Creating “Satisfaction in Life” – the Work of the Topy Industries Group

Technology and quality flowing together in one perfect motion

2015 Creating “Satisfaction in Life”

Technology and quality – the work of the Topy Industries Group flowing together in one perfect motion

The Topy Industries Group plays an active role in various aspects of one’s life and society.

It is our mission to create new value that lead to “Satisfaction in Life” through a wide range of business activities from At the Topy Industries Group, we use the phrase “One-piece Cycle” to describe making steel material – the foundation of society – to producing automobiles and industrial machinery components, our approach to building a richer, prosperous society. Our Group’s most distinctive quality is our integrated production system, which covers everything from raw materi- generating and distributing electric power, and sports / leisure businesses. als to finished products. The know-how cultivated by each of our many business divisions is shared throughout the Group, enabling us to develop technologies with great- We have an integrated production system from raw materials to finished products, which assures the manufacture of er ingenuity and to make products with greater added-value. From design to production, from raw materials to finished products, we at Topy Industries conglomer- high value-added products that meet the various needs of industries. ate are committed to working alongside other Topy Industries Group companies and the society that uses our products to create new ways of doing business. We have a flexible world-wide manufacturing network. By making the most of these strengths we continue to deliver technologies and products to make our society more livable, comfortable, and contribute to the global environment. Contents

This report provides the latest business and CSR activities of the Topy Industries Group. Editorial Policy/Contents 1 Top Message 3 Take a look at the “present” Topy Industries Group as we continue to work on future challenges. Corporate Profile and Governance Corporate Profile 5 Global Development of the Topy Industries Group 9 Special feature 11 Corporate Governance 15 Medium Term Consolidated Management Plan 19 Business Development Topy Industries Group at a Glance 21 Steel Business 23 Automotive and Industrial Machinery Components Business 25 Other Business 29 New Products and Technologies 30 From Topy’s Global Locations 31 CSR Activities CSR of the Topy Industries Group 33 CSR Highlights: Close-up 35 Toward a Promising Future Energy Saving Initiatives 2020 : “Enekatsu 2020” 37 Environmental Activities Environmental Management 39 Recycling 40 Initiatives on Waste Reduction 41 Initiatives on the Prevention of Global Warming 43 Biodiversity Conservation 43 Chemical Substance Management 44 Development of Environmentally Friendly Products 45 Reporting Period Editorial Policy Basic Environment Policy of Each Factory 46 Reporting Scope Covers mainly FY2014 (April 1, 2014 to March 31, 2015), but includes Social Responsibility This report covers all companies listed as an affili- some activities that occurred after April 1, 2015. Relationship with Customers Basic Policy ate of the Topy Industries Group (consolidated basis), 47 Topy Report 2015 has been prepared to provide all financial information. Information which was previously however, some activities and data represents only Date of Issue Involvement with Shareholders and Stakeholders 48 Topy Industries, Limited. Activities where the scope stakeholders with information on the involvement and introduced in the annual report has been integrated December 2015 Relationship with Local Communities 49 activities of the Topy Industries Group with respect to into this Topy Report 2015. has not been specified refer, in principle, to the Topy Relationship with Employees 51 CSR in a comprehensive manner. This report is largely Industries Group. Where it is necessary to specify the Inquiries Regarding this Report divided into two parts: the first part introduces the phi- This report has been prepared with reference to applicable scope, activities by Topy Industries alone Additional Data losophy of the Topy Industries Group, topics of activi- “ISO26000:2010”, GRI“Sustainability Reporting Guide- are identified within the headline or sentences as Topy Topy Industries, Limited (General Affairs Department) ties in the fiscal year (FY) 2014 and addresses the en- line 2006” and Environment Reporting Guidelines Industries and activities by an individual Group compa- TEL: +81-3-3493-0777 Corporate Data 55 vironmental and social responsibilities of the Topy 2012 of Ministry of the Environment. ny are identified by the name of the Group Company Art Village Osaki Central Tower, 1-2-2 Osaki, Industries Group; the second part consists mainly of involved. Shinagawa-ku, Tokyo, Japan 141-8634

1 2 Corporate Profile and Governance Top Message

upheaval. The progressing depreciation of the yen, drop in oil procurement criteria at each department, we are advancing prices and slowing down of the economy in China and ASEAN the formulation of a supply chain management that enables countries which once was a “high-flying economy”, have brought stable procurement and one which can precisely respond to serious impact on our development plans that expected the needs from customers. Corporate Profile and Governance We strive to further enhance quantitative global growth for our products and services. This is As a supplier, we have paid special attention to the issue of particularly conspicuous in the sharp drop in demand for mining BCP (Business Continuity Planning) when building the new corporate value and machinery overall and decrease in demand for construction electric furnace. Since it is highly unrealistic to think that all machinery in China, putting us in a difficult position to achieve the damages can be prevented in the event of a disaster, we are contribute to realizing a targets we initially planned. However, we have steadily implemented taking action on a regular basis to minimize damages by sustainable society by measures to build a foundation for growth and addressed actions increasing the resistance of buildings and manufacturing against environmental changes at each business segment as well facilities against earthquakes, and implementing other disaster providing the world with as reviewing and realignment of business. We have evaluated all mitigation measures so that we do not disrupt the supply of group companies under the same criteria, giving management products to our customers. We are confident that these values generated through freedom to a greater extent for those companies with a high initiatives will help strengthen the continuation of our business our core business. evaluation while applying more effective corporate governance for activities. companies with a low evaluation in order to enhance group The development of global company management levels and to progress business promotion business such as the Topy Industries, Ltd. scheme towards future growth. establishment of a joint venture President and CEO company in Mexico poses another business challenge for us. As our business expands globally it Initiatives on CSR for FY2014 Business Development becomes more important for us to respect differences in cultures, From the view point of CSR, we have exerted increased customs and habits of local efforts toward corporate compliance and risk management, communities, to comply with and promoted the awareness of such matters through applicable laws and regulations of educational training programs for employees of the Topy host countries, to promote Industries Group. Furthermore, human resource development diversity, and to tackle other social issues. from a global prospective is essential to the future of the Topy Industries Group. In order to meet such requirements we have Business Activities and Promotion of CSR accepted trainees from overseas, provided assistance to local production sites and launched a project team to realize the participation and success of women employees in the

workplace as part of promoting diversification. In six years’ time, Topy Industries will celebrate its 100th Corporate Profile and Governance As for EneKatsu 2020 (Energy Saving Initiatives 2020), anniversary of foundation. The 100th anniversary will mark a reported in Topy Report 2014, we have achieved solid results milestone in the history of the company. In order for the and are proceeding with the next plan to introduce energy company to continue being a sustainable organization in the saving equipment. We believe that services and products that future, we need to start our 101st year with a clean slate, and are environmentally friendly and create a new corporate culture. We are fully aware that, the that lead to resolving social issues notion that conventional ideas, technologies and preceding are essential to the future of our examples of management will assure business success had company. In this respect, we are long prevailed during the height of Japan’s economic growth. determined to progress our However, this can no longer be applied to our business today. contribution to the environment When drawing out our future business plan, it is now unrealistic through our business, namely to think that following our predecessors’ paths and doing Fulfill Corporate Social Responsibility (CSR) through produce reliable and high-quality products that meet the diversified making use of our new electric business in the same way will eventually lead us to our desired Business Activities need of customers for certain material characteristics as well as furnace (the world’s most energy goal. design. efficient, maximum capacity) as The basic corporate philosophy of the Topy Industries Group is We believe our continued initiative in improving corporate value our key weapon. This recognition will consequently require the change in expressly stated as “Win the trust of society through the through manufacture will lead to the realization of a richer, more awareness of our employees in the coming five to six years. It continuance and development of the Topy Industries Group and livable and sustainable society including the future growth of the is the task of the management to provide such opportunities

the execution of one’s duty as a public institution.” Topy Industries Group. Desired Supply Chain Management and environment to our employees. This is one of the issues Additional Data Our CSR strategies aim at obtaining the trust of our that the Topy Industries Group faces. For the Topy Industries stakeholders by realizing a sustainable society through Group to be a reliable enterprise and one where our employees manufacturing activities based on this corporate philosophy. Initiatives on Medium Term Consolidated The major products of the Topy Industries Group such as can work with confidence and pride, we need to listen to public Management Plan Topy Industries uses products produced at the raw material wheels for large-sized vehicles and undercarriage components opinions, avoid being egocentric and promote management to section, the Steel Division, to produce various high value-added for construction machinery occupy a remarkably high market resolve social issues through our core business operations. We products through unique technologies at the processing sections, 2015 is the final year of our on-going Medium Term share. Such products must be reliable, safe and of high-quality, are determined to take our first step in FY2015. the Wheel Division and the Undercarriage Components Division. Consolidated Management Plan. In the past three years we have excellent in cost performance, as well as being able to supply This integrated production from raw materials to finished products witnessed a drastic change in the business environment far steadily to any volume demand increase. Topy Industries has a highlights the competitive strength of our unique business beyond our expectation envisaged at the time the management firm standpoint with regards to procurement. With unique operation. By utilizing the synergy effect of this integration, we plan was drafted. It is no exaggeration to call the change an

3 4 Corporate Profile and Governance Corporate Profile

Brief History

Corporate Profile Miya Steelworks (predecessor of Toto Steel Mfg., Co., Ltd.) was 1985 Topy Corporation (current Topy America, Inc.) was founded 1921 founded Dunlop-Topy Wheel Ltd. (a joint venture company) was founded 1922 Miya Steelworks succeeded in hot-rolling of steel sashes (U.K.) 1987 Corporate Profile and Governance Company name: Topy Industries, Limited Tokyo Shearing Co., Ltd. (predecessor of Toto Steel Mfg., Co., Succeeded in the practical application of high quality synthetic 1926 Ltd.) was founded mica for cosmetic use Founded: October 1921 Concluded a technical assistance agreement with PT. Pakoakuina Teikoku Hatsujo Seisakusho (predecessor of Japan Motor Wheel 1988 1930 Co., Ltd.) commenced production of prototype steel wheels for (Indonesia) Head office: Art Village Osaki Central Tower, automobiles 1989 A plant for undercarriage components for construction equipment 1-2-2 Osaki, Shinagawa-ku, Tokyo Tokyo Sharin Seisakusho Co., Ltd. (predecessor of Japan Motor commenced operation at Toyohashi Factory 1934 Wheel Co., Ltd.) was founded 1990 Akemi Plant of Toyokawa Factory commenced operation President and CEO: Yasuo Fujii Tokyo Sharin Seisakusho and Abe Tekkosho Co., Ltd. merged to 1941 form Japan Motor Wheel Co., Ltd. 1991 Kimi to Boku Hall was completed at Toyohashi Factory Capital: ¥20,983 million Miya Steelworks and Tokyo Shearing Co., Ltd. merged to form 1992 Kurate Plant of Toyokawa Factory commenced operation 1943 Toto Steel Mfg., Co., Ltd. No. of employees: 1,855 (non-consolidated) Fujian Yuan Shing Topy Ltd. (current Fujian Topy Autoparts Co., 1955 Toto Zoki Co., Ltd. was founded Ltd.) was founded (China) 4,596 (consolidated) 1995 A mill for deformed concrete bars commenced operation at Toyo- Toto Tekko Co., Ltd. was founded 1956 hashi Factory No. of issued shares: 240,775,103 shares Toyohashi Steel Mill Plant of Toto Steel Mfg., Co., Ltd. (current Obtained ISO 9001 accreditation at all production sites 1958 Toyohashi Factory of Topy Industries, Ltd.) was established 1998 No. of consolidated subsidiary companies: Chigasaki Seisakusho of Toto Zoki Co., Ltd. (current Kanagawa Topy International, U.C.A. Inc. (current Topy America, Inc.) was 22 companies Factory of Topy Industries, Ltd.) was established 1999 founded Toyokawa Plant of Japan Motor Wheel Co., Ltd. (current Toyokawa ISO 14001 accreditation was obtained for all production sites No. of equity-based affiliated companies: 1961 Factory of Topy Industries, Ltd.) was established 2000 Akemi Electric Power Ltd. commenced operation Business Development Each headquarters of Japan Motor Wheel Co., Ltd., Toto Steel 2 companies Concluded a comprehensive agreement for steel wheel produc- Mfg., Co., Ltd., Toto Zoki and Toto Tekko Co., Ltd. moved to a new 2001 tion with Fergat group (Italy) Net sales: ¥237,700 million (consolidated) location in Yonban-cho, Chiyoda-ku, Tokyo Qingdao Topy Shantui Machinery Co., Ltd. (current Qingdao Topy Ayase Plant of Japan Motor Wheel Co., Ltd. (current Ayase Facto- 2002 Machinery Co., Ltd.) was founded Ordinary profit: ¥6,000 million (consolidated) ry of Topy Industries, Ltd.) was established 1964 Japan Motor Wheel Co., Ltd., Toto Steel Mfg. Co., Ltd., Toto Zoki 2004 Hamura Plant of Ayase Factory commenced operation Co., Ltd. and Toto Tekko Co. Ltd. merged to form Topy Industries, Topy America, Inc. was founded (merger of Topy International, Limited 2007 Inc., Topy Corporation, and Topy International U.C.A. Inc.) 1969 Topy International, Inc. (current Topy America, Inc.) was founded Head Office moved to Osaki, Shinagawa-ku, Tokyo Exterior view of the Head Office Technology Research Center (current R&D center) was opened at Science Division was established 1972 Toyohashi Factory 2008 Concluded an agreement with Nippon Steel Corporation to strengthen general business cooperation 1977 Sales of synthetic mica started 2011 Topy Undercarriage (China) Co., Ltd. was founded Concluded a technical assistance agreement with PT. Inkoasku 1980 (Indonesia) Tianjin Topy Machinery Co., Ltd. was founded

2012 Corporate Profile and Governance Concluded a technical assistance agreement with PT. Palingda PT. Topy Palingda Manufacturing Indonesia was founded Nasional (Indonesia) 2013 PT. Topy Undercarriage Indonesia was founded Developed heavy- and medium-duty truck wheels for tubeless Topy MW Manufacturing Mexico S.A. DE C.V. was founded 1982 tires at Ayase Factory PT. Topy Undercarriage Indonesia commenced operation Super-Giant Off-the-road Rim (SGOR®) vehicle wheels were developed 2014 The new steel making plant commenced commercial operation at Toyohashi Factory R&D center, Topy Industries, Limited 2015 Topy Fasteners Mexico S.A. DE C.V. was founded

Office and Factory Locations Head Office Toyokawa Factory Ayase Factory Nagoya Branch Office 1-2-2 Osaki, Shinagawa-ku, Tokyo 141-8634 3-30 Honohara, Toyokawa-shi, Aichi 442-8506 2-3-1 Ogami, Ayase-shi, Kanagawa 252-1104 2-15-22 Nishiki, Naka-ku, Nagoya-shi, Aichi TEL: +81-3-3493-0777 FAX: +81-3-3493-0200 TEL: +81-533-86-5121 FAX: +81-533-89-1309 TEL: +81-467-78-1111 FAX: +81-467-76-7302 460-0003 TEL: +81-52-201-6051 FAX: +81-52-231-2692 Akemi Plant Hamura Plant Toyohashi Factory 5-29 Akemi-cho, Toyohashi-shi, Aichi 441-8074 3-5-10 Nagaoka, Mizuho-cho, Nishitama-gun, Osaka Branch Office 1 Akemi-cho, Toyohashi-shi, Aichi 441-8510 TEL: +81-532-23-3191 FAX: +81-532-23-3194 Tokyo 190-1232 4-4-9 Koraibashi, Chuo-ku, Osaka-shi, Osaka TEL: +81-532-25-1111 FAX: +81-532-25-0354 TEL: +81-42-579-5871 FAX: +81-42-579-5874 541-0043 Additional Data Kurate Plant TEL: +81-6-6220-1250 FAX: +81-6-6220-1273 765-1 Aza-Iwagouchi, Oaza-Muroki, Kanagawa Factory Kurate-machi, Kurate-gun, Fukuoka 807-1307 830 Yabata, Chigasaki-shi, Kanagawa 253-8650 R&D center TEL: +81-949-42-8051 FAX: +81-949-42-8048 TEL: +81-467-82-1171 FAX: +81-467-58-3566 1 Akemi-cho, Toyohashi-shi, Aichi 441-8510 TEL: +81-532-25-5354 FAX: +81-532-25-2384

5 6 Corporate Profile and Governance Corporate Profile

Organization Directors and Audit & Supervisory Board Members (Topy Industries, Ltd.)

President and CEO Director Corporate Profile and Governance Internal Audit Dept. Audit & Audit & Supervisory Board Supervisory Ofﬁce Yasuo Fujii Yasuo Yuuki 1977 Joined Nippon Steel Corporation 1973 Registered lawyer at Tokyo Bar Association (present post) 2005 Executive Counsellor, General Superintendent, Sakai Works, 1994 Vice Chairman of Tokyo Bar Association Secretary Ofﬁce Structurals Division Director, Member of the Board, General 1996 Criminal Law Instructor at Legal Training and Research Institute Superintendent, Sakai Works, Structurals Division 2000 Bar Examination, Examination Committee 2006 Director, General Superintendent, Sakai Works, Structurals Division 2003 Standing Director at Japan Federation of Bar Associations 2007 Director, General Superintendent, Yawata Works 2004 Visiting Professor at Senshu University Law School, Instructor at Corporate Planning Dept. 2009 Managing Director, General Superintendent, Kimitsu Works Meiji University Law School 2011 Executive Officer; Assumed role as Adviser of Topy Industries, Ltd. 2008 Outside Auditor of Nippon Light Metal Company, Ltd. President and CEO (to present) 2012 Auditor of Japan Marrow Donor Program (present post) Chairman of Outside Evaluation Committee at Shinshu University Technical Administration Law School Outside Auditor of Nippon Light Metal Holdings Compa- Dept. ny., Ltd. (present post) Executive Vice President 2013 Outside Auditor of CONFEX CO., Ltd. (present post) Akira Higashi 2015 Outside Director of Topy Industries, Ltd. (present post) Business Process Innovation 1975 Joined Topy Industries, Ltd. & Promotion Dept. 2000 Operating Officer. General Manager of Corporate Planning Dept. 2003 Director, Corporate Planning, Affiliated Companies; General Manag- er of Corporate Planning Dept. Statutory Auditor 2006 Managing Director, Corporate Planning, Affiliated Companies;

General Affairs Dept. Business Development General Manager of Corporate Planning Dept. Takeshi Mitsuma 2007 Managing Director, Corporate Planning, Affiliated Companies, 1978 Joined Fuji Bank, Ltd. Overseas Planning; General Manager of Corporate Planning Dept. 2005 Executive Officer, General manager of Consulting Business Div. at Administrative Headquarters 2010 Senior Managing Director, Corporate Planning, Affiliated Compa- Mizuho Bank, Ltd. Personnel Dept. “Shain-bu” nies, Financial Matters, Overseas Planning 2007 Managing Executive Officer at Mizuho Bank, Ltd. Board of 2011 Executive Vice President in charge of Corporate Planning, Affiliated 2009 Advisor at Mizuho Bank, Ltd. Corporate Companies, Financial Matters, Human Resources and Labor Corporate Auditor of Mizuho Bank, Ltd. Directors Relations 2012 Statutory Auditor of Topy Industries, Ltd. (present post) Finance Dept. 2013 Auditor, Qingdao Topy Machinery Co., Ltd. (present post) Statutory Auditor of Komori Corporation (present post) Auditor, Topy Undercarriage (China) Co., Ltd. (present post) 2015 Executive Vice President (present post) President Nagoya Branch Ofﬁce and CEO Statutory Auditor Senior Managing Director Tamio Kurosaki Osaka Branch Ofﬁce 1972 Joined Yasuda Life Insurance Company

Yasuto Ishii Corporate Profile and Governance 2005 Operating Officer, General Manager of Compliance Coordination Executive 1976 Joined Topy Industries, Ltd. Dept. at Meiji Yasuda Life Insurance Company Management 2008 Operating Officer, Corporate Planning (Manager, Special Matters) Executive Operating Officer, General Manager of Corporate Sales Meeting 2010 Operating Officer, General Manager of Efficiency Improvement Dept. Dept. at Meiji Yasuda Life Insurance Company Steel Div. Toyohashi Factory 2012 Operating Officer, General Manager of Business Reform Promotion Dept. 2006 Senior Executive Operating Officer 2013 Executive Operating Officer overseeing Safety, Quality, Environment, 2012 Standing Advisor of Meiji Yasuda Life Insurance Company Technical Center, New Business Development, Business Administration Statutory Auditor of Topy Industries, Ltd. (present post) Reform; General Manager of Technology Coordination and Business Toyokawa Factory Akemi Plant Outside Auditor of Mizuho Trust & Banking Co., Ltd. (present post) Administration Reform: Auditor at Fujian Topy Autoparts Co., Ltd. (present post); Auditor at Tianjin Topy Machinery Co., Ltd. (present post) Wheel Div. Managing Director overseeing Safety, Quality, Environment, Technical Kurate Plant Center, New Business Development, Business Administration Reform; General Manager of Technical Coordination and Business Administration Statutory Auditor Reform Dept. Masaru Yamamoto Ayase Factory Hamura Plant 2015 Auditor at PT. Topy Palingda Manufacturing Indonesia (present post) 1977 Joined Topy Industries, Ltd. Senior Managing Director (present post) 2011 Operating Officer, General Manager of Science Business 2013 Councilor to General Affairs Dept. Kanagawa Factory Statutory Auditor (present post) Undercarriage Components Div. Managing Director Toyohashi Factory Tadashi Kojima 1976 Joined Topy Industries, Ltd.

Business Function 2011 Operating Officer, General Manager of Internal Audit

Sign System Dept. 2014 Executive Operating Officer, General Manager of Internal Audit Additional Data 2015 Director at Topy America, Inc.; Director at Topy MW Manufacturing Mexico S.A. DE C.V. Statutory Auditor Science Div. Crawler Robot Dept. Executive Operating Officer overseeing General Affairs Managing Director (present post) Yukihiro Ogawa 1982 Joined Topy Industries, Ltd. Mica Dept. 2007 Manager of Educational Issues at Personnel Dept. 2010 Senior Manager of General Affairs Dept. (PR, IR) 2014 Deputy General Manager of General Affairs Dept. 2015 Statutory Auditor (present post)

Note: Director Yasuo Yuuki is a outside director Auditor Takeshi Mitsuma and Tamio Kurosaki are outside statutory auditors. 7 8 Corporate Profile and Governance Global Development of the Topy Industries Group The company is accelerating the establishment of an optimum global production system centering on automobile and con-

struction machinery undercarriage components businesses. Corporate Profile and Governance

−Deliver high quality products around the world using production systems in conformity with customer needs− In order to build such a global optimum production system the Topy Industries Group has pro- gressed with business developments including new production/sales bases as well as alliances with new partners. Our global optimum production system will be further reinforced with the entry into Indonesia and Mexico.

China Fujian Topy Autoparts Co., Ltd. Tianjin Topy Machinery Co., Ltd.

Qingdao Topy Machinery Co., Ltd. Topy Undercarriage (China) Co., Ltd. North America Business Development Europe Topy America, Inc. Topy Precision Mfg., Inc. Italy, France, Poland, Romania, Russia, Turkey Japan (MW) Topy Industries, Ltd. Topy Fasteners, Ltd.

