(Note) This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.
The Company assumes no responsibility for this translation or for direct, indirect or any other forms ofdamages arising from the translation.

Securities code: 7220
May 31, 2019
To our shareholders:
Hiroshi Otsuka
Representative Director and President
Musashi Seimitsu Industry Co., Ltd.
39-5 Daizen, Ueta-cho, Toyohashi-shi, Aichi
NOTICE OF CONVOCATION
OF THE 92ND ANNUAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 92nd Annual Meeting of Shareholders of Musashi Seimitsu Industry
Co., Ltd. (the “Company”).
If you are unable to attend the meeting, you can exercise your voting rights in writing or via the Internet, etc.
Please review the Reference Documents for the Annual Meeting of Shareholders and exercise your voting
rights by 5:00 p.m. on Thursday, June 20, 2019.
Meeting Details
1. Date and Time:
2. Venue:

Friday, June 21, 2019 at 10:00 a.m. (Reception will open at 9:00 a.m.; Japan Standard
Time)
Conference Room of the Company’s Head Office39-5 Daizen, Ueta-cho, Toyohashi-shi, Aichi

3. Purposes:
Items to be reported:
1. Business Report and Consolidated Financial Statements, as well as the audit reports of the
Financial Auditor and the Audit and Supervisory Committee for Consolidated Financial
Statements, for the 92nd fiscal term (from April 1, 2018 to March 31, 2019)
2. Non-consolidated Financial Statements for the 92nd fiscal term (from April 1, 2018 to March 31,
2019)
Items to be resolved:
Appropriation of Surplus
Proposal 1:
Election of Eight (8) Directors (Excluding Directors Serving as Audit
Proposal 2:
and Supervisory Committee Members)
Election of Three (3) Directors Serving as Audit and Supervisory
Proposal 3:
Committee Members
4. Instructions for Exercising Voting Rights, etc.:
Please refer to “Instructions for Exercising Voting Rights, etc.” on page 2.
* If you plan to attend the meeting in person, please present the enclosed Voting Rights Exercise Form at the reception desk. Pleasealso bring this notice to the meeting for use as a meeting agenda.
* If any changes have been made to the Reference Documents for the Annual Meeting of Shareholders, Business Report, Nonconsolidated Financial Statements or Consolidated Financial Statements, such changes will be posted on the Company’s website(http://www.musashi.co.jp).

-1-

Instructions for Exercising Voting Rights, etc.
Voting right at the annual meeting of shareholders is an important right of shareholders.
Please exercise your voting rights.
There are three methods exercising your voting rights.
[Attending the General Meeting of Shareholders]Present the Voting Rights Exercise Form to the receptionist at the meeting.
Date and Time:
Friday, June 21, 2019 at 10:00 a.m.
Venue:
Conference Room of the Company’s Head Office39-5 Daizen, Ueta-cho, Toyohashi-shi, Aichi[Exercising Voting Rights in writing]Complete the enclosed Voting Rights Exercise Form by indicating your approval or disapproval of the
proposals and return it early.
Votes to be received by:Thursday, June 20, 2019 at 5:00 p.m.
[Exercising Voting Rights via the Internet]
Access the voting rights exercise website from a PC or a smartphone. If you are using a smartphone, you can
exercise your voting rights directly with the QR code. Please see the next page for details.
Votes to be given by:
Thursday, June 20, 2019 at 5:00 p.m.
Handling of Multiple Exercises of Voting Rights
1) If you exercise your voting rights twice, in writing and via the Internet, we will treat those via the Internet as valid.
2) If you exercise your voting rights more than once via the Internet, we will treat the last vote as valid.
* The costs incurred for accessing the site for exercising voting rights (such as Internet connection fees) will be borne by
the shareholders.
* Depending on the Internet use environment of the shareholders, it may not be available.
* QR code is a registered trademark of DENSO WAVE Inc..

-2-

Exercising Voting Rights via the Internet
Voting by a smartphone1.
2.

By scanning the QR code located on the bottom right of the Voting Rights Exercise Form, you
can simply exercise your voting rights.
Please follow the directions that appear on the screen to input approval or disapproval to each
proposal.

Note: If you need to change your votes after excising your voting rights, please log in the Website
for Exercising Voting Rights for a PC by using your Login ID and Password provided on the Voting
Rights Exercise Form and exercise your voting rights again.
* Please note that it is not possible to complete this procedure via mobile phone.
Voting by a PC
1.
2.
3.

Please access the Website, https://www.net-vote.com/ for Exercising Voting Rights.
You see the Top screen.
Then at the Login Screen, please enter the Login ID and Password provided on the Voting Rights
Exercise Form, and choose the “Login” button.

Information for electronic voting platform
Institutional investors who have already applied to use of the electronic voting platform operated by ICJ Inc.,
may also use this platform to exercise their voting rights, in addition to internet platforms listed above.
Inquiries for System, etc.
IR Japan Inc., Transfer Agency Services Department
Helpline: 0120-975-960
Reception: 9:00 a.m. - 5:00 p.m. (excluding Saturdays, Sundays and public holidays)-3-

Reference Documents for the Annual Meeting of Shareholders
Proposal 1:

Appropriation of Surplus

Returning profit to shareholders is recognized as one of the highest priorities in the Company’s management,
and the payment of stable, continuous dividends commensurate to business results is our basic policy.
Regarding the appropriation of surplus for the 92nd fiscal term, taking into account such factors as ourbusiness results for the fiscal year under review, the strengthening of our management structure and futurebusiness development, and considering to secure internal reserves on one hand, we propose the following.
Matters relating to year-end dividendsi) Type of dividend property
Cashii) Dividend amount to be allocated
Per share of common stock:Total dividends:iii) Effective date of dividends of surplus
June 24, 2019¥21
¥1,367,495,829-4-

Proposal 2:

Election of Eight (8) Directors (Excluding Directors Serving as Audit and Supervisory
Committee Members)

The terms of office of eight (8) Directors (excluding Directors serving as Audit and Supervisory Committee
Members; the same is applied throughout this proposal) shall expire upon the conclusion of this Annual
Meeting of Shareholders.
In that regard, to execute our management structural reforms and enable strategic, quicker and more flexible
decision making in the Board of Directors, we request the election of eight (8) Directors.
As for this proposal, the Audit and Supervisory Committee has judged that all the candidates for Director are
qualified.
The candidates for Director are as follows:

No.

Name
(Date of birth)

Hiroshi Otsuka(Jul. 6, 1965)

Career summary, positions and areas of responsibility in the Company,
and significant concurrent positions
Jul. 1993

Entered the Company

Apr. 1997

President and Director of TAP Manufacturing Ltd.
(currently Musashi Auto Parts UK Ltd.)

Feb. 2000

President and Director of Musashi Hungary
Manufacturing, Ltd.

Jun. 2001

Director of the Company

May 2002

Senior General Manager of Sales Division of theCompany

Jun. 2004

Managing Director of the Company

Jun. 2005

Senior General Manager of Sales and Management
Divisions of the Company

Jun. 2005

Senior Managing Director of the Company

May 2006

Representative Director and President of the Company(present post)

April 2015

President Executive Officer of the Company

April 2019

Chief Executive Officer of the Company(present post)

Reappointment

1

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10
Number of years since
appointment as adirector
18 years (at theconclusion of thismeeting)Reasons for nomination as a candidate for Director
Mr. Hiroshi Otsuka, who was appointed Representative Director andPresident in 2006, has supervised the entire group with a wealth ofexperience and broad insight. Holding future vision for the group, he has
shown strong leadership through developing policy and long-term strategy
and furthermore implementing innovative strategies such as creation of a
new business utilizing AI technology. Given his long-term excellent
management performance, we determined him a right person to enhance
corporate value and nominated him as a candidate for Director.

-5-

Number of theCompany’s shares held

1,432,700

Takayuki Miyata(Nov. 8, 1965)
Reappointment

2

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10
Number of years since
appointment as adirector
4 years (at theconclusion of thismeeting)

Dec. 1989

Entered the Company

Apr. 2010

President and Director of Musashi Auto Parts Michigan
Inc.

Apr. 2013

Executive Officer of the Company

Apr. 2015

Managing Executive Officer of the Company

Apr. 2015

Head of Machinery & Tools Division and Purchasing
Division of the Company

Jun. 2015

Director of the Company (present post)

Oct. 2015

Head of Power Train (PT) Division and Forging
Engineering Division of the Company (present post)

Mar. 2016

President and Director of Musashi Holdings EuropeGmbH (present post)

Dec. 2017

Head of China Regional Operations of the Company

Apr. 2018

Senior Managing Executive Officer of theCompany(present post)

Apr. 2018

CEO of China region of the Company(present post)(Significant concurrent position)
President and Director of Musashi Holdings Europe GmbH
Reasons for nomination as a candidate for Director
Mr. Takayuki Miyata has extensive experience and insight in the PT
Business, which is a core business of the Company. He concurrently serves
as President and Director of Musashi Holdings Europe GmbH, and has a
track record of increasing profit in existing businesses and creating new
demand. The Company has determined, in view of his superior management
ability cultivated through experience in supervision at multiple divisions
that he is necessary to improve the future corporate value of the Group, andnominated him once again as a candidate for its Director.

-6-15,000Haruhisa Otsuka(Nov. 4, 1960)

Jan. 1984

Entered the Company

Jan. 1998

President and Director of Musashi Auto Parts CanadaInc.

May 2004

President and Director of Musashi Auto Parts Michigan
Inc.

Jun. 2004

Director of the Company (present post)

May 2006

Head of North America Regional Operations of theCompany

May 2006

President and Director of Musashi Auto Parts Canada
Inc. (present post)

Oct. 2010

Head of North America Regional Sales of the Company(present post)

Reappointment

3

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
9/10
Number of years since
appointment as adirector
15 years (at theconclusion of thismeeting)

Apr. 2015

Managing Executive Officer of the Company

Oct. 2015

Head of Linkage & Suspension (L & S) Division of theCompany (present post)

Apr. 2018

Senior Managing Executive Officer of theCompany(present post)

Apr. 2018

CEO of North and South America region of theCompany(present post)(Significant concurrent position)
President and Director of Musashi Auto Parts Canada Inc.
Reasons for nomination as a candidate for Director
Mr. Haruhisa Otsuka has extensive experience and insight in the L&S
Business, which is one of the Company’s core businesses. He concurrently
serves as President and Director of Musashi Auto Parts Canada Inc., etc.,
and has a track record of increasing profit in existing businesses andcreating new demand. The Company has determined, in view of his superior
management ability cultivated through experience in supervision over North
America for many years that he is necessary to improve the future corporate
value of the Group, and nominated him once again as a candidate for its
Director.

-7-

61,200Dec. 1997

Entered Musashi Auto Parts Canada Inc.

Oct. 2013

Executive Officer (present post), Compliance Officer andSenior Manager of Accounting, Purchasing, IT, HR,
Production Control of Musashi Auto Parts Canada Inc.

Nov. 2013

Director of Musashi Auto Parts Canada Inc. (present
post)

Apr. 2015

Executive Office of the Company

Apr. 2016

In charge of Global IT Strategy of the Company (present
post)

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10

Apr. 2017

Senior Executive Officer of the Company

Apr. 2017

Head of Finance and Accounting Division of theCompany

June. 2017

Director of the Company (present post)

Apr. 2018

Managing Executive Officer of the Company(present
post)

Number of years since
appointment as adirector
2 years (at theconclusion of thismeeting)

Apr. 2018

CFO of Group of the Company(present post)

Tracey Sivill(Dec. 2, 1963)
Reappointment

4

Reasons for nomination as a candidate for Director
Ms. Tracey Sivill has extensive experience and insight in finance andaccounting and IT divisions. She has been responsible for the finance andaccounting and IT divisions in the Group company, and has a track recordof promoting efficiency of the Group’s management and operations. The
Company has determined, in view of her superior management ability
cultivated through ample experience in overseas subsidiary, that she isnecessary to improve the future corporate value of the Group, andnominated her once again as a candidate for its Director.

-8-0Goro Kamino(Aug. 29, 1960)

Aug. 2000

Representative Director and President of Gastec Service,Inc.

May 2002

Representative Director and President of Sala
Corporation (present post)

Mar. 2012

Representative Director and President of Chubu Gas Co.,
Ltd.

Jun. 2012

Director of the Company (present post)

Feb. 2018

Chairman and Representative Director of Gastec Service,
Inc. (present post)

Feb. 2018

Chairman and Representative Director of Chubu Gas Co.,
Ltd. (present post)

Reappointment

5

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10

18,600(Significant concurrent positions)Representative Director and President of Sala Corporation
Chairman and Representative Director of Gastec Service, Inc.
Number of years since Chairman and Representative Director of Chubu Gas Co., Ltd.
appointment as a
Reasons for nomination as a candidate for Director
director
Mr. Goro Kamino has provided appropriate advice on the Company’s
7 years (at the
management as its Outside Director based on his extensive experience and aconclusion of thishigh level of knowledge as a corporate manager of listed companies. The
meeting)Company believes that he will continue to supervise the Company’s
management based on his experience and knowledge, and requests hiselection as Outside Director.

6

Aug. 1985

Entered General Motors Corporation

Mar. 1987

RetiredMar. 1987

Entered Tenneco Automotive. (currently Tenneco Inc.)

Aug. 1997

Same as above
Asia

Vice President and Managing Director,

Aug. 1999
Hari N. Nair
（Jan. 1, 1960）

Same as above Vice President, Managing Director,
South America and Asia

Apr. 2000

Same as above Senior Vice President, Managing
Director, International

Reappointment

May. 2001

Same as above Executive Vice President, Managing
Director, Europe

Jun. 2005

Same as above Executive Vice President, Managing
Director, Europe, South America and India

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10
Number of years since
appointment as adirector
2 years (at theconclusion of thismeeting)

Apr. 2009Same as above

Appointed to Board of Directors

May. 2010Same as above

Chief Operating Officer

Jul. 2013

Entered Owens-Illinois Inc.
position)Jan. 2015

Retired from Tenneco Inc. Board of Directors

Board of Directors(current

Mar. 2015

Retired from Tenneco

Jun. 2017

Director of the Company (present post)

Dec. 2017

Director of Delphi Technologies PLC. (present post)

Feb. 2018

Chairman of the Board of Sintercom India. (present post)

Reasons for nomination as a candidate for Director
Mr. Hari Nair has provided appropriate advice on the Company’s
management as its Outside Director based on his extensive experience and ahigh level of knowledge of an overseas auto part manufacturer. The
Company believes that he will continue to supervise the Company’s
management based on his experience and knowledge, and requests hiselection as Outside Director.

