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4. Kasai Kogyo Co., Ltd.
5. Kasai Kogyo Co., Ltd. Business Report FY ended 2015

Factors
1) Sales
<Japan>
-Sales totaled JPY 60,323 million, an increase of 5.6% y/y thanks to strong sales at the Company's major customers.

<North America>
-Sales were JPY 107,905 million, an increase of 29.2% y/y thanks to greater sales at the Company's major customers.

<Europe>
-Sales were JPY 15,478 million, an increase of 9.6% y/y thanks to greater sales at the Company's major customers.

<Asia>
-Sales were JPY 31,177 million, up 26.1% y/y due mainly to strong sales in China.

Contracts

<Land Rover>
-The Company became one of the suppliers for Land Rover brand models of Jaguar Land Rover Limited in the U.K. The Company has received its first order from the U.K. company for soft trunk trims for one model in 2015 and for another model in 2016. The supply will start in the middle of 2015. The Company's plants in the U.K. currently supply door trims and other car interior components to Japanese automakers' car assembly plants in the U.K. The new business with the local automaker will allow the company to strengthen its business in Europe. (From an article in the Nikkan Jidosha Shimbun on July 1, 2015)

<Renault>
-The Company has received an order to supply its interior trims for Renault's two models produced in India. This will be the first time that Kasai Kogyo's products are used in Renault vehicles. The supplier has won this contract by taking advantage of its strong relationship with Nissan Motor Co., Ltd., its major customer and an alliance partner of Renault. Under this contract, the Company will produce door trims and body side trims at its subsidiary in Chennai, Tamil Nadu in southern India. Production for the two models will begin in the spring and the fall of 2015, respectively. Kasai Kogyo expects that this business will allow the company to seek marketing opportunities with Renault in other regions, including China. (From an article in the Nikkan Jidosha Shimbun on December 17, 2014)

Business Partnership

-The Company will expand its supply capacity in Europe for the Renault Group and Nissan Motor Co., Ltd., in cooperation with a French interior parts supplier, Eurostyle Systems. The Company decided to create a new alliance with the local supplier, as it has won orders for interior parts of Nissan cars that are scheduled to be built at Renault's Flins plant in France. The ordered interior parts include door trims for the next-generation compact car that Nissan plans to release for the European market in 2016 or later. Eurostyle Systems has a technical center and production bases in France. It also has plants in Spain and Eastern Europe. Starting with the cooperation in France, the Company will consider other joint business opportunities, including parts supply from Kasai Kogyo's plants in the areas where Eurostyle Systems does not have its own plants. (From an article in the Nikkan Jidosha Shimbun on May 27, 2015)

Joint Ventures

<China>
-The Company will establish a joint venture subsidiary for producing door trims with Dongfeng Visteon Automotive Trim Systems Co., Ltd. (DFV) in Dalian, Liaoning Province, China. The subsidiary will start operations in the middle of 2015. It will supply the door trims to Dongfeng Nissan's Dalian Plant, which will start operations in 2014, with the aim of expanding business in China. The new subsidiary was established to supply door trims for Nissan brand models that are locally produced in China. The subsidiary, to be capitalized at CNY 65 million (JPY 1 billion), will be equally funded by Kasai Kogyo and DFV. The joint venture aims to achieve sales of CNY 130 million (JPY 2 billion) in 2016. (From an article in the Nikkan Jidosha Shimbun on July 28, 2014)

Recent Development Outside Japan

<India>
-The Company held a board meeting and decided to take 100% ownership in its joint venture (JV) in India, Antolin Kasai TEK Chennai Private Limited. This 50-50 JV was established between Kasai Kogyo and Grupo Antolin-Irausa, S.A., a Spanish manufacturer of automotive interior parts, in 2012. Kasai Kogyo decided to buy all the shares currently owned by Grupo Antolin for EUR 3.65 million (JPY 550 million). With this acquisition, the Company intends to establish a solid business base on its own and increase its production in India, in anticipation of growing demand in the market. The acquisition will be completed by the end of October 2014. (From an article in the Nikkan Jidosha Shimbun on September 29, 2014)

Business Plan

-The Company mapped out a new long-term management plan, KR10 (Kasai Realize 10), which covers the period between 2014 and 2023. Plans are to offer excellent quality to global customers by standardizing manufacturing methods and processes, to create its "only one" technology and develop it into a "number one" technology, and to generate new business targeted at the automotive industry. Following are financial targets for the final year of the plan:

• Sales: JPY 300,000 million
• Operating profit margin: 8%
• Global market share (interior trim): 10%

