2018 the Topy Industries Group Corporate Basic Philosophy

Technology and quality flowing together in one perfect motion T OPY R e p o r t

2 0 1 8

Art Village Osaki Central Tower, 1-2-2, Osaki, Shinagawa-ku, Tokyo, Japan 141-8634 TEL：+81-3-3493-0777 FAX：+81-3-3493-0200 http://www.topy.co.jp/ 2018 The Topy Industries Group Corporate Basic Philosophy

Win the trust and respect of society through the continuance and development of the Topy Industries Group and the execution of one’s duty as a public institution.

The Topy Industries Group Corporate Code of Conduct − To win the trust and respect of society –

Under the Corporate Philosophy, the management and employees of the Topy Industries Group shall strictly abide by all applicable laws and ordinances, the spirit reflected, and the Corporate Code of Conduct, while accepting full corporate social responsibility and fostering an open-minded and creative corporate culture.

Contents

Editorial Policy / Contents 1

Chapter 1 Knowing Topy 3

Businesses of the Topy Industries Group 3 Top Message 5 History of the Topy Industries Group 11 Strengths of the Topy Industries Group 13

Chapter 2 Topy’s Growth Strategies 15

Progress in the Medium-Term Management Plan 15 Steel Business 17 Automotive and Industrial Machinery Components Business (Wheels) 19 Automotive and Industrial Machinery Components Business (Undercarriage Components for Construction Machinery) 21 Other Businesses 23 Global Expansion of the Topy Industries Group 25

Chapter 3 Topy’s Sustainability Initiatives 27

Sustainability Initiatives of the Topy Industries Group 27 Environmental Initiatives 29 Social Responsibility 36

Chapter 4 Corporate Governance 42

Chapter 5 Corporate Data 46 Reporting Period Editorial Policy Our History 46 Reporting Scope Covers mainly FY2017 (April 1, 2017 to March 31, 2018), but includes This report covers all companies listed as a subsidiary of the Topy Indus- some activities that occurred on and after April 1, 2018. Directors and Members of the Audit & Supervisory Basic Policy tries Group (consolidated basis), however, some activities and data rep- Board 47 resents only Topy Industries, Limited. Activities where the scope has not been Topy Report 2018 is prepared to provide selected material information related to Date of Issue specified efer,r in principle, to the Topy Industries Group. Where it is necessary Consolidated Financial Statements for the the company's business activities, operating results, social responsibility as well as September 2018 to specify the applicable scope, activities by Topy Industries alone are identi- Past 10 Years 49 management control system focusing on its management strategies to improve cor- fied within the headline or sentences as Topy Industries and activities by an porate value in a medium- to long-term perspective, thereby aiming at offering op- Inquiries Regarding this Report Major Subsidiaries & Affiliates 51 individual Group company are identified by the name of the Group Company portunities to leverage candid dialogue with our stake holders including shareholders, involved. investors and related parties. Topy Industries, Limited (General Affairs Department) IR Information 52 TEL: +81-3-3493-0777 Art Village Osaki Central Tower, 1-2-2, Osaki, Shinagawa-ku, Tokyo, Japan 141-8634 1 2 Technology and quality flowing together in one Knowing Topy perfect motion Businesses of the Topy Industries Group • For details, see Topy’s Growth Strategies on pages 17 to 24.

The Topy Industries Group is a comprehensive metal processing group with an integrated Chapter 1 Steel Business production system from raw material production to the fabrication of finished products, in which the steel business as the business unit engaging in raw material supply and the automotive and industrial A raw material business that Topy machinery components business as the business unit engaging in processing are interrelated. Industries has been operating The Group also strives to diversify its businesses. It now engages in businesses in fields including since its foundation the wholesale of electricity, synthetic mica, crawler robots, indoor and outdoor sign systems, In the steel business, we produce steel by engineering and construction, leasing of real estate, and operation of a sports club. electric furnaces and roll out a variety of steel bars. Wide flange beams, standard structural shapes and deformed bars are shipped as construction ■Net sales and operating profit by segment materials chiefly to the customers in the domestic FY2017 and overseas market, while special sections are largely shipped to the Wheel Division and the Undercarriage Components Division of the company where they are turned into finished products. This business unit includes the companies engaging in the collection and recycling of steel scrap, a transportation company and a trading company playing as logistic and trading arms for the unit. In addition to inter-group business transactions, they also sell merchandize and provide services to the customers outside Net sales Operating profit the Topy Industries Group.

3% Automotive and Industrial Machinery Components Business 4% A world-leading comprehensive manufacturer of wheels and undercarriage components for construction machinery Others In the automotive and industrial machinery components Steel business, we manufacture and sell steel and aluminum wheels 12% 31% for automobiles, steel wheels for construction machinery, pressed products Power 15% for automobiles, industrial spring steel fasteners, and industrial machinery generation components. Industrial steel fasteners such as precision leaf springs are shipped to the 7% customers in automobiles, home appliances, industrial machinery and other industries in numerous applications. The industrial machinery component that we manufacture and sell include undercarriage components (track shoes* and tracks**) , cutting edges such as blades and buckets of bulldozers and hydraulic excavators , and cutting edges of motor graders.

Automotive and industrial *Track shoes: Component of tracks manufactured by processing and heat-treating hot rolled steel materials (special steel). Track shoes and other components are assembled to form tracks. machinery components **Tracks: A general name for the assembled undercarriage components of construction machinery vehicles, which is generally called steel track belt.

c20m80y50 66% Power Generation Business Other Businesses

Focusing on the stable Creating new sources of 62% supply of electricity while profit paying utmost consideration We are expanding sales of synthetic to maintaining mica, which is used for cosmetics and other products, in Japan and other harmony with the countries, while developing applications surrounding environment for Crawler Robots that are capable of We took electricity deregulation as an opportunity to moving back and forth and left and right. We also operate an construct a coal thermal power plant (Toyohashi-shi, Aichi) by indoor and outdoor sign systems business, a civil engineering paying utmost consideration to maintaining harmony with the business and a construction business, the leasing of real estate surrounding environment, and began to operate the electricity such as Topy-Rec Plaza (Minamisuna, Koto-ku, Tokyo), the wholesale business in 2000. We changed the supply destination operation of the OSSO sports club, and other businesses. and began to supply power under new contracts in 2015.

3 4 Technology and quality flowing together in one Knowing Topy perfect motion Top Message

A company that creates the future Chapter 1 with technologies At Topy Industries, we want to be a company that Creating a new future with creates the future with technologies. We will celebrate our 100th anniversary in 2021. Since our foundation, we have been developing ourselves with our corporate human resources and culture, with which we have continued taking on new challenges by remaining in step with the times technologies and devising creative measures on the front lines, again and again, over many years. Our technological capabilities, which have supported these efforts, have President and CEO also contributed to our development. Topy Industries, Ltd. At the core of our technological capabilities is our system of integrated production from raw materials to finished products. We produce steel by melting scrap iron in electric furnaces and use the steel as a raw material for manufacturing wheels, undercarriage components of construction machinery such as track shoes and tracks, and other products. In the trend toward mass production, many companies have given up integrated production and have sought to survive in their areas of specialty by promoting the division of labor and company splits. We have maintained integrated production by improving our unique technologies for manufacturing special section steel that enables the functional improvement of these products, and by establishing a production system for high-mix, low-volume production. I believe that it is the synergy between these material supply capabilities, processing technologies, and product development capability that have enabled us to cater to various customer needs. With this background, we have established a strong position in Japan as a supplier of wheels for road and off-road vehicles and undercarriage components for construction machinery, based on which we have also paved the way for our own global expansion. However, economic society is changing significantly at an unprecedented speed and we are facing changes in needs, such as a demand for lighter vehicle bodies, while automotive manufacturers are confronting new challenges such as the trend towards protectionism among countries, the spread of EVs, and the shift to automated driving. We are experiencing a difficult time when we would be advised to exercise our prediction ability again, just as we did when we moved ahead of the times and began to operate businesses manufacturing wheels and undercarriage components for construction machinery, and when we expanded overseas ahead of others. To continue developing as a sustainable company

5 6 Technology and quality flowing together in one Knowing Topy perfect motion

during the next 100 years, we need to achieve further have enabled us to win the trust of users. Aiming to be a company that Committee, which consists mainly of young staff Chapter 1 evolutions as a company that creates the future with We would like to continue cherishing our on-site creates the future and provides job members. We established this committee to enable technologies. capabilities and design capability for taking advantage satisfaction every single employee to fully demonstrate their of the on-site capabilities. We attach importance to capabilities, thereby allowing them to enjoy strong Trust as added value created at the how to engineer the wisdom of the people on the front job satisfaction. At present, we are implementing line and their adherence to quality for creating excellent While human resources are essential for creating proposals from this committee, the reviews of which work site products and how to enable the staff members and the future with technologies, the recruitment have been completed. We are reviewing the personnel Looking back at the history of Topy Industries, it people on the front line to cooperate successfully, environment has been growing increasingly difficult. system and improving maternity leave, childcare is clear that, starting with the leadership of previous as well as how to transfer technologies on site. For In recent years, our production bases have seen a leave, and other programs little by little, with a view management, the company has created new example, installing the same pieces of equipment as decrease in the number of locally hired employees. to employing more female employees and foreign businesses skillfully by applying the ideas of the those used in factories in Japan is not sufficient to We are concerned that our value and raison d’être employees. We would also like to provide authority people at the work sites in a proactive manner. I feel manufacture the same products overseas. It is difficult have been declining in these areas, and we are failing to local employees at our overseas bases so as to that the environment and tradition that allow us to to fill in the gap with the skills and creative measures to appeal to local people. We will strive to coexist in develop the company into one that wins acceptance take advantage of the wisdom of people in the front taken on site. I think that this is why products made in harmony with the local areas and contribute to the from the local people. I think that by solving these line constitute one of the strengths of Topy Industries, Japan are said to be of high quality. local communities by keeping in mind the fact that issues one by one, we can make Topy Industries into which has continued to grow sustainably for nearly At present, we make daily improvements in quality, our existence is meaningful only when we become a a company that our employees can be proud of and 100 years. cost, delivery dates, and other aspects through small company that the local people wish to work for. create the next 100 years of the company. For example, while we have many products with group activities carried out on site so as to continue I think making a company where employees wish to Steering the company toward the top market shares that have been supported for a the stable production of high-quality products that continue to work for, and are proud of working there long period of time, design capability is not the only satisfy our customers. These activities also enable is the basis of ESG management. While moneymaking future strength that has enabled us to survive the competition every single employee to achieve personal growth. We may appear to be the sole objective of a company, with other companies in the market where products would like to expand these small group activities to I want our employees to be proud that their work is In the business environment surrounding Topy are likely to turn into commodity products. I think it is our overseas bases to further enhance our strength, contributing to society through products. Industries, demand for automobiles and construction our on-site capabilities, including the originality and with which we value the opinions and ideas of people This means that Topy Industries must be a machinery is expected to grow in the long term, mainly ingenuity of people at the work sites and the detailed on site and reflect them as we bring out our collective company that our employees can be proud of and in emerging countries. On the other hand, we cannot improvements they make, as well as our design strengths. that provides them with job satisfaction. Under the expect domestic demand to increase, due in part capability, which allow us to take advantage of the Medium-Term Management Plan “Growth & Change to the population decline. The idea of globalization on-site capabilities, and that have continued to create 2018” that we are implementing at present, we under free trade is about to be inappropriate due to new added value, have maintained high quality, and have established the Job Satisfaction Improvement the trade protectionism of the United States, China,

7 8 Technology and quality flowing together in one Knowing Topy perfect motion

and European countries and emerging countries’ for reinforced concrete for the first time in Japan. centimeters. The robots can also move horizontally the sustainable growth of our businesses by powerfully Chapter 1 shift to domestic production. As a result, there The TACoil ® is compact and enables users to save without changing their posture. They also demonstrate promoting initiatives for producing synergetic effects may be changes to the positions of our overseas storage space. In addition, when used with automatic their capabilities in locations with poor footholds, of the acquisition of Asahi Tec Corporation and Ring production bases and the role of the domestic mother processing machines, the TACoil ® not only improves such as construction sites and farmland, and for Techs Co., Ltd. as our subsidiaries, expanding the factory. However, global expansion remains the key processing efficiency significantly, but also enables transporting goods on narrow pathways in factories sales of TACoil ®, and commercializing synthetic mica to our sustainable growth. In September 2017, we a higher yield. It therefore contributes to solving the or warehouses, for example. We would like to develop and crawler robots. established a joint venture in India, thereby completing problems faced by users from the rebar industry, these businesses into our mainstay businesses. To our shareholders a system that enables us to supply steel wheels with that is, the problems of storage space, the labor Growth & Change 2018 toward the common designs to any locations in the world jointly shortage, and processing losses. We will continue to with our alliance partner in Europe. Further, in May detect changes in society and reinforce our system for future With regard to dividends for our shareholders, 2018, we made Asahi Tec Corporation, an aluminum creating products that meet customer needs. we increased the consolidated dividend payout ratio wheel manufacturer with production bases in China Further, I think it is important to fulfill our desire Under Growth & Change 2018, we have been from around 25% to 30-35% as a guide in FY2016 and Thailand, our wholly owned subsidiary to build a to take on new challenges, which is in our DNA, implementing specific measures steadily from a long- to return even more profits to our shareholders. We new infrastructure for the global supply of aluminum without being afraid of undergoing trial and error, in term perspective under the basic policy of achieving determine the dividend amount by fully considering the wheels, the demand for which is growing from the a business environment with rapid changes like the sustainable growth and transforming into a company continuation of stable dividend payment as well. Based viewpoint of design quality and the realization of one we are facing now. From this perspective, under that provides job satisfaction to employees. In on this policy, we have paid JPY 80 per share as the lighter vehicle bodies. We will build a global supply Growth & Change 2018, we are striving to increase FY2018, as the final year of the plan, we expect to annual dividends for FY2017, with a consolidated system with a focus on wheels and undercarriage sales of synthetic mica and are working on the full- achieve the target sales by expanding our businesses dividend payout ratio of 34.2%. We allocate components for construction machinery. At the scale commercialization of crawler robots to make the with a focus on wheels for automobiles, mainly the internal reserve mainly to investment in new same time, we will reinforce the system based on the products our new sources of profit. Synthetic mica through the acquisition of Asahi Tec Corporation, businesses and the development of new technologies technological and on-site capabilities that we have is an example of success in our attempt to embody which I mentioned above, and Ring Techs Co., Ltd., and products for long-term stable business expansion cultivated at our mother factory in Japan. a concept that was created by taking advantage of a steel wheel manufacturer, as a result of which they in our efforts to bolster our corporate structure and For the steel business, we will take advantage our steel refining technologies. We made the attempt became our subsidiaries. However, the target profit international competitiveness. of the cost competitiveness and technologies for in the desire to take on new challenges, which is difficult to achieve. This is attributed mainly to the We will continue striving to achieve sustainable manufacturing deformed section steel at our state- encourages us to try whatever we want. Our high- fact that the increase in costs in the steel business, growth while improving our corporate value by of-the-art steel-making plant so that the business quality synthetic mica has begun to bear fruit, being which is caused mainly by the steep rise in the cost providing products, for which we have pursued will play a role as the business unit engaging in raw adopted as a raw material of luxury cosmetic products of secondary materials such as electrodes and alloy quality and cost that satisfy our customers, under our material supply in our integrated production system. little by little, although it took us long time to achieve iron and the electric utility rate, is putting pressure basic philosophy, which advocates, “Win the trust We will also expand the sales channel of products this. Our crawler robots come with a drive unit with the on the profit of all our businesses because we have and respect of society through the continuance and for customers outside the Topy Industries Group capabilities of moving back and forth and left and right, failed to reflect it quickly enough in sales prices. We development of the Topy Industries Group and the by creating new demand with the aim of achieving which we developed by applying our technologies will continue to take initiatives for improving costs execution of one’s duty as a public institution.” We sustainable growth. In fall 2018, we will launch the for tracks. They can go straight without problems, and ensuring appropriate margins. Further, we are would appreciate the continued understanding and compact coil (trade name: TACoil ® ) as a new bar even in a location with a height difference of several determined to make comprehensive efforts to achieve support of our shareholders.