-9-0Keisuke Tomimatsu(May 2, 1974)
Reappointment

7

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10
Number of years since
appointment as adirector
4 years (at theconclusion of thismeeting)

Apr. 1997

Entered SBC Warburg Japan Ltd. (currently UBS
Securities Japan Co., Ltd.)

Dec. 2001

Entered UBS Securities Japan Co., Ltd.

Mar. 2003

Director of UBS Securities Japan Co., Ltd.

Mar. 2006

General Manager/Executive Director, Financial Products
Equities Dept. of UBS Securities Japan Co., Ltd.

Aug. 2008

Managing Director, Equities Dept. of Credit Suisse
Securities (Japan) limited.

Nov. 2009

Executive Director, Equities Dept. of Morgan Stanley
Japan Securities (currently Morgan Stanley MUFG
Securities Co., Ltd.)

Sep. 2011

Resigned Morgan Stanley Japan Securities (currently
Morgan Stanley MUFG Securities Co., Ltd.)

Jun. 2013

Audit & Supervisory Board Member of the Company

Jun. 2014

Director of IR Japan Inc.

Feb. 2015

Director of IR Japan Holdings, Ltd.

Jun. 2015

Director serving as an Audit and Supervisory Committee
Member of the Company

Jun. 2017

Director of the Company (present post)

7,100(Significant concurrent positions)
Director of ABEJA, Inc.
Reasons for nomination as a candidate for Director
Mr. Keisuke Tomimatsu has extensive experience at various companies
such as securities industry and AI industry as well as considerable financial
and accounting knowledge. Based on such experience and knowledge, he
has provided appropriate advice on the Company’s management. The
Company believes that he will supervise the Company’s management basedon his experience and knowledge, and requests his election as Outside
Director.

Yoshie Munakata(Jun. 20, 1958)

Apr. 1981

Entered Dai Nippon Printing Co., Ltd.

Dec. 1983

Entered Intel Japan K.K. (present Intel K.K.)

Apr. 1999

Manager, Communication Product Business
Headquarters of Intel K.K.

Apr. 2001

Executive secretary in charge of corporate
planning/government relation of Intel K.K.

Apr. 2002

Manager, Business Development Headquarters of Intel
K.K.

Apr. 2009

Director and executive deputy president of Intel K.K.

Reappointment

8

Notes:

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
7/7
Number of years since
appointment as adirector
1 year (at theconclusion of thismeeting)1.
2
3.

Apr. 2016

Advisor of Intel K.K.

Oct. 2016

Established B.Grove Inc., Representative Director of
B.Grove Inc., (present post)

Jun. 2017

Director of SoftBank Technology Corp. (present post)

2,000

Reasons for nomination as a candidate for Director
Mr. Yoshie Munakata has extensive experience cultivated in the
management at a global company in the data telecommunications
technology industry. Based on such experience and knowledge, he has
provided appropriate advice on the Company’s management. The Company
believes that he will supervise the Company’s management based on his
experience and knowledge, and requests his election as Outside Director.

There are no special interests between the Company and the candidates.
.
Mr. Goro Kamino, Mr. Hari N. Nair, Mr. Keisuke Tomimatsu and Mr. Yoshie Munakata are candidates for Outside
Director.
Mr. Goro Kamino is currently serving as Outside Director of the Company and his term of office will be 7 years at theconclusion of this Annual Meeting of Shareholders. Mr. Hari N. Nair is currently serving as Outside Director of theCompany and his term of office will be 2 years at the conclusion of this Annual Meeting of Shareholders. Mr. Keisuke- 10 -

4.
5.

6.

7.

Tomimatsu is currently serving as Outside Director of the Company and his term of office will be 4 years at theconclusion of this Annual Meeting of Shareholders. Mr. Yoshie Munakata is currently serving as Outside Director of
the Company and his term of office will be 1 year at the conclusion of this Annual Meeting of Shareholders.
Mr. Keisuke Tomimatsu had served as Outside Audit and Supervisory Board Member of the Company.
The Company, with respect to liability under Article 423, paragraph 1 of the Companies Act, entered into an agreementwith Mr. Goro Kamino, Mr. Hari N. Nair, Mr. Keisuke Tomimatsu and Mr. Yoshie Munakata limiting the total amountof the liability to the amount stipulated in Article 425, paragraph 1 of the same Act. Should their election be approved,
the Company plans to continue the aforementioned agreements limiting liability.
The Company registered Mr. Goro Kamino, Mr. Hari N. Nair and Mr. Yoshie Munakata as independent officers with
the Tokyo Stock Exchange and the Nagoya Stock Exchange, pursuant to the guidelines thereof. Should their election
be approved, the Company would continue his service as Independent Officer. Although the Company has fuelpurchasing transactions etc. with Chubu Gas Co., Ltd. and Gastec Service, Inc., in which Mr. Goro Kamino servesconcurrently. However, since the annual transaction amount relating thereto accounts for less than 1% of sales of theCompany, Chubu Gas Co., Ltd. and Gastec Service, Inc., we believe that there would be no conflicts of interest withgeneral shareholders.
The Company, with respect to liability under Article 423, paragraph 1 of the Companies Act, entered into an agreementwith Mr. Keisuke Tomimatsu, limiting the total amount of the liability to the amount stipulated in Article 425,
paragraph 1 of the same Act. Should his election be approved, the Company plans to continue the aforementioned
agreements limiting liability.
The Company consigns consulting operations and other services to ABEJA, Inc., where Mr. Keisuke Tomimatsu servesconcurrently, and the annual transaction amount relating thereto accounts more than 1 % of sales of the Company. For
that reason, although the Company had previously registered Mr. Keisuke Tomimatsu as an independent officer with
the Tokyo Stock Exchange and the Nagoya Stock Exchange, pursuant to the guidelines thereof, because of the conflictwith the criteria for independence, the Company plans to cancel his designation as independent officer.
However, as the transactions with ABEJA, Inc. account for less than 1% of the consolidated net sales of the Company,
and are small at around 2% of the net sales of ABEJA, Inc., the Company believes that the risk of a conflict of interest
with general shareholders arising is not substantial, and that Mr. Keisuke Tomimatsu can be expected to perform his
duties of an Outside Director properly.

- 11 -

Proposal 3: Election of Three (3) Directors Serving as Audit and Supervisory Committee Members
The terms of office of three (3) Directors serving as Audit and Supervisory Committee Members shall expire
upon the conclusion of this Annual Meeting of Shareholders.
Therefore, we request the election of three (3) Directors serving as Audit and Supervisory Committee
Members. This proposal has been submitted with prior consent by the Audit and Supervisory Committee.
The candidates for Director serving as Audit and Supervisory Committee Members are as follows:

No.

1

Name
(Date of birth)

Career summary, positions and areas of responsibility in the Company,
and significant concurrent positions
Apr. 1985

Entered the Company

Apr. 2008

Senior Administrator of MCG Promotion Dept., General
Affairs DivisionNov. 2012Manager of CG & Legal Dept., General Affairs Division

Michi Miyasawa(May 29, 1962)

Apr. 2016

General Manager of Sustainability Office

Apr. 2018

Acting General Manager of Human Resources Division

New appointment

Reasons for nomination as a candidate for Director

Number of theCompany’s
shares held

19,000Ms. Michi Miyazawa has extensive knowledge and experience accumulated
during her service in the Legal, Sustainability Promotion, and Human
Resources sections. The Company believes that she is capable ofperforming the functions of supervision and audit, and proposes to elect her
as Director serving as an Audit and Supervisory Committee Member.

Yoshinori Morita(Apr. 27 1948)
Reappointment

2

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
10/10

Jul. 1971

Entered the Ministry of FinanceJul. 1994

Director of the Examination Division, Financial
Inspection Department, Minister’s Secretariat

Jul. 1997

Director-General of the Nagoya Regional Taxation
BureauJul. 1999

Director-General of the Osaka Regional Taxation Bureau

Jul. 2001

Director-General of the Tokyo Regional Taxation Bureau

Jul. 2002

Director-General of the Printing Bureau

Mar. 2003

Retired from Director-General of the Printing Bureau,
Retired from the Ministry of Finance

Apr. 2003

Executive Director of Japan Railway Construction Public
Corporation

Aug. 2007

Advisor of The Bank of Ikeda, Ltd.

Oct. 2009

Advisor of Senshu Ikeda Holdings, Inc. and Advisor of
The Bank of Ikeda, Ltd.

Advisor of Senshu Ikeda Holdings, Inc. and Advisor of
Number of years since May 2010
The Senshu Ikeda Bank, Ltd. (present post)
appointment as adirector
Reasons for nomination as a candidate for Director
2 years (at theconclusion of thisMr. Yoshinori Morita has held important government posts and been
meeting)
engaged in corporate management as an advisor for companies. Based onsuch extensive experience and a high level of specialized knowledge, he has
provided appropriate advice on the Company’s management. Although he
has never been involved in corporate management except as advisor, basedon his experience and knowledge explained above, we believe that he has
the capabilities to implement his duties as Outside Director serving as an
Audit and Supervisory Committee Member appropriately.

- 12 -0Makiko Yamamoto(May 29, 1971)3

New appointment

Jul. 1995

Entered TMI Associates

Apr. 1999

Legal Training and Research Institute of the Supreme
Court of Japan

Oct. 2000

Registered Tokyo Bar Association

Sep. 2005

Simmons & Simmons (London)

Sep. 2006

TMI Associates

Feb. 2012

Registered British Lawyer Solicitor

Jun. 2012

Simmons & Simmons (London)

Sep. 2014

TMI Associates (currently)

Jun. 2016

Outside Corporate Auditor of Starzen Co, Ltd(present
post)

Jun. 2018

Outside Corporate Auditor of SIGMAXYZ Inc.(present
post)

0

(Significant concurrent positions)
Attorney at law
Reasons for nomination as a candidate for Director
Ms. Makiko Yamamoto is qualified as an attorney at law, in which area she
has extensive experience, such as advising on cases involving corporate
legal affairs in domestic and international legal firms, and a high level of
specialized knowledge. The Company believes that she is capable ofperforming the functions of supervision and audit, and proposes to elect her
as Outside Director.
Notes:
1.
2.
3.
4.
5.

6.

7.

There are no special interests between the Company and the candidates.
Ms. Michi Miyasawa and Ms. Makiko Yamamoto are new appointee candidates for Director serving as Audit andSupervisory Committee Members.
Mr. Yoshinori Morita and Ms. Makiko Yamamoto are candidates for Outside Directors serving as Audit and Supervisory
Committee Members.
Mr. Yoshinori Morita is currently an Outside Director serving as an Audit and Supervisory Committee Member of theCompany and his term of office will be 2 years at the conclusion of this Annual Meeting of Shareholders.
The Company, with respect to liability under Article 423, paragraph 1 of the Companies Act, entered into an agreement with
Mr. Yoshinori Morita limiting the total amount of the liability to the amount stipulated in Article 425, paragraph 1 of thesame Act. Should his election be approved, the Company plans to continue the aforementioned agreements limiting liability.
Should Ms. Makiko Yamamoto’s election be approved, the Company, with respect to liability under Article 423, paragraph
1 of the Companies Act, would enter into an agreement with her limiting the total amount of the liability to the amountstipulated in Article 425, paragraph 1 of the same Act.
The Company registered Mr. Yoshinori Morita as independent officers with the Tokyo Stock Exchange and the Nagoya
Stock Exchange, pursuant to the guidelines thereof. Should his election be approved, the Company would continue his
service as Independent Officer. Ms. Makiko Yamamoto is a candidate for independent officer with the Tokyo Stock
Exchange and the Nagoya Stock Exchange, pursuant to the guidelines thereof.
Candidate Ms. Makiko Yamamoto is listed in the family register under the name of Makiko Yasukawa.

- 13 -

(Reference) Composition of the Board of Directors [Scheduled to be effective on June 21, 2019]
The abilities of the Directors of the Company are listed below.

Directors

Areas in charge

HiroshiOtsukaCorporate
management

Manufacturing
andengineering
R&D●

PT & Engineering●●

Haruhisa
OtsukaL&S●●

TraceySivillFinancial affairs●

OutsideDirector.

●

Hari N.
Nair

OutsideDirector.

●

KeisukeTomimatsu

OutsideDirector.

YoshieMunakata

OutsideDirector.
(New)

Michi
Miyasawa

Advanced
technology
and IT

Financialaffairs andfinancing●

Takayuki
MiyataGoro
KaminoSales andmarketing●●●

Audit and Supervisory
Committee Member

MakikoYamamoto

OutsideDirector(NEW)

Audit and Supervisory
Committee Member

●

●

●

●

●

●

●

●

●

●

●

Audit and Supervisory
Committee Member
OutsideDirector.

