(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
June 15, 2020
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 93RD ANNUAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 93rd Annual Meeting of Shareholders of Musashi Seimitsu Industry
Co., Ltd. (the “Company”).
The Company recommends that you exercise your voting rights either in writing or via the Internet to avoid
risk of infection of a novel coronavirus disease (COVID-19) at the meeting. Please review the Reference
Documents for the Annual Meeting of Shareholders and exercise your voting rights by 5:00 p.m. on Monday,
June 29, 2020.
Meeting Details
1. Date and Time:
2. Venue:

Tuesday, June 30, 2020 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
93rd fiscal term (from April 1, 2019 to March 31, 2020)
2. Non-consolidated Financial Statements for the 93rd fiscal term (from April 1, 2019 to March 31,
2020)
Items to be resolved:
Appropriation of Surplus
Proposal 1:
Election of Seven (7) Directors (Excluding Directors Serving as
Proposal 2:
Audit and Supervisory Committee Members)
Election of One (1) Directors Serving as Audit and Supervisory
Proposal 3:
Committee Members-1-Requests to Ensure the Health and Safety of Our Shareholders
We seek the understanding and cooperation of our shareholders regarding the following precautions being
taken due to the proliferation of COVID-19.
◦ We ask that any shareholder considering the possibility of attending the meeting sufficiently check on thestatus of the epidemic along with his or her own physical condition on the day of the meeting. We
furthermore ask that shareholders wear protective masks and otherwise take the utmost precautions toprevent infection.
◦ Seating capacity may be insufficient given that seats will be arranged so that there is greater distance
between shareholders. As such, you may be refused admission upon arriving at the venue if seating fills tocapacity.
◦ To prevent contact transmission, the Company will not serve beverages in the reception room nor will it
provide gifts to shareholders at the venue. Moreover, the Company will not hold its exhibition of corporate
activities.
◦ The Company will implement measures necessary to prevent infection in alignment with the status of
COVID-19 on the day of the meeting.

◦ If any changes have been made to the Reference Documents for the Annual Meeting of Shareholders,Business Report, Non-consolidated Financial Statements or Consolidated Financial Statements, suchchanges will be posted on the Company’s website.
◦ The Company will provide notification on its website if it makes substantial operational changes withrespect to the Annual Meeting of Shareholders due to developments going forward.
The Company’s website: (http://www.musashi.co.jp)-2-

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.
[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:
Monday, June 29, 2020 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:
Monday, June 29, 2020 at 5:00 p.m.
[Attending the General Meeting of Shareholders]Present the Voting Rights Exercise Form to the receptionist at the meeting.
Date and Time:
Tueaday, June 30, 2020 at 10:00 a.m.
Venue:
Conference Room of the Company’s Head Office39-5 Daizen, Ueta-cho, Toyohashi-shi, Aichi
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..

-3-

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)-4-

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 93rd 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
July 1, 2020

¥ 10.5¥ 684,248,576-5-

Proposal 2:

Election of Seven (7) 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.
Therefore, considering the composition of the Board of Directors as a whole, the Company proposes theelection of 7 (seven) Directors, reducing the number of Directors by 1 (one).
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)

Apr. 2015

President Executive Officer of the Company

Apr. 2019

Chief Executive Officer of the Company(present post)

Reappointment

1

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
9/9
Number of years since
appointment as adirector
19 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.

-6-

Number of theCompany’s shares held

1,449,900

Takayuki Miyata(Nov. 8, 1965)

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

Apr. 2020

Representative Director(present post)

Apr. 2020

Chief Technical Officer(present post)

Apr. 2020

CEO of Europe region of the Company (present post)

Apr. 2020

President and Director of Musashi Europe GmbH(present post)

Reappointment

2

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
8/9
Number of years since
appointment as adirector
5 years (at theconclusion of thismeeting)(Significant concurrent position)
President and Director of Musashi Holdings Europe GmbH
President and Director of Musashi 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.

-7-22,500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
9/9

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
3 years (at theconclusion of thismeeting)

Apr. 2018

CFO of Group of the Company(present post)

Tracey Sivill(Dec. 2, 1963)
Reappointment

3

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)
Reappointment

5

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

Hari N. Nair
（Jan. 1, 1960）
Reappointment

6

Number of Board of
Directors’ meetings
attended during the
fiscal year underreview
9/9
Number of years since
appointment as adirector
3 years (at theconclusion of thismeeting)Aug. 2000

Representative Director and President of Gastec Service,
Inc. (currently Sala Energy Co., Ltd.)May 2002

Representative Director and President of Sala
Corporation

Mar. 2012

Representative Director and President of Chubu Gas Co.,
Ltd. (currently Sala Energy Co., Ltd.)

Jun. 2012

Director of the Company (present post)

Feb. 2018

Chairman and Representative Director of Gastec Service,
Inc. (currently Sala Energy Co., Ltd.)

Feb. 2018

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

Jan. 2020

Representative Director, President and Group CEO of
Sala Corporation (present post)

24,300(Significant concurrent positions)Representative Director and President of Sala Corporation
Chairman and Representative Director of Sala Energy Co., Ltd.
Reasons for nomination as a candidate for Director
Mr. Goro Kamino has provided appropriate advice on the Company’s
management as its Outside Director based on his extensive experience and ahigh level of knowledge as a corporate manager of listed companies. 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.
Aug. 1985

Entered General Motors Corporation

Mar. 1987

RetiredMar. 1987

Entered Tenneco Automotive. (currently Tenneco Inc.)

Aug. 1997

Same as above
Asia

Aug. 1999

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

Apr. 2000

Same as above Senior Vice President, Managing
Director, International

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

Vice President and Managing Director,

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(present

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)

Jul. 2019

REE Automotive LTD Board of Directors (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
9/9
Number of years since
appointment as adirector
5 years (at theconclusion of thismeeting)8Notes:

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)

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.
Apr. 1981

Entered Dai Nippon Printing Co., Ltd.

Dec. 1983

Entered Intel Japan K.K. (currently Intel K.K.)

Apr. 1999
Yoshie Munakata(Jun. 20, 1958)

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

Apr. 2001

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

Reappointment

Apr. 2002

Manager, Business Development Headquarters of Intel
K.K.

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

Apr. 2009

Director and executive deputy president of Intel K.K.

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.(currently SB
Technology Corp.) (present post)

Jun 2018

Director of the Company (present post)

1.
2
3.

9,400

4,700

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.
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,- 10 -

4.

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., (currently Sala Energy Co., Ltd.) in
which Mr. Goro Kamino serves concurrently. However, since the annual transaction amount relating thereto accounts
for less than 1% of sales of the Company, Chubu Gas Co., Ltd. and Gastec Service, Inc., (currently Sala Energy Co.,
Ltd.) we believe that there would be no conflicts of interest with general shareholders.

