Page 1 / 13Page 1 / 13Presentation for India-Thailand round table discussion

Win-Win success in Greater Asia

T d it l i i t ti- Towards vital economics integration -

30.08.2012DENSO INTERNATIONAL ASIA CO LTDDENSO INTERNATIONAL ASIA CO.,LTD

COO & Executive Vice PresidentMasao Suematsu

1．DENSO Profile Page 2 / 13Page 2 / 13

December 16, 1949Established

Capital 187 4 billion en (US$2 3 billion)Capital 187.4 billion yen (US$2.3 billion)

Net sales3,154.6 billion yen (US$38.4 billion)2 031 6 billion yen (US$24 7 billion)

Consolidated basisNon-consolidated basis

Net income89.3 billion yen (US$1,086.5 million)79 2 billion yen (US$963 2 million)

Consolidated basisNon consolidated basis

2,031.6 billion yen (US$24.7 billion)Non-consolidated basis

79.2 billion yen (US$963.2 million)Non-consolidated basis

Employees126,03638 323

Consolidated basisNon consolidated basis

(Japan 68, North America 28, Europe 35, Asia/Oceania 51, Others 6)Consolidated subsidiaries 188

38,323Non-consolidated basis

Notes:

(Japan 13, North America 4, Europe 2, Asia/Oceania 10, Others 2)Affiliates under the equity method 31

Notes:U.S.dollar amounts have been translated, for convenience only, at the rate of 82.19 yen = US$1,the approximate exchange rate prevailing on March 31, 2012. Billion is used in the American sense of one thousand million.

/ as of March 31, 2012

Main Products Page 3 / 13Page 3 / 13

ComfortGasoline engine management system,diesel engine management system

Car air conditioning system,air conditioner for buses air purifier etc

Environment

diesel engine management system,hybrid and electric vehicle components,starter, alternator, radiator, etc.

air conditioner for buses, air purifier, etc.

ConvenienceSafetySensing technologies for driving assist systems,actuator & computer for antilock brake system (ABS) /

Car navigation system,electronic toll collection system (ETC),

t it telectronic stability control (ESC),adaptive front-lighting system (AFS),airbag sensors & electronic control units,periphery monitoring system, instrument cluster,

remote security system,remote touch controller, smart key,advanced vehicle operation system (AVOS),etc.p p y g y , ,

rain sensor for automatic windshield wiper, etc.

Sales by Region (Consolidated basis)Page 4 / 13Page 4 / 13

OthersEuropeNet sales： 373,214 million yen(Including sales between DENSO companies:

387,192 million yen)

North AmericasNet sales： 504,075 million yen(Including sales between DENSO companies:

512,117 million yen）Asia

1.8%Others

Japan 52 0%Japan

11 8%Europe

18.4%Asia

JapanNet sales： 1,639,962 million yen(Including sales between DENSO companies:

2,197,632 million yen）

52.0%

16.0%

The Americas

11.8%

3,154,630 million yenTotal:

Asia-OceaniaN t l 579 752 illi

OthersN t l 57 627 illi

, , yIncluding sales between DENSO companies:

3,781,390 million yen

Net sales： 579,752 million yen(Including sales between DENSO companies:

626,721 million yen）

Net sales： 57,627 million yen(Including sales between DENSO companies:

57,728 million yen）

/ as of March 31, 2012

2．DENSO Operations in Asia Page 5 / 13Page 5 / 13

ASEAN 19

Vietnam 2DMVNIndia 6

DNIN DIINHDVN

Philippine 2

Thailand 8

PACDNKIDNHA

DTPUDTPHDSEC

DNTHDSTHDTTH

SDMADTH

SKD

TBFSTDIATNo of Cos No of Employees

RHQ

(S S)(Thailand: DIAT)

Dubai 1DSMN

Malaysia 2DNMY NWBM

(as of Mar. 31, 2012)ASEAN 19,850

Th il d 8 200Manufacturing 21

RHQ 3No. of Cos No. of Employees (Singapore: DIAS)

Singapore 1

Indonesia 4

DIAS

Australia 1

Thailand 8,200

India 5,000Australia 420

T t l 25 270

Manufacturing 21

Sales 3

27Total DNIA DSIAHDI AINEDNAU

Australia 1Total 25,27027Total

< Production & Supply Strategy >< Production & Supply Strategy >• Bulky products: in each country [ Decentralized ]• Small & High Function products: in a certain country [ Centralized ]

3. Production & Supply Framework Page 6 / 13Page 6 / 13

Strengthen competitiveness by optimum production & supply strategy across ASEAN & India●: Centralized, ○: Decentralized

Vietnam○

India○

Australia○

Philippine TaiwanIndonesia○○○○HVACThermal

MalaysiaThailand

ASEAN

g p y p p pp y gyIndia

○

○

○

○

○

○A/CSys.