●

●

●

●

YoshinoriMoritaGlobalexperience

●

●

●

Governance,risk
management
and human
resources

●

●

●

●

- 14 -●

(Reference 2) Independence criteria for Outside Officers
If the Outside Officers of the Company are judged to have fulfilled the requirements set out below, the Boardof Directors deems them to be sufficiently independent of the Company.
1. They are not currently an executive, etc.<Note 1> of the Group, nor have they in the past been an executive,
etc. or an Audit & Supervisory Board Member of the Group (excluding Outside Audit & Supervisory
Board Members).
Also, none of their close relations, etc. <Note 2> shall have been executives, etc. of the Group within thepast five years.
2. They shall not come under any of the following categories currently, or within the past five years.
1) Executives, etc. of other companies affiliated to the Company, or of other affiliated company groups2) Executives, etc. of major shareholders of the Company <Note 3>3) Executives, etc. of companies in which the Company is a major shareholder
4) Executives, etc. of major business partners of the Company <Note 4>, or executives, etc. of companies
that consider the Company a major business partner
5) Individuals who execute duties for organizations that have received substantial <Note 5> donations or
aid from the Group6) Executives, etc. of companies that have conducted mutual exchanges with the Group of Directors, Audit& Supervisory Board Members, or Executive Officers
7) Executives, etc. of the Group’s major lenders
8) Certified Public Accountants (or Tax Accountants) who are Financial Auditors to the Group, or theemployees, partners or staff of audit corporations (or tax accountant corporations) that are Financial
Auditors to the Group
9) Individuals who have received substantial monies or other financial profits, excluding Directors’
remuneration, from the Group10) Individuals who are employees, partners, associates, or staff of specialist advisory firms, such as legal
firms, that consider the Group a major business partner, but do not belong to categories 8) or 9) above
3. None of their close relations currently fall under categories 2-1 to 2-10.
<Notes >1. Executives, etc.: Directors (excluding Outside Directors), Executives, Executive Officers, Managers andother employees
2. Close relations: Spouse, or other relative within the second degree of kinship, or family member who isliving in the same household with the person
3. Major shareholder: A company, etc. holding shares with 10% or more of total voting rights
4. Major business partner: A company to which 1% or more of annual consolidated net sales of the Company
were paid in the most recent fiscal year
5. Substantial: Cases in which the amounts involved have exceeded 10 million yen annually on average overthe previous three fiscal years- 15 -

(Attached materials)
Business Report(April 1, 2018 to March 31, 2019)
1. Overview of the Group(1) Business results for the fiscal year ended March 31, 20191) Progress and results of business
During the fiscal year ended March 31, 2019, the global economy showed a modest recovery in
the first half, but began to slow in the second half due to concerns regarding issues such as trade
friction between the United States and China, and the exit of the United Kingdom from the EU. In
the automobile industry, the needs in world’s largest market of China slowed, however, new products
and services are being born in quick succession in the face of a major period of transformation of thekind that appears only once every 100 years, represented by the themes of Connectivity,
Autonomous, Shared, Electric (CASE). The Group sees these changes in the environment as anopportunity to establish its position as a global supplier, and during the fiscal year under review wehave been making efforts to further strengthen our existing businesses, develop cutting-edge
technology, and open up new businesses
On the businesses front, in order to enable Musashi’s strengths in integrated processing
technology to evolve further, and to reinforce the business platform, the Company acquired all of theshares of ASADAKATAN CHUTETSUSHO, making it a subsidiary. We are working on initiatives
in the Power Train business to further improve product development capabilities and to further
enhance the production system. In Europe, the Company has changed the name of the former Hay
Group, which was acquired in 2016, so that the company name in all locations is now prefixed with“Musashi” to unify the brand. We worked to further improve the acceptance of the Musashi brandand to strengthen the integration between the various Musashi Europe companies. As part of ourinitiatives to strengthen our presence in the world’s largest market of China, we expanded production
capacity at our Nantong site, and began volume production.
On the businesses front, in order to enable Musashi’s strengths in integrated processing
technology to evolve further, and to reinforce the business platform, the Company acquired all of theshares of ASADAKATAN CHUTETSUSHO, making it a subsidiary. We are working on initiatives
in the Power Train business to further improve product development capabilities and to further
enhance the production system. In Europe, the Company has changed the name of the former Hay
Group, which was acquired in 2016, so that the company name in all locations is now prefixed with“Musashi” to unify the brand. We worked to further improve the acceptance of the Musashi brandand to strengthen the integration between the various Musashi Europe companies. As part of ourinitiatives to strengthen our presence in the world’s largest market of China, we expanded production
capacity at our Nantong site, and began volume production.
On the sales front, orders for our main product of differentials remained strong. We are receiving
an increased level of inquiries about next-generation parts notably from new customers, such as
high-precision gears, for which demand is expected to grow in the era of electric vehicles. In the
motorcycle business, where we have the global top share for transmission components, orders fromoverseas manufacturers are increasing.
In the above environment, the Company’s results for the fiscal year under review were affected by
the local currency depreciation in Asia and South America, but sales grew in all regions, leading toconsolidated net sales rising 7.6% year on year to 255,934 million yen. On the profit front, operating
profit was down 10.5% year on year to 14,107 million yen, while ordinary profit fell 7.2% year on
year to 14,791 million yen, and profit attributable to owners of parent fell 4.5% year on year to 9,885
million yen.

- 16 -

2) Segment Overview
Net sales in Japan rose 17.1% year on year to 33,699 million yen, and segment profit rose 26.3%
year on year to 2,733 million yen. In the United States, net sales rose 7.3% year on year to 55,922
million yen, but due to changes in model mix, segment profit fell 2.7% year on year to 2,017 million
yen. In Asia, net sales rose 2.0% year on year to 64,955 million yen, but segment profit fell 11.1%
year on year to 5,600 million yen, as a result of provisions for quality related costs, etc. In China, net
sales were 23,597 million yen, up 14.3% year on year, but increases in R&D expenses and declining
exports to North America, etc. led to segment profit of 3,091 million yen, or down 3.7% year on year.
In Europe, net sales were 77,759 million yen, or up 7.0% year on year, due to rising steel stock
prices being reflected in selling prices, etc. and segment profit fell 78.4% year on year to 315 million
yen, as a result of the slump in the vehicle market and of cost increases caused by measures taken in
response to robust demand for commercial vehicles.
3) Group sales by product(Unit: million yen)Item

The 91st fiscal
year ended
March 31, 2018

The 92nd fiscal
year ended
March 31, 2019

Increase / Decrease

AmountComposition
ratio
(%)

AmountComposition
ratio
(%)

PT Business

156,86865.9

171,136

66.9

14,2689.2

L&S Business

18,441

7.8

19,248

7.5

807

4.4

Motorcycle
Business

62,601

26.3

65,549

25.6

2,948

4.7

Total

237,910100.0

255,934

100.0

18,023

7.6

Note:

AmountYear on Year(%)

Figures are presented with amounts less than one million yen truncated.

4) Status of capital investment
During the fiscal year under review, the Group implemented capital investments totaling 16,276
million yen, for such purposes as manufacturing newly ordered products and responding to increases
in output by customers.
5) Status of fund procurement
In the fiscal year under review, procurements of funds from financial institutions were conducted forroutine purposes only, and there were no fund procurements made by means of capital increases orissuance of corporate bonds.
6) Initiatives toward achieving sustainability
Providing continuous value to society and fulfilling our corporate social responsibility toward therealization of a sustainable society is considered a significant matter for the Musashi Group's
medium- and long-term growth.
Based on the “Musashi Group Basic Policy for the Realization of a Sustainable Global Society” andCSV*1 / CSR*2, which were resolved by the Board of Directors, as a company that is trusted bypeople around the world and contributes to the development of a sustainable global society We will
promote initiatives for sustainability.
*1 CSV=Creating Shared Value creating shared value for both society and the company*2 CSR=Corporate Social Responsibility- 17 -

(2) Issues to be handled
The automobile industry is facing the kind of a wave of innovation that is said to come only once
every 100 years, exemplified by the evolution of self-driving technology, and the dramatic shift toelectric vehicles. On the other hand, problems related to quality falsification have become a social issue
in recent years, and the importance of compliance and corporate governance is once again being
examined. In such circumstances, the Group seeks to achieve sustainable global growth, and tocontribute to the resolution of social issues through the evolution of technology, as promoted by the
initiatives below.
1) Creating businesses that treat environmental change as an opportunity, and building a better
corporate culture
By generating synergies through the integration of the former Hay Group and ASADAKATANCHUTETSUSHO, as well as further refining our high-quality, inexpensive manufacturing, we will
work on initiatives to capture the evolution of technology at an early stage, allowing us to develop andcommercialize advanced products, technologies and services. With regard to quality, our top priority is
genuinely to provide products and services developed with the customer in mind, preventing
wrongdoing before it occurs, and creating a more open and transparent corporate culture.
2) Achieving greater efficiency in global operations through the use of shared systems
By using shared platforms, which we are in the process of rolling out at global sites, we aim to
improve the efficiency of administration and indirect operations. In order that people may demonstrate
their abilities in the areas where they can fully make use of their creativity, we are putting mechanisms
in place, including work style reforms, to achieve continuous improvements.
3) Ongoing initiatives aimed at developing human resources and achieving sustainability
We are continuously working on developing the personnel who will be responsible for developing
and commercializing new technology. In addition, we treat initiatives for sustainability as some of themost important issues facing a management, and by contributing to achieving SDGs* through ourbusiness activity, we aim to become a corporate group that is trusted by stakeholders all over the world.
*SDGs (Sustainable Development Goals): International objectives for sustainable development adopted at the United
Nations summit of September 2015

- 18 -

(3) Status of Group assets and income(million yen, except for per share amounts)
The 91st fiscal
The 92nd fiscal
year ended
year ended
March 31, 2018
March 31, 2019

The 89th fiscal
year ended
March 31, 2016

The 90th fiscal
year ended
March 31, 2017

Net sales

164,397

180,522

237,910

255,934

Operating income

13,398

11,166

15,767

14,107

Ordinary income

11,44910,323

15,92914,791

Profit attributable to ownersof parent

6,809

6,315

10,351

9,885

Item

Earnings per share¥

109.15¥101.24¥165.85¥155.55

Total assets

155,152

248,482

247,778

244,450

Net assets

77,94788,312

100,350

108,333(Note 1) Net sales, operating income, ordinary income, profit attributable to owners of parent, total assets, and net assets are presented
with amounts less than one million yen truncated.
(Note 2) On October 1, 2018, we conducted a 1:2 share split of our common shares. For the most recent three fiscal years, we havecalculated earnings per share for each on the basis that the share split had been carried out.
(Note 3) The Company has applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (Accounting Standards
Board of Japan Statement No. 28, February 16, 2018) from the beginning of the fiscal year under review, and the major
economic indicators, etc. for the previous fiscal year are presented after having been recalculated to reflect the retroactive
adoption of the standard.

(4) Status of parent company and major subsidiaries
1) Status of the parent company
No items to report.
2) Matters concerning to transactions with the parent company, etc.
With regard to transactions with Honda Motor Co., Ltd., a company defined as “other affiliate” of
the Company, prices are determined similarly to ordinary transactions through negotiations based onmarket values. In addition, the Company’s Board of Directors deems that decisions pertaining to thebusiness operation and management of the Company are made by its independent managerial
determination, securing its independence, and therefore the interest of the Company is not impeded
in transactions with the parent company, etc.
3) Status of major subsidiaries
Company name

The
Company’s
ownership
ratio
(%)

Capital(million)

Principal business

Manufacturing of motorcycle andgeneral-purpose engine parts
Manufacturing of ductile cast ironmaterial

Kyushu Musashi Seimitsu Co., Ltd.

JPY

100

100.0

ASADAKATAN CHUTETSUSHOCo., Ltd.

JPY

45

100.0

Musashi Auto Parts Michigan Inc.

USD

40

89.5

Manufacturing of automobile parts

Musashi Auto Parts Canada Inc.

CAD

20

100.0

Manufacturing of automobile parts

Musashi Auto Parts Mexico, S.A. de
C.V.

USD

12.3

100.0

Manufacturing of automobile parts

Musashi do Brasil Ltda.

BRL

105.1

74.9

Musashi da Amazonia Ltda.

BRL

139

100.0

- 19 -

Manufacturing of motorcycle andgeneral-purpose engine parts
Manufacturing of motorcycle andgeneral-purpose engine parts

Company name

The
Company’s
ownership
ratio
(%)

Capital(million)

Principal business

Manufacturing of motorcycle andgeneral-purpose engine parts
Manufacturing of motorcycle andgeneral-purpose engine parts
Manufacturing of motorcycle andgeneral-purpose engine parts
Manufacturing of motorcycle andgeneral-purpose engine parts

Musashi Auto Parts Co., Ltd.

THB

200

82.3

P.T. Musashi Auto Parts Indonesia

USD

14

80.0

Musashi Auto Parts India Pvt. Ltd.

INR

10,100100.0

Musashi Auto Parts Vietnam Co., Ltd.

USD

42

100.0

Musashi Auto Parts (Zhongshan) Co.,
Ltd.

USD

65.2

100.0

Manufacturing of automobile parts

Musashi Seimitsu Investment(Zhongshan) Co., Ltd.

USD

30

100.0

Regional Headquarters in China

Musashi Auto Parts (Nantong) Co., Ltd.

USD

30

(100.0)

Manufacturing of automobile parts

Musashi Auto Parts (Tianjin) Co., Ltd.

USD

20

(75.0)

Manufacturing of automobile parts

Musashi Hungary Manufacturing, Ltd.

EUR

20.1

100.0

Manufacturing of automobile parts
Holding shares of subsidiaries
conducting manufacturing and sales
businesses relating to automobileparts
Holding shares of subsidiaries
conducting manufacturing and sales
businesses relating to automobileparts

Musashi Holdings Europe GmbH

EUR

320

75.0

Musashi Europe GmbH

EUR

0.1

(75.0)

Musashi Bockenau GmbH & Co.KG

EUR

15

(75.0)

Manufacturing of automobile parts

EUR

0.001

(75.0)

Manufacturing of automobile parts

EUR

6.6

(75.0)

Manufacturing of automobile partsEUR

5(75.0)

Manufacturing of automobile parts

EUR

8.7

(75.0)

Manufacturing of automobile parts

Musashi Bad Sobernheim
GmbH&Co.KG
Musashi Hann. Muenden HoldingGmbHMusashi Hann. Muenden
Forging GmbHMusashi Spain Villalba S.L

Notes: The figures shown in parentheses show the ownership ratio when including ownership by subsidiaries.

