Nidec Corporation (6594) Earnings Call Transcript & Summary

Now we'd like to start the first press conference. From here on, this press conference will be moderated by the Third-Party Committee member. I will excuse myself here.

Hello, everyone. My name is [ Misaki ], the assistant of the Third-Party Committee. I'd like to introduce to you our presenters today. Here are our presenters, Mr. Kaku Hirao, the Chairperson of the Committee; Mr. Toraki, a member of the Committee; and Mr. Makoto Shirai, another member of the committee. First of all, Mr. Hirao, the Chairperson, will provide you with the result of the investigation, followed by the question-and-answer session. Mr. Hirao, please start your presentation. Thank you.

Can you hear me okay? This is Kaku Hirao, the Chairperson of the Third-Party Committee established by the Nidec Corporation. I'm the attorney at law in charge of foreign law joint enterprise at Nishimura and Asahi law firm. Please take a look at the document outlined of the investigation report. Please take a look at the document in front of you. This is a summary of our investigations. And based on that investigation, I would like to provide you with some verbal explanations as we go forward. Prior to launching the presentation, I'd like to let you know that the investigation by our committee are still ongoing. But investigation so far have revealed various facts. We have analyzed various facts, and we have accumulated the facts enough for us to be able to make proposals and recommendations. And for a long time, we have had these investigations ongoing. We have had a root cause analysis, and I believe this is the right timing for us to make the announcement of those findings. And the purpose of this committee is as follows. The launch -- this committee was launched to reveal all the facts relevant to the issues involving Nidec Corporation and to make recommendations for recurrence prevention. This committee is not intended for finding someone responsible for any areas of business-related responsibilities. Please take a look at the document in front of you that I've mentioned. And please take a look at the document over there. Starting from September 3, 2015, that's the start of the period of our investigation range time range. The investigations are ongoing, as I've said already. We have 3 these members. These members are all in charge of those investigations based on the guidelines established by the Japan Federation of Bar Associations. And based on those guidelines, we have launched our investigations. We examined all the relevant documents. We launched forensic investigations as well. And we interviewed via a questionnaire various managerial and executive employees. We established a hotline on various issues. And we have covered 319 people, including former Nidec employees. 532 (sic) [ 536 ] times, we interviewed various individuals. Forensic investigations include former Nidec employees, 113 people in total. We have covered past fiscal years 2020 through 2025's first fiscal quarter. When necessary, we expanded -- we went further back in time. Now I would like to provide you with an outline of Nidec Corporation as a company. You may not know all of them. Mr. Nagamori established this company back in 1973. It's a corporation and this company has expanded their businesses very rapidly. M&A was one of the driving factors of this company. Back in 1984, the fan business was purchased by Nidec. And since then, Nidec has been expanding itself and its businesses through M&A, the small precision motors and appliance, commercial industrial and motion and energy and various areas are now Nidec's business fields. Nidec started with hard disk drive motor business, which supported its rapid growth. But due to the changes in the market, Nidec has expanded its areas into automotive and appliance and industrial, other motor-related areas. Nidec Corporation is not the only entity within the Nidec Group. 354 subsidiaries and affiliated companies exist within the Nidec Group. And business group system have been and were introduced in 2014 or so. We have SPMS, ACIM, MOEN business units as well as Machinery and Automation. These 5 different business entities are in existence as of today. In addition to these business units, there is another unit of business management called the Group Companies, 15 companies. And there is one exception is that one company with the overseas offices. All of these companies are managed by Nidec Corporation's group company management department. I'd like to give you some findings as a result of our investigations. Section 1 findings outlined -- well, I'm not going into details. We have 250 pages or so long document. I refrain from printing all of these, making copies. We didn't make all of these copies for all of you today, but we have a large number of findings. As you can see in the document, the document -- that the investigation is still ongoing. And the numbers of inappropriate accounting practices were found in numbers of Nidec Group business basis. There is a variety of such practices, low profit materials. And intentionally, the material loss was not really recorded despite its low future prospect. There was a case of avoidance of financial impairment and inappropriate personnel expenses were recorded as fixed costs in order to postpone the recording of fixed assets or fixed costs actually. There were some subsidiaries regarding the return of subsidiaries. And there are some subsidiaries whose nature were falsified intentionally and inappropriate recordings of the allowance for bad loans. These cases were just among various the inappropriate practices that we found. I have just picked up 12 of all of these cases. I would like to pick up 12 of these cases to explain them in detail in the document. And 2025 quarter first end, there is JPY 139.7 billion is the amount of negative impact on the latest corporate earnings of Nidec Corporation. There was excessive pressure on people to achieve company provided profit targets under the strong leadership by Mr. Nagamori for a long time and also has been in existence that it is seen to be in a deficit. It was mandatory for each entity to achieve its own target. For a long time, Mr. Nagamori has made -- established these targets for individual subsidiaries on a top-down way. These targets were based on future expected growth. It was above the capability of some of these subsidiaries and other entities. And to the CFO of the head office as well as other executives, Mr. Nagamori