India Mexico (Wheels India Ltd.) Vietnam Topy MW Manufacturing Mexico S.A. DE C.V. Thailand Topy Fasteners Vietnam Co., Ltd. Topy Fasteners, (Thailand) Ltd. Topy Fasteners Mexico S.A. DE C.V. Corporate Profile and Governance Indonesia PT. Topy Palingda Manufacturing Indonesia PT. Topy Undercarriage Indonesia

(PT. Inkoasku, PT. Pakoakuina)

South Africa (MW) MW: MW Italia S.p.A.

地図中のMW社＝MW Italia S.p.A.

World Business Presence of the Topy Industries Group

South East Asia China Japan North America

Additional Data Infrastructure development is increas- Production and sales of SGOR® (ul- Factories in Japan function as mother factories to support Operation in the U.S. started more than 20 years ago and ingly brisk in the ASEAN countries and tra-large diameter mining dump truck rims) the global development of our businesses. Wheels for solid operation has been maintained since. We currently Production and Sales Base / Product Category the Topy Industries Group meets the de- components started in Tianjin in 2012 and passenger cars, trucks and buses as well as off-road ve- have five bases for three different product categories in- mand for automobile and construction steel wheels for passenger cars are pro- hicles and undercarriage components for construction cluding steel wheels for automobiles, off-road wheels/rims Undercarriage components Wheels and rims for off-road machinery components there. In Indone- duced in Fujian. Those facilities function to machinery are produced at our four domestic bases. The for construction and mining vehicles and undercarriage for construction machinery vehicles including SGOR® sia, a plant for truck and bus wheels and meet local demand and also to disperse latest developments include a new steelmaking plant de- components for construction machinery. In 2013, we signed a sales outlet for undercarriage compo- international procurements risks. In Qingd- signed to achieve drastic improvements in costs and the a joint venture company agreement with MW Italia S.p.A. to Wheels for trucks and buses Industrial fasteners nents have been added, and industrial ao, we produce and sell undercarriage introduction of new processes composition to promote establish a plant in Mexico to manufacture and sell steel fasteners are produced and supplied for components for construction machinery development of high value-added products. The benefits wheels for passenger cars and light trucks. The plant com- both two-wheeled and four-wheeled ve- and further solidification of business foun- of these efforts are well capitalized on strengthening the menced operation from April, 2015. In the same year, Topy Wheels for passenger cars Alliance partner hicles in Thailand and Vietnam. dation continues to be undertaken. competitive strengths of our overseas bases. Fasteners Mexico S.A. DE C.V. was founded. This will enable us to meet the increasing demand in North and South American markets. 9 10 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 12 - ( )denotes oldsteel makingplant Ground breaking Ground Completion run (hotTrial run) started Performance evaluation / oper ationtraining Quality/ Validation Parallel operation with old plant Production switch the new to plant

Aiming achieve to a targeted level 210 tons/h210 (130tons/h) 90,000 ton/month(65,000 ton/month) Construction schedule of the steelnew making plant

December 2012 December 2014 October operation 2015 March Full FY2015 - - - -

About ¥30 billion station and continuous casting equipment Crudesteel production capacity Productivity Building, scrap yard, electric furnace facility, ladle refinement furnace, wire wire furnace, refinement ladle facility, furnace electric yard, scrap Building, Production capacity Total investment Scope of new plant The floorthe of level new steel making plant By strengthening thefacility against earth *TP (Tokyo Peil): Bay Tokyo Mean Sea Level quakes, willwe be ablecontinue to stable pro duction crude of steellarge- a evenin theof event scale earthquake and tsunami. has been raised to TP* + 3.75m. According the to has been raised TP* to + 3.75m. announcement Disaster made the Toyohashi by the maxi Prevention Forum 2014, on August 28, mum tsunami height predicted under the worst case scenario based on past disasters caused by In ad- Earthquakethe Nankai Trough is TP +2.7m. “unexpect the consideration into taking by dition, the electric which room, ed”, is the most critical has beenfacility, locatedTP at +5.0m. Thorough PreparationThorough Natural Disastersagainst Summary the of Steel New Making Plant - - Maintaining supply chain by implementing earthquake implementing by chain supply Maintaining and tsunami countermeasures electricity extremely low unit consumption Realizing Strengthening self-sufficiency cost competitiveness by and blooms billets of Objectives Investment Investment The long-awaited steel new making facility commenced full-scale at operation from March 2015 The plant new has incorporated earthquake and tsunami-resistance measures in anticipation a of The steel making plant equipped with most the world’s advanced and cutting-edge technology commenced Factoryoperation in Aichi Prefecture. at Toyohashi The New Steel Making Plant Making Steel New The –Special feature– ity that can used for both bloom and billet. Each these of measures helped have the plant be re to born a domestic into top-class environmentally conscious and cost competitive facility. Toyohashi Factory of Topy Industries, This was a total renewal Ltd. Factory and replacement Topy of Toyohashi our of old steel making facilities 30 years built over well ago. earthquakeNankai Trough and established a supply system more resilient against natural disasters. Furthermore, electric the 200 furnace, ECOARC™ ton one the of largest in Japan, has reduced the electricity consumption intensity remarkably to while levels, the low increase in steelmaking capacity has reduced operation the night time to time hours only when electricity costs are at its lowest. We are also supplying our billets own for deformed bars the introducing by a continuous of casting facil Corporate Profile and Governance and Profile Corporate 1111 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 14 - BT Twin (Billets for deformed bars) BL Single Storage yard for molded slab Molded slabs aresorted for three rolling mills (large sized shapes, medium sized shapes anddeformed bars) and con trolled according charge. to (Blooms for shapes) - - Continuous CastingContinuous Molten metal is poured evenly Molten metal is poured four-cast- into tundish the from con- ing molds, and undergoes tinuance casting. device en- Atmosphere sealing of high ables the production quality billet or bloom. - Bloom-cum-Billet Continuous Casting Machine Bloom-cum-Billet Continuous Ladle Refining Furnace Ladle Refining Input slag making agent and al refine steelloy to and adjust The chemicalcomposition. suit to controlled is temperature conditions. casting We have installed have We a continuous casting facility that can mold blooms both and theformer billets; is usedrollingfor shapes and the latter for deformed bars. In order achieve high to productivity, a twin cast is pro system vided with four strands first, for bloomeight and the world’s strands for billets. advanced adopted Inaddition, have we technologies such as equipment oscillation hydraulic and mold casting high-speed products. of productivity quality improve maintain and will that become has possible it equipment, this of introduction the With By quality. high maintaining while productivity high achieve to succeeding in- sequence our developed technologies casting house for different grade enabled have steels, we a small lot and flexible billet/bloomfeeding three rolling system into mills. With these advantages continue maintain we to our strong sell manufacturing. low-volume high-mix, of point ing - - Shaft Shaft tank) tank) (Preheat (Preheat Molten steel Scrap Scrap 200 ton Electric Furnace Melt scrap electricity by and Re heat. reaction oxidation molten from impurities move metalin the furnace oxida by tion-refining. - Arc furnace Arc main body Capacity tons/charge 210 (largest of the 6 units) Installation record (including domestic and overseas) 6 units 6 overseas) and domestic (including record Installation Exhaust gas ECOARC™ Installation Record Installation ECOARC™ - - Scrap yard Scrap come material, raw and makes composition scrap optimum using a computer system. Stores scrap metal that will be - The New Steel Making Plant Making Steel New The

Raw materials are melted in melted are materials Raw impuri – furnace electric the ties are removed inthe ladle – chemicalfurnace refining – adjusted is composition shapes required molded into casting. continuous by Manufacturing Process Environmentally Friendly and Highly Efficient Arc Furnace [ECOARC™] Arc Friendly and Highly Efficient Environmentally tion unit and improvement aim in productivity. We reduction in electricity achieve a 24% to cost by shift night increasing operation. Our operating technology acquired through past state-of-the-art the with coupled experience competitive cost our strengthen will ECOARC™ ness. ECOARC™ is comprised the main of ECOARC™ body the of furnace and the scrap preheat furnace called the shaft (preheat tank) which is attached directly to the main furnace. This theart, of is a state highly efficient furnace lowest enabling level world’s the unit. consumption electric of Compared the old furnace, to the new furnace electricity consump of reduction enabled the has FeatureMain of Facility –Special feature– Corporate Profile and Governance and Profile Corporate 1313 Corporate Profile and Governance Corporate Governance

Outside Director and Outside Statutory We will work on strengthening and improving corporate gov- Strengthening of Corporate Governance Auditors Corporate Profile and Governance ernance in order to establish a corporation that can earn the Topy Industries has currently elected one Outside Improvement of Risk Management and Compliance trust of all stakeholders. Board Director and two Outside Statutory Auditors. There The Risk Management Committee has been set up to are no special interests between those personnel and the extract, classify and make visible the underlying risks in Basic Approach company. the Topy Industries Group, to centralize information on Outside Director, Yasuo Yuuki is a lawyer, an Outside high-risk matters, and for PDCA execution. The members The Topy Industries Group pledges to fulfill its CSR in accordance with the Group Basic Philosophy, “Win the Auditor of Nippon Light Metal Holdings Company, Ltd., an of the Risk Management Committee are mainly general trust and respect of society through the continuance and development of the Topy Industries Group and the Outside Auditor of CONFEX CO., Ltd., and an Auditor of managers at the head office. execution of one’s duty as a public institution.” The Topy Industries Group considers the strengthening and Japan Marrow Donor Program. There are no personal, In addition, we have established an Internal Audit De- capital, or business transactions between these corpora- partment, which is under the direct control of the corpo- enhancement of corporate governance as one of its most important management issues. In order to earn the tions or organization and Topy Industries. rate president and currently operated by 11 staff, in order trust of our shareholders and all stakeholders we will comply with applicable laws and regulations and their Outside Director, Takeshi Mitsuma is an Outside Audi- to strengthen risk management including internal control. spirit, as well as the Group Code of Conduct, and improve management transparency. tor at Komori Corporation. There are no personal, capital, In order to strengthen compliance, Topy Industries has or business transactions between the said corporation worked on implementing various undertakings such as Outline of the Corporate Governance System and Topy Industries. Takeshi Mitsuma formally worked at setting up a contact office for whistle-blowers, publishing Mizuho Bank, Ltd. Topy Industries is borrowing funds of the Compliance Guide Book and Anti-Trust Law Manual, As illustrated below, we have an Audit & Supervisory Management Meeting, comprising directors and a num- about 10% of the total loans from Mizuho Bank. The said and formulating the Topy Industries Group Basic Philoso- Business Development Board, which functions as one of the key bodies of corpo- ber of designated members, is held (once a week in prin- bank holds 3.27% of Topy Industries’ shares. phy and Group Code of Conduct. rate governance. We have divided management functions ciple), where such matters that require the resolution at Outside Auditor, Tamio Kurosaki is an Outside Auditor In addition, in April, 2012, we launched the “Topy In- into management decision-making functions and operat- the Board of Directors will be deliberated in advance. The at Mizuho Trust & Banking Co., Ltd. Topy Industries is bor- dustry Group Basic Corporate Ethics Consultation Office,” ing functions, and adopted an Exective Officer System to deliberation also includes the execution, planning and im- rowing funds of less than 10% of the total loans from the “Topy Industries Group Compliance Hot Line,” a whis- vitalize and improve the efficiency of management. plementation of specific business policies, thus support- Mizuho Trust & Banking Co. The said corporation holds tle-blower system applicable to all companies of the Topy The Board of Directors constitutes of four Executive ing appropriate management desisions. 2.03% of Topy Industries’ shares. Kurosaki formally Industries Group, and distributed the revised version of Directors and one Outside Director and is convened (once Furthermore, in order to respond quickly to changes in worked at Meiji Yasuda Life Insurance Company. Topy In- the Compliance Guide Book to all employees of Group a month in principle and extraordinary meetings as need- the business environment, the term of the Directors and dustries is borrowing funds of less than 10% of the total companies in Japan. Effective from March 2013, we also ed) to resolve important issues of the company including Operative Officers is set to one year. The Audit & Supervi- loans from Meiji Yasuda Life Insurance Company. The launched the “Employee Ethics Seminar: Fostering per- basic management policy, in addition to matters required sory Board is constituted of two External Statutory Audi- said corporation holds 4.05% of Topy Industries’ shares. sonnel to support compliance” targeting all staff members by applicable laws and regulations. In order to ensure effi- tors and two Internal Auditors. All are full-time auditors, At Topy Industries, an Independent Outside Director or of the Topy Industries Group. cient deliberation by the Board of Directors, the Executive and are carrying out fair and neutral audits. auditor is one who does not influence, or has not worked

at a company that may influence the business decision Corporate Profile and Governance making process of the company. We believe that the Out- Corporate Governance System side Director and Outside Auditors at Topy Industries are independent. All our Outside Directors and Outside Audi- General Meeting of Shareholders tors have been submitted and accepted at Tokyo Security Exchange and Nagoya Security Exchange as indepen- Appointment and dismissal Appointment and dismissal Appointment and dismissal of Audit & Supervisory Board Members of directors dent executives. We have great hopes that outside director Yasuo Yuuki will reflect his rich experience as a profes- Audit & Board of Directors Audit and sional lawyer, and contribute to the company in Supervisory Board Audit Meeting report Accounting Auditor decision-making and audit functions by expressing his opinion and executing his voting right at board meetings. Prior consultation Outside auditor Takeshi Mitsuma and Tamio Kurosaki Report Report have acquired rich management experience primarily at Compliance Guide Book Cooperation Report financial institutions and are contributing to the company Compensation in strengthening audit functions of management through Executive Committee advice and proposal at board meetings in connection with Group Risk Management Briefing Session Management the legitimacy and validity to be secured and through ex- The first Group risk management briefing session was Report Report Meeting pressing their opinions during audit meetings. held at the headquarters of Topy Industries in December Internal Audit Dept. Risk Management

Supervision Committee, etc. 2012. Employees of various Group companies participat- Additional Data Internal Audit Report ed and listened intently to the briefing pertaining to the Internal Audit Group Basic Philosophy, Code of Conduct and Guide Book. After this event, a similar briefing session has been Group Companies Operating Ofﬁcers held at each factory as part of our efforts to strengthen risk management and the aggregated. Cooperation Report Consent on appointment, resolution on dismissal or non-reappointment, conﬁrmation of adequacy and independence of accounting auditor

15 16 Corporate Profile and Governance Corporate Governance

Responsibility to Stakeholders Information Tools Addressed to Stakeholders Therefore, slowdown of economy and subsequent drop Now, with economic development in China and Asian in demand for our products in major markets such as countries, the Group’s manufacture and sales activities Corporate Profile and Governance The business activities of the Topy Industries Group Japan, North America and Asia would adversely affect have expanded into these regions by way of direct invest- stretch over a broad range of fields including materials, the results of business and financial status of the Topy ment. However, doing business in these countries brings motorization, land development, urban construction, elec- Industries Group. various intrinsic risks and new challenges such as inade- tric power, distribution, sports and leisure, recycling, quate social/technical infrastructures, unexpected chang- transportation and services, and are widely involved with 2. Procurement of Raw Materials es of local laws and regulations, disadvantageous political society in playing an indispensable role in various aspects The prices of major raw materials used to manufac- or economic factors, and difficulties in securing human re- of people’s lives. Topy’s corporate message “One-piece ture products of the Topy Industries Group such as steel sources etc. Cycle” has been chosen to express the corporate attitude material, metal scrap, and fuel oil, may fluctuate rapidly towards creating a new wave in each business area to in response to changes in international business environ- (4) Risks Related to New Products and New Technolo- build a better future through the concerted efforts of the Topy Report 2015 Corporate Profile Corporate Profile DVD ments. gy Development Topy Industries Group and the rest of society. When raw material costs surge and such cost in- It is necessary for the Topy Industries Group, which en- Going forward, we will contribute to the development crease cannot be appropriately reflected onto the selling gages in manufacturing activities, to establish a firm tech- of society by delivering high quality, cost competitive prices of products, there would be adverse effects on nological position within the competitive environment in products that satisfy customers and users in accordance business and financial performance of the Group. order to ensure each business segment achieves long and with the Group Basic Philosophy to “Win the trust and stable profit. Especially in the automotive/industrial ma- respect of society through the continuance and develop- 3. Currency Exchange Risks chinery components business, driven by technological in- Business Development ment of the Topy Industries Group and the execution of The business of the Topy Industries Group includes novation of automobiles, we must be prepared to respond one’s duty as a public institution.” At the same time, we exports of products from Japan to North America/Asia, to the increasingly sophisticated requirements from auto- will fulfill our social responsibility as a corporation by pos- and the manufacture and sales of products in such re- mobile manufacturers. itively addressing issues such as timely, appropriate dis- Financial Statement Financial Results Brief gions. Fluctuations in currency exchange rates would We are continually at risk for that we must gain favor of closure of corporate information, contribution to local affect the Group’s business and financial performance. the market and customers by precisely forecasting new 株主の皆様へ

株主の皆様には、日頃より格別のご高配を賜り、厚くお礼申しあげます。ここに第122期第1四半期（平成27年4月1日から平成27年6月 communities, and the global environment, in order to en- 30日まで）の営業の概況をご報告申しあげます。 products and technologies, as well as successfully com- 当第1四半期連結累計期間における世界経済は、米国は回復基調が続くとともに、欧州の持ち直しにより、全体としては緩やかに回復したものの、中国の景気減速の強まり及び新興国の足踏み状態が見られました。 hance the corporate value of the Topy Industries Group as わが国経済は、企業収益の改善に伴う設備投資の持ち直し等により、緩 4. Change in Interest Rate and Reliance on Interest-bear- mercializing such products. やかな回復基調で推移したものの、個人消費や鉱工業生産等に弱い動きが見られました。このような状況下、当社グループは、グローバルでの“成長”と高収益体質への“変革”を基本方針とした中期連結経営計画「Growth ＆ Change 2015」を推進してまいりました。その一環として、トピー・ well as the common interests of stakeholders. エムダブリュ・マニュファクチャリング・メキシコS.A. DE C.V.（メキ ing Debt シコグアナファト州）において乗用車用ホイールの生産を開始いたしました。また、発電事業では事業の見直しを実施し、特定規模電気事業者への電力供給を新たに開始いたしました。さらに、鋼材の適正な販売価格の維持を図るとともに、需要に応じた生産体制の構築や生産性の向上、省エネ等のコスト改善にも引き続き取り組んでまいりました。 The Topy Industries Group has been working to re- (5) Disaster Risks 今後のわが国経済は、堅調な企業収益や政府の経済対策等により、緩やかに回復していくと期待されるものの、中国や新興国の経済動向、米国の金融政策の動きや欧州の債務問題等、不透明な要素もあり、当社グループを取り巻く事業環境は予断を許さない状況が継続するものと思われます。 ducing interest-bearing debt. However, the percentage The Topy Industries Group has steadily implemented このような経営環境下、当社グループは、中期連結経営計画「Growth ＆ Change 2015」を推進する中で、成長が見込まれる海外市場に対して積極的に事業展開を図るとともに、国内のモノづくり基盤を強固なものとすることで、環境 of interest-bearing debt to the total assets remains at a various effective measures against anticipated natural di- 変化に強い事業構造を確立し、企業価値の一層の向上に努めてまいります。今後も、コーポ Information Disclosure for Highly レートメッセージ「One-piece Cycle」が表す「素材から製品までの一貫生産」の優位性を発揮し、トピー工業グループの一貫利益の追求とさらなる躍進を図ってまいります。 high level. Therefore, the fluctuation in interest rates on sasters including strengthening our emergency communi-

株主の皆様におかれましては、今後と Transparent Management も一層のご支援とご鞭撻を賜りますようお願い申しあげます。代表取締役社長 Corporate Profile and Governance 平成27年8月 interest-bearing debt would affect the Group’s business cation systems, executing regular evacuation drills, an- The Topy Industries Group discloses its business activ- and financial performance. ti-seismic reinforcement of facilities. However, our business To Our Shareholders ities and financial conditions through various information operations and financial status would be adversely affected tools in the hopes that our stakeholders will understand 5. Corporate Financing by the occurrence of any large scale earthquakes, ty- the high transparency of our management. Annual publi- The Topy Industries Group conducts corporate fi- phoons, or other natural disasters in the vicinity of our fac- cation of the Topy Report which integrates CSR informa- Business Related Risks nancing mainly by loans from financial institutions. The tories. tion such as corporate social contribution and environ- financing costs are affected by the interest rates and mental activities as well as financial information for The risks that may impact corporate performance, evaluation of the Group by financial rating organizations. (6) Risk from Product Defects shareholders and stakeholders started from FY2012 in stock prices and financial position of the Topy Industries Rise in interest rates or decline in business performance The Topy Industries Group places the safety of the order to expand investor relations. In addition, a variety of Group include the following. Issues related to the future of the Group may result in the procurement of financing products as a top priority and we products are manufac- corporate information is delivered in real-time on our web- are based on estimations made by the Group as of the at higher interest rates, or difficulty in securing the financ- tured in strict conformance with quality requirements and site (http://www.topy.co.jp/). date the securities report was submitted (June 25th, ing amount needed. This would adversely affect the standards emplace by law and regulation applicable in the 2015). Group’s business and financial performance. country where we operate. The Group is insured in terms of product liability; however, there is always the possibility of (1) Changes in Economic Environment (2) Risks due to Selling Price Decline incidents not covered by insurance or large-scale recalls 1. Sales The Topy Industries Group conducts its manufacture needed for the safety of our users and customers which The primary income of the Group comes from the and sales business of steel, automotive/industrial machin- may result in substantial cost that will adversely affect our sales of steel products and components for automotive, ery components within extremely competitive markets. The financial status.

mining and construction equipment. The sales of the au- Group will continue to exert efforts to secure earnings by Additional Data tomotive, mining and construction components are af- reducing purchasing costs and improving productivity. (7) Risks from Laws and Regulations fected largely by the sales of completed vehicles and However, if the selling price overrides our efforts, it may The business operations of the Topy Industries Group machinery which are vulnerable to the economic condi- lead to decrease in profit ratio. are subject to various laws and regulations of the country Website: Top Page Website: Shareholders and Investors Information tions of the respective market where such vehicles and where we operate. Any changes in these laws and regula- machinery are sold. Likewise, the sales of steel-products (3) Risks Associated with Overseas Expansion tions may have adverse effects on our business perfor- are also affected by the business environment in the par- Japan and North America had long been existing man- mance and financial status. ticular country or area where those products are sold. ufacture and sales activities of the Topy Industries Group.