- 11 -

Proposal 3: Election of One (1) Directors Serving as Audit and Supervisory Committee Members
We request the election of one (1) Director serving as an Audit and Supervisory Committee Member,increasing the number of Directors by one (1) Director serving as an Audit and Supervisory Committee
Member to enhance the audit framework.
The candidate for Director serving as Audit and Supervisory Committee Members are as follows:
Name(Date of birth)

No.

Career summary, positions and areas of responsibility in the Company,
and significant concurrent positions
Nov. 1995

Entered Century Audit Corporation (currently Ernst &Young ShinNihon LLC)

Apr. 1999

Registered as certified public accountant

Oct. 2003

Director of ShinNihon Integrity Assurance
Inc. (currently Ernst & Young Sustainability
Co., Ltd.)

Feb. 2005

Managing Director of ShinNihon Integrity Assurance Inc.
(currently Ernst & Young Sustainability Co., Ltd.)

Jun. 2006

Partner of Ernst & Young ShinNihon LLC

Jul. 2012

Senior Partner of Ernst & Young ShinNihon LLC

Feb. 2016

Senior Managing Director and General Manager of ERM
Division of Ernst & Young ShinNihon LLC

Jun. 2019

Retired from Senior Managing Director of Ernst &Young ShinNihon LLC due to expiration of his term ofofficeJun. 2019

President and Representative Director of
Okubo Associates Inc. (present position)

Jun. 2019

Outside Audit & Supervisory Board Memberof SEGA SAMMY HOLDINGS INC.
(present position)

Jun. 2019

Outside Director of Sun Frontier FudousanCo., Ltd. (present position)

Aug. 2019

Project Professor of Graduate School of Media andGovernance of Keio University (present position)

Sep. 2019

Outside Audit & Supervisory Board Memberof BrainPad Inc. (present position)

Dec. 2019

Outside Director of LIFULL Co., Ltd. (present position)

Feb. 2020

Outside Director of Sala Corporation(present position)

Jun. 2020

Outside Director of The Shoko Chukin Bank，Ltd.
(scheduled to assume the position)

Kazutaka Okubo(March 22, 1973)1

New appointment

Number of theCompany’s
shares held

0

Reasons for nomination as a candidate for Director
Mr. Kazutaka Okubo has extensive financial and accounting knowledge
gained from his audit experience as a certified public accountant. He is alsofamiliar with governance and finance and has an abundance of insight andexperience in the fields of compliance and CSR, having served particularly
as a member on various expert panels in the public sector. The Company
believes that he is capable of performing the functions of supervision andaudit drawing on such extensive experience and his high level of specialized
knowledge, and requests his election as Outside Director.
Notes:
1.
2.

There is no special interests between the Company and the candidate.
Should Mr. Kazutaka Okubo’s election be approved, the Company, with respect to liability under Article 423, paragraph 1- 12 -

3.

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.
Mr. Kazutaka Okubo is a candidate for independent officer with the Tokyo Stock Exchange and the Nagoya Stock
Exchange, pursuant to the guidelines thereof.

- 13 -

(Reference) Composition of the Board of Directors [Scheduled to be effective on June 30, 2020]
The abilities of the Directors of the Company are listed below.

Directors

Areas in charge

HiroshiOtsukaCorporate
management

Manufacturing
andengineering
R&D●

Takayuki
MiyataPT & Engineering●

TraceySivillFinancial affairs●

Goro
KaminoOutsideDirector●

Hari N.
Nair

OutsideDirector●

KeisukeTomimatsu

OutsideDirector

YoshieMunakata

OutsideDirector

Sales andmarketing

Advanced
technology
and IT

Financialaffairs andfinancing

●

●

●

●

●

●

●

YoshinoriMoritaOutsideDirector

Audit and Supervisory
Committee Member

MakikoYamamoto

OutsideDirector

Audit and Supervisory
Committee Member

Kazutaka
Okubo

OutsideDirector(NEW)

Audit and Supervisory
Committee Member

●

●

●

●

●

●

●

●

●

●

●

●

Audit and Supervisory
Committee Member

Michi
Miyasawa

Globalexperience

●

●

●

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 three years.
2. They shall not come under any of the following categories currently, or within the past three 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 audit
corporations (or tax accountant corporations) that are Financial Auditors to the Group, or partners, orothers who are directly in charge of the Company in terms of being 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 partners, etc. of specialist advisory firms, such as legal firms, that consider theGroup a major business partner, but do not belong to categories 8) or 9) above, who are directly in chargeof the Company 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
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 2% or more of annual consolidated net sales of the Company
were paid on average in the past three fiscal years
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, 2019 to March 31, 2020)
1. Overview of the Group(1) Business results for the fiscal year ended March 31, 2020
1) Progress and results of business
During the fiscal year ended March 31, 2020, the global economy slowed drastically in the fourth
quarter as ramifications of COVID-19 spread worldwide, in addition to negative effects ofdevelopments such as those involving trade friction between the United States and China. In theautomobile industry as well, demand was sluggish largely due to diminishing consumer sentimentglobally as production volume headed lower due to the COVID-19.
Amid these circumstances, the Group made efforts to further strengthen our existing businesses,
develop cutting-edge technology, and open up new businesses during the fiscal year under review.
On the businesses front, ASADAKATAN CHUTETSUSHO Co., Ltd., acquired in 2018, wasrenamed Musashi Casting Co., Ltd. We worked to further improve acceptance of the Musashi brandand to strengthen integration which entailed unifying the brand by prefixing names of Group
companies with the “Musashi” name. Furthermore we will persist with efforts that involved further
improving product development capabilities and enhancing the production system. In the Indian
market which is poised for growth, we launched operations of a new factory located in the Industrial
Growth Center in Bawal, India.
In terms of R&D, we have been making progress in researching and developing our proprietary
gear reducer units essential for electronic applications with respect to hybrid vehicles, electricautomobiles, and electric two-wheeled vehicles.
We have also been working toward employing optimal specifications and shortening development
timeframes by fully drawing on simulations featuring the latest in computer design support.
On the sales front, we generated strong orders for items such as our main product of differentials,
high-precision gears that facilitate marketability of electric vehicles which are encountering growing
demand. In the motorcycle business, where we have the global top share for transmission
components, we generated steadily increasing orders from overseas manufacturers, particularly thosein developing countries.
In the above environment, the Company’s results for the fiscal year under review were affected bya downturn in sales such that consolidated net sales decreased by 7.6% year on year to 236,355
million yen over the twelve months of the fiscal year. On the profit front, operating profit was down
48.4% year on year to 7,285 million yen.
Meanwhile, ordinary profit fell 51.9% year on year to 7,113 million yen, and loss attributable toowners of parent amounted to 6,902 million yen, in comparison with a profit of 9,885 million yen in
the previous fiscal year, due to factors such as recognition of impairment loss with respect to our
European subsidiaries.

