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## M&A Strategy 

Q4: What were the objectives of your M&A strategy in the year ended March 31, 2010 and what impact did the mergers have? 

## A4: We were looking to build our distribution network overseas, while in Japan our M&A moves were made with the aim of maximizing economies of scale by increasing operating efficiency and expanding our market share. 

n April 2010, both Shin Nikkei and Sun Wave became consolidated subsidiaries, which has enabled us to capture an overwhelming share of the Japanese market for both aluminum building materials and kitchen systems. To maximize economies of scale, we will quickly work to reduce costs by unifying product standards and conducting joint purchasing of materials. This should contribute to an increase in overall Group profitability. I 

Shin Nikkei, which is now part of our Metal Building Material Business segment, excels at making proposals to prefabricated home builders, and has a strong sales network in the low- to medium-sized building market. Tostem, our existing mainstay brand, is somewhat weak in these areas, so we will look to build a complementary relationship between the two entities. Moreover, by sharing Tostem’s knowhow in the sash business, which is already a highly profitable business within the Group, we will reduce costs even further. Increased production volume should also yield greater cost efficiency. 

Sun Wave has been added to the Plumbing Fixtures Business. In July 2010, subsidiary Inax Sunwave Marketing Corporation (ISM), which combines the sales and marketing divisions of Inax and Sun Wave, will commence operations. Through efficient and carefully targeted sales efforts, ISM will cultivate the housing stock market, comprising the home renovation and replacement markets which are expected to grow over the long-term horizon. The American Standard, which is involved in the sanitary wares business overseas, will be a foundation upon which we will look to expand sales of other sanitary fixtures, including Inax products. In the year ending March 31, 2011, we will start by spending on marketing to strengthen the brand strategy. 

In Japan, aside from M&A activity, we announced an agreement with Asahi Glass Co., Ltd. (AGC) to engage in a joint business endeavor. Going forward, we will actively pursue deals that we believe will effectively advance our objectives, including alliances such as the one with AGC. It is essential that we utilize M&A activity overseas to increase our overseas sales ratio in the three-year period from the year ending March 31, 2011. 

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