17 18 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 20 see page 15-18 (Qualitative Change) (Qualitative ) for mining trucks in order to enhance to enhance ) for mining trucks in order ® see page 26 see page 28 (Quantitative Growth) see page 11-14 and 24 and see page 11-14 see page 29-30 and 45 components production capacity. capacity. components production The construction of this leading edge steelmaking plant incorporates various features The construction of this leading edge steelmaking plant incorporates various features such as the achievement competitiveness in various areas designed to improve self- completely a costs, environmental and power in reduction dramatic a of of blooms and billets and an advanced supply supply mechanism sufficient commenced plant The disasters. other and tsunamis earthquakes, against chain and 2014 in tryouts successful after 2015 March from production commercial costs, a completely self- in power and environmental enables dramatic reduction supply mechanism of blooms and billets and an advanced supply chain sufficient Prefecture) Aichi City, against earthquakes, tsunamis and other disasters. (Toyohashi section and expand sales of special profile to develop exerting our efforts are We steel, ultra-large diameter wheels for mining dump trucks, high design large window and other products. wheels, fine-particle synthetic pearl mica, crawler robots of methods, concentration new of the introduction on working positively are We cost of improvement as well as lines new of introduction and processes production workplace capabilities. activities by strengthening reduction our website. have established an intranet system and renewed We As part of strengthening our corporate governance, we are working on the promotion our corporate governance, working on the promotion we are As part of strengthening our risk management system and compliance. of strengthening Development and sales expansion of strategic and high-value and high-value of strategic and sales expansion Development originality featuring Topy’s added products to factories mother at strength manufacturing of Reinforcement at overseas locations support production reforms Business process Instillation of risk management system Topy Fasteners Vietnam Co., Ltd. commenced operation in Fasteners Vietnam in operation commenced Ltd. Co., Topy demand for two-wheeled increasing November 2012 to meet vehicle fasteners. commenced Machinery Co., Ltd. (Tianjin, China) Tianjin Topy components for ultra-large operation in November 2012 to produce diameter wheels (SGOR (China) Co., Ltd. (Qingdao, China), a subsidiary Undercarriage Topy in of track shoes for construction machinery for the production China, commenced operation in October 2012. Indonesia (Java Barat, Indonesia), Palingda Manufacturing Topy PT. of truck/bus wheels was established a subsidiary for the production the increasing and commenced operation in April 2014 to meet demand in the ASEAN region. Indonesia (Becasi, Indonesia) established Undercarriage Topy PT. sales reinforce in December 2013 and commenced operation to April in machinery construction for components undercarriage of 2014. established Mexico) (Guanajuato, Mexico Manufacturing MW Topy passenger for wheels of demand increasing the meet to 2013 in The markets. American South and North in trucks light and cars in April 2015. company is scheduled to commence production was (San Luis Potosi, Mexico) Fasteners Mexico S.A. DE C.V. Topy and industrial fasteners for motorcycles established to manufacture automobiles. Factory Operation starts at the new steel making plant in Toyohashi

Current Progress Current Current Progress Current Progress Current

- - - - 1 11 2015FY 1 11 2014 2 9 2013 9 2012 6 3 In preparation In operation In (consolidated Group companies) Number of Overseas Manufacturing Locations 2011

- - Enhancement of Management of Enhancement Expansion Overseas of Business Reinforcement Domestic of Business Foundation We are We responding the to increasing demand for we Under G&C2015 will We expedite the transformation domestic of areWe committed the to further improvement in business processes enhance and our will We 3 1 2 Progress Priority of Themes Raising the level of management of efficiency. Raising level the Expand production and supply system in response to increasing demand accompanying accompanying demand increasing response to in Expand system supply and production infrastructure emerging in countries. improvement domestic the businesses in developments as concrete represented the Make by modernization steelmaking of facilities. construction equipment and automobiles amid dy amid automobiles and equipment construction in progress in infrastructure of improvements namic ASEAN and other emerging countries. The automo com undercarriage equipment construction and bile of pillar business major a segment, business ponents Industriesthe Topy Group, produces track shoes and construction for components undercarriage related mining wheels for diameter ultra-large and equipment trucks where we hold a large portion the of global share. additional build to plan Chi in systems supply na, South East Asia and Mexico respond to to de global increasing the mand for our products to maintain/expand market shares and strengthen to competitiveness. cost business smooth by startup and stable operation the including projects investment large-scale the of modernization steel of making facilities. expansion the for factory mother the as function our overseasof businesses back our by inherent product over nurtured technologies production and design the years. will We also address the reconstruction of that structure business strong a build and businesses environment. business in changes withstand can global group management system as the foundation Further, we will improve our techno “G&C2015.” of new and products new develop to strength logical processes compete to in theglobal marketplace and reinforceto risk management system. - FY FY Original Original 2015 2015 0.66 Target Values Target Target Values Target 9.6% 0.660.66 2015 2015 5.0% Projection Projection 0.73 0.73 2014 2014 2.4% 0.73 2013 2013 2.1% “Growth & Change 2015” “Growth Change & 0.60 0.60 2012 4.0% 4.0% 2012 2011 0.71 4.8% 2011 Maintain and expand global market share Strengthen global supply system 2010 0.78 0.78 2.6% 2.6%

2010 D/E Ratio Return On Equity (ROE) 2) 1) Change business administration processes businessChange administration Promote global enhancement of Group management Group enhancement global of Promote Reinforce technology strength compete to in the global field Refine risk management system FY FY

2) 1) 3) 4) Original Original 2015 2015 6.4% Target Values Target Target Values Target 7.3% 2015 2015 3.9% 4.2% Projection Projection 2014 2014 2.9% 2.7% 2.9% 2013 2013 2.6% 2.3% 3.5% 3.1% 3.5% 3.1% 2012 2012 Expansion of Overseas Business (Quantitative Growth) Change) (Qualitative Foundation Business FortificationDomestic of Enhancement of Management of Enhancement Quantitative Growth of Overseas Business Qualitative Change of Domestic Business Fundamental improvement in production costs installing by advanced steelmaking facilities Development and sales expansion of strategic and high value-addedproducts Productivity improvement changes in manufacturing domain and further development of cost reduction activities 5.3% 5.3% 4.4% 2011 2011

Respond to the growing markets of emerging countries Realize a solid business foundation to win out against competition on a global level Achieve strong competitive edge in costs Expand the sales of high value-added products making by the most out of costcompetitive products and prominent technology Strengthen the functions of mother factories tosupport overseas business developments 3 1 2

1) 2) 3) • • • • • Change in the Medium Term Consolidated Management Plan Consolidated Term Medium the Change in Progress of Priority Themes Basic Policy “Growth” from a global perspective and “Change” to a highly profitable corporate to a highly structure perspective “Change” and from a global “Growth” 3.6% 3.2% 3.2% 3.6% 2010 2010 Return On Assets (ROA) Ratio of operating income to sales We have entered our final year of “Growth & Change 2015 (G&C 2015)”, the Medium Term Plan which Consolidated Management the Medium “Growth(G&C yearof final our entered have We & Change 2015)”, 2015 started “Growth” corporate realizing on perspective at global higher for FY2012 earnings. in aiming and “Change” find difficult we it Unfortunately, amidst set theinitially hostile economic targetsconditions we achieve in to as forseen earnings as the construction as well equipment China. in the for demand world equipment mining the plummeted overseas expand to measures promoted (Quantitative business have we Growth) domestic of and strengthening busi However, a nessstrong with (Qualitative foundation business Change) structureto build firm a determination that can withstandin changes economic conditions the onbasis. a global are brief Followings report on the progress. Medium Term Consolidated Management Plan Plan Management Consolidated Term Medium Corporate Profile and Governance and Profile Corporate 19 Business Development

Sales, Operating Profits and Projections Topy Industries Group at a Glance We aim to build a richer and more comfortable society where we can feel greater satisfaction in our lives. The business activities of the Topy Industries Sales Sales (in millions of yen) Operating proﬁts Group extend over a vast area covering steel, automobiles, construction ma- 300,000 Operating proﬁts 30,000 246,000 chinery, robots, distribution, transportation, sports and leisure. The various 250,000 226,912 234,682 237,677 25,000 products, technologies and services provided by the Topy Industries Group 200,000 20,000 contribute to society through their respective roles. Our business activities are divided into three segments, namely “Steel,” “Automobile and Industrial 150,000 15,000 9,700 Machinery Components” and “Other.” Major products and business records 100,000 6,990 10,000 5,308 6,422 for the last 3 years are provided here for reference. 50,000 5,000 Corporate Profile and Governance 0 0 FY2013 FY2014 FY2015 FY2016 (projection) Business Segment Main Products

Steel Business Sales Sales (in millions of yen) Operating proﬁts 100,000 Operating proﬁts 10,000 90,000 9,000 The Topy Industries’ raw material business since its foundation 80,500 General steel sections 80,000 72,955 72,247 8,000 67,621 Topy’s steel business possesses unique manufacturing technologies for special sec- 70,000 7,000 tions, is able to respond to diverse specification requirements, and has a flexible produc- Deformed bars 60,000 6,000 tion system for high-mix, low-volume production. These technologies enable the in-house 4,700 supply of raw materials to the automotive and industrial machinery components business Extra-thick, 50,000 5,000 extra-wide flat bars divisions. This integrated production system of raw materials to finished products under 40,000 4,000 30,000 3,000 one corporate umbrella gives Topy an extra competitive edge over other electric furnace Mast rail sections for forklifts 3,381 20,000 2,000 mills. The Topy Industries Group also possesses business units engaging in steel product 720 fabrication, collection and recycling of scrap metal, as well as transportation, trade, and Universal mill plates 10,000 1,630 1,000 distribution. These satellite Group resources are well positioned around the steel manu- with grooves 0 0 FY2013 FY2014 FY2015 FY2016 (projection)

facturing business and act to increase the business’s competitiveness. Business Development

Automotive and Industrial Machinery Components Business Steel and aluminum wheels for passenger cars Wheel Division Steel wheels for commercial A world top-class general wheel manufacturer trucks and buses Sales Sales (in millions of yen) Operating proﬁts Steel wheels and rims for Operating proﬁts Topy responds to the various needs of the automobile and construction ma- 180,000 18,000 chinery industries by producing a comprehensive lineup of wheels for passenger construction and industrial machinery 160,000 151,025 16,000 cars, commercial trucks and buses, and ultra-large mining and construction 145,398 147,423 147,000 140,000 14,000 equipment. While developing high quality products, we are committed to contrib- Ultra-large diameter wheels uting to the future motorization of society by building a global supply system tak- (SGOR®) for mining dump 120,000 12,000 trucks 9,966 Corporate Profile and Governance ing into consideration environmental and safety concerns as well as top priority 100,000 10,000 issues of the automobile industry such as weight reduction and driving stability. 80,000 7,360 6,919 8,000 Industrial spring steel fasteners 60,000 5,400 6,000 Undercarriage Components Division 40,000 4,000 Shoes A general undercarriage components manufacturer 20,000 2,000 Track shoes 0 0 Taking full advantage of our unique heat treatment and processing tech- FY2013 FY2014 FY2015 FY2016 (projection) nologies that have been accumulated over the years, Topy produces and sells various undercarriage components including shoes, track shoes and blade Cutting edges components (cutting edges) for construction machinery such as hydraulic ex- Links cavators and bulldozers. Our competitiveness in QCD realized by an integrated production system from raw materials to finished products, as well as our design Rollers development and proposal capabilities are highly evaluated by our customers.

Other Business Sales Sales (in millions of yen) Operating proﬁts Robots for surveying, and Operating proﬁts 20,000 4,000 under floor and roof inspection 18,500 New earning power 18,000 3,300 3,600 Additional Data This segment includes the Science Division and other new businesses. The Science Indoor and outdoor billboards 16,000 3,200 13,891 14,303 14,404 Division was established with the intent to create sources of profit for the company in sci- 14,000 2,800 ence-related fields other than metal processing, and is currently developing businesses at Synthetic mica 12,000 2,400 Mica Department which sells ingredient materials for cosmetics; and the Crawler Robot 10,000 2,000 Department which develops and sells remotely controlled survey robots such as those Power generation business 8,000 1,600 that have been utilized for the inspection of Fukushima Daiichi Nuclear Power Station. 6,000 1,200 Real estate business Other business includes social contribution through electric power generation, and sports 4,000 632 800 and leisure-related businesses. 400 Sports and leisure business 2,000 542 As for the power generation and supply business at Toyohashi, we have changed the 418 0 0 supply destination effective as of April 2015 to power producer and suppliers. This is FY2013 FY2014 FY2015 FY2016 (projection)

treated as a segment report in view of the increasing quantitative importance of the busi- Projection for FY2016 includes the sales and operating profits from Power ness from FY2015. Generation Business 21 22 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 24 - Managing Operating Officer Operating Managing Akira Tanahashi General Manager, the Steel Division ------TOPY Highlights FY2014 mass commenced Factory Toyohashi at plant steelmaking new The intro have we that furnace electric the plant, the of facility main The Production Starts at the New Steelmaking Plant productionafter from March tryout 2015 operations started in October In order strengthen to 2014. business continuity, state the of art equip ment and technologies with measures against large earthquakes and and quality improvement, and productivity for consideration tsunamis, environmental burden have been introduced. duced, is the largest eco-friendly and highly-efficient arc furnace in Ja of reduction by significantly electricity cost reduce to expect We pan. operations concentrating by as well as unit electricity consumption the during the night time and holidays when electricity ratesare relatively to designed is machine casting continuous new the addition, In low. castboth blooms and billets. With this, arewe able replace to billet complete achieve and supply, in-house to outside the from procured self-sufficiencyof raw materials that will give our products greater com petitiveness. In the rolling operation, will we start,theduring mass thisproduction fiscalof year, new products de The new steelmaking plant commenced production in March March in commenced production plant steelmaking The new The new electric furnace Factory is introduced we Toyohashi at a BCP standFrom the building point, has earth a “new adopted Message from Division General the Manager veloped last year. By increasingveloped last the production year. new products, of will we continue our evolve “Only to special profile of products representative our produce enables to us that technology inherent or One” sections will realize steels. work We early to achievement the targets of had that we set when deciding the introduction the new of plant, and proceed with production and delivery new products of as sched- willuled. exert We our utmost efforts the achievement towards these of targets. quake resistant design withstand method” to seismic intensity 6+ of which is estimated in the simultaneous and occurrence the Tokai of Earthquakes.Tonankai Other facilities and equipment also have in corporated earthquake resistant and damage prevention measures. As a measure against tsunami and high the floor tide, of major level electrical equipment has been raised. the Also, overall floortheof level new steelmaking plant has been comparem the old plant to and the electric raisedin preparation 1.0 by room has been raised 1.6+m by highof tides caused tsunamis by after an earthquake, and typhoons. 2015. andcalled provides environmentally the Eco Arc (ECOARC™) friendly features capable suppressing of power consumption and dust production. Inaddition thefurnace, installed to have we newa con tinuous casting machine capable molding of blooms both for struc turalshapes and billetsfor deformed bars,providing us greater pro duction flexibilityversatilefor demand. thisBy shiftof billet source from cut aim outside cost we in-house to significantly. to supply, Drawing out maximum capacity of the new steel steel maximum out new capacity the Drawing of development and steady plant making products new of Steel Business Steel Business Development Business 23 23 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 26 - - - - - Managing Operating Officer Operating Managing Shinichi Kijima - General Manager, the Wheel Division Wheel the Manager, General ------Recently, Japanese and major world car manufac ing sites with in Japan the however, es and the U.S.; tablishment a new of factory in Mexico, we will be able respond to the to global supply needs our of customers. We busi further strengthen will ness foundation taking by in the demand for steel wheels in the expanding market. turers have made inroads into Mexico, backed its by Free of conclusion the and advantage geographical relat automobile for demand The Agreements. Trade ed products is expected increase to considering mar potentialsket in North and South America. The new precision high of supply stable make will company andhigh quality industrial fasteners both Japanese to se and manufacturers car European/American and cure the growing demand in these markets. ------TOPY Highlights On May 28, 2013, we established we On 2013, May 28, a joint venture is Mexico in passenger vehicles of production The includ fasteners industrial supplies Fasteners Topy FY2014 Fasteners a subsidiaryTopy Ltd., Indus Topy of Establishment of Manufacturing Site in Mexico for Steel Passenger Car Wheels Establishment of a New Factory in Mexico for Industrial Fasteners manufacturing subsidiary company for steel passen steel for subsidiary company manufacturing ger car wheels in Mexico with MW Italia and S.p.A de factory. new a of construction the cided expected grow as to exports North to and South America has increased in recent years. Until now, manufactur our from supplied were Mexico to wheels tries, decided establish to Topy on April 2015, 27th, Fasteners in Mexico Mexico and em S.A. DE C.V. the for factory new a of construction the on barked manufacture and sales industrial of fasteners. ing precision spring steelfasteners for wide range of ma precision cars, motorcycles, as such industries manufacturing has and equipment industrial chines, sites Thailand in the U.S., and Viet Nam beside Japan. Under the basic policy “Growth” in of the global perspective and will continueWe strengthen to our global supply chain re to Message from Division General the Manager spond the needs to customers of and effective markets by allianc es with overseas partners while solidifying existing overseas bases for passenger and industrial machinery wheels and Chi in the U.S. na. By fostering “technological competiveness” “cost strength”, and “human resources” through close cooperation between these overseas bases and and Japanese mother factories Toyokawa at from whereAyase, “competitive strength manufacturing” of origi will we nates, enhance our class presence top gen asa “world’s solidify busi our time same the at and wheel manufacturer” eral ness foundation. “Change” to higher corporate earnings, the Wheel Division the has earnings, higher corporate to “Change” businesspromoted development in overseas markets where growth a pro of is expected. Following the establishment in 2014 up started have we Indonesia, wheels in bus-truck for site duction a production for steel site passenger wheels this year in Mexico. Dynamic propelling of business development in in development business of Dynamic propelling in “Growth” policy basic the under markets overseas earning high to and “Change” perspective global corporate structure Wheel Division Automotive and Industrial MachineryAutomotive Business Components Business Development Business 25 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 28 General Manager, Manager, General Managing Operating Officer Operating Managing Hiroyuki Kinoshita the Undercarriage Components Division Components Undercarriage the ------TOPY Highlights Component of “tracks” manufacturedprocessing by hot rolled steel materials. shoes Track and other components are assembled form to “tracks” FY2014 Undercarriage Topy PT. Indonesia,In April 2014, a The company will also play a part in expanding Operation Starts at the Subsidiary Undercarriage of Company Indonesia in Sales Components sales and distribution organization tracks of and track company The operation. commenced components busi components undercarriage expanding at aims nessin the ASEAN region providing by customer-ori ented services. sales in the future not only in the ASEAN region, but also in South Asia and Oceania where demand in expected. is crease The Undercarriage Components Division manufactures and sells sells and manufactures Division Components The Undercarriage The Division operates in North America, China and Indonesia and Demand from emerging countries has been slow in the recent Looking the future, global into population growth and urban expansion is expected, and anticipate we Message from Division General the Manager *Track shoe:*Track belt. track steel a machinery is and construction of components undercarriage assembled for name general A **Tracks: various undercarriage components for construction machinery such construction for components undercarriage various Above track all, shoes* hydraulicfor ashydraulicexcava excavators. embodytors the production “integrated from system materials raw finishedto products”featuring our strongest selling point. The inte manufacturinggrated has system realized high QDC level of and our products receive excellent evaluation from our customers thanks to de advanced by supported proposals VA services refined including years. many nurtured over development sign to QDC high of products supplying by globalization to contributes fluc to responding by machinery manufacturers, construction local tuation risks in foreign currency exchange and rates performing by delivery. As a result, the Divisionjust-in-time enjoys the world’s top-level market share in terms OEM supply of track of shoes and excavators. hydraulic for tracks** years putting us under harsh will business we exert our greatest environments. efforts However, towards competitiveness cost improving products, added value high developing businessby our further promote and utilizing the advantage our of global supply chain. demandfor construction machinery willincrease. will contribute thedevelopment We to society of as a machinery industry. components construction the in company leading - Building a strong business respond foundation to to demand fluctuations and advance business adminis tration reforms to supporttration reforms to construction machinery manufacturers and society. Undercarriage Components Division Undercarriage Components Automotive and Industrial MachineryAutomotive Business Components Business Development Business 27 Business Development Other Business New Products and Technologies

Introducing some of Topy’s next-generation products and Aiming to Introduce an “Only One” and Highly Func- technologies

tional Product The Topy Industries Group has been actively promoting various research and development

themes that suit the needs of our customers and society, embodying the ideas into visible prod- Corporate Profile and Governance ucts. The items introduced below show some of the new technologies and products that are expected to help boost the growth of the Topy Industries Group in the future.

Message from the Division General Manager

The Science Division is the fourth division of Topy Industries with focus on research and development, and challenges scientif- 1 The Inspection Robot for Decommissioning Nuclear Reactors ic fields other than metal processing. At first look at the business lines of the Science Division, it may The Crawler Robot Department of the Science unit of this robot can be recombined so that for in- seem there is not much association with the company’s core tech- Division and the Technology Development Promo- spection of any water leakage from the surrounding nologies. But, in fact, Topy’s high level of technology which we tion Center has delivered an “Underwater Inspection structures in the upper section, an inspection unit have been nurturing over the years and our continued initiatives for Robot” and a “Suppression Chamber (Pressure with an ascending/descending camera function can development activities forms the main body of this division. Control Center) Upper Section Inspection Robot” for be attached to gain visual images, and for inspection inspection towards decommissioning of nuclear re- of the wall surface, an inspection unit with a sus- Our mind for developing new products based on such technol- Business Development actors at Fukushima No.1 Nuclear Power Plant. pended type underwater camera can be attached to ogies will influence the expansion and development of the Science It is said that decommission of the nuclear reac- gain visual images. This enables inspection of both Division in the future. tors at Fukushima No.1 Nuclear Power Plant will take the flow of retained water This Division is faced with challenges for new markets and another 30 to 40 years. Radiation inside the nuclear from the penetrated wall products, and we have young forces full of vitality towards that reactors is very high and therefore, robots are need- and the catwalk. With these ed to work and inspect in the place of human work- features, Topy’s robots are achievement. Toshiyuki Tani Managing Operating Officer ers. expected to find more op- Clarifying product concept for each business, promoting so- General Manager, Currently, for the extraction of nuclear fuel, the portunities for use under phistication and efficiency of each process and as a result, send- Science Division “Water Immersion Method” is scheduled to be ap- severe conditions where ing products rich in originality to society; this is the image of the plied in which the pre-stressed concrete container workers are unable to ac- Division that we are aiming to realize. will be filled with water. The difficult part of this par- cess. ticular method is the determination of water leakage location. With such challenges at hand, Topy’s

crawler mechanism and under-water control tech- Corporate Profile and Governance nology was highly evaluated and our robot was adopted for the under-water decommissioning nuclear TOPY reactor inspection robot. Our robot succeeded in FY2014 locating the water leakage, and we have been given Highlights high praises from various quarters. In addition, we have developed a robot that can inspect the upper section of the suppression chamber and its vicinity in the No.1 building which is locat- Development of a Crawler Robot Marine Resource Research ed right under the nuclear reactor. The inspection

The Science Division has concluded an agreement with Japan Agency for Marine-Earth Science Technol- ogy and Nissan Motors, Co., Ltd. to develop high efficient operating technology for marine resource research crawler robot. Particles with Upgraded Luster and Saturation make it into the ® Topy’s crawler robots have operated as ROV (Re- 2 Helios Lineup motely Operated Vehicle) to inspect and measure the conditions inside the buildings and basements at The Mica Department of the Science Division has suc- Fukushima No.1 Nuclear Power Plant after the Great cessfully added small particle size products to the existing Additional Data East Japan Earthquake and Tsunami. The joint re- large particle size pearl mica “Helios®” lineup. search team will work on developing a robot that can Luster and saturation (grade of purity of a color image) work efficiently under the water by combing our crawl- are the most appealing quality features of our pearl mica. ing technology that allows robots to run in a stable Luster and saturation level of Topy’s pearl mica products form even on complex terrains of the sea floor, with are much higher compared to our competitors’ products, the system that can grasp the surrounding conditions and we have achieved excellent review from our custom- at ease. Source:JAMSTEC ers. We will exert more efforts to increasing the sales of our core product, “Helios®” with focus in the cosmetic industry.