- 16 -

2) Segment Overview
Net sales in Japan rose 4.8% year on year to 35,316 million yen, and segment profit rose 2.2%
year on year to 2,793 million yen. In the United States, net sales increased 0.0% year on year to55,924 million yen, but segment profit fell 12.7% year on year to 1,761 million yen due to changes
in model mix. In Asia, net sales declined 5.0% year on year to 61,678 million yen, and segment
profit fell 23.1% to 4,309 million yen as a result of sluggish demand in India. In China, net sales
were 22,003 million yen, down 6.8% year on year due to effects of the COVID-19, while theepidemic combined with effects of a downturn in exports to North America caused a 44.0% decrease
in segment profit to 1,732 million yen. In Europe, net sales were 61,433 million yen, down 21.0%
year on year, and segment loss amounted to 3,603 million yen, in comparison with a segment profitof 315 million yen in the previous fiscal year, due to sluggish demand with respect to passenger andcommercial vehicles.
3) Group sales by product(Unit: million yen)Item

The 92nd fiscal
year ended
March 31, 2019

The 93rd fiscal
year ended
March 31, 2020

Increase / Decrease

AmountComposition
ratio
(%)

AmountComposition
ratio
(%)

PT Business

171,13666.9

158,970

67.2△12,166△7.1

L&S Business

19,248

7.5

17,871

7.6△1,377△7,2

Motorcycle
Business

65,54925.6

59,51425.2△6,035

△9,2

Total

255,934

100.0

236,355

100.0△19,578

△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 17,368
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
It is expected that global economy will be significantly slowed down by the novel coronavirus
disease, and that it will take considerable time for it to recover. The automobile industry is facing amajor wave of revolution, with the technological innovations such as EVs (electric vehicles),autonomous driving, and connected technology developing at an accelerated pace. Even in suchcircumstances, the Group seeks to achieve sustainable global growth, and to contribute to the resolutionof social issues through new technologies, as promoted by the initiatives below.
1) Build a streamlined and solid corporate structure
In anticipation of the slowdown in the global automobile market, we will work to build a streamlined
and solid corporate structure that can generate profits even with declining sales. Specifically, we will
promote total cost reduction by thoroughly reviewing costs, improving efficiency of investment by
utilizing technological capabilities, as well as improvement activities around the world. Especially in
the European region, we will increase the utilization rate by consolidating production and rebuilding
the production system in order to improve profitability, which is one of the issues to be handled.
2) Develop new products compatible with the era of EVs
With the increasing number of EVs, the power transmission parts, suspension parts, etc. that we
supply are required to be smaller, lighter, and more accurate than ever before. By utilizing thetechnologies we have developed so far, we will focus on expanding our business for original small andlightweight differential assemblies and high-precision gears for speed reducers. Despite the difficult
business environment, we will accelerate the development of original speed reducer units for EVs.
3) Creation of new business that contributes to solving social issues
We aim to contribute to solving social issues through business activity, innovating through the fusionof manufacturing techniques and advanced technologies. We will work to create new business thattranscends existing business frameworks, such as AI-based solution services for the manufacturingindustry, smart mobility-related businesses in collaboration with overseas start-up companies, flexible
power supply, and energy solution businesses that contribute to optimization of power use, etc.
4) Improve operational efficiency by making full use of our global platforms
By making full use of the shared platforms that we have been rolling out at global sites, we candramatically improve operational efficiency. We aim to maximize results through new work styles
compatible with technological advances, such as the introduction of remote work and virtual technicalsupport.
5) Carry out initiatives for sustainability that can be trusted by society
We will continue to treat initiatives for sustainability efforts as some of the most important corporate
issues, and by contributing to achieving SDGs* through business activity aimed at solving social
issues and harmony with local communities, we aim to become a corporate group that is trusted bystakeholders 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 92nd fiscal
The 93th fiscal
year ended
year ended
March 31, 2019
March 31, 2020

The 90th fiscal
year ended
March 31, 2017

The 91st fiscal
year ended
March 31, 2018

Net sales

180,522

237,910

255,934

236,355

Operating income

11,166

15,767

14,107

7,285

Ordinary income

10,323

15,92914,791

7,113

Profit or loss(△)
attributable to owners ofparent6,315

10,351

9,885△6,902Item

Earnings or loss per share¥

101.24¥165.85¥155.55¥△105.95

Total assets

248,482

247,778

244,450

207,333

Net assets

88,312

100,350

108,333

82,511(Note 1) Net sales, operating income, ordinary income, profit or loss (△) 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 90th and 91st fiscal terms, we havecalculated earnings or loss per share for each on the basis that the share split had been carried out.

(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
Manufacturing and sales businessesof AI Inspection machine andSDV

Kyushu Musashi Seimitsu Co., Ltd.

JPY

100

100.0

Musashi Casting Co., Ltd..

JPY

45

100.0

Musashi AI Ltd.

JPY

4.5

51.0

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

109

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

19

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, 2020)
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, 2020)
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, 2020)
1) Employees of the Group
Change from previous
fiscal year-end

Number of employees
12,853(3,260)△137 (△589)

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
1,138(218)△3(44)

Average age

Average years of service

39.9 years old

15.5 Years

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, 2020)
Balance of borrowings(million yen)

LenderThe Bank of Mitsubishi UFJ, Ltd.

27,189Sumitomo Mitsui Banking Corporation

22,913

Mizuho Bank, Ltd.

20,611Development Bank of Japan

3,433

Sumitomo Mitsui Trust Bank, Limited

3,000

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, 2020)
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
65,184,001
3,099
Number of shares(thousand shares)

Shareholder name

Ownership ratio(%)

Honda Motor Co., Ltd.

16,364

25.1

Japan Trustee Services Bank, Ltd. (Trust Account)

3,968

6.0

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

3,321

5.0

JPMorgan Chase Bank, 385632

2,675

4.1

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

2,664

4.0

Joint Stock Company Otsuka Holdings

2,603

3.9

Hiroshi Otsuka

1,449

2.2

JPMorgan Bank Luxembourg S.A. 380578

1,391

2.1

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

1,217

1.8

Juniper

1,038

1.5

Notes:

1.
2.

Shares less than one thousand have been truncated.
Ownership ratio is calculated excluding treasury shares (17,470shares).

(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, 2020)
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 and South 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
and Group CEO
Chairman and Representative Director of Sala Energy Co.,Ltd.

