TOPY Report 2022

TOPY

Report2022
Art Village Osaki Central Tower
1-2-2, Osaki, Shinagawa-ku, Tokyo 141-8634
TEL: 03-3493-0777 FAX: 03-3493-0200

http://www.topy.co.jp[Overview of official Twitter account]
Account name: Topy Industries, Ltd.
User name: @TOPY_INDUSTRIESURL: https://twitter.com/TOPY_INDUSTRIESTOPY

Report2022

Editorial Policy
Basic Policy
Topy Report 2022 provides selected important information
focusing on the company s management strategies to improve corporate value in the medium to long term, including
information related to its business activities, operating results, social responsibilities, and management control system. The aim of this report is to encourage candid dialogue
with our stakeholders, including shareholders, investors andrelated parties.

Group Basic Philosophy

The Topy Industries Group will fulfill its responsibilities as apublic institution and contribute to the realization of a sustainable
recycling-oriented society through the continuation and developmentof its business.

Group Code of Conduct− To win the trust and respect of society −Under the Corporate Philosophy, the management andemployees of the Topy Industries Group shall strictly abideby all applicable laws and ordinances, the spirit reflected,
and the Corporate Code of Conduct,
while accepting full corporate social responsibility andfostering an open-minded andcreative corporate culture.

The IIRC s International Integrated Reporting Frameworkand the Ministry of Economy, Trade and Industry s Guidance for Collaborative Value Creation were used as references in the creation of this report.

Contents2

Editorial Policy and Contents

Chapter 1 Value Creation
Businesses of the Topy Industries Group

3

History of the Topy Industries Group

5

Value Creation Process of the Topy Industries Group7
9

Business Model and Strengths of the Topy Industries GroupPursuit of High Added Value Through Proprietary Technologies 11

13

Non-Financial Capital to Support Value Creation

Chapter 2 Growth Strategies
Top Message

15

New Medium-Term Management Plan

19

Chapter 3 Business

Reporting Scope
This report covers all companies listed as subsidiaries of theTopy Industries Group (consolidated basis). However, some
activities and data represent only Topy Industries, Ltd. In
principle, activities where the scope is not specified refer tothose of the Topy Industries Group. Where it is necessary
to specify the applicable scope, activities by Topy Industries
alone are identified within the headline or descriptions as
Topy Industries or the Company, and activities by an individual Group company are identified by its corporate name.

Reporting Period
Covers mainly FY2021 (April 1, 2021 to March 31, 2022),
but also includes some activities that occurred on and after
April 1, 2022.

Date of Issue
October 2022

Inquiries Regarding this Report
Topy Industries, Ltd. (General Affairs Department)
Art Village Osaki Central Tower, 1-2-2 Osaki,
Shinagawa-ku, Tokyo 141-8634, Japan
TEL: +81-3-3493-0777

Steel Segment

23

Automotive and Industrial Machinery Components Segment(Wheels for Passenger Vehicles)25

Automotive and Industrial Machinery Components Segment(Commercial and Off the Road Wheels)

27

Automotive and Industrial Machinery Components Segment(Undercarriage Components for Construction Machinery)

29

Business Development Segment

31

Promotion of DX

32

Chapter 4 Sustainability
Sustainability Initiatives of the Topy Industries Group/
Basic Policy

33

Identification of Materiality

35

E Environmental Initiatives
Environmental Philosophy andBasic Environmental Policy

37

Response to Climate Change

38

Reducing Environmental Impact through Products andServices
42
Responding to Environmental Risks and Contributing to
the Establishment of a Recycling-Oriented Society
43

S Social Responsibility

Relationship with Customers and Business Partners

45

Contribution to Society through Our Business47

Contribution to Local Communities

48

Respect for Human Rights

49

Relationships with Employees

50

G Corporate GovernanceManagement Team

55

Corporate Governance

57

Chapter 5 Corporate Data

1

TOPY Report 2022

Our History

63

Consolidated Financial Performance for the Past 11 Years

65

Non-Financial Highlights

67

Major Subsidiaries & Affiliates

69

IR Information

70

TOPY Report 2022

2

Chapter1

Value Creation

The Topy Industries Group is a comprehensive metal processing group with an integrated production system from raw material production to thefabrication of finished products. Within this, the steel segment engages in raw material supply and the automotive and industrial machinery components segment unit deals in material processing, both of which are interrelated. The Group is also striving to diversify its businesses, which now
encompass the wholesaling of electricity, manufacture and sale of mica and robots, leasing of real estate, and operation of sports clubs.

Businesses of the Topy Industries Group

88,91532.79%
Operating profit(JPY million)

166,542At the Topy Industries Group (the Group ), the steel business unit produces steel using electric furnaces as well as awide variety of steel bars. Wide flange beams, standard structural shapes and deformed bars are shipped as construction materials chiefly to customers in both domestic and overseas markets, while special sections are largely supplied
to the company s automotive and industrial machinery components segment unit where they are turned into finishedproducts. This business unit includes companies engaging in the collection and recycling of steel scrap, a transportation company, and a trading company that acts as the logistics and trading arms of the unit. In addition to inter-groupbusiness transactions, it also sells products and provides services to customers outside the Topy Industries Group.
Steel construction materials

61.42%

A world-leading comprehensive
manufacturer of wheels and undercarriage
components for construction machineryWe manufacture and sell products including steel and aluminum wheels for automobiles, wheels for mining vehicles,
undercarriage components for construction machinery (track shoes*1 and tracks*2 ), and industrial steel fasteners forautomobiles such as precision leaf springs.

Operating profit

4,813(JPY million)

Growth Strategies(625)

Steel Segment

Automotive and Industrial
Machinery Components
Segment

Net sales

A raw material business operated since ourfoundation

Value Creation

Net sales*1 Track shoes: Component of tracks manufactured by processing and heat-treating hot rolled steel materials (special steel).
Track shoes and other components are assembled to form tracks.
*2 Tracks: A general name for the assembled undercarriage components of construction machinery vehicles, which are generally called a steel track belt.

Wheels for passenger vehicles

Steel materials for ships and industrial machinery

Wheels for commercial
vehiclesUndercarriage components
for construction machinery

Ultra-large wheels for mining
equipment [SGORⓇ]

Industrial fasteners

Track shoes

Steel

Business

Aluminum

TracksSteel■Net sales
100,000
80,000

Steel for use within the company

71,52580,442

WheelsOperating profit
88,91573,404(JPY million)
10,00060,000

1,925

2,248

1,293

(625)

3.58%

Power Generation
Segment

2019

2020

(1,957)(JPY million)■Net sales

Operating profit

15,00012,000
9,000

3,000

9,596

10,567

871

852

2017

Power plant

2018

2019

2020

1,023

0
-4,000(JPY million)

2018

2019

2020

2021 (FY)We are expanding sales of mica, which is used for cosmetics and other products, in Japan and other countries, whiledeveloping applications for crawler robots utilizing our suspension technology. We also lease real estate, such as Topy-Rec Plaza (Minami-Suna, Koto-ku, Tokyo), and operate sports clubs, including OSSO.

■Net sales
8,000
6,000

4,000

4,000

2,000

2,000

0

0

-2,000-2,000(1,957)-3,000Operating profit

6,000

165

4,000

(221)

Creating new sources of profit

8,000
7,583

1,228

2.21%

Other Segment

10,000

9,718

9,326

0

TOPY Report 2022

6,001

(JPY million)
10,0006,000

3Net sales

We took electricity deregulation as an opportunity to construct a coal
thermal power plant (Toyohashi-shi, Aichi) while paying utmost consideration to maintaining harmony with the surrounding environment, andbegan to operate our electricity wholesale business in 2000.

Operating profit

8,000

4,813
1,657

2017

2021 (FY)

Focusing on the stable supply of electricity while
paying utmost consideration to maintaining
harmony with the surrounding environment

12,0007,833

Corporate Data

9,718

2018

16,000-40,000-2,000

2017

8,433

(JPY million)
20,000166,542
136,1130

0-20,000

174,015

142,790

40,0002,000

Operating profit

120,000
80,0004,000

0Net sales(precision leaf springs, etc.)

188,175

Sustainability

40,00020,000160,000

Industrial fasteners

6,000
4,142

200,000(track shoes, tracks)

8,000

75,657■Net sales

Undercarriage components
for construction machinery

2021 (FY)

6,548
1,465

(JPY million)
5,000
4,000

6,558

5,767

6,001

3,000
2,000

1,550

1,023

893

1,000

(185)

0
-1,0002017
Mica for cosmetics

7,041

Operating profit

2018

2019

2020

2021 (FY)

RobotsTOPY Report 2022

4

Chapter

Value Creation

1

History of the Topy Industries Group(JPY billion)(JPY billion)

300

Three strengths developed over our 100-year history

30■Net sales

250

25

200

20

150

15

100

10

50

5
0

0
Steel

WheelsUndercarriage components
for construction machinery

Power
Generation(FY) 1964

Business
Development

Value Creation

In 1964, our integrated production system for producing and making full use of steel was completed through the mergerof four companies (engaging in businesses concerning steel and wheels, undercarriage components for construction
machinery, and others). The integration of different businesses has led to the global development of the automotive andindustrial machinery parts segment and the creation of new businesses (industrial fasteners, power generation, mica,
robots, and other businesses), creating management stability and contributing to earnings growth.

Operating profit

1970

1980

1990

2000

2010

2020

Growth Strategies-50*FY1964 to FY1976: Non-consolidated FY1977 to FY2021: Consolidated(Year)

Founded in

1921

1921

Japan

Founding of Miya Steelworks (predecessor of
Toto Steel Mfg., Co., Ltd.)

Origin of deformed section
steel technologies

1922

Establishment of an integrated
production system

1953

Miya Steelworks succeeds
in hot-rolling steel sash
bars (window frames)

Hot-rolling and thecommercial productionof track shoes starts

1930

1990

2000

1964

2020
2008

Topy Industries, Ltd. is established

2003

Expansion into theUnited States

Expansion
into China

A building in the early Showa Period(1926 to 1989) with steel sash bars

Undercarriage components
for construction machinery

1999

2016

The business and capitalalliance with MW Italia
S.R.L. is strengthened

Technologies andnew businesses

Developed from metal
processing technologies

Expansion
into China

1987

Practical applicationof high-quality mica
for cosmetics

2018

Developed from electric furnace melting
technologies of the steel business

The power generation
business is launched

Expansion into China and Thailand(Asahi Tec Corporation becomesa wholly owned subsidiary)

Expansion
into Indonesia

Strength 2

GlobalExpansion of theProcessing
Division

2013

Expansion
into Indonesia

2018

Development of lighter-weight wheels
Adoption of rims made of deformed
section steel and discs formed
through cold spinning (rocking die
forming) (for commercial vehicles)
Adoption of high-tensile-strength
steel sheet (for passenger vehicles)

2000

Expansion
into India

2013

2009

Heat treatment efficiency
improved through thedevelopment of low-carbon
boron steel for track shoes

Commencementof the industrial
fastener business

2002

2017

Launched TACoil®, Japan s
first compact coil made ofsteel bars wound at highdensity for reinforced concrete

Corporate Data

Expansion into theUnited States

1989

1974

Integrated
Production
SystemSustainability

Overseas

Wheels forcommercial vehicles

Development of SGOR®, the world slargest wheel for mining vehicles

TOPY Report 2022

Expansion
into Mexico

Aluminum wheels
for passenger vehicles

1982

5

2013

Strength 1

100th anniversary

The production capacity of the rolling mill shop for medium-size steel products (a rolling line for deformed section
steel) is increased at the Toyohashi Works

1985

Wheels manufactured
by Teikoku Hatsujo Seisakusho

2021

2009

Through the merger of Japan Motor Wheel
Co., Ltd., Toto Steel Mfg., Co., Ltd., Toto
Zoki Co., Ltd., and Toto Tekko Co., Ltd.

Steel wheels forpassenger vehicles

A new steelmaking plant is completed at the Toyohashi Works with the introduction of an environmentally friendly, high-efficiency electric furnace

Business

Teikoku Hatsujo Seisakusho (the predecessor of Japan Motor Wheel Co., Ltd.)
commences the production of prototype
steel wheels for automobiles

2014

Strengthening of the business alliancewith Nippon Steel Corporation

2021

Launched Evolution Type
SGOR® wheels for mining
vehiclesStrength 3

2017

Value Creation
Through
Proprietary
Technologies

Development of an automateddriving system for crawlers thatcan move left, right, forward andbackward

Use of existing infrastructure of thesteel business for the power generation business (including land, quays
and power transmission facilities)

TOPY Report 2022

6

Chapter1

Value Creation

Value Creation Process of the Topy Industries Group

Creating social value and achieving sustainable growth based on
advanced technological capabilities and an integrated production
system for producing and making full use of steel

The Group has paved the way for global expansion by providing products and services that meet the needs of customers and society basedon its advanced technological capabilities and integrated production system for producing and making full use of steel and continued to growby applying its core technologies to expand business into peripheral fields. Going forward, we will continue to achieve sustainable growth by
maximizing the strengths and management resources we have developed over the years, while working to solve social issues and create social value.

Value Creation

Group Basic Philosophy/Basic Sustainability Policy
P.35,36

Materiality (important issues)

Environment

E

Production bases in Japan andoverseas and highly efficientmanufacturing facilities and lines

Electric furnace steelmaking technology

Proprietary technologies andknow-how, and R&D for future growthTechnology for rolling deformed section steel

Contribute tosociety throughbusiness

P.14

Diverse human resources capable ofsupporting sustainable growthSocial capital

Coating technology
Steel for use within the company (rims, track
shoes)
Steel construction materials
Steel materials for ships and industrial
machinery

Wheels for passenger vehicles (steel, aluminum)
Steel wheels for commercial vehicles
Ultra-large wheels for mining equipment

Strength

1

Strength
P.14

Integrated Production System

2

Global Expansion of theProcessing Division

Strength

Value Creation Through
Proprietary Technologies

Procurement

Stable supply chain within andoutside the Group

Development
and design

Product development and design
capabilities that leverage thetechnological strengths and synergies
of each process

Production

Ability to produce products efficiently
and stably in an environmentally friendly
manner

Supplyand sales

Ability to handle a wide variety of
products in small lots and global supply
system of the processing division

3

Financial capitalSound financial footing

Businessdevelopment

Reinvestmentof capital

7

TOPY Report 2022

Electricity: Use of the existing infrastructureof the steel businessMica: Application of electric furnace
melting technologies

Contribution to recycling-basedsocieties

Contribution to motorization andinfrastructure development

Securing of manpower andimprovements in safety

Supporting prosperous lifestyles
and the natural environment

Reductions in manpower andenergy needs using robots

Economic Value
Financial capital targets(medium-term plan)Powergeneration

Social Issues andRelevant SDGs

Corporate DataG

Improvements in the safety andfunctionality of cosmetics using
impurity-free synthetic mica asa raw material

P.9,10

P.14

Trust from customers,
business partners, local communities,
and other stakeholders

Improvements in the safety
and functionality of wheels andundercarriage components forconstruction machinery
Provision of a stableenergy supply

Undercarriage components for construction
machinery (track shoes, tracks)

Value chain

Recycling of scrap iron, etc.,
using electric furnaces
Enhancement of thefunctionality of steel materials
for various purposes

Heat treatment technology

Efficient use of various resources

Build of a solidmanagementfoundation

P.12

Metal processing technology

P.9,10Natural capital

Governance

Automobiles andindustrial machinerySocial impact

Sustainability

S

Support fordiverse humanresources

Steel

Value created (outcomes)

Business

Social

Processing

P.13

Human capital

Respect humanrightsMaterials

P.11

Intellectual capital

Contributeto building a
recycling-oriented
societyBusiness model, strengths, and main product services (outputs)

P.13

Growth Strategies

Promote green of
innovation

Manufacturing capital

Shareholder returns

Rate of operating profit on sales
4.5% or higher
EBITDA ......................... 32.0 billion
ROE ....................... 8.0% or higher

Robots: Application of track
manufacturing technologies

P.19,20,21,22

Medium-Term
Management PlanTOPY Active & Challenge 2025

TOPY Report 2022

8

Chapter1

Value Creation

Business Model and Strengths of the Topy Industries Group

Building a competitive value chain with the One-piece Cycle
and supplying high value-added products globally

Strength1

Integrated
Production
SystemStrength3

The Group hopes to create a new movement, using steel as a medium to create a cycle in unison withsociety through the technology and quality that we have developed over the years to make society more
affluent and easier to live in. The One-piece Cycle embodies the thinking of the Group.

Our integrated production system from materials tofinished products is the source of our ability to develop
products that meet the needs of customers and society
as well as our manufacturing capabilities that enable us toconsistently produce high-quality products. In addition, we
contribute to the realization of a recycling-oriented society
by recycling steel scrap as the main raw material, while atthe same time reducing both environmental impact andcosts by utilizing environmentally friendly production facilities and energy-saving technologies.

×

Product lineup withhigh market share at the top
level in Japan and overseas

18 production bases in
7 countries overseas

Strength2With production bases around theworld, we have established a global
supply system capable of meetingthe local procurement needs ofglobal automobile and construction
equipment manufacturers.

Global Expansionof the Processing
Division

Value Creation

Value Creation
Through
Proprietary
Technologies

Source of our product development andmanufacturing capabilities

Products

Materials Division

Steel segment

Materials

Stable supply chain within

Automotive and industrial machinerycomponents segment

and outside the Group

Customers

Development and design

Product development and design capabilities thatleverage the technological strengths and synergies of each process

Production

Ability to produce products efficiently and stably

in an environmentally friendly manner

Ability to handle a wide variety of products in small lots

SocietyCompensation/
cash
Business

Supply and sales

Products
Growth Strategies

Procurement

Processing
Division

Shareholder returns

and global supply system of the processing division

Growth investment* Excluding locations in Japan, MW Italia S.p.A., Incoasc, Paco Aquina

China
Topy Undercarriage (China) Co., Ltd.

EuropeRecycling of steel scrap as a raw material

Sustainability

18 production basesin 7 countries overseas*

External suppliers

United States(France, Poland, Romania, Russia, and Turkey)

Fujian Topy Autoparts Co., Ltd.

(MW Italia S.R.L.)

Ring-Techs Guangzhou Co., Ltd.

Topy America, Inc.

Guangzhou Wheelhorse Asahi Aluminium Co., Ltd.

Topy Precision Mfg., Inc.

Guangdong Dicastal Asahi Auto Parts Co., Ltd.

Japan

India

Corporate Data

Topy Industries, Ltd.

WIL Car Wheels

Ring Techs Co., Ltd.
Kyushu Wheel Kogyo, Ltd.
Topy Fasteners, Ltd.

Capacity expansion of the Akemi Recycling Center
Approximately

Processing capacity

4,000 tons
per monthCO2 emissions from electric
furnaces due to recyclingof dustReduction of approximately

Approximately

10,000 tons

VietnamIndonesia

in 2025

9TOPY Report 2022

PT. Topy Palingda Manufacturing
Indonesia

ThailandTopy Fasteners (Thailand) Ltd.

17,000 t/year

Asahi Tec Aluminium(Thailand) Co., Ltd.

Wheels for passenger vehicles(steel)MexicoTopy MW Manufacturing Mexico
S.A. de C.V.

(MW Italia S.R.L.)

Products produced
at each baseRaw materials

Topy Fasteners Vietnam Co., Ltd.

South Africa

Topy Fasteners Mexico,
S.A. de C.V.

PT. Topy Undercarriage Indonesia(PT. Inkoasku, PT. Pakoakuina)

Wheels for passenger vehicles(aluminum)

Wheels forcommercial
vehiclesWheels forminingequipment

Undercarriage
components forconstruction machinery

Industrial
fasteners

Alliance
partner

Ferrous scrap
TOPY Report 2022

10

Chapter1

Value Creation

Pursuit of High Added Value Through Proprietary Technologies
Strength 3Over the years, the Group has nurtured diverse and original technologies under the keyword of making steel andhandling steel. We will continue to focus on developing and strengthening technologies that will contribute to solving issues faced by our customers and society and become a source of competitiveness for the Group.

Metal processing
technologies

Achieved weight reduction and high strength and quality,and gained about 90% of the Japanese market share
The company boasts world-class productivity, capable of manufacturing commercial wheels
as fast as one every nine seconds. The rim material for steel wheels is deformed steel manufactured by the company. We have reduced the weight of the rim material by making it asthin as possible while maintaining its strength, which greatly contributes to improved fuelefficiency. In addition, discs manufactured through our unique ECOD molding process cansignificantly reduce waste materials compared to general manufacturing methods, contributing to resource conservation.

Electric furnacesteelmaking technologies

State-of-the-art electric furnace plant boasting world-leading power saving and productivity

Outstanding environmental
performance
World-leading heat efficiency

Energy saving and cost reduction effects

Heat generation efficiency improved by ４.９％
Total energy consumption reduced by ７.７％

Shaft output
side exhaustgas temperaturemust be above acertain level.

Maintain exhaust gas temperature
Maximize the use of scrap
preheating
Secondary combustion of
unburned gases such as CO isused to achieve these goals.

It is the technology that increases strength, wear resistance and toughness through repeated heating and cooling based on a proprietary heat conduction analysis system. In addition,
by developing the world s fastest link processing line and an automatic link belt assemblyline that no other company can match, we supply stable quality and low-cost crawler belts
to the world.

20％ reduction
in steelmaking
costs compared
to conventional
equipment

TracksOur main product, track shoes, ismanufactured in an integrated manner
in-house, from material selection tocompletion, in close cooperation with
the Steel Division, which handles
steelmaking and rolling.

Lowest cost level
in JapanCoating technology

Manufacturing various complex cross-section steel to meet the needs of customers
and the processing departments

Responding to the diversifying needs of customers and society with our unique coating technology

Mast materials Forklift
This steel shape is used for the vertical section(mast) at the front of a forklift. It is a productthat requires high strength as well as wear
resistance and weldability.

TOPY Report 2022

Corporate Data

Technology for rollingdeformed section steel

One of our strengths is our deformed steel manufacturing technology that makes full use of ourunique numerical analysis. Although deformed steel products with asymmetrical cross sections areprone to bending during the rolling process, we are able to correct the bending by having our production lines convey the special shapes.

11

Unique heat conduction analysis system achieves high durability of undercarriage components for construction machinery

Sustainability

By using the heat energy from the exhaust gas, whichused to be discarded, to preheat steel scrap and continuously feed it into the electric furnace, we have beenable to significantly reduce the amount of electricity used.
In addition, continuous melting by flat bath operation, in
which scrap is continuously fed from the preheating shaft
into the hot water pool of the electric furnace, has resulted
in improved productivity and significant cost reduction due
to the reduction of inactive time and heat extraction.

Robust BCP
The seismic strength of the building exceeds the seismic intensity of the Tokai
and Tonankai earthquakes when they are linked. The electrical equipment is
TP500 (Installed at 500 cm above the average sea level in Tokyo Bay).

Heat treatment
technologies
Business

Largest scale in Japan
Japanʼs largest class 200ton eco-friendly high-efficiency electric furnace

Steel wheels for commercial vehicles
Our steel wheels for trucks and buses are made of deformed steel, which wehave independently developed based on our advanced analysis technology
and accumulated know-how, to reduce weight and achieve high strength andquality. We have acquired about 90% of the Japanese market share.

Growth Strategies

The steelmaking plant at the Toyohashi Plant began full-scale operations in March 2015 after
upgrading and modernizing aging facilities. In the upgrading process, we have establish a
disaster-resistant supply system by implementing earthquake and tsunami countermeasures
based on the assumption of the occurrence of a Nankai Trough earthquake. The plant has
been transformed into one of the most environmentally friendly and competitive steel millsin Japan through the introduction of the Japan s largest class 200-ton eco-friendly high-efficiency electric furnace, to achieve low electricity consumption, operation using only inexpensive nighttime electricity by increasing steelmaking capacity, and self-sufficiency in billets forsteel bars by introducing a continuous casting machine for both bloom and billets.

Value Creation

Value Creation
Through
Proprietary
Technologies

Proprietary technologies to meet diverse internaland external needs

Taking advantage of our coating technology that enables uniform and precise orientation of
metallic particles, we are developing new paint color wheels with a premium look for highgrade vehicles, in addition to conventional chrome coated wheels. We are also actively
promoting environmental friendliness by using low-temperature baking paints and improving
coating efficiency.