(5) Principal business (As of March 31, 2019)
The principal business of the Group consists of the manufacturing and sales of automobile power train
parts, suspension parts, steering parts and transmission parts, among others, of which the main
products are listed below.
PT
L&S
Motorcycle

Planetary gear assemblies, differential gear assemblies, bevel gears, ring gears,
camshafts, balance shafts
Suspension arm assemblies, suspension ball joints, steering ball joints, various
connection joints
Motorcycle transmission gear assemblies, motorcycle camshafts, motorcycle kickstarter
parts, other motorcycle power train parts and general-purpose engine parts- 20 -

(6) Principal business locations and plants (As of March 31, 2019)1) Musashi Seimitsu Industry Co., Ltd.
Head Office and Ueta Plant(Aichi)
Akemi Plant #1(Aichi)
Akemi Plant #2(Aichi)
Horai Plant(Aichi)Suzuka Plant(Mie)2) Principal subsidiaries
For the information on the major subsidiaries and their location, etc., please refer to “(4) Status ofparent company and major subsidiaries 3) Status of major subsidiaries.”- 21 -

(7) Status of employees (As of March 31, 2019)1) Employees of the Group
Change from previous
fiscal year-end

Number of employees
12,990 (3,849)

395 (59)

Note: Number of employees means the number of full-time employees currently at work only, and the average number of part-timeand temporary employees for the year is indicated in parentheses.

2) Employees of the Company
Change from previous
fiscal year-end

Number of employees
1,141(174)

Average age

Average years of service

39.5 years old

15.2 Years

16 (5)

Note: Number of employees means the number of full-time employees currently at work only, and the average number of part-timeand temporary employees for the year is indicated in parentheses.

(8) Status of major lenders (As of March 31, 2019)
Balance of borrowings(million yen)

LenderThe Bank of Tokyo-Mitsubishi UFJ, Ltd.

35,746

Sumitomo Mitsui Banking Corporation

28,466

Mizuho Bank, Ltd.

16,163Development Bank of Japan

4,754

Note: The balance of borrowings is the sum total by lender group.

- 22 -

2. Status of the Company(1) Status of shares (As of March 31, 2019)1) Total Number of Shares Authorized to be Issued2) Total Number of Issued Shares
3) Number of Shareholders
4) Major Shareholders (Top 10)

140,000,000
65,135,001
2,706
Number of shares(thousand shares)

Shareholder name

Ownership ratio(%)

Honda Motor Co., Ltd.

16,364

25.1

Japan Trustee Services Bank, Ltd. (Trust Account)

5,653

8.6

The Master Trust Bank of Japan, Ltd. (Trust Account)

3,602

5.5

JPMorgan Chase Bank, 385632

2,806

4.3

Otsuka Holdings Co., Ltd.

2,603

3.9

Hiroshi Otsuka

1,432

2.1

Northern Trust Company (AVFC) Re Mondrian International
Small Cap Equity Fund, L.P.

1,350

2.0

The Bank of New York Mellon 140044

1,257

1.9

BNP PARIBAS Sec Service Luxembourg/
JASDEC/Aberdeen Standard SICAVI Client Assets

1,100

1.6

Japan Trustee Services Bank, Ltd. (Trust Account 9)

931

1.4

Notes:

1.
2.

Shares less than one thousand have been truncated.
Ownership ratio is calculated excluding treasury shares (16,152shares).

(2) Status of share subscription rights
1) Status of share subscription rights held by the Company’s officers granted as a consideration for the
execution of duties
No items to report.
2) Status of share subscription rights granted to employees, etc. during the fiscal year under review as aconsideration for the execution of duties
No items to report.

- 23 -

(3) Status of Corporate Officers
1) Status of the Directors (As of March 31, 2019)
Position

Name

Representative Director
and President

Hiroshi Otsuka

Director

Takayuki Miyata

Director

Haruhisa Otsuka

Director

Tracey Sivill

Director

Goro Kamino

Director

Hari N. Nair

Director

Keisuke Tomimatsu

Director

Yoshie Munakata

Areas of responsibility in the Company
and significant concurrent positions

Head of PT Business and Forging Engineering
Head of China Regional Operations
President and Director of Musashi Holdings Europe GmbH
Head of L&S Business
Head of North America Regional Operations
President and Director of Musashi Auto Parts Canada Inc.
Head of Finance and Accounting
In charge of Global IT strategy
Representative Director and President of Sala Corporation
Chairman and Representative Director of Chubu Gas Co.,
Ltd.
Chairman and Representative Director of Gastec Service,
Inc.

Director of ABEJA, Inc.

Director (Full-time
Audit and Supervisory
Nobuyoshi Sakakibara
Committee Member)
Director (Audit andSupervisory Committee Asako Yamagami
Attorney at law
Member)Director (Audit andSupervisory Committee Yoshinori Morita
Member)Notes:
1. Directors Goro Kamino, Hari N. Nair, Keisuke Tomimatsu, Yoshie Munakata and Directors (Audit and Supervisory
Committee Members) Asako Yamagami , and Yoshinori Morita are Outside Directors.
2. Director (Audit and Supervisory Committee Member) Asako Yamagami is qualified as a lawyer with high level of
specialized knowledge in corporate legal affairs and compliance.
3. To strengthen the auditing and supervisory functions of the Audit and Supervisory Committee, the company has
designated Mr. Nobuyoshi Sakakibara as Audit and Supervisory Committee Member (full-time) so that information
gathering from the Director (excluding Audit and Supervisory Committee Member), information sharing throughattendance of important in-house meetings and sufficient cooperation with the internal audit section will be allowed.
4. The Company designated Messrs. Goro Kamino, Hari N. Nair, Keisuke Tomimatsu, Yoshie Munakata, Yoshinori
Morita and Ms. Asako Yamagami as Independent Officers pursuant to the regulations of the Tokyo Stock Exchange
and the Nagoya Stock Exchange, and registered them as such.
5. The retired Directors during the fiscal year under review are as follows.
The terms of office of Directors Koji Horibe and Toru Uchida expired as of the conclusion of the 91st Annual Meetingof Shareholders held on June 22, 2018.

- 24 -

(Ref.) The Company has adopted the executive officer system. The executive officers as of April 1, 2019 are as follows.
Areas of responsibility in the Company
Position
Nameand significant concurrent position
President and Executive
Hiroshi Otsuka
Officer
Head of PT Business and Forging Engineering
Senior Managing
Takayuki Miyata
CEO of China Region
Executive Officer
President and Director of Musashi Holdings Europe GmbH
Head of L&S Business
Senior Managing
Haruhisa Otsuka
CEO of North and South America region
Executive Officer
President and Director of Musashi Auto Parts Canada Inc.
Managing Executive
CFO of Group of the Company
Tracey Sivill
Officer
In charge of Global IT strategy
Managing Executive
Koji Horibe
Head of Quality Assurance
OfficerManaging Executive
Nobuo Takemasa
Head of R&D
Officer
Senior Executive
Takeshi Isaku
Head of New Business, and Corporate Planning
Officer
Senior Executive
Ulrich Mehlmann
CEO of Europe region
Officer
Senior Executive
Takashi Soda
Head of Purchasing & Production Management
Officer
CEO of Japan region
Senior Executive
Kenji Morisaki
Head of Manufacturing Engineering
Officer
Chief Risk Management Officer
Executive Officer

Tetsunobu Kawai

Managing Director of Kyushu Musashi Seimitsu Co ., Ltd

Executive Officer

Graham Hill

In charge of Globalization Initiatives
President and Director of Musashi Auto Parts UK Ltd.

Executive Officer

Tetsuro Toyama

Deputy Head of L&S Business

Executive Officer

Toshihisa Otsuka

COO of China region

Executive Officer

Hideaki Asakura

Head of Motorcycle Business Unit / CEO of Asia region
President and Director of Musashi Auto Parts India Pvt. Ltd.
and Musashi Asia Co., Ltd.

Executive Officer

Yasunori Amano

Head of Sales

Executive Officer

Tatsuya Yanagisawa

Deputy Head of R&D

Executive Officer

Masaru Maeda

Head of Human Resources & IT Solution
Compliance Officer- 25 -

2)

Total amount of remuneration of Directors for the fiscal year under review
Classification

Amount paid
(million yen)

Number of payees

Directors (excluding Directors serving as Audit andSupervisory Committee Members)

10

204

(Outside Director of the above)

(4)

(31)

Directors (Audit and Supervisory Committee Members)

3

27(Outside Director of the above)

(2)

(12)

Total

13

231

(Outside Officers of the above)

(6)

(43)

Notes:

1.

2.
3.
4.

The maximum amount of remuneration of Directors (excluding Directors serving as Audit and Supervisory Committee
Members) was determined as 400 million yen per year (of which, 80 million yen or less for Outside Directors;
provided, however, that this excludes the portion of employee salaries for Directors who serve concurrently as
employees) by resolution at the 88th Annual Meeting of Shareholders held on June 23, 2015. And apart from this, for
the Company’s Directors (excluding Directors serving as Audit and Supervisory Committee Members), it wasapproved at the 90th Annual Meeting of Shareholders held on June 23, 2017, a resolution was adopted that themonetary remuneration to grant shares with transfer restrictions and monetary remuneration in an amount linked to theaforementioned share price, etc. shall be not more than 250 million yen per year (of which not more than 40 million
yen per year shall be for Outside Directors; however, this excludes the portion of employee salaries of Directors
serving concurrently as employees).
The maximum amount of remuneration of Directors (Audit and Supervisory Committee Members) was determined as
80 million yen per year by resolution at the 88th Annual Meeting of Shareholders held on June 23, 2015.
The total amount of remuneration of Directors does not include the portion of employee salaries for Directors who
serve concurrently as employees.
The total amount of remuneration paid includes the provision for Directors’ bonuses for the fiscal year under review.

3) Matters regarding Outside Officers
A. Status of significant concurrent positions at other companies, etc. and relationship between suchcompanies with the Company* Mr. Goro Kamino, Director, also serves as Representative Director and President of Sala
Corporation and as Representative Director and Chairman of Chubu Gas Co., Ltd. and Gastec
Service, Inc. The Company has fuel purchasing transactions etc. with Chubu Gas Co., Ltd and
Gastec Service, Inc. However, the annual transaction amount relating thereto accounts for less than
1% of sales of the Company as well as the two companies. There is no special relationshipbetween the Company and Sala Corporation.
* Mr. Keisuke Tomimatsu, Director, he is a Director of ABEJA, Inc. The Company consigns
consulting operations and other services to ABEJA, Inc., where Mr. Keisuke Tomimatsu servesconcurrently, and the annual transaction amount relating thereto accounts more than 1 % of salesof the Company. For that reason, although the Company had previously registered Mr. Keisuke
Tomimatsu as an independent officer with the Tokyo Stock Exchange and the Nagoya Stock
Exchange, pursuant to the guidelines thereof, because of the conflict with the criteria for
independence, the Company plans to cancel his designation as independent officer. However, as
the transactions with ABEJA, Inc. account for less than 1% of the consolidated net sales of theCompany, and are small at around 2% of the net sales of ABEJA, Inc., the Company believes thatthe risk of a conflict of interest with general shareholders arising is not substantial, and that Mr.
Keisuke Tomimatsu can be expected to perform his duties of an Outside Director properly.

- 26 -

B. Main activities during the fiscal year under review* Mr. Goro Kamino, Director, attended 10 out of the 10 Board of Directors Meetings held during the
fiscal year under review at which he actively provided comments necessary for the deliberation of
agenda items of the Board of Director Meetings thereat based on his broad experience andextensive knowledge in corporate management.
* Mr. Hari N. Nair, Director, attended 10 out of the 10 Board of Directors Meetings held during the
fiscal year under review and has utilized his abundant experience of company management and the
deep insights cultivated over many years in the industry to actively contribute as required to thedeliberation of resolutions by the Board of Directors.
* Mr. Keisuke Tomimatsu, Director, attended 10 out of the 10 Board of Directors Meetings held
during the fiscal year under review and has utilized his abundant experience of the securities
industry and his wide-ranging knowledge of the economy to actively contribute as required to thedeliberation of resolutions by the Board of Directors.
* Since taking up the role of Director on June 22, 2018, Mr. Yoshie Munakata, Director, attended 7
out of the 7 Board of Directors Meetings held during the fiscal year under review and has utilized
his abundant experience of company management and the deep insights cultivated over many
years in the industry to actively contribute to the deliberation of resolutions by the Board of
Directors as required.
* Ms. Asako Yamagami, Director (Audit and Supervisory Committee Member) attended 10 of the 10
Board of Directors Meeting held during the fiscal year under review where she raised questions
and provided advice whenever appropriate from a professional perspective as a lawyer. Also, she
attended 11 of the 11 Audit and Supervisory Committee Meetings held during the fiscal year underreview where she expressed opinions regarding matters that concern the audit methods andexecution of Audit and Supervisory Committee Member duties.
* Mr. Yoshinori Morita, Director (Audit and Supervisory Committee Member) attended 10 out of the
10 Board of Directors Meetings held during the fiscal year under review and has utilized hisabundant experience and deep insights cultivated over many years to put appropriate questions andoffer appropriate advice to the Board of Directors. Also, he has attended 11 out of 11 meetings of
the Audit and Supervisory Committee held during the fiscal year under review and has voiced his
opinions on audit methods and on other matters related to the duties of the Audit and Supervisory
Committee.
4) Overview of limited liability agreements* The Company and the Outside Directors entered into limited liability agreements that limit theamount of liability under Article 423, paragraph 1 of the Companies Act, pursuant to theprovisions of Article 427, paragraph 1 of the same Act. The maximum amount of liability fordamages under these agreements is the amount stipulated in Article 425, paragraph 1 of the sameAct.

- 27 -

(4) Financial Auditor
1) Name: Ernst & Young ShinNihon LLC
2) Amount of remuneration, etc.
Amount paid
(million yen)
Remuneration, etc. of the Financial Auditor for the fiscal year under review

72.5

Total economic benefits, including money, that should be paid to the Financial
72.5
Auditor by the Company and its subsidiaries
Notes:
1. Subsidiaries of the Company are audited by audit corporations other than the Financial Auditor of the Company.
2. In the audit agreement between the Company and the Financial Auditor, a distinction is not made between the
remuneration for auditing based on the Companies Act and that for auditing based on the Financial Instruments andExchange Act, nor is such distinction effectively possible. Therefore, the amount of the remuneration, etc. of the
Financial Auditor for the fiscal year under review includes the amount of remuneration, etc. for auditing based on the
Financial Instruments and Exchange Act.
3. The Audit and Supervisory Committee gives consent regarding the remuneration etc. of the Financial Auditor pursuant
to Article 399, paragraph 1 of the Companies Act, after it has obtained necessary materials and received reports fromthe Directors, relevant departments within the Company and the Financial Auditor, confirmed the performance ofprevious financial audits etc. by the Financial Auditor and reviewed the details of the audit plan of the Financial
Auditor and the calculation basis for the estimated amount of remuneration etc. for the fiscal year under review.