■Position of Growth & Change 2018 and numerical targets under the plan ■Shareholder returns th (JPY) (%) Vision toward the 100 anniversary of Topy Industries in 2021: 150 150 Be a world-leading company in each field! Dividend policy: Consolidated dividend payout ratio of 30-35% as a guide + Stable dividend (policy set in FY2016) Stage 1 Stage 2 Stage 3 (2012 to 2015) 2021 (2016 to 2018) (2019 to 2021) th 100 100 Growth & Change 2015 Leap forward toward the 100 Building a foundation for Growth & Change next 100 years growth 2018 anniversary

50 50 90 Achieving sustainable growth and Numerical targets for FY2018 80 80 transforming into a company that provides 60 Policy Net sales JPY 250.0 billion job satisfaction to employees Operating profit JPY 14.0 billion 0 – Achieving ROE of 5% or higher – 20 Profit attributable to owners of parent JPY 8.5 billion 0 0 ROA 6.1% 2013 2014 2015 2016 2017 2018 (Fiscal year) ROE 7.7% (Forecast) 1. Achieving sustainable growth of businesses Priority Operating profit on sale 5.6% ■ Dividend ◦ Dividend payout ratio 2. Winning trust and empathy from society targets Debt equity ratio 0.60 * The dividend payout ratio for FY2015 was 83.6% as a result of the comprehensive consideration of the continuation of stable dividend payment 3. Reinforcing corporate foundation and other factors.

9 10 Technology and quality flowing together in one Knowing Topy perfect motion History of the Topy Industries Group

In the long history since its foundation, the Topy Industries Group has Chapter 1 been expanding its businesses by utilizing the originality and ingenuity of the people at its work sites based on its unique technologies. c20m80y50

In 1964, our integrated production system for producing and making full use of steel was completed through the merger of four companies (engaging in businesses regarding steel and wheels, undercarriage components for construction machinery, and others). The integration of different businesses creates management stability while diversification produces synergy (between the industrial fastener, synthetic mica, power generation, crawler robot and other businesses), thereby contributing to increasing business domains and improving business performance. Steel Wheels Undercarriage components Other businesses Power generation business for industrial machinery Origin of Establishment of Founded in 1921 deformed section an integrated production system 2008 2014 2017 2018 steel technologies Vertical integration of Steelmaking and hot-rolling + Wheel production 1921 1922 1953 2008 2014 Miya Steelworks succeeds Hot-rolling and the

apan Foundation of The business alliance with Nippon A new steelmaking plant is completed at the in hot-rolling of steel sash commercial production Miya Steelworks 1964 Steel Corporation is strengthened. Toyohashi Works with the introduction of an Strength 1 (predecessor of Toto bars (window frames). of track shoes have started. environmentally friendly, high-ef ciency arc furnace. Steel Mfg., Co., Ltd.) Topy Industries, Ltd. Integrated is established production 2009 1930 through the merger of Japan Motor system Teikoku Hatsujo Seisakusho (the predecessor of Wheel Co., Ltd., Toto Steel Mfg., The production capacity of the rolling mill shop Japan Motor Wheel Co., Ltd.) commences the Co., Ltd., Toto Zoki Co., Ltd., for medium-size steel products (a rolling line for deformed production of prototype steel wheels for automobiles. and Toto Tekko Co., Ltd. section steel) is increased at the Toyohashi Works.

1985 2003 2013 2016 2017 Wheels for passenger vehicles The business and capital Expansion into Expansion Expansion alliance with MW Italia Expansion Overseas the United States into China into Mexico S.R.L. is strengthened. into India

Aluminum wheels 2018 Strength 3 Expansion into China and Optimal global production 2013 Thailand (Asahi Tec Wheels for commercial vehicles Corporation becomes system Expansion into Indonesia a wholly owned subsidiary.)

Undercarriage components 1999 2002 2013 A building in the early Showa Period Wheels manufactured by for construction machinery Expansion into the United States Expansion into China Expansion into Indonesia (1926 to 1989) with steel sash bars Teikoku Hatsujo Seisakusho

1982 2009 ® Technologies and Development of the SGOR ,

new businesses Development of lighter weight wheels the world’s largest wheel for mining vehicles ●Adoption of rims made of deformed section steel and forged and molded discs (for buses and trucks) 1989 ●Adoption of high-tensile-strength steel Strength sheet (for passenger vehicles) 2 Improved heat treatment ef ciency is Technological achieved through the development of capabilities for low-carbon boron steel for track shoes. each process and creation Developed of new value Developed from from electric furnace Use of the existing 2017 metal processing melting technologies of infrastructure of the steel business technologies 1974 1987 the steel business 2000 for the power generation business Development of an automated (including land, quays and driving system for crawlers that Commencement of the Practical application of high-quality The power power transmission facilities) industrial fastener business synthetic mica for cosmetic use generation business are capable of moving back Developed from and forth and left and right is launched. track manufacturing technologies

11 12 Technology and quality flowing together in one Knowing Topy perfect motion Strengths of the Topy Industries Group

We have enhanced customer trust based on our high level of Topy's strength lies in an integrated production system and technological capabilities for each Chapter 1 process. The integrated production system covers a whole range from the steel making and hot technological capabilities related to steel and our integrated system rolling of various deformed sections to the fabrication of wheels for trucks, buses as well as mining for production, from raw materials to finished products. As a result, our vehicles and undercarriage components for construction machinery. mainstay products have gained top-level market shares in Japan and abroad.

Products with industry-leading On-site capabilities market shares Strength 1 Strength 2 Strength 3 Integrated production Technological capabilities for Optimal global production system × each process × system

Steel Business Automotive and Industrial Machinery Components Business

Tracks

Overseas sales ratio Track shoes of automotive and industrial machinery components business: 38% Metal processing technologies Raw Others Technology for rolling deformed section steel material China 13％ 9％ Heat treatment technologies U.S. Steel wheels for trucks and buses 16％ Sales by region FY2017 Japan 62％

TOPY CORMILL SYSTEM*

*This is our proprietary hot rolling analysis system employing the three-dimensional rigid plastic finite element method. This system is making a significant contribution to reducing the design development time • For details, see Global Expansion of the Topy for a new product, improving product quality and Industries Group on page 25. reducing costs. Ultra-large diameter wheel for mining dump trucks (SGOR®)

13 14 Technology and quality flowing together in one Topy’s Growth Strategies perfect motion Progress in the Medium-Term

Management Plan In the business environment surrounding Topy Industries, global demand for automobiles and steel is expected to grow, mainly in emerging countries. On the other hand, we cannot Medium-Term Management Plan (FY2016 to FY2018) expect domestic demand to increase, due in part to the population decline and the aging of the population. In addition, demand for construction machinery and mining equipment is also expected “Growth & Change 2018” to grow in the long run due to the world’s population growth and rising urbanization rate. Under the Medium-Term Management Plan “Growth & Change 2018” we will strive to achieve sustainable growth by continuing to promote global growth and shift to a highly profitable business structure, positioning the automotive and industrial machinery components business as a growth driver, and accelerating global business development. We will also take on new challenges by Status of Implementation of Major Initiatives creating new ways of using our proprietary technologies to generate new businesses.

1 Achieving sustainable growth of businesses ●Acquisition of Asahi Tec Corporation as a wholly owned subsidiary Chapter 2 [Steel wheels] [Industrial fastener] ■Objectives ●Business and capital alliance with MW Italia S.R.L., a ●Commencement of operation of the production base ◦Building a new infrastructure for the global wheel manufacturer in Europe, is strengthened. (2016) in Mexico (2017) supply of aluminum wheels, the demand ●Establishment of a joint venture in India (2017) ●The production capacity of the production base in for which is expected to grow from ●Ring Techs Co., Ltd. becomes a wholly owned Vietnam is increased. (2017) the viewpoint of design quality and the subsidiary. (2018) realization of lighter vehicle bodies ●A decision is made to invest in the renewal of the [Steel] ◦ Creating synergy in sales and technologies ® production base in the United States. (Operation ●Launch of TACoil , a new bar for reinforced concrete with Topy Industries, which is a global planned to commence in 2020) (Planned to be launched in autumn 2018) supplier of steel wheels and specializes in aluminum wheels as luxury products Sales Manufacturing [Aluminum wheels] [Crawler Robots] ■Profile of Asahi Tec Corporation R Sales destination Manufacturingsales ●Asahi Tec Corporation becomes a wholly owned ●Development of an automated driving system for ◦Bases: Japan, China, Thailand and the subsidiary. (2018) crawlers capable of moving back and forth and left United States and right (Omni-Crawler) (2017) ◦Production items: Aluminum wheels for passenger vehicles and other products ◦Production capacity: 4 million pieces/year 2 Winning trust and empathy from society ◦Sales: JPY 30.8 billion (FY2016) ●Introduction of a performance-based stock ●Consolidated dividend payout ratio increased to 30% compensation plan for management personnel to 35% as a guide. (FY2016) ●Acquisition of Ring Techs Co., Ltd. as a wholly owned subsidiary (FY2016) ●Appointment of independent outside directors ■Objectives constituting at least one-third of board members ◦Reinforcing the business structure in response to the decline in domestic demand for steel wheels and (Ordinary General Meeting of Shareholders held in Ota Factory June 2018) the growth in demand for the products in overseas markets, mainly in emerging countries ◦ Promoting business reforms by using each other’s Ring-Techs 3 Reinforcing corporate foundation technologies, know-how, and wealth of human Guangzhou Co., Ltd. ●The ERP system (SAP) has been introduced, and a ●The activities of the Job Satisfaction Improvement resources and taking other initiatives Fujian Topy Profile of Ring Techs Co., Ltd. Autoparts Head Ofﬁce shift to the new system is being made in a gradual Committee, which consists mainly of young staff ■ Co., Ltd. Head Ofﬁce/ ◦Bases: Japan and China Okayama manner. members, are being promoted. Factory Ayase Factory ◦Production items: Steel wheels for passenger vehicles and other products Toyokawa Factory ◦Sales quantity: 8 million pieces/year Topy Industries, Ltd. ◦Sales: JPY 9.9 billion (FY2016) Ring Techs Co., Ltd. ■Changes in numerical targets

Operating profit on sales (%) Return on assets (ROA) (%) Return on equity (ROE) (%) Debt-to-equity ratio

5.6 7.7 7.1 4.6 6.1 6.1 0.73 0.66 0.71 0.72 3.5 3.5 5.2 0.60 3.4 4.5 0.54 0.56 0.60 3.1 4.1 4.0 2.7 3.5 3.5 3.7 2.3 2.6 2.9 2.1 2.4

1.7

2012 2013 2014 2015 2016 2017 2018 2018 2012 2013 2014 2015 2016 2017 2018 2018 2012 2013 2014 2015 2016 2017 2018 2018 2012 2013 2014 2015 2016 2017 2018 2018 Forecast Target Forecast Target Forecast Target Forecast Target

15 16 Technology and quality flowing together in one Topy’s Growth Strategies perfect motion Steel Business

Message from the Division General Manager Policy under the Medium-Term Research and Development Management Plan We promote research on steelmaking methods Developing products that cater to the needs We will make full use of the capabilities of our aimed at reducing costs and improving productivity world-leading steelmaking mill. At the same time, we and quality, the development of steel in new will create new demand with products developed shapes and new grades of steel for it, and R&D of the times with technologies for deformed by applying our technologies for manufacturing activities related to labor-saving and automation of deformed section steel and processing technologies, inspections and environmental improvements such section steel and processing technologies which are our strengths. as waste reduction and the development of new recycling methods. As a result of these efforts, we have achieved improved quality and productivity in Progress in the Medium-Term steelmaking processes, orders received for steel Chapter 2 Management Plan in new shapes, the reduction of the CO2 emission intensity of existing products, and the development of ●We have developed large, wide flat bars with technologies related to waste reduction and recycling. grooves as segment members for tunnel construction. We have begun to deliver the product for Toward Sustainable Growth the Tokyo Outer Ring Road. We are expanding sales of mast rails for forklift ● The target of the steel business under Growth & trucks to overseas manufacturers. Change 2018 is overwhelming cost competitiveness Tsuyoshi Nakamura ●We are planning to launch a compact coil (Trade in the steelmaking process and distinctive Operating Officer in charge of the steel business Name: TACoil ® ), which is a densely rolled compact General Manager, Steel Division technologies for deformed section steel and coil of deformed reinforcing bar, in autumn 2018. processing technologies. By achieving this target, we When used with automatic processing machines, will further solidify our unique position in the electric ® furnace industry. In addition, this industry plays an Features and Strengths the TACoil significantly improves their processing efficiency and also provides other benefits. It important role in iron recycling. Topy Industries will also assume therefore contributes to solving the problems 1. Steelmaking mill with the latest world-leading 2. Specialist in deformed section steel this role in its equipment We are a specialist in the manufacture of deformed faced by users from the rebar industry, such as the efforts to save Our steelmaking mill has the [ECOARC™], an section steel with asymmetric cross-sections. problems of labor shortage, processing losses and resources and environmentally-friendly, high-efficiency arc furnace We cater to diverse customer needs by providing storage space. energy. boasting world-leading heat efficiency. By combining high value-added products, which are developed, this furnace with the steelmaking technologies of manufactured and fabricated based on our TACoil® production line that has been completed Topy Industries, we have achieved further power proprietary technologies for manufacturing deformed conservation and productivity. This has resulted in section steel with the full use of numerical analysis. unmatched cost-competitiveness. In addition, the Initiatives for Sustainable Growth mill has been designed to be earthquake resistant 3. Wide array of products and high production in preparation for the Nankai Trough earthquake, efficiency G&C 2018 thereby contributing to the stable supply of our In response to customers’ requests for high-mix, 2000 to 2015 2016 to 2018 products with large market shares. low-volume production, we manufacture products efficiently by maintaining high quality, productivity, Internal materials yield, etc. (Track shoes, SGOR®, etc.) Developing diverse products by cooperating with the business unit engaging in processing

Business Environment 2002: Construction of a new processing mill 2015 2005, 2011, and 2014: Enhancement of processing facilities Mast rails for First order received Finding new Increase of production achieved with quality from an overseas customers in the ●Domestic steel demand has remained strong, partly ●Cost-push inflation has been significant among forklift trucks control and delivery as advantages The first size manufacturer global market reflecting investment in construction related to the electric furnace manufacturers and steelmakers due developed in 2002 2020 Tokyo Olympics and Paralympics. to the rising cost of iron scrap, secondary materials ●Global steel demand has been growing gradually, such as alloy iron and electrodes, electricity, Rails for the Joint development Delivery of Rails, frames linear motor of freight car frames coupling partly driven by infrastructure-related demand in transportation and others. Capturing demand for for freight car (2002) were with a freight car material for infrastructure and transportation adopted for Linimo, which was manufacturer in water pipes for a project in emerging countries. cars, etc. equipment on a global level built for the Aichi Expo. North America (2003 and 2007) Libya (2005) ●Moves toward trade protectionism, such as the introduction of additional tariffs on steel products The first size was developed 2015 Segment members and a new processing mill was An additional by the United States, have come to the surface. constructed in 2002. Strengthening the processing for tunnel processing mill Contributed to fulfilling the demand for a shorter business based on technologies was constructed to construction construction period with fabrication for deformed section steel increase production.