We are developing wheels in satin, bronze, and high-gloss luster colors using
our unique coating technology. We differentiate ourselves from our competitors and respond to diversifying customer needs.

TOPY Report 2022

12

Chapter

Value Creation1

Non-Financial Capital to Support Value Creation

Strengthening non-financial capital for further value creation

Intellectual
capitalHuman capitalSocial capital

Natural capital

Production bases in Japan andoverseas and highly efficientmanufacturing facilities and lines

Proprietary technologies
and know-how,and R&D for future growthDiverse human resources capableof supporting sustainable growthTrust from customers,
business partners, local communities,
and other stakeholders

Efficient use of various resources

The Group has a wide range of production basesin Japan and overseas, manufacturing products
in optimal locations according to product characteristics and customer needs. We promote
the supply and cross-sourcing of materials andthe sharing of development and manufacturing
roles among our production bases to build an
efficient global production system and support
the integrated production system from materials
to products and the resource-recycling businessmodel that is a characteristic of the Group.
In addition, at each of our production bases,
we are introducing highly efficient manufacturing
equipment and constructing production lines tocreate products that are competitive in terms ofboth cost and environmental friendliness.

Throughout its more than 100-year history, theGroup has always been a pioneer, repeatedly
taking on new challenges with originality andingenuity, and creating diverse and creative technologies. Recently, customers have requested
a wide range of products in terms of weight
reduction, shape and size, and environmental
friendliness, and the Groupʼs strength lies in its
ability to respond to such requests, backed by
the proprietary technologies and know-how it
has developed over the years.
Furthermore, by applying these technologies
and know-how, we have created new technologies, leading to the expansion of our business.

Electric furnace steelmaking technologies●

Technology for deformed steel rolling●

Metal processing technologies●

Heat treatment technologies
Coating technology

ECOARC™, an environmentally friendly
high-efficiency electric furnace●

Crude steel production capacity of approx.
1 million tons/year●●

Advanced metal sorting equipment at the
Akemi Recycling Center●

Business development strategy center●●

Manufacturing facilities and lines based on
proprietary technologies

R&D expenditures 1.1 billion yen (FY2021)●

Capital investment 84 million yen (FY2021)●

Promote green of innovation●

Contribute to building a recycling-oriented society●

Contribute to society through business

●
●
●

●

●

Promote green of innovation

Global production bases ........................ P.10●

Proprietary technologies ........................ P.11

Proprietary technologies ......................... P.11●

Responding to environmental risks andcontributing to the establishment ofrecycling-oriented societies ..................... P.43

Development of environmentally friendly
products ................................................. P.42●

Technical education (development ofeducation system) .................................. P.50

Quality .................................................... P.45●

Intellectual property policy ...................... P.62●●

Number of consolidated employees:
approx. 6,000●

High market share based on customer trust●・Steel wheels for passenger vehicles:
approx. 50% in Japan

Ratio of employees at overseas production
bases: 44% (FY2021)

Scope 1 246 thousand tons CO2

・Steel wheels for commercial vehicles:
approx. 90% in Japan

Human resource development based onan education system

CO2 emissions (consolidated, Japan,
FY2021)
Scope 2 311 thousand tons CO2
Scope 3 924 thousand tons CO2●

Promotion of environmental improvement
and other measures to promote diversity

・Super-Giant Off-the-Road Rim vehicle
wheels for mining dump trucks:
approx. 90% in Japan and overseas●

Efforts to improve ES (employee satisfaction)・Track shoes for hydraulic excavators:
approx. 70% in Japan●

Promotion of Health Management ®** All of the above are actual sales shares forautomobile manufacturers and construction
equipment manufacturers in FY2021.

●

Respect human rights●

Respect human rights●

Support for diverse human resources●

Contribute to society through business●

Human resource development ................ P.50●

Quality .................................................... P.45●

Resource-recycling value chain .............

●

Diversity ................................................. P.51●

Supply chain management .................... P.46●

Environmental management .................. P.37●

Improvement of employee satisfaction..... P.53●

Ensuring fair trade ................................. P.46●

Responding to climate change .............. P.38●

Health and safety .................................... P.54●

Contribution to communities ................. P.47●●

Respect for human rights ....................... P.49●

Environmental management system ISO
14001 certification ratio (consolidated andproduction sites): 75% (FY2021)●

Monthly processing capacity of the Akemi
Recycling Center: approx. 4,000 t●

Promote green of innovation●

Contribute to building a recycling-oriented
society●

Corporate Data●●

The business activities of the Group are closely related to natural capital, including the use of water
resources and mineral resources as raw materials
for products and fuel for power generation.
Through its resource-recycling businessmodel, the Group contributes to the realizationof a sustainable, recycling-oriented society byeffectively utilizing limited resources throughrecycling. We also view promotion of green innovation as a materiality and promote efficient use
of natural capital and environmental impact reduction through development and advancementof environmental technologies to conserve theglobal environment and biodiversity as well as tocreate economic value.

Sustainability

Initiatives forstrengthening capital●

The Group has earned the trust of its customers
by providing products and services that meettheir needs. In addition, by building strong relationships of trust and cooperation with many ofour business partners and alliance partners, weare able to provide a stable supply of products
and services around the world.
Moreover, coexistence with the local communities in which we operate is essential to ourbusiness activities, and each of our production
bases engages in activities that contribute to the
local communities in which it is located.

Business

Related materiality

Optimal global production system(Japan and 18 production bases in 7 countries overseas)

We believe that our human capital is our greatest
asset and that reinforcing it is the source of ourvalue creation.
In order to respond to rapidly changing society and technology and open the way to the future, we need human resources who can always
think and act on their own initiative. We also
believe that the ability to create new value comesfrom diverse human resources who recognize
each otherʼs differences in values, enhance organizational capabilities, and take on the challengeof achieving major goals.
The Group is working to strengthen its humancapital through human resource development
and the creation of a workplace environment inwhich a diverse range of human resources canplay an active role.

Growth Strategies

Manufacturing
capital●Strengths of capital/
current status

Value Creation

Concept of capital

Non-financial capital, including technological capabilities that have been continuously refined over the 100 years since our founding
and human resources that are the source of value creation, are important management resources that support the sustainablegrowth of the Group.
We are working to strengthen our non-financial capital for further evolution of value creation.

P.9

Biodiversity preservation andchemical management ........................... P.43
Waste reduction and recycling ............... P.44

* Health Management® is a registered trademark of the Institute for Health Management, a non-profit organization.

13

TOPY Report 2022

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Chapter2

Growth Strategies

Representative Director, President and CEO
Topy Industries, Ltd.

In formulating A&C 2025 and considering the future directionof the Group, it will be necessary to consider the drasticallychanging global and economic environment. We are now

15

TOPY Report 2022

Corporate Data

Breaking away from forecasting, we are
now more than ever in need of willful action

Sustainability

Nobuhiko Takamatsu

Business

We will continue to actively
take on challenges in anever-changing businessenvironment and pursue whatkind of company we should
be in a sustainable society.

Growth Strategies

Top Message

The Topy Industries Group has been implementing its Medium-Term Management Plan Growth & Change (G&C), which
divides the 10-year period from FY2012 to FY2021 into threephases. When the G&C was formulated, many Japanesecompanies were seeking to strengthen their domestic business foundations, restructure their businesses, and strengthen their overseas operations in response to the strong yen
following the bankruptcy of Lehman Brothers. The Group
has also steadily implemented its plan through means suchas building a framework for its business foundation and expanding its overseas production bases from 9 to 18.
However, during the three years of G&C 2021, which
was positioned as a period for the full completion of G&C,
the global economic environment changed drastically. Restrictions and voluntary restraints on socioeconomic activities
due to COVID-19, sharp rises in steel scrap and coal prices,and significant reductions in automobile production due tosupply shortages of semiconductors and other materials had
a major impact on the completion of G&C 2021. Although
we showed signs of recovery in FY2021, the final year of theplan, we were unable to achieve our goals in terms of earnings.
On the other hand, we were able to turn this difficult
situation into an opportunity and implement more significant
reforms in some areas. In the structural reform of the steel
wheels for passenger vehicles business, we exceeded our
initial plan to consolidate five lines at three production basesin Japan to three lines at two production bases, and we have
now reduced the number of lines to two at one production
bases. This is the result of our efforts to optimize demandand production capacity for the future. Similarly, in the steel
wheels for commercial vehicles business, we have halved
the small-lot production of products manufactured in Japanand transferred production to Indonesia.
In the new Medium-Term Management Plan TOPY Active & Challenge 2025 (A&C 2025), which started in FY2022,
we aim to reap results by strengthening individual measures,
utilizing the framework established and organized in G&C.

in a situation where we have no choice but to change ourconventional way of thinking, which is to anticipate, set a
course, and move toward it. In the previous era, there werestrong calls for globalization, and the barriers between
worlds became lower and lower. It is my understanding thatthe era lasted for about 15 years, during which companies
could develop as long as they could forecast and constructoptimal supply chains, since the entire world was operating
according to the same rules. Subsequently, factors such as
the conflict between the US and China triggered a change inglobalization, and a wall gradually began to form. The spreadof COVID-19 advanced this trend in a significant manner.
Walls were also erected within the EU, and even the Japanese automobile industry, which had boasted a stable supply
chain in the midst of globalization, was shaken by the resulting turmoil.
We are now entering an era in which anything can happen anywhere at any time. What is required of us in this situation is not accurate forecasts. What is important is how weact with willpower in the face of sudden changes. I believethat one of the key words in facing this challenge is sustainability. So how do we ensure sustainability? It is possible tosay, If we make a profit, we can sustain the Company. So
how can we be profitable in these times that are difficult toforecast? This is the essence of the issue. The era in which
it is sufficient to build a supply chain with an emphasis on
price has come to an end. The rise of the nationalism foryour country first mentality has led to the need for global
localization, or in other words, global development based on
the local location. This will be a more difficult challenge thanadvancing conventional globalization.
Originally, the basic premise of a company is to continue to grow and survive. I feel that we have entered an era
in which we must purposely put this into words. We are determined to move forward strongly into the present and thefuture with a constant awareness of sustainability, which isdifficult to foresee.

Value Creation

Summary of the previous Medium-Term
Management Plan Growth & Change

New Medium-Term Management Plan
with the theme of sustainability
The words Active & Challenge in the title of our new consolidated Medium-Term Management Plan express our will
as to what the Group should be in this turbulent businessenvironment. We will contribute to the sustainability of society by evolving the framework we have established so far
into the Groupʼs strengths and solving various issues, andwe will ensure the sustainable growth of the Company. In thisTOPY Report 2022

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Chapter2

Growth Strategies

TOPY Report 2022

The formulation of A&C 2025 started with the definition of vision for 2030, which was discussed with younger employees
as well. The phrase Active & Challenge was also thought up
by one of our employees. Through this process, I sensed thateach and every one of our employees was beginning to thinkthat we must change. I also accepted their desire to work for acompany they can be proud of.
In 2021, the year of our 100th anniversary, the Group set
out to evolve into a new Topy Industries. We are changing while
preserving our 100-year tradition. We are able to carry on our
traditions because we evolve with the changing times. The
Groupʼs traditions are built on a pioneering spirit and an attitude
of constantly taking on the challenge to create new products.
Many people have described the Group as a cheerful company,
and we believe that the source of our vitality lies in our pioneering spirit of manufacturing. All of our employees are actively
taking on a variety of challenges. We will use this vitality andcheerfulness as energy to create products and services witheven higher added value and earn the trust of society, which
we will take pride in as we move forward to the next step. By
further strengthening this cycle, the new Topy Industries willachieve sustainable growth.

Corporate Data17

Becoming a trusted and proudly
sustainable Topy Industries Group

Sustainability

Strategies by segment
The strategy for each segment is to focus on leveraging theGroupʼs strengths and strengthening its weaknesses.
In the steel segment, we will expand high value-added
products based on our unique technology for deformed steel
rolling, such as mast rail materials for forklift trucks, andpersistently nurture strategic products such as TACoil®. The
enhancement of strategic products is also being promoted inother business fields, with the percentage of strategic products growing to more than 40% of all product groups.
In the Automotive and Industrial Machinery Components

Financial strategy and sustainability strategy
The financial strategy and the sustainability strategy in A&C
2025 are counterparts. In our financial strategy, we havechanged our financial indices from operating profit to EBITDA. This is an indication of the Groupʼs commitment tosecuring reasonable cash flow by emphasizing investment
activities, rather than pursuing apparent profit and saving
money. We will maintain a sound financial structure and ensure the sustainability of the Group, which is the bottom lineof A&C 2025. What will be important against this backdrop is
the improvement of business practices, including the formation of appropriate selling prices for products and services inlight of changes in society. For example, if the Group were tosell its products at prices that unreasonably compress costs
in response to social changes, this could have a negative
impact on employees, suppliers, and other stakeholders,
as well as on the global environment. We will work toward
the ideal state for both society and the Group, with financial
strategy and sustainability strategy as the two wheels of ourinitiatives.
In our sustainability strategy, we have clearly statedrealization of a sustainable recycling society in the Group
Basic Philosophy from the current fiscal year, and have established the Group Basic Sustainability Policy based on thisphilosophy. In addition, we have identified materiality (important issues) and set KPIs and targets for them. Under A&C
2025, we will continue to implement various initiatives basedon the Basic Sustainability Policy and materiality, and practice sustainability management that leverages the strengthsof the Group to create new value and address social issues.

Business*The three major US automakers (General Motors, Ford, and Stellantis)

Human resources development and promotion of DX
strategy
The Group has identified structural reforms, operational
reforms, and work style reforms as three internal reforms.
Closely related to these reforms are the securing and development of human resources and the promotion of DX strategies.
Japan is currently facing a shortage of workers, and securing technical human resources is a particularly pressing
issue for the manufacturing industry. In response, several
years ago we introduced an internship system for university
students and have been enhancing our post-hiring training
system. Since the establishment of this new system, we
have seen growth in our younger employees, and this growthhas been well received internally. Looking back at the past, inthe manufacturing industry, employees in all occupations, including administrative staff, took time to learn manufacturing
and production planning. However, in the name of efficiency,that time has somehow been reduced. I believe this is where
the issue of training lies. Now is the time to learn from thepast and change it to fit the times while promoting training.
We will also focus on the development of DX human re-sources. DX human resources, as defined by the Group, arethose who can transcend departmental boundaries, utilize
data in their own work, and bring about innovation. Moreover, in the future, they will also be able to share data withcustomers and suppliers. In April 2022, we established a new
DX Strategy Department to lead this movement. Through thesmart factories promoted under G&C 2021, we have built thefoundation for DX, which is to connect and utilize data, andwe will aim for transformation through the creation of innovation by utilizing this data. At the Toyokawa Factory, datavisualizing the movement of production lines on a 0.1-second basis has been used to identify the causes of problems
and improve operations, and this has begun to change themindset of employees in the field. The aim of these threeinternal reforms is precisely this change in awareness. In an
age when business as usual is no longer acceptable, it isessential to think about what one should do and to continue
to devise and strive to do so. We will continue to reiterate theimportance of these three reforms going forward.

Growth Strategies

Segment management andstrengthening overseas operations
By rethinking our existing divisional strategies from thebroader perspective of segments, we will improve capital
productivity and optimize our business portfolio. For example, we began specific measures in FY2021, such as establishing a new Aluminum Control Center to strengthen thealuminum wheels business for passenger vehicles, for which
demand is expected to grow in the future. The Business Development Strategy Center and the Sales Department, whichwere newly established in FY2021, are also part of the measures we are taking to strengthen internal collaboration forsegment management.
Furthermore, with regard to overseas operations, wewill rebuild a business foundation that can compete locallyin order to minimize the impact on the Group of changes inthe business environment of Japanese customers. Alreadyin North America, we are moving forward with efforts to increase orders from the Big Three* and are gradually achieving results in strengthening our growth foundation as a local
company. The steel, automobile, and construction machineryindustries in which the Group operates are among the mosttrusted in Japanʼs manufacturing industry. Having customers in these industries is a major strength of the Group andone of the advantages we see in strengthening our overseas
earning power. We are planning moves to acquire a newcustomer base in these three industries, which are growing
strongly and robustly overseas as well.

Segment, in addition to strengthening the aluminum wheels
business for passenger vehicles as previously mentioned,
we will continue our efforts to reduce the weight of wheels,
which is increasingly required due to the shift to electric vehicles. For small-diameter wheels for compact passenger
vehicles, we will focus on steel wheels, which are lighter
than aluminum wheels. We believe that the worldʼs fastest
production line at the Toyokawa Factory will be an important
tool in this effort. On the other hand, for high-end passenger
vehicles, we use aluminum wheels to reduce weight, and
the Groupʼs aluminum wheel weight reduction technology
has been well regarded by our customers. Based on these
two measures, which can be considered polar opposites,
we plan to respond to the shift to EVs by adding design andother forms of added value while expanding our businessoverseas. With regard to wheels for mining equipment andundercarriage components for construction machinery, in
addition to OEM applications, which are our strength, we will
also strengthen our efforts to expand sales for after-market
applications and supplemental components, where the market is growing.
For the Power Generation Segment, we are considering
the introduction of biomass co-firing for decarbonization, andwe are also conducting tests of fuel blending for co-firing,and have reached the stage where we can judge that it istechnically feasible. Although challenges remain in the stableprocurement of biomass fuels, we see this as an opportunity
to advance new projects and infrastructure development
against the backdrop of rising electricity prices due to soaring coal prices.
We will also work to become carbon neutral by promoting energy conservation and fuel conversion in the manufacturing processes of these businesses.

Value Creation

era when the ability to respond to change is crucial, the newTopy Industries will be a company that continues to actively
take on challenges, regardless of the environment, with astrong will to change as its first priority. This is the starting
point for the Topy Group, which celebrated its 100th anniversary in 2021 and began its journey into the next 100 years.
Under A&C 2025, we have formulated a business strategy, financial strategy, and sustainability strategy that consistsof five key themes based on the Groupʼs basic strategies of
implementing segment management, strengthening overseas
profitability, strengthening the domestic business foundation,and contributing to decarbonization. By executing theseclosely interrelated strategies, we are determined to regain
earning power and move into the growth phase.

TOPY Report 2022

18

Chapter2

Growth Strategies

Summary of past Medium-Term Management Plan Growth & Change(G&C) and positioning of new Medium-Term Management Plan

New Medium-Term
Management Plan

Strengthening of an integrated
production system
Upgraded steelmaking facilities at
Toyohashi Works

Overseas production bases
9 production bases→

18 production bases

Expansion and strengthening wheel
through M&As

Establishment of DX platform(ERP introduction, smart factories)

2016–20182019–2021

G&C 2018

G&C 2021

Global growth and transformation toa highly profitable structure

Sustainable growth andtransformation into a rewarding
company to work forCompletion of G&C andfuture growth

Expand overseas business(quantitative growth)●Strengthen domestic business foundation(qualitative transformation)●

Enhance sophistication of management●

Operating margin 4.6%●

Sustainable growth of business●

Increase in earnings power●

Trust and empathy from society●

Manifestation of the Group synergies●

Strengthen the management foundation●

Enhancement of strategic products●

Taking on the challenge of innovation●

Further strengthening of the managementfoundation●

Achieve consolidated ROE of 5% or higher●

Recovering earnings power andmoving into the growth phase

Growth Strategies

Main measures●

Under the Group Basic Philosophy, we will solve a wide range of social
issues, grow and develop through contributing to the realization of a sustainable, recycling society, and become a global company that is trusted bystakeholders for many years to come.

Value Creation

2013–2015

G&C 2015

New Medium-Term
Management Plan 2022〜2025

TOPY
Active &Challenge
2025

Evolution in G&C (2013-2021)

Basic Policy
In order to realize our vision for 2030, we have formulated
a new Medium-term Management Plan, TOPY Active &Challenge 2025, which will cover the period from FY2022 to2025, based on a backcasting approach.

Transform earning power to strengthen existing
businesses● Pursue innovation for the next stage of growth● Contribute to a sustainable society through ourbusiness activities●

Strengthening of business foundation

Group Basic Strategy

During the implementation period of G&C 2021, quantitative targets for net sales and profit were not achieved due to the impact ofchanges in the business environment that greatly exceeded initial expectations, including restrictions and self-restraint in socioeconomic activities due to the spread of the coronavirus, a sharp rise in steel scrap and coal prices, and significant automobile production
fluctuations due to supply shortages of semiconductors and other materials. Nonetheless, we made steady progress in establishing abusiness foundation for future growth by implementing structural reforms.

Increase inearnings power

Structural reforms and other initiatives to improve sales & purchaseactivities did not lead to achieving the goal despite our redoubled
efforts.
Need to further reinforce the foundation for generating earnings.

Manifestationof the Groupsynergies

Implemented structural reforms for steel wheels for domestic passenger and commercial vehicles.
For aluminum wheels, further integrated procurement and manufacturing technologies, and established the Aluminum Business
Integration Center.
Established the Sales Headquarters to further increase synergies.

Enhancement ofstrategic products

Developed TACoil® and high-luminance metallic color wheels.
Continued working on development of high value-added products
and environmentally friendly new products.

Taking on thechallenge ofinnovation
Furtherstrengthening of
the managementfoundation

FY2021 target

Promoted conversion to smart factories, and established the Business Development Strategy Center.
Built a foundation for developing new products and businesses bypromoting innovation and human resource development.
Promoted sustainability and carbon-neutral initiatives under the
newly organized specialized team.

15.4

16.7
4.6

(FY)

19

2012

TOPY Report 2022

Contribute to decarbonization

Three key strategies

FY2021 results

Businessstrategy

Operating profit
margin5.0%(0.6)%

ROE

8.5%

0.4%

Financialstrategy

Sustainability
strategy

ROA

5.7%

(0.3)%

Financialgoals

Non-financial
goals

D/E Ratio

0.52

0.76

Net sales

JPY 320.0 billion(Under the new accounting standard:
271.2 billion yen)

Operating profit

JPY 293.9 billion

JPY (1.7) billion

JPY 16.0 billion

Five key
themesFinancial goals
Operating profit
marginEBITDANet income
attributable toowners of parent

JPY 0.4 billion

JPY 11.0 billion

ROE

Plan for FY2025

4.5% or more
32.0 billion
8.0% or more

JPY

2.3

2013

2.7

2014

2015

Evaluation indicators

Numerical targets

Environment

CO2 emissions

emissions by%compared to FY2013(FY2030)

Aim to reduce CO2

18.6

3.4

3.5

18.6
15.2

2017

9.6
2.6

2018

1.1

(1.3)

2019

2020

11.1

4.5%

(0.6)
2021

(Scope 1 and 2)

Ratio offemale managers
Social17.8

2016

Non-financial
goals

32.0 billion

Consolidated operating profit on sales (%)

21.3

3.1

Strengthen overseas profitability

JPY■Consolidated EBITDA (billion yen)
15.9

Strengthen domestic business base

Corporate Data

Evaluation

Promote segment management

Sustainability

Major Topics

Business

Summary of the previous Medium-term Management Plan G&C 2021

Governance46

10% or more
(FY2030)

zero

Number of workrelated accidents inJapan

Aim to achieve
accidents every year

Serious complianceviolations
Number of cases

Continue to reportviolations
every year

(Lost time injuries or more)zero

2025 (target)

TOPY Report 2022

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Chapter

Growth Strategies

2

Ideal state in 2030 and new Medium-Term Management Plan
Based on the business foundation established in the previous Medium-Term Management Plan,
G&C2021, we aim to contribute to a sustainable society and further enhance our corporate value
by pursuing innovation and becoming carbon neutral for the next stage of growth, while further
strengthening profitability.