Director (Full-time
Audit and Supervisory
Michi Miyazawa
Committee Member)
Director (Audit andSupervisory Committee Yoshinori Morita
Member)Director (Audit andSupervisory Committee Makiko Yamamoto
Attorney at law
Member)Notes:
1. Directors Goro Kamino, Hari N. Nair, Keisuke Tomimatsu, Yoshie Munakata and Directors (Audit and Supervisory
Committee Members) Yoshinori Morita and Makiko Yamamoto are Outside Directors.
2. Director (Audit and Supervisory Committee Member) Makiko Yamamoto 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 Ms. Michi Miyazawa 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. Makiko Yamamoto 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 (Audit and Supervisory Committee Member) Nobuyoshi Sakakibara and Asako
Yamamoto expired as of the conclusion of the 92nd Annual Meeting of Shareholders held on June 21, 2019.

- 24 -

(Ref.) The Company has adopted the executive officer system. The executive officers as of April 1, 2020 are as follows.
Areas of responsibility in the Company
Position
Nameand significant concurrent position
President and Executive
Hiroshi Otsuka
CEO
Officer
CTO (Chief Technical Officer)
Senior Managing
CEO of Europe Region
Takayuki Miyata
Executive Officer
President and Director of Musashi Holdings Europe GmbH
President and Director of Musashi Europe GmbH
CBO-L&S (Chief Business unit Officer -L&S)
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 (Chief Financial Officer)
Tracey Sivill
Officer
In charge of Global IT strategy
Managing Executive
Koji Horibe
CQO (Chief Quality Officer)
OfficerManaging Executive
Nobuo Takemasa
CRO (Chief R&D Officer)
OfficerManaging Executive
Takeshi Isaku
CIO (Chief Innovation Officer)
OfficerManaging Executive
CEO of Japan region
Kenji Morisaki
Officer
Chief Risk Management Officer
Senior Executive
Takashi Soda
CPO (Chief Purchasing Officer)
Officer
Senior Executive
CEO of China region
Toshihisa Otsuka
OfficerMusashi Seimitsu Investment (Zhongshan) Co., Ltd. CFO
Deputy CBO-MC (Deputy Chief Business unit Officer –MC)
Executive Officer
Tetsunobu Kawai
Managing Director of Kyushu Musashi Seimitsu Co ., Ltd
Executive Officer

Tetsuro Toyama

Deputy CBO-L&S(Deputy Chief Business unit Officer -L&S)

Executive Officer

Hideaki Asakura

CBO-MC (Chief Business unit Officer –MC)CEO of Asia region
President and Director of Musashi Auto Parts India Pvt. Ltd.
and Musashi Asia Co., Ltd.

Executive Officer

Yasunori Amano

CSO (Chief Sales Officer)

Executive Officer

Tatsuya Yanagisawa

Deputy CRO (Deputy Chief R&D Officer)

Executive Officer

Masaru Maeda

CHO (Chief Human resource and IT Officer)
In charge of Corporate Planning
Compliance Officer

Executive Officer

Hideaki Imoto

CBO-PT (Chief Business unit Officer –PT)

Executive Officer

Shinichi Takahashi

Deputy CFO (Deputy Chief Financial Officer)
CFO of Japan region- 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)

8163(Outside Director of the above)

(4)

(35)

Directors (Audit and Supervisory Committee Members)

531(Outside Director of the above)

(3)

(16)

Total

13

194

(Outside Officers of the above)

(7)

(51)

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 Group CEO and as Representative Director and Chairman of Chubu Gas Co., Ltd.
and Gastec Service, Inc. (currently Sala Energy Co., Ltd). The Company has fuel purchasingtransactions etc. with Chubu Gas Co., Ltd and Gastec Service, Inc. (currently Sala Energy Co.,
Ltd). 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 relationship between the Company
and Sala Corporation.
* Mr. Keisuke Tomimatsu, Director, had been a Director of ABEJA, Inc., but retired from serving as
Director of ABEJA at the end of June 2019. The Company has consigned consulting operations
and other services to ABEJA, Inc. Moreover, the annual transaction amount relating thereto
accounted more than 1% of ABEJA Inc.’s net sales. Accordingly, he is not designated as anindependent officer because of past conflict with the Company’s criteria for independence.
However, as the transactions with ABEJA, Inc. account for less than 1% of the consolidated net
sales of the Company, and have accounted for a small proportion of ABEJA, Inc.’s net sales as oflate, 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.

- 26 -

B. Main activities during the fiscal year under review* Mr. Goro Kamino, Director, attended 9 out of the 9 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 9 out of the 9 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 9 out of the 9 Board of Directors Meetings held during
the fiscal year under review and has utilized his abundant experience of the securities industry andhis wide-ranging knowledge of the economy to actively contribute as required to the deliberationof resolutions by the Board of Directors.
* Mr. Yoshie Munakata, Director, attended 9 out of the 9 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 deliberationof resolutions by the Board of Directors.
* Mr. Yoshinori Morita, Director (Audit and Supervisory Committee Member) attended 9 out of the 9
Board of Directors Meetings held during the fiscal year under review and has utilized his abundant
experience and deep insights cultivated over many years to put appropriate questions and offer
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.
* Since taking up the role of Director(Audit and Supervisory Committee Member) on June 21, 2019,
Ms. Makiko Yamamoto, Director (Audit and Supervisory Committee Member) attended 7 of the 7
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, since
taking up the role of Director (Audit and Supervisory Committee Member) on June 21, 2019, she
attended 7 of the 8 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.

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

57.0

Total economic benefits, including money, that should be paid to the Financial
57.0
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 centered on the Chief Officer system for monitoring the global execution ofduties by the Board of Directors.
* Make rapid and optimal business decisions and carry out operations efficiently and effectively withrespect to regional business and execution functions, tailoring response to suit each region andworkplace.
* 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 to- 29 -

contribute to the formation of an efficient and effective audit framework and deepen collaboration
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 madereports.
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.
* The Company has implemented compliance training for all employees based on the “Our
Compliance” code of conduct, and seeks to further enhance corporate ethics.
* 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 2019, the Company implemented confidentiality management training for all employees,
reaffirmed its confidentiality management regulations, and otherwise took steps to heighten
awareness of confidentiality management.
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 2019, the Company systematically implemented measures to prevent damage caused bytyphoons and heavy rains. The Company also took action with respect to the COVID-19 epidemic
by establishing a system for crisis management during emergencies, centered on the risk
management officer, and has accordingly been gathering information on business continuity risks
and implementing measures to prevent the spread of infection to employees.
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 businessplan, 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.