17 18 Technology and quality flowing together in one Topy’s Growth Strategies perfect motion Automotive and Industrial Machinery Components Business (Wheels) Policy under the Medium-Term Research and Development Management Plan Message from the Division General Manager We are advancing research related to weight Demand for automobiles has been growing around reduction, design quality improvement, quality the world, mainly in emerging countries, while global improvement, cost reduction, and other topics, as Expanding sales by evolving the product supply competition has been growing increasingly fierce. well as research related to new product development. In this environment, automakers are promoting With regard to steel and aluminum wheels for cost reductions by creating common platforms. In automobiles, which are our mainstay products, we system in the global automotive market response, we will expand and reinforce our global have made achievements such as improving the supply system, which enables us to supply steel precision of analysis and evaluation technologies, wheels with common designs to anywhere in the the development and commercial production of world, thereby enhancing our presence. new products, and the cost reduction and quality Chapter 2 improvement of existing products. Concerning ultra- Progress in the Medium-Term large diameter wheels for mining dump trucks, we Management Plan conducted research on a wheel with a new structure that is able to withstand heavy loads on vehicles. ●We strengthened our business and capital alliance with MW Italia S.R.L. in Europe (2016) and established a joint venture in India with Wheels India Toward Sustainable Growth Limited (2017). By combing these developments Ichiro Takeuchi with our existing production bases, we see our The overseas bases of our wheel business and Managing Operating Officer in charge of the automotive the Ayase Factory and the Toyokawa Factory – and industrial machinery components business global supply system for steel passenger car General Manager, Wheel Division the mother factories in Japan where our efforts wheels has been established for phase one. to strengthen manufacturing competitiveness ●We decided to invest in the renewal of the steel commence – will brush up on our technological wheel production base in the United States. capabilities, improve cost competitiveness, and Features and Strengths (Operation planned to begin in 2020) develop human resources in an integrated manner. We made Ring Techs Co., Ltd., a steel wheel They will also create synergy with Ring Techs Co., ® ● 1. Approx. 90% domestic market share* (steel world [SGOR ] with a rim diameter of 63 inches (1.6 manufacturer, our wholly owned subsidiary. (2018) Ltd. and Asahi Tec Corporation, which have recently wheels for trucks and buses) meters) and a weight of nearly 3 tons. We made Asahi Tec Corporation, an aluminum joined the Topy Industries Group. We will thereby We have succeeded in developing lightweight ● wheel manufacturer with production bases in China strive to further enhance our presence as a world- wheels by using deformed section steel produced 3. Establishment of a global supply system (steel leading comprehensive wheel manufacturer and and Thailand, our wholly owned subsidiary (2018) in in our steel business. In addition, we have a base in wheels for passenger vehicles) further reinforce our business foundation. Indonesia where we cater to the local procurement We supply steel wheels to all automakers in Japan an effort to build a new infrastructure for the global needs of Japanese automakers. as an independent wheel manufacturer. We have supply of aluminum wheels. also established a global supply system under which 2. Approx. 80% global market share* (ultra- our bases in the United States, Mexico, China, and large diameter wheels for mining dump trucks India and a strategic alliance with MW Italia S.R.L. Initiatives for Sustainable Growth [SGOR®]) enable us to cater to the local procurement needs Our wheels for mining vehicles are used at mines of automakers from Japan, Europe, and the United in harsh conditions all over the world. Given their States. Establishment of a global system for supplying steel wheels for passenger vehicles track record, the products have earned high trust. Fuian Yuan We also produce one of the largest wheels in the *OEM market share (components to be mounted on new vehicles) Shing Topy Ltd. Ring-Techs Guanghou Co., Ltd. Topy Industries, Ltd. NAFTA (China) Ring Techs Co., Ltd. Topy America, Inc. (apan) Business Environment China Europe Japan Topy MW Manufacturing Mexico S.A. E C.. ●The global automotive market continues to grow, ●Demand for mining equipment has begun to MW Italia S.R.L. India mainly in emerging countries. recover rapidly, reflecting the resumption of WIL Car Wheels Ltd. Latin America ●The domestic automotive market has been the resource development business that was (India) shrinking. undertaken in response to the rising commodity ●Technological innovations, such as electric vehicles prices. and automated driving, have been progressing.

South Africa MW Italia S.R.L. Base of the Topy Industries Group Base of a capital alliance partner

19 20 Technology and quality flowing together in one Topy’s Growth Strategies perfect motion Automotive and Industrial Machinery

Components Business (Undercarriage excavators. Policy under the Medium-Term Management Plan Components for Construction Machinery) Toward Sustainable Growth We will cultivate new customers by striving to Message from the Division General Manager bolster overseas production and logistics bases and Demand for construction machinery, which had enhance the functions of the mother factory in Japan been in a slump, hit the bottom in 2015. Since then, to rebuild our global supply system for undercarriage the demand has been on a recovery trend due to components for construction machinery. the increase in infrastructure investments in China, Aiming to be the top manufacturer in the world Indonesia, and other emerging countries, as well as rising commodity prices. In the medium and long Progress in the Medium-Term term, demand for construction machinery is expected by expanding domestic and overseas bases Management Plan to grow further because the global population and Chapter 2 urbanization rate are expected to grow. ●We are strengthening the functions of the mother In this environment, we are striving to reinforce our factory in Japan, which supports our overseas business foundation by developing high value-added expansion. These functions include those related products based on customer and market needs, to design, production technologies, global improving cost competitiveness, and promoting sales promotion activities by taking advantage of our global procurement, and human resources development. production bases, which are our strength. We thereby ●We are taking initiatives to strengthen the optimal aim to be an industry-leading company, which is a global production system to build a business target under Growth & Change 2018. structure that is resistant to environmental changes. These initiatives include the construction of a new Sales quantity of excavators in China

Katsuyoshi Tanaka track shoe assembly line at our logistics base in (Units) Operating Officer in charge of the automotive and industrial 180,000 machinery components business Indonesia (which is planned to begin operating in General Manager, Undercarriage Components Division autumn 2018). 140,000

Research and Development 100,000 Features and Strengths 60,000

We conducted research related to quality 20,000 1. We are proud of our OEM market share for materials to products. In addition, we have received improvement and cost reduction in the heat treatment 0 2010 2011 2012 2013 2014 2015 2016 2017 tracks for hydraulic excavators, which is among high evaluations from construction machinery processes of rollers and track shoes for hydraulic (Source: China Construction Machinery Association) the largest in the world manufacturers for our VA proposals and meticulous We deliver track shoes and tracks for hydraulic services, which we provide by making full use of excavators to major Japanese and United States the design development capabilities that we have construction machinery manufacturers, which cultivated. Initiatives for Sustainable Growth produce the majority of hydraulic excavators

worldwide. We are proud of our OEM market share 3. Establishment of a global system 〉〉 Es tablishing an optimal global production system by 〉〉 E xpanding sales to new markets and customers for these products, which is among the largest in the We strive to improve customer satisfaction by enhancing overseas bases world. supplying high-quality products to customers all 〉〉 S trengthening the mother factory functions (product ▶ 〉〉 I mproving customer satisfaction (cost, quality, and development, production technologies, and others) of reliable delivery) over the world on a timely basis in accordance our bases in Japan 2. High level of quality, reliable delivery and with their needs. We deliver the products from our nder design development capabilities based on five production bases – those in the United States consideration integrated production (Tennessee) and China (Tsingtao) in addition to the We ensure a high level of quality and reliable Kanagawa Factory, the Toyohashi Works, and Sanwa delivery with integrated production from raw Buhin – and our logistics base in Indonesia (Cikarang). Europe Topy ndercarriage Topy Industries, Ltd. Topy America, Inc. (China)Co., Ltd. (apan) NAFTA Business Environment China apan India nder consideration ●Domestic demand for construction machinery has ●Overseas demand for construction machinery been strong because investment in construction is recovering rapidly, partly reflecting the rising PT. Topy ndercarriage Indonesia remains stable. commodity prices in Southeast Asia in addition to ASEAN the recovery of demand in China.

Base of the Topy Industries Group Regions to which our products are supplied

21 22 Technology and quality flowing together in one Topy’s Growth Strategies perfect motion Other Businesses

Message from the Division General Manager Crawler Robots

In Japan, there is concern over the labor shortage evolving the technologies that we have developed, Striving to create new businesses resulting from the declining birthrate and the aging achieving the practical application of crawler robots population. This has led to growing demand for with the capability of moving back and forth and left robots for practical use in all industries in Japan. and right that enables them to drive themselves, and through technological innovations We have established a reputation for our crawler suggesting the use of the robots for carrying out robots developed through government-industry tasks that cannot be undertaken by humans and for collaborations, including those for decommissioning releasing humans from dangerous tasks and hard surveys of nuclear power plants, the exploration of labor, with a focus on the distribution, agricultural, marine resources, and space probes. and construction industries. We would like to expand this business by further Chapter 2

Aiming to be No.1 in practical robots with innovative crawler technologies

〉〉 D eveloping compact, lightweight robots by taking advantage of our experience in the 〉〉 E ntry to the service and agricultural business of undercarriage components for construction machinery and in facility design fields, which are expanding 〉〉 B eing highly acclaimed in a range of fields for the development of crawler robots for ▶ 〉〉 Pr actical application of an innovative use in special environments, such as nuclear reactor buildings and under the sea, and movement mechanism Satoshi Fukura a track record of operating such robots Operating Officer General Manager, Science Division Attempt to enter new fields with trust earned through our actual achievements and our ability to cope with a range of situations based on our experience! Synthetic Mica Disaster response/Maintenance For Fukushima Daiichi Nuclear Power Plant Marine surveys Our synthetic mica features high purity, superior is highly likely to be used more widely in the future transparency, and stable quality. It is widely used because there has been growing demand for safety by cosmetics manufacturers in Japan and other and advanced functionality. We aim to increase sales countries as a basic ingredient of their make-up of our synthetic mica globally by ensuring that it has cosmetic products. This synthetic mica also has stronger appeal, because the cosmetics market is industrial applications such as the heat retaining expected to grow in China and Southeast Asian cover papers to protect copying papers, and gas countries as well. barrier application for the food packaging films. It is We will develop and suggest safe, high- therefore an extremely promising commodity. performance ingredients for cosmetic products and While natural mica has been prevalent as an for industrial applications as well by applying our ingredient of cosmetic products, especially in proprietary technologies in our efforts to differentiate overseas markets, we believe that synthetic mica ourselves from our competitors. New Product/Technology

Aiming to be the No.1 synthetic mica company with our proprietary technologies Crawler mechanism for moving back and forth and left and right OMNICRAWLER® 〉〉 Manufacturing and managing synthetic mica, which features higher purity than natural mica 〉〉 S ynthesis of pure white trans- 〉〉 Technology for changing the composition for synthesizing color mica and coating technology parent mica for iron oxide and other substances ▶ 〉〉 A wide range of colors, from We are striving to have this product 〉〉 S urface treatment for adding water repellent function and comminution technology, which low-gloss to high-gloss used in a wide range of areas as a tool for enables adjustments to be made to obtain the optimal particle diameter addressing the labor shortage being faced Moving Catering to diverse needs by taking advantage of our proprietary technologies in our efforts to by a range of industries. It can be used Moving to backward the right expand applications further in the global market. for harvesting and conveying agricultural crops and conveying goods in logistics OMNICRAWLER® warehouses, for example. Mica for cosmetics Mica for industrial uses

Synthetic mica •Automotive coating •Decorative material for enameled ware •Moisture-proof paper •Confectionery packaging Moving Moving to material forward the left And others Crawler movement mechanism

*See page 37 for details of its functions and application examples.

23 24 Technology and quality flowing together in one Topy’s Growth Strategies perfect motion Global Expansion of the Topy Industries Group

We promote the establishment of the optimal global production system with a focus on the automotive and industrial machinery components business.

We aim to establish the optimal global production system that will enable us to deliver high-quality products with a production system designed to cater to customer needs in a range of locations worldwide. For this purpose, we at the Topy Industries Group are focusing on establishing new Chapter 2 production/sales bases and expanding business with our alliance partners. Our expansion to Mexico and India has further reinforced our optimal global production system.

Europe (France, Poland, Romania, Russia, and Turkey) United States (MW Italia S.R.L.)

China Topy America, Inc.

Topy Precision Mfg., Inc. Topy ndercarriage (China) Co., Ltd.

Fuian Topy Autoparts Co., Ltd. Japan Ring-Techs Guanghou Co., Ltd. Topy Industries, Ltd. Guanghou Wheelhorse Asahi Aluminium Co., Ltd. Ring Techs Co., Ltd. Guanghou icastal Asahi Aluminium Co., Ltd. yushu Wheel ogyo, Ltd.

Topy Fasteners, Ltd.

India eico WIL Car Wheels Ltd. Topy MW Manufacturing Mexico S.A. E C..

Topy Fasteners Mexico, S.A. E C.. Thailand Indonesia Topy Fasteners (Thailand), Ltd. PT. Topy Palingda Manufacturing Indonesia Asahi Tec Aluminium (Thailand) Co., Ltd.

PT. Topy ndercarriage Indonesia

Vietnam (PT. Inkoasku, PT. Pakoakuina) South Africa Topy Fasteners ietnam Co., Ltd. Icon Legend (products produced at each base) (MW Italia S.R.L.) Undercarriage components SGOR for construction machinery

Wheels for trucks and buses Industrial fasteners

Wheels for passenger vehicles (steel) Alliance partner

Wheels for passenger vehicles (aluminum)

25 26 Chapter 3 28 perfect motion flowing together in one flowing together Technology and quality and Technology - - - - Compliance Global management Corresponding SDGs G governance Strengthening Strengthening Risk management system − To win− To the trust and respect of society – BCP (disaster-resilient system) warming Recycling procurement Local job creation Chemical management op managementshall make example by leadership and inform the f and when any of the Code of Conduct is violated, management T strict adherence the to Code of Conduct and ensure the compli manage its administrating effectively ethics corporate the of ance ment systems. I solve personally to determination indomitable an demonstrate shall the issue by launching an investigation and shall take actions to prevent the recurrence of such incidents. At the same time, top management shall make full disclosure within and outsidethe company promptly and precisely, and, upon determining the disciplinary strict impose responsibility, and competence of source responsible. held those against action Promotion of responsible Initiatives to reduce waste Initiatives to reduce global Response to risks / regulations perate business in a fair and transparent manner under free compe eek widely for knowledge and information both domestically and . . tence. titionand appropriately keep an arm’s length distance from politics agencies. administrative and S internationally, and continue the innovation of technology and know- compe professional and technologies distinctive refining by how O 1 2 Diversity Article 7 (Fairness in corporate activities) corporate in (Fairness Article 7 management) top of (Responsibilities Article 8

Article 6 (Technology and know-how innovation) Recruitment and development of globally competitive human resources ------S Approach of Topy Industries, Ltd. Supplying safe, secure products (quality assurance) business products Products with Development of high work efficiency Operation of recycling Business opportunities environmentally friendly Job Satisfaction Small group activities Small group Improvement Committee Improvement E issues Supply chain management ESG Initiatives of the Topy Industries Group the of Topy Initiatives ESG resources Air pollution development Local economic System for promoting System for promoting environmental activities environmental Tightening of laws and Depletion of water and regulations in countries Environmental and social Environmental Increased global warming Shortage of skilled workers ppose resolutely any anti-social forces and parties posing a men ommunicate widely with society as well as shareholders and ac ace social to orders and security. C O tively disclose corporate information fairly and appropriately. Co appropriately. and fairly information corporate disclose tively contri social on work actively and communities local with operate bution activities as being a good corporate citizen. espect the individual character and personality of employees, and ealize that a sensible approach environmental to conservation is The Topy Industries Group Corporate Basic Philosophy Basic Industries Corporate Group Topy The IndustriesThe Topy Group Corporate Code of Conduct roduce and supply, high-quality and safety-oriented merchandise merchandise safety-oriented and high-quality supply, and roduce ay due respect different to cultures and customs of all countries and . . ment and well being of local communities. P and service gain to customers and consumer confidence. 1 2 R P regions, and perform business activities contribute to the to develop R provide safe-working environments allowing them work to with en lives. fulfilling attain and thusiasm, essential the to existence and activities of thecompany, and behave actively. and voluntarily Corporate Basic Philosophy of the Topy Industries Group Industries Topy the of Basic Philosophy Corporate Article 5 (With the environment) (With the Article 5 Article 2 (For the benefit of society) Article 3 (For the benefit of employees) Win the trust and respect of society through the continuance and development of the Topy Industries Group and the execution of one’s one’s of execution the and Industries Group Topy the of development and continuance society the through respect trust and of the Win institution. public a duty as applicable all by strictly abide shall Industries Group Topy the of employees and management the Philosophy, Corporate the Under responsibility and social corporate full accepting while Conduct, of Code Corporate the and reflected, spirit the ordinances, and laws culture. corporate creative open-minded and an fostering Article 1 (For the benefit of customers) Article 4 (With the world) E S systems Supporting - - - Local communities Employees health Human Trust resources Safety and Sense of development fellowship A loop of “Symbiosis” with communities local Fulfill responsibility as a member of the local com cre and communication, promote actively munity, - co-develop ensure to recognition fellowship ate ment. A loop of “Growth” with employees growth the for maximum consideration Provide and safety of employees working in the Indus Topy tries Group and make the most of their skills and enthusiasm. Build a relationship ensure to that both grow. can corporation the and employees Loop of growth Loop of symbiosis Skill As a citizen Enthusiasm corporate improvement - For the benefit of employees of impact Trust benefit For the Working Reduction of society in harmony with the world Evaluation environmental with For the benefit of customers philosophy Loop of Friendliness environment recycling Environmental Basic policy for the environment Loop of trust Philosophy Group Basic Group Code of Conduct Customers Senior technology natural Innovation in Safety Quality Valuable and know-how management’s responsibilities resources Fair A loop of “Trust” with customers Deliver customers safe and high quality products, evalu customers’ where environment an establish ations of our products are repeatedly fed back to the production site, and build a solid trust. A loop of “Recycling” for the technologies and environment positiveTake initiatives in promoting recycling of preciousnatural resources pertaining the to recycling a is Industries Topy that self-declaration environmental reduce to work and corporation, lifestyles. social in burden activities corporate Environment and technologies ------strength Relation Analysis and disclosure measurement Technological Information together Loop of working Value Trust Loop of expectations Sustainable development Return of profits Sustainability Initiatives of the Topy of the Topy Initiatives Sustainability Group Industries At the Topy Industries theAt Topy Group, see we our relationship with our stakeholders as shown and below, aim sustainable deepening mutual growth understanding achieve by to loops. six through the Topy’s Sustainability Initiatives Sustainability Topy’s partners Business and Makeuse of technologies and values possessed by both parties through dealings in a fair and equi Respond the to expectations that shareholders and investors have with regards Industries Topy to disclo and business of growth sustainable through transparen high with information corporate of sure cy and establish a win-win relationship that en sures mutual benefit. A loop of “Working together” business partnerswith work of relationship a establish and manner, table ing together across entire value chains by actively providinginformation such asanalysis and mea technologies. suring A loop of “Expectations” with shareholders investors and investors Shareholders 2727 Chapter 3 30 perfect motion - flowing together in one flowing together Technology and quality and Technology Recycling Electric furnace Shapes Steel Div. Melting/Rolling Steel Scrap iron in the market ducts Pro Science Div. Steel Div., Wheel Div., Undercarriage Components Div. paper Waste Recycled byprocessing some of thosematerials A variety ofhot rolled steelmaterials are shoes and track shoes aremanufactured born from recycled materials,plus wheels, equipment Undercarriage construction Components Div. Components of Slag Waste paper Use as material Civil In-house recycling system recycling In-house construction Wheel Div. Steel wheels more, we have implementedan originalrecycling system within our production flow for the reuseof resources. pany assigned carry to out a vital role in the production Further society. of system recycling the within activities - - Steel Division Market iron to produce steel Recycles and reuses scrap Production activities within Society Consumption activities

