million profit recorded during the previous fiscal year.

<Europe>
-European operations recorded a 6.7% year-on-year increase in operating revenue, which was 6,690 million yen, due to greater sales volume of products for four-wheel vehicles. Likewise, the region recorded an operating profit of 963 million yen, which was a tremendous year-on-year increase of 59.7%.

<Asia>
-Due to the flooding in Thailand, sales of products for four-wheel vehicles decreased year-on-year by 2.8%, with operating revenue at 42,166 million yen. Although the region recorded an operating profit of 4,540 million yen, this was a year-on-year decrease by 30.8%.

<South America>
-Sales of products designed for two-wheel vehicles increased for the year. As a result, operating revenue was up by 6.8%, to 20,575 million yen. The region posted an operating profit of 2,459 million yen, which was a year-on-year decrease of 2.5%.

New Company

- The Company announced on February 21 that it will establish a new production subsidiary, Musashi Auto Parts Mexico, S.A. de C.V., in San Luis Potosi, Mexico. In addition to a significant recovery in demand seen in the North American automotive market, the vehicle market in Central and South America is expected to grow substantially in the future. The company intends to increase its presence in the region by locating a plant in Mexico, which has an edge over other countries as a production and export hub in the Americas. The new company will be established in March with a capital of 160 million Mexican pesos (approximately 1 billion yen), which will be fully provided by Musashi Seimitsu. It will begin manufacturing ball joints, camshafts, and planetary gear components in January 2014. By the business year ending in March 2017, Musashi is going to invest 2.4 billion yen in the new operation and employ 100 people. (From an article in the Nikkan Jidosha Shimbun on February 24, 2012)

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	1,539	1,337	1,240

R&D Structure

Division	Business in charge	Number of engineers	R&D cost
Development Div.	-Developing new suspension systems and researching new applications for existing products -Maintaining and administering patents -Management of product drawings -Developing new car and motorcycle drivetrains and researching new applications for existing products -Developing advanced technology for next-generation products	88	961 million JPY
Production Technology Dept.	-Conducting R&D work on new production technology	64	110 million JPY
Production technology Dept., Technology Div., Kyushu Musashi Seimitsu Co., Ltd.	-Conducting R&D work on production technology for motorcycle and general-purpose gears, camshafts, etc.	35	466 million JPY

R&D Activities

 - In April 2010, the Company integrated its Development Division 1 and Development Division 2 into a single unit called the Development Division. 

Development of suspension system components
- The Company's suspension system business conducted development activities to deal with vehicle model changes at its customers. It proceeded with its development programs according to schedule. In India, the Company has developed new ball joints using locally procured steel materials, and engineered and tested production methods for the new products. The company, which worked on various exploratory R&D products focused on cost reduction, has entered a phase of moving to mass production in many areas. It is looking to introduce new technologies as practical business solutions in steps on the occasion of model change and other opportunities.

Development of engine system components
-The Company worked to develop production methods that further reduce the costs of camshaft assembly operations already being conducted, and which take advantage of the Company's proprietary cam-forming and joining methods. The Company plans to strengthen its product advantages to expand its business.

Development of drivetrain system components
- The Company developed and launched series production of 2-pinion type lightweight differential assemblies that boast cases having an optimum shape. The new assemblies have smaller and high precision bevel gears, featuring a unique three-dimensional shape.
- The Company has already won a contract for the new differential assemblies from its major customers. It is now preparing for launching mass production.
-The Company is working to commercially produce two-pinion differential assemblies designed for its customers' CVTs.

Development of advanced technologies
- In the area of elemental technologies, the Company is working hard on development of multi materials technology, which combines the plastic forming technology, the Company's area of expertise, with other materials.
- The Company joined the “Knowledge Hub” project promoted by Aichi Prefecture through its development program for engineering environmentally friendly nano/micro processing technology for the next generation.    
- The Company began developing new products and technologies for hybrid vehicles, electric cars, and motorcycles.

Development production technologies
-The Company is working to make a series of differential gears that are smaller and lighter in weight based on the its proprietary gear-teeth design of differential gears.
-The Company is conducting activities to develop cold-forging technology that improves environmental performance. Also, the Company plans to launch commercial production on new assembly lines in order to ensure the integrity of its product functions based on its assemblies.
-The Company, amidst the changing formats of its customer's transmissions, is building a production line that will automatically assemble planetary gears, which are its main products.
-The Company is further advancing die design and in-house technology in establishing molding technology for reverse-tapered, single-unit dog teeth gears; and DCTs, for which demand is expected to grow tremendously.