29 30 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 32 - - - Improvement of the Steel Wheel Production Line (Automotive Division, America Topy Inc.) (PT. Topy Undercarriage Indonesia) Undercarriage Topy (PT. CNo Vessel Operating Common OperatingCommon Vessel CNo Carrier LicenseSecures New Or (Topy Marine Transport, Ltd.) Local Staff Recruitment and a Step Business Expansiontowards ders Theproduction line of passenger car steel wheels for the Topy MarineTopy Transport obtained a license for Non Vessel Topy Undercarriage Indonesia was founded in 2013, the the 2013, in founded was Indonesia Undercarriage Topy 8 9 7 North American market is aiming produce to wheels of almost and stability running improve to order in perfect roundness quietness of the vehicle which to it is assembled. enable To this, thorough examination of each process in order reduce to production rim production, disc of stage each at “vibration” process, assembly and as well as every possible including improvement skill level of operators have been conducted. Operating Common Carrier With in this, 2013. Marine Topy Transport has expanded its business capability, and in 2014, Toyohashi at plant steelmaking new the for carried equipment Factoryas well as rim and side ring sections Topy PT. to Manufac Palingda Indonesia. turing opening ceremony was held in February and by Novem 2014, a total ofber five 2014, staff including a locally-hired manager and warehouse operators was appointed. aim We for business expansion by delivery Japanese to OEM customers who are already in Indonesia and by utilizing geographical advantages. - - - - 20th Anniversary Ceremony Establishing functions as overseas base Indonesia) Manufacturing Palingda Topy (PT. Zero Accidents by Reviewing Safe Safe Reviewing Zero by Accidents Operation Procedures (Topy Fasteners Thailand, Ltd.) OnNovember Fasteners Topy 20th, (Thailand) 2014, cele Topy Palingda Manufacturing commenced production and and commenced production Manufacturing Palingda Topy Topy Fasteners (Thailand) manufactures and sells industrial industrial sells and (Thailand) manufactures Fasteners Topy 6 5 brated its 20th anniversary with a celebration banquet at a ho tel in the suburb of Chonburi,Thailand. The party was attended by more than 320 participants including shareholders, guests and company employees. The ceremony was highlighted with a dance party with a live music, which is indispensable parties to Thailand. in sales from April The company 2014. is expected become to a com for business wheel expand to base production strategic mercial vehicles in the ASEAN region and at the same time, MW Topy with together chain supply global the in role a play Manufactur Mexico ing S.A. DE C.V. fasteners. There was once an accident inwhich an operator’s finger got caught between theattaching jigs when trying to attach a hose clamp a folder. to This initiated the review of the jig method, operation including processes production entire attachment device, operator’s fatigue level and concentration etc. for improvement methods. As a result, zero accident has been achieved and production output per hour has improved. - - - - - 8 9 1 7 3 4 2 6 - - 5 Communication Improvement (Fujian Autoparts Topy Ltd.) Co., Nurture Consciousness through Nurture Consciousness through Japanese Language and Education Greater Communication (Topy Fasteners Viet Nam Ltd.) Co., There arevarious on-going programs promote to commu Important meetings are conducted with interpretation into into interpretation with conducted are Important meetings 3 4 nication between workersat Fujian Autoparts. Topy Japanese language classes are held twice a week aiming at acquiring grade 4 on the Japanese proficiencytest which comes with a bonus for those who pass. In-house news letters are printed in both Chinese and Japanese. Also, for health and communica tion improvement, a basketball court has been opened where tournaments and free throw contest are held and training pro grams where workers are dispatched Japan to are being operated. Japanese and Japanese education is provided at daily meet ings of each department. There was even an episode where a localvisitor wasvery surprised bythe welcome inJapanese conscious the Here Morning”). (“Good Gozaimasu” “Ohayou ness of being Group a Topy member is nurtured daily. Besides thelanguage education, various events such as sports events barbe and que par ties are organized promote to communica tion. - - - (Qingdao Machinery Topy Ltd.) Co., (Topy Undercarriage China Ltd.) Co., Human Resource Development Human Resource Development and Awareness Improvement In to crease Motivation Jig Improvements Reduce Defects Defects Reduce Improvements Jig Efficiency Work and Improve Qingdao Topy Machinery manufactures undercarriage undercarriage Machinery manufactures Topy Qingdao Since 2014, Topy Undercarriage Topy Since 2014, China has been promoting 2 1 components such as links, bush and pins. Broaching ma Broaching pins. and bush links, as such components and easier justments as a result, achieved defect,0% 60% set- adjustment and up time improvement, and elimination of damage to cutting edge tools. chine is used for machining, but there were problems such as defective position of the nut, damage of cutting edge tools, long set-up and adjustment time. At Qingdao Machinery, Topy employees set thesematters as the theme of their days 100 improvement activity (JK activity) and discussed and came up with solutions; changed the jigs from mono-type divided to grooves. to holes positioning changed and independent type, This made subtle ad JK activities aiming at improving the skill level of workers by such groups Several training. and improvement awareness as Shoe Track Group, Forging Group, Assembly Group and Warehouse Group (women only) have been formed and each group examines issues and in six months, they present the activities their of results shareto their output and workplace enhance to capability. In NorthIn America, China, and Southeast Asia, theTopy GroupIndustries operations the into assimilated are well environments. local here areIntroduced of some the latest and topics news. The Topy Industries Group has expanded its globalThe Topy presence. activities. their of some introduce will we Here, From Topy’s Global Locations Topy’s From Business Development Business 31 31 CSR Activities

Responsible behaviors by each corporate employee based on the Group CSR of the Topy Industries Group Corporate Basic Philosophy and Group Corporate Code of Conduct; this is the basic position of the Topy Industries Group towards CSR. The Topy Industries Group understands the relationship with its stakeholders as shown below and desires to propel CSR activities by deepening two-way understanding through the six loops. Since the enactment of the International Standard ISO 26000 on November 1st, 2010, the recognition that every

Customers organization should fulfill its social responsibility for the Corporate Profile and Governance sustainable development of society is spreading worldwide. CSR activities are one of the most important issues for our organization. The Topy Industries Group believes that in order to respond to the expectations and needs Quality Evaluation from stakeholders including customers and employees of Loop of trust Safety Trust the corporation, CSR should be handled as one corporate strategy. Corporations are indispensable existence for the Tadashi Kojima Information As a Managing Director disclosure corporate development of economy, but at the same time, its activities General Affairs Relation citizen have huge impacts on society and the environment. We must therefore fully recognize that continued CSR activities Shareholders Loop of expectation For the Loop of symbiosis Local are essential. We desire that the Topy Industries Group benefit of and Top customers For the communities continues to be a trusted organization working worldwide sessions. To further strengthen our Group compliance, we Sustainable management benefit investors Sense of with global perspectives and responding to the expectation development responsibilities of society have prepared a Compliance Guide Book and opened an Redistribution fellowship of various stakeholders including customers, consumers, office for consultation about corporate ethics for all Group of profits Trust shareholders, investors, local communities and employ- companies. Business Development Fair For the ees. In other words, CSR means the “activities needed to corporate Group Basic benefit of Recently, many scandals involving large corporations activities Philosophy employees become a trusted company”. Going forward, we will look have been reported. Taking this opportunity as a reminder Human beyond short-term profits and contribute to the creation of a to ourselves, the Topy Industries Group will reinforce the resources Value Innovation of Group Code of Conduct Working development sustainable society through development of business activ- importance of the Group Basic Philosophy and the Code of Trust technology in harmony Safety and ities by combining overall aspects of economy, environment Conduct to fulfill our responsibility to stakeholders. and know-how with the world health Friendliness and society from various angles. We will strive to realize the Group Basic Philosophy by Loop of working with Loop of growth In April 2009, we formulated the Group Basic Philosophy Business together environment Employees addressing issues along with the Group Code of Conduct, partners and Group Code of Conduct as the basis of CSR activities and continue to be a corporate group that is needed by so- Technological Enthusiasm strength and have promoted CSR awareness to be shared by hosting ciety. Environmental Skill Analysis and philosophy improvement measurement

Basic policy Corporate Profile and Governance for environment Reduction Quality of materials Loop of environmental The Topy Industries Group Corporate Basic Philosophy recycling burden 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 Environment 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.

Article 1 (For the benefit of customer) Article 6 (Technology and know-how innovation) Produce and supply, high-quality and safety-oriented merchandise Seek widely for knowledge and information both domestically and and service to gain customers and consumer confidence. internationally, and continue the innovation of technology and know- Article 2 (For the benefit of society) how by refining distinctive technologies and professional compe- A loop of “Expectation” with A loop of “Trust” with A loop of “Symbiosis” with 1. Communicate widely with society as well as shareholders and ac- tence. shareholders and investors customers local communities tively disclose corporate information fairly and appropriately. Co- Article 7 (Fairness in corporate activities) Respond to the expectations that shareholders Deliver customers safe and high quality products, Fulfill responsibility as a member of the local com- operate with local communities and actively work on social contri- Operate business in a fair and transparent manner under free compe- and investors have with regards to Topy Industries establish an environment where customers’ evalu- munity, actively promote communication, and cre- bution activities as being a good corporate citizen. tition and appropriately keep an arm’s length distance from politics through sustainable growth of business and disclo- ations of our products are repeatedly fed back to ate fellowship recognition to ensure co-develop- sure of corporate information with high transparen- the production site, and build a solid trust. ment. 2. Oppose resolutely any anti-social forces and parties posing a men- and administrative agencies. cy and establish a win-win relationship that en- ace to social orders and security. Article 8 (Responsibilities of top management) Additional Data sures mutual benefit. Article 3 (For the benefit of employee) 1. Top management shall make example by leadership and inform the Respect the individual character and personality of employees, and strict adherence to the Code of Conduct and ensure the compli- provide safe-working environments allowing them to work with en- ance of the corporate ethics effectively administrating its manage- thusiasm, and attain fulfilling lives. ment systems. A loop of “Working together” A loop of “Recycling” for the A loop of “Growth” with Article 4 (With the world) 2. If and when any of the Code of Conduct is violated, management with business partners environment employees Pay due respect to different cultures and customs of all countries and shall demonstrate an indomitable determination to personally solve Make use of technologies and values possessed Take positive initiatives in promoting recycling of Provide maximum consideration for the growth regions, and perform business activities to contribute to the develop- the issue by launching an investigation and shall take actions to by both parties through dealings in a fair and equi- precious natural resources pertaining to the and safety of employees working in the Topy Indus- ment and well being of local communities. prevent the recurrence of such incidents. At the same time, top table manner, and establish a relationship of work- self-declaration that Topy Industries is a recycling tries Group and make the most of their skills and ing together across entire value chains by actively corporation, and work to reduce environmental passion. Build a relationship to ensure that both Article 5 (With the environment) management shall make full disclosure within and outside the providing information such as analysis and mea- burden in social lifestyles. employees and the corporation can grow. Realize that a sensible approach to environmental conservation is company promptly and precisely, and, upon determining the suring technologies. essential to the existence and activities of the company, and behave source of competence and responsibility, impose strict disciplinary voluntarily and actively. action against those held responsible.

33 34 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 36 - 3rd Grade 3rd 2016 Elementary School 1st Grade Implementation and veriﬁcation Drafting speciﬁc proposals Drafting 18 months Policy review and resolution Policy review 1 year Environmental implementation Environmental Childcare leave Short working hour system Limit/exempt overtime, exempt night shifts Nursing care leave Childcare Assistance System 2015 Problem analysis Problem Delivery Initiatives on Work-Life Compatibility Initiatives on Work-Life ployees to realize a pleasant workplace environment Improve the assistance system to meet the diversified needs of em Extraction of problems Cross-industry interaction Cross-industry In-house informing action Positive recruitment of women Positive recruitment Kick off Kick off Top down Bottom up Improvement of child Improvement -care assistance system -care 2014 Be proactive in promoting greater participation by women in the workplace by participation by women in the workplace by greater in promoting Be proactive the accomplishment of voluntary action plans working towards Changing the way employees think and workplace environment of corporate culture Further improvement and Their Surroundings Think Early drafting of an implementation plan at each organizational unit to achieve women of pre-management position of 10% by 2020 Drafting and implementation of policy for the development of women to a managerial position Extraction of problems in policy implementation and drafting of improvement plans Extraction of current issues and discussion of solutions based on the gender equal way of working Consideration and proposal of pleasant workplace point of view environment and structure from women’s External interaction and networking among women employees Changing the Way Women Themselves Women Changing the Way To be implemented as a corporate strategy To Project Objectives Project Workplace Diversity Subgroup to Womenin the Womenin Promotion Participation by PromoteGreater Employees Think Changing the Way At Topy Industries, Topy At we have launched a diversity promotion project with members consisting men of and women in Offering Opportunity Promotion of Women’s Participation Workplace the in Women’s of Promotion Environmental Arrangement Reform of Corporate Culture Career Formation Assistance Project activity Project to Sub-group greater promote participation by women in the workplace System and environmental implementation Recruitment activity Action Implementation Structure participation by women in the workplace greater Initiatives to promote managerial positions initiate to the promotion greater of participation women of in the workplace. have also We organized various through action coordinated achieve may we that so women position pre-management of consisting subgroup a channels. communication - 12 10 8 6 4 2 0 （％） 2020 2019 2018 2017 2016 2015 2014 2013 2012 Number Percentage 2011 2010 0 10 20 50 40 30 60 Number Number and Percentage of Pre-Management Women Women of Pre-Management Number and Percentage (FY2010 to FY2020) We have launched have We a project as part a diversity of promotion initiative and are working on creating started have We the approach focusing first, on supportingthe successwomenof workplace.thein We believe that acceptingWe personnel with versatile values and and potentials, drawing out their motiva One of the slogans under the Topy Industries Group Group Industries Topy the under slogans the of One furtherTo accelerate this move, have we launched a Voluntary Action Plan tion the Industries fullest and potential to are continue Group vital to developing for the Topy in the future. workplace environments where diverse human resources are able succeed. to The objectives a corporate create are culture to where employees can succeed irrespective to gender, of facilitate awareness change employees, of implement and to assist compatibility to systems work-life etc. This will result in the development human Industries of resources Group. for thefuture the Topy of Corporate Code of Conduct is “Respect the individual individual the “Respect is Conduct of Code Corporate we such, With employees”. personality of and character of promotion the toward initiatives on embarked have successwomen’s in the workplace as one the of actions proportion the in resulted has This diversity. promote to during double to positions pre-management in women of Industries. at Topy 2014 to the period from 2011 extracting on work will and project promotion diversity additional issues as well as measures be to taken, and on support measures to and systems enhancing in-house career forming In order the by end promote to FY2015. of womenmanagerial to positions, we willrecruit and train women in pre-management positions and assist women in leadership roles. Our the of aim is 10% that 2020, by positions. pre-management in women are employees Toward a Promising Future a Promising Toward Industries greater promote Group to initiatives Topy participation in the workplace women by − CSR Highlights − Close-up − Highlights − CSR 35 − CSR Highlights − Close-up

Environmental Topics Energy Saving Initiatives 2020 : “Enekatsu 2020”

Deployment 2 Promotion of investment for energy saving Energy saving activity with employee involvement to (FY2013 to FY2020)

contribute in reducing energy consumption and In addition to mentality actions aiming at developing the awareness of energy savings through conservation of the Earth’s environment united efforts across the company, we will make solid physical investments to build efficient

measures and facilities to curb increase in energy costs. In the past, investment on energy saving Corporate Profile and Governance has not necessarily been given high priority compared to other rationalization investment Deployment 1 Promotion of a company-wide energy index programs. However, now we are fully aware of the necessity of treating investments related to reduction campaign (FY2013 to FY2016) energy saving among our top priority issues.

tricity loss occurred Attain solid achievements at each factory! Kanagawa Factory Wins Award for FY2014 “Visualization of Electricity” at Kanagawa Quantitative Grasp of Electricity Loss (Fig. 2) and at the same ％ Factory, Undercarriage Components Division 100 2 1 Topy Energy Saving Award In FY2014, Kyushu Wheel Kogyo, Ltd., Topy Fasten- time, the reduction 2 ers, Ltd., Hokuetsu Metal Co., Ltd., Akemi Recycling 80 We have implemented an “Energy Saving Competi- In response to surging electricity costs and as one part of target became very 3 Center, Ltd. in addition to the four factories at Topy In- 5 tion among Factories” aiming to achieve solid results “Enekatsu 2020”, Kanagawa Factory promoted the visualization of clear. 10 dustries participated in the energy savings competition. 60 against the energy reduction target stipulated in the 20 Kanagawa Factory won first place in two consecutive Electricity before any of the other office or factory. Fig.1 shows a *The arrow in Fig.2 shows 98 Law Concerning the Rational Use of Energy (1% reduc- the reduction target after 40 years. road map of electricity consumption showing targeted milestones. visualization efforts. 40 tion over the previous FY). The annual reduction per- st 1 Kanagawa Factory, Topy Visualization has become an indispensable tool to manage electricity 20 centage of specific energy consumption at each facto- Industries, Ltd. consumption for the factory. ry is compared and the award along with prize money 0 (Reduction percentage 25.8%) Before Visualization After Visualization nd is given to the factory that achieves the greatest aver- 2 Akemi Recycling Center Road map of “Visualization of Electricity” Fig. 1 Effort (2-1) Efforts (2-2)

age reduction percentage during the aggregate activity (Reduction percentage 7.4 %) Business Development period. We are targeting to improve awareness toward a “Reduction of 1% over the previous year.” % Connection with Productivity 100 Production innovation 90 Ultimate target With visualization, we can now see when and how much electrici- 80 Visualization of electricity 70 Optimization ty is being used at each machine. (the right bar in Fig.2) plus production 60 of energy In addition to reduction in electricity usage, it is now possible for Address power savings by work unit! The Administration Office of Toyokawa 50 Visualization 40 Energy saving us to suppress peak consumption and cut cost by concluding elec- Factory wins award for FY2014 with employee 2 30 Topy Power Saving Award of electricity participation tricity contract at lower cost levels. 20 Supplier + energy A “Power Saving Competition by Work Unit” has been In FY2014 a total of 53 units including group compa- 10 Energy saving meeting saving implemented for non-production work units such as our nies participated in the competition. The Administrative 0 head office, branch offices, and the administrative de- Office of Toyokawa Factory won the award with an Future Developments partments of production sites. The annual reduction per- overwhelming reduction percentage. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 In the administrative unit, Osaka Branch Office fin- centage in electricity consumption amount at each work •Leveling off of electricity consumption Moderation of electricity ished 2nd with a reduction percentage of 18.5%, and Corporate Profile and Governance unit (work unit is the smallest unit by which power con- the Administration Department of Toyohashi Factory Determining Reduction Targets contract Reduction in electricity cost sumption amount is measurable) are compared and the finished 3rd with a reduction percentage of 17.7% and •Optimization of energy consumption (electricity and fuel oil) and op- award along with prize money is given to the work unit both received an award. Until now, it had been difficult to know the exact amount of elec- timization of production equipment with the greatest reduction. We aim to improve the aware- Overall standings (Administrative units and Factory *Improvement is not limited to the above mentioned but includes ness about energy saving among all our employees. unit) tricity needed for each machine to operate (the left bar in Fig.2), and 1st The Administrative Office of Toyokawa Factory only approximate numbers such as “XX% reduction target”. However, drastic review (production reform) of the whole processes that con- (Reduction percentage 61.3%) now, as shown in Fig.2, with visualization we were able to see the sume a lot of energy. 2nd The Deformed Bar Rolling Mill of Toyohashi Factory amount of minimum electricity needed for each machine to operate. •The knowhow we obtained by visualization will be expanded to other (Reduction percentage 27.8%) By accumulating such data, we were able to understand where elec- workplaces throughout the Topy Industries Group.

Special award for excellent improvements in energy saving Out of the all proposals the Deformed What is Visualization? 3 Topy Energy Saving Improvement Award Bar Production Mill of Toyohashi Factory was selected as the best improvement In the past, operators walked to the meter attached to each machine to check the amount of electricity in use. Vi- The “Special Award for Energy Saving Improve- for this FY2014. ment Proposal” is offered to recognize proposals sualization has made it possible to know the amount of electricity used at any particular moment in the workplace and within on-going improvement proposals which have 1. The Deformed Bar Production Mill of Toyohashi Factory we can display the total amount of electricity and percentage on the PC monitor. achieved successful results in terms of improved Improvement Theme: Reduction of electricity con- energy saving. The award along with prize money is sumption during non-operating hours by shutting down ■Image of Equipment Connection for Visualization ■PC screen (Electricity amount of each equipment) Additional Data given to the strongest proposal in relation to energy the compressor saving based on the reduction percentage of ener- Operator assigned PC Other PC gy saving and its sustainability. We aim to vitalize energy saving efforts at each workplace. In-house LAN

RS-485 RS-485

We will move onto the next stage (FY2017 to FY2020) challenging higher Electricity meter Electricity meter H-4 Logging (one unit attached Logging (one unit attached M-12 4 device device Compressor levels set based on the outcome from the first period(FY2013 to FY2016) to each equipment) to each equipment) DIQ-12 T/A-1 Block 1 Block 2 M-11 Compressor accessary T/A-3 NC-2 T-4

37 38 CSR Activities Environmental Activities

Environmental Management [Topy Industries, Ltd.] Recycling [Topy Industries, Ltd.] Corporate Profile and Governance Environmental Philosophy Topy is a corporation that recycles We believe it is our duty to preserve a rich and beautiful world for future generations to enjoy. In Topy Industries, Ltd. manufactures steel products us- pany assigned to carry out a vital role in the production partnership and solidarity with local communities we will work to promote continuous improvement in ing scrap iron generated over the course of consumption activities within the recycling system of society. Further- everything we make, from materials to finished products, to lay the foundation for sustainable devel- and production activities within society. more, we have implemented an original recycling system opment in our society. In this business model, we see ourselves as a com- within our production flow for the reuse of resources. Environment conservation initiatives Basic Environmental Policies Collected by the promotion structure [Topy Industries, Ltd.] Topy Industries Group Market As part of its duty as a corporate citizen, Topy ranks • Tojitu Co., Ltd. • NE-Tojitsu, Ltd. Consumption activities continuous improvement under the ISO 14001 environ- President • Akemi Recycling Center, Ltd. Production activities mental management system among its top management priorities. Therefore, Topy has established and implemented the following policies: ) p P 1. Complying with the Law a r r Executive Management o

c Directors Business Development Topy will comply with all environmental regulations, protocols, d Meeting s

( u

and agreements in its manufacturing activities. c

e Recycling System

t t s

2. Reducing Environmental Footprint s

a In order to bolster environmental management, Topy will un- W within Society dertake cost-conscious efforts to reduce its environmental Central Environment footprint by saving energy, lowering greenhouse gas emis- Committee sions, using fewer resources, and recycling. Director in Charge of Environment 3. Developing Environmentally Conscious Products General Managers of Factories Personnel Dept. Manager Steel materials born from recycling are Topy will develop products that are environmentally conscious Representative of Labor Union processed and turned into various at every stage in their life cycle, from design and production to wheels and undercarriage components use and disposal. Environment Steel Division Steel Division, Wheel Division, Ofﬁce Undercarriage Components Division 4. Raising Environmental Awareness and Finding Recycles and reuses scrap Technical iron to produce steel Harmony with Local Communities Administration Dept. Topy will promote understanding of its environmental policy Corporate Profile and Governance and raise awareness of environmental conservation through environmental training and enrichment for its employees. Fur- thermore, Topy will strive to create harmony between the company and local communities. Reuse of material In-house recycling system Environment Factory Environment 5. Conserving the Environment in Overseas Business Sub-Committee Committee Activities At Topy’s Toyohashi Factory, we produce various steel Use as material Environment staff of each factory Shapes Topy will remain mindful of its impact on local environments sections from molten steel made in an electric furnace. and implement measures in accordance with the needs of local We have two sources of scrap iron, the major material for our steelmaking process; scrap gathered in-house and communities. Components of Melting/Rolling scrap procured from outside. A substantial quantity of Steel wheels construction equipment steel sections produced by the Steel Division is shipped to Electric the Wheel Division and the Undercarriage Components furnace ISO 14001 certification status Division to be used as raw materials in the production of Undercarriage Wheel Div. Science Div. Steel Div. various wheels and undercarriage components. Components Div. Since the Wheel Division (Toyokawa Factory) launched ISO 14001 Certification Status [Topy Industries, Ltd.] a certification acquisition program to promote environ- ISO 14001 Transition to Factory ment conservation activities in February 1998, all Topy certification obtained 2004 version Waste manufacturing sites have undertaken an ISO 14001 certi- Completed in Toyohashi Factory Apr. 1999 Additional Data fication acquisition program, which was completed in Feb. 2006 Recycling Completed in June 1999. Toyokawa Factory Nov. 1998 Oct. 2005 Maintenance of our environmental management sys- Slag Waste paper Steel Completed in Ayase Factory Nov. 1998 tem has been confirmed by regular audits after this initial Nov. 2005 certification. We are carrying out environment-friendly Completed in Kanagawa Factory Jun. 1999 production activities by promoting scheduled and sys- Jun. 2005 Civil Recycled Scrap iron in the market tematic environmental initiatives in line with our Basic En- construction paper vironmental Policies.