Recycling System

)

s p t e a r

( c s Collected by the Topy Industries Group • Tojitsu Co., Ltd. • NE-Tojitsu, Ltd. • Akemi Recycling Center, Ltd. Topy Industries, Ltd. manufactures steel products us products steel manufactures Ltd. Industries, Topy In this business model, we see ourselves as a com material of Reuse Works, Toyohashi we produce various Topy’s At steel Topy Industries is a recycling Topy corporation ing scrap iron generated over the course consumption of society. within activities production and furnace. electric an in made steel molten from sections have twoWe sources scrap of iron, the major material for our steelmaking process; scrap gathered in-house and scrap procured from outside. A substantial quantity of steel sections producedthe by Steel Division is shipped to Components Undercarriage the and Wheel Division the Division be to used as raw materials in the production of components. undercarriage and wheels various Environmental Initiatives Environmental Business Our of Nature Recycling - Apr. 2018 Jun. 2017 Aug. 2016 Sep. 2016 Transition to 2015 version Completed in Completed in Completed in Completed in Directors Office Committee Engineering Environment [Topy Industries, Ltd.] Administration Dept.Administration Factory Environment [Topy Industries, Ltd.] [Topy Oct. 2005 Jun. 2005 Feb. 2006 Nov. 2005 Director in Charge of Environment of Charge in Director Factories General Managers of Manager Dept. Personnel Labor nion of Representative Transition to 2004 version Completed in Completed in Completed in Completed in Meeting President Committee Central Environment Executive Management Executive Apr. 1999 Jun. 1999 Nov. 1998 Nov. 1998 ISO 14001 certification obtained Environment Sub-Committee Ayase ISO 14001 CertificationISO 14001 Status Environment conservationEnvironment initiatives promotion structure Factory

Toyokawa Toyohashi Environment staff of each factory Kanagawa ------order to bolster environmental management, Topy will Topy environmental management, bolster to order Basic Environmental Policies As part its of duty as a corporate ranks citizen, Topy Conserving the Environment in Overseas Business Activities Raising Environmental Awareness and Finding Raising Environmental Awareness and Finding Harmony with Local Communities Developing Environmentally Conscious Products Reducing Environmental Footprint Working out on Energy-Saving and Prevention of Working out on Energy-Saving and Prevention Global Warming Complying with the Law ments and implement measures in accordance with the needs of local communities. Topy will remain mindful of its impact on local environ icy and raise awareness of environmental conservation through environmental training and enrichment for its employees. Furthermore, Topy will strive to create harmony between the company and local communities. Topy will promote understanding of its environmental pol scious at every stage in their life cycle, from design and scious at every stage in their life cycle, from design production to use and disposal. Topy will develop products that are environmentally con Topy will develop products that are environmentally In environ- undertake cost-conscious efforts to reduce its mental footprint by saving energy, lowering greenhouse gas emissions, using fewer resources, and recycling. In all the manufacturing processes, Topy will work on pro In all the manufacturing processes, Topy will work active energy-saving and greenhouse gas reductions. Topy will comply with all environmental regulations, proto Topy will comply with all environmental regulations, cols, and agreements in its manufacturing activities.

riorities. Therefore, Topy has established and implement and established has Topy Therefore, riorities. We believe it believe is our dutyWe preserve to a rich and beautiful world for future In generations enjoy. to Since the Wheel Division (Toyokawa Factory, Ayase Ayase Factory, (Toyokawa Wheel Division the Since Maintenance our of environmental management sys 6. 5. 4. 3. 2. continuous improvement under the ISO 14001 environ 14001 ISO the under improvement continuous mentalmanagement system among its management top p ed the following policies: following the ed 1. ISO 14001 certification status 14001 ISO Environmental Philosophy tem has been confirmedby regular audits after this initial certification. We are carrying out environment-friendly sys scheduled and promoting by activities production En Basic our with line in initiatives environmental tematic Policies. vironmental Factory) launched a certification acquisition program to to program acquisition certification a launched Factory) February in activities conservation environment promote manufacturing all1998, Topy sites have undertaken an certificationISO 14001 acquisition program, which was 1999. June in completed Environmental Management Environmental Initiatives Environmental partnershipand solidarity withlocal communities promote willwork continuous to we improvement in everything from make, materials we finished to products,the foundation to lay for sustainable devel opment in our society. Environmental Philosophy and Philosophy Environmental Policies Basic Environmental 29 Chapter 3 32 perfect motion - - - - - flowing together in one flowing together Technology and quality and Technology ) ® - - - - - (Super GiantOff-the-road Rim) wheels areul ® wheels can can wheels ® The world’s largest wheel contributing to efficient mining efficient mining to largest contributing wheel world’s The hauling and operations Hot-rolled high-strength rim material rim high-strength Hot-rolled safety collision reduction and weight assuringWheels vehicle of use their increasing are manufacturers Automotive SGOR Ultra-large diameter wheel mining for (SGOR trucks dump high-strength steel that enables chassis weight reduction reduction weight enables chassis that steel high-strength while maintaining equal strength conventional to steel as this allows the achievement both of reductions in fuel con sumption due lighter to body weight and improvement in collision has been safety. Topy working on the use high- of bus and truck for sections special hot-rolled strength wheel applications. A challenging issue for raw material was how uniform strength could be attained. have suc We inherent our to thanks production commercial ceeded in thickness material controlling for technologies hot-rolling and temperature. tra-large diameter wheels that Topy has developed for for developed has Topy that wheels diameter tra-large the across sites mining large-scale at used trucks dump dimen have available wheels largest the Currently, world. sions 63 of inches in inner m) (about 44 diameter, inch 1.6 in widthm) and weighesas much (abouttons as 1.1 2.83 about being each, five times the diame ter ordinary of pas senger car wheels. SGOR meetthe demanding min of requirements in applications ing functionality of terms and hauling capaci contributingty, to en of reduction the vironmental burden. ------Corrugated rim Overall thickness distribution was redesigned. Product drawing Product drawing Lightweight wheels weight lighter 15% approx. efficiency with fuel improve Helping ISO-compliant developed has Ltd. Industries, Topy The corrugated rim is made from a rim section with un An industry first for chromium-free processing chromium-free industryAn for first Surfacetreatment aluminum of alloy wheels has long Non-chrome pre-treatment of aluminum wheel painting wheels, which lighter are about than corresponding 15% cre rim corrugated a combining by wheels, conventional reduction proprietary weight company’s the with ated disc. ECOD-processed an with technology surface corrugat is tire-mounting whose thickness, even ed so that it will have the optimal thickness distribution when roll-formed. The corrugated rim is a product our of com to us enabled which system, production integrated technologies steelmaking proprietary hot-rolling our bine ECOD The technologies. design and analysis wheel with disc is formedthrough cold spinning (rocking die forming) a tubeof made steel of plate, which enables a thinner, lighter disc while also ensuring the required strength. been developed with a focus on long-term corrosion re sistance and anti-discoloring, and treatment with chromi umwas thought be vital to for anti-corrosion properties. in viewHowever, European of environmental regulations, at their turned have manufacturers automobile Japanese tention surface to treatments that avoid the use heavy of substantial spent has Topy chromium. as such metals timeon the study and technological development alter of succeeded has and chromium, replace to materials native in a chromium-free process for the first time in the indus try. Development of Environmentally Friendly Products Friendly Environmentally of Development - scraps products the electric furnaces electric the processing Nonferrous Nonferrous Nonferrous Nonferrous Smelting and machines Combustion improver for for improver Combustion CFC recovery Disassembly and End-of-life vending Recycled Shredder dust Shredder and solidification crushed stones Volume reduction Shredding and screening Shredding and rolling Steel scraps Electric furnace steelmaking Shredderdust is reduced in volume and solidified into Recycling flow chart Volume reduction and solidification reduction Volume End-of-life Vehicles Shredded iron iron Shredded ■ tries, for thermal Ltd. recycling. shapes which are optimal for use for electric furnaces. It isthus recycled intocoke a alternative and used for the electric furnaces Indus at the Works Toyohashi Topy of A machine for reducing the the reducing for machine A volume of shredder dust and solidifying it ■ [Akemi Recycling Ltd.] Center, ------Wind sorterWind In 2004, Akemi Recycling In and Ltd. Topy Center, Akemi Recycling significantlyIn 2013, Ltd. Center, im In addition, protect to the global environment, the Recycling of end-of-life vehicles, end- Recycling of end-of-life and other machines, of-life vending waste Akemi Recycling was established Ltd. Center, in 1991 ELVs, end-of-lifevending ELVs, machines, andother waste Shredding and screening Shredding Shredder al wastes intomajor raw materials for producing steel and aluminum making by full use the of shredder plant, which is among the largest in Japan. dustries, jointly Ltd. developed a technology for recycling generated is which (ASR), residue shredder automobile when shredding intoan alternative cokesELVs, to used ASR established companies The furnace. electric for recycling facilities and created an ideal recycling system which enables zero waste. proved the quality iron of and nonferrous scraps obtained shredding by and other industrial ELVs waste, increas by ing the dust collection capacity the of shredder line and building a new line for screening out nonferrous metals. company also recovers CFC from end-of-life vending ma chines and the similar waste and screens out fluorescent lamps and dry cells in advance. as a company that belongs Industries the to Topy Group. Since then, this company has been recycling substantial volume scraps of iron, of end-of-life vehicles and industri Operation of recycling business business recycling Operation of are crashed into tiny pieces with blades attached a cy to lindrical drum that rotates at high speed in the shredder. pro screening various through pieces go shredded The cesses,in which theyare sortedout into iron, nonferrous metals (such as copper and aluminum), and shredder dust (such as plastics and rubber). ■ Environmental Initiatives Environmental Business Opportunities 31 Chapter 3 34 perfect motion ------flowing together in one flowing together Technology and quality and Technology e will 2017 112.9 2016 103.0 2015 118.9 opped to half compared to opped to half compared emained almost unchanged 2014 163.9 om the facilities generating VOC at 2013 156.4 [Topy Industries, Ltd.] 2012 192.4 2011 387.4 a proactive approach for the prevention of air pollu of air the prevention for approach a proactive 0 Total amountsTotal of environmental releases and transfers of VOC Initiatives on air pollution prevention In FY2012, VOC emission dr In FY2017, VOC emissions r Since FY2012, the amount of substances in ques Since FY2012, the As With the revision of the Air Pollution Control Law in May With of the Air Pollution Control the revision (ton) 100 200 500 400 300 (Fiscal year) (Fiscal tion has continued to decrease. In FY2017, however, the In FY2017, however, decrease. tion has continued to than the FY2016 level. W amount was slightly higher of emis technologies for the reduction lated to production sion. facilities commissioned). tory (emission gas treatment ■ emissions and transfer amounts of the materials regulated amounts of the materials regulated emissions and transfer due to the business significantly by PRTR have decreased taken in FY2012. integration and other measures the amount in a well-planned continue striving to reduce manner. items re action our four major factories as well as reviewing Works at the Toyohashi year due to reduction the previous use of paint in the bridge business after decreased (due to Fac the Ayase announcement of business withdrawal) and to reduce will continue striving the FY2016 level. We from the emissions in a well-planned manner. tion, Topy Industries is conducting voluntary measurement voluntary measurement Industries is conducting tion, Topy of VOC concentration fr mestic reduction target by the end of FY2010. target mestic reduction 2004, it became necessary to respond to regulations on to regulations 2004, it became necessary to respond to of 30% compared emission of VOC, and a reduction as the do basis was presented FY2000 on a year-on-year ------2017 359 338 2016 339 2015 546 2014 589 2013 644 2012 onment and Promotion of Improvements to the of Improvements onment and Promotion ocess to implement the continuous management 2011 1,056 transfers of chemical substances that are hazardous hazardous that are transfers of chemical substances 0 The emissions of chemical substances, as in the case Initiatives on Biodiversity on Initiatives Topy of operations manufacturing and business The Emission management materials of under Law the PRTR with the PRTR Law (the Pollutant Re In accordance Total amountsTotal of environmental releases and transfers of substances regulated under the PRTR Law [Topy Industries, Ltd.] (ton)

200 400 800 600 1,200 1,000 (Fiscal year) (Fiscal Industries, do not Ltd. involve activities such as deforesta tion and other activities that may disrupt the ecosystem. biodiversity of conservation that recognition the share We and prevention global of warming are essential for a sus conservation biodiversity part one of As society. tainable and preservation forest of resources in developing coun tries, encourage we the use paper of made from domestic materials and preserve recycled To paper. water resourc es we are working on the reduction water of consumption circulatingby and reusing cooling water at our factories. Biodiversity Conservation Biodiversity Management Chemical chem business entities that handle Management thereof), to ad report obliged to manage and ical substances are emissions ministrative offices the amount of environmental and of chemical substances and emissions reductions.. heavily affected of carbon dioxide and industrial waste, are both volume. At the company, by variations in production lease and Transfer Register Act; the Act on Confirmation, Register Act; the Act lease and Transfer Substances etc. of Release Amounts of Specific Chemical in the Envir to humans and ecosystems at each of their business sites. to humans and ecosystems at each of their to the re Based on this system, we submit annual reports spective administration bodies, and at the same time, we use this pr ------with an estimated output some of 46,000 kWh per 2 The Kanagawa Factory was grant Pilot introductionPilot a solar gen of power Works eration facility Toyohashi the at Topy Industries wins the Chairman of the the of Chairman the wins Industries Topy Japan Award Center, Energy Conservation Grand Prize. in the Energy Conservation We areWe promoting Energy Saving Action whose 2020, year. In the pilotyear. introduction, three different panels (sin gle-crystal panel, multi-crystal panel, and CIS panel) were installed at the same time compare to output and power generation characteristics. In another experiment, we laid the on in-house produced aggregates slag oxidized ground the of pilot facility check to the effectiveness theof slag aggregates for preventing weeds and their effects on the pilotequipment and its power generation perfor mance. With these and other initiatives, we are striving to contribute the to protection the of global environment in a aspects. of range edthe Chairman the of Energy Con servation Japan Center, Award in the Best Practice Category the of Energy Conservation Grand Prize for FY2017, which is hosted the by Energy Conser vation Japan. Center, The award pre sentation ceremony was held on Feb ruary The factory 14. was granted the award for its activities in promoting en ergyconservation in the entire factory introducingby an energy conservation program called Energy Conservation UnderMeister. the direction Energy of Conservation the Meister, Kanagawa Factoryintroduced a system that showspower consumption with automatic analysis, which is an advanced form the of visualization powerof consumption, thereby encouraging workers to be more proactive in saving energy. With this and oth er initiatives,the KanagawaFactory is now capable of promoting energy conservation continuously in well- a activities, the of effects quantitative As manner. planned energy consumption (intensity) at the factory in FY2016 was reduced compared around by the to FY2012 17% level, and contract demand was reduced around by 28%. environ global the of preservation the include purposes ment through energy conservation. As part the of Promo tion Energy of Efficiency Investments, which is the main stay Energy of Saving Action we have 2020, experimentally introduced a solar power generation facili ty at the Works Toyohashi and began assessment in The facilityMarch 2014. has a total solar panel space of 270m

