Tensho Electric Industries Co., Ltd

Approximately 70% of net sales are derived from Japanese automobile manufacturers, and if automobile production volumes at major customers decline, it may become difficult to continue product deliveries, potentially adversely affecting business results and financial condition. As a countermeasure, the Company is promoting sales expansion in the Logistics & Industrial Materials and Mechanical Components fields, working to reduce the risk of dependence on specific fields.

Raw material prices, including crude oil and resin materials, are in an unstable condition due to rising prices, and there is a risk that passing on these costs to product prices may become difficult depending on sales conditions. The Company is working to reduce costs and treats the appropriate reflection of raw material prices in product prices as the highest priority issue in its sales measures.

Major products, centered on Automotive Parts, depend on technological capabilities, and if the Company is unable to respond to rapid changes in technology and demand, its competitiveness may decline, potentially worsening future growth and profitability. The Company is working to maintain and improve its technological and product development capabilities through joint development with customers at the factory level and company-wide idea solicitation.

At Tenshoprastic (Changzhou) Co., Ltd., there are various risks including local demand trends, laws and regulations, infrastructure (electricity, water, transportation, etc.), deterioration of security, and labor disputes. In addition to regular meetings, the Company gathers information as needed, but there remains a possibility that expected results may not be achieved due to country risk and other factors.

As a manufacturer, the Company requires continuous fundraising for new capital investment and equipment renewal, and rising interest rates may affect business results and worsen financial condition. Currently, relationships with financial institutions are favorable and there is no problem in raising necessary funds, but attention must be paid to changes in the interest rate environment.

The Company holds receivables such as accounts receivable and loans to affiliated companies and business partners, and there is a possibility that collection risk may materialize due to deterioration in the business conditions of credit counterparties, among other factors. The Company conducts periodic reviews of credit counterparties and works to collect receivables as necessary while paying close attention to business conditions.

The Company conducts purchasing transactions of goods and raw materials and sales transactions of molded products and Molds with Sanko Co., Ltd., in which it indirectly holds 33.6% of voting rights, and if the transaction relationship becomes difficult to continue or demand trends change, business results may be affected. Transaction prices are determined through negotiation with reference to market prices, maintaining a stable and continuous transaction relationship.

The Company's production activities are subject to legal regulations such as environmental and recycling-related laws, and failure to comply with such regulations may result in penalties such as suspension of operations or becoming a party to legal proceedings. The Company assigns personnel with legal qualifications at each factory to ensure regulatory compliance, but responding to regulatory tightening and similar developments could become a challenge.

If facilities such as factories are damaged by disasters such as large-scale earthquakes or wind and flood damage, temporary suspension of operations may adversely affect business results and financial condition. The Company has established regulations for countermeasures against damage from earthquakes and other disasters, and while risk is dispersed given its six domestic factories and overseas locations, the possibility of simultaneous damage at multiple locations cannot be ruled out.

Product defects, the occurrence of harmful substances, or other causes may give rise to claims for damages or litigation, and depending on the content, this may adversely affect business results and financial condition. It is stated that, at present, the Company has not been subject to any litigation that would have a material impact on future business results.