39 40 CSR Activities Environmental Activities

Initiatives on Waste Reduction [Topy Industries, Ltd.] Hazardous Materials Elusion and Inclusion Test (Analysis example) Elusion Test (mg/L) Inclusion Test (mg/kg) Item Obtained revised JIS Certification for Analysis value Spec. value Analysis value Spec. value Corporate Profile and Governance Waste reduction and recycling Oxidized Slag Cadmium < 0.001 ≤0.01 <5.0 ≤150 A part of the metal scrap (steel) generated during Toyohashi Factory has established a system in which Lead <0.005 ≤0.01 6.0 ≤250 production activities is reused directly in-house as a raw oxidized slag generated within the electric furnace during Hexavalent Chromium <0.01 ≤0.05 <2.0 ≤15 material in electric furnaces. As for other waste, we are the refining process and reduced slag discharged from Arsenic <0.005 ≤0.01 <0.5 ≤150 engaged in reducing ultimate disposal amount of waste the ladle after continuous casting subsequent to the through re-resourcing (e.g. collection of scrap iron, col- refinery process are completely separated, treated, pro- Total mercury <0.0005 ≤0.0005 <0.05 ≤150 lection of zinc out of melting dust). Oxidized slag generat- cessed and recycled by installation of a slag cooling facil- Selenium <0.002 ≤0.01 <0.5 ≤150 ed from steelmaking is recycled at a rate as high as 90% ity and crushing facility. In April 2013, the factory obtained Fluorine 0.05 ≤0.8 160.0 ≤4,000 or more and is reused for civil construction material and JIS A 5011-4: A slag aggregate for concrete category concrete material. No.4 : electric furnace slag aggregate. In addition, the Boron 0.19 ≤1.0 150.0 ≤4,000 The amount of discharged industrial waste remained factory acquired in December 2013, another certificate almost flat since FY2010 but decrease 5.5% year-on-year for Revised JIS A 5011-4 and started to produce and sell AIKURU Certificate in FY2014. Meanwhile, the ultimate amount of disposed electric furnace oxidized slag aggregate for concrete. industrial waste marked 422 tons, an increase of 14.7% Oxidized slag aggregate is heavier in specific gravity New Slag Treatment Flow from the previous term in spite of our efforts on 3Rs (Re- than natural materials such as sand and gravel that have duce, Reuse, Recycle). This attributes to the decrease in been used as concrete aggregate materials and so we Business Development the reuse of refractory materials at the old steelmaking expect slag to be used for heavy concrete aggregate New slag treatment for JIS certiﬁcation plant in connection with transformation to the new steel- such as wave dissipation blocks. The sales expansion making plant. of oxidized slag aggregate for concrete has a favorable We will continue to promote recycling and reduce the effect as it reduces the extraction of natural aggregate New indoor treatment shop ultimate disposal amount through the expansion and im- materials and thus its impact to natural environments and No risk of contamination by reduced slag provement of 3R activities. also curbs energy consumption. We will exert our continued efforts to reduce environmental load through review Slag discharge from electric furnace Transition of Discharged and Ultimate Amount of of our business activities. Industrial Waste Disposal

Discharged amount Electric Furnace Slag for Recycled Road-bed Material ② First storage (ton/month) Disposed amount ④ ⑤ ⑥

15,648 ③ Corporate Profile and Governance 16,000 ECO Stone obtains “AIKURU” certificate 15,088 15,463 15,276 ① 14,429 14,000 The electric furnace slag for recycled roadbed materi- Concrete Slag pan New crushing plant aggregate TM als (Product Name: ECO Stone ) is a recycled roadbed (JIS-certiﬁed 12,000 material made by crushing, sheaving and mixing oxi- product) dized slag and reduced slag. The ECO Stone obtained 10,000 ① Discharge into the slag pan ② Cooling ③ Slanting and delivery a license on August 31, 2014 under the Aichi Prefecture 8,000 Recycle Materials Evaluation System (Pet name: AIKU- ④ Input of raw stone ⑤ Crushing (automated operation) ⑥ Shipment

6,000 RU), which started in 2002. The license certifies that the materials meet quality, performance and environmental 4,000 safety requirements, and that it can be used for public

2,000 works. Certificate Number 2)-201. 388 385 416 368 422 ECO Stone meets the environmental criteria by a great 0 Conventional treatment FY2010 FY2011 FY2012 FY2013 FY2014 margin in terms of elusion and inclusion of hazardous materials.

Recycling of cutting oil by Outdoor slag treatment ground clarification treatment Risk of contamination as reduced Additional Data Various cutting oils are being used in the production slag is treated on the same premises processes of our operations, and these also constitute Reduced slag treatment ground one of our major environmental issues. At Ayase Factory, Hauling First storage we apply clarification treatment to the used cutting oil by slag car and bring it back for reuse. We will eventually implement this at all other factories. Oxidized slag Existing crushing plant Road sub-grade treatment ground aggregate

41 42 CSR Activities Environmental Activities

Initiatives on the Prevention of Global Warming [Topy Industries, Ltd.] Chemical Substance Management [Topy Industries, Ltd.]

Pilot solar power generation facility Emission management of Corporate Profile and Governance Reduction of CO2 emissions at Toyohashi Factory materials under the PRTR law At each factory of Topy Industries, Ltd. improvement The company is propelling “Energy Saving Action In accordance with the PRTR Law (the Pollutant Re- Transition of PRTR Applicable Total Emission activities are in place according to the production facilities 2020” as one of the objectives of “Preservation of Global lease and Transfer Register Act (the Act on Confirmation Amount and Transfer Amount [Topy Industries, Ltd.] involved toward achieving targets based on Keidanren's Environment by Energy Saving.” As part of “Promotion of etc. of Release Amounts of Specific Chemical Substances Total Toyohashi Factory Toyokawa Factory (Japan Business Federation) "Voluntary Action Plan on the Energy Saving Investment,” the mainstay of such action in the Environment and Promotion of Improvements to the (ton) Kanagawa Factory Ayase Factory Environment." In FY2014, the total amount of CO2 emis- plan, we installed a pilot solar power system facility at Management Thereof), business entities that handle chem- 1,200 sions from energy use at Topy's facilities was 469 thou- Toyohashi Factory and assessment has started from ical substances are obliged to manage and report to ad- 1,041 1,056 sand tons, maintaining the target level below that of March 2014. The facility has a total solar panel space of ministrative offices the amount of environmental emission 1,000 FY1990. However, the CO2 emissions has continued to be 270 m2 with an estimated generation power of some and transfer of chemical substances that are hazardous to

flat since FY2010 due to the increase in production along 46,000 kWh per year. For testing purpose three different humans and ecosystems at each of their business sites. 800 with the recent upturn trend of the global economy. panels (single-crystal panel, multi-crystal panel and CIS Based on this system, we submit annual reports to the 650 644 As we anticipate an increase in the amount of energy panel) were installed at the same time to compare gener- respective administration bodies, and at the same time, 600 589 use in the future as production volume recovers, we will ation power and characteristics. For another experimental use this process to implement continuous management of

pursue stringent control and improvements in order to purpose beside the solar facility, we laid oxidized slag ag- chemical substances. 400 continue to restrict the amount of energy usage. gregates produced in-house on the ground of the pilot The amount of chemical substance emission depends Business Development The amount of CO2 at our facilities is reported to the facility to check the effectiveness of oxidized slag aggre- significantly on the production volume just as the amount 200 government authorities according to the revised Energy gates as a suppressor against weeds including its effects of CO2 emission and discharge of industrial wastes do Saving Regulation enacted in FY2009. The report in- to the pilot equipment and power generation itself. We are likewise. Both total emission and transfer amounts of sub- 0 cludes Topy’s offices, which would usually be excluded undertaking these attempts as part of our contributions to stances subject to PRTR (Pollutant Release and Transfer FY2009 FY2010 FY2011 FY2012 FY2013 from designated energy control factories. As for Toyo- the global environmental conservation activities. Register) declined due to the global economic slump trig- (The results for FY2014 will be posted in Topy Report 2016.) hashi Factory and Toyokawa Factory in Aichi Prefecture, gered by the economic crisis in 2009 but turned to an in- we have submitted a Global Warming Prevention Mea- crease as business activities started to pick up. However, sures Plan according to the Aichi Prefecture Ordinance for with the reduction of VOC (Volatile Organic Compound), Global Warming Prevention Measures Plan System. such amounts in FY2012 dropped to FY2009 levels. The amounts for FY2013 decreased about 7% on a year-on- Energy Source Based CO2 Emission Amount year comparison with FY2012 due to further improvement efforts.

(thousand ton-CO2) Corporate Profile and Governance 500 479 473 469 462 457

400 Initiatives on air pollution prevention

With the revision of the Air Pollution Control Law in May VOC Total Emission Amount and Transfer Amount 300 2004, it became necessary to respond to regulations on [Topy Industries, Ltd.] emission of VOC, and a reduction of 30% compared to Pilot solar power generation facility at Toyohashi Factory FY2000 on a year-on-year basis was presented as the do- Total Toyohashi Factory Toyokawa Factory 200 (ton) Kanagawa Factory Ayase Factory mestic reduction target by the end of FY2010. 500 As a proactive approach for the prevention of air pollu- 451.3 Emission amount Biodiversity Conservation 387.4 100 tion, Topy Industries is conducting voluntary measurement 400 353.5 [Topy Industries, Ltd.] of VOC concentration from the facilities generating VOC at our four major factories as well as reviewing action items re- 300 0 FY2010 FY2011 FY2012 FY2013 FY2014 lated to production technologies for the reduction of emis- 200 192.4 Initiatives on Biodiversity sion. 156.4 In FY2012, VOC emission dropped to half compared to 100 The business and manufacturing operations of Topy the previous year due to reduction at Toyohashi (due to de- Industries does not involve activities such as deforestation creased use of paint in the bridge business after announce- 0 FY2009 FY2010 FY2011 FY2012 FY2013 Additional Data and other activities that may disrupt the ecosystem. We ment of business withdrawal) and Ayase Factory (emission share the recognition that conservation of biodiversity and gas treatment facilities commissioned). FY2013 posted fur- (The results for FY2014 will be posted in Topy Report 2016.) prevention of global warming are essential for a sustain- ther reduction of 20% due to paint gas emission facilities able society. As one part of biodiversity conservation and and decreased use of paint and thinner. preservation of forest resources in developing countries, we encourage the use of paper made from domestic materials and recycled paper. To preserve water resources we are working on the reduction of water consumption by circulating and reusing cooling water at our factories.

43 44 CSR Activities Environmental Activities

Development of Environmentally Friendly Products [Topy Industries, Ltd.] Basic Environment Policy of Each Factory [Topy Industries, Ltd.]

Hot-rolled high-strength rim material New lightweight wheels Corporate Profile and Governance Wheels assuring vehicle weight reduction and collision safety Contribution to fuel efficiency by roughly 15% wheel weightreduction Toyohashi Factory Ayase Factory Automobile manufacturers are increasing their use of Topy has developed ISO-compliant wheels that are Basic Environment Policy Environment basic policy high-strength steel that enables chassis weight reduction about 15% lighter compared to the corresponding con- Toyohashi Factory engages in recycling activity of metal 1. Comply with applicable legal and related requirements in order to build a symbiotic relationship with the local commu- while maintaining equal strength to conventional steel as ventional wheels by combining a corrugated rim that uses and non-metal production using metal scrap and related natural resources. On the other hand, we are aware that our busi- nity. this allows the achievement of both reductions in fuel con- Topy’s inherent weight reduction technology with an ness uses large amounts of energy and is accompanied with 2. Reduce greenhouse gases (CO2) to prevent global warming. sumption due to lighter body weight and improvement in ECOD-processed disc. The corrugated rims are pro- environmental burden. We will continue to work on the con- 3. Work toward building eco-friendly manufacturing processes collision safety. Topy has been working on the use of high- duced from rim sections with uneven thickness in a corru- servation of both the local and global environment. throughout the entire business activities from design, to strength hot-rolled special sections for truck and bus gated shape on their tire-mounting side, allowing the sec- Action guidelines sales, purchasing, production and transportation and main- 1. Continuous improvement of environmental management tain, and improve the health of the environment by saving wheel applications. A challenging issue for raw material tions to achieve an optimal thickness distribution when energy, saving resource, and reduction of waste and chem- system to raise overall environmental performance. was how uniform strength could be attained. We have suc- roll-formed. The rim material is produced by the Steel Di- ical substances (environment impacting substances). 2. Work to establish a harmonious relation with the local com- 4. Work toward accomplishing environmental improvement ceeded in commercial production thanks to our inherent vision and shipped to the Wheel Division to undergo pro- munity by participating in a variety of environmental activi- activities by setting up environmental objectives and tar- hot-rolling technologies for controlling material thickness cess forming into rims, capitalizing on the advantages of ties such as local environmental conservation activities and gets, and at the same time, implement regular reviews for and temperature. our integrated production system that enables us to com- communication promotion with local communities, contrib- continuous improvement of environmental management. uting to the maintenance and continuation of the natural 5. Provide education to understand approaches and roles re- bine our unique hot-rolling steelmaking technologies with environment surrounding Mikawa Bay where Toyohashi garding the environment to all employees and sub-contrac- superior analysis and design wheelmaking technologies. Factory is located.

tors working at the factory so that each and every employee Business Development The ECOD discs are formed through cold spinning (rock- 3. Work toward reducing waste through activities such as can recognize their duties to the environment and thus, ac- ing die forming) of a tube made of steel plate, enabling reining in waste generation, utilization of resources, and ex- complish the targets without failure. thinner and lighter discs without compromising the re- panding recycling. 6. Exercise thorough routine management and remove signifi- 4. Work toward decreasing environmental impact through im- quired strength. cant waste and inconsistencies to improve quality and pro- provement in processes and facilities, designing and devel- ductivity, and realize environmental improvement directly opment of eco-friendly products. connected to production activities. 5. Comply with applicable laws and regulations related to activities, products and services at Toyohashi Factory and the voluntary regulations of the Japan Iron and Steel Federation etc. or other requirements such as agreements with local Kanagawa Factory communities. 6. Set up environmental objectives and targets at all depart- Environment basic policy ments in the management system of Toyohashi Factory and 1. Comply with applicable laws and regulations as well as in- promote environmental improvement activities. Regularly dustry specific requirements and at the same time, make review and make necessary revisions to environmental ob- continuous efforts to improve environmental management by maintaining voluntary standards and job procedures ac- Non-chrome pre-treatment of jectives and targets. Corporate Profile and Governance cording to the basic environmental policy of Topy Industries. aluminum wheel painting 7. Enhance employee understanding and awareness at Toyo- hashi Factory on the environment through environmental 2. Prevent environmental pollution by chemical substances An industry first for chromium-free processing such as organic solvent. Apply effective management fo- ® education, in-house publicity activities and exchange with Ultra-large diameter wheel SGOR for local communities. Make this environment policy public cusing on thinners, soluble paint and solvent. Surface treatment of aluminum alloy wheels has long mining dump trucks within and outside the company. 3. Work toward reducing electric power and oil consumption been developed with a focus on long-term corrosion re- by focusing on the reduction of energy for drive lines, air The world’s largest wheel contributing to efficient mining conditioning and lighting. sistance and anti-discoloring, and treatment with chromi- operations and hauling 4. Promote reduction of discharges for effective utilization of um was thought to be vital for anti-corrosion properties. Toyokawa Factory resources and resource recovery, by focusing on reduction However, in view of European environmental regulations, SGOR® (Super Giant Off-the-road Rim) wheels are ul- of papers, discarded packaging materials and resource re- Japanese automobile manufacturers have turned their at- tra-large diameter wheels that Topy has developed for Environment basic policy covery. 1. Compliance with applicable legal and related requirements tention to surface treatments that avoid the use of heavy dump trucks used at large-scale mining sites across the 5. Promote communication by participating in local environ- Strictly comply with applicable legal and related require- mental conservation activities to build a symbiotic relation- metals such as chromium. Topy has spent substantial world. Currently, the largest wheels available have dimen- ments associated with the environment and promote build- ship with the local community. time on the study and technological development of alter- sions of 63 inches (about 1.6 m) in inner diameter, 44 inch- ing a symbiotic relationship with the local community. 6. As for overseas business activities and exports, make ef- native materials to replace chromium, and has succeeded es (about 1.1 m) in width and weigh as much as 2.83 tons 2. Reduction of environmental impact forts to implement measures responding to requests from in a chromium-free process for the first time in the indus- each, being about Promote energy saving, resource saving, reduction of the local community of the host country and take into account local environmental impact. try. five times the diame- waste and chemical substances throughout corporate activities including design, sales, purchasing and transporta- 7. In the case that any environmental issues arise from busi- ter of ordinary pas- tion and implement continuous improvement to maintain ness activities, take appropriate measures to minimize such senger car wheels. and enhance eco-friendly manufacturing. In addition, pro- environmental impact. In addition, exercise regular emer- SGOR® wheels can mote activities to reduce the emission of greenhouse gases gency drill in anticipation of environmental issues. and measures against global warming. Additional Data meet the demanding 3. Supplying eco-friendly products requirements of min- Be considerate of the environment from the product design ing applications in stage and reduce use of hazardous substances to supply terms of functionality eco-friendly products. and hauling capaci- 4. Increase environmental awareness ty, contributing to Provide education on basic approaches and roles regard- the reduction of ening the environment to all employees of Toyokawa Factory and increase environmental awareness. vironmental burden.

45 46 CSR Activities Social Responsibility

Relationship with Customers [Topy Industries, Ltd.] − Customer Satisfaction and Quality Management − Involvement with Shareholders and Stakeholders Corporate Profile and Governance Adequate information disclosure Quality Assurance Philosophy Topy Industries is devoted to placing customers as our first priority and strives to contribute to society by delivering safe and high Article 2 (For the benefit of society) of the Topy Indus- quality products and services that always satisfy customers, while continuously improving the effectiveness of our QMS (Quality tries Group Code of Conduct stipulates that the Topy Management System). Industries Group will “Communicate widely with society Always anticipate the expectations and needs of customers ahead of time, react to their requirements promptly and precisely, and continue to introduce and deliver quality products and services that satisfy customers as well as shareholders and actively disclose corporate Focus on building quality in design and development stages, stabilize product quality and improve reliability information fairly and appropriately. Cooperate with local communities and actively work on social contribution March 2015, explanation session Realize the importance of education and training and enhance the quality awareness of all employees of our organization for financial results Notice that quality defects are caused by multiple factors, promptly investigate the true cause of the problem to make substan- activities as being a good corporate citizen.” From the tial improvement standpoint of securing management transparency we Participants of FY2014 Explanation Session are endeavoring to disclose corporate information in a Date Held Content Participants fair and equitable manner in accordance with the related nd laws and regulations such as the Financial Instruments Nov. 19, 2014 2 quarter financial results 30 and Exchange Act. May 21, 2015 12-month financial results 35 Quality Management Structure FY2014-15 Quality Assurance Policy Formulate president's quality policy President Minimum quality review once/year “Incorporate quality into the production process and

Initiatives to vitalize general meet- Shareholder special benefit plan Business Development President Review factory quality Verify the development status accomplish the complete prevention of defective Issue instructions responding to of president's quality policy product shipment.” ings of shareholders [Topy Industries, Ltd.] [Topy Industries, Ltd.] critical quality problems with production site —Strengthen “quality power” to outrun global competition— We are taking the following initiatives to vitalize gener- For our shareholders registered as of the end of March Central quality committee Two times/year al meetings of shareholders as a place of communication and September of each year a traffic accident insurance • Report and follow up quality policy between the company, shareholders, and investors to policy and/or a flower gift are provided depending on Formulate division quality policy Technical Administration Department development status and quality cost Division Conduct division quality audit ensure that voting rights can be exercised with ease. the number of shares owned. Shareholders eligible for a transition (Regular meeting) • Central quality committee office • Conduct audit to verify the effect of head personnel Conduct Group company quality audit • Office for president's quality review 1) Enrichment and early dispatch of notice to convene flower gift have an option to choose a donation to a social measures taken against critical quality with supreme issues by the chairman and vice responsibility Work as a member of central quality committee • Office for quality divisional managers meeting general meeting of shareholders welfare organization instead of a flower gift, which will for quality • Support reporting on critical quality issues to the chairman of the committee Judge the necessity to report quality 2) Use of the Internet for notices to convene general directly be donated by the company on behalf of share- (Extraordinary meeting) president and the risk management committee issues to the president at headquarters • Participate as auditing member to division Committee members: chairman, meetings of shareholders holders. Managing rank quality audit and Group company quality audit vice chairman and other members (Responsibility and authority) 3) Exercise of voting rights via the Internet Mechanism 4) Preparation of notice to convene general meetings of (Committee, motivation enhancement etc.) Stable dividends Formulate president's shareholders in English (summary) Factory Formulate quality policy for factory Group [Topy Industries, Ltd.] Corporate Profile and Governance Approximately quality policy Quality managers meeting general company In four times/year manager Management in QMS president Management in QMS accordance Enhance system and activate information exchange with current In order to earn the trust of our shareholders and ISO 9001 • Quality assurance of each division Implement PDCA based on ISO 9001 Implement PDCA based on ISO 9001 investors, we believe it is important to continue making • Technical coordination department Quality Management System Quality Management System stable dividends besides redistribution of profits by taking into account overall factors including business development, and strengthening corporate financial structure.