Vision for

Promote segment
management

Strengthen domestic
business baseStrengthen overseas
profitability

Value Creation

2030

Group Basic Strategy
Contribute todecarbonization

Three key strategies(business strategy, financial strategy,
and sustainability strategy)●

SustainablegrowthTOPY
Active &Challenge
2025

Structuralreforms

Create high value-added advanced
products●

Enhance the recycling business●

Growth investment of

26.8 billion yen or
more(4-year cumulative total)●

Complete structural reforms in the Automotive and Industrial Machinery
Component Business●

Fundamentally reform the steel bar business●Maximize the effectiveness of new organizational structure to strengthen
competitiveness●

Ensure appropriate selling prices and expand our domestic and overseas
customer bases●

Improve our financial position●

Pursue HR and DX strategies

Operating profit margin of

5.0%
or higher*(by FY2025)*Main segment

Free cash flow of

20.0 billion yen or more

Final FY of
TOPY Active &Challenge 2025

A company that creates
new value and plays aleading role in solvingsocial issues

EBITDA

32.0

JPY
billionRealization
Harvest investments in growthareas and invested capital in thenext medium-term management
plan

BusinessStrengthenbusinessfoundation

Accelerate the business strategy
globally● Expand the aluminum wheel business●

Growth Strategies

New Medium-Term
Management Plan

Optimize the business portfolio(4-year cumulative total)

Earnings growth throughgrowth-oriented investment
Reap the results of investments +Structural reforms of low profitability business

Structural reforms
Developments (Shrinking domestic demand + Impacts of environmental change)

Shinichi Kijima
Executive Vice President
Assistant to President,
in charge of Finance

Expansion of green products

Optimization of global production bases

Carbon neutrality

profitability and sustainable growth

3 Deepen proprietary technologies and become carbon
neutral

4 Secure and develop human resources to support
sustainable growth

5 Enhance management sophistication through promotion of
DX strategy

Focus on free cash flow generation
for investments to support future growth
The financial strategy of this Medium-Term Management Plan is investment for growththrough sustainable EBITDA generation and execution of shareholder returns. We focusedon securing free cash flow for investment in areas of future growth and expansion, while
manifesting the results of structural reforms under the previous Medium-Term Management
Plan, G&C 2021. We aim to achieve free cash flow of 20 billion yen or more by the final fiscal
year of the plan. Accordingly, EBITDA was adopted as the financial target, aiming to achieve
EBITDA of 32 billion yen, operating profit on sales of 4.5%, and ROE of 8% during the periodof this Medium-Term Management Plan to improve capital efficiency, maximize consolidated
earnings, and improve our financial position. In terms of shareholder returns, we will strive tomaintain stable dividends with a target consolidated dividend payout ratio of 30-35%.

Sustainability
strategy

Tsuyoshi Nakamura
Senior Managing Director
Corporate Planning Department
In charge of Sustainability Strategy

Corporate Data

Financialstrategy

Expansion ofhigh value-added products

Sustainability

Five key themes

Businessstrategy

1 Improve capital productivity and optimize business portfolio
2 Restructuring of the business foundation for enhanced

We will implement sustainability management based on
our long-term goals
We regard the implementation of sustainability management as part of our growth strategy,
and have established a long-term vision for sustainability, TOPY Sustainable Green Vision
2050, and formulated our sustainability strategy in this Medium-Term Management Plan. Under the Basic Sustainability Policy, we have established the Sustainability Strategy Committee
and put in place an implementation system, while identifying materialities and clarifying priority issues to be addressed.
In particular, we have set long-term targets for decarbonization, and are working todevelop environmentally friendly products and reduce environmental impact throughout the
product lifecycle, with a view to achieving carbon neutrality by 2050. We have also established KPIs for social and governance aspects, and will implement sustainability management
while managing the progress of our initiatives.
*For details about TOPY Sustainable Green Vision 2050, please visit our website.

21

TOPY Report 2022

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22

Chapter3

Business

Steel Segment
Value Creation

Responding to customer needs by leveraging proprietary
technologies and contributing to the realization of a recycling-oriented society through the recycling of resources

Topic
Introduced advanced
sorting line at Akemi
Recycling Center

Growth Strategies

Katsuyoshi Tanaka
Operating Officer
in charge of the steel business
General Manager,
Steel Division

Opportunities and Risks

Our steel products contribute to the realizationof a recycling-oriented society through the recycling of various resources, including scrap, andthe use of advanced technologies to provide
steel products with manufacturing processes
that save energy and have a low environmental
impact. In addition, our advanced design andmanufacturing technologies for deformed steel
products contribute to the development of sustainable, high-quality social infrastructure.

Opportunities●●

Companies are expected to tackle global environmental issues such as reducing
greenhouse gas emissions and realizing a
recycling-oriented society

Strengths of the Business

23

TOPY Report 2022

Policies andstrategiesof the new
Medium-Term
Management
Plan●

Strengthening our ability to handle sharp
rises in prices of raw materials, energy, andsecondary materials, including steel scrap● Strengthening measures toward DX and carbon neutrality●

Expansion of high value-added products●

Optimization of logistics●

Further productivity and cost improvements●

Upgrade recycling business●

Creation of new value-added products using DX

Risks
●

Steel demand in Japan is shrinking in thelong-term●

Worsening of production costs due to rising
prices of raw materials, etc.

●

The price of steel scrap is rising due to increasing electric furnace steel production in
Japan and overseas

Future issues
and initiatives

We will expand high value-added products that take advantage of our proprietary technologies, such as TACoil®
and mast rail materials for forklift trucks, while optimizing steel sales prices to match the cost of raw materials,
energy, and secondary materials, and reforming ourbusiness practices. We will also aim to establish a highly
profitable structure through means such as building a
procurement system for inexpensive, high-quality steel
scrap. In order to maximize the effect of capital investment in the recycling business, we will contribute to therealization of a recycling-oriented society by promoting
the sophistication of recycling.

Akemi Recycling Center (below, ARC ),a consolidated subsidiary with one of
the largest shredder plants in Japan,
has established a recycling systemthat minimizes waste generation by
shredding waste automobiles andmiscellaneous scrap into ferrous andnonferrous scrap, and utilizing shredder
dust consisting of plastic and rubber
as a substitute for charcoal in our electric furnaces. However, the nonferrous
metals contained in shredder dust, theraw material for charcoal substitutes,
affect the properties of steel, limiting its
use in electric furnaces and restricting
ARC s shredder production. The newly
installed advanced sorting line is capable of thoroughly sorting and recovering nonferrous metals, enabling the useof coal substitutes in electric furnaces
and the expansion of ARC s shredder
production volume. In addition, the volume of nonferrous metals sorted andrecovered, as well as the volume ofsales to external customers, is expected to increase, leading to higher profit.

TOPY Report 2022

Corporate Data

In regard to steel demand in Japan, there iscontinuing demand related to civil engineering projects, such as measures for building
national resilience

Challenges●

Core Competencies

In addition to being able to efficiently produce
various types of products, such as steel sections
and bars for construction, rims for automobileand construction machinery components, anddeformed section steel for track shoes and thelike, the Group s strength is product development capabilities that meet the needs of customers and society. This enables us to have abroad and stable customer base. Recycling andenergy-saving technologies using high-efficiency
electric furnaces are also major strengths.

Global steel demand is expected to grow inthe long-term, driven by infrastructure-related demand in emerging nations

Sustainability

Outcomes Created by Our Products

Summary of
G&C 2021

Business

Our Business Environment

Outcomes

Social Value of Products

In addition to establishing a structure capableof manufacturing 1 million tons per year ofsteel products such as shapes and bars, wedeveloped and expanded high value-added
products, including the larger size (3 tons)of TACoil® steel bars for reinforced concreteand new sizes of mast rail materials for forklift
trucks for export. In addition, we steadily implemented measures to strengthen our foundation, such as structural reforms, and cost
improvements.

24ChapterBusiness

3

Automotive and Industrial
Machinery Components Segment(Wheels for Passenger Vehicles)

Value Creation

Our completed global network,and maximizing synergies as acomprehensive wheel manufacturer.

Topic

Koji Nanayama
Operating Officer in charge ofthe automotive and industrial
machinery components
business
General Manager,
Wheel Division

Summary of
G&C 2021

By providing wheels for passenger vehicles, we
support motorization around the world and contribute to the reduction of environmental burdens
through improved fuel efficiency created by lightweight, aerodynamic, and quiet wheel technologies.

Opportunities●

Core Competencies●

Domestic automobile demand is contracting due to factors such as Japan s declining
population●

Protectionism is becoming evident aroundthe world●

Production adjustment by automobile manufacturers due to economic trends and difficulty in procuring parts

TOPY Report 2022

Rising manufacturing costs due to soaring
raw material and transportation costs

Policies andstrategiesof the new
Medium-Term
Management
Plan

Future issues
and initiatives

Completion of structural reform of steel wheels for passenger vehicles● Expansion of aluminum wheels for passenger vehicles
business● Restructuring of global production system (optimizationof production bases)● Initiatives to respond to the shift to EVs●

We will complete the structural reforms in each business
implemented under G&C 2021 to improve profitability andmaximize profit by allocating management resources to thealuminum wheels for passenger vehicles business, whichis expected to grow. As for our global production bases inNorth America, China, and other regions, we will strengthen
our business by establishing an optimal production system
in response to changes in the parts procurement network
due to factors such as the impact of the coronavirus.

We established the Aluminum Control
Center in Kakegawa City, Shizuoka
Prefecture, to consolidate the development and management functions of thealuminum wheels for passenger vehicles business. This will further promote
integrated operations of the businesswith consolidated subsidiaries Asahi
Tec Corporation and Kyushu Wheel Kogyo, Ltd. In addition, we will strengthen
our ability to respond to changes in thebusiness environment, such as the rapid shift to electric vehicles and sharp
rises in the prices of raw materials andenergy, and to develop and apply newtechnologies that meet the needs ofcustomers and the market, in order tocapture the expected growth in global
demand for aluminum wheels for passenger vehicles and further increase
profit.

TOPY Report 2022

Corporate Data

*1 Connected, Autonomous, Shared/Service, Electric*2 Mobility as a Service●

25

The automotive industry is advancing technological innovation such as CASE*1 andMaaS*2Risks

Completion of structural reform of the steel
wheels for passenger vehicles business inJapan● Optimization of selling prices in responseto the rising prices of raw materials, energy,
and secondary materials, etc.
● Strengthening ability to respond to demand
fluctuations●

Challenges●

As a result of economic growth worldwide,
global automobile demand is expected to
expand in the medium to long term, particularly in emerging nations

Sustainability

Opportunities and Risks

Business

Outcomes Created by Our Products

Outcomes

Our Business Environment

The Group has built a global supply system forwheels for passenger vehicles by establishinglocations in Japan, the U.S., Mexico, China, andIndia and forming a strategic alliance with MW
Italia S.R.L. in Europe. In addition, our aluminum
wheels for passenger vehicles are highly valued
by customers for their high design quality andlightweight technology. These strengths enable
us to have a broad sales network to the worldʼsmajor automakers.

Consolidation of domestic production
bases in the steel wheels for passenger
vehicles business has resulted in an optimal
production system with appropriate supply
capacity to meet domestic demand for steel
wheels for passenger vehicles (5 lines at 3
production bases → 2 lines at 1 productionbase). In addition, we promoted DX by converting our plants to smart factories.
● In the aluminum wheel for passenger vehicles business, we have promoted mutual
deepening of procurement and manufacturing technologies with Group companies andestablished a new Aluminum Control Centerin order to capture demand for aluminum
wheel for passenger vehicles, which is expected to grow on a global scale.
●Social Value of Products

Strengths of the Business

Growth Strategies

Consolidation ofdevelopment and operation
functions of the aluminum
wheels for passenger
vehicles business

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ChapterBusiness

3

Automotive and Industrial
Machinery Components Segment(Commercial and Off the Road Wheels)

Summary of
G&C 2021

Operating Officer in charge ofthe automotive and industrial
machinery components business
General Manager, Commercial
and Off the Road Wheel Division

Our Business Environment

Outcomes Created by Our Products

Opportunities and Risks

Opportunities
Global demand for commercial vehicles is
expected to grow in the long-term●Long-term expansion of demand for mining
equipment in nonferrous mines due to theshift to EVs in automobiles●

Growing demand for inspection and repair
business for wheels for mining machinery

Risks

Strengths of the Business●

In wheels for commercial vehicles, we hold approximately 90% of the market share* in Japanby achieving weight reduction through advanced
product development capabilities using deformed
steel and flat plate materials. In addition, our production base in Indonesia is meeting the needs ofautomobile manufacturers for local production. In
the area of wheels for mining equipment, we haveearned a high level of reliability by providing theworldʼs largest class of high-quality SGOR® wheelsthat can withstand the harsh conditions of minedevelopment around the world, and we hold approximately 90% of the global market share*.

●●Commercial vehicle production in Japanis decreasing due to a decline in domestic
demand and a shift to local production overseas
Decrease in demand for mining equipment
due to the shift to aluminum wheels for commercial vehicles toward a carbon-neutral
society and decrease in demand for coal
Restrictions on ocean transport and higher
ocean transport costs due to prolonged
global container shortages

Future issues
and initiatives●

Optimization of selling prices in responseto the rising prices of raw materials, energy,
and secondary materials, etc.

●

Optimization of the product portfolio of theoff the road wheels business, and sophistication and modernization of manufacturing
by streamlining the manufacturing process●

Completion of structural reform of the wheels for commercial vehicles business (optimization of domestic andoverseas production systems)●

Expansion of inspection and repair service businessand commercial sales expansion system for SGOR®,
ultra-large wheels for mining equipment

In the wheels for commercial vehicles business, we willcomplete structural reforms, including the transfer ofsome production from Japan to Indonesia, to transformthe business into a highly profitable structure.
In the off the road wheels business, we will develop new markets and expand the after-sales service
business, including inspection and repair services, tostrengthen sales expansion in overseas markets andmaximize profit.
Through valuable technological innovations that
anticipate user needs, we will develop high value-added
products that outperform competitors and expand ourcompetitive product lineup.

In the 2021 SQEP* of Caterpillar Inc. of
the United States, we have been certified Platinum for the 10th consecutive
year, the highest level in the wheels formining equipment category, for meeting high standards in quality, production, delivery, and other requirements.
Very few companies have received
platinum certification for more than the
10 consecutive years, and we consider
it a prestigious certification.
We will continue to promote improvement activities to further enhance
the trust of our customers and ouroverall strength.

Corporate Data

Core Competencies

Policies andstrategiesof the new
Medium-Term
Management
Plan

Completion of structural reform of thewheels for commercial vehicles businessand strengthening of price competitivenessSustainability●

Challenges

By providing wheels for commercial vehicles that
support logistics, we enrich the lives of people
and contribute to reducing environmental impact
by improving loading efficiency and fuel efficiency
through the development of lighter weight wheels.
In addition, by providing wheels for mining vehicles used to extract iron ore and coal, we support
mine development and contribute to industrial development and the building of social infrastructurearound the world.

●

Received SQEP Platinum
certification for the 10thconsecutive years from
Caterpillar Inc. (US)Business

Social Value of Products

Topic

Growth Strategies

Outcomes

Koji Takeuchi

In the wheels for commercial vehicles business, structural reforms were implemented tostrengthen profitability by consolidating domestic production lines, optimizing the product mix with the Indonesian production baseand integrating production types, thereby reducing the number of wheel types produced inJapan by about half, reducing fixed costs, anddiversifying material suppliers. In the off theroad wheels business, we are strengthening
frameworks for expanding sales in overseas
markets and establishing an inspections andrepair business in North America. With respect
to product development, we expanded ourhigh value-added products, such as Brilliant
Wheels, Japanʼs first clear coated commercial
vehicle wheels, and Evolution Type SGOR®,
a new product that contributes to reducing
heavy-duty work by workers at mine sites andimproving the operating rate of mining equipment vehicles, which were introduced to themarket.

Value Creation

Providing products and services that contribute tosociety on a global scale through advanced technologicalcapabilities and innovation for the next stage of growth*SQEP：Supplier Quality Excellence Process
SQEP is a system under which Caterpillar annuallycertifies suppliers based on its own standards, and isclassified into four levels: Gold, Silver, and Bronze, with
Platinum as the highest level.

* Sales shares for automobile manufacturers and construction equipment manufacturers (new vehicle assembly)

27

TOPY Report 2022

TOPY Report 2022

28

ChapterBusiness

3

Automotive and Industrial
Machinery Components Segment(Undercarriage Components for Construction Machinery)

Value Creation

Achieve stable earnings and growth as aleading company in undercarriage
components for construction machinery.

Growth Strategies

Topic
Automation of track
shoes loading operation
using AI

Hideo Katsuyama
Operating Officer in charge ofthe automotive and industrial
machinery components business
General Manager, Undercarriage
Components Division

A new track assembly line was constructedat the Toyohashi Works, enabling integrated
production from materials to finished products at the works, and establishing a flexible track supply system to meet fluctuating
demand and reduce logistics costs.
● We were the first Japanese company to introduce a water-soluble coating equipment
for tracks, contributing to an environmental
impact reduction.
●

By providing undercarriage components forconstruction machinery, we contribute to therealization of a society in which people can livewith peace of mind through infrastructure development, resource development, and housing
construction in countries around the world.

Opportunities●

Demand for construction equipment will
expand over the long term, especially inemerging countries●

Demand for smaller product models is expected to rise as emerging nations become
increasingly urbanizedCore Competencies

We have gained high levels of trust from customers by involving them in the design processfrom the development stage and fulfilling our
responsibility to supply high-quality undercarriage components for construction machinerythat meet their needs. We have a large share of
the market for hydraulic excavator tracks andtheir component parts, such as track shoes,
and have established a global supply system byutilizing our production bases in Japan, North
America, China, and Indonesia. Another one of
our strengths is our efficient production system
in Japan, which integrates production from materials to finished products.

29

TOPY Report 2022

Risks
●

Soaring prices of raw materials and marinetransport costs●

Emergence of low-priced Chinese construction equipment manufacturers

Policies andstrategiesof the new
Medium-Term
Management
Plan

Future issues
and initiatives

Strengthen partnerships with construction equipment
manufacturers● Enhance sales expansion system for supply parts● Develop products and sell high value-added products●

We will develop new products based on market and customer needs, and modernize our production facilities toenhance profitability and improve customer satisfaction.
We will continue to study further ways to strengthen ourability to respond to the supplemental components market and supply systems for growth markets around theworld.

We have introduced an AI-based
crawler plate feeder for the purposeof automating the work of inserting
track shoes on the tracks assemblyline at Toyohashi Works. The device
uses AI image analysis to recognize
the position and front and back of the
track shoes, and the robot automatically performs all picking and loading
operations, thereby contributing to the
reduction of worker workload and improvement of productivity. We will continue to pursue improvements in work
efficiency and productivity, leading togreater customer satisfaction throughimproved working conditions for workers and lower costs.

TOPY Report 2022

Corporate Data

Strengths of the Business

Improve cost competitiveness by optimizing
manufacturing processes and increasing
productivity● Improve profitability by developing and expanding high value-added products● Establish a business structure less susceptible to demand fluctuations●

Sustainability

Opportunities and Risks

Business

Outcomes Created by Our Products

Summary of
G&C 2021

Challenges

Our Business Environment

Outcomes

Social Value of Products

30

Chapter3

Business

Business Development Segment

Promotion of DX
Topy Industries Group’s Approach to DX
Topy Industries seeks to create new sources of profit by producing novel approaches to digital innovation, evolving its
smart factories (SF) established as part of its digital transformation in the manufacturing domain with digital transformation(DX). In June 2022, we obtained DX Ready certification from
the Ministry of Economy, Trade and Industry, demonstrating
our commitment that the promotion of DX is one of our mostimportant management strategies.
The maturity level of the Company s DX is currently level2, which is to connect data, and we have completed building
the foundation for DX. Going forward, we will use informationfrom production and equipment operations to analyze, assess
and predict changes. This will allow us to push ahead withactivities in small themes with the clear goal of transitioning
from individual optimization to overall optimization. We are
now moving ahead with DX systematically, aiming to reachLevel 6--Gaining and opening up new insight--while building
up small effects over a short period of time.

Mica

Level 4
Identifying and addressing problems

Strengths of the Business

Topic

The robots we manufacture are equipped with running
functions that can run on steep stairs of buildings andrough roads, and underwater running and swimming
functions that can run stably not only on land but also inwater.

Level 1Visualization

Ｐ
ＥＲ

n

ctio

stru

on
Fc

S

FY2021
Digitization

Data coordination

Topic
The Japan Water Robot Research and Cleaning Association (JWRCA) used an underwater cleaning robot developed by Topy Industries to create the uninterrupted
underwater method that enables cleaning and inspection of water distribution ponds without interrupting water service. This method received the Minister of Health,Labour and Welfare Award at the FY2021 Infrastructure
Maintenance Awards. The method was highly evaluatedfor increasing the safety of work while securing hygieneof water distribution ponds without interrupting water
services, for shortening cleaning time by increasing
work efficiency and for enabling regular inspections
and cleaning of water distribution ponds. Today, we areworking alongside the JWRCA to develop a high performance underwater cleaning robot.

Individual optimization

Overall optimization●

Establish overall optimization by clarifying correlation between measures and targets●

Evaluate the effects of measures using KPIs to connect efforts to target achievement●

Shift from measures focused on conventional system development to emphasis on business measures and system utilization●

Form teams lead by departments implementing business measures (each dept. and head office dept.) to implement activities●

Newly establish the Digital Transformation Strategy Department to encourage close cooperation and collaboration with relevant
departments and promote human resource development where all employees utilize data to transform their work

June 2022:
obtained DX Ready certification

Management reports (semiannually)DX Promotion Council (meets semiannually)(1) Confirms direction of DX and (2) monitors progress of each DX theme
Owner: Officer in charge of DX Strategy Department
Members: GM of DX Strategy Department, GMs of Business Divisions andHead Office Departments, etc.

DX Promotion Subcommittee(organized by each business unit and department)

Exterior view ofwater distribution
pond

TOPY Report 2022

Digitize information and operations that
could only be handled physically.

Detailed Approaches to Promotion of DX(1) Discusses DX themes, (2) develops environment for digitalization,and (3) manages progress of systemization
Owner: GMs of Business Divisions and Head Office Departments, etc.
Members: Theme leaders (members appointed by GMs of Business Divisions)31

Achieve operational streamlining by changing approaches
to work using digitalization. Resolve issues Harness effects(Activities on cross-functional themes)
Measurement and Control Technology Research Group, SF Promotion Working
Group, Energy Conservation Meister, CN Promotion Council, Central Quality Committee (quality system development), and Product Development Strategy Council,
etc.

Corporate Data

We have unified the collective brand used for the mica
business and its product lineup as TOPY MICA, seeking to further increase the status and visibility of themica business globally. Additionally, we have createdthe slogan Make Up A Life for the mica business tospur on efforts toward achieving its business vision.
This slogan embodies our strong commitment to continuously create prosperous lifestyles together using
mica in various aspects of our daily lives.

Streamlining (Digitalization)

Level 2Connecting

Sustainability

Topy Mica, which is refined from natural minerals, themain raw material, is well regarded by domestic andoverseas cosmetic manufacturers for its safety, high purity, and stable quality without impurities. It is also highly
evaluated for its high barrier performance controlling thepermeation of gas and other substances as a raw material for food packaging materials.

Level 3
Organizing as information

Strengths of the Business

Sharing and systemization
Sharing to enable use at other departments(companywide) Inclusion in mechanisms

BusinessCore Competencies

ion

at
ner
ion
vat fit ge
o
n
In
pro
New

Level 5
Foreseeing the futureCore Competencies

Growth Strategies

DX

Level 6
Gaining and opening up new insights

RobotsValue Creation

Becoming a global niche leader
in innovative technologies(Digital Transformation Strategy Department)
DX Strategy Meeting(1) Formulates DX strategy and (2) confirms DX outcomes
Owner: GM of DX Strategy Department
Members: Managerial staff off DX Strategy Department(Execution support)(1) Digital transformation support● Coordinates direction of DX● Promotes small themes of business divisions and other departments andfollows up to ensure steady outcomes are realized(2) Digitization support● Develops environment for digitization and supports systemization
Core Business Innovation Theme
SF Utilization Theme
Efficiency Management Theme
Information System Utilization ThemeERP Promotion GroupSF Promotion GroupOperational Reform Promotion Office
ICT Management Office

TOPY Report 2022

32

Chapter

4

Sustainability

Basic Policy on Sustainability of the Topy Industries GroupWe will address environmental and social issues in terms of the unique opportunities, risks and regulatory response of the Groupand ensure that the Group s activities contribute to the SDGs by promoting various initiatives supporting this response.

Value Creation

The Group aims to be a global company that can always address the needs of the times and live up to the trust placed in it fromstakeholders by resolving social issues in various areas and helping to achieve a sustainable recycling-oriented society. In October
2022, we formulated our long-term sustainability vision for the year 2050, TOPY Sustainable Green Vision 2050. * Looking ahead,
we will set our sights on contributing to a sustainable society through corporate activities and enhancement of corporate value
achieved by promoting initiatives following each of our sustainability policies.