- - - - 2017 526

2016 507 2015 488 emissions 2 emissions from energy sources sources energy from emissions 2 469 2014 emissions and improvements that we 2 emitted Industries, Topy by is regu Ltd. 2 ) 2 473 2013 emissions energy from sources 0 2

100 200 500 400 300 600

reduction target outlined in the ActionPlan for Low 2 Emissions Reduction of CO Each factory Industries, Topy of is involved Ltd. in a CO [Topy Industries, Ltd.] (Fiscal year) (Fiscal (thousand ton-CO range of improvement activities that are appropriate for for appropriate are that activities improvement of range the achieve to equipment production and products the CO at Topy Industries,at Topy were 526,000 Ltd. tons, maintaining the volume lower than the level FY1990 as the target. the volumeHowever, has been on an upward trend since due the to increaseFY2015 crude of steel production attributed the to commencement the of operation new of steel-making facilities. In view the of anticipated increase production increased with associated usage energy in in the future, we will promote control and improvements The consumption. energy in increase the curb further to amountCO of larly reported the to government authorities in charge by those to addition offices in its from emissions including in factories management energy designated the from accordance with the Revised Act on the Rational Use of Energy that came into effect in 2009. With regard the to Ayase Factory and the Kanagawa Factory in Kanagawa countermeasures on plans our submit we Prefecture, againstglobal warming in business activities in accor dance with Kanagawa ordinance Prefecture’s promote to global warming measures.we began In FY2010, report ing the actual CO have made in accordance with our reduction plan. For For plan. reduction our with accordance in made have the Works Toyohashi Factory and the Toyokawa in Aichi Prefecture, we submit our plan tackle to global warming regulations the following by government prefectural the to ordinance. prefectural a on based eration. In FY2017, CO eration. In FY2017, Carbon Society stipulated theby Japan Business Fed Initiatives for Preventing Global Warming Preventing for Initiatives ■ Environmental Initiatives Environmental Risk Response 33 Chapter 3 36 perfect motion flowing together in one flowing together Technology and quality and Technology - - In ISO 9001 accordance accordance with current Plaque attesting to Caterpillar SQEP Certification that we as a supplier of received components for undercarriage construction machinery Formulate presidents Formulate quality policy QMS in Management Engineering Administration Dept.Engineering Administration Central quality committee office Office for presidents quality review Office for quality divisional managers meeting Support reporting on critical quality issues to the committee management risk the and president Participate as auditing member to division quality audit and Group company quality audit risks and improvements” Group Implement PDCA based on ISO 9001 Quality System Management company president through providing world supreme quality— complaints by thorough analysis of quality complaints by thorough FY2016-2017 Quality Policy “Work on the challenges to achieve a zero quality on the challenges to achieve a zero “Work —Establish an unwavering presence in the global markets —Establish an unwavering presence in the global Minimum onceyear Formulate quality policy for factory QMS in Management Formulate division quality policy quality audit Conduct division quality audit company Conduct Group Work as a member of central quality committee Judge the necessity to report quality issues to the president at headquarters President quality review Implement PDCA based on ISO 9001 Quality System Management Verify the development status status development the Verify of presidents quality policy production site with general Factory manager Division for quality with supreme with responsibility head personnel head Managing rankManaging (Responsibility and authority) and (Responsibility Approximately four timesyear four Two timesyear Two Mechanism Quality Assurance Philosophy Quality Assurance Formulate presidents quality policy quality presidents Formulate factory qualityReview to responding instructions Issue problems quality critical A F R N and continue introduce to and deliver quality products and services that satisfy customers tial improvement tial (Committee, motivation enhancement etc.) motivation (Committee, lways anticipate the expectations and needs of customers ahead of time, react their to requirements promptly and precisely, reliability improve quality and product stabilize stages, development and design quality in building on ocus ealize the importance of education and training and enhance the quality awareness of all employees of our organizationotice that quality defects are caused by multiple factors, promptly investigate the true cause of the problem make to substan Awards from Customers from Awards Industries, Ltd. certified by Caterpillar Inc. as highest-level suppliers divisions of Topy Two under SQEP certified by Caterpillar Inc. as the highest, Platinum Level Industries, Ltd. were divisions of Topy Two under (SQEP) for 2017. SQEP is a program suppliers under the Supplier Quality Excellence Process are Suppliers criteria. own its on based year every suppliers excellent certifies Inc. Caterpillar which — four levels of certification are There of various requirements. in terms evaluated comprehensively — with Platinum being the highest. and Bronze Platinum, Gold, Silver, components for construction machinery to we became the first supplier of undercarriage This year, certified as a Platinum Level supplier In addition, we were be certified as a Platinum Level supplier. six than 8,000 suppliers, only Of more of wheels for mining vehicles for the sixth consecutive year. consecutive years. companies in total have been certified as highest-level suppliers for six or more by Honda Motor Co., Ltd. and other customers as a supplier of wheels for automobiles and have also been commended We as an excellent supplier. by Hitachi Construction Machinery Co., Ltd. and other manufacturers Topy Industries,Topy is Ltd. devoted placing to customers as our first priority and strivesto contributeto society by delivering safe highand quality products and services that always satisfy customers, while continuously improving theity effectiveness Management System). of our QMS (Qual Quality assurance of each division each Quality assurance of Engineering Dept. Administration Quality Management Structure Report and follow up quality policy Conduct audit to verify the effect of Committee members: chairman, vice chairman and other members Central quality committee quality Central Enhance system and activate information exchange information activate and system Enhance Quality managers meeting President cost quality and status development transition (Regular meeting) quality critical against taken measures issues by the chairman and vice chairman of the committee (Extraordinary meeting) Relationship withCustomers Social Responsibility Social ------” certificate” ) is) recycleda roadbed TM AIKURU ), which), started in The 2002. license certifies that the The electric furnace slag for recycled road-bed mate road-bed recycled for slag furnace electric The Obtained revised JIS Certification for JIS Certification Obtained revised Oxidized Slag The Works Toyohashi has established system a in Oxidized slag aggregate is heavier in specific gravity ECO Stone™ meetsECO Stone™ the environmental criteria a by Electric Furnace Slag for Material Road-bed Recycled “ ECO Stone™ obtains rials (Product Name: ECO Stone ECO Name: (Product rials which oxidized slag generated within the electric furnace furnace electric the within generated slag oxidized which during the refining process and reduced slag discharged from the ladle after continuous casting subsequent to the refinery process are completely separated, treated, processed and recycled installation by a slag of cooling factory the 2013, April In facility. crushing and facility concrete for aggregate slag A 5011-4: A JIS obtained categoryelectric No.4: furnace slag aggregate. In ad another December 2013, in acquired factory the dition, certificate and started for Revisedto pro JIS A 5011-4 for aggregate slag oxidized furnace electric sell and duce concrete. thannatural materials such as sand and gravel that have been used as concrete aggregate materials and so we expect slag be to used for heavy concrete aggregate such as dissipation wave blocks. The sales expansion oxidizedof slag aggregate for concrete has favorable a aggregate natural of extraction the reduces it effect as materials and thus its impact natural to environments and also curbs energy consumption.will We exert our contin ued efforts reduce to environmental load through review activities. business our of material made crushing, by sheaving and mixing oxidized slag and reduced slag. The obtained ECO Stone™ a underlicense the Aichi 2014 on Prefecture August 31, Recycle Materials Evaluation System (Pet name: AIKU RU performance environmental and quality, meet materials safety requirements, and thatit can be used for public works. Certificate Number:2)-201. hazard of inclusion and elusion of terms in margin great materials. ous [Topy Industries, Ltd.] [Topy

- - - - 468 2017 13,817 468 Emissions volume disposal Final 2016 15,883 470 2015 12,568 422 2014 14,429 368 2013 15,276 [Topy Industries, Ltd.] 0 Recycling of machining oil by purification treatment Industries, Topy At various types machining of oil are The amount discharged of industrial waste increased continueWe promote to recycling and reduce the Waste reduction and recycling reduction Waste partA the of metal scrap (steel) generated during Emissions and Final Disposal Volume of Industrial Waste 2,000 4,000 8,000 6,000 12,000 14,000 10,000 16,000 (Fiscal year) (Fiscal (ton/month) used at its manufacturing processes and reuse the of in concerns major the of one become has oil machining terms environmentalof impact. the At Ayase the Factory, and treatment purification undergoes oil machining used is reused. plan We introduce to this system all to other factories. lection zinc of out melting of Oxidized dust). slag generat edfrom steelmaking is recycled at ratea as high as 90% and material construction civil for reused is and more or material. concrete about year-on-year as the 26% slag in FY2016 volume Mean production. steel crude increased to due grew re waste industrial disposed of amount ultimate while, mained almost flat at 468tons since the previousyear. the through waste industrial disposed ultimate of amount expansion and improvement 3R of activities. production activities is reused directly in-house as a raw material in electric furnaces. As for other waste, we are waste of amount disposal ultimate reducing engaged in through re-resourcing collection (e.g. scrap of iron, col ■ Initiatives for Reducing for Waste Initiatives Environmental Initiatives Environmental Response Risk 35 Chapter 3 38 perfect motion - flowing together in one flowing together Technology and quality and Technology - - - Support for cultural activities and Support for cultural activities and sports we citizen, corporate good a As In the field sports, of we have become an official continue to support cultural activi support cultural to continue ties and sports in a low-profile man ner working by together with local culture, of field the In communities. we co-sponsored Deep Ocean lat the on exhibition special a 2017, est study on deep-sea biology and the earth that began be to held at theNational Museum Nature of and Science, in July Tokyo 2017. sponsor the of San-En Neophoenix, a basketball team that started be to based in City Toyohashi in the current season and belongs a professional to basketball league (B.LEAGUE). will We continue carry to out support activ ities for revitalizing local communities and other purposes purposes other and communities local revitalizing for ities manner. proactive a in President Takamatsu talking with Governor Haslam ------attends a recep Takamatsu President state governmenttion held by the of Tennessee President Takamatsu attended 2017, On October 12, High Junior Students of Taketoyo Industries, Ltd. for ca- School visit Topy education reer seven Junior studentsOn May 30, 2018, Taketoyo of a receptiona that was held for Governor Haslam Ten of nessee, who was visiting Japan, at the residence the of Mina Akasaka, in Japan to Ambassador States United compa Japanese 120 around from People Tokyo. to-ku, nieswere invited the to reception, and our president was invited because the Undercarriage Department Topy of America, Inc. operates business a in Nashville, Tennes see.In his greeting, Governor Haslam said that the State Tennesseeof owes a great deal Japanese to companies for its development, referring the to fact that many jobs were created due the to entry Japanese of companies. Industries, Topy visited Prefecture Aichi in School High for careerLtd. education. This educational program is part the of support for career education provided by the Gakko Support Center (School Support Center), an It NPO. is aimed at assisting students look to at so ciety from a broader perspective and take advantage whatof they learn through the program in a productive inway the future. On the day the of visit, we introduced our businesses them to while answering questions that they had prepared finding by out about the company in deepenadvance. To their understanding Indus Topy of tries, we showed them offices in our headquarters. We business exchanging experience to them enabled also high junior The opportunities. other them gave and cards school students were nervous, but appeared be to learn ing things with interest. Contribution Local to Communities - - Moving backward Moving to the left ® akenaka Corporation and Moving to the right Moving forward hehigh driving force ensures that it is capable roviding a high driving force with a wide ground hanks to its high positioning accuracy, it stops stops it accuracy, positioning high its to hanks t movesback and forth and left and right in t drives itself detecting by the landmark (fixed a straight line, makingit unnecessary turn to around. It can therefore travel in narrow and intri for functions with and sensor laser a with pole) obstacles. collisions avoiding and preventing cate spaces. I I of climbingof up and down hills. T precisely at the desired point. T P contact area, it enables the vehicle to travel on on travel to vehicle enables the it area, contact roads. rough (2) (2) (5) (1) (1) (3) (4) (4) We areWe striving have this to product used in wide a Features 1) Crawler mechanism for moving back for moving back Crawler mechanism and right and forth and left OMNICRAWLER Transportation of heavy goods and other other goods and of heavy Transportation a TO, Crawler site construction a on tasks assisting transportation robot Spraying chemicals onto agricultural crops, Spraying chemicals onto agricultural crops, transporting them (automatic follow-up in harvesting), and other farm work onto and Loading and unloading trolleys trucks and other tasks in a logistics from warehouse Jointly developed with T Joint marketing with Ginza Farm Co., Ltd. (Joint development with this company is planned.) Okaya & Co., Ltd. rangeareas of as tool a for addressing the labor shortage faced a range by industries. of Itcan be used for har conveying and crops agricultural conveying and vesting example. for warehouses, logistics in goods Suggestions for saving labor in the field of construction ● * Suggestions for saving labor in the field of agriculture ● * Suggestions for saving labor in the field of logistics ● Products with high work efficiency with high work Products - ® NC machine (exhibited at Tekkin Expo, a trade show on reinforcing steel) processed with an NC machine ® (launched in autumn 2018) (launched in autumn ® is an advanced solution problems to faced by ecause it is highly dense and compact, it saves ombined with an NC machine, it significantly in significantly it machine, NC an with ombined venwhen the bar isdrawn and used as a ® t is capable minimizing of the loss generated storage space. It also offers high transportation efficiency. B during the process and increasing the yield rate. I straight it maintains bar, the same performance as the existing deformed reinforcing bar. E C creases processing efficiency and resolves labor shortages. (4) (4) (3) (3) (1) (1) (2) (2) TACoil 2) Sizes: D10, D13, D16 D13, Sizes:2) D10, Features:3) A new deformed reinforcing bar reinforcing A new deformed TACoil 1) Product name: TACoil name: Product 1) Examples of a TACoil Densely rolled compact coil is drawn and put into the NC machine. Contribution through Business Social Responsibility Social Relationship withSociety users from the rebar industry, such as labor shortages, processing losses, and storagespace. 37 Chapter 3 40 perfect motion - - - - - flowing together in one flowing together Technology and quality and Technology We have beenWe encouraging employees make to stan we launched a program underIn April which 2017, we began providing opportunitiesIn May 2017, for Family we held Day theOn Topy March 2018, 29, Encouraging employees to make standard greetings expand dardthis greetings To mea since January 2017. sure further as a company-wide movement, we formulat Greetinged the Topy Guidelines and put up in July 2017 posters ateach manufacturing site raise to employees’ awareness. card Thank-you employees can write their feelings gratitude of on cards and pass them those to their of colleagues who have One challenge. good undertaken a or job good a done card was distributed each to employee from April to June. Of the 565 cards that were distributed, cards 157 were collected. management the Discussions with discussions between employees and the management to shorten the psychological distance between them, devel op loyalty the to company, and promote understanding Medium-Term the including strategies business our of Management Plan. Family DayTopy for families employees of working at the headquarters. peopleTwenty from six families participated in the event. The participants made positive comments, such as “We werehappy be able to It watchseemed him to work.” that the families became deepening by fans Topy of their understanding the of will company. We continue en to courage employees balance to work and life creating by a workplace atmosphere that values families. ------The Second All Topy Small Group Activity Presenta Activity Group Small Topy All Second The the program was providedfor employeesIn FY2017, Asmeasure a for improving the office environment,we Activities of the Job Satisfaction Im- Committee provement The Second All Topy Small Group Ac- Small Group Topy The Second All Convention tivity Presentation tion Convention Prior to was held on December 2017. 2, Takamatsu President activities, the on presentations the gave a speech and told theparticipants, “I believe that solving for force driving the are activities group small the the problems we face and moving the company forward. I have high hopes for the presentations that will be made This was followed thetoday.” by commendation es of the In FY2017. for activities control autonomous on says presentations on the activities, a total ten of circles — two from the back-office section, two from the Shonan district,three from the Mikawa district, and three from against competed and participated — companies group each After other. the presentations, a social gathering Presi Fujii, Chairman of participation the with held was dent and Takamatsu, other executives. the At gathering, employees the and presentations gave that circles the who werecommended for theiressays were rewarded for their services in a friendly atmosphere. Program Mentoring (TMP) Topy in their third year at the company as mentees, with com mittee and subcommittee members serving as mentors. Thementees were extremely satisfied with the program in terms the of askability the of mentors and the benefits provided the by program, and evaluated it as highly rec for effective proved therefore program The ommendable. mentors the of Many support. psychological providing also said that they noticed that their listening skills and leadership had improved. environment meeting of Improvement exper an on tables height-adjustable automatic installed imentalbasis in the headquarters’ meeting rooms, there permittingby standing meetings be to held in the room. This is aimed at enabling meetings finish to more quickly and helping the participants have lively to discussions. Members of the two circles that won the highest award and the award for excellence - -