- 31 -

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
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, 2020)(Unit: million yen)Account title

AmountAccount title

AmountAssets207,333

Liabilities

124,821

Current assets

89,07587,800Work in process

7,054

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

18,843

Accounts payable – other

8,424

Others9,401

Income taxes payable

1,247

Allowance for doubtful accounts△78

Provision for bonuses

2,230

Cash and bank deposits

20,665

Notes and accounts receivable – trade25,370

Merchandise and finished goods

7,817

15,18931,803
19,345
3,002

118,258

Provision for directors’ bonuses

42

Property, plant and equipment

98,219Provision for product warranties

1,144

Buildings and structures

22,167

Others5,369Machinery, equipment and vehicles

52,659Non-current liabilities

37,021Tools, furniture and fixtures

3,949

Long-term loans payable

27,958

Land

6,994

2,285

Construction in progress

12,449Deferred tax liabilities
Liabilities on employees’
retirement benefits
OthersNon-current assets

Intangible assets

7,423

Goodwill

972

5,169
1,607

Customer relationship assets

2,948

Net assets

82,511

Software

1,560

Shareholders’ equity

89,317

Capital stock

5,361

Software in progress

33
1,908

Capital surplus

4,340

Investments and other assets

12,614Retained earnings

79,624

Investment securities

6,203

Investments in capital667

Long-term loans receivable

993

OthersDeferred tax assets

2,189

Others2,604

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
207,333 Total liabilities and net assets
Note: Figures are presented with amounts less than one million yen truncated.

- 33 -△8△17,882
1,437△19,314△6
11,076207,333

Consolidated Statement of Income(April 1, 2019 - March 31, 2020)(Unit: million yen)Account title

AmountNet sales

236,355

Cost of sales

203,665

Gross profit

32,690

Selling, general and administrative expenses

25,405

Operating income

7,285

Non-operating income

1,621Interest income

596

Dividend income

425

Others598

Non-operating expenses

1,792Interest expenses

743

Foreign exchange losses

629

Others419

Ordinary income

7,113

Extraordinary income

77

Gain on sales of non-current assets

77
17,052Extraordinary losses
Loss on sales of non-current assets

17

Loss on retirement of non-current assets

130

Impairment loss

13,762

Loss on litigation

3,142△9,861

Loss before income taxes
Income taxes – current

3,883

Income taxes – deferred△3,065Loss△10,679

Loss attributable to non-controlling interests△3,776

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

- 34 -△6,902

Consolidated Statement of Changes in Net Assets(April 1, 2019 - March 31, 2020)(Unit: million yen)
Shareholders’ equity

Balance at April 1, 2019

Capital stock

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity

5,326

4,305

89,261△8

98,88435

35

Changes of items during
periodDividends of surplus△2,73570△2,735

Loss 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△6,902△6,902

Share issuance

Balance at March 31, 2020

△0
2

△0
2

35

35

△9,636△0△9,566

5,361

4,340

79,624△8

89,317

Accumulated other comprehensive income

Balance at April 1, 2019
Changes of items during
periodValuationdifference
on availablefor-salesecurities

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plan

Total
accumulated
othercomprehensive
income2,026△9,593

192△7,374Non-controllinginterests

Total net assets

16,823

108,33370△2,735

Share issuance
Dividends of surplus
Loss 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
periodBalance at March 31, 2020

△6,902△0
2△588△9,720△198△10,507△5,747△16,255△588△9,720△198△10,507△5,747△25,822

1,437△19,314△6△17,882

11,07682,511

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:
33ii) Names of consolidated subsidiaries:
Kyushu Musashi Seimitsu Co., Ltd.
Musashi Casting Co., Ltd..
Musashi AI 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
Musashi AI Ltd. was included in the scope of consolidation during the fiscal year ended March 31, 2020
because of increased materiality of Musashi AI Ltd.

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 applied- 36 -

i) Names of principal companies, etc.:
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 23 consolidated subsidiaries of the Company is December 31. These
23 companies carry out settlement by provisional settlement on the consolidated settlement date.
For Musashi Holdings Europe GmbH, a consolidated subsidiary, and its subsidiaries whose accountclosing date is December 31, previously, financial statements as of the foregoing date were used andmaterial transactions occurring during the period from the said date to the consolidated account closing
date were 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, 2020. Accordingly,
profit or loss of these consolidated subsidiaries in the period between January 1, 2019 to March 31,
2019, was each adjusted as increase or decrease in retained earnings.
(4) Change in accounting policies
Overseas consolidated subsidiaries except for that in the United States have applied IFRS 16“Leases” from the fiscal year ended March 31, 2020. Accordingly, a lessee in a lease records all leases
as assets and liabilities in principle. In the application of IFRS 16, the Group has used the method
where the cumulative effect of applying this accounting standard is recognized at the date of initial
application, which is permitted as a transitional measure. The impact of this change on consolidated
financial statements is immaterial.
(5) Change in presentation“Insurance income” of “Non-operating income,” which was posted independently in the previous fiscal
year, has been included in “Other” from the current fiscal year, because the amount has become lessimportant. The amount of “Insurance income” included in “Other” under “Non-operating income” for thecurrent fiscal year was 22 million yen..
(6) Matters regarding accounting policies
1) Valuation basis and method for significant assetsi) Securities
A. Shares of subsidiaries
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 method- 37 -

iii) 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).
iv)

Leased assets
Leased assets related to ownership transfer finance lease transactions
We use the same depreciation method applied to our own non-current 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.

v)

Right-of-use assets
Depreciation is calculated over the shorter of the lease term and the asset’s useful life as the usefullife with no 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.
3. Additional information(Accounting estimates due to the growing spread of infections of the novel coronavirus disease (COVID-19))
Due to the growing global spread of infections of COVID-19, each country has seen a slowdown ineconomic activities and been slipping into severe recession. Because automakers, which are major
customers, made operational adjustments due to sluggish demand for new cars, the Group’s net sales of
products have decreased. Since it is difficult to predict future spread of infections of COVID-19, timing ofreturning to normal, etc., the Group made accounting estimates, including judgment on whether or not an
impairment loss on non-current assets needs to be recognized, based on a certain assumption that impact of
the infectious disease will last over a certain period of time in the fiscal year ending March 31, 2021, taking
into account information from outside sources.

- 40 -

4. Notes to the consolidated balance sheet(1) Amount of accumulated depreciation for property, plant and equipment
181,413 million yen
5. Notes to the consolidated statement of income(1) Impairment loss in extraordinary losses
Location

Use
Other

Musashi Europe GmbHBusiness assets

Type
Goodwill
Customer relationship assets
Machinery and equipment

Amount13,731 million yen
31 million yen

The Group groups assets for the smallest cash-generating unit that independently generates cash flow.
With regard to Musashi Europe GmbH, a consolidated subsidiary, as a result of reviewing future prospects
on the car market environment in Europe and the world under the current situation, the total estimated amountof cash flows in the initially assumed period is expected to decline. Consequently, the book value of the asset
groups was reduced to their recoverable value.
While the recoverable amount of the asset group was measured in terms of its value in use, its future cash
flows were computed by discounting them by 7.2%.
(2) Loss on litigation
The Group has been investigated by overseas authorities on suspicion of violation of the competition law incertain past transactions acted earlier the Company acquired the subsidiary and has provided all-out
cooperation on the investigations. With the progress in the investigations, the Company estimated the amountof losses expected to be incurred in the future in light of current information and advice from experts.