ESG Initiatives of the Topy Industries Group

Corresponding
SDGs
Approach of Topy Industries

Environmental andsocial issues

Business opportunities

Response to risks and regulations

Development of environmentallyfriendly products

Global warming reduction
initiatives

Recycling business

Chemical management

Group Basic Philosophy
The Topy Industries Group will fulfill its responsibilities as a public institution
and contribute to the realization of a sustainable
recycling-oriented society through the continuation and development of its business.

Group
Code of Conduct

EnvironmentE

Air pollution

Products enhancing
work efficiency

Social

S

Tightening of laws andregulations in countries

Promotion of
responsible procurement
Supplying safe, secure products (quality assurance)

Local economic development

Supporting
systems

Local job creation

System for promoting
environmental activities

Small group activities

Diversity

Strengthening governance

Global management

Supply chain management

Communication promotion
committee

Recruitment anddevelopment of globallycompetitive human resources

Risk management system
BCP (Business Continuity Plan)

ComplianceE

SocialS

GovernanceG

Sustainability

Environment

Business

By continuously taking on challenge of green innovation, we will contribute to the preservation of
the irreplaceable global environment and its inheritance into the future.

Waste reduction initiatives

Skilled worker shortages

Basic Sustainability Policy
The Topy Industries Group will promote management based on the Group Basic
Philosophy and aim to enhance sustainable corporate value and contribute to thesustainable development of society through the pursuit of technological innovationand the resolution of social issues.

Water and resource depletion

Growth Strategies

Recycling
Acceleration of global warming

We aim to realize a sustainable and prosperous future for all people involved in the businessactivities of the Topy Group.
We will strive to realize sound and highly transparent management that is trusted by all stakeholders.

Policies
Anti-corruption Policy, Intellectual Property Policy, Tax Policy

Six Materialities (Important Issues)
Promotion of green innovation

Contribution to building a
recycling-oriented society

Respect for human rights

Support for diverse human resources

Contribute to society throughbusiness

Build of a solid managementfoundation

The Group has established the Sustainability Strategy Committee (chaired by a Senior Managing Director; convenes
at least twice per year) in an effort to promote sustainability
management.
The committee discusses and determines important matters involving formulation of basic policy and medium- to longterm strategy. It also conducts monitoring as well as reports
its discussions and decisions to the Executive Management
Meeting and Board of Directors for deliberation. Furthermore,
we have established the Sustainability Promotion Council andCarbon Neutral Promotion Council under the committee toplan and execute specific sustainability measures while facilitating close cooperation within the Group.

Board of Directors
Corporate Data

Human Rights Policy, Procurement Policy, Supply Chain Management Policy,

Promotion System for Sustainability Management

Executive Management Meeting

Sustainability Strategy Committee*

Sustainability
Promotion Council

Carbon Neutral
Promotion Council*Chairperson: Director in charge of Sustainability Strategy Department*For details about TOPY Sustainable Green Vision 2050, please visit our website.

33

TOPY Report 2022

TOPY Report 2022

34

Chapter

Sustainability

4■ Materiality Assessment Results of Candidates

Sustainability Initiatives of the Topy Industries Group

5.0

Climate change
Respect for
Effective utilization ofhuman rights
resources andStable supply of products
achieving recyclingoriented society
Risk management

4.5

Sustainable supply chain(environmental aspects)

High

Identification of Materiality

Materiality assessment of social issues

Validation and identification

We identified and listed global social
issues referencing the evaluation
items of ISO 26000, internationalguidelines such as the GRI Standards, the SDGs, and major ESG
rating agencies (FTSE, MSCI, andSustainalytics, etc.).

We analyzed and evaluated the selected social issues based on the two
perspectives of materiality for stakeholders (society) and materiality for
the Group (importance to operations),
assigning a priority ranking to each.

The Sustainability Strategy Committee validated the evaluation process
and analysis results for materiality,
and after approval by the Executive
Management Meeting and reportingto the Board of Directors, each materiality was identified.

Job creation and humanresources development
Digitization progress

Labor health and safety

Water risks

Sustainable supply chain (social aspects)

4.0

Co-existence withlocal communities

Compliance
Product safety and quality
Stakeholder engagement
Information security
Reduction of waste

3.5

Comfortable workplace and employee engagement

Growth Strategies

Sorting of social issues

Corporate governanceValue Creation■ Materiality Identification Process

Materiality for stakeholders (society)

The Group identified the six forms of materiality (important issues) that it should address based on discussions held by the Sustainability Strategy Committee and Board of Directors as well as the advice of outside experts. The identified materiality has been incorporated into the main measures of the Group s Medium-Term Management Plan, and business activities are being carried out forsustainable growth based on a detailed action plan and targets.

Diversity and inclusion

Low
3.0
3.0

3.5

Low

4.0

4.5

Materiality for the Group (importance to operations)

5.0

High

*Importance rated on a scale of 0.0 to 5.0

Materiality (material issues)

Development of environmentally friendly
products (green products)
Reduction of CO2 emissions
Expanding the use of renewable energy

CO2 emissions (Scope 1 and 2)
Energy consumption per unit

Aim to reduce CO2 emissions
by 46% compared to FY2013 in
FY2030Continuation of 1% reduction fromthe previous year

Conversion to power generation methods and fuels with lower
CO2 emissions, development of environmentally friendly products and consideration of LCA.

Contribute to buildinga recycling-oriented
society

Reduce and recycle waste
Promotion of resource recycling within theGroup
Biodiversity conservation
Water resource conservation initiatives
Chemical substance management

Final disposal volume of industrial
waste per unit of production

Continuation of 1% reduction fromthe previous year

Promote in-house recycling and reduce delivery packaging
wastes.

Respect humanrightsEstablishment of human rights policy
Implementation of human rights education
Assessment of and response to humanrights risks

Percentage of employees receiving
human rights education and training
Establishment of human rights due
diligence

Achieve and maintain 100% every
year

Accelerate initiatives to respect human rights.

Support for diverse
human resources

Global human resources development
Promotion of diversity
Health management initiatives andpromotion
Improvement of engagement

Ratio of female managers
Number of work-related accidents inJapan
Certified White 500 as a good
health management corporation

10% or more in FY2030
Aim to achieve zero lost time injuries
or more severe incidents every year
Aim to obtain certification in FY2025

Advance diversity & inclusion and work-style reforms.

Contribute to society
through business

Customer relations (quality)
Contribution through businessContribution to local communities

Implementation of human rights
education
Number of complaints

Continue to report zero violations
every year
100% in FY2022

Strengthen the quality assurance system and management
system.

Governance

Build of a solidmanagementfoundation

Corporate governanceCompliance
Risk management/BCP
Supply chain management

Number of serious complianceviolations
Basic Sustainability Procurement
Policy penetration rate

Continue to report zero violations
every year
100% in FY2022

Build a foundation for the autonomous internal control systemand enhance the supervisory function of the Board of Directors.

G

35

TOPY Report 2022

Corresponding SDGs

Corporate Data

S

Initiatives under the new Medium-term Management Plan

Sustainability

SocialKPIs and targets

Promote green of
innovation

EnvironmentE

Key initiatives

Business■ Materiality, KPI, Targets, and Initiatives in Medium-Term Management Plan (TOPY Active & Challenge 2025)

TOPY Report 2022

36

Chapter

4

Sustainability

Environmental Initiatives

Environmental Initiatives

Environmental Philosophy and Basic Environmental Policy

Response to Climate Change

Environmental Management
We believe it is our duty to preserve a rich and beautiful world for future generations to enjoy. In partnershipand solidarity with local communities, we will work to promote continuous improvement in everything we
make from materials to finished products to lay the foundation for the sustainable development of society.

Basic Environmental Policy

1. Complying with the Law

President*For details about our governance system, see Overview of Corporate Governance System on
page 57.

Executive Management Meeting

Central Environment Committee

Topy Industries will comply with all environmental regulations, protocols, and agreements in its manufacturing activities.

2. Working to Save Energy and Prevent Global Warming
In all its manufacturing processes, Topy Industries will proactively
strive to save energy and reduce greenhouse gases.

• Director in charge of Engineering
Administration Department• General Manager of General Affairs
Dept.
• General Manager of Engineering
Administration Department• General Managers of Factories• Executive Chairman of Labor Union

Environment and Disaster
Prevention Office

In order to bolster environmental management, Topy Industries will
undertake cost-conscious efforts to reduce its environmental footprint by saving energy, lowering greenhouse gas emissions, using
fewer resources, and recycling.

Engineering Administration Dept.

4. Developing Environmentally Conscious Products

Topy Industries will promote understanding of its environmental
policy and raise environmental conservation awareness throughenvironmental training and enrichment for its employees.

6. Conserving the Environment in Overseas
Business Activities
Topy Industries will remain mindful of its impact on local environments and implement measures in accordance with the needs of
local communities.

Since the Wheel Division (Toyokawa and Ayase factories)
launched a program to acquire ISO 14001 certification topromote environmental conservation activities in February
1998, all of the manufacturing facilities of Topy Industries haveacquired ISO 14001 certification, and Group companies havealso acquired certification.
Proper maintenance of our environmental management
system has been confirmed through regular audits after obtaining this certification, and we continue to carry out environmentally friendly production activities by promoting scheduled
and systematic environmental initiatives in line with our Basic
Environmental Policy.

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TOPY Report 2022

Group company
environment staff

Environment staff ofeach factory

Factory Environment
Committee

ISO 14001 Certification Status(Topy Industries + Group companies)

Topy
Industries

DomesticGroup
companies

OverseasGroupcompanies

Affiliates

Board of Directors
Executive Management Meeting
Reports (reports directly to the Board of Directors on occasion)

ISO14001
certification
obtained

Toyohashi

Apr. 1999

Toyokawa

Nov. 1998

Ayase

Nov. 1998

Kanagawa

Jun. 1999

Topy Fasteners, Ltd.

Sep. 2001

Kyushu Wheel Kogyo, Ltd.

July 1999

Tojitsu Co., Ltd.

Nov. 2005

Akemi Recycling Center, Ltd.

Mar. 2006

Ring Techs Co., Ltd.

Aug. 2002

Topy America, Inc.

Jun. 2009

Topy Fasteners (Thailand), Ltd.

Jun. 2021

Fujian Topy Autoparts Co., Ltd.

Jul. 2003

Topy Undercarriage (China) Co., Ltd.

Oct. 2017

Topy Fastener Vietnam Co., Ltd.

Sep. 2019

PT. Topy Palingda Manufacturing Indonesia

Dec. 2018

Topy MW Manufacturing Mexico S.A. de C.V.

Jan. 2017

Ring-Techs Guangzhou Co., Ltd.

Jan. 2008

Asahi Tec Aluminium (Thailand) Co., Ltd.

Jan. 2003

Hokuetsu Metal Co., Ltd.

Jan. 2005

Risk Management Committee
Formulates business continuity plan and mitigatesbusiness continuity risks with approval● Response to contingencies in case climatechange risks materialize (occurrence of damages
or loss, etc.)●

Sustainability Strategy Committee●

Identifies and assesses risks related to climatechange and other sustainability issues based onreports from business divisions and discusses/monitors countermeasures for preventing thematerialization of these risks, etc.

Central Environment Committee●

Identifies and assesses risks regarding laws andregulations related to the environment and disaster prevention based on reports from businessdivisions and monitors the situation, etc.

Corporate Data

ISO 14001 Certification

Environment andDisaster Prevention
Sub-Committee

Governance
The Group positions sustainability management including
response to climate change as one of management s mostimportant issues. A system of supervision led by the Boardof Directors has been put into place for these initiatives. The
promotion of initiatives to address climate change issues iscovered by the Sustainability Strategy Committee (chaired by aSenior Managing Director; which meets at least twice per year,

Risk Management
The Group s environmental risks including climate change issues are managed through its ISO 14001 environmental management system and the activities of Toby Industries Risk Management Committee, Sustainability Strategy Committee, andCentral Environment Committee.
In particular, with regard to risk identification and assessment, the following committees assess risks and narrow downmaterial risks as well as determine countermeasures and monitor the progress of such. Additionally, regular reports are madeto the Board of Directors regarding material risks.

Sustainability

5. Raising Environmental Awareness and Preserving theEnvironment at the Global Level

Environmental andDisaster Prevention
Liaison Committee

Governance and Risk Management

Business

3. Reducing Our Environmental Footprint

Topy Industries will develop environmentally friendly products at every stage in their life cycle, from design and production to use anddisposal.

The Group has announced its endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD).

in principle). The committee formulates basic policy as well as
deliberates and discusses important matters including medium- to long-term strategy. In addition to monitoring, it reports
the details of its discussions and decisions to the Executive
Management Meeting and Board of Directors for deliberation.
Furthermore, we have established the Sustainability Promotion
Council and Carbon Neutral Promotion Council under the committee to plan and execute specific sustainability measures andfacilitate close cooperation within the Group.

Growth Strategies

As part of its duty as a corporate citizen, Topy Industries ranks
continuous improvement under the ISO 14001 environmental management system as among its top management priorities. Topy
Industries has therefore established and implemented the following
policies.

Environmental Conservation Structure

Endorsement of the TCFD’s Recommendations

Value Creation

Environmental
Philosophy

Disclosures Based on the TCFD s Recommendations*Receipt of preliminary reports on events, instructions for
departments responding, and approval/confirmation ofcompletion of events, etc.

Sustainability
Promotion Council

Topic

Carbon Neutral
Promotion Council

Endorsement of the GX League Basic Concept

The Group believes that response to climate change issues is a material issue to be addressed by theentire Group. We are now working on initiatives aimed at carbon neutrality and reviewing a medium- tolong-term strategy at specialist organizations. We announced our endorsement of the GX League Basic
Concept, released by the Ministry of Economy, Trade and Industry, recognizing that it aligns with thedirection of these activities.

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Chapter

4

Sustainability

Disclosures Based on the TCFD s Recommendations

Business and Financial Impacts Associated with Climate Change-Related Risks and Opportunities as Well as Our Response

Strategy■ Risks
Category

Details

Business andfinancial impacts*1

Topy Industries Group s response

Operations*2

Reduction of CO2 emissions (-46% by 2030)
Use of renewable energy and transition of factories
and offices to ZEB*3● Promotion of decarbonization in the supply chain● Enhancement of energy conservation

All

Less than 4-degree
2-degrees increase

Value Creation

Scenario Analysis
The Group identified, analyzed and assessed risks and opportunities based on the two scenarios where the world s temperature risesby 4 degrees or less than 2 degrees. We are now examining impacts on the Group s business activities and countermeasures.

●■ Steps of Scenario Analysis

Policy andregulation

Step2

Step3

Step4

Identification of important
climate-related risks andopportunities and setting ofparameters

Setting of climate-related
scenarios

Assessment of financial
impacts of each scenario

Evaluation of resilienceof strategy in response to
climate-related risks andopportunities and further
examination of countermeasures

Identify climate-related risks andopportunities● Assess risks and opportunities
with high materiality● Set parameters related to theserisks and opportunities with highmateriality●

Identify deeply relevant scenarios
from among existing scenarios
based on the information from
Step 1● Set climate-related scenarios(social vision)●●

Analyze the financial impactsof each scenario based on the
scenarios set in Step 2, important
climate-related risks and opportunities identified in Step 1, andrelated parameters.

Assess resilience of the Group s
strategy in response to climate-related risks and opportunities● Further review of countermeasures

Engineering●

A scenario assuming that published targets will be achieved,
such as country-specific targets in the Paris Agreement. No
new policies or regulations are introduced and the world s
CO2 emissions from energy continue to increase. Transition
risks are low, but physical risks are higher.

●

IEA World Energy Outlook 2021. Stated Policy
Scenario● IEA World Energy Outlook 2020. Sustainable
Development Scenario● IPCC RCP8.5, SSP5-8.5

Utilization of green finance
Expand trademarks through response to CO2 reduction

All

Utilization of green finance● Introduction and utilization of internal carbon pricing

Real Estate

Utilization of green financeIntroduction and utilization of internal carbon pricing

Power
Generation

Energy conservation activities based on the Act on
Rationalizing Energy Use● Promotion of green procurement

Parts

Improving productivity of electric furnace method
and reduction of electricity per unit of production● Increasing procurement capability (expansion of
procurement regions, etc.)● Use of difficult-to-melt scrap due to improving technology

Steel

Promotion of conversion to facilities with lower
energy consumption and CO2 emissions (promotionof initiatives for using 100% renewable energy)

Real Estate

Higher ESG rating from increased information disclosure on climate change response and increased
dialogue with shareholders/investors

Power
Generation

●
●
●

̶

Rising procurement costs from higher demand
for scrap following the shift from the blast furnace
method to the electric furnace method with lower
CO2 emissions.

Physicalrisk

Reputation

Decreasing profitability and rising financing costs
due to declining reputation caused by delays in
response to climate change or lack of disclosureson response

Acute

Declining revenue caused by intense climate disasters and occurrence of losses on assets, etc.

̶

●

●

Improved resilience through re-review of and enhancement of BCP● Promotion of BCP including supply chain●

All

Sustainability

4-degreescenario

IEA World Energy Outlook 2021. Sustainable Development Scenario● IEA World Energy Outlook 2020. Sustainable Development Scenario● IPCC RCP2.6, SSP1-2.6●

̶Occurrence of investment costs and running costs
from fuel conversion and dual-fuel thermal power
generation with biomass fuelDeclining profitability and real estate values due toweaker ability of the Group s commercial facilities
to attract customers caused by rising demand forgreenification of commercial facilities

Main scenarios referenced

A scenario where policies and regulations are implemented toachieve a decarbonized society and the worldwide temperature increase is less than 2 degrees compared to before theIndustrial Revolution. Transition risks are high, but there areless physical risks than the 4-degree scenario.

Rising costs due to response to greenification ofcommercial facilities●●

Business

Less than
2-degreescenario●●

MarketOverview of scenarios

Rising investment costs for achieving CO2 reduction
targets

Declining revenue caused by delayed response to
low carbon products

Transition
risk■ Referenced Scenarios
Category●

Growth Strategies

Step1

Rising transportation, manufacturing, and CO2
emission costs due to carbon pricing and higher
energy costs■ Opportunities
Category

Details

Declining energy usage and energy costs fromgreater energy conservation

Resilience
After examining the resilience of the Group s current strategy, we determined that the Group s operations have a high level of resilience against climate change because operations are carried out flexibly and strategically even in case of the less-than 2-degreeand 4-degree scenarios.

EnergysourceTopy Industries Group s response

Operations*2

Expanded use of renewable energy (introduction ofrenewable energy power generation facilities, etc.)● Promotion of energy conservation activities

Parts

Reduction of CO2 emissions(-46% by 2030)
Promotion of energy conservation activities
3● Transition of factories and offices to ZEB* from useof renewable energy

All

Transition of factories and offices to ZEB*3 from introduction of renewable energy● Enhancement of energy conservation

Steel andParts

Enhanced development of environmentally friendly
products● Development of low carbon products as well as
research and conversion to alternative materials(utilization of carbon material substitutes made bysolidifying shredder dust with fewer nonferrous metal
content in electric furnaces)● Promotion of green procurement● Promotion of decarbonization in the supply chain

Steel andParts

Tackling challenges of renewable energy power generation (examination of dual-fuel with biomass fueland single fuel with biomass fuel)Power
Generation

Less than 4-degree
2-degrees increase●

Corporate Data

Resource
efficiency

Business andfinancial impacts*1●

Avoidance of carbon tax costs from initiatives toreduce carbon emissions

Reining in energy costs by switching to renewableenergyOpportunities

●

●

●

Increasing profitability from development and marProducts andket launch of competitive and superior low carbon
services
products in response to societal needs

MarketGrowing demand for electricity derived from renewable energy (in case of shift to renewable energy
power sources)●*1 Business and financial impacts (anticipated single year impacts on P/L in FY2030): over 10 billion yen, between 1 and 10 billion yen, and less than 1 billion yen*2 Operations: Steel stands for Steel Business, Parts for Automotive and Industrial Machinery Components Business, Power Generation for Power Generation Business, and Real Estate for Real EstateBusiness*3 Acronym for Net Zero Energy Building. A building that seeks to achieve net zero use of primary energy for an entire year.

39

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Chapter

Sustainability

4Disclosures Based on the TCFD s Recommendations

Environmental Initiatives

Reducing Environmental Impact through Products and Services
Indicators and Targets

Development of environmentally friendly products

Targets for CO2 emissions and results

FY2030 target

FY2050 target(Topy Industries + Consolidated subsidiaries)

Item

Unit

ReportingConsolidated(Scope 1, 2 and 3)

Scope 2 1,000 t-CO2

Consolidated

Aim to reduce by 46%
compared to FY2013

Tackling the challengeof carbon neutrality

Scope 3 1,000 t-CO2

Consolidated(Topy Industries + Consolidated subsidiaries)(Topy Industries + Consolidated subsidiaries
in Japan and overseas)

CO2 emissions

FY2013540
̶FY2020

FY2021

227

246

309

311

1,294

924

*Not including CO2 emissions equivalent to electricity supplied externally for selling purposesas part of the Power Generation Business (FY2021: 916 thousand t-CO2 )*Due to reviews of aggregation content, past fiscal year figures have been changed from thepublished value of May 2022.

■ CO2 Emissions Reduction Roadmap
Scope 1 and 2 CO 2 emissions

FY2013

FY2030Utilization of renewable energy

Transition away from fossil fuels
Use of electrification and CO2 fuelReview existing processes and tap into innovative technologies

46% reduction in CO2
Explanation of terms
Scope 1: Direct emissions of greenhouse gases by the company itself (fuel combustion, industrial processes)
Scope 2: Indirect emissions from the use of electricity, heat and steam supplied by other companies
Scope 3: Indirect emissions other than Scope 1 and Scope 2 (emissions of other companies related to our own business activities)

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TOPY Report 2022

Product drawing
Corrugated rim

Non-chrome Pre-treatment of Aluminum
Wheel Painting
An Industry First for Chromium-Free Processing
Aluminum alloy wheels have long been surface-treated toachieve long-term corrosion resistance and anti-discoloring,and treatment with chromium was thought to be essential toconfer anti-corrosion properties. However, in view of European
environmental regulations, Japanese automobile manufacturers
have turned their attention to surface treatments that avoid the useof heavy metals such as chromium.
Topy Industries has spent substantial time on the study and technological development of alternative
materials to replace chromium, andis the first in the industry to succeedin creating a chromium-free process.

The World s Largest Wheel Contributing to
Efficient Mining Operations and Hauling
SGOR® (Super Giant Off-the-Road Rim) wheels are ultra-large
diameter wheels that we have developed for mining equipmentused at large mines across the world. Currently, the largest wheels
available have a rim diameter of 63 inches (about 1.6 meters), are
44 inches (about 1.1 meters) wide, and weigh as much as 2.83
tons each, making them about fivetimes the diameter of ordinary passenger car wheels. SGOR® wheels
meet the demanding requirementsof mining applications in terms offunctionality and hauling capacity,and contribute to reducing environmental burden.

Corporate Data

Fuel conversion

46% reduction

Introduction ofenergy efficient equipment

Overall thickness
distribution was
redesigned

Ultra-Large Wheels for Mining Equipment[SGORⓇ]

Sustainability

DX deployment

Contributes to a Significant Reduction in Environmental Impact
Tracks used in the undercarriage of construction equipment
are painted to prevent rust. While solvent-based paints havebeen used traditionally, we switched to water-soluble paints
the year before last when a new crawler assembly line wasbuilt at Toyohashi Works. This has greatly reduced emissionsof VOC (volatile organic compounds). In addition, the works
has achieved integrated production of tracks from raw materials to finished products, significantly reducing transportation
volume and contributing to a reduction in CO2 emissions.

