Financial Overview

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	Rate of Change (%)	Factors
Overall
Sales	125,993	125,205	0.6	-
Operating income	938	10,377	(91.0)	-
Ordinary profit	2,597	10,677	(75.7)	-
Net income	2,529	4,432	(42.9)	-

<Japan>
-Operating revenue fell 0.3% year-on-year to 35,353 million yen because of lower product sales as a result of decreased production volumes at major customers. Operating profit increased 26.0% year-on-year due to higher sales of facilities and equipment sold to subsidiaries.

<North America>
-Operating revenue increased 29.6% year-on-year to 26,310 million yen due to higher sales of products for automobiles. Operating profit was 439 million yen. (During the previous fiscal year, the region recorded an operating loss of 105 million yen.)

<Europe>
-As a result of lower sales volumes of automobile products, operating revenue decreased 23.0% year-on-year to 5,150 million yen. Operating profit was 421 million yen, a 56.2% year-on-year decrease.

<Asia>
-Operating revenue increased 6.8% year-on-year to 45,016 million yen, thanks to higher sales volumes of automobile products. However, the region reported an operating loss of 3,835 million yen, compared to an operating profit of 4,540 million yen the previous fiscal year. The loss was due to huge costs the Company incurred in finding alternative production arrangements because its facilities in Thailand were damaged by the flooding.

<South America>
-Operating revenue, which was 14,162 million yen, decreased 31.2% year-on-year; and operating profit, which was 507 million yen, fell 79.4% year-on-year, due to lower sales of motorcycle products.

Contracts

Location winning contract	Customer, Vehicle model, Delivery to, etc.	Products (parts)	Remarks
Headquarters	Honda Accord sold in North America	Further orders for planetary assemblies	Launched production and delivery from June 2012
Headquarters	Step Wgn sold in Japan	New-type CVT transmission planetary assemblies	Launched delivery from March 2012
Musasi Auto Parts India	Honda Cars India Brio sold in India	Manual transmission parts, suspension parts, engine parts	Launched production and delivery from September 2012
Musashi Auto Parts Michigan	ZF; for its new transmissions	Differential assemblies	-
Musashi Auto Parts Canada	GM’s global platform vehicles	Camshafts	Launched production and delivery from March 2012
Musashi Auto Parts Indonesia	Aisin Indonesia; for Toyota’s global platform vehicle	Transmission parts	-
Musashi Hungary Manufacturing	Jaguar Land Rover	Camshafts used in V6 DOHC engines	Launched production and delivery from May 2012 (estimated sales of 400,000 units annually, 100,000 set)

Business Plan

- The Company will reorganize its production operations in Thailand based on its experience of the heavy flooding that inflicted severe damage to its facility in the fall of 2011. It is going to integrate production activities into its plant No.2 in Prachinburi, Chonburi in the eastern region of Thailand by the end of this year, while making the water-damaged plant No.1 in Navanakorn specialize in production of dies and other manufacturing equipment. Since the inundation of the plant No.1 caused supply chain interruptions for mass production parts, the company will have to take measures to prevent such risks in the flood-prone area. (From an article in the Nikkan Jidosha Shimbun on July 23, 2012)

- The Company will begin to produce automotive parts at its existing plant in Haryana, the northern region of India. Starting in the summer of this year, the company will produce engines, manual transmission and forged suspension parts for the Honda Brio compact targeted for the emerging countries. Up until now, the Brio components have been supplied from Japan and Thailand. The company will enhance support to Honda by shifting to local production, planning to manufacture parts for 150,000 vehicles a year, including products destined for export. (From an article in the Nikkan Jidosha Shimbun on Jun. 13, 2012)

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

R&D Expenditure

(in millions of JPY)

	FY ended Mar. 31, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	1,481	1,539	1,337

R&D Structure

Division	Business in charge	Number of engineers	R&D cost
Development Div.	- Developing chassis, engine and drivetrain products - Developing technologies for the next generation - Managing intellectual properties	83	867 million JPY
Production Technology Dept.	-Conducting R&D work on new production technology	83	220 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.	39	393 million JPY

R&D Activities

Development of Chassis system components
-The Company has made product proposals and developed them for its customers' models, for the most part according to plan. Specifically, it has completed manufacturing a series of ball joints, finishing the development and evaluation of specs and production methods by using locally produced steel. As a result, it is focusing on launching production from 2014 for 2015 model-year vehicles and after. It is also gradually beginning to apply several new, cost-cutting technologies to its commercial-production operations.