3) Description of non-auditing services
The Company requested the Financial Auditor to provide advice on international accounting
standards as services other than the services under Article 2, paragraph 1 of the Certificated Public
Accountants Act (non-auditing services), and paid consideration for such services.

- 28 -

(5) Systems to ensure properness of operations and overview of operational status of the systems
Basic policy relating to the establishment of the internal control system
Below is an overview of decisions regarding systems for ensuring that the execution of duties byDirectors comply with laws and regulations and the Articles of Incorporation, and other systems for
ensuring proper operations.
1) Systems for ensuring that the execution of duties by Directors and employees comply with laws andregulations and the Articles of Incorporation, and any other systems for ensuring proper operations* Appoint an Officer in charge of promoting compliance and establish a systematic framework.
* Establish a committee to deliberate matters regarding business ethics and compliance.
* Articulate “Our Compliance” as a code of conduct which must be adhered to by all employees of theGroup when dealing with customers and society and striving for the improvement of business ethics.
* Establish a hotline to receive proposals regarding compliance concerns.
2) Systems for the preservation and management of information relating to the execution of duties byDirectors* Establish an information management framework for the proper storage and management of
documents relating to the execution of duties by Directors and other information based on the
document management rules.
3) Rules and other systems for loss risk management and other systems* Appoint an Officer in charge of promoting risk management and establish a systematic risk
management framework.
* Promote formation of relevant regulations on organizations and actions to be taken by employees inthe event of a crisis.
4) Systems to ensure efficiency of the execution of duties by Directors* Establish a framework for monitoring the global execution of duties by the Board of Directors that
includes governance and regional governance.
* Appoint Officers in charge of regional business and execution functions for rapid and optimalbusiness decisions in each region and workplace as well as efficient and effective operations.
* Management meetings deliberate important managerial matters within the scope of authority
delegated by the Board of Directors.
* Establish GTM (Global Top Meeting) for the extraction and handle issues for sharing group policies
and realizing business plans, as well as enhancing the optimality and efficiency of businessexecution as a corporate group.
5) Systems to ensure the properness of operation of the Company and the corporate group constituted by
the parent and subsidiaries* Formulate “Regulations on Control of Affiliate Companies” for the proper execution of tasks by all
constituent companies of the Group, manage thereof according to such regulations, and receive
reports from all constituent companies of the Group.
* All constituent companies of the Group conduct periodical self-assessment based on checklists.
* The Internal Audit Office, an independent internal audit section of the Company, conducts audits on
the status of the business execution of all sections and works to enhance internal auditing in eachregion and at subsidiaries and associates.
* The Internal Audit Office informs the audited departments and audited companies about the results ofinternal audits, requests plans for measures to improve its observations and periodically confirms
the status of progress on the improvement measures in addition to reporting to the Board of
Directors as appropriate.
6) Matters concerning Directors and employees requested by Audit and Supervisory Committee to assist
its duties, and matters regarding the independence of the Directors and employees from other
Directors (excluding Directors serving as Audit and Supervisory Committee Members (hereinafterreferred to as “Audit and Supervisory Committee Members”))* Provide assistance in the duties of Audit and Supervisory Committee in the internal audit section tocontribute to the formation of an efficient and effective audit framework and deepen collaboration- 29 -

with such Audit and Supervisory Committee while ensuring the independence of the internal audit
section.
7) System for reporting from Directors (excluding Audit and Supervisory Committee Members) andemployees to Audit and Supervisory Committee, and other systems for reporting to Audit andSupervisory Committee* Periodical reports are made to Audit and Supervisory Committee on the status of the business of theCompany and subsidiaries, etc. as well as the status of preparation and operation of internal control
system covering areas such as compliance and risk management. Also, other factors that may
potentially have significant influence on the Company have to be reported.
* Audit and Supervisory Committee Members have no obligation to report information obtained from
Directors (excluding Audit and Supervisory Committee Members) or employees to the third parties,
and may request Directors (excluding Audit and Supervisory Committee Members) to disclose
reasons for the transfer, evaluation and disciplinary action, etc. of such employees who made reports.
8) Other systems to ensure that auditing by Audit and Supervisory Committee is conducted effectively* Form an audit framework and establish audit environment to increase the effectiveness of audits.
Audit & Supervisory Committee conduct audits on the Company and subsidiaries, etc. in close
collaboration with the Internal Audit Office, the internal audit section, and Audit & Supervisory
Committee Members attend management meetings and other important meetings.
* When an Audit and Supervisory Committee Member requests prepayment or reimbursement ofexpenses that arise in relation to the execution of duties or repayment of obligations incurred, theCompany shall comply, except in cases where it can be proved that the expenses, etc. did not arise inrelation to the execution of duties of the Audit and Supervisory Committee Member.
Status of operation of the internal control system
Major operational status of the systems to ensure the adequacy of operations for the fiscal year underreview is as follows:
1) Systems for ensuring that the execution of duties by Directors and employees comply with laws andregulations and the Articles of Incorporation, and any other systems for ensuring proper operations* The Company has appointed a compliance officer who promotes initiatives relating to complianceand has established an Internal Control Committee, deliberating business ethics and compliance.
* We have implemented compliance training based on the “Our Compliance” code of conduct, and seek
to further enhance corporate ethics. In addition to this, in fiscal year 2018, we implemented
compliance education using e-learning materials for all managers in the Company, with the aim ofstrengthening the compliance system.
* The Company has handled proposals regarding compliance concerns at the Musashi compliancehotline, the in-house reporting hotline. In addition to this hotline, there are also contact points set up
with external lawyers and with the Audit and Supervisory Committee, improving the effectivenessof the system by creating an environment in which it is easier to disclose information.
2) System for the preservation and management of information relating to the execution of duties byDirectors* The Company has preserved and managed information by prescribing matters relating to management
and preservation period of documents in the document management rules.
* It also has properly managed information regarding the execution of duties of Directors by specifying
the preservation period and indicating the degree of confidentiality under the document management
rules.
* In fiscal year 2018, in addition to checking the status of compliance with the regulations on security
management revised last year, the Company reaffirmed the regulations throughout the company,
with the aim of strengthening the management of stored information.
3) Rules concerning loss risk management and other systems* The Company has appointed a risk management officer who promotes initiatives concerning risk
management. It has established a BCP Committee where it has deliberated business continuity risks
and its countermeasures and developed the Business Continuity Plan (BCP).

- 30 -

* The Company has continuously conducted BCP drills for a large-scale earthquake with an assumptionof the maximum risk.
*In fiscal year 2018, in order to create a system capable of responding promptly to risks, the Company
conducted practical training to confirm specific actions.
4) Systems to ensure efficiency of execution of duties by Directors* The Board of Directors have allocated duties of Directors and appointed executive officers, efficiently
operating the duties. In addition, the management strategy and medium- to long-term management
plans for the Group as a whole are actively deliberated with the aim of enhancing corporate value.
* As a company with an Audit and Supervisory Committee, the Company has delegated parts of theexecutions of important operations resolved at the Board of Directors Meeting to management
meetings in accordance with the provisions of the Articles of Incorporation, making efficient andflexible management decisions.
* Execution of operations is performed with flexibility under the clear accountability of the executive
officers.
* In order to share these policies with all Group companies and to achieve the aims of the business plan,in addition to holding Global Top Meetings (GTM) to discuss issues and so on, the Company seeks
to optimize the execution of duties and to improve efficiency for the Group as a whole, primarily
through broadening the global platform, by means of redesigning the core systems.
5) Systems to ensure the adequacy of the business of the Company and the corporate group constitutedby the parent company and subsidiaries* The Board of Directors has set out the basic policy relating to the establishment of the internal control
system and is supervising the establishment and the operational status of the system of the Group.
* The Company has formulated the “Regulations on Control of Affiliate Companies,” which stipulates
matters to be reported from companies of the Group to the Head Office, and is managing companiesof the Group.
* The Company is working to ensure that the shared rules (global policies) drawn up to contribute to
the efficient management, and the unified administration of the Group as a whole, take root.
* Each companies of the Group periodically conduct self-assessment regarding laws and regulations
complied and risks considered in business operations by using checklists. Based on the assessment
results, the Internal Control Committee has deliberated issues which need to be taken as a Group. In
fiscal year 2018, self-assessment was conducted throughout the Group, including ASADAKATANCHUTETSUSHO Co., Ltd. that was integrated in October, 2018.
* The Internal Audit Office belonging to the internal audit section of the Company periodically audits
each section of the Company and companies of the Group.
6) Matters concerning a Director and employee who is to assist the duties of the Audit and Supervisory
Committee and matters concerning the independence of such Director and employee from other
Directors (excluding Directors serving as Audit and Supervisory Committee Members (hereinafter,
the “Audit and Supervisory Committee Members”))* The Internal Audit Office independent from the business execution section assists the Audit andSupervisory Committee, thereby fortifying the auditing function. As the Internal Audit Office is an
office independent from other business execution sections, when assisting the duties of the Audit
and Supervisory Committee, the Internal Audit Office follows the instructions of the Audit andSupervisory Committee.
7) System of reporting from Directors (excluding Audit and Supervisory Committee Members) andemployees to the Audit and Supervisory Committee, and other systems reporting to the Audit andSupervisory Committee* The internal audit section, internal control section and other business sections periodically report to
the Audit and Supervisory Committee so that the Committee may obtain information necessary forauditing.
8) Other systems to ensure that auditing by the Audit and Supervisory Committee is conductedeffectively* In addition to the periodical audits conducted by the Audit and Supervisory Committee, the Company- 31 -

has developed an environment to enhance the efficacy of audits by working to understand the statussurrounding the Company, as well as collaborating with the Internal Audit Office and providing
opportunities for the Audit and Supervisory Committee Members to share information among them.
* The Audit and Supervisory Committee Members have attended management meetings and otherimportant meetings, thus understanding the status of the operational execution. Furthermore, theAudit and Supervisory Committee Members have actively stated their opinions at the Board of
Directors Meetings from the standpoint of audit and supervision, thereby strengthening thesupervisory function.
* The Audit and Supervisory Committee Members have conducted audit by collaborating with theInternal Audit Office and being present in audits conducted by the Office.
(6) Policy on the determination of dividends from surplus, etc.
Returning profit to shareholders is recognized as one of the highest priorities in the Company’s
management, and the payment of stable, continuous dividends commensurate to business results is ourbasic policy.
The Company plans to appropriate internal reserves for the repayment of debts that contributes to theimprovement of its financial position as well as the augmentation of production facilities and R&D
activities in the future, aiming at the further expansion of the business.

- 32 -

Consolidated Balance Sheet(As of March 31, 2019)(Unit: million yen)Account title

AmountAccount title

AmountAssets244,450

Liabilities

136,116

Current assets

104,555

74,755Work in process

5,671

Current liabilities
Notes and accounts payable –trade
Short-term loans payable
Current portion of long-termloans payable
Current portion of bonds

Raw materials and supplies

20,683

Accounts payable – other

6,203

Others8,093

Income taxes payable

1,188

Allowance for doubtful accounts△100

Provision for bonuses

2,258

Cash and bank deposits

27,152

Notes and accounts receivable – trade

32,047

Merchandise and finished goods

11,007

17,12925,14014,5153,267

51

139,894

Provision for directors’ bonuses

Property, plant and equipment

102,506

Provision for product warranties

Buildings and structures

23,273

Others

4,071

Machinery, equipment and vehicles

58,971

Non-current liabilities

61,361Tools, furniture and fixtures

3,946

Long-term loans payable

49,173

Land

7,248

6,025

Construction in progress

9,067

Deferred tax liabilities
Liabilities on employees’
retirement benefits
OthersNon-current assets

928

4,644
1,518

Intangible assets

25,602

Goodwill

9,168

Customer relationship assets

12,386

Net assets

108,333

Software

1,709

Shareholders’ equity

98,884

Capital stock

5,326

Software in progress

19
2,317

Capital surplus

4,305

Investments and other assets

11,786

Retained earnings

89,261

Investment securities

6,440

Investments in capital

113

Long-term loans receivable

127

OthersDeferred tax assets

2,244

Others2,904

Allowance for doubtful accounts△43

Treasury shares
Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Foreign currency translation
adjustment
Remeasurements of defined
benefit planNon-controlling interests

Total assets
244,450 Total liabilities and net assets
Note: Figures are presented with amounts less than one million yen truncated.

- 33 -△8△7,374
2,026△9,593
192
16,823
244,450

Consolidated Statement of Income(April 1, 2018 - March 31, 2019)(Unit: million yen)Account title

AmountNet sales

255,934

Cost of sales

216,240

Gross profit

39,694

Selling, general and administrative expenses

25,586

Operating income

14,107

Non-operating income

1,795Interest income

502

Dividend income

400

Foreign exchange losses

190

Subsidy income

202

Others499

Non-operating expenses

1,111Interest expenses

854

Others256

Ordinary income

14,791

Extraordinary income

265

Gain on sales of non-current assets

38

Impairment loss reversal gain

227

Extraordinary losses

386

Loss on sales of non-current assets

44

Loss on retirement of non-current assets

119

Impairment loss

215

Others7

Profit before income taxes

14,669

Income taxes – current

4,540

Income taxes – deferred△409

Profit10,538

Profit attributable to non-controlling interests

653

Profit attributable to owners of parent
Note: Figures are presented with amounts less than one million yen truncated.