applied a strong pressure to achieve these targets from himself. When it comes to these pressures, these pressures were applied to these executives, organizations and subsidiaries. This is just one example. One of the examples we have understood is that if you cannot achieve the target, each and every day, Nidec NCJ executives held meetings each and every day to force or blame these managerial executives for not achieving the target. And such unreasonable instructions were given to these subsidiaries, managerial and executive employees. And even after the end of fiscal term, if a certain organization fails to achieve its target, the instructions were given to achieve its target even after the end of the certain quarter. There was sometimes a direct pressure applied from Mr. Nagamori directly to those executives. Such a strong pressure was applied from Mr. Nagamori to others. Fixed avoidance of financial impairment cost was made into assets by these manipulations in some cases of -- some organizations, they try to achieve their targets. When it comes to CFOs and other organizations, executives came up with a way and explained those methods to financial -- the auditing firms for approval. But sometimes, people fortified the facts and sometimes people neglected giving explanation, of course, asset calculation method as well as other methods, there is some range of accounting processes. Not all of these methods were incorrect, but our investigations found sometimes those processes were beyond the realm of proper processing, and that's the inappropriate accounting practices. And in order to achieve the consolidated performance targets of the Nidec Group as a whole, Nidec Group CFO and other executives were under the pressure to achieve the company's target. And if they fail to achieve the target, they were reprimanded very severely by Mr. Nagamori. Now I'd like to mention negative legacy. I would like to explain that in detail here. And there were some results -- efforts made to eliminate such legacies. This was part of the reasons for this committee to have been established. In the internal investigations prior to the establishment of this committee, there were quite a few issues in existence. And there were some documents about the suspicious activities or conducts by Nidec executives. Sometimes assets were created as a result of stagnation and those assets were called the negative legacy in Nidec's term. And Nidec Group's collected information about these negative legacies and the actions were launched to handle those negative assets and negative legacies. And on a periodical basis, Mr. Nagamori and other executives will receive the information about those negative elements. And in the announcement made on structural reform instead of reporting the negative legacies, self-funding was one of the terms used in Nidec Group. Self-funding is to -- was a term to cover the negative performance with the something that you can use, and that's so-called self-funding. And recording loss means that deterioration in your organization's performance. So you can only do so much about taking such methods to handle process such losses. And while doing -- while having those process, new losses will be created in some cases. And then under this situation, the internal audit department has completed the project to normalize the asset quality. And then in replace with that, the structural reform was launched in the first quarter of the FY '22 because these 2 initiatives are similar. Therefore, I'd like to introduce what it is. In the first quarter of the FY '22, under the leadership of the Nidec head office, CFO; under the name of the structural reform, the process of the negative assets or negative legacy was started in order to facilitate the candid reports from facilities and be used for this initiative. CFO believed that this should not be incorporated into the performance evaluation of the BUs and subsidiaries, meaning that self-funding was not severe enough that this was not regarded as self-funding. In other words, this would be processed outside of the performance evaluation of the BUs and subsidiaries. And that is the scheme for this, and this was proposed to Mr. Nagamori and approval was given. And then as a result of that, around JPY 160 billion of the self-report for the negative -- the legacy was made. However, when the CFO got the approval from Mr. Nagamori throughout the year for the FY 2022, the policy not to go below the JPY 100 billion of operating profit was reported to Mr. Nagamori and approval was given. In addition to that, Mr. Nagamori gave the instruction that V-shape recovery should be achieved in FY '23. And then in total, around JPY 160 billion of negative assets were reported. However, which the assets that required the process highly and the necessary assets for the V-shape recovery were prioritized. However, other deals or other assets were put on hold to be covered in FY '23 onward. This is called the planned process at each BU and subsidiary. This planned treatment or assessment should be done at each BU, however, or at subsidiaries that this is so-called the self-funding, meaning that they have to achieve the performance forecast while they have to process the loss. However, this loss must be absorbed by the profit. As a result of that, JPY 56.6 billion of negative legacy was processed in the fourth quarter of FY '22. However, at the same time, prerequisite is not to go below JPY 100 billion of operating profit throughout the year. Then the simple subtraction tells you that the negative legacies reported by BUs and subsidiaries, most of them are outside of the structural reform. However, our committee found that when this structural reform was made, although there were report made, however, this was sorted as the -- however, the appropriate process was not conducted because of the self-funding. And this is a situation for the fourth quarter of the FY 2022. And then I'd like to explain what happened after that. So the negative legacy going through the planned process required the expenses. However, these expenses were covered by self-funding and therefore, actual implementation was not done. For example, in the fourth quarter of the FY '23, because of the launch of new businesses, JPY 59.8 billion was recorded as the expenses for the structural reform. In addition to that, the expenses necessary for the process of the negative legacy was not incorporated into the performance assessment of BUs and subsidiaries, meaning that this is