Support for acquisition of public qualifications

Subsidies for employees attending language schools

development Correspondence course for capability development Support for self-

Training onJishu Kanri (autonomous control) and improvement proposal activities score 600 of or higher Technical training ®

Safety and health training

Specialized training Sectoral engineering training

Overseas training verseas group company (FY2017: Topy verseas Topy group company (FY2017: O Short-term program for America, Inc.) studying English abroad human globally resources developing Training for competitive Off-JT Business English environments allowing them work to with enthusiasm, and attain fulfillingWe promote initiativeslives.” for rein human that belief the in base resource human our forcing resources are ourgreatest assets and that the improve ment our of human assets’ capabilities lies in the source theof value we create. Requirement for trainees: TOEIC Trainees and production management staff members of Topy America, Inc. Tutor training ingwith the aim developingof youngemployees who can demonstrate their capabilities in different cultural environments overseas of countries. The employees who undergo this training aredispatched overseas to group companies as trainees and receive practical on- the-job training under the guidance local of managers in experiencing thereby plan, training the with accordance and understanding overseas work. Theyalso acquire the with along languages, different in communicate ability to intercultural skills. On February the trainees 2018, 9, who division management production the to dispatched were America, Topy of Inc. reported on their achievements as a result the of one-year training. [Outline of the program] Period: One year Destination: [Topy Industries, Ltd.] - - - employees Topy juku Mandatory employees Manager training Career training New manager training promoted to chiefs to senior staff members senior to

Training for employees

Training for promoted Training for employeespromoted Training for new management-level

employees

Rank-and-file employees Rank-and-file Training Programs Programs Training Management-level ■ oduce future oduce future eate an organizational an organizational eate an assets) who continue to to continue who assets) an trengthen employees’ ca- In FY2017, we introduced Overseas Long-Term Train In FY2017, Session reporting for achievements from long-term overseas training FY2017 Topy Juku Topy FY2017 Industries, Ltd.] [Topy provided Juku,We a new employee Topy training Our philosophy and basic policy on Our philosophy development human resources IndustriesThe Topy Group declares in article the 3 of business leaders. permits that environment diverse human assets to diverse in actively work ways. Cr Continue to pr Support employees in their autonomous career development. Create human resources (hu- m ronmental changes. develop themselves through work. S pability torespond to envi- program, during a period about of four months from the The training was providedmiddle 13 April of to 2017. trainees, who were divided into four groups and received at separately training practical and training on-the-job learned the they training, on-the-job the In factories. four basics manufacturing of experiencing by work at manu facturing sites. In the practicaltraining, they experienced under work regular part of practicing by work practical the guidance a senior of colleagues. On July 2017, 28, debriefing session on the training was held at the head quarters, and Juku all trainees the of Topy reported on their achievements from the training. Group Corporate Code of Conduct (for the benefit of of benefit the (for Conduct of Code Corporate Group character individual the “Respect will it that employees) and personality employees, of and provide safe-working ■ ■ ■ Policy on human resources Policy on human resources development ■ ■ Initiatives for employees for Initiatives Social Responsibility Social Relationships with Employees 39 Technology and quality flowing together in one Social Responsibility Corporate Governance perfect motion Relationships with Employees Corporate Governance

We will work on strengthening and improving corporate gov- higher. Improvement of work-life balance •We will be proactive in supporting employees’ career ernance to establish a company that will earn the trust of all development. Pilot introduction of measures •We will increase the percentage of women among stakeholders. We implemented a pilot project introducing measures management-level employees (managers) by five for improving work-life balance in a certain department. times compared to the current level. We are looking for issues and investigating how to ad- Basic approach vance the measures to extend them throughout the entire company in the future. (Project period: May to July 2017) Improvement of labor health and safety Topy Industries, Ltd. pledges to enhance corporate value in the medium to long term by establishing a corporate governance system that is appropriate for the company from the stand-

At Topy Industries, Ltd., we consider that our prima- •Measures for ensuring that no employees work over- ry corporate responsibility is to ensure workers’ safety point of management soundness, transparency and efficiency in order to maintain and improve time on no-overtime days and health. We therefore implement a variety of actions the trust of stakeholders. This comes from the group basic philosophy, which advocates, “Win •Measures for reducing the time spent on meetings to achieve zero accidents. We also conduct statistical the trust and respect of society through the continuance and development of the Topy Industries •Implementing Concentration Time surveys on labor accidents and report the results of the surveys in in-house newsletters and via other media to Group and the execution of one’s duties as a public institution.” Action plan based on the Act on Advancement of Mea- raise the safety and health awareness of each and every sures to Support Raising Next-Generation Children employee. by the Board of Directors, the Executive Management We are implementing an action plan based on the Outline of our corporate governance Meeting, which comprises the directors and others, is Results of a statistical survey on labor accidents ■ system Chapter 3 Act on Advancement of Measures to Support Raising (Period: January to December 2017) [Topy Industries, Ltd.] held (once a week in principle) for prior deliberations of Next-Generation Children, with the aim of enabling all As illustrated below, Topy Industries, Ltd. is a com- matters to be resolved by the Board of Directors and for Manufac- Total working Number of employees to fulfill their potential by balancing work and Frequency Severity pany with the Audit & Supervisory Board, where man- discussions on policies, plans and the conduct of busi- turing site hours accidents childcare. agement oversight and audits are conducted by the ness execution, thereby ensuring that appropriate man- (Period of the plan: July 1, 2015 to June 30, 2020) Kanagawa 406,892 0 0.00 0.00 Board of Directors and the Audit & Supervisory Board, agement decisions are made. •Incr ease the rate of taking childcare leave to the stan- Ayase 917,200 2 2.18 0.00 respectively. We have divided management functions into Moreover, to respond rapidly to changes in the busi- dard or a higher level during the period of the plan. decision-making functions and executive functions and ness environment, the term of the directors and executive Male employees: A t least one person shall take the Toyohashi 1,454,614 0 0.00 0.00 have adopted an operating officer system to vitalize man- officers is set as one year. leave during the period of the plan. agement and improve its efficiency. The Audit & Supervisory Board consists of a total of Toyokawa 853,608 3 3.51 0.07 Female employees: T he rate of taking childcare The Board of Directors (to be convened once a month four members: two fulltime members and two outside leave shall be 75% or higher. Total 3,632,314 5 1.38 0.02 or extraordinarily as required, in principle) consists of a members, conducting fair and neutral audits. •Encouraging employees to take annual paid leave. total of six members: four executive directors and two Aside from the statutory organizations, the compa- outside directors. The Board resolves the matters re- ny has the Compensation Committee, the Nomination Kanagawa Factory wins award for ex- quired by laws and regulations or the articles of incorpo- Advisory Committee, the Risk Management Committee Chapter 4 Diversity ration and important issues of the company, including the and other optional organs to strengthen governance cellence in steel safety commendations basic management policy, and oversees management functions. The company will establish a voluntary organi- General employers action plan based on the Act on The 59th Tekko Anzen Hyosho (steel safety commen- from an independent and objective standpoint. In addi- zation when required in its efforts to further enhance its Promotion of Women’s Participation and Advance- dation ceremony) hosted by the Japan Iron and Steel tion, for the purpose of ensuring efficient deliberations governance capabilities. ment in the Workplace Federation was held on February 27, 2018. Kanagawa Topy Industries, Ltd. stipulates that it shall “Respect Factory was granted the award for excellence for 2017 Corporate governance organizational diagram the individual character and personality of employees” in as a business establishment with excellent safety per- the Topy Industries Group Corporate Code of Conduct formance. In addition, the factory received an award for General Meeting of Shareholders and implements initiatives for promoting the active partic- zero labor accidents together with Toyohashi Works. Appointment and dismissal Appointment and dismissal Appointment and dismissal ipation of female employees as a measure for promoting Kanagawa Factory received the award for zero labor ac- Audit Audit and report Audit & Supervisory Board (four members) Board of Directors Meeting (six members) Accounting Auditor (including two outside auditors) (including two outside director) diversity. cidents for the fourth consecutive year. Report Report Close cooperation Close cooperation As one of the initiatives, we launched a diversity pro- Nomination Advisory Committee Prior Compensation Committee motion project in FY2014. In this project, we identified consultation new issues and determined measures to take by FY2015 Close Executive Management Meeting Report cooperation Report Risk Management Committee and enhanced related programs and introduced mea- Internal Audit Dept. President Internal sures related to career development support. At present, Appointment Audit Dismissal Each Permanent Committee we are promoting an action plan targeting the following Supervision Topy Industries Group Basic Report based on the Act on Promotion of Women’s Participation Corporate Ethics Consultation Office and Advancement in the Workplace, with the aim of al- Whistle blower Topy Industries Group Report lowing female employees to participate actively by fulfill- Whistle Compliance Hotline Policy, planning, etc of business execution ing their potential. blower Head Office Organization Executive Director/Executive Officer (Period of the plan: April 1, 2016 to March 31, 2021) Division Organization Employee /Operating officer •We will maintain the percentage of women among Affiliated Companies new recruits (career-track employees) at 40% or

41 42 Technology and quality flowing together in one Corporate Governance perfect motion Corporate Governance

and experience he has acquired as a corporate manager, includes basic compensation, which consists of fixed Compliance system Outside Directors and outside members and Outside Director Sumio Moriwaki, mainly through his amount compensation and compensation based on the We have formulated the Group Basic Philosophy and of the Audit & Supervisory Board statements in the decision-making process of the Board business performance for the previous fiscal year, and the Group Corporate Code of Conduct and ensure that all Currently, the company has two Outside Directors and of Directors based on the extensive knowledge and ex- the bonus. the officers and employees of the Topy Industries Group two outside members of the Audit & Supervisory Board. perience related to law he has acquired as an attorney for Of the cash compensation, the compensation based are familiar with them through our websites, in-house There are no special interests between those personnel many years, contribute to reinforcing the decision-mak- on the business performance for the previous fiscal year newsletter, Group Compliance Guidebook, etc. Moreover, and the company. ing functions and supervisory functions of the Board of is determined based on the company’s business perfor- under the leadership of the Risk Management Committee Outside Director Tsuyoshi Inoue is an outside corpo- Directors. Outside members of the Audit & Supervisory mance and the performance of each director for the pre- of the company, employees in each department of the rate auditor of Mitsubishi Paper Mills Ltd., and an out- Board Masakazu Kawabata and Kazuo Shouyu con- vious fiscal year. The standard amount of this compen- company and group companies formulate annual activity side corporate auditor of Fuji Oil Co., Ltd. There are no tribute to reinforcing audit functions through their advice sation is 30% of the basic compensation, and it varies plans for full compliance, engage in compliance improve- human, capital or business transactions between these and suggestions to secure legality and adequateness in within the range of 0% to 75% of it. The portion based on ment activities and share relevant information. In addition, corporations and the company. He once worked for the the decision-making of the Board of Directors and other the company’s business performance ranges from 0% the divisions of the company supervising compliance and Development Bank of Japan. The company carries a occasions as well as opinions expressed in meetings of to 65%, while the portion based on the individual perfor- others provide a range of compliance education to em- loan from the Development Bank of Japan for an amount the Audit & Supervisory Board based on the extensive mance is between 0% and 10%. ployees at each level of the Topy Industries Group. of less than ten percent of the total loan of the company. knowledge and experience they have acquired, mainly at The amount of compensation based on the compa- Regarding the whistle-blowing system, the Rules con- Outside Director Sumio Moriwaki is a partner of Ishii financial institutions. ny’s business performance for the previous fiscal year cerning Topy Industries Group Basic Corporate Ethics Con- Law Office and an outside corporate auditor of JSR Cor- is determined by combining the number of points deter- sultation Office and Topy Industries Group Compliance Ho- poration. There are no human, capital or business trans- Compensation for board members mined based on the results of two evaluations. One is tline stipulate to the effect that reports and consultations from actions between the law office or the corporation and the ■Total amount of compensation, etc., total amount the result of quantitative evaluation, which is calculated employees are held in strict confidence and will not become company. of each type of compensation etc., and number based on return on equity (ROE) as the key indicator and the basis for any unfair treatment. We also provide outside Outside member of the Audit & Supervisory Board of subject board members by position the levels of achievement of performance indicators such counsel as recipients of such reports and consultations. Total amount Amount of compensation by type Risk management system Masakazu Kawabata is an outside corporate auditor of Number of as return on assets (ROA), operating profit on sale, and of compen- (million yen) Komori Corporation and an outside director of Fuyo Auto Position subject board the debt equity ratio. The other is the result of qualitative Under the leadership of the Risk Management Com- sation, etc. Basic com- Stock-based Bonus members Lease Co., Ltd. There are no human, capital or business (million yen) pensation compensation evaluation, which is determined in consideration of man- mittee of the company, employees in each department of transactions between these corporations and the com- agement activities and other situations. the company and group companies formulate annual ac- Directors (excluding outside 280 267 − 12 6 pany. He once worked for Mizuho Bank, Ltd. Topy Indus- directors) Stock-based compensation is a stock compensation tivity plans for risk management and engage in risk man- Members of the Audit & agement improvement activities. tries carries a loan from Mizuho Bank, Ltd. for an amount Supervisory Board (excluding 40 40 − − 2 plan that uses trusts. It is aimed at further clarifying the of about ten percent of the total loan of the company. outside members) relationship between the company’s business perfor- When an issue related to risk management occurs or is Mizuho Bank, Ltd. holds 3.27% of the company’s shares. Outside board members 34 34 − − 4 mance and stock value with the amount of compensation likely to occur in the Topy Industries Group, it is reported Outside member of the Audit & Supervisory Board ■Contents and method of determination of the pol- for directors, fostering a shared awareness of profits with to the Risk Management Committee, etc. and the neces- Kazuo Shouyu is the managing director of Meiji Yasuda icy on the amount of compensation, etc. for board our shareholders, and motivating directors to contribute sary instructions are provided through the risk manage- Cultural Foundation. There are no human, capital, or members or method of calculation of the amount to improving the business performance and corporate ment system. business transactions between this organization and the The amount of compensation for our board members value of the company in the medium and long term. The As for response to emergencies such as major natural Chapter 4 company. He once worked for Meiji Yasuda Insurance is determined as follows. The Compensation Commit- amount of this compensation is based on the level of disasters, we have formulated business continuity plans Company. The company carries a loan from Meiji Yasu- tee deliberates on the level of compensation, which is achievement of the Medium-Term Management Plan. The and have taken steps to improve the earthquake resis- da Life Insurance Company for an amount of about ten determined by considering the compensation policy, the standard amount is 5% of the basic compensation, and it tance of the buildings and production facilities and con- percent of the total loan of the company. Meiji Yasuda business performance of the company, and other fac- varies within the range of 0% to 10% of it. It is calculated duct regular disaster response drills, etc. to cope with Life Insurance Company holds 4.05% of the company’s tors. Based on the results of the deliberation, the amount based on the number of points determined by quantita- such emergencies. shares. of compensation for each director is determined by the tive evaluation, which is based on the levels of achieve- Execution of duties by Directors In accordance with the independence standards Board of Directors, and that of each member of the Audit ment of performance indicators set in the Medium-Term The Board of Directors resolves matters required by defined by the Tokyo Stock Exchange, the company & Supervisory Board is determined through deliberation Management Plan, including net sales, operating profit, laws and regulations or the articles of incorporation and takes into account the interests in the company of those by all members of the Audit & Supervisory Board within profit attributable to owners of parent, operating profit on important issues of the company stipulated in the Board of parties whose attribute information is required to be dis- the total amounts of compensation for which resolu- sale, ROE, ROA, and the debt equity ratio. The compa- Directors Regulations. Moreover, prior deliberations of mat- closed, including major shareholders, business partners, tions were passed in advance at the General Meeting of ny’s stock is issued when each director resigns. ters to be resolved by the Board of Directors are held at the those parties with whom the company has relationships Shareholders. Only basic compensation, which only includes fixed- Executive Management Meeting, which comprises the Ex- through Outside Directors and persons to perform the The Compensation Committee consists of two ex- amount compensation, is paid to outside directors and ecutive Directors and others. Prior explanations of the operations of organizations to which the company do- ternal members and one internal member and is chaired members of the Audit & Supervisory Board in consider- agenda for meetings of the Board of Directors are provided nates, and takes the independence of Outside Directors by an external member to ensure that the compensation ation of their independent standpoint, which is unaffect- to Outside Directors who do not attend the Executive Man- or outside members of the Audit & Supervisory Board system is highly fair and transparent. ed by the company’s business performance. agement Meeting. In addition, the company endeavors to into consideration. The company believes that it has The level of compensation, etc. of board members Overview of the operational status of ensure efficient deliberations by the Board of Directors and secured the independence of the two Outside Directors and the compensation structure are designed to match rationality in the course of its decision-making by means and the two outside members of the Audit & Supervisory their job responsibilities well, based on the principle that systems necessary to ensure the appro- such as establishing Bylaws concerning Preparation of Board. All the Outside Directors and outside members they shall contribute to the sustainable improvement of priateness of operations of the company Agenda Document for Board of Directors’ Meetings. of the Audit & Supervisory Board of the company have the company’s business performance and its corporate Internal control systems in general Business management of the group companies been reported to and accepted by the Tokyo Stock Ex- value. In setting the level of compensation, we refer to Based on annual audit policies and plans, the Internal In accordance with the Group Company Management change and Nagoya Stock Exchange as independent research data from an external specialty firm and take Audit Department of the company conducts the monitor- Regulations, the division of the company supervising the officers. Outside Director Tsuyoshi Inoue, mainly through other measures to set it more objectively. ing of internal control in the Topy Industries Group in ac- group companies receives reports therefrom regarding his statements in the decision-making process of the Executive directors receive cash compensation cordance with the Companies Act and the Financial In- their business policies, plans, results and other matters as Board of Directors based on the extensive knowledge and stock-based compensation. Cash compensation struments and Exchange Act. necessary, while important matters are resolved at the