- 41 -

6. 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, 2019

Increase

65,135Decrease
49

March 31, 2020–

65,184(Note) The breakdown of the increase in the number of common shares is as follows:- Increase due to the insurance of new shares as share-based remuneration with transfer restrictions: 49 thousand shares(2) Matters concerning number of treasury shares
Types of shares
Common shares

April 1, 201916,152(shares)

Increase

Decrease
1,318March 31, 2020–

17,470(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: 40 shares- Increase due to the lapse of rights to share-based remuneration with transfer restrictions: 1,278 shares(3) Matters concerning dividends of surplus
1) Paid amount of dividendsi) Matters concerning dividends resolved at the 92nd Annual Meeting of Shareholders held on June 21,
2019* Total dividends
1,367 million yen* Dividends per share
21 yen* Record date
March 31, 2019
* Effective dateJune 24, 2019ii) Matters concerning dividends resolved at the Board of Directors Meeting held on November 6, 2019
* Total dividends
1,368 million yen* Dividends per share
21 yen* Record date
September 30, 2019
* Effective dateNovember 29, 20192) 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 93rd Annual Meeting of Shareholders to be held on June 30,
2020* Total dividends
684 million yen* Dividends per share
10.5 yen* Record date
March 31, 2020
* Effective dateJuly 1, 2020
* Source of dividends
Retained earnings- 42 -

7. 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 demandaccording to internal rules.
(2) Matters concerning fair values, etc. of financial instruments
Amounts on the consolidated balance sheet, fair values and their differences at March 31, 2020 are as
follows.
(Unit: million yen)
Consolidatedbalance sheet
amountFair value

Difference(1) Cash and bank deposits

20,665

20,665–(2) Notes and accounts receivable – trade25,37025,370–(3) Investment securities

3,645

3,645

–

49,68049,680–(4) Notes and accounts payable – trade

15,18915,189－(5) Short-term loans payable

31,80331,803－(6) Accounts payable – other

3,002

3,002

－

(7) Accrued expenses

8,424

8,424

－

(8) Income taxes payable

1,247

1,247

－

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

47,304

48,375

1,070

Total liabilities

106,972

108,0421,070(10) Derivative transactions (*2)

△496

△496

－

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 (2,558 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.

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

1,096.20 yen
105.95yen

9. Notes concerning significant subsequent events(Business combination through acquisition)
On January 27, 2020, the Company entered into a share transfer contract with JSR Corporation to acquire 80% of
issued shares of JM Energy Corporation and make this company a subsidiary of the Company, and acquired all theshares as of April 1, 2020.
(1) Overview of business combination
1) Name of the acquired entity and description of its business
Name of acquired entity: JM Energy Corporation
Description of the business: Development, manufacturing and sale of lithium ion capacitors
2) Main reason for the business combination
The Company conducted the business combination for the purpose of acquiring sophisticated development
technologies, production technologies and production infrastructure for lithium ion capacitors, which are expected to
grow in the near future, and developing energy solution business that can respond to diverse needs in electrified
society, including products for high-value-added electric mobility.
3) Date of the business combination
April 1, 2020
4) Legal form of the business combination
Acquisition of shares5) Name of the entity after the combination
JM Energy Corporation
6) Percentage of voting rights acquired
80%7) Main grounds for determining the acquiring entity
The basis is that the Company acquired shares in exchange for cash.
(2) Breakdown of acquisition cost of the acquired entity and consideration by type
As we are obligated to confidentiality pursuant to the stock transfer agreement, we will not disclose thisinformation.
(3) Content and amount of major acquisition-related expenses
Advisory expenses, etc. 24 million yen(4) Amount, cause, amortization method and amortization period of goodwill incurred
They have not been determined at present.
(5) Amounts of assets acquired and liabilities assumed at the date of business combination and their main components
They have not been determined at present.

- 44 -

Non-consolidated Balance Sheet(As of March 31, 2020)(Unit: million yen)Account title
AssetsCurrent assets
Cash and bank deposits

AmountAccount title

Amount104,250
16,35621
10,06369,73048,68542

Raw materials and supplies

1,695
1,521
822

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
Others

362
837
1,032
87,893
10,531
2,599
168
4,720
24
515
2,490
12
625
584
33
7

Liabilities
Current liabilities
Notes payable – trade
Electronically recorded obligations –operatingAccounts payable – trade
Short-term loans payable
Current portion of long-term loans
payableLease obligations
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

Investments and other assets
Investment securities

76,736
1,627
50,813

Net assets
Shareholders’ equity
Capital stock

Accounts receivable – tradeFinished goods
Work in process

Shares of subsidiaries and associates
Investments in capital
Long-term loans
Long-term loans receivable fromsubsidiaries and associates
Investments in capital ofsubsidiaries and associates
Long-term prepaid expenses
Deferred tax asset

620
876
2,986
19,237

15,319
49
629
1,962
585
117
1,035
32
55
250
51
21,045
20,39565451
71
62
34,51933,142
5,361
5,102
5,102

Retained earnings

22,688Other retained earnings
General reserve
Retained earnings brought
OthersforwardAllowance for doubtful accounts
Treasury shares△36
Valuation and translation adjustments
Valuation difference on available-forsale securities
104,250
Total assets
Total liabilities and net assets
Note: Figures are presented with amounts less than one million yen truncated.