- 34 -

9,885

Consolidated Statement of Changes in Net Assets(April 1, 2018 - March 31, 2019)(Unit: million yen)
Shareholders’ equity

Balance at April 1, 2018
Cumulative impact ofchanges in accounting
policies
Current period balance
reflecting change inaccounting policy
Changes of items during
periodShare issuance

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total
shareholders’equity

3,006

1,985

80,440△885,423

100
3,006

1,985

2,320

2,320

Dividends of surplus

80,541100△885,524△2,5454,640△2,545

9,885

9,885

Profit attributable toowners of parent
Purchase of treasury
sharesIncrease (decrease) due tochange fiscal year of
subsidiaries
Net changes of items otherthan shareholders’ equity
Total changes of items during
period

2,320

2,320

8,719

△0

13,359Balance at March 31, 2019

5,326

4,305

89,261△8

98,884

Noncontrollinginterests

Total net
assets

△0
1,379

△0
1,379

Accumulated other comprehensive income

Balance at April 1, 2018
Cumulative impact ofchanges in accounting
policies
Current period balance
reflecting change inaccounting policy
Changes of items during
periodValuationdifference
on availablefor-salesecurities

Foreigncurrencytranslation
adjustment

Remeasureme
nts of defined
benefit plan

Total
accumulated
othercomprehensive
income2,706△5,270195△2,36817,294100
2,706△5,270195△2,36817,294

Dividends of surplus

Balance at March 31, 2019100,451

4,640△2,545

Share issuance
Profit attributable toowners of parent
Purchase of treasury
sharesIncrease (decrease) due tochange fiscal year of
subsidiaries
Net changes of items otherthan shareholders’ equity
Total changes of items during
period100,350

9,885
△0
1,379
△679

△4,323△2△5,005△470△5,476△679△4,323△2△5,005

△470

7,882

2,026

△9,593

192△7,374

16,823

108,333

Note: Figures are presented with amounts less than one million yen truncated.

- 35 -

Notes to Consolidated Financial Statements
1. Notes relating to the assumptions of the going concern
No items to report
2. Significant matters that serve as the basis for the preparation of consolidated financial statements(1) Matters relating to the scope of consolidation
1) Status of consolidated subsidiariesi) Number of consolidated subsidiaries:32ii) Names of consolidated subsidiaries:
Kyushu Musashi Seimitsu Co., Ltd.
ASADAKATAN CHUTETSUSHO Co., Ltd.
Musashi Auto Parts Michigan Inc.
Musashi Auto Parts Co., Ltd.
P.T. Musashi Auto Parts Indonesia
Musashi Auto Parts Canada Inc.
Musashi do Brasil Ltda.
Musashi Hungary Manufacturing, Ltd.
Musashi da Amazonia Ltda.
Musashi Auto Parts India Pvt. Ltd.
Musashi Auto Parts (Zhongshan) Co., Ltd.
Musashi Auto Parts Vietnam Co., Ltd.
Musashi Auto Parts Mexico, S.A. de C.V.
Musashi Auto Parts (Nantong) Co., Ltd.
Musashi Auto Parts (Tianjin) Co., Ltd
Musashi Europe GmbHMusashi Bockenau GmbH & Co.KG
Musashi Bad Sobernheim GmbH & Co.KG
Musashi Luechow GmbHMusashi Grolsheim GmbH & Co.KG
Musashi Hann. Muenden Holding GmbHMusashi Leinefelde Machining GmbH & Co.KG
Musashi Hungary Fuzesabony Kft.
Musashi Spain Villalba S.L.
iii) Changes of the scope of consolidation
ASADAKATAN CHUTETSUSHO Co., Ltd. of which shares were newly acquired by the Company was
included in the scope of consolidation.

2) Status of non-consolidated subsidiaries:i) Names of principal non-consolidated subsidiaries:
Musashi Auto Parts UK Ltd.
ii) Reason for exclusion from the scope of consolidation
Non-consolidated subsidiaries are excluded from the scope of consolidation because theirrespective total assets, net sales, profit or loss, and retained earnings do not have a material effecton the consolidated financial statements.
(2) Matters concerning application of equity method
Status of non-consolidated subsidiaries to which the equity method is not appliedi) Names of principal companies, etc.:- 36 -

Musashi Auto Parts UK Ltd.
ii) Reason for not applying equity method
Non-consolidated subsidiaries have an immaterial effect on profit or loss and retained earnings;
they do not have a material effect on the items of the consolidated financial statements and are
therefore not accounted for by the equity method.
(3) Items relating to the fiscal years, etc. of consolidated subsidiaries
The account closing date of the 17 consolidated subsidiaries of the Company is December 31.
Financial statements as of the foregoing accounts closing date are used to prepare consolidated
financial statements. However, material transactions occurring during the period from the accounts
closing date of a subsidiary and the consolidated accounts settlement date are adjusted as necessary forconsolidation.
For Musashi do Brasil Ltda., Musashi da Amazonia Ltda., Musashi Auto Parts (Zhongshan) Co., Ltd.,
Musashi Auto Parts (Nantong) Co., Ltd., Musashi Seimitsu Investment (Zhongshan) Co., Ltd. andMusashi Auto Parts Mexico, S.A. de C.V., consolidated subsidiaries whose account closing date is
December 31, previously, financial statements as of the foregoing date were used and materialtransactions occurring during the period from the said date to the consolidated account closing datewere adjusted as necessary for consolidation. However, to increase the usefulness as financial
information based on more timely and appropriate information, the method applied to them has beenchanged to the one where consolidation is made based on the provisional settlement of accounts carriedout on the consolidated account closing date, from the fiscal year ended March 31, 2019.
In addition, Musashi Auto Parts Co., Ltd., a consolidated subsidiary whose account closing date was
December 31, changed its account closing date from December 31 to March 31 to increase theusefulness as financial information based on more timely and appropriate information. Accordingly,
profit or loss of these consolidated subsidiaries in the period between January 1, 2018 to March 31,
2018, was each adjusted as increase or decrease in retained earnings.
(4) Change in accounting policies
Overseas consolidated subsidiaries except for those in the United States have applied IFRS 15(Revenue from Contracts with Customers) from the fiscal year ended March 31, 2019. The impact of
the application of this standard on consolidated financial statements is immaterial.
(5) Change in presentation
1) Application of the “Partial Amendments to Accounting Standard for Tax Effect Accounting,” etc.
The Company has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting”(Accounting Standards Board of Japan Statement No. 28, February 16, 2018) and relevant Guidance fromthe beginning of the fiscal year ended March 31, 2019. Accordingly, deferred tax assets are presented in
the category of investments and other assets, and deferred tax liabilities are presented in the category of
non-current liabilities.
2) Consolidated statements of income“Insurance income,” which was included in “Other” under “Non-operating income” in the fiscal year
ended March 31, 2018, has been separately presented from the fiscal year ended March 31, 2019, due tothe increased materiality.
“Subsidy income” under “Non-operating income,” which was separately presented in the fiscal year
ended March 31, 2018, has been included in “Other” from the fiscal year ended March 31, 2019, because
its amount has become immaterial. The amount of “Subsidy income” included in “Other” under “Nonoperating income” for the fiscal year ended March 31, 2019, is 49 million yen.
(6) Matters regarding accounting policies
1) Valuation basis and method for significant assetsi) Securities
A. Shares of subsidiaries- 37 -

Stated at cost using the moving average method
B. Available-for-sale securities* Securities with market valueMarket value method based on the market price as of the accounts settlement date (the fullamount of the valuation difference is charged to net assets using the direct transfer to capitalmethod, with the disposal cost determined by the moving average method)* Securities without market value
Stated at cost using the moving average methodii) Derivatives
Market value methodiii) Inventories
The Company and consolidated subsidiaries mainly state inventories at cost using the moving
average method (figures on the balance sheet are adjusted by writing down the book value where
the profitability declines), however, some overseas consolidated subsidiaries use the lower of costor market method by the first-in first-out method or weighted average method.
2) Depreciation methods for material depreciable assetsi) Property, plant and equipment (excluding leased assets)
Depreciated using the straight-line method. Please note that the main useful lives are as follows.
Buildings and structures
20 to 50 years
Machinery, equipment
5 to 20 years
and vehiclesii) Intangible assets (excluding leased assets)
The straight-line method is applied. However, for software for internal use, the straight-line
method is applied based on the expected usable period within the Group (mainly 5 years).
Furthermore, straight-line method is applied for customer relationship assets based on the expected
usable period (5 to11 years).
iii) Leased assets
Leased assets in non-ownership-transfer finance lease transactions
Depreciation is calculated on the straight-line method over the lease term as the useful life withno residual value.

- 38 -

3) Accounting policy for significant provisionsi) Allowance for doubtful accounts
To provide for losses due to bad debt, the Group reserves an estimated bad debt allowance on
ordinary receivables based on historical bad debt ratios and on highly doubtful receivables andother specified debt based on the recoverability from individual receivables.
ii) Provision for bonuses
To provide for the future payment of employee bonuses, the Company and some consolidated
subsidiaries report the anticipated amount of bonus payments.
iii) Provision for directors’ bonuses
To provide for the future payment of directors’ bonuses, the Company and some consolidated
subsidiaries report the anticipated amount of bonus payments.
iv) Provision for product warranties
To provide for product warranty expenses, the Group reports the anticipated amount of warranty
expenses.
4) Accounting policy for translating significant assets or liabilities denominated in foreign currencies into
Japanese currency
Foreign currency-denominated receivables and payables are converted to yen at the spot exchange
rate on the consolidated closing date and the translation adjustment is treated as a profit or loss.
Please note that assets and liabilities of overseas subsidiaries and others are converted into yen basedon the spot exchange rate on the day of consolidated closing date, and revenue and expenses areconverted into yen by using the average exchange rate during the fiscal year, while the difference
arising from the conversion is shown as foreign currency translation adjustment and non-controllinginterests.
5) Hedge accounting methodi) Hedge accounting method
Deferred hedge accounting is used for derivative transactions satisfying hedge accounting
requirements. However, appropriation accounting is applied to forward foreign exchange contracts
and currency swap transactions that satisfy requirements for appropriation accounting, and special
treatment is applied to the interest-rate swap transactions that meet the requirements for special
treatment.
ii) Hedging instruments and hedged items
Hedging instruments
Forward foreign exchange contracts, currency swap
transactions, and interest-rate swap transactions
Hedged items
Foreign currency denominated borrowings and foreign
currency denominated trade receivables and payablesiii) Hedging policy
To avoid foreign exchange fluctuation risk for receivables and payables denominated in foreign
currencies, the Group uses forward foreign exchange contracts and currency swap transactions. To
avoid interest-rate fluctuation risk for borrowings, the Group uses interest-rate swap transactions.
It is our policy that these derivative transactions are carried out in accordance with its internal rules
which stipulate authorization and limitation amount of transactions, and used to avoid foreign
currency exchange and interest-rate fluctuation risks, and no speculative transactions are allowed.
iv) Hedge effectiveness evaluation method
The effectiveness of hedges is evaluated by comparing the cumulative cash flow fluctuations ofhedged items or market fluctuations with cumulative cash flow fluctuations of the hedging method
or market fluctuations based on the changes of both.
Please note that this assessment is omitted for interest-rate swaps subject to special treatment.
6) Other significant matters that serve as the basis for the preparation of consolidated financial statementsi) Accounting treatment for retirement benefits
A. The attribution of benefits to periods of service
For the calculation of projected benefit obligation, the Group adopts the plan’s benefit formulafor the attribution of benefits to the end the fiscal year under review.

- 39 -

B.

Accounting method of actuarial gains and losses and past service costs
Past service costs are amortized using the straight-line method over a certain period (mainly, 15
years), which is within the average remaining service period of the employees, when they arerecognized.
Actuarial gains and losses will be amortized over a certain period (mainly, 15 years), which iswithin the average remaining service period of the employees, using the straight-line method,from the following fiscal year when the actuarial gains and losses is recognized.
ii) Method and period for amortization of goodwill
Straight-line method is applied for a period of 5 to 15 years.
iii) Accounting treatment of consumption taxes
Accounting treatment for consumption tax and local consumption tax is based on the tax-excluded
method.
iv) Application of Consolidated Taxation System
From this fiscal year Consolidated Taxation System is applied.

- 40 -

3. Notes to the consolidated balance sheet(1) Amount of accumulated depreciation for property, plant and equipment
182,062 million yen(2) Contingent liabilities
The Group has been investigated by overseas authorities for a possible violation of competition laws incertain past transactions and is cooperating fully with the investigation. Such effect on the consolidated
financial statements is difficult to reasonably estimate.

4. Notes to the consolidated statement of income
Reversal of impairment loss is gain on reversal of impairment loss on machinery and equipment, andothers accounted for by overseas consolidated subsidiaries based on the International Financial ReportingStandards.

- 41 -

5. Notes to the consolidated statement of changes in net assets(1) Matters concerning total number of issued shares(thousand shares)
Types of shares
Common shares

April 1, 2018
31,221

Increase

Decrease

33,913

March 31, 2019–65,135(Note) The breakdown of the increase in the number of common shares is as follows:- Increase due to the exercise of share subscription rights of convertible bonds subject to call: 2,275 thousand shares- Increase due to the insurance of new shares as share-based remuneration with transfer restrictions: 18 thousand shares- Increase due to the two-for-one common share split: 31,620 thousand shares(2) Matters concerning number of treasury shares
Types of shares
Common shares

April 1, 2018
6,787

(shares)

Increase

Decrease
9,365

March 31, 2019–16,152(Note) The breakdown of the increase in the number of common shares is as follows:- Increase due to the purchase of shares less than one unit: 105 shares- Increase due to the lapse of rights to share-based remuneration with transfer restrictions: 1,184 shares- Increase due to the two-for-one common share split: 8,076 shares.