●Compressor○○○○Radiator

●Evaporator○○○Condenser

Group

●EPS ECU

○

○

○

○

●

●Meter ClusterElectronic Group Engine ECU

○●Alternator, StaraterElectric Group

●Relay

○ ○

●

●

○ ○○○Air CleanerPower-train Group Oil Filter

2 Relay Flasher

○

○ ○

●Gasoline Injector●Common rail

○● ○Fuel Pump

●Plug, Coil, O2Sensor

●APM●

○

●Horn

●Wiper MotorMotor (ASMO)

EGR Valve

VN Turbo Motor●EPS Motor

○●Power Window Motor

●

●Arm & Blade

2014

1005200095908580751970

4. History of DENSO in Asia Page Page 7 7 / / 1313

1005200095908580751970Vehicle import prohibit Local productionRegulation Deregulation of Local production

Trade

Eco-car policy(Thailand, Indonesia)

AFTA (’93-) FTA outside ASEAN

（200Ｋ）

（420Ｋ） （330Ｋ） （840Ｋ） （1,190Ｋ） （2,240Ｋ） （2,920Ｋ）ASEAN Vehicle Production

＜1st era＞ ＜2nd era＞ ＜3rd era＞

Trade agreement

（3,300Ｋ）

THAILAND

DN’s Strategy Many products at each country ASEAN Complementation Furthermore

Evolution(TH: 25 products, Indonesia: 17 products)

DNTH (’72) DTTH (’87) SDM (’02) DIAT (’07)

＜1 era＞ ＜2 era＞ ＜3 era＞

Indonesia

THAILAND DNTH ( 72) DTTH (’87)

DNIA (’75) AINE (’97)

SDM ( 02)ADTH & TBFST (’02)

SKD (’03)DSTH (’02)

DIAT (’07)

Extent of Complementation

Philippines

Malaysia

IndonesiaASEAN

DNIA (’75)

PAC (’95)

HDI (’97)AINE ( 97)

NWB (’95)DNMY（80） Single OGC

DSIA (’04)

DTPH (’05)

Complementation

Singapore

Vietnam

pp PAC ( 95)

DMVN (’01)

DIAS (’98)

Multiple OGC

& ( )DSMN (’10)DNAU（89）

DTPH ( 05)

HDVN (’08)

India

Related Co. (Mfg.)Regional Head Office / Functional Co. Mfg. Co. (Multiple) Mfg. Co. (Single)

DNIN (’93) DNHA & DNKI (’99)DSEC (’11)DIIN (’99)

DTPU (’01)

5. Growth in Great Asia (Lead by India & Thailand)

Focus on global market by enlarging collaboration within Greater Asia

Page Page 8 8 / / 1313

ChinaKorea

Focus on global market by enlarging collaboration within Greater Asia

ACFTA AKFTA

KoreaJapan

AFTA

USA

TPP?AIFTAIndia

AJCEP

AFTAEU

?

TPP?

ASEAN(High added value)

AANZFTA

(High added value)

【Target】 AANZFTA

Australia/

(1) No.1position in Asia

(2) Global supply base Australia/New

ZealandFTA utilization is key for success

Page Page 9 9 / / 13136.Market harmonization of India & ASEANCar Maker (Model) Market SOP Unit Car Maker (Model) Market SOP UnitCar Maker (Model) Market SOP Unit

TOYOTA (ETIOS) IndiaIndonesia

’10/12’13/01

150 K40 K

Car Maker (Model) Market SOP UnitHONDA (BRIO) Thailand

IndiaIndonesia

’11/04’11/09’13/09

60 K110 K80 KIndonesia 13/09 80 K

Car Maker (Model) Market SOP Unit Car Maker (Model) Market SOP UnitMARUTI (MPV/ERTIGA)