43 44 Technology and quality flowing together in one Corporate Governance Corporate Data perfect motion Corporate Governance Our History

Executive Management Meeting or meetings of the Board between the company, shareholders, and investors to en- Miya Steelworks (predecessor of Toto Steel Mfg., Co., Ltd.) was Concluded a technical assistance agreement with PT. Pakoakuina 1921 1988 of Directors. In addition, the company promotes the au- sure that voting rights can be exercised with ease. founded (Indonesia) tonomous management of each group company and 1) Enrichment and early dispatch of notice to convene 1922 Miya Steelworks succeeded in hot-rolling of steel sashes A plant for undercarriage components for construction equipment 1989 commenced operation at Toyohashi Factory conducts management soundness evaluation to assess general meeting of shareholders Tokyo Shearing Co., Ltd. (predecessor of Toto Steel Mfg., Co., 1926 the business results and risk management status, among 2) Use of the Internet for notices to convene general Ltd.) was founded 1990 Akemi Plant of Toyokawa Factory commenced operation other aspects, of each group company for every fiscal meetings of shareholders Teikoku Hatsujo Seisakusho (predecessor of Japan Motor Wheel 1991 Kimi to Boku Hall was completed at Toyohashi Factory 1930 Co., Ltd.) commenced production of prototype steel wheels for year. Based on the results of the evaluation, the division of 3) Exercise of voting rights via the Internet automobiles 1992 Kurate Plant of Toyokawa Factory commenced operation the company supervising the group companies provides 4) Preparation of notice to convene general meetings A mill for deformed concrete bars commenced operation at Toyo- 1934 Tokyo Sharin Seisakusho Co., Ltd. (predecessor of Japan Motor 1995 instructions and support to the group companies. of shareholders in English (summary) Wheel Co., Ltd.) was founded hashi Works Audits by the Audit & Supervisory Board Tokyo Sharin Seisakusho and Abe Tekkosho Co., Ltd. merged to 1998 Obtained ISO 9001 accreditation at all production sites Explanation session for financial 1941 form Japan Motor Wheel Co., Ltd. The Audit & Supervisory Board members receive re- Topy International, U.C.A. Inc. (now Topy America, Inc.) was ports on the activities of the Internal Audit Department, results [Topy Industries, Ltd.] Miya Steelworks and Tokyo Shearing Co., Ltd. merged to form 1999 founded 1943 Toto Steel Mfg., Co., Ltd. the Risk Management Committee, etc. and other matters We believe that the opportunity for our top executives ISO 14001 accreditation was obtained for all production sites Toto Zoki Co., Ltd. was founded that have a significant influence on the Topy Industries to directly explain our management plan and financial 1955 Akemi Electric Power Ltd., which engages in the power supply 2000 business, commenced operation Group through attendance by the Audit & Supervisory results helps us earn the trust of our investors. Such ses- 1956 Toto Tekko Co., Ltd. was founded Took a stake in Fujian Yuan Shing Topy Ltd. (now Fujian Topy Toyohashi Steel Mill Plant of Toto Steel Mfg., Co., Ltd. (current 2003 Board members at meetings of the Board of Directors and sions are held after financial results are disclosed at the 1958 Autoparts Co., Ltd.) other important meetings and attendance by the full-time end of the second quarter and at the end of the fiscal year Toyohashi Factory of Topy Industries, Ltd.) was established 2004 Hamura Plant of Ayase Factory commenced operation members of the Audit & Supervisory Board at the Execu- for analysts and institutional investors. The president him- Chigasaki Seisakusho of Toto Zoki Co., Ltd. (now Kanagawa Factory of Topy Industries, Ltd.) was established Topy America, Inc. was founded (merger of Topy International, 1961 tive Management Meeting. In addition, the Representative self presents our financial results as well as our medium to Toyokawa Plant of Japan Motor Wheel Co., Ltd. (now Toyokawa 2007 Inc., Topy Corporation, and Topy International U.C.A. Inc.) Director and the Audit & Supervisory Board members long-term consolidated management plans. This manage- Factory of Topy Industries, Ltd.) was established Head Office moved to Osaki, Shinagawa-ku, Tokyo hold regular meetings to exchange opinions. ment plan session can Ayase Plant of Japan Motor Wheel Co., Ltd. (current Ayase Facto- Science Division was established When an issue related to risk management occurs or is be watched via stream- ry of Topy Industries, Ltd.) was established 2008 Concluded an agreement with Nippon Steel Corporation to likely to occur in the Topy Industries Group, it is also reporting from our website for 1964 Japan Motor Wheel Co., Ltd, Toto Steel Mfg. Co., Ltd., Toto Zoki strengthen general business cooperation Co., Ltd. and Toto Tekko Co. Ltd. merged to form Topy Industries, Topy Undercarriage (China) Co., Ltd. was founded ed to the Audit & Supervisory Board members in accor- shareholders/investors, Limited 2011 dance with the Group Risk Management Regulations. In “IR library.” 1969 Topy International, Inc. (current Topy America, Inc.) was founded 2012 Tianjin Topy Machinery Co., Ltd. was founded addition, the company has developed a structure in which Technology Research Center (current R&D center) was opened at PT. Topy Palingda Manufacturing Indonesia was founded whistleblowing is reported to the Audit & Supervisory 1972 Toyohashi Factory 2013 PT. Topy Undercarriage Indonesia was founded Topy MW Manufacturing Mexico S.A. DE C.V. was founded Board members in accordance with the Rules concerning 1977 Sales of synthetic mica started PT. Topy Undercarriage Indonesia commenced operation Topy Industries Group Basic Corporate Ethics Consultation Explanation session for financial results Concluded a technical assistance agreement with PT. Inkoasku The new steel making plant commenced commercial operation at Office and Topy Industries Group Compliance Hotline. 1980 (Indonesia) 2014 ■Explanation sessions for financial results that Toyohashi Factory were held in FY2017 Concluded a technical assistance agreement with PT. Palingda Adequate information disclosure Nasional (Indonesia) 2015 Topy Fasteners Mexico S.A. DE C.V. was founded Number of Date Content Developed heavy- and medium-duty truck wheels for tubeless Chapter 4 Article 2 (For the benefit of society) of the Topy Industries participants The business and capital alliance with MW Italia S.R.L. was 1982 tires at Ayase Factory 2016 strengthened Group Corporate Code of Conduct stipulates that the Topy Explanation session for the November 22, 2017 23 Super-Giant Off-the-road Rim (SGOR®) vehicle wheels for mining 2nd quarter financial results WIL Car Wheels Ltd., a joint venture with Wheels India Limited, Industries Group will “Communicate widely with society as dump trucks were developed 2017 was established (India) Explanation session for the well as shareholders and actively disclose corporate infor- May 23, 2018 28 full-year financial results 1985 Topy Corporation (current Topy America, Inc.) was founded Ring Techs Co., Ltd. was made into a wholly owned subsidiary mation fairly and appropriately. Cooperate with local com- 2018 Dunlop-Topy Wheel Ltd. (a joint venture company) was founded Asahi Tec Corporation was made into a wholly owned subsidiary munities and actively work on social contribution activities (U.K.) 1987 as being a good corporate citizen.” From the standpoint of Stable dividends Succeeded in the practical application of high quality synthetic securing management transparency we are endeavoring [Topy Industries, Ltd.] mica for cosmetic use to disclose corporate information in a fair and equitable Our basic policy regarding profit distribution is to return manner in accordance with the related laws and regulations profits to shareholders in proportion to the consolidated such as the Financial Instruments and Exchange Act. business results while building up retained earnings for Initiatives to vitalize general meetings of future business development and strengthening our corporate structure. Retained earnings will be allocated to Chapter 5 shareholders [Topy Industries, Ltd.] investment into new technologies/products for long-term We are taking the following initiatives to vitalize general business development, and thus we are committed to meetings of shareholders as a place of communication strengthening our corporate structure and global competitiveness. We would like to set the profit return index at

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages a payout ratio of 30 to 35% as a guideline. However, the arising from the translation.

Securities Code: 7231 June 4, 2018 decisions are to be made with careful consideration for To Our Shareholders: Nobuhiko Takamatsu President and CEO TOPY INDUSTRIES, LIMITED stable continued dividends. Dividends are, in principle, 1-2-2 Osaki, Shinagawa-ku, Tokyo

Notice of Convocation of the 124th Ordinary General Meeting of Shareholders paid out twice per year as interim and year end dividends.

You are cordially invited to attend the 124th Ordinary General Meeting of Shareholders of Topy Industries Limited (the “Company”). The meeting will be held as described below. If you are unable to attend the meeting in person, you may exercise your voting rights by either means of Regarding the body responsible for deciding dividends, Form for Exercising Voting Rights enclosed herein or via the Internet. Please exercise your voting rights after reviewing the attached Reference Documents for the General Meeting of Shareholders.

To exerciseNotice your voting rights byof post: convocation in English Please indicate “for” or “against” on the enclosed Form for Exercising Voting Rights and return it to us it is stipulated in Topy’s article of the corporation to the by 5:45 p.m. on Monday, June 25, 2018. (summary) To exercise your voting rights via the Internet: Please review the “Guide for Exercising Voting Rights via the Internet” and access the designated voting website (https://www.web54.net) and enter your approval or disapproval for the proposal no later than effect “dividends of surplus can be decided by the resolu- 5:45 p.m. on Monday, June 25, 2018.

1. Date and Time Tuesday, June 26, 2018 at 10:00 a.m. tion of the Board of Directors in accordance with Section 2. Place Conference Room, Art Village Osaki Central Tower 7th Floor, 1-2-2 Osaki, Shinagawa-ku, Tokyo th Notice3. Objectives of ofConvocation the Meeting of the 124 1 of Article 459 of Companies Act.” Matters to be reported: a. Business Report and Consolidated Financial Statements for the 124th Fiscal Year (from April Ordinary1, 2017 General to March 31, 2018), as wellMeeting as the audit reports of theof Independent Auditor and the Audit & Supervisory Board for Consolidated Financial Statements b. Non-Consolidated Financial Statements for the 123rd Fiscal Year (from April 1, 2017 to ShareholdersMarch 31, 2018) Agenda for resolution: Proposal 1: Election of Six (6) Directors Proposal 2: Election of One (1) Audit & Supervisory Board Member 45 46 1 Technology and quality flowing together in one Corporate Data perfect motion Directors and Members of the Audit & Supervisory Board

President and CEO Director Nobuhiko Takamatsu Sumio Moriwaki Position Name Title or responsibilities 1979 Joined Nippon Steel Corporation 1981 Registered as lawyer (to present) 2011 Executive Officer General Manager, Head of Division, Ironmaking Joined Ishii Law Office (to present) Technology Division, Nippon Steel Corporation 1995 Partner (to present) President and CEO Nobuhiko Takamatsu Representative Director 2012 Advisor, Nippon Steel Corporation; Executive Officer in charge of 2003 Instructor, The Training and Research Institute for Court Officials, technology/quality, Usiminas Supreme Court of Japan 2014 Advisor, Nippon Steel & Sumitomo Metal Corporation; Vice Presi- 2007 Visiting Professor, The University of Tokyo Graduate Schools for Law Senior Managing Director Norio Saito In charge of Corporate Planning Dept., Finance Dept., and Sales Administra- dent in charge of business planning, Usiminas and Politics tion Dept. 2016 Managing Executive Officer and Vice Head of Global Business 2015 Chairman, Research Committee on the Judicial System, Japan Development Sector, Nippon Steel & Sumitomo Metal Corporation Federation of Bar Associations 2016 Director at Usiminas 2017 Director of Topy Industries, Ltd. (to present) Senior Managing Director Satoshi Kumazawa In charge of General Affairs Dept. and Personnel Dept. 2017 Senior Executive Officer, Assumed the role as Assistant to the Outside Auditor of JSR Corporation (to present) President of Topy Industries, Ltd. 2017 President and CEO (to present) In charge of Engineering Administration Dept., Internet of Things Promotion Senior Managing Director Hiroyuki Kinoshita Dept., and overall safety issues Senior Managing Director Norio Saito Statutory Auditor Director Tsuyoshi Inoue Outside Director 1979 Joined Topy Industries, Ltd. 2007 Operating Officer, Deputy General Manager of the Wheel Division Yukihiro Ogawa 2011 Director, General Manager of the Wheel Division 1982 Joined Topy Industries, Ltd. Director Sumio Moriwaki Outside Director 2013 Director, Managing Operating Officer, Automotive and Machinery 2007 Manager of Educational Issues at Personnel Dept. Components Business, General Manager of the Wheel Division 2010 Senior Manager of General Affairs Dept. (PR, IR) 2015 Managing Operating Officer, General Manager of Corporate 2014 Deputy General Manager of General Affairs Dept. Full-Time Member of the Yukihiro Ogawa Planning 2015 Statutory Auditor (to present) Audit & Supervisory Board 2017 Director of Topy Undercarriage (China) Co., Ltd. (to present) Senior Managing Operating Officer, Corporate Planning, General Full-Time Member of the Affairs Audit & Supervisory Board Koichi Sakamoto Senior Managing Director, Corporate Planning, Financial Matters (to present) 2018 Director of Topy America, Inc. (to present), Member of the Audit & Masakazu Kawabata Outside Member of the Audit & Supervisory Board Senior Managing Director of Topy Industries, Ltd. (to present), Supervisory Board Director of Topy MW Manufacturing Mexico S.A. DE C.V. (to present), Member of the Audit & Kazuo Shoyu Outside Member of the Audit & Supervisory Board President & CEO of ATC Holdings Co, Ltd. (to present), Statutory Auditor Supervisory Board Director of Asahi Tec Corporation (to present) Koichi Sakamoto General Manager of Wheel Div., in charge of Automotive and Industrial Senior Managing Director 1982 Joined Topy Industries, Ltd. Managing Operating Officer Ichiro Takeuchi Machinery Components Business 2015 Operating Officer of Topy Industries, Ltd., Director and CEO of Satoshi Kumazawa Qingdao Topy Machinery Co., Ltd., and Director and CEO of Topy 1980 Joined Orient Watch Co., Ltd. Undercarriage (China) Co., Ltd. Managing Operating Officer Masayoshi Takezawa General Manager of Internet of Things Promotion Dept. and Engineering 1989 Joined Topy Industries, Ltd. 2016 Operating Officer of Topy Industries, Ltd. and Director and CEO of Administration Dept. 2010 Operating Officer, General Manager of General Affairs Dept. Topy Undercarriage (China) Co., Ltd. 2013 Operating Officer, General Manager of Personnel Dept. 2017 Councilor of Topy Industries, Ltd. and Director and CEO of Topy 2015 Managing Operating Officer, General Manager of Personnel Dept. Undercarriage (China) Co., Ltd. Managing Operating Officer Katsuyoshi Daido General Manager of Internal Audit Dept. 2016 Managing Operating Officer, General Manager of Personnel Dept. 2018 Councilor to General Affairs Dept. of Topy Industries, Ltd., 2017 Senior Managing Operating Officer, General Manager of Personnel Statutory Auditor (to present) Dept. Operating Officer Satoshi Fukura General Manager of Science Div. 2018 Auditor of PT. Topy Palingda Manufacturing Indonesia (to present), Senior Managing Operating Officer in charge of General Affairs Dept. and Personnel Dept. of Topy Industries, Ltd. (to present), Operating Officer Tsuyoshi Nakamura General Manager of Steel Div., in charge of Steel Business and General Senior Managing Director (to present) Manager of Toyohashi Works, Steel Div. Statutory Auditor Senior Managing Director Masakazu Kawabata Operating Officer Hiroji Kobayashi General Manager of Corporate Planning Dept. Hiroyuki Kinoshita 1977 Joined Fuji Bank Limited 1981 Joined Nippon Steel Corporation 2005 Executive Officer, Branch Manager of Shinjuku Branch of Mizuho 2011 Operating Officer, Technical Coordination (Manager, Special Bank Ltd. Operating Officer Takanori Kawano General Manager of Financial Dept. Matters) of Topy Industries, Ltd. 2006 Executive Managing Officer of Mizuho Bank Ltd. 2012 Operating Officer, Deputy General Manager of Undercarriage 2009 Representative Director, Vice President of Mizuho Research Institute Components Div. and General Manager of Kanagawa Factory, Ltd. Operating Officer Kentaro Oba General Manager of Ayase Factory, Steel Div. Undercarriage Components Div. 2012 Representative Director and President of Mizuho Capital Co., Ltd. 2013 Managing Operating Officer, General Manager of Undercarriage 2016 Statutory Auditor of Topy Industries, Ltd. (to present) Components Div. Outside corporate auditor of Komori Corporation (to present) 2017 Senior Managing Operating Officer, General Manager of Undercar- Outside director of Fuyo Auto Lease Co., Ltd. (to present) Operating Officer Shuichi Tachibana General Manager of General Affairs Dept. riage Components Div. 2018 Director of Topy Undercarriage (China) Co., Ltd. (to present), Director of PT. Topy Undercarriage Indonesia (to present), Operating Officer Masatoshi Takahashi Director and Vice President of Asahi Tec Corporation Senior Managing Operating Officer in charge of Engineering Administration Dept., Internet of Things Promotion Dept. and Safety Statutory Auditor of Topy Industries, Ltd., Senior Managing Director (to present) Chapter 5 Kazuo Shouyu Operating Officer Masahiro Abe Deputy General Manager of Wheel Div. Director 1978 Joined Meiji Yasuda Life Insurance Company Tsuyoshi Inoue 2005 General Manager of Multi-life Product Development Promotion General Manager of Undercarriage Components Div., in charge of Automotive Dept. of Meiji Yasuda Life Insurance Company Operating Officer Katsuyoshi Tanaka and Industrial Machinery Components Business 1976 Joined Development Bank of Japan 2008 General Manager of Medical Department of Meiji Yasuda Life 2006 Supervisor of Development Bank of Japan Insurance Company 2008 Resident Auditor of Development Bank of Japan 2012 Statutory Auditor of Meiji Yasuda System Technology Company Operating Officer Tetsuya Sakai General Manager of Personnel Dept. 2010 Managing Director of Japan Nuclear Fuel Limited 2016 Statutory Auditor of Topy Industries, Ltd. (to present) 2013 Director and Executive Officer of Japan Nuclear Fuel Limited Managing director of Meiji Yasuda Cultural Foundation 2014 Representative Director and President of Value Management Institute, Inc. Operating Officer Koji Nanayama Deputy General Manager of Wheel Div. Outside Audit & Supervisory Board Member of Mitsubishi Paper Note: Director Tsuyoshi Inoue and Sumio Moriwaki are outside directors. Mills Limited (to present) Auditor Masakazu Kawabata and Kazuo Shouyu are outside statutory 2015 Auditor of Fuji Oil Co., Ltd. (to present) As of June 26, 2018 2016 Director of Topy Industries, Ltd. (to present) auditors. Representative Director and President of Japan Economic Research Institute Inc.

