Release: July 25, 2002

NGK Establishes Joint Venture for Insulator Production in India

Take advantage of this joint venture as a base for
low-cost manufacturing and the exporting of all types of insulators

NGK Insulators, Ltd. (NGK, President: Shun Matsushita, Head Office: Nagoya, Aichi) announced the establishment of a joint venture of insulator productions in India in December 2002, with Indian Rayon & Industries Ltd., a part of the Aditya Birla Group (Chairman: Kumar Mangalam Birla), which is the 3rd largest business house in India. This insulator production base would enable NGK to have a complete product lineup ranging from high-strength and quality insulators to cost-oriented ones in all models of porcelain insulators. The success of this joint venture will improve NGK's international competitiveness as well as enlarge its global market share, which, in turn, will reinforce NGK's position as the largest insulator manufacturer in the world.

Joint Venture Objectives

The electrical power business industry is currently in the process of structural reformation due to ongoing global deregulation of the industry. Power companies are becoming cost conscious and their demand regarding these costs are getting serious. As one measurement in response to such changes, NGK has deployed overseas manufacturing bases in Europe, North America, China and Indonesia.

1. In our continuation with our policy of globalization, NGK has agreed to establish a joint venture with the top-ranking insulator supplier in India.
2. The combination of cost-effective production in India with the technology/marketing power of NGK should provide us with improved cost competitiveness and a larger share in the world market.
3. In addition, the Indian electricity market is predicted to show remarkable expansion in the near future. This investment should also be a solid step for NGK as a major player in such a promising market.

Outline of the Joint Venture

Indian Rayon and Industries Ltd., a part of the Aditya Birla Group, is the 3rd largest business house in India. Upon separation of its insulator business division, it will become an independent company. NGK will then purchase 50% of its shares at US$ 25 million. (Mitsubishi Corporation, one of the biggest Japanese trading houses, is supposed to have a 10% stake in NGK's share, namely 5% of the total shares). The Aditya Birla Group will be responsible for marketing in India (domestic), and NGK will export to third-party countries. In the next 1-2 years, JP¥ 1 billion is speculated to be invested in the production for the improvement of capacity as well as of product quality. It is planned that this joint venture's first-year's (FY2004) production and sales is estimated at 30,000 tons and JP¥ 6 billion respectively, and by the third-year (FY2007), is expected to be 35,000 tons and JP¥ 7 billion respectively.

Name:	Birla-NGK Pvt. Ltd. (tentative)
Establishment:	December 2002 (tentative)
Head Office:	Halol (Gujarat, India)
CEO:	Two joint CEOs One appointed by NGK and one by the Aditra Birla Group

Profile of Indian Rayon and Industries, Ltd.

Established:	1956
Business:	Production and sales of rayon, carbon black, porcelain insulators and garments
Employees:	10,000 (approx.)

Profile of the Insulator Business Division of Indian Rayon and Industries, Ltd.

Brand Name:	Jayashree Insulators (JSI)
Established:	1967
Plant Locations:	Halol plant (in the suburb of Baroda, Gujarat) Rishra (in the suburb of Calcutta, West Bengal)
Production Items:	Substation apparatus insulators, transmission insulators, distribution insulators
Production Output:	25,000 tons (for FY2002)
Sales Output:	JP¥ 5 billion (approx.)
Employees:	3,000 (approx.)

• News 2002