IndiaIndonesia

’12/01’12/03

80 K40 K

FORD (FIGO/FIESTA) IndiaThailand

’10/03’10/05

100 K60 K

MARUTI (SWIFT) India ’13/12 170 KMARUTI (SWIFT) IndiaThailand

13/12’14/TBD

170 K110 K

Harmonized market Common model for both Asia (Thailand) and India

•Duty exemption AIFTA＋India-Thailand FTA to enhance mutual growth•Logistics infrastructure East-West economic corridor for shorter Lead Time

Page Page 10 10 / / 13137. Business opportunity in India for DENSO＜Vehicle production＞ ＜Sales＞ 213＜Sales＞ 213＜Sales＞ 213＜Vehicle production＞ ＜Sales＞ 213

128500

600

700(00 thousand)

＜Vehicle production＞

CV435

598

<100> <108>

<148>

<VS FY11>10 Mill market in 2020 (World No.3)

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

＜Sales＞

<VS FY11>

Double growth in 2015(00 Mill Rs)

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

<213>

<VS FY11>

Double growth in 2015(00 Mill Rs)

300

400

500

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

＜Sales＞

<VS FY11>

Double growth in 2015(00 Mill Rs)

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

<213>

<VS FY11>

Double growth in 2015(00 Mill Rs)

300

400

500

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

＜Sales＞

<VS FY11>

Double growth in 2015(00 Mill Rs)

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

<213>

<VS FY11>

Double growth in 2015(00 Mill Rs)

300

400

500

128500

600

700(00 thousand)

＜Vehicle production＞

CV435

598

<100> <108>

<148>

<VS FY11>10 Mill market in 2020 (World No.3)

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

＜Sales＞

<VS FY11>

Double growth in 2015(00 Mill Rs)

DNHA

DNKI

<120>

(00 Mill Rs)

DNHA

DNKI

<213>

<VS FY11>

Double growth in 2015(00 Mill Rs)

300

400

500

7592

95

294 312 340

470200

300

400

500

PV369 404 435100 DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11> DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11>

100

200

300DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11> DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11>

100

200

300DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11> DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11>

100

200

300

7592

95

294 312 340

470200

300

400

500

PV369 404 435100 DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11> DNHA

DNIN

<120>

SMB shift

DNHA

DNIN

<100> SMB shift

<VS FY11>

100

200

300

0

100

FY10 FY11 FY12 FY15

DENSO will expand the business more than market growth in India.

DNIN

FY10 FY11 FY12 FY15

DNINDNINDNIN

0

100 DNIN

FY10 FY11 FY12 FY15

DNINDNINDNIN

0

100 DNIN

FY10 FY11 FY12 FY15

DNINDNINDNIN

0

100

0

100

FY10 FY11 FY12 FY15

DNIN

FY10 FY11 FY12 FY15

DNINDNINDNIN

0

100

Import amount from India to Thailand

2,500,000

DENSO will expand the business more than market growth in India.Export amount from Thailand to India

90,000,000

100,000,000Localization

New product (Starter/FP)New product

(VCT/HTR )

1,000,000

1,500,000

2,000,000

TH

B

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

, ,

TH

B

JPN Earth quake & MS strike

TH flood

(VCT/HTR case)

TH flood

0

500,000

,000,000

0/1

0/2

0/3

0/4

0/5

0/6

0/7

0/8

0/9

/10

/11

/12

1/1

1/2

1/3

1/4

1/5

1/6

1/7

1/8

1/9

/10

/11

/12

2/1

2/2

2/3

0

10,000,000

20,000,000

30,000,000

, ,

10/1

10/3

10/5

10/7

10/9

0/11

11/1

11/3

11/5

11/7

11/9

1/11

12/1

12/3

10 10 10 10 10 10 10 10 10

10/

10/

10/ 11 11 11 11 11 11 11 11 11

11/

11/

11/ 12 12 12

Year/Month

Both India & Thailand are increasing mutual trading (export amount Thailand : India = 4 : 1).