Development of engine system components
-The Company is working to enhance its cost advantages in order to expand its business operations in the area of camshafts, balance shafts, and other products for both automobiles and motorcycles. In this regard, it is vigorously working to respond to advances taking place in its customers' engine designs/architecture so as to win more business from customers in and outside Japan.

Development of drivetrain system components

- As the nucleus of its prowess and expertise in making bevel gears smaller and more precise based on the shape of its proprietary three-dimensional gear teeth, the Company is focusing its efforts to complete a series of light-weight, 2-pinion differential assemblies that ideally match the shapes of differential cases.

-The Company has made plans to expand its business by commercially producing 2-pinion differential assemblies for its customers.
-The Company received orders from a customer outside Japan for differential assemblies. It is now reached the stage of launching commercial production.
-The Company is developing products with local specs suited to each region by making use of its Musashi Global Network, expanding local production.

Development of advanced technologies

-In the area of elemental technology, the Company is developing technology to reduce the weight of joints based on technology on unconventional materials.

-The Company is participating in a major project being advanced by Aichi Prefecture. Called the "Knowledge Hub", it focuses on developing next-generation nano and micro processing technology, which reduces environmental impact.
-The Company is conducting R&D activities on surface reforming technology that makes use of tribology.
-The Company is conducting advanced development on electric drivetrain technologies for hybrid vehicles, electric vehicles, and two-wheel electric vehicles.

Development production technologies
-The Company is continuing its development of a series of smaller and lighter weight differential gears, based on its proprietary design for gear teeth.
-The Company set up new production lines outside Japan. These new lines were installed to establish seamless cold-forging and machining operations, taking environmental concerns into consideration; and to ensure the product functionality of assemblies.
- The Company is conducting R&D activities to enable automated assembly lines to be set up outside Japan to manufacture planetary gears, which are the main components of transmissions that are becoming more and more diversified; and to prolong the product life of dies by developing optimal shapes based on simulation analysis on reverse tapered, single-unit dog gear teeth, for which its needs to raise its cost competitiveness. These dog gear teeth are essential for DCTs (dual clutch transmissions), for which the global market is forecast to increase significantly; and for manual transmissions, for which the market in developing countries is expanding.
-The Company is working as quickly as possible to develop and commercialize a cold-forging process that eliminates phosphate bonderizing, which is essential to cold-forging, by using a single-liquid coating process that reduces environmental impact.
-The Company is focusing its attention on research to make product proposals on forging techniques that eliminate the cutting/machining of housings and ball joints.

Contracts for Technical Assistance

(As of Mar. 31, 2013)

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 Manufacturing 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, 2013	FY ended Mar. 31, 2012	FY ended Mar. 31, 2011
Overall	22,907	18,182	9,705

Breakdown of investments:
<Japan>
-The Company spent 2,757 million yen on capital investments, which included 859 million to respond to new models and 770 to increase production.

<North America>
-The Company spent 1,861 million yen on capital investments, which included 767 million to respond to new models and 388 to increase production.

<Europe>
-The Company spent 151 million yen on capital investments, which included 51 million to streamline operations, 37 million to increase production, and 32 million to renew existing facilities.

<Asia>
-The Company spent 15,917 million yen on capital investments, which included 5,177 million to increase production and 4,140 to respond to new models.

<South America>
-The Company spent 2,221 million yen on capital investments, which included 284 to respond to new models, 274 to renew existing facilities, and 185 million to streamline operations.

Capital Investment Plan

(As of Mar. 31, 2013)

Region	Planned investment (million yen)	Major details and objectives of production facilities
Japan	4,000	Readying for production of new vehicle models; strengthening R&D capabilities and main functions
North America	3,900	Readying for production of new vehicle models; renewing and rationalizing existing facilities
Europe	400	Increasing production capacity/streamlining operations for automobile parts
Asia	14,200	Increasing production capacity/streamlining operations for automobile & motorcycle parts; preparing for new models
South America	1,500	Readying for production of new vehicle models; renewing and rationalizing existing facilities