-The Company will lower the sales ratio to Nissan Motor in its consolidated net sales to below 60% by the fiscal year ending March 2020 (FY2019). While continuing business with Nissan, the Company intends to win more orders from other Japanese automakers including Honda and foreign OEMs with the aim of lowering dependency on Nissan. In its long-term vision to fiscal 2023, Kasai Kogyo has set a goal to expand its net sales up by 67% from FY2013 to JPY 300 billion. The Company is eyeing growth of business scale while maintaining stability by expanding its customer base. To attain its long-term vision, the company will bolster sales of door trims, its major product, headliners, sun visors and resin parts, while at the same time increasing the number of customers. Sales to Honda, the second largest customer after Nissan, will be increased to 25% in FY2019 from current 20% and sales to other carmakers in and outside Japan will also be expanded. (From an article in the Nikkan Jidosha Shimbun on December 1, 2014)

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

-During this fiscal year, the Company is spending its entire budget allocated for R&D, in Japan.

R&D Structure

-The Company's R&D activities are mainly conducted at the Advanced Product and Production Method Development Division.

-A new development center in China began operating in 2014, which will be followed by operation launch at a new North American development center and ASEAN Development Center by the end of 2015.

R&D Activities

Weight Reduction
-Weight reduction is the main focus of R&D activities on doors, pillars, ceilings, and trunk-trim. In addition, the Company is working to achieve an optimum balance between products that are lower in cost but still offer the highest levels of quality and weight reduction.

Safety
-Based on a proprietary structural design, the Company has succeeded in injection-molding impact-absorbing products that offer greater safety to vehicle occupants during lateral collisions. These products, which are lower in price compared to conventional products, still offer a high level of performance. The Company is delivering these to OEMs for mounting on mass-marketed vehicle models.

-The Company developed a side collision analysis technology using CAE tools. It has already tested the practicality of the new technology in bench testing. The collision analysis technology is expected to improve the driving safety of production vehicles.

Environmental protection
-The Company is working to reduce and/or eliminate VOC (volatile organic compounds) in materials, as well as changing to alternative production methods. It is changing to water-soluble adhesives and hot-melting processes; as well as mixing coloring agents directly into plastics instead of relying on paint.

-The Company is working to find alternatives for plastics, by using plant-based resins (polylactic acid); and alternatives to vinyl chloride materials, changing to TPO (thermoplastic elastomer olefin) and TPU (thermoplastic elastomer urethane).

Cabin-interior comfort
-Working under the aim of further improving soundproofing, the Company is developing high-performance products by making use of acoustic theory and CAE, conducting experiments on materials by utilizing reverberation rooms and actual vehicles that use four-wheel drive chassis dynamos.

-The Company is working to make products for cabin ceilings that have even further improved insulating properties, as it strives to offer a more comfortable temperature in the cabin-interior, while reducing fuel consumption.

Appeal and convenience
-The Company is designing products for cabin-interiors, such as decorative trim for door coverings and ornamentation for door-waists, making these types of trim more stylish, more pleasant to the touch by using innovative surface treatments, and giving them a more solid feel. In addition, the Company is working on developing interior illumination technology that helps create a stylish cabin space at night. It is also developing plastic pillars and trunks that make scratches less noticeable.

Investments Outside Japan

<USA>
-The Company is poised to increase supply to Honda Motor Co., Ltd. in the U.S. The Company plans to expand and add production equipment to its plant in Alabama, in order to convert it into a dedicated plant for Honda. Honda is Kasai Kogyo's second largest customer following Nissan Motor Co., Ltd. The Company's sales have increased, as the two automakers are currently boosting their production and sales volumes in the growing U.S. market. The company intends to establish an efficient production structure in the U.S. by making two plants serve only to Nissan and two others serve only to Honda. This will allow the Company to further improve its profitability at its North American division. (From an article in the Nikkan Jidosha Shimbun on July 10, 2015)

<China and Mexico>
-The Company will expand the production of headliners in China and Mexico. With the dissolution of a partnership with Grupo Antolin-Irausa, S.A. (GA), a Spanish automotive interior parts manufacturer, the Company will establish a supply system on its own. In China, the Company will introduce production facilities to its plant in Guangzhou, Guangdong Province. Also, the Company will expand its supply network in China by setting up a joint venture factory with Dongfeng Visteon Automotive Trim Systems Co., Ltd. (DFV), an automotive parts maker affiliated with Dongfeng Motor. In Mexico, the Company will consider establishing a new plant. For the fiscal year ended March 2014 (FY2013), sales of headliners accounted for a little less than 20 percent of consolidated sales. The Company intends to increase the ratio to 25-30 percent for the medium- to long-term, in order to make headliners the second pillar of its business following door trims. (From an article in the Nikkan Jidosha Shimbun on June 4, 2014)