(3) Matters concerning dividends of surplus
1) Paid amount of dividendsi) Matters concerning dividends resolved at the 91st Annual Meeting of Shareholders held on June 22,2018* Total dividends
1,217 million yen* Dividends per share
39 yen* Record date
March 31, 2018
* Effective dateJune 25, 2018ii) Matters concerning dividends resolved at the Board of Directors Meeting held on November 2, 2018
* Total dividends
1,328 million yen* Dividends per share
42 yen* Record date
September 30, 2018
* Effective dateNovember 30, 2018
2) Of the dividends whose record date belongs to the fiscal year under review, dividends whose effective
date falls in the next fiscal year
The following shall be presented at the 92nd Annual Meeting of Shareholders to be held on June 21,
2019* Total dividends
1,367 million yen* Dividends per share
21 yen* Record date
March 31, 2019
* Effective dateJune 24, 2019
* Source of dividends
Retained earnings- 42 -

6. Notes concerning financial instruments(1) Matters concerning the conditions of financial instruments
The Group procures necessary capital through loans from banks and other financial institutions andthrough bond issuances. Temporary surplus funds are managed only as short-term deposits.
Credit risk of customers in terms of notes and accounts receivable – trade are mitigated according to
the Sales Management Rules. Investment securities are mainly shares, and we quarterly monitor themarket prices of listed stock.
Borrowings are used as working capital and capital investment funds. Forward foreign exchange
contracts and currency swap contracts are used against the exchange fluctuation risk for foreigndenominated borrowings, and interest rate swap contracts are used against interest rate fluctuation risk.
Please note that derivative transactions are conducted only in the scope of actual demand according tointernal rules.
(2) Matters concerning fair values, etc. of financial instruments
Amounts on the consolidated balance sheet, fair values and their differences at March 31, 2019 are as
follows.
(Unit: million yen)
Consolidatedbalance sheet
amountFair value

Difference(1) Cash and bank deposits

27,152

27,152–(2) Notes and accounts receivable – trade

32,04732,047–(3) Investment securities

4,404

4,404

–

63,60463,604–(4) Notes and accounts payable – trade17,12917,129－(5) Short-term loans payable

25,14025,140－(6) Accounts payable – other

3,267

3,267

－

(7) Accrued expenses

6,203

6,203

－

(8) Income taxes payable

1,188

1,188

－

(9) Long-term loans payable (*1)

63,68864,968

1,280

Total liabilities

116,617

117,898

1,280(10) Derivative transactions (*2)

△35

△35

－

Total assets(*1) Includes current portion of long-term loans.
(*2) Net claims and obligations derived from derivative transactions are indicated in net amounts.
Notes:
1. Calculation method of the fair value of financial instruments and matters concerning marketable securities andderivative transactions(1) Cash and bank deposits and (2) Notes and accounts receivable – trade
Because their fair value is almost equal to book value due to their short-term settlement, they are posted at their book value.
(3) Investment securities
Fair value of investment securities is based on market prices on exchanges.
(4) Notes and accounts payable – trade, (5) Short-term loans payable, (6) Accounts payable – other, (7) Accrued expenses, and(8) Income taxes payable
Because their fair value is almost equal to book value due to their short-term settlement, they are posted at their book value.
(9) Long-term loans payable
The fair value of long-term loans is calculated at the present value thereof equal to the total of capital and interests
discounted by an interest rate reflecting the remaining terms adjusted for credit risk.
Please note that, for loans requiring interest rate renewals at certain periods, their fair value is roughly equal to book value,
and therefore they are determined by the relevant book value.
(10) Derivative transactions
The fair value of derivative transactions is determined by the quoted price obtained from financial institutions.

- 43 -

However, interest rate swap contracts meeting special treatment criteria are treated together with hedged borrowings,
therefore, their fair value is included in the fair value of the relevant borrowings. However, forward foreign exchange
contracts meeting appropriation accounting criteria are treated together with hedged borrowings, accounts receivable – trade,
and accounts payable – trade, therefore, their fair value is included in the fair value of the relevant account items.
2. Unlisted equity securities (2,035 million yen posted) among investment securities are not included in “(3) Investment
securities” as no quoted market price is available and it is extremely difficult to ascertain fair value by such means asestimating future cash flows.

7. Per share information(1) Net assets per share:(2) Earnings per share:

1,405.28 yen
155.55yen(Note) The Company implemented a common share split at a ratio of two shares for one share as of October 1, 2018.
“Net assets per share” and “Earnings per share” were calculated based on the assumption that the share split had been
conducted at the beginning of the fiscal year ended March 31, 2019.

8. Notes on business combination, etc.
(Business combination through acquisition)(1) Summary of business combination
1) Name of acquired entity and its line of business
Name of acquired entity: ASADAKATAN CHUTETSUSHO Co., Ltd.
Line of business: Graphite cast iron (ductile) materials for automobiles, construction machinery and industrial
machinery, and machine processing2) Main reason for the business combination
To further enhance the product development capability and improve the production system in the power train
business by strengthening the foundation for casting technologies.
3) Date of the business combination
October 1, 20184) Legal form of the business combination
Acquisition of shares by cash consideration
5) Name of the entity after the combination
The name is not changed.
6) Percentage of voting rights acquired
100%7) Main grounds for determining the acquiring entity
It is because the Company acquired shares of the said company by cash consideration.
(2) Period of business performance of the acquired entity included in the consolidated financial statements
From October 1, 2018 to March 31, 2019(3) Acquisition cost of the acquired entity and breakdown of types of consideration
Consideration for acquisition: Cash 3,800 million yen
Acquisition cost: 3,800 million yen(4) Description and amount of major acquisition related expenses
Advisory fee, etc.: 23 million yen(5) Amount of goodwill recognized, reason for recognition, and method and period for amortization of goodwill
1) Amount of goodwill recognized
1,390 million yen
2) Reason for recognition
Since the acquisition cost exceeded the net amount of assets acquired and liabilities assumed, the excess amount
was recognized as goodwill.
3) Method and period for amortization of goodwill
Straight-line amortization over five years(6) Amount and breakdown of components of assets accepted and liabilities assumed on the date of businesscombination
Current assets: 2,860 million yen
Non-current assets: 1,687 million yen
Total assets: 4,547 million yen
Current liabilities: 794 million yen
Non-current liabilities: 1,637 million yen- 44 -

Total liabilities: 2,432 million yen(7) Breakdown by major type, amount and amortization period of value allocated to intangible assets other than
goodwill
Type
AmountAmortization period
Customer relationship assets 451 million yen
5 years

9. Significant subsequent events
No items to report.

- 45 -

Non-consolidated Balance Sheet(As of March 31, 2019)(Unit: million yen)Account title
AssetsCurrent assets
Cash and bank deposits
Accounts receivable – tradeFinished goods
Work in process
Raw materials and supplies
Current portion of long-term loans
receivable
Prepaid expenses
Accounts receivable – other
OthersNon-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Construction in progress
Intangible assets
Software
Software in progress
OthersInvestments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital
Long-term loans receivable fromsubsidiaries and associates
Investments in capital ofsubsidiaries and associates
Long-term prepaid expenses
Deferred tax asset

AmountAccount title

Amount118,015
14,32912
8,429

Liabilities
Current liabilities
Notes payable – trade
Electronically recorded obligations –operatingAccounts payable – trade
Short-term loans payable
Current portion of long-term loans
payable71,04440,599
19

1,107
1,585
710
760

Lease obligations

3,380
3,135
18,493
10,851
35

179
718
825
103,686
10,996
2,531
119
5,179
31
540
2,490
104
665
638
19

Accounts payable – otherAccrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Provision for directors’ bonuses
Provision for product warranties
Notes payable – facilities
OthersNon-current liabilities
Long-term loans payable
Lease obligations
Provision for retirement benefits
Long-term accounts payable – other
Asset retirement obligations

604
2,193
140
178
1,041
38
11
426
49
30,44429,714
70
526
71
62

7
92,023
1,105

Net assets
Shareholders’ equity
Capital stock

46,97045,041
5,326

68,18461
50
22,495

Capital surplus
Legal capital surplus

5,067
5,067

Retained earnings

34,656

Legal retained earnings

82
34
45

Other retained earnings
General reserve
Retained earnings brought
OthersforwardAllowance for doubtful accounts
Treasury shares△36
Valuation and translation adjustments
Valuation difference on available-forsale securities
118,015
Total assets
Total liabilities and net assets
Note: Figures are presented with amounts less than one million yen truncated.

- 46 -

306
34,34923,50010,849
△8
1,929
1,929
118,015

Non-consolidated Statement of Income(April 1, 2018 - March 31, 2019)(Unit: million yen)Account title

AmountNet sales

52,077

Cost of sales

41,838
10,238Gross profit

7,839

Selling, general and administrative expenses

2,399

Operating income
Non-operating income

3,269Interest income

13

Dividend income

2,756
462

Guarantee commission received

37

OthersNon-operating expenses

121Interest expenses

91

Foreign exchange losses

1

Others28
5,546

Ordinary income

1

Extraordinary income

1

Gain on sales of non-current assets

5

Extraordinary loss

5

Loss on retirement of non-current assets
Profit before income taxes

5,542

Income taxes – current

1,153

Income taxes – deferred

56

ProfitNote: Figures are presented with amounts less than one million yen truncated.

- 47 -

4,333

Non-consolidated Statement of Changes in Net Assets(April 1, 2018 - March 31, 2019)(Unit: million yen)
Shareholders’ equity

Balance at April 1, 2018

Capitalstock

CapitalsurplusLegalcapitalsurplusLegalretainedearnings

Otherretainedearnings

Total
retainedearnings

3,006

2,746

306

32,561

32,868

2,320

2,320

Retained earnings
TreasurysharesTotalshareholders’equity△838,613

Changes of items during period
Share issuance

4,640

Dividends of surplus
Profit△2,545△2,545△2,545

4,333

4,333

4,333
△0

Purchase of treasury shares△0

Net changes of items other thanshareholders’ equity
Total changes of items during period

2,320

2,320

－

1,787

1,787

△0

6,427

Balance at March 31, 2019

5,326

5,067

306

34,34934,656△8

45,041

Valuation and translation adjustments

Balance at April 1, 2018

Valuation difference on
available-for-sale securities

Total valuation andtranslation adjustments

2,568

2,568

Total net assets

41,182

Changes of items during period

4,640

Share issuance△2,545

Dividends of surplus

4,333

Profit△0

Purchase of treasury shares
Net changes of items other thanshareholders’ equity

△639

△639

△639

Total changes of items during period

△639

△639

5,788

1,929

46,9701,929
Note: Figures are presented with amounts less than one million yen truncated.

Balance at March 31, 2019

- 48 -

*Other retained earnings(Unit: million yen)
General reserve
Balance at April 1, 2018
Change in the fiscal year
Dividends of surplus
ProfitTotal changes of items during period
Balance at March 31, 201923,500Retained earnings
brought forward

9,061

Total

32,561△2,545△2,545
4,333
4,333
1,787
1,787
－
23,50010,84934,349Note: Figures are presented with amounts less than one million yen truncated.

- 49 -

Notes to Non-consolidated Financial Statements
1. Notes relating to the assumptions of the going concern
No items to report
2. Matters pertaining to significant accounting policies(1) Valuation basis and method for securities
1) Shares of subsidiaries
Stated at cost using the moving average method
2) Available-for-sale securities* Securities with market valueMarket value method based on the market price as of the accounts settlement date (the full amountof the valuation difference is charged to net assets using the direct transfer to capital method, withthe disposal cost determined by the moving average method)* Securities without market value
Stated at cost using the moving average method(2) Valuation basis and method for derivative transactions
Market value method(3) Valuation basis and method for inventories
1) Finished goods, work in process and raw materials
Cost using the moving average method (figures on the balance sheet are adjusted by writing down
the book value where the profitability declines)
However, machinery purchased for sale and in-house manufactured machinery are recorded at costusing the individual method
2) Supplies of metal molds
Stated at cost using the individual method
3) Other supplies
Stated at cost using the final purchase cost method(4) Depreciation method for non-current assets
1) Property, plant and equipment (excluding leased assets)
Straight-line method
Please note that the main useful lives are as follows.
Buildings
31 to 47 years
Machinery and equipment
9 years2) Intangible assets (excluding leased assets)i) Software for internal use
The straight-line method is applied based on the expected usable period within the Company (5years).
ii) Other intangible assets
Straight-line method
3) Leased assets
Leased assets in non-ownership-transfer finance lease transactions
Depreciation is calculated on the straight-line method over the lease term as the useful life with noresidual value.
(5) Accounting policy for provisions
1) Allowance for doubtful accounts
To provide for losses due to bad debt, the Company reserves an estimated bad debt allowance on
ordinary receivables based on historical bad debt ratios and on highly doubtful receivables and otherspecified debt based on the recoverability from individual receivables.
2) Provision for bonuses
To provide for the future payment of employee bonuses, the Company reports the anticipatedamount of bonus payments.

- 50 -

3) Provision for directors’ bonuses
To provide for the future payment of directors’ bonuses, the Company reports the anticipated amountof bonus payments.
4) Provision for product warranties
To provide for product warranty expenses, the Company reports the anticipated amount of warranty
expenses.
5) Provision for retirement benefits
To provide for employee retirement benefits, this provision is posted based on an estimate ofretirement benefit obligations and plan assets at fiscal year-end.
i) The attribution of benefits to periods of service
For the calculation of projected benefit obligation, the Company adopts the plan’s benefit formulafor the attribution of benefits to the end of the fiscal year under review.
ii) Accounting method of actuarial gains and losses and past service costs
Past service costs are amortized using the straight-line method over a certain period (15 years),
which is within the average remaining service period of the employees, when they are recognized.
Actuarial gains and losses will be amortized over a certain period (15 years), which is within the
average remaining service period of the employees, using the straight-line method, from thefollowing fiscal year when the actuarial gains and losses is recognized.
(6) Accounting policy for translating assets or liabilities denominated in a foreign currencies into Japanesecurrency
Foreign currency-denominated receivables and payables are converted to yen at the spot exchange
rate on the closing date and the translation adjustment is treated as a profit or loss.
(7) Hedge accounting method
1) Hedge accounting method
Deferred hedge accounting is used for derivative transactions satisfying hedge accounting
requirements. However, appropriation accounting is applied to forward foreign exchange contracts
and currency swap transactions that satisfy requirements for appropriation accounting, and special
treatment is applied to the interest-rate swap transactions that meet the requirements for special
treatment.
2) Hedging instruments and hedged items
Hedging instruments
Forward foreign exchange contracts, currency swap
transactions and interest-rate swap transactions
Hedged items
Foreign currency denominated borrowings and foreign
currency denominated trade receivables and payables
3) Hedging policy
To avoid foreign exchange fluctuation risk for receivables and payables denominated in foreign
currencies, the Company uses forward foreign exchange contracts and currency swap transactions.
To avoid interest-rate fluctuation risk for borrowings, the Company uses interest-rate swap
transactions. It is our policy that these derivative transactions are carried out in accordance with its
internal rules which stipulate authorization and limitation amount of transactions, and used to avoid
foreign currency exchange and interest-rate fluctuation risks, and no speculative transactions areallowed.
4) Hedge effectiveness evaluation method
The effectiveness of hedges is evaluated by comparing the cumulative cash flow fluctuations ofhedged items or market fluctuations with cumulative cash flow fluctuations of the hedging method
or market fluctuations based on the changes of both.
Please note that this assessment is omitted for interest-rate swaps subject to special treatment.