- 45 -

3,841
20,375

Capital surplus
Legal capital surplus

Legal retained earnings

67
499
45

4,336

306
22,381
23,500△1,118
△8
1,377
1,377
104,250

Non-consolidated Statement of Income(April 1, 2019 - March 31, 2020)(Unit: million yen)Account title

AmountNet sales

56,052

Cost of sales

45,127
10,924Gross profit

7,992

Selling, general and administrative expenses

2,932

Operating income
Non-operating income

6,256Interest income

6
5,814

Dividend income

386

Guarantee commission received

49

OthersNon-operating expenses

355

Interest expenses

102

Foreign exchange losses

104

Others

148
8,833

Ordinary income

3

Extraordinary income

3

Gain on sales of non-current assets

16,667Extraordinary loss

4

Loss on retirement of non-current assets
Loss on valuation of shares of subsidiaries and associates

16,662△7,830Loss before income taxes
Income taxes – current

1,626

Income taxes – deferred

△224

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

- 46 -△9,232

Non-consolidated Statement of Changes in Net Assets(April 1, 2019 - March 31, 2020)(Unit: million yen)
Shareholders’ equity

Balance at April 1, 2019

Capitalstock

CapitalsurplusLegalcapitalsurplusLegalretainedearnings

Otherretainedearnings

Total
retainedearnings

5,326

5,067

306

34,34934,65635

35

Retained earnings
TreasurysharesTotalshareholders’equity△845,041

Changes of items during period
Share issuance70

Dividends of surplus△2,735△2,735Loss△9,232△9,232△2,735△9,232

Purchase of treasury shares△0△0

Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance at March 31, 2020

35

35

－

△11,968△11,968△0△11,898

5,361

5,102

306

22,381

22,688△8

33,142

Valuation and translation adjustments

Balance at April 1, 2019

Valuation difference on
available-for-sale securities

Total valuation andtranslation adjustments

1,929

1,929

Total net assets

46,970Changes of items during period

70

Share issuance
Dividends of surplus△2,735Loss△9,232△0Purchase of treasury shares
Net changes of items other thanshareholders’ equity

△552

△552

△552

Total changes of items during period

△552

△552

△12,450

1,377

34,519Balance at March 31, 2020
1,377
Note: Figures are presented with amounts less than one million yen truncated.

- 47 -

*Other retained earnings(Unit: million yen)
General reserve
Balance at April 1, 2019
Change in the fiscal year
Dividends of surplus

23,500Retained earnings
brought forward

10,849Total

34,349△2,735△2,735△9,232△9,232
Total changes of items during period－△11,968△11,968
Balance at March 31, 2020
23,50022,381△1,118
Note: Figures are presented with amounts less than one million yen truncated.
Loss- 48 -

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.

- 49 -

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.

- 50 -

(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. Additional information(Accounting estimates due to the growing spread of infections of COVID-19)
Due to the growing global spread of infections of COVID-19, each country has seen a slowdown ineconomic activities and been slipping into severe recession.
Because automakers, which are major customers, made operational adjustments due to sluggish
demand for new cars, the Group’s net sales of products have decreased.
Since it is difficult to predict future spread of infections of COVID-19, timing of returning to normal,
etc., the Group made accounting estimates, including judgment on whether or not an impairment loss
on non-current assets needs to be recognized, based on a certain assumption that impact of theinfectious disease will last over a certain period of time in the fiscal year ending March 31, 2021,
taking into account information from outside sources.
4. Notes to the non-consolidated balance sheet(1) Claims and obligations with respect to subsidiaries and associates
Short-term cash credit
Short-term cash debt
Long-term cash debt

9,215 million yen
3,766 million yen
6,000 million yen(2) Amount of accumulated depreciation for property, plant and equipment
39,869 million 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

17,108Musashi Auto Parts (Tianjin) Co., Ltd.

4,006

Musashi Auto Parts Michigan Inc.

1,958

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

2,448

Musashi Auto Parts India Pvt. Ltd.

78

Musashi da Amazonia Ltda.

26

Total

25,627

5. Notes to the non-consolidated statement of income
Transactions with subsidiaries and associates
Net sales
Purchases
Transactions other than operational transactions- 51 -

44,999 million yen
15,423 million yen
6,237 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, 201916,152

Increase

Decrease
1,318March 31, 2020–

17,470(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: 40 shares- Increase due to the lapse of rights to share-based remuneration with transfer restrictions: 1,278 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
52
Payable for enterprise tax refund
309
Provision for bonuses
9
Provision for directors' bonuses
48
Accrued social security premiums
324
Loss on evaluation of inventories
241
Credit for foreign tax
165
Over depreciation
134
Provision for retirement benefits
21
Directors’ retirement benefits payable
42
Loss on valuation of investment securities
6,149
Loss on sales of shares of subsidiaries and associates
10
Allowance for doubtful accounts
28
Shares of subsidiaries acquisition costs
89
Others7,629
Subtotal deferred tax assets△6,540
Valuation allowance
1,088
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
OthersTotal deferred tax liabilities
Net deferred tax assets (liabilities)- 52 -

△588
△0
△588
499

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

Company
nameOwnership
percentage ofvoting rights(%)

RelationshipTransaction
details

Transaction
amounts(million yen)Account
item(Note 2)

Fiscal yearend balance(million yen)
(Note 2)

Sale of the
Accounts
Sales of
Other
Honda Motor
25.1 Company’s
2,179
19,420 receivable –products
affiliateCo., Ltd.
(Note 1)
products
trade
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.
Consumption taxes are excluded from transaction amounts, but included in balances at fiscal year-end.

(2) Subsidiaries
Category

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

Transaction
details

Transaction
amounts(million yen)Account
item(Note 4)

Product
purchasing(Note 4)

8,230

Accounts
payable –
trade

1,794

1,958

–

－

2,448

(Note 1)

Underwriting ofdebt guarantees

Fiscal yearend balance(million yen)

(Note 2)

SubsidiaryMusashi Auto
Parts Canada
Inc.

CapitalLending and100.0
secondment ofofficers

Receipt ofinterest (Note3)0Long-term
loans
receivable
fromsubsidiaries
andassociates

SubsidiaryMusashi Auto
Parts Co., Ltd.

Capitalborrowing and82.3
secondment ofofficers

Payment ofinterest (Note3)–Long-term
loans
payable6,000

SubsidiaryMusashi
Hungary
Manufacturing, Ltd.

Capitalborrowing and100.0
secondment ofofficers

Payment ofinterest (Note3)8Current
portion of
long-term
loans
payable1,357

SubsidiaryMusashi Auto
Parts
(Zhongshan)Co., LtdSale of theCompany’s
100.0 products andsecondment ofofficers

Sales ofproducts (Note
1)

4,644

Accounts
receivable –
trade

1,064

Sales ofproducts (Note
1)

5,174

Accounts
receivable –
trade

1,240

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

Sale of theCompany’s
products
Debt
100.0
guarantees
andsecondment ofofficers

Underwriting ofdebt guarantees(Note 2)

2,448

Subsidiary- 53 -

Category

Subsidiary

Subsidiary

Company
nameOwnership
percentage ofvoting rights(%)

MusashiEurope GmbHMusashi Auto
Parts (Tianjin)
Co., Ltd.