47 48 Technology and quality flowing together in one Corporate Data perfect motion Consolidated Financial Statements for the Past 10 Years

Fiscal year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Net sales (Million yen) 290,333 196,848 221,413 240,534 226,912 234,682 237,677 215,872 208,237 230,462 Operating profit (Million yen) 6,686 355 7,006 10,554 6,990 5,308 6,422 10,000 7,180 7,997 Ordinary profit (Million yen) 6,010 626 5,241 7,304 6,234 4,485 6,037 8,806 6,116 8,034

Profit (loss) before income 5,842 4,249 4,476 4,681 10,897 7,933 taxes (Million yen) 5,225 (1,641) 4,765 6,118 Profit (loss) attributable to 3,409 1,914 2,360 1,700 7,191 5,500 owners of parent (Million yen) 2,384 (1,032) 2,072 3,918 Comprehensive income (Million yen) — — (340) 4,459 8,222 7,566 12,416 (6,860) 7,702 7,199 Capital investments (Million yen) 12,401 7,659 7,170 8,982 20,477 25,458 20,374 8,815 9,874 12,132 Depreciation (Million yen) 11,707 11,195 10,057 9,310 8,957 10,086 10,315 11,321 10,631 10,599

Research and development 1,212 1,519 1,202 1,059 1,137 1,131 expenses (Million yen) 1,649 1,288 1,245 1,271

Net assets (Million yen) 80,942 81,884 80,165 83,096 91,258 96,219 107,941 99,973 104,853 109,859 Total assets (Million yen) 202,995 201,138 203,956 212,828 208,781 232,714 252,456 231,583 223,050 249,221 Interest-bearing debt (Million yen) 63,763 62,255 61,696 58,091 53,534 62,453 77,516 70,070 55,831 61,096

Net assets per share (Yen) 3,341.56 3,375.33 3,351.63 3,473.70 3,774.71 3,983.91 4,483.61 4,175.99 4,426.81 4,640.13 Net profit (loss) per share (Yen) 103.88 (42.96) 86.37 165.20 143.76 80.76 99.65 71.80 303.90 234.25 Dividends per share (Yen) 50 20 40 40 40 20 40 60 80 80

Equity ratio (%) 39.6 40.3 39.0 38.7 42.9 40.5 42.1 42.7 44.6 43.7 Return on equity (%) 2.9 (1.3) 2.6 4.8 4.0 2.1 2.4 1.7 7.1 5.2 Price/earnings ratio 13.9 — 25.2 15.6 15.3 22.5 28.0 30.9 9.7 13.2

Net cash provided by (used in) 16,770 7,251 19,440 19,346 10,130 10,780 operating activities (Million yen) 21,547 12,010 6,236 16,010 Net cash provided by (used in) (14,770) (17,478) (29,141) (7,529) (1,016) (5,861) investing activities (Million yen) (15,908) (7,507) (3,681) (7,703) Net cash provided by (used in) (4,997) 7,538 13,157 (8,391) (16,861) 1,834 financing activities (Million yen) (287) (2,236) (1,952) (4,983) Cash and cash equivalents at 19,798 17,485 21,733 24,599 16,349 23,036 the end of the current period (Million yen) 18,293 20,547 18,741 22,124

Number of employees 4,125 4,242 4,151 4,135 4,374 4,515 4,596 4,408 4,568 5,034 [Average number of tempo- (Persons) rary employees not included ［471］［422］［432］［428］［491］［538］ [573] [597] [587] [581] in the above] *The company executed a one-for-ten common share consolidation effective on October 1, 2016. Profit (loss) per share, net assets per share, and dividends per share have been calculated on the assumption that the share consolidation took place at the beginning of FY2008.

Segment information

■Steel business ■Automotive and industrial machinery components business ■Power generation business ■Others

Sales Sales Sales (in millions of yen) Operating profits Sales Sales (in millions of yen) Operating profits Sales Sales (in millions of yen) Operating profits Chapter 5 Operating profits 10000 Operating profits 1000 1000 Operating profits 1000 1000 Operating profits 000 Sales (in millions of yen) Operating profits 142,790 10,626 151,025 134,099 129,681 9,596 0000 000 72,247 71,525 10000 1000 000 8,425 000 1000 000 63,767 63,803 0000 000 8,433 6,647 4,815 0000 6,919 6,524 000 000 000 000 7,757 7,378 000 6,326 6,548 5,320 0000 2,882 000 1,323 1,465 1,474 1,557 3,381 1,925 0000 000 000 2,475 000 000 1000 0000 000 871 494 (904) 0 0 0 0 0 0 0 0 01 01 01 2017 (Fiscal year) 01 01 01 2017 (Fiscal year) 01 01 01 2017 (Fiscal year) 01 01 01 2017 (Fiscal year)

Detailed financial data are available on the following page of our official website. http://www.topy.co.jp/en/news/irnews.html

49 50 Technology and quality flowing together in one Corporate Data Corporate Data perfect motion Major Subsidiaries & Affiliates IR Information

Holding Holding Stock exchange listings Tokyo Stock Exchange and Nagoya Stock Exchange (securities code: 7231) Capital voting Capital voting Company name Head office (millions Business right or Company name Head office (millions Business right or Number of authorized shares 88,300,000 location of yen) segment owned location of yen) segment owned by (%) by (%) Number of outstanding shares 24,077,510 Steel, Automotive 606 (Consolidated Automotive Topy Undercarriage and Industrial Number of shareholders 10,729 Subsidiaries) and Industrial Qingdao, China million 100 Shinagawa-ku, Tokyo 480 100 (China) Co., Ltd. Machinery Topy Enterprises, Machinery renminbi Components Ltd. Components, Other Automotive 6,240,000 ■Top 10 major shareholders Topy Fasteners Yen My District, Hung and Industrial 100 U.S. Topy Marine Toyohashi-shi, Aichi Vietnam Co., Ltd. Yen Province, Vietnam Machinery (80) 225 Steel 100 dollars Name Number of shares held Shareholding ratio (%) Transport, Ltd. Pref. Components Nippon Steel and Sumitomo Metal Corporation 4,818,264 20.46 Automotive Automotive PT. Topy Palingda 710.5 Karawang Regency, and Industrial Topy Fund Business Association 1,029,110 4.37 Matsumoto-shi, and Industrial Manufacturing billion 90 Topy Fasteners, Ltd. 310 100 West Java, Indonesia Machinery Nagano Pref. Machinery Indonesia rupiah Meiji Yasuda Life Insurance Co. 975,134 4.14 Components Components Mizuho Bank, Ltd. 787,802 3.34 Automotive PT. Topy 2,850,000 Bekasi Regency, West and Industrial 100 The Master Trust Bank of Japan, Ltd. (trust account) 713,900 3.03 Topy-Rec, Ltd. Koto-ku, Tokyo 300 Others 100 Undercarriage U.S. Java, Indonesia Machinery (30) Indonesia dollars Components Japan Trustee Services Bank, Ltd. (trust account) 653,419 2.77 Automotive Sompo Japan Nipponkoa Insurance Inc. 574,600 2.44 Automotive Kyushu Wheel Miyako-gun, Fukuoka and Industrial Topy MW 867 100 100 Silao City, State of and Industrial Kogyo, Ltd. Pref. Machinery Manufacturing million 95 DFA Intl Small Cap Value Portfolio 545,200 2.31 Guanajuato, Mexico Machinery Components Mexico S.A. DE C.V. pesos Components Employee Shareholding Association of Topy Industries, Ltd. 544,743 2.31

Toyohashi-shi, Aichi 100 Automotive Mizuho Trust & Banking Co., Ltd. 489,300 2.08 Tojitsu Co., Ltd. 80 Steel San Luis Potosi City, 166 Pref. (100) Topy Fasteners and Industrial 100 State of San Luis million Mexico, S.A. DE C.V. Machinery (100) Notes: 1. Topy Industries, Ltd. owns 523,512 treasury shares but is excluded from the major shareholders listed above. Potosi, Mexico pesos Components 2. The shareholding ratios were calculated by excluding treasury shares. 3. Topy Fund Business Association is the name of the shareholding association of Topy Industries, Ltd., its affiliates, and its business partners. Urayasu-shi, Chiba 100 NE-Tojitsu, Ltd. 34 Steel Automotive Pref. (100) Ring-Techs Guangzhou City, 105 and Industrial 80 Guangzhou Co., Guangdong Province, million Machinery (80) Ltd. China renminbi Automotive Components and Industrial 100 Autopia, Ltd. Koto-ku, Tokyo 30 Machinery (100) (Unconsolidated ■Breakdown of shareholders by type subsidiary accounted for Components Nagaoka-shi, Niigata 35.6 under the equity method) 1,969 Steel Pref. (1.4) Hokuetsu Metal Co., Akemi Recycling Toyohashi-shi, Aichi 100 Ltd. 200 Steel Center, Ltd. Pref. (30) Individuals and others Manufacture Financial institutions (Other affiliates) 0.1 and sales of 21.99 Nippon Steel & (Owned by) Automotive Chiyoda-ku, Tokyo 419,524 steel products 32.83 Sumitomo Metal Sanwa Buhin and Industrial and 20.6 Bando-shi, Ibaraki Pref. 200 100 Co., Ltd. Machinery Corporation engineering (0.1) Components As of March 31, 2018 Securities companies

Akemi Electric Toyohashi-shi, Aichi Power Notes: 205 100 Foreign investors 0.72 Power, Ltd. Pref. Generation 1. The respective business segments are listed in the “Business segment” column (excluding other affiliated companies). 17.90 2. Topy America, Inc. and Topy Precision Mfg., Inc. have paid premiums of U.S. $62,999,400 and U.S. $4,950,000, respectively, aside from the capital mentioned above, totaling capital of U.S. Other domestic corporations Automotive $63,000,000 and U.S. $5,000,000, respectively. Kurashiki-shi, Okayama and Industrial Ring Techs Co., Ltd. 100 100 3. Topy Enterprises, Ltd., Topy America, Inc., Fujian Topy Autoparts Co., Ltd., Topy Undercarriage 26.56 Pref. Machinery (China) Co., Ltd., PT. Topy Palingda Manufacturing Indonesia, and Topy MW Manufacturing Components Mexico S.A. DE C.V. are categorized as special subsidiary companies. Treasury shares are included in Individuals and others. 4. Hokuetsu Metal Co., Ltd. and Nippon Steel & Sumitomo Metal Corporation issue an official -fi nancial statement separately. Automotive 5. The sales ratio of Topy Enterprises, Ltd. as a proportion of the consolidated sales of the Topy Seibu Wheels Co., Kurashiki-shi, Okayama and Industrial 100 100 Industries Group exceeds 10% (excluding internal sales among consolidated Topy Industries Ltd. Pref. Machinery (100) Group companies). Components Major financial information (1) Net sales JPY ¥103,480 million Fiscal year end March 31 (2) Operating profit JPY ¥1,195 million (3) Net profit JPY ¥744 million Automotive Ordinary general meeting of June (4) Net assets JPY ¥8,177 million 600 U.S. and Industrial Topy America, Inc. Kentucky, U.S.A. 100 (5) Total assets JPY ¥40,240 million shareholders dollars Machinery 6. The values in parentheses in the “Voting rights held or owned by” column represent indirect Components holding percentages or percentages of voting rights indirectly owned by the company, which are Record date March 31 (ordinary general meeting of shareholders, year-end dividend) each included in the value above. September 30 (interim dividend) Chapter 5 50 Automotive Topy Precision Mfg., thousand and Industrial 100 Illinois, U.S.A. Inc. U.S. Machinery (100) dollars Components Share unit number 100 Shareholder registry administrator Sumitomo Mitsui Trust Bank, Limited Automotive Topy Fasteners 50 million and Industrial 75 (special account management 1-4-1 Marunouchi, Chiyoda-ku, Tokyo Chonburi, Thailand (Thailand), Ltd. baht Machinery (40) Components institution)

Automotive Contact for inquiries Stock Transfer Agency Business Planning Dept. 194 Fujian Topy and Industrial Sumitomo Mitsui Trust Bank, Limited Fujian, China million 100 Autoparts Co., Ltd. Machinery 2-8-4 Izumi, Suginami-ku, Tokyo 168-0063 renminbi Components Phone: 0120-782-031 (toll free)

As of March 31, 2018

51 52 MEMO MEMO