FY2050

Tackling the challenge ofcarbon neutrality

Production improvements

Energyconservation

Helping to Reduce CO2 Emissions (Life Cycle/Scope 3)
Topy Industries has developed ISO-compliant wheels, which
are about 15% lighter than corresponding conventional
wheels, by combining an ECOD-processed disc with a corrugated rim created with the company s proprietary weight
reduction technology. The corrugated rim is made from a rim
section of an uneven thickness and corrugated tire-mounting surface, giving it optimal thickness distribution when rollformed. The corrugated rim is a product of our integrated production system, which enabled us to combine our proprietary
hot-rolling steelmaking technologies with wheel analysis anddesign technologies. The ECOD disc is formed through cold
spinning (rocking die forming) tubes made of steel plate. This
enables a thinner, lighter disc while also ensuring the required
strength. These lightweight wheels contribute to efforts toprevent global warming by reducing CO2 emissions during
material production by reducing the amount of material used,
and also by reducing CO2 emissions through improved fuelefficiency when driving trucks and buses.

Business(Scope 1 and 2)

CO2 emissions

Scope 1 1,000 t-CO2

Water-Soluble Coated Tracks

Growth Strategies

Scope 1, 2 and 3 results

Scope 1, 2 and 3 targets

Lightweight Wheels

Value Creation

The Group has established long-term targets for CO2 emissions reduction for FY2030 and FY2050 and is now working on initiatives
to achieve these targets.
We are not only addressing Scope 1 + 2 by thoroughly conserving energy in the production process through the Energy Conservation Meister Program, but also addressing Scope 3 emissions by reducing energy consumption in product transportation
throughout the value chain and improving fuel efficiency by reducing wheel weight, as it promotes initiatives to ensure strategic responses by the company as a whole, including engineering, sales and production control functions. In this manner, we continue totackle the challenges toward carbon neutrality by implementing these initiatives.

Acquisition of Right to Use
EcoLeaf Environmental LabelSix of our products, including H-beams, have acquired theright to use the EcoLeaf environmental label certified by the
Sustainable Management Promotion Organization (SuMPO).
EcoLeaf is one Environmental Product Declaration (EPD)
certification system that quantitively discloses environmental
information of a product throughout the course of its entire life
cycle, from resource extraction to manufacturing, distribution,
use and end-of-life disposal, using the life
cycle assessment (LCA) method. Customers can use this system to quantitively
and objectively assess the environmental
impacts of the products they use and use
this as a determining factor in purchasing
environmentally friendly products.

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Chapter

4

Sustainability

Environmental Initiatives

Responding to Environmental Risks and Contributing to theEstablishment of a Recycling-Oriented Society

Initiatives for waste reduction and recycling

Biodiversity Preservation

Water Resource Conservation Initiatives
To conserve water resources, the Group is working to reducewater consumption by circulating and reusing cooling water at

Water consumption (Topy Industries + Consolidated subsidiaries)
Industrial water(Thousand m3)

Clean water

Well water, etc.

4,000

977

1,066

979

877

820

3,000

810

919

863

742

821

2,246

2,162

2,148

2,164

2,164

2,000

1,000

0

2017
2018
2019
2020
2021 (FY)*Due to reviews of aggregation content, past fiscal year figures have been changed
since the previous yearʼs values.

A part of the metal scrap (steel) generated during production
activities is reused directly in-house as a raw material in electric furnaces. As for other waste, we are engaged in reducing
final waste disposal volumes through re-resourcing efforts
such as collecting scrap iron and collecting zinc from melted
dust. Oxidized slag generated from steelmaking is recycled
and reused for civil engineering and concrete materials.
In FY2021, the total amount of industrial waste generated
by the Group companies was 265,000 tons, and the final disposal amount was 33,000 tons.
We continue to promote recycling and reduce final disposal volumes of industrial waste by expanding and improving
our 3R (reuse, reduce, recycle) activities.
Industrial waste emissions (Topy Industries + Consolidated subsidiaries)

Chemical Management

304
255
251

347

0

32,48033,467(Tons)

300
250
200

265

283

50,00040,00033,024
28,67830,000100,000

20,00050,00010,000

0

2017

2018

2019

2020

2021

(FY)

0

*Due to reviews of aggregation content, past fiscal year figures have been changed since
the previous year s values.

Total amounts of releases and transfers of VOC

150

265,068
236,154

292
230

232

2020

2021 (FY)Electric Furnace Slag for Recycled Road-Bed Material
The electric furnace slag for recycled road-bed materials(product name: ECO Stone™) is a recycled roadbed material
made by crushing, sieving, and mixing oxidized slag and reduced slag. ECO Stone™ obtained a license on August 31,
2014 under the Aichi Prefecture Recycle Materials Evaluation
System (pet name: AIKURU), which started in 2002. The license certifies that the materials meet quality, performance,and environmental safety requirements, and that they can beused for public works (Certificate Number: 2)-201).
ECO Stone™ passes environmental standards by a wide
margin in terms of elution and inclusion of hazardous materials.

50

2017

2018

2019

*Due to reviews of aggregation content, past fiscal year figures have been changed
since the previous yearʼs values.

200
100

242,132

150,000(Topy Industries + Consolidated subsidiaries)

0300

29,753As a proactive approach for the prevention of air pollution, theGroup voluntarily measures VOC (volatile organic compounds)
concentrations from VOC generating facilities at its four major
factories while also reviewing action items related to production technologies for the reduction of emissions.

100

500

255

244,525

Corporate Data

Total transfers

600

400

249,198

Electric Furnace Oxidized Slag Aggregate
Toyohashi Works has deployed a slag cooling facility andcrushing facility to separate, treat, process, and recycle oxidized slag generated within the electric furnace during the refining process, and has reduced the slag discharged from theladle after continuous casting subsequent to the refinery process. In April 2013, the factory obtained JIS A 5011-4: Slagaggregate for concrete Part 4: Electric arc furnace oxidizing
slag aggregate certification. In December 2013, the factoryacquired another certificate for the Revised JIS A 5011-4 andstarted to produce and sell electric furnace oxidized slag aggregate for concrete.
Oxidized slag aggregate has a larger specific gravity thannatural materials such as sand and gravel which have traditionally been used as concrete aggregate materials, and wetherefore expect slag to be used for heavy concrete aggregate
such as wave dissipation blocks. Increasing sales of oxidizedslag aggregate for concrete reduces the extraction of natural aggregate materials and thus mitigates its impact on thenatural environment while also curbing energy consumption.
We will continue working to reduce our environmental load byreviewing our business activities.

Sustainability

Total releases(Tons)

250,000

Air Pollution Prevention Initiatives

Total amounts of environmental releases and transfers of substances
regulated under the PRTR Act (Topy Industries + Consolidated subsidiaries)(Tons)

60,000200,000

In accordance with the PRTR Act (the Pollutant Release andTransfer Register Act; the Act on Confirmation, etc. of Release
Amounts of Specific Chemical Substances in the Environment andPromotion of Improvements to the Management thereof), business
entities that handle chemical substances are obliged to manage
and report to administrative offices the amount of environmental
emissions and transfers of chemical substances that are hazardous to humans and ecosystems at each of their business sites.
Based on this system, the Group submits annual reports to therespective regulatory bodies while also using this process to continuously manage chemical substance and emission reductions.

Final disposal

300,000

The Group promotes the effective use of resources by recycling electric furnace slag. We sell recycled products equivalent to the amount of electric furnace slag generated.

Business

Effluent(Tons)

Substance Emissions andManagement under the PRTR Act

Effective Utilization of Electric Furnace Slag

Growth Strategies

The business and manufacturing operations of the Group does
not involve activities such as deforestation and other activities
that may disrupt the ecosystem. We recognize that biodiversity
conservation and global warming prevention are essential for asustainable society. As a part of efforts to conserve biodiversity
and forest resources in developing countries, the Group encourages the use of paper made from domestically-produced materials and recycled paper that have less environmental impact.

Waste Reduction and Recycling

Value Creation

its factories. Also, to prevent environmental pollution, we areusing treatment facilities to purify our drainage to within environmental regulatory limits.

Biodiversity Initiatives

266

283

292

2017

2018

2019

231

232

2020

2021 (FY)*Due to reviews of aggregation content, past fiscal year figures have been changed
since the previous yearʼs values.

43

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Chapter

Sustainability

4Social Responsibility

Relationship with Customers and Business Partners
Topy Industries is committed to making customers its first priority and strives to contribute to society by delivering safe and high-quality products and services that always satisfy customers, while continuously improving
the effectiveness of its quality management system (QMS).

1. 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
2. Focus on building quality in the design and development stages, and stabilize product quality while improving reliability
3. Recognize the importance of education and training and enhance the quality awareness of all employees at the company
4. Recognize that quality defects are caused by multiple factors and promptly investigate the true causes of problems to makesubstantial improvements

Establish a quality assurance system for the next generation of new creation!
Deepen and develop initiatives without fearing change—Promote centralized management and utilization of quality information from the perspective of
DX to transform quality control for a new era—
Quality Management Structure
President s quality review

Review factory quality
Issue instructions in response to critical quality problems

Central qualitycommittee

Use Genchi/Genbutsu to verify the degree to which thepresident s quality policy has been implemented

Two times per year

Report and follow up on quality policy implementation and quality cost transitioning(regular meetings)

Committee members
Chairperson, vice chairperson,and other members
Mechanism(Committee, motivation boosting, etc.)

Approximately fourtimes per year

Quality assurance division managers
Engineering Administration Dept.

Division head
personnel
with overall
responsibility
for quality

Conduct division quality audit

Central quality committee office

Conduct Group company quality audit

Office for quality divisional managers meeting

Work as a member of central quality committee

Support reporting on critical quality issues to the president and the risk management committee

Judge the necessity of reporting quality issues
to the president at headquarters

Participate as auditing members in division quality audits
and Group company quality audits

Formulate quality policy for factoryor department
Management in QMS or manager

Implement PDCA based on ISO 9001 Quality
Management System

Groupcompany
president

The Group has established a quality management system (QMS)
and provides necessary quality training to all employees involvedin product quality-related operations. In addition to regular training
programs on quality knowledge, skills training, and our quality
policy, we offer other training options such as quality lectures on
specialized subject matters and on-the-job training. Additionally,
we periodically evaluate the effectiveness of our education andtraining programs to ensure that the curriculum it helps to improve

45

TOPY Report 2022

* For details about the Topy Industries Group Procurement Policy and the Topy Industries Group
Supply Chain Management Policy, please see our website.

Ensuring fair trade
Formulate president s quality policy
Management in QMS

Implement PDCA based on ISO 9001 Quality
Management System

In accordancewith current
ISO 9001*QMS：Quality Management System

Implementation of Quality Training* For details about the Declaration of Partnership Building, please see our website.

Office for president s quality review

Managing rank
(responsibility andauthority)

GeneralManager ofFactories or
Departments

Note: The Promotion Standards refer to a set of standards for maintaining desirable businesspractices between the subcontracting party and subcontractor. Topy Industries has set
five priority areas for transaction optimization: (1) optimization of pricing methods; (2) optimization of cost burden such as mold management; (3) optimization of payment terms
such as bills; (4) protection of intellectual property and know-how; and (5) prevention of
any toll associated with work style reforms.

quality. Through these ongoing activities and by having each
employee take the lead in quality, we seek to eliminate all
quality-related complaints and earn the trust of customers.

The Topy Industries Group Corporate Code of Conduct statesthat we will operate business in a fair and transparent manner
under free competition. In order to conduct fair transactionsin accordance with domestic laws and regulations such as the
Act on Prohibition of Private Monopolization and Maintenanceof Fair Trade (Antimonopoly Act) and the Act against Delayin Payment of Subcontract Proceeds, etc. to Subcontractors

Topic(Subcontract Act), as well as related overseas laws and regulations, we are thoroughly educating and disseminating information to employees, creating and utilizing formats for basic
transactional contracts in accordance with the intent of laws
and regulations, and confirming the status of compliance withlaws and regulations through internal audits.

Corporate Data

Enhance the system and actively exchange
information

Engineering Administration Dept.

Formulate division quality policy

Topy Industries endorses the Declaration of Partnership Building created by the Council on Promoting Partnership Building
for Cultivating the Future run by the Cabinet Office of Japanand the Small and Medium Enterprise Agency together withbusiness groups. In December 2021, we announced our own
Declaration of Partnership Building. Following this declaration,
Topy Industries is working toward co-prosperity and new close
cooperation beyond affiliations throughout the entire supply
chain as well as compliance with the Promotion Standards.

Sustainability

Conduct audits to verify the effects ofmeasures taken against critical quality
issues by the chairperson and vice chairperson of the committee (extraordinary
meetings)

Quality division
managers meeting

At least once per year

Today, supply chains are becoming more global and complex,
and response to worldwide issues such as human rights, ethics, the environment, and information security is an important
issue facing all companies. Additionally, there are growing
risks facing procurement symbolized by political uncertainty,
bad and extreme weather, volatility in market prices and exchange rates, and leakages involving technology and confidential information. The Group must achieve procurement thatcan continuously support its stable and efficient production
activities.
In response to these challenges, the Group establishedthe Topy Industries Group Procurement Policy and the Topy
Industries Group Supply Chain Management Policy in 2022.
Following these policies, the Group builds relationships oftrust and mutual understanding with all of its business partners in the supply chain and follows a high level of ethicalvalues in building and maintaining a safe and secure supply
chain with consideration for protecting human rights and theenvironment, which enables us to contribute to a sustainable society. At the same time, by maintaining a high level ofquality, delivery and cost with suppliers, the Group is able toachieve stable and efficient production activities.

Initiatives to Build Better Business Relationships(Declaration of Partnership Building)Business

Formulate president s quality policy
President

Basic Approach

Growth Strategies

Quality policy for FY2022 to 2023

Procurement and supply chain management
Value Creation

Quality
Assurance
Philosophy

Received the Gold award in the EcoVadis (France) Sustainability Rating forthe third consecutive year

For the third year in a row, the Toyohashi Plant received the Gold award in the sustainability survey conducted by EcoVadis, an international supply chain evaluation organization, placing it among the top 5% of
approximately 90,000 companies surveyed worldwide. EcoVadis s Sustainability Rating is a comprehensive assessment in four areas: environment, labor and human rights, ethics, and sustainable procurement.
We received particularly high marks in the areas of the environment.

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Chapter

4

Sustainability

Social Responsibility

Social Responsibility

Contribution to Society through Our BusinessContribution to Local Communities

Evolution Type SGOR®
Wheels for Mining Vehicles

TACoil®
Deformed Reinforcing Bars

Densely rolled compact coil is drawn andput into the NC processor

Tire change in progress(Tires can be changed without removing the wheel from the mining vehicle)

Environmental Conservation Activities in Cooperation
with Local Communities
Our Toyohashi, Toyokawa, Ayase, and Kanagawa manufacturing plants are working together with local communities onenvironmental conservation activities. In FY2021, although allenvironmental conservation activities in Toyokawa, Ayase, andKanagawa were cancelled due to the COVID-19 pandemic,
we engaged in environmental conservation activities at the
Toyohashi Works. Going forward, we will continue to actively
work with local communities.

Corporate Data

NC processor

Career Education for Elementary, Junior High, andHigh School Students
Our Head Office accepts junior high and high school students
from all over Japan for company visits as part of the career
education support activities conducted by the NPO School
Support Center. In addition, at the Toyohashi Works, we madevisits to local junior and senior high schools in Toyohashi
City as part of a career education program sponsored by the
Toyohashi Chamber of Commerce and Industry to introduce
the Group s history and businesses and to teach the students
about the appeal of steel.
In addition, each plant
accepts factory tours from local elementary and junior highschools. It has been well received
as a valuable opportunity to see,touch, and feel the manufacturing
process. In FY2021, we hosted
plant tours after instituting thorough infection control measures
to stop the spread of COVID-19.

Sustainability

1) Product name: Evolution Type SGOR®
2) Sizes: 57-inch and 63-inch3) Weight: around 2 to 3 tons
4) Features:(1) Tires can be changed without removing the wheel fromthe mining vehicle.
(2) This not only greatly reduces the time spent on tirechanges, but also can reduce hazardous work bystreamlining the work process.
(3) The wheels completely eliminate the need for an impact
wrench, mitigating the risk of vascular related neurological disorders (Raynauds disease).

Business

Evolution Type SGOR® wheels for mining vehicles make itpossible for tire changes without having to remove the wheelfrom the mining vehicle, addressing the needs of mining
companies to a much higher degree, including increasing theutilization rate of mining vehicles, streamlining of maintenancework, and improving safety.

Growth Strategies

Wheels for mining equipment

1) Product name: TACoil®
2) Sizes: D10, D13, D163) Weight: 2 tons, 3 tons
4) Features:(1) Combined with an NC processor, it significantly increases processing efficiency and resolves labor shortages.
(2) It is capable of minimizing the loss generated during theprocess and increasing the yield rate.
(3) Highly dense and compact, it saves storage space while
enabling excellent transportation efficiency.
(4) Maintains the same performance as existing deformed
reinforcing bars even when used as a straightened bar.

We have donated stockpiled food at our head office for disaster prevention, which will expire in one year, to the Shinagawa Kids Cafeteria Network operated by the Shinagawa City
Council of Social Welfare in Shinagawa Ward, since 2019. By
donating these stockpiled foods prior to their expiration date,
we not only help to prevent food loss and waste, but also provide these products to people truly in need of food. Throughthis initiative, we hope to contribute not only to the reductionof food loss but also to the enrichment of the lives of local
residents. We also received a letter of appreciation from theCouncil for our contribution to the development of the local
community and the improvement of social welfare.

Sea, the National Museum of Emerging Science and Innovation s special exhibition Under Construction! In FY2021,
we were unable to sponsor events due to the COVID-19 pandemic, but in the future, we will consider sponsoring events or
exhibitions that align with the Groups commitment.
In the field of sports, since 2018 we have become an
official sponsor of the San-En Neophoenix, a member of aJapanese professional basketball league (B.LEAGUE) whose
hometown is the Mikawa area where our manufacturing plant
is located. We support the team together with the fans in thehope of further development of the Mikawa area as part of ouractive involvement in the local community. At our sponsoredgames, we organize a taiko drum performance by local highschool students and invite students interested in basketball
to attend. In this manner, sports provide various opportunities
for us to get involved in the community. We will continue toengage in support activities for revitalizing local communities
and other purposes.

Value Creation

TACoil® is an advanced solution to problems faced by users
in rebar industry, such as labor shortages, processing losses,
and storage space.

Support for the Shinagawa Kids Cafeteria Network andReduction of Food Loss

Examples of a TACoil® processed with an NC processor

Support through Culture and Sports
Under the Group Basic Philosophy, the Group works closelywith local communities to actively support culture and sports
as a good corporate citizen. In the cultural field, we havesponsored events related to our business, such as the National Museum of Nature and Science s special exhibition Deep

47

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TOPY Report 2022

48

Chapter

4

Sustainability

Social Responsibility

Social Responsibility

Respect for Human Rights

Relationships with Employees

Respect for Human Rights

Initiatives for Employees
Initiatives in the Supply Chain

Prevention of harassment●

Prohibition of child labor and forced labor●

Promotion of diversity and inclusion●

Respect for fundamental rights at work●

Enhancement of education and training●

Verification, prevention, etc.

●

Topy Industries Group Supply Chain Management Policy:
Matters concerning human rights and labor

Reinforcement of corrective and remedial mechanisms

Communication with employees (acceptance of freedom of association
and right to collective bargaining, etc.)

Response to conflict minerals* For details about the Topy Industries Group Human Rights Policy and the Topy
Industries Group Supply Chain Management Policy, please see our website.

Autonomous employee behavior
transformation training

Career training for young
employees
Logical thinking

T3 training

First/Second year training
presentation
Topy juku/Follow-up training

Newly hired
employeetraining

JK training●

Improvement proposal
presentation

T4 training

Support for self-development (skills development seminars, subsidies for employees attending language schools, andencouragement to acquire public qualifications) and essential e-learning

Selective training

FY2021 training results (Topy Industries)
Number of participants: over 900 employees
Training hours: over 10,000 hours

We also provide systematic training for managers according totheir position. For newly appointed managers, we provide new
manager training to understand their role as managers, learn
the basics of organizational and subordinate management, andmethods for solving problems in their own organizations. In
addition, we conduct the Topy Management Survey, a 360-degree survey for all managers, every other year as an opportunity to foster a nurturing mindset as well as change awarenessand improve behavior to strengthen management. In addition,
feedback training is conducted after the survey is completed.
This provides an opportunity to convey the responsibilities andmindset that the Company expects of managers.

Corporate Data●

Plant technical training TPM activities

Mid-career leadershipdevelopment training

Safety and health training

Complying with working hours

In-house seminar for specified engineers●

Workplaceleadertraining

Intellectual property seminar (beginner to advanced levels)

Improvement proposal
presentation

Specialized training(engineering training andtechnical training)

In-house seminar for manager-level engineers (IE, quality control, MOT, environmental protection, etc.)

Complying with wages and legal benefits

Rank-based(blue-collar
workers)

Management
coaching
school (inhouse training)

In-house TOEIC

Prohibition of forced labor●

Long-term overseas dispatch

TOPY Report 2022●

Reskilltraining(Promotion exam)

Overseas training

49

0Prohibition of child labor

Training for new managementlevel employees

DX promotion training

Number of labor standards violations in FY2021

Elimination of abuse and harassment●

Safe and healthy working environment

Management
philosophy(off-sitetraining)

Enhance practical global business skills(Topy Industries, Ltd.)New manager training●

Human resource development

Corporate culture
improvement workshop

Short-term program for studying English abroad

Compliance with labor standards on working hours and wages

Cross-industry training

Respect for human rights and prohibition of discrimination●

Corporate
management
training

Supervisor (interview) training●●

Areas tostrengthen

Rank-based(admin staff)

Rank-and-file employees

The Group is working on various initiatives to increase awareness of human rights among officers and employees andestablish corporate culture that respects human rights. These
include holding training sessions led by outside instructors
and persons in charge of human rights inside the Company,
posting of internal rules related to human rights including harassment prevention guidelines to the Company intranet, andtaking disciplinary action against violations of provisions onhuman rights in employment regulations.
In addition, we receive consultations and reports on humanrights violations or suspected cases through two whistleblower
hotlines: the Topy Industries Group Basic Corporate Ethics Consultation Office and the Topy Industries Group Compliance Hotline.

Managerial (Management Level Employees) Training
Training System

Mentor training/Tutor training (for eligible persons only)

Human Rights Training and Establishing a
Culture that Respects Human Rights●

Sustainability●

Create human resources who continue to develop
Strengthen employees capability to respond to environmental
changes● Support employees in their autonomous career development● Continue to produce future business leaders● Create an organizational environment that permits diverse
human resources to work actively in various ways●

Manager training

Respect for fundamental human rights and prohibition of discrimination

The Topy Industries Group declares in Article 3 of the Group
Corporate Code of Conduct (for the benefit of employees)that it will Respect the individual character and personality of
employees, and provide safe working environments that allow
them to work with enthusiasm, and attain fulfilling lives. We
promote initiatives for reinforcing our human resources in the
belief that they are our greatest asset and that improving theircapabilities creates our value itself.

Management-level employees●

Our Philosophy and Basic Policy on Human Resources
Development

Business

Content of the Topy Industries Group Human Rights Policy

The Group engages in business globally and has established adiverse supply chain. To facilitate global business operations,
we recognize the importance of supply chain actors working
closely together to address issues such as respect for humanrights.
In 2022, the Group established the Topy Industries Group
Supply Chain Management Policy in order to contribute to a sustainable society by fulfilling our social responsibilities in various
issues within the supply chain. This policy contains provisions
concerning matters on human rights and labor, and declares theGroup will work on respecting human rights in the supply chain.
The Group is now working to promote initiatives for respect forhuman rights in the supply chain by gaining the understanding
and cooperation of its initiatives from suppliers to ensure it grows
together with them.
In addition, we take measures to respect human rights atthe contract level, such as stipulating compliance obligations
with labor-related laws and regulations in our basic transactional
contracts with domestic business suppliers.
We take measures to correct and remedy human rights
problems in the supply chain, such as accepting consultations
and reports on human rights issues from suppliers at the Group s
whistleblower hotlines.

We conduct training (Topy juku) for university graduates recruited during the regular hiring period spanning a four-month
period after joining the Company. In FY2022, we conductedGroup training with due consideration given to preventing the
spread of COVID-19. In addition to classroom training to learn
about business content, basic knowledge of the Company
as a whole, and business etiquette, the training held at thehead office included a five-day training camp where new hires
learned IE basics, quality control, and improvement methods
thorough hands on exercises and other means.
After the training at the head office, the trainees were divided into different manufacturing sites and on-site training and improvement theme training were held. The on-the-job training saw
participants learn the fundamentals of manufacturing throughactual tasks at production sites, while in the improvement theme
training they took part in continuous improvement activities using
the methods learned at training camp under the guidance of senior workers. On the last day of Topy juku, participants reported
on the achievements of improvement themes to executive management at the head office.

