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5. Tokai Rika Co., Ltd. Business Report FY ended Mar. 2016

Tokai Rika Co., Ltd. Business Report FY ended Mar. 2016

Factors

-The Company will build a new plant for manufacturing switches and security systems in Mexico. This is the Company's first entry into the country. In May 2015, the Company will set up a new subsidiary, which will start operations in the autumn of 2016. The Company will invest USD 34 million (JPY 4 billion) in the subsidiary by the end of the fiscal year ending in March 2019 (FY 2018). In FY 2018, the plant is expected to generate sales of USD 52 million (JPY 6.2 billion) , which will be raised to USD 126 million (JPY 15.1 billion) in FY 2020. (From an article in the Nikkan Jidosha Shimbun on April 28, 2015)

Investments in Japan

-The Company announced that its new wind tunnel testing facility will go into operation at the end of October 2015. The new facility has been built to improve the function of door mirrors, one of the company's mainstay products. The new test equipment has three times larger measuring range than that of the existing facility, and the maximum wind speed has been increased to more than 200 km per hour from 140 km per hour. In order to meet rising demand for improved serenity of vehicles, the Company will utilize the new facility to make door mirrors having excellent design and producing less wind noise and vibration. Using this opportunity, several in-house departments conducting reliability tests of door mirrors will be consolidated to the new facility by the end of October, with the aim of improving efficiency of the tests and evaluation. (From an article in the Nikkan Jidosha Shimbun on September 19, 2015)

-In August 2015, Plant B of the Company's seatbelt production facility in Toyota City was completed, which expanded capacity.

Product Development

-The Company developed lever combination switches and other products that are used around the steering column. These products contribute to improving functionality, reducing product size, and enhancing parts layout.

-The Company's automatic transmission shift levers are used in the Toyota Lexus RX.

AT shift lever for TNGA platform
-The Company has developed the third-generation automatic transmission (AT) shift lever based on the Toyota New Global Architecture (TNGA) design scheme of Toyota Motor Corporation. The Company standardized design of its shift levers in accordance with the TNGA, which aims at the use of common components with its focus on introducing a common platform and a driving position. In addition, the Company has introduced simultaneous and synchronized planning for parts development, process concept and production. As a result, the Company has achieved the Ryohin-Renka Cost Innovation (RR-CI: low-cost non-defective products cost innovation) target that aimed for a 30% cost reduction (RR-CI was announced by Toyota in 2009). Leaving enough room for designing the peripherals of shift levers, the company has cut costs and also improved product appeal at the same time. The Company will start supplying the new shift lever globally in 2015 or later. (From an article in the Nikkan Jidosha Shimbun on March 16, 2015)

Awards

-November 2015: the Company received a technical award for its AT shift levers and the cost reduction contribution award for its front seatbelts from Toyota. The award was given at the line-off ceremony for the new Lexus RX at Toyota Motor Kyushu's Miyata Plant.

-February 2016: at Toyota's global supplier meeting, the Company received the Excellent TNGA Promotion Award for its highly functional and low-cost products that are used around the steering system. It was the second consecutive year that the Company had been given this award.

R&D Activities

Switches
-Developed smaller products and switches that incorporate improvements in terms of design and operability.
-Launched commercial production of touch pad type remote control device which realized an intuitive operation like a smartphone.

Shift levers
-Developed standard AT shift levers and low cost AT shift levers
-Improved variations of shift-by-wire shifters

Security systems
-Developed low-cost smart-key systems to expand applications for compact vehicles
-Developed high-security products

Safety Systems
-Improved occupant protection performance
-Developed a seatbelt incorporating the next standard for retractors that are able to respond to the need for smaller components
-Expanded lineup of low-cost door mirrors
-Developed products with improved design such as high-quality steering wheels that apply the Company's proprietary, high-precision decorating technology "3D Dry Transfer Technology"

R&D Structure

-R&D activities in Japan are focused on advanced development and elemental technology. R&D activities in North America, Europe, and China are centered on developing products and making proposals to customers in response to the local market needs.

-FY ended March 2016:

• Japan: JPY 9,800 million　(equipment to produce new products and other facilities)
• North America: JPY 3,700 million (new plant in Mexico)
• Asia: JPY 4,900 million
• other regions: JPY 3,500 million

-FY ending March 2017 (forecast):

• Japan: JPY 12,500 million (equipment to produce new products)
• North America: JPY 5,800 million (new plant in Mexico, new products in North America
• Asia: JPY 4,200 million (construction of production lines for the Toyota IMV series completed)
• Other regions: JPY 500 million (investment in plating operations in Brazil completed)

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