- 51 -

(8) Other significant matters that serve as the basis for the preparation of financial statements
1)Accounting treatment of consumption
Accounting treatment for consumption
taxes
tax and local consumption tax is basedon the tax-excluded method.
2)Application of consolidated tax payment
Consolidated taxation system issystemapplied.
3. Change in presentation(Application of the Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.)
The Company has applied the Partial Amendments to Accounting Standard for Tax Effect Accounting(Accounting Standards Board of Japan Statement No. 28, February 16, 2018) and relevant Guidancefrom the beginning of the fiscal year ended March 31, 2019. Accordingly, deferred tax assets arepresented in the category of investments and other assets.
4. Notes to the non-consolidated balance sheet(1) Claims and obligations with respect to subsidiaries and associates
Short-term cash credit
7,439 million yen
Long-term cash credit
50 million yen
Short-term cash debt
2,973 million yen
Long-term cash debt
1,357 million yen(2) Amount of accumulated depreciation for property, plant and equipment
38,669million yen(3) Contingent liabilities
Guarantee obligations
The following guarantees are made with respect to loans from financial institutions of subsidiaries andassociates(Unit: million yen)Company name

Guarantee balanceMusashi Europe GmbH

20,416

Musashi Auto Parts (Tianjin) Co., Ltd.

6,515

Musashi Auto Parts Michigan Inc.

2,877

Musashi Auto Parts Mexico, S.A. de C.V.

2,219

Musashi Auto Parts India Pvt. Ltd.

100

Musashi da Amazonia Ltda.

11

Total

32,142

5. Notes to the non-consolidated statement of income
Transactions with subsidiaries and associates
Net sales
Purchases
Transactions other than operational transactions- 52 -

42,067 million yen
17,268 million yen
3,273 million yen

6. Notes to the non-consolidated statement of changes in net assets
Matters concerning number of treasury shares(shares)
Types of shares
Common shares

April 1, 2018
6,787

Increase

Decrease
9,365

March 31, 2019–16,152(Note) The breakdown of the increase in the number of common shares is as follows:- Increase due to the purchase of shares less than one unit: 105 shares- Increase due to the lapse of rights to share-based remuneration with transfer restrictions: 1,184 shares- Increase due to the two-for-one common share split: 8,076 shares

7. Notes concerning tax effect accounting
Breakdown of major causes for the occurrence of deferred tax assets and deferred tax liabilities(Unit: million yen)
Deferred tax assets
33
Payable for enterprise tax refund
313
Provision for bonuses
11
Provision for directors' bonuses
50
Accrued social security premiums
136
Loss on evaluation of inventories
436
Credit for foreign tax
163
Over depreciation
157
Provision for retirement benefits
21
Directors’ retirement benefits payable
7
Loss on valuation of investment securities
1,164
Loss on sales of shares of subsidiaries and associates
10
Allowance for doubtful accounts
44
Others2,550
Subtotal deferred tax assets△1,686
Valuation allowance863
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
OthersTotal deferred tax liabilities
Net deferred tax assets (liabilities)- 53 -

△828
△0
△828
34

8. Notes concerning transactions with related parties(1) Parent company and principal corporate shareholder
Category

Other
affiliate

Company
nameHonda MotorCo., Ltd.

Ownership
percentage ofvoting rights(%)

RelationshipTransaction
details

Transaction
amounts(million yen)Account
item(Note 3)

Sale of theCompany’s
25.1 products,
purchase of
raw materials

Sales ofproducts(Note 1)

Purchase of
raw materials(Note 2)

Fiscal yearend balance(million yen)
(Note 3)

Accounts
21,937 receivable –
trade

2,404

Accounts
4,995 payable –
trade

129

Conditions of transactions and policy for determining the conditions of transactions
Notes: 1.
Sale prices are determined by drafting estimates taking into consideration market values based on economic rationality
and the Company’s production technologies, etc. which are submitted for negotiation.
2.
The purchase of raw materials is determined under the same requirements as general transactions upon pricenegotiations based on market values.
3.
Consumption taxes are excluded from transaction amounts, but included in balances at fiscal year-end.

(2) Subsidiaries
Category

Subsidiary

Subsidiary

Subsidiary

Company
nameOwnership
percentage ofvoting rights(%)

Relationship

KyushuMusashi
Seimitsu Co.,Ltd.

Product
purchasing
100.0 andsecondment ofofficers

Musashi Auto
Parts
Michigan Inc.

Debt
guarantees
89.5 andsecondment ofofficers

Musashi
Hungary
Manufacturing, Ltd.

Lending of
100.0
funds

Transaction
details

Transaction
amounts(million yen)Account
item(Note 5)

Product
purchasing(Note 5)

9,993

Accounts
payable –
trade

1,226

2,877

–

－

Current
portion of
long-term
loans
receivable

1,276Long-term
loans
payable1,357(Note 1)

Underwriting ofdebt guarantees

Fiscal yearend balance(million yen)

(Note 2)

Receipt ofinterest (Note)
46

SubsidiaryMusashi Auto
Parts Mexico,
S.A. de C.V.

Capitalborrowing and100.0
secondment ofofficers

Interest
payment(Note 3)

2,219

–

–

SubsidiaryMusashiEurope GmbH

Debt
guarantees
75.0 andsecondment ofofficers

Underwriting ofdebt guarantees(Note 2)

20,416––

Underwriting ofdebt guarantees(Note 2)

462

–

–

Musashi Auto
Parts (Tianjin)
Co., Ltd.

Indirect Debt
75.0 guarantees
andsecondment ofofficers

Subsidiary

Guarantee
commissions
6,515
income(Note 2)
Conditions of transactions and policy for determining the conditions of transactions
Notes: 1.
Prices and other transaction requirements are determined based on basic agreements with subsidiaries and taking into

- 54 -

2.
3.
4.

account market conditions.
Debt guarantees are underwritten by each company for loans from financial institution, no guarantee commissions arereceived. However, guarantee commissions are received from Musashi Europe GmbH.
Interest rate in capital borrowing is reasonably determined in consideration with market interest rate.
Consumption taxes are excluded from transaction amounts, but included in balances at fiscal year-end.

9. Per share information(1) Net assets per share:
721.30yen(2) Earnings per share:
68.18yen
Note: On October 1, 2018, we conducted a 1:2 share split of our common shares. Assuming that the stock split was conducted at the
beginning of the current fiscal year, “Net assets per share” and “Net income per share” are calculated.

10. Significant subsequent events
No items to report.

- 55 -

[English Translation of the Audit Report Originally Issued in the Japanese Language]

Audit Report of Financial Auditor on Consolidated Financial Statements

Independent Auditor’s Report
May 15, 2019
To the Board of Directors of Musashi Seimitsu Industry Co., Ltd.

Ernst & Young ShinNihon LLC
Shigeki Hiki

(Seal)

Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant

Toshikatsu Sekiguchi(Seal)

Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant

We have audited the consolidated financial statements of Musashi Seimitsu Industry Co., Ltd. for the fiscal
year from April 1, 2018 to March 31, 2019, comprising the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of changes in net assets and notes to consolidated financial
statements for the purpose of reporting under the provisions of Article 444, paragraph 4 of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with corporate accounting standards generally accepted in Japan, and for designing and operatingsuch internal control as management determines is necessary to enable the preparation and fair presentation of
the consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit from an
independent position. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected and applied depend on the auditor’s judgment,
based on the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness ofaccounting policies used, the method of their application, and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionOur opinion is that the above-mentioned consolidated financial statements present fairly the status of assets
and earnings during the period relating to the relevant consolidated financial statements of the corporate groupconsisting of Musashi Seimitsu Industry Co., Ltd. and its consolidated subsidiaries in every important point inaccordance with the corporate accounting standards generally accepted in Japan.

- 56 -

Conflicts of Interest
Our audit corporation and engagement partner have no financial or other interest in the Company required to
be stated by the provisions of the Certified Public Accountant Act of Japan.

- 57 -

[English Translation of the Audit Report Originally Issued in the Japanese Language]

Audit Report of Financial Auditor on Non-consolidated Financial Statements

Independent Auditor’s Report
May 15, 2019
To the Board of Directors of Musashi Seimitsu Industry Co., Ltd.

Ernst & Young ShinNihon LLC
Shigeki Hiki

(Seal)

Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant

Toshikatsu Sekiguchi(Seal)

Designated Limited Liability Partner,
Engagement Partner,
Certified Public Accountant

We have audited the non-consolidated financial statements of Musashi Seimitsu Industry Co., Ltd. for the
92nd fiscal year from April 1, 2018 to March 31, 2019, comprising the non-consolidated balance sheet, thenon-consolidated statement of income, the non-consolidated statement of changes in net assets and notes tonon-consolidated financial statements and the accompanying financial schedule for the purpose of reporting
under the provisions of Article 436, paragraph 2, item 1 of the Companies Act.
Management’s Responsibility for the Non-consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the non-consolidated financial
statements and the accompanying financial schedule in accordance with corporate accounting standards
generally accepted in Japan, and for designing and operating such internal control as management determines
is necessary to enable the preparation and fair presentation of the non-consolidated financial statements andthe accompanying financial schedule that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the non-consolidated financial statements and the accompanying
financial schedule based on our audit from an independent position. We conducted our audit in accordancewith auditing standards generally accepted in Japan. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the non-consolidated financial statements and theaccompanying financial schedule are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
non-consolidated financial statements and the accompanying financial schedule. The procedures selected andapplied depend on the auditor’s judgment, based on the assessment of the risks of material misstatement of the
non-consolidated financial statements and the accompanying financial schedule, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation andfair presentation of the non-consolidated financial statements and the accompanying financial schedule inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used, the method of their application, and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the nonconsolidated financial statements and the accompanying financial schedule.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

- 58 -

Opinion
Our opinion is that the above-mentioned non-consolidated financial statements and the accompanying
financial schedule present fairly the status of assets and earnings during the period relating to the relevant nonconsolidated financial statements and the accompanying financial schedule in every important point inaccordance with the corporate accounting standards generally accepted in Japan.
Conflicts of Interest
Our audit corporation or operating partner has no financial or other interest in the Company required to bestated by the provisions of the Certified Public Accountant Act of Japan.

- 59 -

[English Translation of the Audit Report Originally Issued in the Japanese Language]

Audit Report of Audit and Supervisory Committee

Audit Report
The Audit and Supervisory Committee has conducted audit on the performance of duties of the Directors
during the 92nd fiscal year from April 1, 2018 to March 31, 2019, and hereby reports the methods and resultsof audit as follows:1.

Auditing Methods and Contents
The Audit and Supervisory Committee regularly received reports from Directors and employees on thecontents of regulation of the Board of Directors relating to the matters set forth in the Article 399-13,
paragraph 1, item 1 (b) and (c) of the Companies Act and the status of the establishment and operation of
the system (internal control system) established in accordance with the resolution, demanded
explanations, as the occasion demanded, and expressed its opinions. The audit was conducted by thefollowing methods.
1)

In accordance with the Audit and Supervisory Committee’s auditing standards, auditing policies,
share of assignment, and other matters stipulated by the Audit and Supervisory Committee, we
cooperated with the Internal Auditing Department and other departments for internal control; attended
important meetings; received reports of execution of duties from Directors and employees; demanded
explanations, as the occasion demanded; inspected important documents; and investigated theactivities and assets of the head office and of other principal places of business.
As for the subsidiaries, we communicated and exchanged information with the Directors and Audit &Supervisory Board Members, etc. of the subsidiaries, and received reports on their business
operations as the occasion demanded.

2)

We monitored and verified whether or not the Financial Auditor had maintained their independent
positions and had conducted appropriate audits and received reports on activities of execution of duty
from the financial auditor and received explanation as the occasion demanded. Also, we received
notice that the “system to assure that duty is executed appropriately” (the matters listed in the items of
Article 131 of the Corporate Accounting Rules) has been maintained in accordance with the “Quality
Control Standards for Audits” (October 28, 2005, the Business Accounting Council) from the
Financial Auditor and demanded explanation as the occasion demanded.

Based on the above methods, we examined the business report and accompanying financial schedule forthe relevant fiscal year, non-consolidated financial statements (non-consolidated balance sheet, nonconsolidated statement of income, non-consolidated statements of changes in equity and notes to nonconsolidated financial statements) and accompanying financial schedule as well as the consolidated
financial statements (consolidated balance sheet, consolidated statement of income, consolidated
statements of changes in equity and the notes to consolidated financial statements).
2.

Results of Audit(1) Results of audit on the business report
1) The business report and accompanying schedule are found to accurately present the status of theCompany in conformity with the laws and regulations and Articles of Incorporation.
2) In connection with the performance by the Directors of their duties, no dishonest act or significant
fact of a violation of laws, regulations, or the Articles of Incorporation is found to exist.
3) The contents of the resolutions of the Board of Directors regarding the internal control systems arefound to be proper. Also, the descriptions in the business report and execution of duty by the
Directors regarding the relevant internal control system are found to accurately present the mattersto be stated therein and have nothing to be pointed out including the internal control system- 60 -

(2)(3)

regarding financial reporting.
Results of audit on the non-consolidated financial statements and accompanying financial schedule
The methods and results of the audit made by the Financial Auditor, Ernst & Young ShinNihon LLC,
an incorporated auditing firm, are found to be proper.
Results of audit on the consolidated financial statements
The methods and results of the audit made by the Financial Auditor, Ernst & Young ShinNihon LLC,
an incorporated auditing firm, are found to be proper.

May 16, 2019
Audit and Supervisory Committee ofMusashi Seimitsu Industry Co., Ltd.
Nobuyoshi Sakakibara(Seal)

Audit and Supervisory Committee Member (Full-time)

Asako Yamagami(Seal)

Audit and Supervisory Committee Member

Yoshinori Morita(Seal)

Audit and Supervisory Committee Member
Notes:

1. Audit and Supervisory Committee Members Asako Yamagami and Yoshinori Morita are outside directors provided in
Article 2, item 15 and Article 331, paragraph 6 of the Companies Act.

- 61 -