Notice of convocation in English Our basic policy regarding profit distribution is to ■Topy Industries, Ltd. Communication Tool Chronology (summary) return profits to shareholders in proportion to the consolidated business results while building up retained 1960 1970 1980 1990 2000 2010 earnings for future business development and strength- 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 120th Ordinary General Meeting of ening our corporate structure. Retained earnings will be Corporate Introduction Shareholders allocated to investment into new business undertakings Topy Industries In-house news letter News In-house news letter and the development of new technologies/products Corporate History Four Company 50 70 Merger for long-term business development, and thus we are Annual Report Annual Report Explanation session for financial Printed Material committed to strengthening our corporate structure and results [Topy Industries, Ltd.] Topy Report global competitiveness. The profit return index based Web Site Bridge Div. Topy Industries We believe that the opportunity for our top executives on consolidated business results is targeted at a payout Annual Report to directly explain our management plan and financial ratio of about 25%. However, decisions are made with Additional Data Environment Report results helps us earn the trust of our investors. Such ses- careful consideration for stable and continued dividends. Topy Report sions are held after financial results are disclosed at the Dividends are, in principle, paid out twice per year— Electronic Medium Videos end of the second quarter and at the end of the fiscal year an interim and a year-end dividend. Regarding the body for analysts and institutional investors. The president him- responsible for deciding dividends, it is stipulated in To- self presents our financial results as well as our medium to py’s articles of incorporation that “dividends of surplus long-term consolidated management plans. This manage- can be decided by the resolution of the Board of Direc- ment plan session can be watched via streaming from our tors Meeting in accordance with section 1 of article 459 website for shareholders/investors, “IR library.” of Companies Act.”

47 48 CSR Activities Social Responsibility

Relationship with Local Communities − Contributions to Society −

Visitation of Junior High School Stu- Cleaning of areas neighboring factory Music club awarded for voluntary Corporate Profile and Governance Evacuation drill at Head Office dents from Anjyo City, Aichi Prefecture [Topy Industries, Ltd.] activity at Topy Industries Head Office At Toyohashi Factory, a cleaning activity of neighboring The music club of the Toyohashi Factory received an An evacuation drill was conducted on October 9th, As part of a social contribution activity, and with the areas has been organized several times a year as part of award from the Mayor of Toyohashi City in April 2014 at 2014 at the office building of Art Village Osaki Central belief of for the need of education of the next generation, environmental conservation activities. the “Appreciation Party” hosted by Toyohashi Goodwill Tower where Topy Industries has its head office. Topy Industries accepts junior high school student visi- In FY2014 a cleanings event was conducted on June Bank at Toyohashi Multi-purpose Gymnasium. The award, Every tenant including Topy’s employees evacuated tations at our head office. On June 2nd, seven students 4th. The 60 participants cleaned for about one hour, col- the 2nd consecutive in two years, was to appreciate their following the emergency evacuation drill plan. Two emer- from Higashiyama Junior High School (Anjyo City, Aichi lecting a large quantity of driftwood, plastic bottles and regular voluntary activities. gency stairs were used to Prefecture) visited the head office of Topy Industries. The other objects. The music club’s main activity includes participation in shorten the evacuation time purpose was for them to have hands-on business relat- the “Charity Artist Festival”, the “Goodwill Festival” held in and the drill was completed ed experience, which it not possible at school or in their Toyohashi city and visits to various welfare facilities. On without any particular trou- local community. The office visit was part of their school their consolation visits to those facilities they include small bles. trip to Tokyo. magic tricks besides their regular program of playing mu- The office visit started with the students making their sic in hopes that the people there will enjoy something original business cards. The students wrote their extra different. Evacuation drill curriculum club activities or their future dream jobs on Seashore cleaning their name cards, and practiced customary name card Business Development exchanges for the first time in their lives. Next, they lis- Toyohashi team wins indoor fire hydrant Earthquake Disaster Drill tened attentively to our presentation on Topy’s business competition [Topy Industries, Ltd.] structure of “Integrated manufacturing from steel raw ma- A joint earthquake disaster drill was conducted on No- terials to the finished products”, followed by a virtual plant The in-house fire-fighting team of Toyohashi Factory vember 20th, 2014 at Toyohashi Factory. The drill as- tour of each division so that they could see our operators participated in the 48th Toyohashi City In-House Fire-fight- sumed a large Nankai Trough Earthquake of seismic in- at work and how our products are being produced at ers Liaison Council Hose Watering Contest on November tensity 6+ to 7 followed by a huge tsunami. each factory. In addition, they learned our improvement 1st, 2014 and won first place in the “In-door Fire Hydrant” In the drill, participants confirmed the evacuation route efforts for reducing electricity costs and CO2 emission category and the 3rd place in the “Small Power Pump” Members of Topy’s Music Club to shelters at high elevation in preparation of tsunami by introduction of the new largest, environmental friendly category. waves. The undercarriage plant also took the time to and highly efficient electric arc furnace in Japan. They lis- Each team consists of 5 members including a leader practice using the outdoor fire hydrant. tened carefully to the explanation from the General Affairs and they compete on the time and efficiency in shooting Co-sponsor to “HINO TEAM SUGA- Department staff. We hope what they have experienced down the target with water WARA” in Dakar Off-road Rally 2015 Corporate Profile and Governance here becomes useful in some way during their future through the hydrant under school life as well as in the selection of their course of life the instruction of the leader. Topy Industries co-sponsored “HINO TEAM SUGA- after graduation. Topy teams performed well WARA” which participated in the 15-day long Dakar Off- despite the heavy rain. road Rally from January 3rd to January 17th, 2015. The Dakar Rally had been held in Europe/Africa since its first meet but the venue has been moved to South Outdoor fire hydrant The In-house Fire-fighting Team America since 2009. This year, the course ran over 9,000 km from Argentina to Bolivia and back to Argentina, tres- A virtual plant tour on our home page Kanagawa Factory concludes an agree- passing deserts, mountainous terrains and trackless [Topy Industries, Ltd.] ment with Chigasaki City paths. Hino’s two rally cars with Topy’s logo on its body completed the world’s toughest course and gained an in- The company has opened on its home page a link for a Kanagawa Factory entered an agreement with Chiga- credible win in the class for less than 10 liter displace- “Virtual Factory Tour” introducing the production process- saki City on September 17th, 2014 regarding measures to ment. es of our products in a form that is easy to understand. be taken in times of natural disaster. The three virtual tours available are “Production Process Kanagawa Factory will assist in the emergency activi- of Manufacturing Steel,” “Production Process of Steel ties of Chigasaki City by providing an extended support Wheel Manufacturing” and “Production Process of Under- base including secondary evacuation facilities, personnel, carriage Components of Construction Machinery.” Each Students of Higashiyama Junior High School equipment and emergency one is a narrated tour of about one and half minutes. Additional Data first-aid. Please browse through our home page and see how We will strengthen our re- our factories are operated and lationship with our local what production processes are neighbors and work on required for the manufacture of community contribution. HINO TEAM SUGAWARA No.1 Car our products. Photo provided by Hino Motors, Ltd. http://www.topy.co.jp/ Hiroyuki Kinoshita, General Manager of Kanagawa Factory and Nobuaki Hattori, Mayor of Chigasaki City

49 50 CSR Activities Social Responsibility

Relationship with Employees [Topy Industries, Ltd.] − Creating a Safe and Comfortable Workplace Environment −

Philosophy and basic policy With the motto “having interests in a broad range of Holding the Topy Juku induction Corporate Profile and Governance field beyond the job assigned and maintaining a positive Danger Simulation Dojo to develop human resources attitude for learning enriches human resources,” we are course for new employees The Topy Industries Group declares in article 3 of the focused on developing human resources to draw out the The “Danger Simulation Hall,” or “Dojo,” at Toyohashi The company organizes an induction course entitled Group Code of Conduct (For the benefit of employees) potential and motivation of each individual. Also, we offer Factory provides a mock experience using equipment Topy Juku for newly recruited personnel for the four that it will “Respect the individual character and personal- various education systems available from the start of em- that are actually used at workplaces, and makes it possi- months starting from mid-April every year, right after they ity of employees, and provide safe-working environments ployment through to retirement in order to nurture human ble for us to learn what is dangerous, how we should re- start their duties. In FY2014, 10 associates were divided allowing them to work with enthusiasm, and attain fulfilling resources with rich expertise and the management facul- spond to such dangers, and why we should comply with up into groups and dispatched to each factory. They were lives.” ties needed for a manufacturing company. the rules. We continue to foster safety awareness among exposed to workplace experience, which is the founda- our employees by offering them vivid experiences through tion for manufacturing, by working under the same shift Education System Structure [Topy Industries, Ltd.] practical training at the “Dojo.” arrangement as production line personnel. During their on-the-job training program, they carried out office staff Items to be nurtured Development step jobs and job-related problem solving under the one-to- Knowledge (technical skill) Conceptual skill Human skill one guidance of their training leaders. Topy Juku is de- • Business manners signed to broaden new recruits’ horizons through first- Newly employed • Individual knowledge • Entry level communication ability hand job experience and at the same time let them feel • Health and safety their social responsibility with respect to work. Business Development • Intermediate level communication Senior employee • Advanced individual knowledge ability

Follower • Problem-solving ability (candidate to • Expert knowledge • Guidance to juniors • Basic logical thinking become a leader)

• Advanced expert knowledge Leader • Applied logical thinking • Fostering juniors • Financial knowledge

Learning at the Danger Simulation Dojo • Master expert knowledge • Fostering junior partners • Basic management • Target-driven management • Senior level communication ability • Advanced management Manager The first Indonesian trainees head home • Business strategy • Organization management Corporate Profile and Governance The first 10 technical trainees from Indonesia set out Topy Juku (Ayase) on their return trip on October 22nd, 2014 after complet- ing their program that started in November 2013. During their almost 12 months stay, they learned a lot Improvement in workplace about wheel manufacturing at Ayase Factory with great Initiatives on work-life balance enthusiasm. Toward the last leg of the training period, health and safety their knowledge including communication in Japanese We consider securing the health and safety of our We provide various health and welfare programs for reached such levels that they could give handoff instruc- workers to be one of the top priorities of the company. employees to help them maintain a balance between hav- tions in Japanese to the second trainees who started We have implemented a variety of actions to achieve ing a career and family. We are working to broaden pro- training in September 2014. zero accidents, and at the same time conduct a monthly grams for parental and care leave. We promote the en- We have great expectations for them as they start statistical survey for labor accidents in order to enhance hancement of awareness among employees about these working at new production sites in their home country by the awareness of health and safety of each and every programs by posting special reports in our in-house utilizing the knowledge, skills and experiences they have employee. The survey results are listed in the company’s newsletters introducing male employees who are involved obtained in Japan. monthly magazine. in childcare. Topy Juku (Kanagawa)

Labor Accident Statistical Survey List (Term: January 2014 through December 2014) Additional Data Total working No. of Factory Frequency Severity hours accidents Kanagawa 464,517 0 0.00 0.00

Ayase 957,684 0 0.00 0.00

Toyohashi 1,451,066 5 3.45 0.34

Toyokawa 907,743 1 1.10 0.00 The first Indonesia trainees Total 3,781,010 6 1.59 0.13

Topy Juku (Toyokawa)

51 52 CSR Activities Social Responsibility

Relationship with Employees [Topy Industries, Ltd.] − Creating a Safe and Comfortable Workplace Environment −

Initiatives on FY2014 National Safety Corporate Profile and Governance JK Activity (Jishu Kanri Katsudo) Week and National Labor Health Week As part of the event for the National Safety Week as lowing slogans have been selected out of a large number JK activity refers to group activities peculiar to the fore, is called JK activity taking the initial letter of J=Jishu well as the National Labor Health Week the company of submissions and awarded for the FY2014 contest. Japanese steel industry that started when the Japan and K=Kanri. At Topy Industries, various autonomous solicited posters and slogans from employees. The fol- Iron and Steel Federation established an Autonomous improvement activities are performed in small groups ev- Control Activity Committee in 1969. This activity is “ac- ery day, a issues such as costs, productivity, safety, and ■Posters for National Safety Week ■Posters for National Labor and Health Week tivity based on the autonomy of employees,” and there- environmental preservation.

Small Group Activity Presentation Convention (JK activity) 26th Topy Industries Group Small Group Activity Presentation Convention The presentation took place on December 6th, 2014 with a total of 409 participants. 12 groups made pre- Honorable Mention Award Honorable Mention Award sentation; five from Topy Industries and seven from the Group companies. The best award went to the Rainbow Business Development

Excelent Poster Award Circle of Toyokawa Factory and the Express Delivery team from Fujian Topy Autoparts Co., Ltd. received the impressive award. In addition to the presentation awards, awards for outstanding essays (three recommended The Convention Presentation by Toyokawa Factory awards and four honorable awards) were presented. Rainbow Circle The presentation themes covered various areas such as quality, productivity, energy saving, cost reduction. Honorable Mention Award Excelent Poster Award Honorable Mention Award Each group made solid analysis of their theme based on Excelent Poster Award collected data. The Topy Industries Group believes it is important to determine the problem, solve it and continue better activities to make visible contributions to actual jobs at each workplace. Corporate Profile and Governance

Presentation by Topy America Presentation by Fujian Topy Autoparts Wheel Watcher Team Express Team

Excelent Poster Award Honorable Mention Award Honorable Mention Award Honorable Mention Award Honorable Mention Award ■The 26th Convention Award Activities Award Business Unit Group Name Theme The Platinum Award from Caterpillar for also received a Silver certificate in 2014 for two consecu- First prize Toyokawa Factory Rainbow Circle Productivity improvement of 3E line tive years. 3 consecutive years Fujian Topy Autoparts Express Team Reduction in repair ratio of disc line Topy Industries will continue to improve performance The Wheel Division won the platinum award SQEP to win customer’s trust. Ayase Factory Juggling Circle Reduction in repair ratio of top coat at painting line AP-7 Excellent Prize for 2014 from Caterpillar for three consecutive years and *SQEP:Supplier Quality Excellence Process Topy Fasteners Silk Princess Overall efficiency improvement on B22765G equipment received a certificate on March 23rd at Ayase Factory, Kyushu Wheel Casting Joint Circle Improvement of MG casting failure ratio Kanagawa. SQEP (Supplier Quality Excellence Award) is the most Toyohashi Factory TOSBO-1 Reduction of electricity in non-operating time prestigious award given to suppliers who meet excellent Kanagawa Factory Circle A Energy saving approach of heat treatment line RQ ∙ PQ quality, cost, delivery and other requirements. The award Hokuetsu Metal “Zubatto” Reduction of die setting time and discard number system also includes Gold, Silver, Bronze; Platinum is the Additional Data highest level of the award and each award is evaluated by Superior Award Akemi Electric Power J & B Reduction of industrial water usage on bottom ash treatment facility a clear assessment criteria set by Caterpillar. SGOR® (ul- Topy America Wheel Watchers Team Process improvement by review of paint (acid) treatment method tra-large wheels) for mining and construction equipment has won Caterpillar’s trust for its overall performance Toyohashi Factory Straightening Project Circle Operation efficiency improvement by reviewing straightening pitch over the years. The Undercarriage Components Division Awarding Ceremony at Ayase Factory Topy Marine TZ Circle Vanning of export track shoes by use of F building Impressive Award Fujian Topy Autoparts Express Team Reduction in repair ratio of disc line

53 54 Additional Data Corporate Data

Financial Highlights

Millions of yen Thousands of Corporate Profile and Governance Consolidated U.S. dollars 2015 2014 (Note)

Net sales ¥ 237,677 ¥ 234,682 $ 1,976,195 Net income 2,360 1,914 19,622 Total assets 252,456 232,714 2,099,077 Net income per share (in yen and U.S. dollars) 9.96 8.08 0.083 Millions of yen Thousands of Non-Consolidated U.S. dollars 2015 2014 (Note)

Net sales 140,884 140,047 1,171,398 Net income 2,886 2,663 23,996 Annual Report Total assets 187, 337 176,395 1, 557,637 Net income per share 12.18 11. 2 3 0.101 Fact Book Cash dividend applicable to the period (in yen and U.S. dollars) 4.00 2.00 0.033 Business Development Note: Dollar amounts are converted at the rate of ¥120.27 to U.S. 1 dollar (Year ended March 31, 2015) Contents Additional Data

Financial Highlights 56 Analysis of Operation Results and Financial Situation 57 Five-year Trends in Sales and Profits

Business by Segment Net sales (Millions of yen) Net income (loss) (Millions of yen) Net income per share (loss) (Yen)

• Steel Business 58 Corporate Profile and Governance 300,000 5,000 20.00 • Automotive and Industrial Machinery Components Business 59 • Other Business 60 250,000 237,677 16.52 240,534 234,682 4,000 3,918 Major Subsidiaries & Affiliates 61 226,912 15.00 221,413 14.38 Directors, Auditors & Operating Officers 3,409 62 14.20 200,000 3,367 Consolidated Financial Statements 12.18 3,000 2,886 11.23 • Consolidated Balance Sheet (Assets) 63 2,663 161,788 150,000 10.00 9.96 • Consolidated Balance Sheet (Liabilities/ 140,047 64 149,510 9.03 Net Assets) 143,672 140,884 2,167 2,360 8.08 • Consolidated Statement of Income 2,000 8.64 65 2,072 and Comprehensive Income 1,914 7.50 • Consolidated Statement of Changes 100,000 1,780 in Net Assets 67 5.00 • Consolidated Statement of Cash Flows 69 1,000 Additional Data 50,000 • Notes to Consolidated Financial Statements 71 Segment Information 73

Consolidated Financial Statement 0 0 0 73 FY2011 FY2012 FY2013 FY2014 FY2015 FY2011 2012 2013 2014 FY2015 FY2011 FY2012 FY2013 FY2014 FY2015 for the Past 10 Years (Year ended March 31) (Year ended March 31) (Year ended March 31)

Consolidated

Non-consolidated

55 56 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 58 - 0 500 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Topy Industries,Topy Ltd. Akemi Recycling Center, Ltd. Industries,Topy Ltd. Ltd. Enterprises, Topy MarineTopy Transport, Ltd. Tojitu Ltd. Co., Ltd. Co., NE-Tojitsu

(Millions of yen)

(Year ended March 31) 3,381 Companies included in this business segment business this in included Companies 72,247 Research and development Research and FY2015 Ongoingachievements include orders received for We areWe involved in the enhancement quality of level million spentWe on these ¥10 R&D activities. Manufacturing: services: and Sales promotion efficiency of to obtain improvement in revenue from production integrated our of cost the reducing by raw materials product to delivery. of hot of rolled products, reduction industrial of wastes and improvementin environmental issues suchas recycling while implementing development new of shapes and new grade steels. of new shapes, reduction in power intensity rate on conven tional products, development of technology on industrial industrial on technology of development products, tional wastes and recycling resources.of 1,6301,630 ------72,955 FY2014 720 67,621 FY2013 3,833 71,271 FY2012 2,694 67,221 Sales Sales income Operating FY2011 0 Business Results Issues be addressed to We willWe drastically lower electric power consumption In the Japanese steel industry, production crude of Group Industries Topy the circumstances, such Under willWe aimbecome to the leading company in the in Steel Business Steel Net sales, operating income operating sales, Net

90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 110,000 100,000 (Millions of yen) rate, improve productivity and quality, reduce environ reduce quality, and productivity improve rate, blooms, and billets of self-support enable effects, mental and strengthen our cost competitiveness ensuring by the Furthermore, facilities. steel-making new the of operation all companies Industries the of Topy Group will join in dustrytaking by advantage our of distinctive special sec tionsteel and being by cost competitive at the highest level. domestic steel fell below that the of previous year due decline to in do for demand industry, furnace electric the In demand. mestic construction was steady during the first halfof the but unfortunatelyyear, weakened during the latter half of over continued difficult conditions Furthermore, year. the all due increase to in electricity and other costs despite declineour of main material cost, steel scrap price, from the middle the of year. sales appropriate of formulation the in endeavored has result This reduction. cost intensive and structures price millioned in net sales (year-to-year compari ¥72,247 of decrease). 1.0% son, Businesses by segment Businesses by ------Topy Industries,Topy Ltd. President and CEO Outlook the for future and issues be resolved to In view of the circumstances for stable and continuous continuous and stable for circumstances the of view In Withregards theto outlook the of economic environ promot in and conditions, management such Under As for the outlook next of consolidated year’s per olution organization for the dividend is as stipulated in the make can “Company incorporation, articleof company’s dividend payout for the retained earnings the by resolu tion the of Board Directors of Meeting in accordance with 459”. No. Act Companies payout, the dividend for this consolidated fiscalterm has beenresolved per at ¥4 share (including interim dividend per share)¥1 ment from here on, there is hope for gradual recovery as a result governmental of economic policies. However, there are unclear elements that remain such as the eco nomic trend in China and other emerging countries, and the movement momentaryU.S. of policies which etc. surround environment business the believe to us leaves Industriesing the Topy Group will continue be to unpre dictable. management consolidated medium-term new the ing Industries the Topy plan, “Growth & Change 2015”, Group will strive further to improve its corporate value activeby business development into overseas markets wheregrowth can be expected, and solidifying by the business a establish to base manufacturing domestic changing drastically withstand to enough strong structure environments. Industries The Topy Group will continue to further seek and progression profit consecutive pursue exertingby its competitive advantage “integrated of man ufacture from raw material products” to as definedby the Cycle”. “One-piece message corporate formance, we anticipate net sales million, ¥246,000 of operating million, income ordinary ¥9,700 of income of ¥8,800 million, and income attributable parent to compa shareholdersny million ¥5,400 of ensuring by produce to formulating by plant steel-making new the of effects the implementing by and structures price sales appropriate reductions. further cost ------Dividend Business Overview Business The company considers it important to maintain maintain important to it considers company The As a result, net sales for this consolidated fiscalyear the at allocation profit regarding policy basic The As for the number payout of dividend of for retained The global economy during this consolidated fiscal Group Industries Topy the conditions, such Under Analysis of Operation Results and Financial Situation and Financial Operation Results Analysis of stable and continuous payout taking by an overall con agement plan, “Growth with its basic Change & 2015” principle being global “Growth” and “Change” achieve to a highly profitable structure. As part such of plan, the manufacture truck of wheels Palingdaat Topy Manufac well as started, Indonesia), Barat, (Java Indonesia turing as operation the of new steel-making plant at Toyohashi Factory(Toyohashi Aichi City, Prefecture) have started. Furthermore, we will continue working on determining optimum sales price steel of material, as well as the to respond that system production a of establishment demand, and improvement productivity of and cost in etc. energy-conservation to relation million Industriesfor the Topy Group ended at ¥237,677 (year-to-year comparison, increase), operating 1.3% in come ended million at ¥6,422 (year-to-year comparison, increase),ordinary 21% income ended million at ¥6,037 (year-to-year comparison, increase). 34.6% Net income endedmillion at ¥2,360 (year-to-year comparison, 23.2% increase) due impairment to loss fixed of assets of etc. subsidiary companies. consolidated business shareholders, to return profit the on sideration structure. corporate of strengthening and development company return is to profitto our shareholders appropri ately according consolidated to business results, and to for and development business future for earnings retain earnings Retained structure. corporate our strengthening and investments business new to appropriated be will and long-term for developments technology/product new our strengthen to order in development business stable profit A competitiveness. global and structure corporate return index based on consolidated business earnings is targeted at consolidated payout However, ratio 25%. of decisions are made with careful consideration for stable dividend. continuous and earnings, the company’s basic policy 2 times is; a year, oneinterim dividendand one year-end dividend. The res year showed gradual recovery as the United States economy recovered and the European economy showed continued sign picking of the back growth however, up; slowed down in China and was at a standstill in other developing countries. The economy in Japan showed governmental by supported recovery gradual of signs due spending personal weak despite policies, economic effectsto from the tax increase. man consolidated medium-term the implemented has Consolidated Business Results for Fiscal 2015 (Summary) Results for 2015 Fiscal Business Consolidated Additional Data Additional 57 Additional Data Corporate Data

Business by Segment

Automotive and Industrial Machinery Components Business Other Business Corporate Profile and Governance

Business Results Research and development activities Business by Segment Research and development activities

In the automobile industry, volume of domestic pro- We are involved in weight saving, quality improve- Topy Industries Group also engages in wholesale We work on positive promotion of university-industry duction decreased below that of last year due to the ments, cost reduction, speed up of development time electricity, indoor and outdoor sign systems, manufacture cooperation in new areas. The Science Division is in- downfall in demand after the tax raise. On the other hand, and development of new products. of synthetic mica used in cosmetics etc., manufacture volved in the development new products using high gloss automobile production was strong in North America. The Ongoing achievement related to steel and aluminum and sale of LED displays and crawler robots, civil engi- synthetic mica as well as crawler robots. The Technical demand for construction machinery industry remained wheels for passenger cars includes, improvement in the neering and construction, real estate such as “Topy-Rec Center is involved in the development of basic element low as the Chinese and South East Asian markets and accuracy of analysis and evaluation technology, develop- Plaza” (Minami Suna, koto-ku, Tokyo), and operation of technology related to the business of each operating divi- demand for mining machinery stagnated. ment and commercial production of new products, cost sport club “OSSO”. sion. Under such conditions, the sales of wheels for pas- reduction, and quality improvement of conventional prod- Net sales resulted at ¥14,418 million and operating in- We spent ¥575 million on these R&D activities. senger cars and trucks for the Topy Industries Group ucts. come was ¥418 million. were steady. This resulted in net sales of ¥151,025 million Achievements related to construction and mining (year-to-year comparison, 2.4% increase). Despite con- equipment components includes cost reduction in forg- tinued improvement actions that were taken, operating ing process of ultra-large wheels, quality improvements Companies included in this segment

Issue to be addressed Business Development income remained at ¥6,919 million (year-to-year compar- and cost reduction in heat treatment processes of rollers Manufacturing: Topy Industries, Ltd. Topy Enterprises, Ltd. ison 6.0% decrease) due to decrease in sales volume of and shoes for hydraulic excavators. We work forward expanding our business by product Akemi Electric Power, Ltd. construction machinery components in the Chinese and We spent ¥617 million on these R&D activities. development that satisfy the needs of customers in the Sales and services: Topy Industries, Ltd. East Asian markets, and due to effects from severe com- course of developing our business extending over vast Topy-Rec, Ltd. petition. area from energy, service and other domains.

