Message from the President

Regaining the growth pathby realizing our goals under
the JGP2014 new mediumterm management plan

Ikuo Sato
Representative Director & President

Business performance
The growth of the overall global economy slowed down during fiscal 2010 against thebackground of the fiscal and monetary crises in Europe, which led to the stagnation of theEuropean economies and consequent widening ripple effects. Other factors hampering
the global economy included growing inflationary pressures, even in emerging countries,
notably in Asia, which are expected to post good growth on the back of rising domestic
demand, and higher crude oil prices.
Meanwhile, the Japanese economy faced extremely severe conditions early in thereporting term, as a result of the Great East Japan Earthquake of March 11, which sundered
supply chains and forced constraints on the supply of electric power, leading to continued
stagnation in both demand for goods and production activity. The economy was also hurt
by a decline in Japanese firms’ export competitiveness, owing to the ongoing appreciationof the yen on the foreign exchange market. Toward the end of the term, however, theeconomy staged a rally thanks to a partial correction of the exchange rate and the impact ofvarious government stimulation measures.
Amid these conditions, the JSW Group carried out business activities in pursuit of thegoals of its three-year medium-term management plan, which commenced in fiscal 2010.

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These goals are to “become the No.1 global monozukuri (manufacturing) company,” andto “raise our earnings through competitiveness in individual products and by leveraging
our comprehensive strength.” However, as a result of the earthquake and tsunami of March
11, 2011, and the resultant Fukushima Daiichi nuclear disaster, during the reporting period
we were forced to wrestle with difficult and unclear conditions, including a worldwide
reexamination of nuclear power strategies. We took steps to minimize the adverse impactof this situation on our nuclear power-related products, and have positioned efforts toincrease orders for our existing products as a management priority.
As a result of the above, net sales for fiscal 2011 on a consolidated basis increased 4.0%
over the previous year, to ¥221,368 million (US$2,693 million), despite a severe worseningof the external environment, thanks to growth by our Industrial Machinery Products
Business, which offset a decline by our Steel and Energy Products Business.
At the profit level, we had hoped that the growth in sales by the Industrial Machinery
Products Business would compensate for the decline in earnings by the Steel and Energy
Products Business, but the strong performance of the Industrial Machinery Products
Business was insufficient to offset the poor profitably of individual products manufacturedby the Steel and Energy Products Business due to an increase in the proportion of lowprofitability items and a decline in orders received. As a result, operating income fell by
16.1% year on year, to ¥23,911 million (US$290 million), ordinary income dropped
19.9% to ¥23,360 million (US$284 million), and net income was down 23.8% at ¥12,591
million (US$153 million), which includes the effect of a loss on valuation of investments
in securities.
Orders received by the Industrial Machinery Products Business held firm at a highlevel, orders received by the Steel and Energy Products Business were sluggish due tothe government’s reconsideration of its electric power and nuclear energy policies, andrestructuring being undertaken by these industries. We made efforts to acquire orders bythese divisions for products requiring quick delivery as an alternative to our conventional
mainline products, but total orders received were down by 8.1% from the previous year, at¥199,316 million (US$2,425 million).
Regarding the appropriation of profits, the Company remains committed tobolstering its internal reserves in order to fund the capital expenditure and expenditure ontechnological development required to ensure long-term and stable business operations,as well as to strengthen its financial position. At the same time, the Company follows abasic policy of paying stable and sustained dividends to its shareholders. The Company has
decided to pay an annual dividend of ¥10 per share for the fiscal year under review.

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Forecasts for fiscal 2012
Looking ahead, although the risk of a sudden deterioration in the global economy appears
to have receded in the wake of monetary easing measures taken by various governments,
crude oil prices remain high, the European sovereign debt crisis seems to have flaredup again, and the specter of slowdown or even stagnation continues to hover over theemerging economies. In view of these factors, any growth or recovery by the global
economy is likely to be gradual. In Japan, further time is required to dispel deflationarypressure, and the yen is expected likely to remain strong for quite some time to come.
Although investment in post-disaster reconstruction should continue helping to shore up
the economy, little likelihood is seen of economic expansion or a real recovery.
The majority of the JSW Group’s principal products require long production anddelivery times, and therefore orders received in fiscal 2011 will have a major effect on sales
and earnings for the following term (fiscal 2012). In particular, for our Steel and Energy
Products Business, which suffered a sharp decline in orders during the reporting period, themiddle of fiscal 2012 should see a bottoming out for electric power generation (includingnuclear power) products, and we project a recovery in the second half of the term. Themajority of countries around the world, with the exception of Japan, are expected to finalize
their revised electric power and nuclear power policies from the mid-point of fiscal 2012
into the second half of the term, and projects are likely to commence subsequent to this.
We will carefully examine developments in this field and respond appropriately.
With respect to our Industrial Machinery Products Business, sales and earnings
are projected to remain robust, but no firm predictions can be made in view of theunpredictable nature of the Group’s business environment. We plan to focus our efforts
on achieving further cost improvements and on expanding our operations in the fieldof high-value added products, which will be less susceptible to changes in the operating
environment.
June 2012

Ikuo Sato
Representative Director & President4