- In the area of suspension products, the Company developed a new technology to integrate production processes from machining of rack end stud through surface treatment.
- The Company integrated piercing and trimming processes by advancing the hot forging technology for volt on ball joint housings, introducing this technology to its plants overseas.

Contracts for Technical Assistance

(As of Mar. 31, 2012)

Name of the partner company (Country)	Product items	Contents of contract	Term
Musashi Auto Parts Michigan Inc. (USA)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1994.02.01-1999.01.31 Automatically renewed annually after the term
Musashi Auto Parts Co., Ltd. (Thailand)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1987.12.28-1992.12.27 Automatically renewed annually after the term
P. T. Musashi Auto Parts Indonesia (Indonesia)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1996.05.08-2001.05.07 Automatically renewed annually after the term
Musashi Auto Parts Canada Inc. (Canada)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	1998.01.01-2002.12.31 Automatically renewed annually after the term
Musashi Hungary Mfg. Ltd. (Hungary)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	2001.01.01-2005.12.31 Automatically renewed annually after the term
Musashi do Brasil Ltda. (Brazil)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	5 years from 2008.11.01-2013.10.31
Musasi Auto Parts India private Ltd. (India)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	2003.04.01-2004.03.31 Automatically renewed annually after the term
Musashi da Amazonia Ltda. (Brazil)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	5 years from 2009.11.01-2014.11.01
Musashi Auto Parts (Zhongshan) Co., Ltd. (China)	Special parts customized and then produced at the time they are needed for vehicles, motorcycles, and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	10 years from 2006.0101-2015.12.31
Musashi Auto Parts Vietnam Co.,Ltd. (Vietnam)	Special parts customized and then produced at the time they are needed for motorcycles and general-purpose products	1. Technical assistance for production, assembly, and marketing of customized parts 2. Providing industrial ownership rights	For an indefinite period from 2012.12.15

Capital Investment

(in millions of JPY)

	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011	FY ended Mar. 31, 2010
Overall	18,182	9,705	6,669
facility for ball joints	-	-	251
facility for cam shafts	-	-	858
facility for gears and other parts	-	-	4,124

Breakdown of investments:
<Japan>
- The Company invested 2,902 million yen in Japan, which included 1,223 million yen to set up production lines to handle new products, 577 million yen to streamline operations.

<North America>
- The Company invested 1,309 million yen in North America, which included 712 million yen to set up production lines to handle new products and 199 million yen to increase production capacity.

<Europe>
- The Company invested 103 million yen in Europe, which included 42 million yen to set up production lines to handle new products, 25 million yen to streamline operations, and 14 million yen for retooling its facilities.

<Asia>
- The Company invested 12,094 million yen in Asia, which included 3,923 million yen to increase production capacity, 3,636 million yen to set up production lines to handle new products, and 1,609 million yen for retooling its facilities.
-The Company wrote off 915 million yen in losses because of the damage caused by the flooding in Thailand.

<South America>
- The Company invested 1,772 million yen in South America, which included 479 million yen to streamline operations, 318 million yen to set up production lines to handle new products, and 233 million yen to increase production capacity.

Investment Outside Japan

<India>
-The Company announced on October 28 that it will construct a new plant in Karnataka, India. The new plant, which will be built as a second plant of Musashi Auto Parts India Private Limited, will commence production of transmission gears for motorcycles and other products to support an increase in production of motorcycles by its leading customer, Honda Motor Co., Ltd. In the medium- and long-term prospect, Musashi Kogyo has in mind a plan to use the plant as a production hub of auto parts. When the plant goes into operation, it will produce transmission gears and camshafts with a capacity enough to be installed in up to 1.8 million cars and motorcycles a year. Furthermore, Musashi Auto Parts will form a subsidiary responsible for functions, including sales and supplier exploration activities, in Gurgaon, Haryana, in November. The subsidiary will go into operation starting in December. The company is poised to enhance its operations in India where there is a potential for an increase in demand and an expansion in the industrial structure with the aim of increasing its competitive edge in the global market. (From an article in the Nikkan Jidosha Shimbun on October 31, 2011)

Capital Investment Plan

(As of Mar. 31, 2012)

Region	Planned investment (million yen)	Major details and objectives of production facilities
Japan	4,700	Readying for production of new vehicle models; strengthening R&D capabilities and main functions
North America	1,500	Readying for production of new vehicle models; renewing and rationalizing existing facilities
Europe	200	- Retooling production equipment, and streamlining operations
Asia	12,700	Strengthening production capacity of products for both two- and four-wheel vehicles; restoring operations to normal in Thailand
South America	2,900	Readying for production of new vehicle models; renewing and rationalizing existing facilities