Companies included in this segment Manufacturing: Topy Industries, Ltd. Issues to be addressed Topy Fasteners, Ltd. Kyushu Wheel Kogyo, Ltd. Strengthen our presence as a “world top-class gener- Sanwa Buhin Co., Ltd. al wheel manufacturer” and work toward establishing our Topy America, Inc. Topy Precision Mfg., Inc. status as a “general undercarriage components manu- Topy Fasteners (Thailand) Ltd.

facturer of construction machinery”. In addition, we well Qingdao Topy Machinery Co., Ltd. Corporate Profile and Governance endeavor further cost reduction to enable a profitable Fujian Topy Autoparts Co., Ltd. structure even under difficult business conditions. Also, Topy Undercarriage (China) Co., Ltd. Topy Fasteners Vietnam Co., Ltd. we will continue to work in the formulation of a global op- Tianjin Topy Machinery Co., Ltd. timum production structure by expansion of our overseas PT. Topy Palingda Manufacturing Indonesia manufacturing sites and by strengthening operation with PT. Topy Undercarriage Indonesia Topy MW Manufacturing Mexico S.A. DE C.V. our global business partners. Sales and Services: Topy Enterprises, Ltd. Autopia Ltd.

Net sales, operating income Net sales, operating income

(Millions of yen) Sales (Millions of yen) (Millions of yen) Sales (Millions of yen) Operating income Operating income 180,000 18,000 30,000 3,000

154,031 160,000 151,025 16,000 145,398 147,423 25,000 2,500 139,011 140,000 14,000

120,000 12,000 20,000 2,000 10,392

9,966 Additional Data 100,000 10,000 15,180 15,232 15,000 13,891 14,303 14,404 1,500 7,666 80,000 7,360 6,919 8,000

10,000 1,000 60,000 6,000 793 801 632 40,000 4,000 542 5,000 418 500 20,000 2,000

0 0 0 0 FY2011 FY2012 FY2013 FY2014 FY2015 (Year ended March 31) FY2011 FY2012 FY2013 FY2014 FY2015 (Year ended March 31)

59 60 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 62 As of June 26, 2015 [Topy Industries, Ltd.] [Topy Titles or responsibilities or Titles General Manager of Business Process Innovation & Promotion Dept. CEO of the Undercarriage(China) Topy Ltd. & Qingdao Co., Machinery Topy Ltd. Co., General Manager of Finance Dept. General Manager of General Affairs Dept. & Secretary Office President of the MW Manufacturing Topy Mexico S.A. DE C.V. Deputy General Manager of the Wheel Div. General Manager of the Wheel in Div., charge of Automotive and Industrial Machinery Business Components Deputy General Manager of the Wheel Div. General Manager of the Steel in Div., charge of Steel Business In charge of Personnel Dept.“Shain-bu” General Manager of the Undercarrige Components in Div., charge of Automotive and Business Machinery Components Industrial Outside Director Outside General Manager of the Science Div. Outside Auditor Outside Auditor Outside General Manager of the Corporate Planning Dept. In charge of Personnel Dept. In charge of Technical Administration Dept., Business Process Innovation Dept. & Safety Representative Director Representative In charge of Corporate Planning, Personnel Dept. & Finance Dept. Name Yasuo Fujii Yasuo Norio Saito Norio Yasuto Ishii Yasuo Yuuki Yuuki Yasuo Akira Higashi Akira Toshiyuki Tani Toshiyuki Shinichi Kijima Shinichi Ichiro Takeuchi Ichiro Tadashi Kojima Tadashi Tamio Kurosaki Tamio Yukihiro Ogawa Akira Tanahashi Akira Takeshi Mitsuma Takeshi Katsuyoshi Daido Katsuyoshi Hiroyuki Kinoshita Hiroyuki Tsuneo Watanabe Tsuneo Kouichi Sakamoto Kouichi Masaru Yamamoto Masaru Satoshi Kumazawa Satoshi Kazuhisa Nakayama Kazuhisa Masayoshi Takezawa Masayuki Yamaguchi Masayuki Director Position President Statutory Auditor Statutory Statutory Auditor Statutory Auditor Statutory Auditor Statutory Operating OfficerOperating Operating OfficerOperating OfficerOperating Operating OfficerOperating OfficerOperating Operating OfficerOperating OfficerOperating Managing Director Managing President and CEO Director, Executive Vice Senior Managing Director Managing Senior Managing Operating Officer Operating Managing Officer Operating Managing Officer Operating Managing Managing Operating Officer Operating Managing Managing Operating Officer Operating Managing Officer Operating Managing Directors, Auditors & Operating Officers & Operating Directors, Auditors - - - - 75 70 35 by) (30) 100 0.1 (80) 100 100 100 (1.4) (0.1) 36.0 20.5 (Owned Holding voting right or owned by (%) As of March 31, 2015 As of March Business segment Automotive and Industrial Machinery Components Automotive and Industrial Machinery Components Automotive and Industrial Machinery Components Others Automotive and Industrial Machinery Components Manufacture and Manufacture sales of steel and products engineering Automotive and Industrial Machinery Components Automotive and Industrial Machinery Components Steel ¥708 million ¥1,161 million ¥7,082 million ¥36,283 million 173 ¥117,231 million 300 U.S. 330 103 100 491 U.S. 6.24 yuan yuan pesos billion million 1,969 dollars million rupiah million million dollars of yen) Capital thousand thousand (millions 419,524 location (1) Net sales (2) Operating income (3) Net profit (4) Net assets assets (5) Gross Head office West Java, West Indonesia Jawa Barat, Indonesia Tianjin, China Jung Yen, Jung Yen, Vietnam Kitakyushu-shi, Fukuoka Pref. Qingdao, China State of Guanajuato, Mexico Nagaoka-shi, Niigata Pref. Chiyoda-ku, Tokyo rect holding percentages. rect filiated companies). and $62,999,400 U.S. of paid premiums Mfg., Inc. have Precision Topy and Inc, America, Topy the capital mentioned above, totaling capital of U.S. aside from U.S. $4,950,000, respectively, $63,000,000 and U.S. $5,000,000 respectively. Undercarriage Topy Ltd., Co., Autoparts Topy Fujian Inc., America, Topy Ltd., Enterprises, Topy categorized as special Palingda Manufacturing Indonesia are Topy (China) Co., Ltd. and PT. subsidiary companies. Hokuetsu Metal Co., Ltd. and Nippon Steel & Sumitomo Metal Corporation issue an official fi nancial statement separately. Indus of the consolidated sales of Topy Enterprises, Ltd. as a proportion The sales ratio of Topy Industries Group internal exceeds 10% (excluding tries Group sales among consolidated Topy companies). Major financial information Respective business segments are listed in the “business segment” column (excluding other af listed Respective business segments are The values in parentheses under the “holding voting right or owned by” column represent indi voting right or owned by” column represent under the “holding The values in parentheses Company name PT. Topy Topy PT. Undercarriage Indonesia PT. Topy Palingda Topy PT. Manufacturing Indonesia Tianjin Topy Tianjin Topy Machinery Co., Ltd. Topy Fasteners Topy Vietnam Co., Ltd. Nippon Steel Topy Nippon Steel Topy Bridge Co., Ltd. (Other Affiliates) Nippon Steel & Sumitomo Metal Corporation Topy Undercarriage Undercarriage Topy (China) Co., Ltd. Topy Manufacturing Topy Mexico S.A. DE C.V. (Unconsolidated subsidiary accounted for under the equity method) Hokuetsu Metal Co., Ltd. 2. 3. 4. 5. Notes: 1. 6. [Topy Industries, Ltd.] [Topy 70 95 75 (30) (10) (40) 100 100 100 100 100 100 100 100 100 100 100 100 100 (100) (100) (100) (100) Holding voting right or owned by (%) Business segment Automotive and Industrial Machinery Components Others Automotive and Industrial Machinery Components Steel Automotive and Industrial Machinery Components Steel Steel Automotive and Industrial Machinery Components Others Automotive and Industrial Machinery Components Automotive and Industrial Machinery Components Steel Automotive and Industrial Machinery Components Steel, Automotive and Industrial Machinery Components, Other Automotive and Industrial Machinery Components Automotive and Industrial Machinery Components 50 30 34 80 60 50 U.S. 600 205 200 200 480 300 310 225 480 194 U.S. baht yuan yuan dollars million million million dollars of yen) Capital thousand thousand (millions location Head office Illinois, U.S.A. Kentucky, U.S.A. Kentucky, Toyohashi-shi, Toyohashi-shi, Aichi Pref. Bando-shi, Ibaraki Pref. Toyohashi-shi, Toyohashi-shi, Aichi Pref. Koto-ku, Tokyo Urayasu-shi, Chiba Pref. Toyohashi-shi, Toyohashi-shi, Aichi Pref. Miyako-gun, Fukuoka Pref. Koto-ku, Tokyo Matsumoto-shi, Nagano Pref. Qingdao, China Toyohashi-shi, Toyohashi-shi, Aichi Pref. Chonburi, Thailand Shinagawa-ku, Tokyo Fujian, China Company name Topy Precision Mfg., Precision Topy Inc. Topy America, Inc. Topy Akemi Electric Power, Akemi Electric Power, Ltd. Sanwa Buhin Co., Ltd. Akemi Recycling Ltd. Center, Autopia, Ltd. NE-Tojitsu, Ltd. NE-Tojitsu, Tojitu Co., Ltd. Tojitu Kyushu Wheel Kogyo, Ltd. Topy-Rec, Ltd. Topy-Rec, Topy Fasteners, Ltd. Topy Qingdao Topy Qingdao Topy Machinery Co., Ltd. Topy Marine Topy Ltd. Transport, Topy Fasteners Topy (Thailand), Ltd. Fujian Topy Fujian Topy Autoparts Co., Ltd. (Consolidated Subsidiaries) Enterprises, Ltd. Topy Major Subsidiaries & Affiliates & Subsidiaries Major Corporate Data Additional Data Additional 61 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 64 (67) 3,351 1,164 4,307 2,137 6,968 68,704 44,068 14,551 90,305 22,691 12,838 79,604 28,345 86,464 31,562 14,576 (7,691) (2,336) 182,539 625,601 196,225 221,685 575,987 174,466 156,515 443,993 767,282 115,623 897,489 1,201,588 2,099,077 (Note) $ 222,059 U.S. dollars Thousands of 52 (4) 98 774 478 271 389 534 (919) 1,103 7, 552 1,855 3,937 5,447 2,403 3,779 5,000 11,4 41 82,192 51,695 19,259 18,824 96,219 (2,196) 15,946 18,900 20,983 22,607 54,303 90,584 232,714 136,495 ¥ 26,279 2014 (8) 518 140 257 403 838 Millions of yen (281) (925) 9,574 1,753 1,750 1,544 8,263 2,729 3,796 3,409 3,409 5,300 10,861 69,274 21,954 18,824 75,241 92,281 13,906 10,399 26,662 20,983 53,399 53,399 23,600 107,941 144,515 252,456 ¥ 26,707 2015 Notes and accounts payable - trade operating - obligations recorded Electronically payable loans Short-term bonds of portion Current obligations Lease Income taxesIncome payable Other liabilities current Total payable Bonds Long-term loans payable Lease obligations Lease taxDeferred liabilities Provision for corporate officers’ retirement benefits Reserve for repairs Net defined benefit liability obligations retirement Asset Liabilities from application of equity method of application from Liabilities Retained earnings Retained Treasury shares equity shareholders’ Total securities available-for-sale on difference Valuation Deferred gains or losses on hedges adjustments translation currency Foreign plans benefit defined of Remeasurements income comprehensive other accumulated Total Other non-current liabilities Total stock Capital surplus Capital Consolidated BalanceConsolidated Sheet / (Liabilities Net Assets) Current liabilitiesCurrent Non-current liabilities Non-current Accumulated other comprehensive income comprehensive other Accumulated Minority interests netTotal assets Total liabilities Total equity Shareholders’ Liabilities Total liabilitiesTotal and net assets Net assetsNet 0 (382) (283) 5,047 11,782 11,782 10,826 16,105 35,869 25,892 37,000 17,419 36,734 82,398 17,286 47,701 (9,969) 308,980 934,614 277,368 843,693 711,291 271,182 429,459 153,646 277,584 365,744 110,784 (260,165) (440,110) 2,099,077 1,255,384 1,592,276 (Note) $ 183,321 (1,162,817) U.S. dollars U.S. Thousands of 1 597 (36) (79) (817) 3,610 2,129 1,657 1,903 1,270 1,270 8,943 2,792 6,447 4,835 2,643 76,107 31,492 25,514 31,668 28,493 12,790 26,426 18,387 46,073 24,284 98,349 101,602 232,714 163,403 134,365 (50,592) (29,538) ¥ 17,638 (134,910) 2014 0 607 (46) (34) Millions of yen of Millions 3 ,114 1,417 1,417 4,418 9,910 1,937 4,314 1,302 5,737 4,450 2,079 2,095 37,161 51,651 (1,199) 32,615 13,324 18,479 33,359 85,547 43,988 33,385 101,471 191,503 112 ,4 0 6 150,985 (31,290) (52,932) 252,456 (139,852) ¥ 22,048 2015 Leased assets, net assets, Leased depreciation Accumulated net Other, Accumulated depreciation Accumulated net structures, and Buildings depreciation Accumulated Machinery, equipment and vehicles, net Accumulated depreciation Accumulated Total investmentsTotal and other assets Other securities Investment Deferred tax assets other and rehabilitation in provable claims bankruptcy, in provable Claims Other accounts doubtful for Allowance Buildings and structures and Buildings assets Leased progress in Construction Other equipment and plant property, Total assets intangible Total receivable loans Long-term Machinery, equipment and vehicles and equipment Machinery, Land Total non-current assets non-current Total Investments and other assets Intangible assets Intangible Property, plant and equipment and plant Property, Total currentTotal assets Notes and accounts receivable-trade goods finished and Merchandise Work in process supplies and materials Raw Deferred tax assets Other accounts doubtful for Allowance Cash and deposits Consolidated BalanceConsolidated Sheet (Assets) Non-current assets Non-current Current assets Total assets Assets Consolidated Financial StatementsConsolidated Corporate Data Additional Data Additional 63 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 66 8 －－－ 574 133 100 333 665 798 540 308 (50) (582) 2,761 4,781 3,451 2,021 4,739 4,739 9,346 37, 216 28 ,611 11,0 92 17, 585 17, 585 19,631 13,661 50,195 19,623 (4,157) 16,862 15,856 13,777 40,692 85,649 23,797 53,397 (2,029) 103,816 103,234 290,305 236,900 1,685,890 (Note) $ 1,976,195 U.S. dollars U.S. Thousands of 1 9 4 －－－－ 13 21 69 45 27 77 (2) 461 262 697 398 436 489 706 (55) 230 506 996 1,111 1,914 2 , 311 1,933 7, 5 65 1,992 1,992 7, 5 6 6 1,728 4,249 5,573 4,485 3,834 2,256 5,308 28,957 34,265 200,416 2014 ¥ 234,682 1 －－－ 12 16 69 37 65 40 80 96 (6) 415 332 575 570 570 243 243 (70) Millions of yen of Millions 2 ,115 2 ,115 1,124 (244) (500) 1,657 4,476 1,907 1,643 3,441 6,037 1,334 2,361 2,028 6,422 2,862 4,894 2,360 12,416 34,915 10,301 28,492 12,486 202,762 2015 ¥ 237,677 ¥ 237,677 Consolidated Statement of Income and Comprehensive Income and Comprehensive Income of Statement Consolidated Comprehensive income attributable to minority interests minority to attributable income Comprehensive Total other comprehensive income comprehensive other Total Comprehensive income attributable owners to of the parent Valuation difference on available-for-sale securities available-for-sale on difference Valuation Deferred gains or losses on hedges adjustment translation currency Foreign plans benefit defined of Remeasurements equity method using for accounted associates of income comprehensive other of Share Other extraordinary losses Total Loss on retirement of non-current assets Loss on sales of investment securities Loss on valuation of investment securities loss Impairment Loss on sales of non-current assets Total non-operating expenses non-operating Total Gain on sales of non-current assets Gain on sales of investment securities Other income extraordinary Total Total non-operating income non-operating Total expenses Interest losses exchange Foreign Share of loss of entities accounted for using equity method Other Other Interest income Interest Dividend income method equity using for accounted entities of profit of Share income Insurance Comprehensive income Comprehensive to attributable income Comprehensive Income before minority interests minority before Income income comprehensive Other Total incomeTotal taxes interests minority before Income Minority interests in income (loss) income Net Income before income taxes and minority interests taxes-currentIncome Income taxes-deferred Extraordinary losses Ordinary income Extraordinary income Non-operating expenses Non-operating Selling, general and administrative expenses income Operating income Non-operating Net sales Net Cost of sales Gross profit Consolidated Financial StatementsConsolidated Corporate Data Additional Data Additional 65 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 68 － 441 (42) (67) (33) (25) (25) (840) (840) 4,440 27,12 2 27,12 2 41,166 41,166 97,015 31,421 84,194 84,194 31,562 19,623 15,424 14,576 15,923 15,923 86,464 (5,903) 83,346 (2,336) 115,62 3 897,489 (18,259) 800,025 800,466 $ 45,290 (Note) U.S. dollars Thousands of －－ (1) (4) (2) (2) 119 119 326 534 (52) (474) 1,741 1,741 1,914 3 ,911 3 ,911 1,735 1,855 3,453 3,453 5,447 3,572 4,960 3,779 96,219 (2,196) (2,196) (2,196) 91,258 (3,377) ¥ 3,706 2014 － 53 (4) (5) (8) (3) (3) 534 Millions of yen (101) (101) (281) (710) 1,915 1,915 1,753 1,855 4,951 4,951 3,262 3,262 3,779 3,796 2,360 10,126 10,126 10,126 11,668 10,024 96,219 (2,196) 13,906 10,399 96,272 107,941 ¥ 5,447 2015 Net changes of items other than shareholders’ equity Net changes of items other than shareholders’ equity Net changes of items other than shareholders’ equity Net changes of items other than shareholders’ equity Net changes of items other than shareholders’ equity Dividends from surplus Total changes of items during the period Total changes of items during the period Total changes of items during the period Total changes of items during the period Net changes of items other than shareholders’ equity Net changes of items other than shareholders’ equity Total changes of items during the period Total changes of items during the period Net income Purchase of treasury stock Disposal of treasury stock Net changes of items other than shareholders’ equity Total changes of items during the period Cumulative efforts of changes in accounting policies accounting in changes efforts of Cumulative Balance at the beginning of current period Balance at the beginning of current period Balance at the beginning of current period Balance at the beginning of current period Balance at the beginning of current period Balance at the beginning of current period Balance at the beginning of current period Changes of items during the period Balance at the end of current period Changes of items during the period Balance at the end of current period Changes of items during the period Balance at the end of current period Balance at the end of current period Changes of items during the period Balance at the end of current period Changes of items during the period Balance at the end of current period balanceRestated Changes of items during the period Balance at the end of current period Valuation difference on available-for-sale securities Valuation difference on available-for-sale Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plants Accumulated other comprehensive income Accumulated other comprehensive Minority interests Total accumulated other comprehensive income Total net assets 441 441 (42) (42) (42) 13 ,711 (7,641) (7,691) 13,661 19,623 19,623 (5,903) (5,903) 767, 282 753,613 753,172 156,515 156,515 174,466 430,274 429,825 443,993 (Note) $ 174,466 U.S. dollars U.S. Thousands of －－ (52) (52) (52) (474) (474) (919) (866) 1,914 1,914 1,387 1,440 89,196 51,695 18,824 18,824 20,983 50,255 90,584 ¥ 20,983 2014 － 53 53 (5) (5) (5) Millions of yen of Millions (919) (710) (710) (925) 1,649 1,643 1,643 2,360 2,360 51,749 51,695 18,824 18,824 92,281 90,637 20,983 53,399 53,399 90,584 ¥ 20,983 2015 Disposal of treasury stock changesTotal of items during the period Dividends from surplus from Dividends income Net Purchase of treasury stock Purchase of treasury stock Disposal of treasury stock changesTotal of items during the period Total changesTotal of items during the period Dividends from surplus from Dividends Net income Net Total changesTotal of items during the period Disposal of treasury stock changesTotal of items during the period Cumulative efforts of changes in accounting policies accounting in changes efforts of Cumulative Cumulative efforts of changes in accounting policies accounting in changes efforts of Cumulative Balance at the end of current period Balance at the end of current period Restated balanceRestated period the during items of Changes Balance at the beginning of current period Changes of items during the period the during items of Changes Balance at the end of current period Balance at the end of current period Balance at the beginning of current period Changes of items during the period the during items of Changes Balance at the beginning of current period balanceRestated Changes of items during the period the during items of Changes Balance at the beginning of current period period the during items of Changes Balance at the end of current period Balance at the beginning of current period Consolidated Statement of Changes in Net Assets of Changes in Net Consolidated Statement Total shareholders’ equity shareholders’ Total Treasury stock Treasury Retained earnings Retained Capital surplus Capital Capital stock Capital Shareholders’ equity Shareholders’ Consolidated Financial Statements Consolidated Corporate Data Additional Data Additional 67 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 70 (42) 890 (499) 6,577 (1,156) 35,312 (5,928) 82,548 (3,234) 145,381 (41,573) 180,702 128,760 109,396 (45,049) $ (5,288) (Note) U.S. dollars Thousands of (7) 236 376 (19) (300) (392) (475) (116) 7,716 9,927 7,538 19,798 17,485 (6,389) (2,312) ¥ (2,640) 2014 (5) 107 791 Millions of yen (60) (139) (713) (389) 9,928 9,928 4,247 13,157 17,4 85 21,733 (5,418) 15,486 15,486 (5,000) ¥ (636) 2015 Proceeds from long-term loans payable Repayment of long-term loans payable Proceeds from issuance of bonds Redemption of bonds Increase (decrease) in deposit payable in cash Repayments of lease obligations Purchase of treasury shares Proceeds from stock issuance to minority shareholders Cash dividends paid Cash dividends paid to minority shareholders Net cash provided by (used in) financing activities Net increase (decrease) in short-term loans payable Net increase (decrease) in Net cash provided by (used in) financing activities Net cash provided by (used Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period 0 －－ 92 183 341 166 324 881 856 299 308 (100) (632) (665) (249) (299) 1,896 9,728 5,529 4,739 9,346 2,228 13,104 11,0 92 (1,147) (2 ,611) 85,765 24,520 (1,206) (2,810) (9,520) (4,739) (5,355) 161,636 180,718 (19,939) $ 37,216 (240,043) (242,297) (Note) U.S. dollars Thousands of 5 − − － 11 12 15 69 20 86 (9) (0) 552 (17) (17) 382 945 (69) 386 230 (24) (56) 996 (173) (910) (824) (535) 1,617 (448) (209) 7, 2 51 9,257 (1,241) (1,218) 10,086 (2,945) (2,099) (17,478) (19,093) ¥ 4,249 2014 0 －－ 11 41 37 39 20 36 22 103 (12) 570 106 665 268 228 (76) (36) Millions of yen (80) (30) (314) (145) (138) (570) 1,170 1,124 (338) (644) 1,576 1,334 2,949 (1,145) 10,315 21,735 19,440 (2,398) (29,141) ¥ 4,476 ¥ 4,476 (28,870) 2015 Consolidated Statement of Cash Flows of Statement Consolidated Purchase of intangible assets Proceeds from sales of intangible assets Other, net Collection of loans receivable Proceeds from sales of property, plant and equipment Purchase of investment securities Proceeds from sales of investment securities Proceeda from sales of shares of subsidiaries and associates Payments of loans receivable Purchase of property, plant and equipment Net cash provided by (used in) operating activities Income tax refund Proceeds from Insurance income Income taxes paid Interest and dividends income received Interest expenses paid Decrease (increase) in inventories Increase (decrease) in notes and accounts payable-trade Increase/decrease in other assets/liabilities Subtotal Gain (loss) on sales and disposal of property, plant and equipment, net Gain (loss) on sales and disposal of property, plant and Loss on valuation of golf club memberships Decrease (increase) in notes and accounts receivable-trade Insurance income method Share of (profit) loss of entities accounted for using equity securities Loss (gain) on sales of short-term and long-term investment securities Loss (gain) on valuation of short-term and long-term investment Interest expenses Loss on valuation of inventories Increase (decrease) in provision for scheduled repairs Increase (decrease) in net defined benefit liability Interest and dividends income Increase (decrease) in provision for directors’ retirement benefits Increase (decrease) in provision for directors’ retirement retirement benefits Increase (decrease) in provision for corporate officers’ Impaisment loss Increase (decrease) in allowance for doubtful accounts Depreciation Net decrease (increase) in time deposits Income before income taxes and minority interests Income before income taxes Net cash provided by (used in) investing activities Net cash provided (used in) investing activities Net cash provided by (used in) operating activities Net cash provided by (used Consolidated Financial StatementsConsolidated Corporate Data Additional Data Additional 69 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 72 ------Accounting processing of the changes in equity share of subsidiary of subsidiary share of the changes in equity Accounting processing the beginning of the from The company will adopt the said revisions the adoption will start accounting processing, As for the provisional The company is evaluating the impact of the revised Accounting Accounting The company is evaluating the impact of the revised The Company has adopted tax-exclusion system as accounting pro The Company has adopted tax-exclusion Up to preceding consolidated account term, insurance proceeds and and consolidated account term, insurance proceeds Up to preceding in other as as increase/decrease (¥-824 million), presented As a result, Insurance proceeds that has been presented as other of non-operating that has been presented Insurance proceeds as other of non-operating income ¥575 million, presented As a result, Enacted revisions include following: Enacted revisions costs, presentation acquisition related company, company held by parent to non-controlling minority equity share changes from net profit, of current processing. accounting provisional equity share, in 2016. fiscal year ending March the corporate mergers or acquisitions that take place after the be from ed financial statement. ginning of the fiscal term ending March in 2016. ginning of the fiscal term ending March to Corporate Mergers and Acquisitions to its consolidat related Standard counting Standard and Business Divestitures Accounting Standard and Business Divestitures counting Standard September 13, (Corporate Accounting Application Guideline No. 10, dated 2013) per Share Guideline No. 4, dated Sep Application (Corporate Accounting Standard tember 13, 2013) Accounting process for consumption tax Accounting process lion and other ¥506 million. Consolidated Statement of Cash Flow other as presented and in included been has proceeds insurance of amount it was operating activities, however, assets/liabilities under cash flow from to due term accounting consolidated current the from separately presented reor this change we have reflect quantitative importance. To its increased term. ganized consolidated financial statements for the preceding consoli sets/liabilities under cash flow operating activities in the preceding as insurance pro and presented dated account term has been reorganized in other assets/liabilities (¥-824 ceeds (¥-69 million), increase/decrease ¥69 million. million) and amount of insurance proceeds cess for consumption tax. that has not been applied yet) (Accounting Standard to Corporate Mergers and Acquisitions related ∙ Accounting Standard September 13, 2013) No. 21, dated (Corporate Accounting Standard to Consolidated Financial Statement related ∙ Accounting Standard 13, 2013) September, No. 22, dated (Corporate Accounting Standard to Corporate Divestitures related ∙ Accounting Standard September 13, 2013) No. 7, dated (Corporate Accounting Standard Net Income per Share to Current related ∙ Accounting Standard September 13, 2013) No. 2, dated (Corporate Accounting Standard Ac Acquisitions and Mergers Corporate to related Guideline Application ∙ months or less and minimal risks against fluctuations in values. months or less and minimal risks ∙ Accounting Standard Application Guideline related to Current Net Profit Net Profit to Current related Application Guideline ∙ Accounting Standard 1. Outline 2. Scheduled start of adoption (Changes in presentation) income Consolidated Statement of Income and Comprehensive as separate income until the last consolidated accounting term is presented consolidated account term as it exceeded 10/100 of the current item from this change we have reorganized reflect income. To total non-operating term. consolidated financial statements for the preceding account consolidated previous in income of statement consolidated the in ¥69 mil as insurance proceeds and presented term has been reorganized 3. Impact by the adoption of the accounting standards in question 3. Impact by the adoption of the accounting standards (8)