10 10 10 10 10 10/ 11 11 11 11 11 11/ 12 12

Year/Month

8. FTA utilization situationDuty/other logistics cost by country

Page Page 11 11 / / 1313

Cost

amount

Sales am

o

Duty

Other cost

Sales

38.3%

FY11

unt

35.4%12 5% 9 5% (0%)

9.0%

63.5%

TH IA MY PH VN AU IN

12.5% 9.5% (0%)

DENSO i Th il d & I di d t tDuty ratio : 39 0%(FY10) 32 1%(FY11) DENSO in Thailand & India pay duty most.

Amt (MB) Analysis of FTA/EPA utilization (Thailand case)Threat

Duty ratio : 39.0%(FY10) 32.1%(FY11)Reduced by utilizing FTA/EPA, but still too high

Imported Amt97.8%

y ( )

• Less competitiveness by Duty

• Less merit from regional complementationImported AmtApplied Tax privilege Can not get the global demand by Asia/India

【Issue】

JTEPA ATIGA ACFTA TAFTAAIFTA AKFTA

13.1%

26.5% 100%11.3% 74.6%

(1) Short term

(2) Long term

[Bilateral agreement]

[RCEP concept ]

Short term issue (Bilateral agreement)

Local content：Added Value ratio more than 35 % & Tariff code change standard satisfaction (6 digit)

Page Page 12 12 / / 1313

Local content：Added Value ratio more than 35 % & Tariff code change standard satisfaction (6 digit)

＜DENSO product related＞

ASEAN India India ASEAN (Thai)Normal track Condenser, Evaporator, Expansion valve,

Shroud, Fan blowerSensitive track Radiator, CDI amplifier, A/C amplifier, ECU

Washer

ExemptionStarter, Alternator, Motor, Cooling unit, Compressor, Common rail, Meter, Injector, Fuel pump module, Fuel filter, MagnetoMany sensitive track item, then Duty

Radiator, Oil cooler, Fuel heater

M j it it b 0% d t b 2014Remarks Many sensitive track item, then Duty reduction up to 5% ← limited merit Majority item becomes 0% duty by 2014Remarks

DESCRIPTION From HS CODE Normal rate % FTA rate % FTA SAVINGS % FTA SCHEME FTA BENEFIT

STARTER ASSY Thailand 85114000 7.5 ‐ ‐ NOT APPLICABLE ＜Example＞

STATOR ASSY Thailand 85119000 7.5 6 1.5 TIFTA  1.5

SHAFT Thailand 84831099 7.5 ‐ ‐ NOT APPLICABLE 

SLIP RING Thailand 40169990 7.5 7 0.5 TIFTA  0.5

CORE, ROTOR POLE Thailand 85119000 7.5 6 1.5 TIFTA 1.5

Many exemption@ India

CORE, ROTOR POLE Thailand 85119000 7.5 6 1.5 TIFTA  1.5

TERMINAL SUB‐ASSY Thailand 85369090 7.5 ‐ ‐ NOT APPLICABLE 

SHAFT, ARMATURE Thailand 84831099 7.5 ‐ ‐ NOT APPLICABLE 

GEAR, STARTER INTERNAL Thailand 84834000 7.5 ‐ ‐ NOT APPLICABLE 

AIFTA has difficulties for us. Bilateral agreement or Condition change is appreciated.

SHAFT,STARTER ARMATURE,1W Thailand 84831099 7.5 ‐ ‐ NOT APPLICABLE 

Page Page 13 13 / / 1313Long term issue (RCEP concept)

Th il d

Japan India

No COOJ 3333 J

110A’

Double investment

Thailand

33J

J K

A 10034 A

Korea

No COO

T Duty

Higher costJ33110

KJ

34 +10110A’

TLess

competitiveness JK

K

33 33 33

K 33

J KK

K

33

33

yThailand customer

India customer

33p

for export

K 33K33

Regional agreement of FTA is desirable to maximize the benefit for global competition.

【Th il d/I di t b l d t FTA h l b ll 】

•Rolling up ROO cost calculation (ASEAN value = ASEAN + others)

•Simple & Easy method to roll up

【Thailand/India to be a leader to engage FTA scheme globally】

•Simple & Easy method to roll up

•Flexible operation of ROO definition (made in Thailand/India)