Growth Strategies

The Topy Industries Group supports and respects international human rights norms such as the United Nations Guiding
Principles on Business and Human Rights. In accordance with
the Group s Basic Philosophy and Basic Sustainability Policy,
we are also committed to respecting the fundamental humanrights that all people are born with. Specifically, we will practice prohibition of discrimination, child labor, and forced labor,
prevention of harassment, promotion of diversity and inclusion, and respect for fundamental rights at work.
The Group s basic philosophy concerning respect for humanrights can be found in the provision on Respect the individual
character and personality of employees in the Group Code of
Conduct. In 2022, we established the Topy Industries Group Human Rights Policy defining specific approaches to our initiatives
for respecting human rights, expanding the scope of the Code of
Conduct beyond Group employees. Under this policy, the Groupis working to ensure even greater respect for human rights.

New Employee Training

Human Resources Development

Value Creation

Basic Approach

Global HR Development
In FY2017, we introduced Long-Term Overseas Training withthe aim of developing young employees who can demonstrate their capabilities in the different cultural environmentsof other countries. The employees who undergo this training
are dispatched to overseas Group companies for one year
as trainees and receive practical on the-job training under
the guidance of local managers in accordance with a training
plan, thereby experiencing and learning about overseas work.
They also acquire the ability to communicate in different
languages, along with intercultural skills.
Furthermore, with the aim of securing excellent overseas
human resources at overseas Group companies and Topy
Industries, we host internships in close collaboration with overseas universities.
To create an environment where employees can feel close

TOPY Report 2022

50

Chapter

4

Sustainability

Initiatives for Employees

Women in management positions (Topy Industries)
Presentation of trainee accomplishments at Topy
America, Inc.

Number of women in management positions
Percentage of women in management positions

2.4

Overview of long-term overseas training system (Topy Industries)

2.9

2.4

7
0.8

0.8

6

6

Number of employees taking childcare leave (Topy Industries)
Number of women

2

2

2018

2019

Topy Industries promotes employees to management positions (executives) based on a fair evaluation of their abilities,
insight, and personality, regardless of gender, nationality, or
whether they are new graduates or mid-career workers.
Regarding the percentage of women in management posi-

51

TOPY Report 2022

33.3
16

25.0
11

14

9

10

10
2020

2021

6

5

We conduct employee education and others to ensure diversity based on our human resource development policy: Create
an organizational environment that permits diverse humanresources to work actively in various ways. Examples include
training on human rights and holding seminars on different
cultures focused on the home countries (Indonesia and Vietnam so far) of foreign national employees as part of building aworkplace that embraces employees of different nationalities.

Policies for Improving the Environment for Promoting
Diversity and Their Implementation Status
Topy Industries promotes the utilization of human resourcesthat respect the individuality of each employee, and is introducing systems to realize diverse and flexible work styles andimproving the workplace environment in order to foster a corporate culture where employees and the Company can growtogether.

10

42022 (FY)

Human Resources Development Policies for Promoting
Diversity and Their Implementation Status

9

2

1

4
2017

2017

5

2019

2020

2021

2022 (FY)7

Promoting Employment of People with Disabilities

3
2018

2019

As of end of June, 2022

3
5

2018

2020

2021 (FY)

Support for Women s Empowerment
We launched a diversity promotion project in FY2014. In thisproject, we identified new issues and determined measures
to be taken by FY2015, and enhanced related programs andintroduced measures related to career development support.
Specifically, to provide employees with access to flexible
working hours after childcare leave so that they can balancechildcare and work, we have established a childcare support
system that allows employees to work shorter hours until their
youngest child is in the third grade of elementary school. In
addition, to ensure that all female employees can fully utilize
their skillsets and play an active role, we conduct ongoingcareer interviews and surveys to confirm their needs and consider necessary measures.

Topy Industries actively employs people with disabilities, andwith an employment rate of 2.48% (as of June 1, 2022), theCompany is above the legal employment rate (2.3%). We areworking to develop various labor environments that enable
employees with disabilities and other employees to work
together in the same setting. Employees with disabilities,
like other employees, play an active role in a wide range of
workplaces, from the manufacturing frontline at each plant toadministrative departments at the head office, depending on
their individual aptitude.
Since FY2021, we have been actively building relationships
with schools for the disabled, and we will continue to create
employment opportunities for people with disabilities and expand opportunities for them to play an active role at work.

TOPY Report 2022

Corporate Data

Status of and Approach to Appointing Managers(Executives)

40.0

36.0

12

1

The Group sets Respect the individual character and personality of employees in Article 3 (For the benefit of employees)of the Topy Industries Group Corporate Code of Conduct andpositions Supporting diverse human resources as one formof its materiality (important issues). Under our Medium-Term
Management Plan, TOPY Active & Challenge 2025, too, we
are implementing a number of initiatives to promote diversity
as a main measure.

41.7

7

As of end of June, 2022

Diversity Initiatives

Number of women
Number of men
Percentage of female employees (%)

47.6

Sustainability

2017

Percentage of women among new recruits(career-track employees) (Topy Industries)

Number of men

0.4
1

We are also expanding the scope of women s jobs by assigning them to engineering positions and sales positions, where
there were few female employees in the past.
We are currently implementing an Action Plan based on the
Act on Promotion of Womenʼs Participation and Advancement in
the workplace with the following goals.
(Plan period: April 1, 2021 to March 31, 2026)● We will maintain the percentage of women among new
recruits (career-track employees) at 40% or higher.
● We will support the career development of employees andpromote the use of various systems for female employees.
● Maintain the average length of service of female employees
at 13 years or more.
● We will double the percentage of women in management
positions (executives) from the current level (at the time offormulation of the action plan on April 1, 2021; a benchmarkof 2.4% (6 employees)).

Business

Period: One year
Destination: Overseas Group Company
Requirement for trainees: TOEIC® score of 600 or higher

As part of our efforts to achieve this goal, we are promoting an action plan based on the Act on Advancement of Measures to Support Raising Next-Generation Children with the following goals in order to enable employees to balance work andchild rearing and to enable all employees to fully demonstrate
their abilities.
(Plan period: July 1, 2020 to March 31, 2025)● Increase the rate of taking childcare leave to the standard ora higher level during the plan period.
Male employees: Achieve the rate of taking childcare leaveof 7% or higher.
Female employees: Achieve the rate of taking childcare leaveof 75% or higher.
● We will examine and develop systems to enable employees
to achieve a work-life balance and promote flexible work
styles.
We introduced a telework system in FY2020 and a flextime system in FY2021. Furthermore, we plan to introduce asystem where annual paid leave can be take in hourly increments in FY2023. These systems greatly expand employees
options to work from anywhere and at anytime. In addition,
we are actively promoting our childcare leave system throughleaflets and other means so that employees can balance workand childcare. We introduced a job return system as a preferential reemployment system for employees who left the Company due to childcare or nursing care.

Growth Strategies

tions, we have formulated an Action Plan based on the Act on
Promotion of Women s Participation and Advancement in the
Workplace. For details, please see the section on Support for
women s empowerment. Within our Medium-Term Management
Plan starting in FY2022, we have established a target to increase
the ratio of female managers in the Group as a whole to 10%
or more by FY2030 (from around 5% as of March 31, 2022). To
achieve this target, we are quickly developing employees who
can become candidates for future managerial positions fromamong young and mid-career employees.
Although we have not set specific targets for appointing
non-Japanese and mid-career hires to management positions
based on the above approach, we will appoint suitable candidates to management positions regardless of their nationality or whether they are new graduates or mid-career hires(as of June 30, 2022, non-Japanese: 1.2%, mid-career hires:
26.2％).

Value Creation

to globalization even in Japan and to improve their motivation
to learn a second language, we have begun distributing English
e-mail newsletters in-house since FY2021.
We believe that it is important to develop human resources
who can respond to diversity in language, nationality, culture,values, and gender, both domestically and internationally, rather
than just the idea that global = overseas. Going forward, we
will continue to develop global human resources who not only
improve their language skills, but who can also respond to diversity based on the three axes of vision, skills, and mindset.

52Chapter

4

Sustainability

Initiatives for Employees

Efforts to Improve ES (Employee Satisfaction)
Communication Promotion Committee

List of Measures Implemented by FY2021 (Excerpt)

At Topy Industries Group, our primary corporate responsibility
is to ensure the safety and health of our workers. Based on
this basic concept, we have set the highest priority on safety and are implementing a variety of actions to achieve zeroaccidents. We also report the results of statistical surveys on
workplace accidents through the Company s intranet and inhouse newsletters among other media, to raise the awarenessof each and every employee.

Mentor program(2)

Corporate culture improvement workshop for managers[Workplace safety management: priority issues for 2022](3)

Establishment of website introducing each department(4)

Topy Café (an exchange of opinions between staff
employees and skill-based employees)

Creating andimplementing a work
environment thatcomplies with prohibited
matters(5)

Manager meetings(6)

Operational improvement activities(7)

Thanksgiving activities(8)

Women s meetings(9)Inter-departmental mixers

Roundtable meeting for employees who have taken
childcare or maternity leave

Improvements tosafety and healthtraining as well as
follow-up

Promotion of
fundamental
safety activities

Statistical Survey Sheet on Workplace Accidents(Period: January to December 2021)(Topy Industries + Domestic Group companies)

Total
working hours

Number of
lost-time
accidents

Topy Industries, Ltd.

5,735,460

5

0.87

0.05

Domestic Group companies

5,204,635

4

0.77

1.23

Total

10,940,095

9

0.82

0.61

Frequency Severity(%)(%)(13) Encouraging interpersonal Greeting

Since 2020, Topy Industries has been promoting health management initiatives to enhance the attractiveness of the Company and the workplace by creating an environment where
employees can exercise their abilities in good health and withpeace of mind under the Health Management Declaration and
Policy, as activities that directly lead to SDG 3̶health andwell-being for all. Going forward, the Health Promotion Council will take the lead in further enhancing initiatives for healthmanagement, with the goal of Topy Industries being selected
for the White 500 Certified Health & Productivity Management
Outstanding Organizations.

(15)

Establishment of satellite offices andcommunication spaces(16)

Installation of growth support bookshelf(engagement bookshelves)(17) Promotion of 5S in the workplace(18) Improving the Company cafeteria(19)

Re-examination of age restrictions for bachelor
dormitories(20)

Establishment of information sharing site
(Topy s Pearls of Wisdom)(21) Installation of solo work spaces

・Health guidance・Eating habits
・Exercise habits

・Stress check・Prevention of overwork
・Harassment education

・Labor efficiency
improvements
・Promotion of leaveacquisition
・Childcare support
・Family care support

Promotion of Health Management

Health Management Declaration
At Topy Industries, we believe that by keeping our employees
healthy both physically and mentally, our workplaces are filledwith smiles and vitality, and this allows employees to fulfill
their potential. We declare that we will do our utmost to createa healthy work environment to further energize the Company
and its employees.

Our Initiatives
To reduce the smoking rate among employees, we encourage Non-smoking in separate areas during working hours
and we conducted a smoking survey on all employees. The
results of the most recent survey showed that the smoking
rate, which had stood at 41% in 2017, has fallen to between
30% and 40%. We will continue working with the Topy
Industries Health Insurance Association to raise awarenessand support employees who desire to quit smoking in orderto further reduce this rate.
● In addition to increasing health guidance to reduce the rateof employees with findings on their health checkups, we areworking together with the Topy Health Insurance Association to provide specific health guidance, and we expect tosignificantly improve the uptake rate.
● We distributed the Pocket Edition Health Management Initiatives and opened a consultation desk on women s healthand a chatbot consultation desk for both men and women,creating an environment where employees and their families
can easily seek out consultations on their health at any time.
●

Health Management Promotion System
Representative Director, President and CEO(Health Management Officer)

Corporate Data

Discussions with managers(12) (Topy Talk / Employee Satisfaction Improvement
Meetings)*Domestic Group companies include equity method affiliates.

(14) Activity-Based Working (ABW) implementation

Work-life
balance

Sustainability(11)

MentalhealthInitiatives to Eliminate All Workplace Accidents(1)(10) External mixers

PhysicalhealthBusiness

With the aim of creating a culture (climate) that allows for open
discussion and fostering a sense of unity through increased
corporate transparency, we are implementing Topy Talk, acommunication promotion program that allows for real-time
dialogue between management and employees. Participants
can listen to management speak and interact with them in realtime using the chat and questionnaire functions, which presents the opportunity to learn more about the Company and to
think about the Company s growth as a whole. Topy Talk washeld a total of five times in FY2021 with total attendance ofmore than 600 employees.

* The name café was chosen in association with providing an opportunity to talk casually over alight meal. Since FY2020 onward, the program has been conducted in a format that does not
involve eating or drinking to prevent COVID-19.

Employee Health & Safety

Growth Strategies

Topy Talk (A Company-Wide Communication Program
between Management and Employees in the Form of
Dialogue)

In order to reduce misunderstandings and improve work efficiency through mutual understanding beyond the boundaries
of staff and skilled (non-clerical) workers, we hold Topy Café*
to discuss in depth the workplace culture and information
sharing in our own workplace. During the Topy Café, eachtime a theme is set for discussion, communication between
staff and skilled employees is facilitated, and cooperation
across job categories is strengthened to deal with issues.

Based on the belief that the basis of safety is health, the Topy Industries Group places safety above all
else and promotes the creation of a sustainable, safe, and comfortable work environment through theparticipation of all employees of the Group in ongoing health promotion and essential safety activities.

Basic Philosophy of
Safety and Health

Value Creation

With the goal of nurturing and enriching the human resources
who support technological innovation and further growth for
the Company around the world, Topy Industries establishedthe Job Satisfaction Improvement Committee led by young
employees in 2016, and we studied and implemented morethan 20 measures to improve job satisfaction.
In FY2019, we renamed the Communication Promotion
Committee as a project team across all divisions that focuses
more on communication closely related to job satisfaction, andimplemented a total of 80 measures over the three years until
FY2021. Through activities to improve communication in theworkplace, we aim to make the Company more attractive in awide range of themes, and we are working on various measures
such as improving job satisfaction, increasing operational efficiency, and actively sharing information among departments.
The committee provides an opportunity for various employees across divisions and generations to brainstorm ideas andwork together, and it also serves as a venue for the human resource development of participating members.
Based on the results of the employee satisfaction survey
conducted every year, we consider new measures and verify theeffectiveness of existing measures.

Topy Café (An Exchange of Opinions between Staff
Employees and Skill-Based Employees (Blue-Collar))

Executive Management
Meeting
Central Health and Safety Committee(Chair and health management promotion officer: Officer Responsible for Safety)

Central Health and
Safety Subcommittee

Plants:Safety and
HealthCommittee
Head office:HealthCommittee

Health Promotion Council

Information
sharing(Chair: General Manager of Engineering
Administration Department)

Business Administration Department of eachplant, Health and Safety Promotion Section of theEngineering Administration Department, Personnel
and Labor Relations Section of the Human
Resources Department, Topy Industries Health
Insurance Society, and industrial physicians

Collaborative
healthClose
cooperation

Topy Industries
Group Safety and
Health Liaison
Committee
Topy Health Insurance
Association
Topy Industries
Labor Union

Health Promotion Subcommittee(Person responsible: General Managers ofFactories)(Leader: General Manager of Business
Administration Department)

Close cooperation*Established at each plant

53

TOPY Report 2022

TOPY Report 2022

54

Chapter

4

Sustainability

Corporate GovernanceManagement TeamManaging Executive Officers

Value Creation

Hideki Aoyama
General Manager of Corporate Planning Dept. and Deputy
General Manager of Sales Div.

Masahiro Abe
General Manager of Engineering Administration Dept.

Shinichi Kijima

Masayoshi Takezawa

Tsuyoshi Nakamura

Yukihiro Ogawa

Koichi Sakamoto

1979 Joined Nippon Steel Corporation2011 Executive Officer General Manager, Head ofDiv., Ironmaking Technology Div., Nippon SteelCorporation2012 Advisor, Nippon Steel Corporation; Executive
Officer in charge of technology/quality, Usiminas
Siderúrgicas de Minas Gerais S.A.
2014 Executive Vice President in charge of businessplanning, Usiminas Siderúrgicas de Minas
Gerais S.A.
2016 Managing Executive Officer and Vice Head of
Global Business Development Sector, Nippon
Steel & Sumitomo Metal Corporation
2016 Director at Usiminas Siderúrgicas de Minas
Gerais S.A.
2017 Senior Executive Officer, Appointed as
Assistant to the President of Topy Industries,
Ltd.; Advisor, Nippon Steel & Sumitomo Metal
Corporation2017 Representative Director and President
2022 Representative Director and President In
charge of Sales (to present)

1981 Joined Topy Industries, Ltd.
2010 Operating Officer, General Manager ofCorporate Planning Dept.
2015 Managing Executive Officer, Deputy General
Manager of Wheel Div.
2018 Executive Vice President and Operating Officerof Topy Enterprises, Ltd.
2018 Representative Director and President of TopyEnterprises, Ltd.
2022 Executive Vice President, Operating Officer andAssistant to the President of Topy Industries,
Ltd. and Representative Director and Presidentof Topy Enterprises, Ltd.
2022 Director and Executive Vice President of Topy
Industries, Ltd. (to present)

1983 Joined Topy Industries, Ltd.
2015 Operating Officer, General Manager ofBusiness Process Innovation & Promotion
Dept.
2017 Managing Executive Officer, General Manager
of IoT Promotion Dept.
2018 Managing Executive Officer, General Manager
of IoT Promotion Dept. and Technology Div.
2021 Managing Executive Officer in charge ofTechnology, Business Innovation, Safety, andSmart Promotion
2021 Managing Director in charge of Technology,
Business Innovation, Safety, and Smart
Promotion
2021 Managing Director In charge of Technology,
Business Innovation, Business Development
Strategy Center, Safety, and Smart Promotion
2022 Senior Managing Director (to present)

1983 Joined Topy Industries, Ltd.
2016 Operating Officer, General Manager ofEngineering Planning Dept.
2016 Operating Officer, General Manager ofEngineering Administration Dept.
2018 Operating Officer, General Manager of Steel
Div, and General Manager of Toyohashi Works
2020 Managing Executive Officer, General Manager
of Steel Div.
2021 Managing Executive Officer, General Manager
of Corporate Planning Dept.
2022 Senior Executive Officer in charge of Corporate
Planning, and Sustainability Strategy
2022 Senior Managing Director (to present)

1982 Joined Topy Industries, Ltd.
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 Audit & Supervisory Board Member (topresent)

1982 Joined Topy Industries, Ltd.
2015 Operating Officer of Topy Industries, Ltd., Director and
CEO of Qingdao Topy Machinery Co., Ltd., and Director
and CEO of Topy Undercarriage (China) Co., Ltd.
2016 Operating Officer of Topy Industries, Ltd. and Director
and CEO of Topy Undercarriage (China) Co., Ltd.
2017 Councilor of Topy Industries, Ltd. and Director and CEOof Topy Undercarriage (China) Co., Ltd.
2018 Councilor to General Affairs Dept. of Topy Industries, Ltd.,
Audit & Supervisory Board Member (to present)

Representative Director and President

Director and Executive Vice President

Senior Managing Director

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Operating Officers

Takanori Kawano
General Manager of Internal Audit Dept.

Katsuyoshi Tanaka
General Manager of Steel Div., in charge of Steel Business

Tetsuya Sakai
General Manager of General Affairs Dept.

Koji Nanayama

In charge of Corporate Planning, andSustainability Strategy

Business

Assistant to the President, in charge ofFinance

Senior Managing Director

Growth Strategies

Nobuhiko Takamatsu

General Manager of Wheel Div., in charge of Automotive
and Industrial Machinery Components BusinessIn charge of Technology, Safety &Health, DX Strategy, and the Business
Development Strategy Center

Hideo Katsuyama
General Manager of Undercarriage Components Div.,in charge of Automotive and Industrial Machinery
Components Business

Masaru Yasuhara
Sustainability

General Manager of Sales Div.

Yoshihito Kano
General Manager of Business Development Strategy Center

Koji Kawakami

Shuichi Tachibana

Takeshi Kiriyama

Hiroko Kaneko

Takahiro Mikami

Tetsuya Kawagishi

Akio Sakai

1985 Joined Topy Industries, Ltd.
2018 Operating Officer, General Manager of General
Affairs Dept.
2021 Operating Officer, General Manager ofUndercarriage Components Div.
2022 Managing Executive Officer in chargeof General Affairs, Personnel, and Risk
Management
2022 Managing Director (to present)

1986 Joined the Development Bank of Japan
2008 Chief Representative in London, Development
Bank of Japan
2010 DBJ Europe Limited CEO
2013 Director of Industrial Research, Development
Bank of Japan
2015 Operating Officer, Director of Corporate
Investment, Development Bank of Japan2018 Chairman of the Board, DBJ AssetManagement Co., Ltd.
2020 Director of Topy Industries, Ltd. (to present)
President of Value Management Institute, Inc.
(to present)
Director of Japan Economic Research InstituteInc.
2022 Director of Japan Economic Research InstituteInc. (to present)

1997 Admitted to Bar, Japan (to present)
2006 Admitted to Bar, New York (to present)
2019 Audit & Supervisory Board Member of Shinsho
Corporation (to present)
2021 Director of Topy Industries, Ltd. (to present)

1982 Joined Toshiba Machine Co., Ltd.
2013 Operating Officer and Deputy Head of Mold
Machinery Unit, Toshiba Machine Co., Ltd.
2014 Director and Operating Officer, Head of Mold
Machinery Unit and General Manager ofSagami Plant, Toshiba Machine Co., Ltd.
2015 Director and Managing Executive Officer, Headof Mold Machinery Unit and General Manager
of Sagami Plant, Toshiba Machine Co., Ltd.
2016 Director and Managing Executive Officer, Headof Mold Machinery Unit, General Manager
of Administration Dept., Head of Tokyo Main
Branch, and Co-head of Sales Promotion
Dept., Toshiba Machine Co., Ltd.
2017 Representative Director, President and CEO
and Operating Officer, Toshiba Machine Co.,Ltd.
2020 Director, Toshiba Machine Co., Ltd.
2020 Advisor, Shibaura Machine Co., Ltd.
2022 Director of Topy Industries, Ltd. (to present)

1978 Joined The Fuji Bank, Limited

1982 Joined Yasuda Life Insurance Company
2012 Executive Officer, General Manager of Osaka
Headquarters, Meiji Yasuda Life Insurance Company
2014 Managing Executive Officer, General Manager ofCorporate Sales Div., Meiji Yasuda Life Insurance
Company
2016 Senior Managing Executive Officer, General Manager
of Corporate Sales Div., Meiji Yasuda Life Insurance
Company
2018 Representative Director and President, Meiji Yasuda
General Insurance Co., Ltd. (to present)
2020 Audit & Supervisory Board Member of Topy Industries,
Ltd. (to present)

Managing Director

Director

Director

Audit & Supervisory Board Member
2005 Executive Officer, General Manager of Corporate
Banking Div. No. 2, Mizuho Corporate Bank, Limited
2009 Managing Executive Officer, Chief Risk Officer, andChief Personnel Officer of Mizuho Corporate Bank,
Limited2010 Managing Executive Officer, Head of Global
Transaction Banking Unit, and Head of Global AssetManagement Unit, Mizuho Corporate Bank, Limited
2011 Outside Audit & Supervisory Board Member, Tokyo
Tatemono Co., Ltd.
2011 Full-time Audit & Supervisory Board Member, TANAKA
Holdings Co., Ltd.
2013 Director and Deputy General Manager of Technology& Marketing Div., TANAKA Holdings Co., Ltd.
2015 Executive Officer, General Manager of CSR & Public
Relations Dept. and President s Office, TANAKA
Holdings Co., Ltd.
2020 Advisor, TANAKA Holdings Co., Ltd.
2020 Audit & Supervisory Board Member of Topy Industries,
Ltd. (to present)

Audit & Supervisory Board Member

Masatoshi Takahashi
Corporate Data

In charge of General Affairs, Personnel,
and Risk Management

Director

General Manager of Digital Transformation Strategy Dept.