------Commodity futures Commodity physical transaction rate swap Interest rate Borrowing currency forecast transaction forecast currency Exchange contract and currency swap Exchange contract and currency Foreign currency denominated credits and foreign and foreign denominated credits currency Foreign

The Company principally has adopted the deferral hedge account The Company hedges against a fluctuation in exchange rates, com rates, exchange in fluctuation a against hedges Company The Hedging methods and hedging items to which hedging accounting Hedging methods and hedging items to which hedging accounting the total fluctuations in cash flow as hedg The Company compares As for the application of the retirement benefits account standard the standard benefits account As for the application of the retirement benefits at the beginning to retirement the debt related As a result, for earnings per share and retained to net asset per share The effect Scope of funds covers cash in hands, deposit with unrestricted with with unrestricted deposit in hands, cash covers of funds Scope Monetary credits and debts in foreign currencies have been transferred have been transferred currencies and debts in foreign Monetary credits Assets, liabilities and earnings, expenses of subsidiaries overseas have Hedge accounting method Hedging policy Hedging method: Hedging item: Hedging method: Hedging item: ing. The deferral accounting is adopted for exchange forward contracts ing. The deferral accounting is adopted for exchange forward special and met are requirements accounting when swaps currency and rates swaps when accounting require accounting is adopted for interest met. ments are Hedging methods and hedging items as stated below. has been employed for this consolidated fiscal term are Hedging method: item: Hedging with internal rates in accordance standards. modity prices and interest Evaluation method of hedging effectiveness ing item and the total fluctuations in cash flow as hedging method for the and judgment to hedge effectiveness hedge implementation from period make a judgment based on the fluctuation amount of both factors. rates by special accounting, effec for the swapping of interest However, tiveness evaluation is omitted. cordance with the requirements expressed in Retirement Benefits Ac in Retirement expressed with the requirements cordance Applica Benefits No. 35 main body and Retirement counting Standard the will review the company As a result, body. No. 67 main Guideline tion costs service and obligation benefits retirement for method calculation the benefits from retirement for projected and change attribution method to the benefit formula method, and also straight-line attribution method the dis from change the determining method of discount percentage the term similar to the average remaining based on count percentage average weighted single apply that method the to employees of term retirement term for the the projected that reflects discount percentage term. benefits payment and the amount for each projected the from resulting the impacted amount company will add or deduct and obligation benefits retirement for methods calculation the in change consolidated accounting service costs at the beginning of the current stated in Retirement with the transitional processing term in accordance Benefits Accounting No 37. by ¥84 million, consolidated accounting term decreased of the current and by ¥53 million. While, operating profit earnings increased retained respec decreased income taxes and others were before profit ordinary tively by ¥97 million. negligible. consolidated accounting term is the current Significant hedge accounting method a) Consolidated cash flow statement and scope of funds Significant assets or liabilities in foreign currencies and conversion criteria criteria conversion and currencies foreign in liabilities or assets Significant into Japanese Yen. finan to yen at the spot exchange rate on the closing date of consolidated drawal and short-term investments with high liquidity with maturity of three drawal and short-term investments with high liquidity with maturity of three cial statements. Translation differences have been disposed as profits or or have been disposed as profits differences cial statements. Translation losses. on the closing the spot exchange rate yen based on to been transferred in are date of consolidated financial statements and translation differences exchange transfer adjustment account of net assets and cluded in currency equity by minor shareholders. c) b) d) (6) (7) (5)

------4-14 years 2-10 years 10-47 years Others The principal estimated useful lives: Buildings and structures Machinery and transportation equipment Rolls by individual identification cost and others primarily by moving moving others primarily by cost and identification by individual Rolls Primarily moving average method (values on balance sheet to be cal Primarily moving average method Depreciation of property, plant and equipment is calculated by the the plant and equipment is calculated by of property, Depreciation To prepare for possible losses due to uncollectable accounts such such accounts uncollectable to due losses possible for prepare To For software (for in-house use), the straight-line method is adopted (for in-house use), the straight-line For software the leasing term as estimated useful lives and The Company regards In calculating retirement benefits obligations, the benefit formula ba In calculating retirement The net retirement benefit obligations at transition are amortized amortized transition are obligations at benefit The net retirement amortized in the year following the year in Actual gain and loss are To prepare for the payment of retirement benefits for the operating operating the for benefits of retirement payment the for prepare To for Retire The company has adopted to apply Accounting Standard culated by writing down book value due to reduced profitability) due to reduced culated by writing down book value down book value due to reduced profitability) down book value due to reduced average method (values on balance sheet to be calculated by writing down average method (values on balance sheet to be calculated by writing profitability) book value due to reduced Tangible fixed assets (except for leasing assets) Tangible others by the declining balance method or the straight-line method, and de the adopt and consolidated subsidiaries declining balance method, Allowance for uncollectable accounts posted estimated uncollect the Company has as accounts receivable, Intangible fixed assets (except for leasing assets) The straight-line method is adopted. based on the estimated useful life in the company. Leasing assets to reduced value residual eventual with straight-line method the adopts stipulating the transfer of owner For the finance lease agreements zero. Attribution method for projected retirement benefits retirement Attribution method for projected ment Benefits (Corporate Accounting Standard No. 26 dated May 17, May 17, No. 26 dated Standard ment Benefits (Corporate Accounting and Benefits Accounting Standard called as Retirement 2012), hereunder Benefits (Corporate Ac Retirement for Guideline Accounting Standard 20, 26, March dated No. 25, Guideline Application Standard counting Guideline to Benefits Application called as Retirement 2015), hereunder term in ac the current from our consolidated accounting term effective ship and the agreements that started before March 31, 2008, accounting March that started before ship and the agreements lease transactions is adopted. standard with in accordance process able accounts by using actual rate of uncollectable accounts for general of collection possibility individual and also by checking accounts credit for special accounts such as doubtful accounts. for the benefits. dards benefits for the period up retirement sis is adopted to attribute projected consolidated accounting tern.to the current loss principally over a period of 15 years by the straight-line method based on benefits trust was set up. the balance after the employees’ retirement primarily by the straight-line method which the gain or loss is recognized years of service of the employees (principally over the average remaining 15 years). clining balance method or the straight-line method. However, for build clining balance method or the straight-line method. However, for auxiliary facilities of in Japan after April 1, 1988 (except ings acquired method. is calculated by the straight-line building), depreciation amount at the Company has posted payable officers of the Company, with the in-house stan the end of consolidated fiscal year in accordance Supplies Finished goods, semi-finished goods, raw materials, work in process Finished goods, semi-finished goods, Material depreciation assets and depreciation method assets and depreciation Material depreciation a) Accounting basis for significant allowance a) b) c) efits a) b) Allowance for operating officers’ retirement benefits retirement b) Allowance for operating officers’ method of transition obligations and actual gain and b) Account processing (Change in accounting policy) benefits associated with retirement Applicable accounting standard (2) (3) ben concerningChanges in accounting (4) retirement employees’ for payment

------each year. st Total average method or last invoice method depending on the classifi average method or last invoice method Total Running prices to be calculated based on the market prices or calculated based on the market prices or to be Running prices based on moving average method Cost methods are cation of merchandise (values on balance sheet to be calculated by writing cation of merchandise Securities with running prices other applicable prices quoted on the account settling date (evaluation equity and of shareholders’ as component be reported to difference selling costs to be calculated by moving average method). Securities without running prices Total assets, sales, net profits (in proportion to equity) and retained sur and to equity) (in proportion assets, sales, net profits Total Those non-consolidated affiliated companies and subsidiaries, to which Those non-consolidated affiliated companies and subsidiaries, Topy Precision Mfg., Inc., Topy Fasteners (Thailand), Ltd., Topy Ameri Fasteners (Thailand), Ltd., Topy Mfg., Inc., Topy Precision Topy Topy Enterprises, Ltd., Topy Marine Transport, Ltd., Topy Fasteners, Fasteners, Ltd., Topy Marine Transport, Ltd., Topy Enterprises, Topy Consolidated financial statements are prepared based on the financial prepared Consolidated financial statements are Market price method Merchandise The following companies settle their accounts on December 31 Tanagura Development Co., Ltd. has been excluded from the applicable the applicable Development Co., Ltd. has been excluded from Tanagura shares. the Tanagura’s scope by equity method due to the company sold off A major company among non-consolidated subsidiaries and affiliated com A major company among non-consolidated subsidiaries and Reason that the equity method is inapplicable Hokuetsu Metal Co., Ltd. Bridge Co., Ltd. Nippon Steel Topy marginal performances the equity method is inapplicable, posted relatively earnings proportion (in retained and equity) to proportion (in income net in and limited is statements financial consolidated to impact its and equity), to excluded from those companies are insignificant as a whole, and therefore, the scope that the equity method is applied. Non-consolidated affiliated companies by the equity method: 2 companies Non-consolidated affiliated companies by the equity method: A major non-consolidated subsidiary Ltd. Agency, Topy Ltd., Topy-Rec, Ltd., Kyushu Wheel Kogyo, Ltd., Tojitu Co., Ltd., Autopia, Autopia, Ltd., Co., Tojitu Ltd., Kogyo, Wheel Kyushu Ltd., Topy-Rec, Ltd., Mfg., Inc., Sanwa Buhin Precision Topy Ltd., Akemi Recycle Center Ltd., Fasteners (Thailand), Ltd., Topy Ltd., Topy Co., Ltd., Akemi Electric Power, Machinery Co., Ltd., Fuji Co., Ltd, Qingdao Topy America, Inc., NE-Tojitsu data available as of the account settling day of respective companies. How respective day of settling account the as of available data donesia, PT. Topy Undercarriage Indonesia, Topy MW Manufacturing Mexi Indonesia, Topy Undercarriage Topy donesia, PT. co S.A. DE C.V. made on the consolidated statements for necessary adjustments are ever, between the business transactions of material importance that occurred 31. January 1 and March a) Securities Topy Agency, Ltd. Agency, Topy Autoparts Co., Machinery Co., Ltd., Fujian Topy ca, Inc., Qingdao Topy Fasteners Vietnam Co., (China) Co., Ltd., Topy Undercarriage Ltd., Topy Palingda Manufacturing In Topy Machinery Co., Ltd., PT. Ltd., Tianjin Topy panies to which the equity method is inapplicable plus (in proportion to equity) and other performances of those non-consoli to equity) and other performances plus (in proportion marginal in scale and have insig relatively dated subsidiary companies are those and therefore, statements, consolidated overall on impact nificant the scope of consolidation. excluded from companies are an Topy Autoparts Co., Ltd., Topy Undercarriage (China) Co., Ltd., Topy (China) Co., Ltd., Topy Undercarriage Topy Autoparts Co., Ltd., an Topy Topy PT. Machinery Co., Ltd., Fasteners VietnamLtd., Tianjin Co., Topy and Indonesia Undercarriage Topy PT. Indonesia, Manufacturing Palingda MW Manufacturing Mexico S.A. DE C.V. Topy b) Derivative c) Inventories Basic significant matters prepareto financial consolidated statement

Fiscal term of consolidated subsidiaries (2) (4) (3) Reason for exclusion from consolidation (3) Reason for exclusion from (1) Evaluation criteria and evaluation method of material assets (3) Subsidiaries and affiliated companies by the equity method (1) (2) Scope of consolidation 22 companies (1) Consolidated subsidiary companies: 3.

4. Accounting standards securities Other

Notes to Consolidated Financial Statements Consolidated to Notes 1.

Corporate Data Additional Data Additional 71 Corporate Profile and Governance Business Development Corporate Profile and Governance Additional Data 74 — 4.0 2.4 9.96 42.1 28.0 53,397 85,765 [573] total 6,422 6,037 2,360 4,596 169,402 12,416 448.36 19,440 13,157 21,733 1,976,195 1,976,195 2,099,077 237,677 107,941 252,456 (Millions of yen) (29,141) Consolidated 2015 — 657 374 (Year ended March 2015) (Thousands of U.S. dollars) 231,238 (35,728) (151,767) (151,767) Adjustments 2.0 2.1 8.08 40.5 22.5 [538] 5,308 4,485 1,914 7,566 7,251 7,538 4,515 96,219 398.39 17,485 234,682 232,714 (17,478) 2014 89,124 85,100 Total 151,767 169,028 1,976,195 2,127,970 1,867,839 — 3,476 7,774 1,688 4.0 4.0 42.9 15.3 Other 119,764 119,764 185,865 [491] 6,990 6,234 3,409 8,222 14.38 4,374 Business 91,258 377.47 16,770 19,798 (4,997) 226,912 208,781 (14,770) 2013 85,641 77,326 Total 151,767 167,332 1,856,431 2,008,198 1,681,974 4.0 4.8 38.7 15.6 — [428] 7,304 3,918 4,459 16.52 4,135 10,554 83,096 347.37 16,010 22,124 (7,703) (4,983) 240,534 212,828 2012 57,529 50,819 83,795 947,801 Segment Automotive and 1,255,716 1,255,716 Industrial Machinery Components Business 28,112 26,499 83,537 Steel 4.0 2.6 600,707 151,767 752,474 734,165 8.64 39.0 25.2 Products Business (340) [432] 7,006 5,241 2,072 6,236 4,151 80,165 335.16 18,741 (3,681) (1,952) 221,413 203,956 2011 Total — — 2.0 355 626 40.3 (1.3) [422] 4,242 (4.30) 81,884 337.53 12,010 20,547 (1,032) (7,507) (2,236) 196,848 201,138 2010 Depreciation and amortization External sales Increase in tangible and intangible assets Intra-segment sales and transfer Note: Dollar amounts are converted at the rate of ¥120.27 to U.S. 1 dollar Note: Dollar amounts are 31, 2015) ended March (Year Sales Segment income Segment assets Other items — — 2.9 5.0 6,422 13.9 39.6 10,315 20,374 [471] (287) total 4,125 10.39 2,384 6,010 6,686 237,677 252,456 237,677 18,293 21,547 334.16 80,942 202,995 290,333 (15,908) (Millions of yen) Consolidated 2009 — 79 45 27,811 (4,297) (18,253) (18,253) Adjustments — 7.7 9.8 8.0 35.3 [556] 4,133 9,405 28.90 6,366 13,130 11,78 4 83,217 371.40 12,888 (4,266) (8,447) 231,887 296,629 2008 18,253 10,719 10,235 20,329 Total 255,931 224,645 237,677 — 418 935 203 — 9.4 6.0 14,404 22,354 14,404 13.3 33.0 Other [712] 7, 826 4,107 35.60 Business 13,173 15,942 13,999 379.03 (8,217) 84,269 (3,862) 285,058 252,888 13,866 2007 9,300 18,253 10,300 20,125 Total 241,526 202,291 223,273 — 6.0 11. 3 14.3 32.3 — [683] 7,976 4,137 36.12 (3,141) 12,975 16,768 14,807 78,698 358.82 (10,728) 270,447 243,558 17,089 6,919 6,112 2006 10,078 151,025 113,992 151,025 Segment Automotive and Industrial Machinery Components Business (%) (%) 3,381 3,187 (yen) (yen) (yen) 18,253 90,500 88,298 72,247 10,047 Steel Products Business (persons) Total

Fiscal year Fiscal Depreciation and amortization External sales Increase in tangible and intangible assets Intra-segment sales and transfer Cash and cash equivalents at the end of current period No. of employees [temporary employees] Net cash provided by (used in) financing activities Net cash provided by (used in) investing activities Price/earnings ratio Price/earnings Net cash provided by (used in) operating activities Return on equity Equity ratio Net income per share (loss) share per Dividends Net assets Net Comprehensive income Comprehensive assets net Total Net assets per share Net income (loss) income Net Net sales Net income Operating Ordinary profit Segment assets Segment income Sales Other items Consolidated Financial Statement for the Past 10 Years Consolidated Financial Segment Information (2015) Segment Information Corporate Data Additional Data Additional 73 TEL：+81-3-393-0777 FAX：+81-3-3493-0200 http://www.topy.co.jp/ 2015