RelationshipDebt
guarantees
75.0 andsecondment ofofficers

Indirect Debt
75.0 guarantees
andsecondment ofofficers

Transaction
details

Transaction
amounts(million yen)Account
item(Note 4)

Underwriting ofdebt guarantees(Note 2)

17,108

Guarantee
commissions
income(Note 2)

386

Underwriting ofdebt guarantees(Note 2)

4,006

Fiscal yearend balance(million yen)
(Note 4)

–

–

–

–

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
account market conditions.
2.
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.
3.
Interest rate in capital lending and borrowing is reasonably determined in consideration of market interest rate.
4.
Consumption taxes are excluded from transaction amounts, but included in balances at fiscal year-end.

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

529.72yen
141.71yen

10. Significant subsequent events
No items to report.

- 54 -

[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
June 3, 2020
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

Audit Opinion
Pursuant to Article 444, paragraph (4) of the Companies Act, we have audited the accompanying consolidated
financial statements, which comprise the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in equity, and the notes to the consolidated financial statements of Musashi
Seimitsu Industry Co., Ltd. (the “Company”) applicable to the fiscal year from April 1, 2019 to March 31,
2020.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position and results of operations of the Group, which consisted of the Company
and its consolidated subsidiaries, applicable to the fiscal year ended March 31, 2020, in accordance withaccounting principles generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Consolidated Financial Statements section of our report. We are independent of the Company and its
subsidiaries in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan; this includes the maintenance andoperation of such internal control as management determines is necessary to enable the preparation and fairpresentation of consolidated financial statements that are free from material misstatement, whether due tofraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements with the assumption of the Group’s ability tocontinue as a going concern and disclosing, as required by accounting principles generally accepted in Japan,
matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the Directors’ performance of duties
within the maintenance and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements- 55 -

Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion on the consolidated financial statements based on our audit from an independent point ofview. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate they could reasonably be expected to influence the decisions of users taken on the basis of theconsolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:* Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks. Selecting audit procedures tobe applied is at the discretion of the auditor. Obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion.
* In making those risk assessments, we consider internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the audit of the consolidated
financial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
* Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates by management and related notes thereto.
* Conclude on the appropriateness of management’s use of the going concern basis for preparing theconsolidated financial statements and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as agoing concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related notes to the consolidated financial statements or, if the notes to the consolidated
financial statements on material uncertainty are inadequate, to express a qualified opinion with exceptions on
the consolidated financial statements. Our conclusions are based on the audit evidence obtained up to the dateof our auditor’s report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
* Evaluate whether the presentation of the consolidated financial statements and the notes thereto are inaccordance with accounting standards generally accepted in Japan, as well as evaluate the overall presentation,
structure and content of the consolidated financial statements, including the related notes thereto, and whether
the consolidated financial statements fairly represent the underlying transactions and accounting events.
* Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the audit of the consolidated financial statements. We remain solely
responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit, and other matters required by auditing standards.
We also provide the Audit and Supervisory Committee with a statement that we have complied with the
ethical requirements in Japan regarding independence that are relevant to our audit of the financial statements,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards in order to eliminate or reduce obstruction factors.
Conflicts of Interest
We or engagement partners have no interest in the Company and its consolidated subsidiaries which should be
disclosed in accordance with the Certified Public Accountants Act.

- 56 -

[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
June 3, 2020
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

Audit Opinion
Pursuant to Article 436, paragraph (2), item (i) of the Companies Act, we have audited the non-consolidated
financial statements, which comprise the non-consolidated balance sheet, the non-consolidated statement ofincome, the non-consolidated statement of changes in equity, the notes to non-consolidated financial
statements and the supplementary schedules (hereinafter referred to as “Financial Statements, etc.”) of
Musashi Seimitsu Industry Co., Ltd. (the “Company”) applicable to the Company’s 93rd fiscal year from
April 1, 2019 to March 31, 2020.
In our opinion, the Financial Statements, etc. referred to above present fairly, in all material respects, thefinancial position and results of operations, applicable to the fiscal year ended March 31, 2020, in accordancewith accounting principles generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Non-consolidated Financial Statements section of our report. We are independent of the Company inaccordance with the ethical requirements that are relevant to our audit of the non-consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
Responsibilities of Management and the Audit and Supervisory Committee for the Non-consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of the Financial Statements, etc. inaccordance with accounting principles generally accepted in Japan; this includes the maintenance andoperation of such internal control as management determines is necessary to enable the preparation and fairpresentation of Financial Statements, etc. that are free from material misstatement, whether due to fraud or
error.
In preparing the Financial Statements, etc., management is responsible for assessing whether it is appropriate
to prepare the Financial Statements, etc. with the assumption of the Group’s ability to continue as a going
concern and disclosing, as required by accounting principles generally accepted in Japan, matters related togoing concern.
The Audit and Supervisory Committee is responsible for overseeing the Directors’ performance of duties
within the maintenance and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-consolidated Financial Statements- 57 -

Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion on the non-consolidated financial statements based on our audit froman independent point of view. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate they could reasonably be expected to influence the decisions of users taken on
the basis of the non-consolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:* Identify and assess the risks of material misstatement of the non-consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks. Selecting audit
procedures to be applied is at the discretion of the auditor. Obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
In making those risk assessments, we consider internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the audit of the Financial
Statements, etc. is not expressing an opinion on the effectiveness of the Group’s internal control.
* Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates by management and related notes thereto.
Conclude on the appropriateness of management’s use of the going concern basis for preparing the Financial
Statements, etc. and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to therelated notes to the non-consolidated financial statements or, if the notes to the non-consolidated financial
statements on material uncertainty are inadequate, to express a qualified opinion with exceptions on the nonconsolidated financial statements. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
* Evaluate whether the presentation of the non-consolidated financial statements and the notes thereto are inaccordance with accounting standards generally accepted in Japan, as well as evaluate the overall presentation,
structure and content of the non-consolidated financial statements, including the related notes thereto, andwhether the non-consolidated financial statements fairly represent the underlying transactions and accounting
events.
We communicate with the Audit and Supervisory Committee regarding the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit, and other matters required by auditing standards.
We also provide the Audit and Supervisory Committee with a statement that we have complied with the
ethical requirements in Japan regarding independence that are relevant to our audit of the financial statements,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards in order to eliminate or reduce obstruction factors.
Conflicts of Interest
We or engagement partners have no interest in the Company which should be disclosed in accordance with theCertified Public Accountants Act.

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[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 93rd fiscal year from April 1, 2019 to March 31, 2020, 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- 59 -

(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.

June 3, 2020
Audit and Supervisory Committee ofMusashi Seimitsu Industry Co., Ltd.
Michi Miyazawa(Seal)

Audit and Supervisory Committee Member (Full-time)

Yoshinori Morita(Seal)

Audit and Supervisory Committee Member

Makiko Yamamoto(Seal)

Audit and Supervisory Committee Member
Notes:

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

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