General Manager of Aluminum Administrative Center, Wheel
Div. of Topy Industries, Ltd., and Representative Director
and President, Asahitech Co., Ltd.

Koji Takeuchi
General Manager of Commercial and Off the Road Wheel
Div., in charge of Automotive and Industrial Machinery
Components Business

As of October 1, 2022

* Directors Takeshi Kiriyama, Hiroko Kaneko, and Takahiro Mikami are outside directors.
Audit & Supervisory Board Members Tetsuya Kawagishi and Akio Sakai are outside audit & supervisory board members.

55

TOPY Report 2022

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Chapter

4

Sustainability

Corporate GovernanceCorporate GovernanceCompensation Advisory Committee

Topy Industries has an Audit & Supervisory Board, while theBoard of Directors comprises executive directors well-versed in
the Group s business and independent outside directors. The
Board of Directors makes decisions on important managerial
matters and oversees Company management, while the Audit& Supervisory Board, which has a legally stronger right to audit,
oversees the Company s management. Through this system,
we maintain and strengthen the soundness and efficiency of
the Company s management and improve corporate value.

Outside Officers

Corporate Governance Structure

Appointment and dismissal

Nomination Advisory
Committee

Close cooperation

Close
cooperation

Internal Audit Dept.

ReportAppointment and dismissal

Board of Directors(eight members)

Audit and report(including three outside directors)
Appointment
Dismissal
Supervision

Prior deliberation

ReportExecutive Management Meeting

Whistleblower

Topy Industries Group Basic
Corporate Ethics Consultation Office

Whistleblower

Topy Industries Group
Compliance Hotline

57

TOPY Report 2022

ReportReportExecutive Director
Officer

Compensation Advisory
Committee

Global business
operations

Human resources
and labor affairs

Sales andmarketingEngineering andsafetyIT/DX

ESG
Sustainability

Nobuhiko Takamatsu

●

◆

●

●

◆

●

●

●

Shinichi Kijima

●

●

●

◆

●

◆

Masayoshi Takezawa

●

●

●

●

●

●

●

Accounting Auditor

Close cooperation●

Tsuyoshi Nakamura
Shuichi Tachibana
Takeshi Kiriyama●●

Hiroko Kaneko
Takahiro Mikami

●

◆

●

●

●

●

●

●

◆

◆

●

●

●

◆

●

●

Central Environment Committee
Each Permanent Committee

Employee●●For ◆, the skills listed are as Representative Director. The listed skills of executive directors excluding representative director are limited to four.

Execution of Duties by Directors
The Board of Directors resolves matters required by laws andregulations or the articles of incorporation, as well as important
issues of the Company as stipulated in the Board of Directors
Regulations. Moreover, prior deliberations of matters to beresolved by the Board of Directors are held at the Executive
Management Meeting, which comprises the Executive Directors
and others. Prior explanations of the agenda for the Board of
Directors are provided to Outside Directors who do not attend
the Executive Management Meeting. In addition, the Company
endeavors to ensure efficient deliberations by the Board of Directors and rationality in the course of its decision-making by means
such as establishing bylaws concerning the preparation of agenda documents for the Board of Directors.

Risk Management Committee
Sustainability Strategy Committee

Policy, planning, etc.,
of business execution

Head Office Organization
Division Organization
Affiliated Companies

ReportReply/Report

PresidentInternal
Audit

Legal affairs/
Risk management

Evaluating Board Effectiveness
Every year, the Board of Directors analyzes and evaluates theeffectiveness of the Board of Directors as a whole. It then discusses issues identified as a result and strives to utilize thisknowledge in improvements to the operations of the Board of Directors in the future. In FY2021, the Board of Directors enhanced
overall reporting matters including the Company s approach tosustainability and newly established a venue for following up on
recommendations received at the Board of Directors.

An overview of the analysis and evaluation of the effectiveness of the Board of Directors as a whole in FY2021 is provided
below.
Implementation
method(1) Survey conducted of all directors and Audit & Supervisory Board Members (response rate of 100%)(2) Evaluation conducted at the Board of Directors held in
May 2022 based on the survey results

Evaluation
results

The composition of the Board of Directors, provision of materials and information for discussions and decision-making,and time allocation are appropriate. Discussions are multifaceted and proactive and decision-making is carried out
following the Company s intended direction. As a result, theBoard of Directors is functioning effectively.

Awarenessof issues

Agenda items and reporting matters of the Board of
Directors should be narrowed, explanations at the Boardof Directors should be better devised and explanatory
materials need to be further expanded, in order to further
invigorate fundamental discussions at the Board of Directors by allocating more time to discussions on importantmanagement issues.

Corporate Data

General Meeting of Shareholders

ReportFinance andaccounting

Sustainability

In accordance with independence standards established byfinancial instruments exchanges in Japan, the Company determines the independence standards of its outside officers (outside directors and outside Audit & Supervisory Board Members)
based on their interests in the Company, which include personal
relationships, capital ties, and business relationships with theCompany. The Company deems all of its officers to be independent and has notified financial instruments exchanges of such.

To ensure the fairness and transparency of director nominations, wehave a Nomination Advisory Committee chaired by an outside director and comprising the President and three outside directors. The
committee serves as an advisory body to the Board of Directors.

(including two outside auditors)

Corporate
management

Business

Independence of Outside Officers (Outside Directors
and Outside Audit & Supervisory Board Members)

Nomination Advisory Committee

Audit

The following table presents skills identified as essential to directors based on the Groups management strategy along withthe combination of knowledge, experience and skills of eachdirector.

Skill/Experience

Our management functions consist of a management decisionmaking function and a business execution function, and we
employ an executive officer system to vitalize and improve theefficiency of Company management.

Audit & Supervisory Board(four members)

Directors Skills Matrix

Directors Skills Matrix
Name

Business Execution Structure

Appointment and dismissal

The Companys Articles of Incorporation state that the numberof directors shall not exceed nine and the Board s composition shall include the appropriate and necessary numberof directors to ensure an effective management system andsubstantive discussions at the Board of Directors. In orderto ensure diversity and expertise among the Board of Directors Members, the Board of Directors shall be composed of
persons deemed appropriate in consideration of the balance
between executive directors who have excellent personality,
insight, and execution skills, and are familiar with the Group's

Growth Strategies

To ensure the fairness and transparency of director compensation, we have a Compensation Advisory Committee chairedby an outside director and comprising the President and threeoutside directors. The committee serves as an advisory body to
the Board of Directors.

Composition of the Board of Directors

Value Creation

Topy Industries pledges to enhance corporate value in the medium to long term by establishing a corporate governance system thatis appropriate for the Company from the standpoint of management soundness, transparency, and efficiency in order to maintain andimprove the trust of stakeholders. This comes from the Group Corporate Basic Philosophy: Contribute to the realization of a sustainable recycling-oriented society through the continuance and development of the Topy Industries Group s business and the execution of
one s duty as a public institution.

Overview of Corporate Governance Systembusiness and outside directors in an independent position.
The Company believes that it is important to appoint diverse outside directors with a high level of independence andexpertise in order for outside directors to fulfill the role of advisingand checking management as expected by society. In addition,
outside directors include persons with executive management
experience at other companies.

Initiatives to Increase Board Effectiveness

Basic Policy on Corporate Governance

Based on this evaluation of the effectiveness of the Board of
Directors, efforts will be made to review and implement specificmeasures required to further increase the effectiveness of theBoard of Directors.

TOPY Report 2022

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Chapter

4

Sustainability

Message from an Outside Director

Message

59

TOPY Report 2022

Compensation

Fixed basic
compensation

Performance-based
compensation in theprevious fiscal year
(short-term incentives)

Cash

Cash

Payment
model●

Fixed amountbased onposition●

70% ofthe basiccompensation●●

Details ofcompensation

This is linked tocompany performanceand individual
performance in theprevious fiscal year
The standard amountof this compensation
is 30% of the basic
compensation, varying
from 0% to 75%. The
portion based on the
Company s businessperformance ranges
from 0% to 65%, whilethat based on individual
performance ranges
from 0% to 10%●

Quantitative indicators
calculated according
to the level ofachievement of eachperformance indicatorof consolidated
EBITDA (calculated byadding consolidated
depreciation to
consolidated operating
profit) and profit
attributable to ownersof parent. Qualitative
indicators that take into
account management
activities and othercircumstances areadded, as necessary●

Level of achievementof individual mission

Performance
Indicators

Stock-based
compensation(medium- to long-term
incentives)

Stocks (partial cash)●●●

The amount of thiscompensation islinked to the levelof achievement of
the Medium-Term
Management Plan
The standard amountof this compensation
is 5% of the basic
compensation, varying
from 0% to 10%

Quantitative indicators
calculated according
to the level ofachievement of eachperformance indicatorof consolidated
operating profit, returnon equity (ROE) andreturn on assets (ROA)

Note: The above content concerning performance indicators covers compensation for July
2022 onward. The content of performance indicators for compensation up to June 2022
are as follows.
● Performance indicators of performance-based compensation in the previous fiscal year
One is the result of quantitative evaluation, which is calculated based on return on
equity (ROE) as the key indicator, and the level of achievement of performance indicators such as return on assets (ROA), operating profit on sales, and debt equity ratio.
The other is the result of qualitative evaluation, which is determined in consideration ofmanagement activities and other situations.
● Stock-based compensation
Quantitative indicators calculated according to the level of achievement of the performance indicators of operating profit and profit attributable to owners of parent.

Compensation for Audit & Supervisory Board Members
The compensation for Members of the Audit & Supervisory
Board is determined through deliberation by all members of the
Audit & Supervisory Board within the total amounts of compensation for which resolutions were passed in advance at theGeneral Meeting of Shareholders in accordance with the regulations on compensation for Members of the Audit & Supervisory Board resolved by the Audit & Supervisory Board. The
Members of the Audit & Supervisory Board may consult with
the Compensation Advisory Committee as necessary.
The compensation limit for Members of the Audit & Supervisory Board was resolved to be within 8 million yen per monthat the 118st Ordinary General Meeting of Shareholders held on
June 28, 2012.
Compensation for the Audit & Supervisory Board Members
consists of only a fixed basic compensation. This is in consideration of their independent position, which is unaffected by theCompany s business performance.

Corporate Data

3. Assessment of New Medium-Term Management Plan
The new Medium-Term Management Plan TOPY Active& Challenge 2025 defines the Company s vision for 2030
and was formulated using backcasting. I believe that it wasa steady planning process with high feasibility despite thelarge uncertainty of the external environment. In setting targets, the Company also focused on EBITDA and free cash
flow as indicators directly linked to improving corporate val-

Basic compensation

Sustainability

The effectiveness of the Board of Directors has alreadyreached a reasonable level, and I find that further improvements have been made during my tenure. Externally, theCompany has increased the number of independent directors by one and introducing a system for direct reporting from each business division to outside directors andAudit & Supervisory Board Members, and fundamentally,
improvements in the quality of pre-briefings of the Boardof Directors for outside directors and Audit & Supervisory
Board Members (narrowing down more appropriate agenda
items, clarifying points for deliberations, simplifying explanatory materials, etc.) have contributed to the enhancement
and invigoration of discussions at the Board of Directors.
On the other hand, there is room for improvement in termsof holding broader discussions. For example, it is desirable
to enhance discussions with outside officers at an earlier
stage of management plan formulation before the directionof discussions is established.

4. Medium to Long Term Expectations up to 2030
I believe the Company s strength is its talented human resources. The strength of these human resources is evident
in the Company s excellent technical development skills andhigh market share. Of particular note, though, the diversityof these human resources, with differing viewpoints underpinned by the diverse business portfolio of the Company and
the Group, creates resilience, which will become even more
important for increasing corporate value within the futurebusiness environment of rising uncertainty.
While this diversity of human resources should lead tothe emergence of innovation, the Company still has room
for improvement in this area. Going forward, the key will be
developing this strength of diverse human resources and enhancing communication formats between divisions in orderto establish the foundation for growth through emergence.
Additionally, it will be important to systematically develop
management human resources who will carry the torch in the
future. There is no doubt that the importance of managementhuman resources, who lead the Company forward, will growin the future amid efforts to further upgrade the Group s management and the expected higher degree of volatility in theeconomic circumstances and the social environments. In addition to increasing the number of employees in corporate management divisions, the Company should further clarify and disseminate to employees the competencies and career paths of
executive leadership (managerial staff who formulate strategies, allocate management resources, manage subordinates,
etc., as leaders of organizational units). I believe that enhancing
the development and career system that enables employees
to accumulate work experience and training that contributes
to the cultivation of executive management and management
skills from an early stage will be beneficial toward increasing
corporate value over the medium to long term.

Compensation Composition and Performance-based
Compensation for Directors

The Compensation Advisory Committee deliberates on the policy for determining compensation and the level of compensationin consideration of the business performance of the Company,
and other factors. According to the results of the deliberation,
the President, who has been delegated the authority based ona resolution of the Board of Directors, determines the amountof compensation for each director within the total amounts ofcompensation for which resolutions were passed in advance at
the General Meeting of Shareholders. Also, the Compensation
Advisory Committee shall confirm the appropriateness of theamount of compensation for each director in advance to ensurethat the delegated authority is appropriately exercised by the
representative directors, in addition to the percentage of performance-based compensation for the previous fiscal year thatis linked to company performance, and which is determined by
the Board of Directors based on the report of the Compensation Advisory Committee.
The Compensation Advisory Committee shall consist of
three external members and one internal member, and shallbe chaired by an external member to ensure the fairness andtransparency of compensation system.

Business

2. Evaluation of Board Effectivenessue, and it has revised compensation for directors and Audit& Supervisory Board Members to align with these indicators. I highly evaluate these efforts, too.
In the execution of future plans, as an independent
director, I would like to pay close attention to the deepeningof management with a greater awareness of capital costs
and business portfolio management. As a precondition tothis, I expect the Company to strengthen management-led
monitoring of capital efficiency for each division.

Procedure for Determining Compensation for Directors

Growth Strategies

1. Background of Appointment
In the field of corporate investment, I have been involved,
either as shareholder or executive management, in a number of investee companies. I also have served as a Representative Director of a company in Japan and the U.K. This
coupled with my knowledge of corporate management,
finance and accounting, organization and human resourcesmanagement, and global/overseas business gained throughmy career provide me with the broad skill set required of
an independent director and member of a nomination and/or compensation advisory committee. Additionally, with mymanagement experience at an asset management company for institutional investors and research company focusing on carbon neutrality, I am able to provide specialist
knowledge in various other relevant domains.

Basic Policy on Compensation for Directors
In accordance with its basic principle of improving company
performance and value, the Company uses compensation
standards and a compensation system appropriate to individual
employees job responsibilities. The Company also uses survey
data compiled by outside experts to improve the objectivity ofcompensation standards.
The compensation limit for Directors was resolved to bewithin 40 million yen per month (excluding salaries for employees) at the 121st Ordinary General Meeting of Shareholders
held on June 25, 2015. Separately, the 122nd Ordinary General
Meeting of Shareholders held on June 23, 2016 resolved thatthe amount of performance-based stock compensation for
Directors, excluding outside directors, would not exceed 100
million yen over three years.

Compensation for outside directors consists of only a fixedbasic compensation. This is in consideration of their independent position, which is unaffected by the Company s businessperformance in principle.

Value Creation“I expect deepening of management throughimplementation of the new Medium-Term
Management Plan and enhanced
corporate value through humanTakeshi Kiriyama
resources development”
Outside Director

Compensation for Directors and Audit &Supervisory Board Members

Compensation for Directors and Audit & Supervisory
Board Members in FY2021
Amount of compensation by type(million yen)
Position

Total amount ofcompensations(million yen)

Directors（excluding outside
directors）

185

147

38

−

6

Members of
the Audit &Supervisory Board（excluding outside
members）

49

49

−

−

2

Outside officers

44

44

−

−

5

NumberPerformanceof subject
based
Fixed basic
Stock-based
officers
compensationcompensationcompensationin the previous
fiscal year

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Chapter

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Sustainability

Risk management and ComplianceInternal Control Systems in General

Risk Management System

Eligibility

Scope

The Group s officers, employees and their families, former
employees, and suppliers (including contractors, partners injoint ventures, and other partners)
Acts that appear to violate laws and regulations, corporate
ethics, the Group Corporate Basic Philosophy, the Group
Corporate Code of Conduct, or internal rules in relation to
the Group s business(including violations of human rights such as harassment
and child labor and matters concerning corruption such asbribery)

Audits by the Audit & Supervisory Board

We have formulated the Group Corporate Basic Philosophy and
the Group Corporate Code of Conduct and ensure that all theofficers and employees of the Topy Industries Group are familiar
with them through such means as our websites, in-house newsletter, and Group Compliance Guidebook. Moreover, under theleadership of the Risk Management Committee of the Company,
employees in each department of the Company and Group companies formulate annual activity plans to ensure full compliance,engage in compliance improvement activities, and share relevant
information. In addition, our divisions that include those supervising compliance provide a range of compliance education toemployees at each level of the Topy Industries Group.

The Group recognizes that corrupt practices such as corruption and bribery are risk factors that could substantiallydamage trust. As such, the Group has established the Topy
Industries Group Anti-Corruption Policy that declares theGroup will not engage in any form of corrupt practices andbuild fair and transparent relationships with all stakeholders(customers, suppliers, community members, etc.) in order topromote sound corporate activities and business growth. The
Topy Industries Group Supply Chain Management Policy also
contains provisions on anti-corruption. Under this policy, we
are working with suppliers to prevent corrupt practices.
In addition to establishing rules, we are also promoting op-

TOPY Report 2022

Intellectual Property Compliance and GovernanceIn 2022, we established the Topy Industries Group Intellectual
Property Policy. This policy positions intellectual property asa tool that supports the sustainable growth of our business,
defines it as including know-how not limited to patents, promotes stricter management, and creates innovative intellectual property strategies by visualizing, analyzing, and utilizing
intellectual properties. Under this policy, the Group strives tocreate intellectual property and improve compliance and governance related to it.
* For details about the Topy Industries Group Intellectual Property Policy, please see our website.

Information Disclosure
Adequate Information Disclosure
Article 2 (For the benefit of society) of the Topy Industries
Group Corporate Code of Conduct stipulates that the Groupwill communicate widely with society as well as shareholders
and proactively disclose corporate information fairly and appropriately. Cooperate with local communities and be philanthropically active as a good corporate citizen. From the standpointof securing management transparency we are endeavoring todisclose corporate information in a fair and equitable manner inaccordance with the related laws and regulations such as the
Financial Instruments and Exchange Act.

Financial Results Briefings
We believe that the opportunity for our top executives to directly
explain our management plan and financial results helps us earn
the trust of our investors. Such sessions are held after financial
results are disclosed at the end of the second quarter and at theend of the fiscal year for analysts and institutional investors. The
president himself presents our financial results as well as our medium- to long-term consolidated management plans. This management plan session can be watched via streaming from the IR
Library on our website for shareholders and investors.

Financial Results Briefings Held in FY2021
Date

Details

Number of participants

November 24, 2021

2Q financial
results briefing

26 members
Streaming views: 570

May 25, 2022

Full-year financial
results briefing

20 members
Streaming views: 558* Streaming views represent data as of September 6, 2022.

Initiatives to Vitalize General Meetings of Shareholders
In order to further revitalize the General Meeting of Shareholders as a place for communication between the Company andshareholders and investors, and to facilitate the exercise of
voting rights, we are working on the following: (1) Enrichment
and early dispatch of notice to convene general meetings ofshareholders, (2) Use of the internet for notices to convene
general meetings of shareholders, (3) Exercise of voting rights
via the internet, and (4) Preparation of notices to convene
general meetings of shareholders in English (summary).

Diversifying Information Dissemination Methods (Utilization of Social Media)
In order to disseminate information to a broader audience, we
are working to diversify information disclosure methods usingsocial media. In February 2022, we established our Social
Media Policy, which sets out the attitudes and behaviors to beobserved in the use of official social media accounts and welaunched our official Twitter account. This account disseminates a variety of information centered on news releases andrecruitment information.

Corporate Data

Anti-corruption Initiatives* For details about the Topy Industries Group Tax Policy, please see our website.

Sustainability

Compliance System

Tax Compliance and Governance
Under the Group Corporate Basic Philosophy, the Group
complies with laws and regulations, their spirit, and the Group
Corporate Code of Conduct in all corporate activities. With regard to taxation, we believe that it is necessary to increase tax
transparency for various stakeholders. Toward this end, we
have established the Topy Industries Group Tax Policy, whichsets forth compliance and governance related to taxation.

Business

In accordance with the Group Company Management Regulations, the division of the Company supervising the Group
companies receives reports therefrom regarding their business
policies, plans, results and other matters as necessary, while
important matters are resolved at Executive Management
Meetings or the Board of Directors. In addition, the Company promotes the autonomous management of each Group
Company and conducts management soundness evaluations
to ascertain business results and risk management status,
among other aspects, of each Group Company for every fiscal year. Based on the results of such evaluations, the divisionof the Company supervising the Group companies provides
instructions and support to the group companies.

Through the Board of Directors attendance, as well as by
Executive Management Meeting and other important meeting
attendance by full-time members of the Audit & Supervisory
Board, Audit & Supervisory Board Members receive reports on
the activities of such organizations as the Internal Audit Department and Risk Management Committee and other mattersthat have a significant influence on the Topy Industries Group.
In addition, the Representative Director and Audit & Supervisory Board Members hold regular meetings to exchange opinions. Information sharing sessions are also conducted among
outside directors and Audit & Supervisory Board Members.
When an issue related to risk management occurs or is likely
to occur in the Topy Industries Group, it is also reported to
Audit & Supervisory Board Members in accordance with theGroup Risk Management Regulations. In addition, the Company has developed a structure in which whistle-blowing is reported to Audit & Supervisory Board Members in accordancewith the Rules Concerning the Topy Industries Group Basic
Corporative Ethics Consultation Office and the Topy Industries
Group Compliance Hotline.

Business Management of the Group Companies

61(1) Internal: Topy Industries Group Basic Corporate Ethics
Consultation andConsultation Officewhistle-blowing(2) External: Topy Industries Group Compliance Hotline
offices(outside law office)* For details about the Topy Industries Group Anti-Corruption Policy and the Topy
Industries Group Supply Chain Management Policy, please see our website.

Growth Strategies

Under the leadership of the Risk Management Committee of
the Company, employees in each department of the Company
and Group companies formulate annual activity plans for risk
management and engage in risk management improvement
activities. When an issue related to risk management occurs
or is likely to occur in the Topy Industries Group, it is reported
to organizations including the Risk Management Committee,
with the necessary instructions provided through the risk
management system. The activities of the Risk Management
Committee are reported to the Board of Directors to confirm
their effectiveness. In the event of a major disaster, a special
task force headed by the Representative Director and President is established to respond to the situation. We also work
to improve the earthquake resistance of our buildings andproduction facilities while regularly conducting drills and otheractivities to cope with emergencies.

(Overview of whistle-blowing system)

erational anti-corruption initiatives, such as providing anti-corruption training to Group officers and employees and establishing asystem for accepting consultations and whistle-blower reports at
the Groupʼs whistleblowing offices on suspected corrupt practices such as corruption and bribery.

Value Creation

To ensure the effectiveness of the internal control systems ofTopy Industries and its Group companies, and to make continuous improvements to these systems, the Company s Internal
Audit Department monitors Topy Industries Group companies
for compliance with internal control rules established by theCompanies Act and Financial Instruments and Exchange Act
based on the Companys annual auditing policies and plans.

Whistle-blowing System
To strengthen compliance, the Group has established offices
internally and externally that accept consultations and whistleblower reports concerning general matters relating to corporate ethics from Group employees and suppliers. Consultations and whistleblower reports can be made anonymously
and the confidentiality of these communications is protected.
The consulter or whistleblower and cooperating parties will beprotected from unfair treatment.

* For details about our Social Media Policy, please see our website.
* For an overview of our official Twitter account, please see the back cover.

TOPY Report 2022

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Chapter

5

Corporate Data

Our History▶

1921

Miya Steelworks (predecessor of Toto Steel Mfg., Co., Ltd.)was founded

▶

1922

Miya Steelworks succeeded in hot-rolling of steel sash bars

▶

1930

▶

▶

1934

Tokyo Sharin Seisakusho Co., Ltd. (predecessor of Japan
Motor Wheel Co., Ltd.) was founded

▶

1936

▶

2004

▶
Hamura Plant of Ayase Factory commenced operation

1969
1972

▶

1977

Sales of synthetic mica started

2007

▶

Topy America, Inc. was founded (merger of Topy International, Inc.,
Topy Corporation, and Topy International U.C.A. Inc.) Head Office moved to
Osaki, Shinagawa-ku, Tokyo

1960

2000

Technology Research Center (current R&D center) was opened at
Toyohashi Work

▶

2003

Took a stake in Fujian Yuan Shing Topy Ltd. (current Fujian Topy Autoparts
Co., Ltd.)Topy International, Inc. (current Topy America, Inc.) was founded

▶

2000

Akemi Electric Power Ltd., which engages in the power supply business,
commenced operation

1964

Ayase Plant of Japan Motor Wheel Co., Ltd.
(current Ayase Factory of Topy Industries, Ltd.) was establishedJapan Motor Wheel Co., Ltd., Toto Steel Mfg. Co., Ltd., Toto Zoki Co.,
Ltd., and Toto Tekko Co., Ltd. merged to form Topy Industries, Ltd.

Teikoku Hatsujo Seisakusho (the predecessor of Japan Motor
Wheel Co., Ltd.) commences the production of prototype steel
wheels for automobiles▶

▶

Growth Strategies

1920

▶

▶

1926

Tokyo Shearing Co., Ltd. (predecessor of Toto Steel Mfg.,
Co., Ltd.) was foundedFounder of Miya Steelworks
Toshihide Kozuma

1961

Chigasaki Seisakusho of Toto Zoki Co., Ltd.
(current Kanagawa Factory of Topy Industries, Ltd.) was established
Toyokawa Plant of Japan Motor Wheel Co., Ltd.
(current Toyokawa Factory of Topy Industries, Ltd.) was established

Value Creation

▶

2021

100th anniversary

2021

2008

Science Division was established
Concluded an agreement with Nippon Steel Corporation to strengthen
general business cooperation

Business

Toyohashi Steel Mill Plant
at Toto Steel Mfg., Co., Ltd.

1940
▶

▶

1943

▶

Miya Steelworks and Tokyo Shearing Co., Ltd. merged
to form Toto Steel Mfg., Co., Ltd.

▶

1955

Toto Zoki Co., Ltd. was founded

▶

1956

Toto Tekko Co., Ltd. was founded

▶

1958

Toyohashi Steel Mill Plant of Toto Steel Mfg., Co., Ltd.
(current Toyohashi Works of Topy Industries, Ltd.) wasestablishedTopy Corporation

1980

▶

1982

▶

Concluded a technical assistance agreement with PT. Palingda
Nasional (Indonesia)
Developed tubeless tire wheels for heavy- and medium-duty commercial vehicles at Ayase Factory
Ultra-large wheels for mining equipment [SGOR Ⓡ ] were developed

▶

1985

Topy Corporation (current Topy America, Inc.) was founded

▶

1987

Succeeded in the practical application of high-quality synthetic mica
for cosmetics

▶

1988

Concluded a technical assistance agreement with PT. Pakoakuina(Indonesia)▶

Our History

63

TOPY Report 2022

1990

1980

Concluded a technical assistance agreement with PT. Inkoasku(Indonesia)

Logo mark for the 100th anniversary

Kimi to Boku Hall at Toyohashi Works

2011

1990

▶

1991

▶

Akemi Plant of Toyokawa Factory commenced operation

Kimi to Boku Hall was completed at Toyohashi Works

▶

1992

Kurate Plant of Toyokawa Factory commenced operation

▶

1995

A mill for deformed concrete bars commenced operation
at Toyohashi Works

▶

1998

Obtained ISO 9001 certification at all production sites

▶

2011

▶

2013

▶

Topy Undercarriage (China) Co., Ltd.
was founded

2015

Topy Fasteners Mexico S.A. de C.V. wasfounded2016

PT. Topy Palingda Manufacturing Indonesia
was founded

The business and capital alliance with MW
Italia S.R.L. was strengthened

PT. Topy Undercarriage Indonesia was founded▶

Topy MW Manufacturing Mexico S.A. de C.V.
was founded

▶

2014

PT. Topy Undercarriage Indonesia commenced
operation
The new steel making plant commenced commercial operation at Toyohashi Works

Corporate Data

1941

Tokyo Sharin Seisakusho and Abe Tekkosho Co., Ltd.
merged to form Japan Motor Wheel Co., Ltd.

▶

Signing ceremony for the mergerof four companies

Sustainability

Open hearth furnace plant under construction
at Miya Steelworks

2017

WIL Car Wheels Ltd., a joint venture with
Wheels India Limited, was established (India)

▶

2018

Ring Techs Co., Ltd. was made into a wholly-owned subsidiary
Asahi Tec Corporation was made into awholly-owned subsidiary

1999

Topy International, U.C.A. Inc. (current Topy America, Inc.)
was founded
ISO 14001 certification was obtained at all production sites

1989

A plant for undercarriage components for construction equipment
commenced operation at Toyohashi WorksTOPY Active & Challenge 2025▶

TOPY Report 2022

64

Chapter

Corporate Data

5

Consolidated Financial Performance for the Past 11 Years

Fiscal year

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Operating Results (Fiscal year) (Million yen)
226,912234,682

237,677

215,872

208,237

230,462

286,227

263,305

225,121271,178

Operating profit (loss)

10,554

6,990

5,308

6,422

10,000

7,180

7,997

7,505

2,851

(2,943)(1,706)

Ordinary profit (loss)

7,304

6,234

4,485

6,037

8,806

6,116

8,034

9,357

3,597

(575)

(1,401)

Profit (loss) before income taxes

6,118

5,842

4,249

4,476

4,681

10,897

7,933

10,345

1,741

856

1,790

Profit (loss) attributable to ownersof parent

3,918

3,409

1,914

2,360

1,700

7,191

5,500

7,114

(4,497)578

386

Capital expenditure

8,982

20,47725,45820,374

8,815

9,874

12,132

25,10013,397

10,371

8,429

Depreciation and amortization

9,310

8,957

10,086

10,315

11,321

10,631

10,59911,11012,332

12,515

12,775

Research and development costs

1,271

1,212

1,519

1,202

1,059

1,137

1,131

1,096

1,115

1,057

1,107

Total assets

212,828

208,781

232,714

252,456

231,583

223,050

248,102284,198

254,659

264,672

282,195

Shareholders equity

82,38989,522

94,363

106,187

98,893103,951

108,959

111,304

102,732

107,428

112,657

Net assets

83,096

91,25896,219107,941

99,973

104,853

109,859

112,362

103,800

108,385

113,703

Interest-bearing debt

58,09153,53462,45377,51670,07055,831

61,096

79,67676,782

81,07586,035

Cash flows from operating activities

16,01016,7707,251

19,44019,346

10,13010,78011,725

16,206

5,730(5,528)Cash flows from investing activities(7,703)(14,770)(17,478)(29,141)(7,529)(1,016)(5,861)(20,835)(16,048)(8,931)(2,609)Cash flows from financing activities(4,983)(4,997)

7,538

13,157(8,391)(16,861)

1,834

15,936(6,461)

3,668

3,527

165.20143.76

80.76

99.65

71.80

303.90234.25302.85(191.42)

24.70

16.61

40

40

20

40

60

80

80

90

40

20

20

Operating profit margin

4.4

3.1

2.3

2.7

4.6

3.4

3.5

2.6

1.1

(1.3)

(0.6)

Return on equity

4.8

4.0

2.1

2.4

1.7

7.1

5.2

6.5

(4.2)

0.6

0.4

Equity ratio

38.7

42.9

40.5

42.1

42.7

46.6

43.9

39.2

40.3

40.6

39.9

4,135
［428］

4,374
［491］

4,515
［538］

4,596
［573］

4,408
［597］

4,568
［587］

5,034
［581］

6,241
［869］

6,181
［1,016］

6,153
［756］

5,897
［779］

Growth Strategies

240,534

Value Creation

Net sales

Financial Position (End of fiscal year) (Million yen)

Business

Cash Flows (Fiscal year) (Million yen)

Sustainability

Per Share Information (Yen)Net profit (loss) per share

Corporate Data

Dividends per share

Financial Indices (%)

Number of employees at period end[Average number of temporary
employees not included in the above]* A one-for-10 reverse stock split of common stock went into effect on October 1, 2016. Data per share is thus calculated on the assumption that the reverse stock split was executed at the beginning of FY2011.

65

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For detailed financial data, please see the Securities Reports page on our website.

TOPY Report 2022

66

Chapter

5

Corporate Data

Non-Financial Highlights
Environment

Recruiting
Reporting
scope

Unit

2017

2018

2019

2020

2021

Environmental management system
Consolidated*1
Production baset-CO2

Consolidated*2(Partially excluded)

Scope 2t-CO2Consolidated(Partially excluded)

356,083

352,839

324,360

308,952

311,483

Scope 3t-CO2

Consolidated
Japan(Partially excluded)

−

−

−

1,294,158

924,492

63%

67%

71%

75%

71%

236,779

235,010

216,985

226,647

246,208

10,864

Thousand m3

Consolidated

3,056

3,081

3,012

2,906

2,985

3

Consolidated

977

1,066

979

877

820

10,951

10,43910,552

11,249Water intake
Total city water supply and industrial water
Groundwater intake volume

Thousand m

Water discharge
Total water discharge

Thousand m3

39

38

44

40

5

15

9

11

10

Number of mid-career hires - men

Persons

Non-consolidated

42

43

25

14

8

Number of mid-career hires - women

Persons

Non-consolidated

4

4

4

1

0

％

Non-consolidated

50%

47%

38%

21%

14%

Consolidated

2,074

2,206

Average years of service
Men

Years

Non-consolidated

19

19

19

19

19

Women

Years

Non-consolidated

13

13

13

13

13

％

Non-consolidated

2.2%

2.3%

2.4%

2.4%

2.5%
76%

Composition of persons with disabilities
Employment rate of persons with disabilities*6

2,055

1,869

1,819

Waste

Average ratio of days of paid leave taken％

Non-consolidated

72%

74%

82%

67%

Average number of days of paid leave takenDays

Non-consolidated

14

14

15

13

15

Employees using childcare leave

Persons

Non-consolidated

5

6

6

7

14

Employees using family care leave

Persons

Non-consolidated

0

1

0

0

0

Million yen

Non-consolidated

1.8

5.4

1.9

1.0

0.4

Cases/1Mh

Consolidated
Japan

1

1

1

1

1

Social contribution spending
Donations
Workplace accidents and illnesses*7
Frequency rate of lost work-time
workplace accidents (employees)tConsolidated

230,391

222,304

221,721217,248248,521

Number of fatalities (employees)

Cases

Consolidated

0

0

0

0

1

Waste emissionstConsolidated

249,198

244,525

242,132

236,154

265,068

Number of workplace accidents

Cases

Consolidated

19

19

12

11

15

Emissions of substances regulated under
the PRTR Act*3

Number of workplace accidents

Cases

6

6

8

11

266

283

292

231

232

Consolidated
Japan

10

t

Consolidated
Japan

Transfers of substances regulated under the
PRTR ActtConsolidated
Japan

255

255

304

251

347

Total amounts of releases and transfers of
VOCs*4tConsolidated
Japan

265

283

292

230

232

t

Consolidated
Japan

175

166

158

189

146

t

Consolidated
Japan

189

135

124

85

92

*1 Items whose scope is presented as consolidated cover consolidated subsidiaries unless otherwise stated. However, environmental items do not include Asahi Tec North America, Inc.
and Guangzhou Asahi Dongling Research & Development Co., Ltd.
*2 Items presented as partially excluded do not include figures equivalent to electricity related to power transmission sold outside the Company as a power generation business.
*3 Act on the Assessment of Releases of Specified Chemical Substances in the Environment and the Promotion of Management Improvement*4 Volatile organic compounds

Social
Unit

2017

2018

2019

2020

2021

Employee composition*5
Number of employees - consolidated

Persons

Consolidated

5,034

6,241

6,181

6,153

5,897

Number of employees - male - consolidated

Persons

Consolidated

4,137

5,079

5,021

4,974

4,742

Number of employees - female - consolidated

Persons

Consolidated

897

1,162

1,160

1,179

1,155

％

Consolidated

18%

19%

19%

19%

20%

Ratio of females - consolidated
Managerial staff composition
Total number of managers - consolidated

Persons

Consolidated

654

713

742

739

721

Number of managers - male - consolidated

Persons

Consolidated

634

679

707

700

685

Number of managers - female - consolidated

Persons

Consolidated

20

34

35

39

36

Ratio of female managers - consolidated%

Consolidated

3%

5%

5%

5%

5%

Total number of managers - non-consolidated

Persons

Non-consolidated

241

247

256

255

248

Number of managers - female - non-consolidated

Persons

Non-consolidated

1

2

2

6

6

Ratio of female managers - non-consolidated％

Non-consolidated

0.4%

0.8%

0.8%

2.4%

2.4%

Reportingscope

Number of male directors

Persons

Non-consolidated

7

6

6

6

Number of female directors

Persons

Non-consolidated

0

0

0

0

1

Number of outside directors

Persons

Non-consolidated

2

2

2

2

2

Number of designated independent officers
among outside directors

Persons

Non-consolidated

2

2

2

2

2

Number of non-executive directors or
independent directors

Persons

Non-consolidated

2

2

2

2

2

Number of outside members with industry
experience or non-management members

Persons

Non-consolidated

0

0

0

0

0

Number of Board meetings

Times

Non-consolidated

18

17

16

17

18

Attendance rate at Board meetings％

Non-consolidated

100%

100%

100%

100%

100%

Average term of office of directors (covers
directors in office as of the fiscal year end)

Years

Non-consolidated

2.9

1.8

1.9

1.9

2.1

Number of Audit & Supervisory Board
Members

Persons

Non-consolidated

4

4

4

4

4

Number of outside Audit & Supervisory
Board Members

Persons

Non-consolidated

2

2

2

2

2

Number of Audit & Supervisory Board
meetings

Times

Non-consolidated

17

16

16

15

16

Average attendance rate at Audit & Supervisory Board meetings％

Non-consolidated

100.0%

100.0%

100.0%

100.0%

100.0%

2017

2018

2019

2020

2021

Board of Directors
6

Corporate Data

Reporting
scope

Unit

Sustainability

Air pollutants - SOx (sulfur oxides)*5 Items related to employees in society cover full-time employees in Japan, unless otherwise stated.
*6 Includes employees on fixed-term labor contracts.
*7 Does not include Asahi Tec North America, Inc. and Guangzhou Asahi Dongling Research & Development Co., Ltd. However, equity method affiliate Hokuetsu Metal Co., Ltd. is included.
Includes workplace accidents that occur at Group business sites, including partner companies, regardless of the attribution of the victim.

Governance

Pollutants
Air pollutants - NOx (nitrogen oxides)

Business

Recycling volume
Chemical substances

Growth Strategies

Consolidated(Partially excluded)

TJ

41

Non-consolidated

Use of leave programs

Energy use
Energy consumption

Non-consolidated

Persons

Ratio of mid-career hires

Greenhouse gas emissions
Scope 1

Persons

Number of university graduates hired - women

Value Creation％

ISO 14001 acquisition rate

Number of university graduates hired - men

Audit & Supervisory Board

Nomination and Compensation Committees
Number of Nomination Advisory Committee
meetings

Times

Non-consolidated

3

3

3

3

3

Number of Compensation Advisory Committee meetings*8

Times

Non-consolidated

2

2

3

4

3

Cases

Consolidated

17

15

7

8

14

Compliance and risk management
Number of whistle-blower reports andconsultations*8 Only meetings on determining the compensation of directors. Meetings on review of the compensation system are held separately.

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68

Chapter

5

Corporate Data

Major Subsidiaries & Affiliates
Company nameHead office location

IR Information
Capital(million yen)

Business segment

Voting rights held or
owned by (%)(Consolidated Subsidiaries)
Topy Enterprises, Ltd.

Shinagawa-ku, Tokyo

480

Steel, Automotive and Industrial
Machinery Components

100

Topy Marine Transport, Ltd.

Toyohashi-shi, Aichi Pref.

225

Steel

100

Topy Fasteners, Ltd.

Matsumoto-shi, Nagano Pref.

310

Automotive and Industrial
Machinery Components

100

Topy-Rec, Ltd.

Koto-ku, Tokyo

300

Others100

Kyushu Wheel Kogyo, Ltd.

Miyako-gun, Fukuoka Pref.

100

Automotive and Industrial
Machinery Components

100

Tojitsu, Ltd.

Toyohashi-shi, Aichi Pref.

80

Steel

100 （100）

Autopia, Ltd.

Hachioji-shi, Tokyo

30

Automotive and Industrial
Machinery Components

100 （100）

Akemi Recycling Center, Ltd.

Toyohashi-shi, Aichi Pref.

200

Steel

100

200

Automotive and Industrial
Machinery Components

100* Since April 4, 2022, the Companyʼs shares have been listed on the Prime Market of the Tokyo Stock Exchange and the Premier Market of the Nagoya Stock Exchange.

Top 10 major shareholders

（30）

Name

Number of shares held

Shareholding ratio (%)

Nippon Steel Corporation

4,818,264

20.92

The Master Trust Bank of Japan, Ltd. (trust account)

2,232,500

9.70

Topy Fund Business Association

1,158,110

5.03

Meiji Yasuda Life Insurance Company

975,134

4.23

Mizuho Bank, Ltd.

787,802

3.42

Akemi Electric Power, Ltd.

Toyohashi-shi, Aichi Pref.

205

Power Generation

100

Ring Techs Co., Ltd.

Kurashiki-shi, Okayama Pref.

100

Automotive and Industrial
Machinery Components

100

Employee Shareholding Association of Topy Industries Group

725,031

3.15

Seibu Wheels Co., Ltd.

Kurashiki-shi, Okayama Pref.

10

Automotive and Industrial
Machinery Components

100 （100）

Custody Bank of Japan, Ltd. (trust account)621,676

2.70

100

DFA Intl Small Cap Value Portfolio

428,000

1.86

Resona Bank, Limited

413,605

1.80

Sompo Japan Insurance Inc.

374,600

1.63

Kakegawa-shi, Shizuoka Pref.

100

Asahi Tec Corporation

Kakegawa-shi, Shizuoka Pref.

100

Automotive and Industrial
Machinery Components

100 （100）

600 U.S. dollars

Automotive and Industrial
Machinery Components

100

50,000 U.S. dollars

Automotive and Industrial
Machinery Components

100 （100）

50 million bahts

Automotive and Industrial
Machinery Components

90

Topy America, Inc.
Topy Precision Mfg., Inc.

Kentucky, U.S.A.
Illinois, U.S.A.
Chonburi, Thailand

Fujian Topy Autoparts Co., Ltd.

Fujian, China

194 million renminbi

Automotive and Industrial
Machinery Components

100

Topy Undercarriage (China) Co., Ltd.

Qingdao, China

606 million renminbi

Automotive and Industrial
Machinery Components

100

Topy Fasteners Vietnam Co., Ltd.

Yen My District, Hung Yen Province, Vietnam

6,240,000 U.S. dollars

Automotive and Industrial
Machinery Components

100

PT. Topy Palingda Manufacturing Indonesia

Karawang Regency, West Java, Indonesia

710.5 billion rupiahs

Automotive and Industrial
Machinery Components

90

PT. Topy Undercarriage Indonesia

Bekasi Regency, West Java, Indonesia

41.2 billion rupiahs

Automotive and Industrial
Machinery Components

100
95

（55）

Breakdown of shareholders by type（80）

Individuals and others
32.11%（3）

Topy MW Manufacturing Mexico S.A. de C.V.

Silao City, State of Guanajuato, Mexico

867 million pesos

Automotive and Industrial
Machinery Components

Topy Fasteners Mexico S.A. de C.V.

San Luis Potosi City, State of San Luis Potosi, Mexico

331 million pesos

Automotive and Industrial
Machinery Components

100 （100）
90

Guangzhou City, Guangdong Province, China

188 million renminbi

Asahi Tec Aluminium (Thailand) Co., Ltd.

Khlong Tamru, Chonburi, Thailand

1,480 million bahts

Automotive and Industrial
Machinery Components

100 （100）

Asahi Tec North America, Inc.

Troy, Michigan, U.S.A.

90,000 U.S. dollars

Automotive and Industrial
Machinery Components

100 （100）

Guangzhou Asahi Dongling Research &Development Co., Ltd.

Guangzhou City, Guangdong Province, China

11 million renminbi

Automotive and Industrial
Machinery Components

51(Equity-method affiliate)
Hokuetsu Metal Co., Ltd.

Nagaoka-shi, Niigata Pref.

Guangzhou Wheelhorse Asahi Aluminium Co., Ltd.

Guangzhou City, Guangdong Province, China

216 million renminbi

Automotive and Industrial
Machinery Components

49

（49）

Guangzhou Dicastal Asahi Aluminium Co., Ltd.

Yingde City, Guangdong Province, China

40 million renminbi

Automotive and Industrial
Machinery Components

25

（25）

(Other affiliates)
Nippon Steel Corporation

Chiyoda-ku, Tokyo

1,969

419,524

Steel

Manufacture and sales of steel
products and engineering

9.00%

35.1 （1.3）

0.1(Owned by) 21.2 （0.2）*1 The respective business segments are listed in the Business segment column (excluding other affiliated companies).
*2 Topy America, Inc. and Topy Precision Mfg., Inc. have paid premiums of U.S. $62,999,400 and U.S. $4,950,000, respectively, aside from the capital mentioned above, totaling capital of U.S.
$63,000,000 and U.S. $5,000,000, respectively.
*3 Topy Enterprises, Ltd., Topy America, Inc., Fujian Topy Autoparts Co., Ltd., Topy Undercarriage (China) Co., Ltd., PT. Topy Palingda Manufacturing Indonesia, Topy MW Manufacturing Mexico S.A. de C.V.,
Ring-Techs Guangzhou Co., Ltd., and Asahi Tec Aluminium (Thailand) Co., Ltd. are specified subsidiaries.
*4 Hokuetsu Metal Co., Ltd. and Nippon Steel Corporation issue official financial statements separately.
*5 The values in parentheses in the percentage of Voting rights held or owned by column represent indirect holding percentages or percentages of voting rights indirectly owned by the company, which areeach included in the value above.
*6 Non-consolidated subsidiaries and non-equity-method affiliates are not listed.

Other domestic corporations
26.43%

（90）

（51）

0.99%

Treasury shares are included in “Individuals and others.”

Corporate Data

Ring-Techs Guangzhou Co., Ltd.

31.47%

Securities companies
Foreign investors

Automotive and Industrial
Machinery Components

Financial institutions
Sustainability

Topy Fasteners (Thailand) Ltd.

Notes: 1. Topy Industries, Ltd. owns 1,050,785 treasury shares but is excluded from the major shareholders listed above.
Treasury shares do not include the Company s shares held in trust for the stock compensation plan for directors.
2. The shareholding ratios were calculated by excluding treasury shares.
3. Topy Fund Business Association is the name of the shareholding association of Topy Industries, Ltd., its affiliates, and its business partners.

Business

ATC Holdings Co., Ltd.

Automotive and Industrial
Machinery Components

Growth Strategies

Bando-shi, Ibaraki Pref.

Number of outstanding shares ...... 24,077,510 shares
Number of shareholders ....................... 12,205
Value Creation

Sanwa Buhin Co., Ltd.

Stock exchange listings ........................ First Section of the Tokyo Stock Exchange &First Section of the Nagoya Stock Exchange (Securities code 7231)
Number of authorized shares ............ 88,300,000 sharesFiscal year end ...................................................... March 31
Ordinary general meeting of shareholders ... June
Record date ........................................................... March 31 (ordinary general meeting of shareholders, year-end dividend)
September 30 (interim dividend)
Share unit number ............................................... 100 shares
Shareholder registry administrator ................. Sumitomo Mitsui Trust Bank, Limited 1-4-1 Marunouchi,(special account management institution)
Chiyoda-ku, Tokyo...........................................
Contact for inquiries
Stock Transfer Agency Business Planning Dept.
Sumitomo Mitsui Trust Bank, Limited 2-8-4 Izumi, Suginami-ku, Tokyo 168-0063
Phone: 0120-782-031 (toll free)
As of March 31, 2022

As of March 31, 2022

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