related to the self-funding. And then President Kishida explained the necessity for this initiative over and over again to Mr. Nagamori. However, Mr. Nagamori insisted that the operating profit target must be achieved. And therefore, this request was turned down. And then regarding the authority of the approval of Mr. Nagamori, as you find in the official version of the investigation report around Page 44, up until August 2025, authority of Mr. Nagamori, including the personnel change the allocation of fixed assets, all of them have to get to the approval by Mr. Nagamori. In this sense, former President Seki and former President, Mr. Yoshimoto, although they are called President, but they didn't have the authority, as you imagined because everything must get to the approval from Mr. Nagamori, because this request was turned down. And therefore, as a result of that, in the fourth quarter of FY '24, the negative legacy must have been processed. However, there's no treatment made. That is a situation regarding this situation for the untreated or unprocessed negative legacy, Mr. Kishida has recognized it. That's all for the situation for the negative legacy. And then furthermore, what happened furthermore at Nidec, I'd like to explain what kind of fraudulent happened before that. One of the characteristics for the company got to the fraudulent in many cases, the fragile or the internal audit function was pointed out. And then this was not applied to Nidec. In the 1990s, Mr. Nagamori found the situations where subs is committed to the accounting fraud. And therefore, he felt the necessity to set up the dedicated functions. And that's why Mr. Nagamori reinforced the personnels by hiring the certified accountants externally, for example. At the same time, he established the department for the internal audit. This is really rare for other companies because Nidec has established the internal audit department dedicated to the audit activities. This internal audit department covered around 60 sites. In addition to that, throughout the whistleblowing system and if the suspicious case was reported, special investigation was implemented. This is so-called the official public initiative. However, at the same time, Mr. Nagamori has found that there are some employees who are regarded as having highly capable for the audit functions and then he asked them to conduct audit activities, mainly for the bribes and the other accounting fraud. So if the suspicious case was reported, special instructions were given by Nagamori, Mr. Nagamori to conduct the focused investigation. This audit or investigations were conducted anonymously around in 2011 to June 2020, this anonymous audit was conducted. However, the contents of the anonymous audit was not reported to the internal audit department nor the accounting firm. However, this employee found any accounting fraud, he or she asked the correction immediately. However, if the amount is huge, instead of the immediate correction, instruction was given to process those the accounting fraud more than 1 year to prevent the huge loss of the operating profit. And this act itself should be regarded as accounting fraud because certain loss should be recognized as loss. And then upon the report from the employee, Mr. Nagamori recognized that there are some cases where the immediate actions were not taken. However, he has accepted those cases. such the secret audit was ongoing. However, apart from that, if the whistleblowing was made and then the official investigation was conducted within the Nidec Group, each year, more than one accounting fraud was found. And each time the internal audit department has implemented special investigations and there's no delay of the fiscal statement announcement. However, all of these accounting fraudulent cases were not published at all. And then the former executive said in our interview that Mr. Nagamori believed that it's very important to announce the financial statements faster than any other companies, and it's impossible to be delayed in the schedule for the financial statement announcement. And therefore, they have to prioritize to make it in time most -- at the most important time at any rate. Whenever acting fraud was captured, the internal audit department has taken function. However, in the second half of the FY 2018, the external law firm has conducted the investigation. This period, the second half of the FY '18, there was a report by the party who were in charge of the audit for the United States sites. And then external audit investigations were made as a result of that, more than one accounting frauds were captured. In addition to that, as part of this investigation, forensic investigation was conducted and the forensic investigation has found that the similar accounting frauds were committed at many cases within Nidec Group. E-mails and the documents have been shared with PwC Kyoto, and then it should be reviewed by the internal audit department. And then this relevant e-mail correspondences and documents are related to the negative legacies related to the asset normalization project. That's why CFO of the head office as well as the accounting department head had explained what happened for this project for the asset normalization to PwC Kyoto. For example, if you refer the list of the negative legacy prepared by the internal audit department that was shared with PwC Kyoto said that the total amount of the negative legacy as of the third quarter of the FY '18, JPY 6.3 billion. In addition to that, quite a number of negative legacies were generated due to the intentional fraudulent actions. In addition to that, this provision investigation found that the anonymous audit was conducted for subsidiary and this was also shared with PwC Kyoto. In short, as a result of the forensic investigation, the e-mails and other documents were confirmed. And based on them, 7 cases were illegal accounting process. And then the total amount was estimated as JPY 1.66 billion. However, by the end of FY '18, corrective actions were taken. And therefore, all the necessary actions were taken. And then as a result of that, the announcement of the fiscal financial statements were done on time. And then PwC Kyoto submitted this report of the appropriateness of the financial statements. And then as I have mentioned, legacy -- negative legacies include the cases where the intentional wrongdoings or the fraudulent acts were not denied. And then if you see the mark of the intentional in the draft of this list, we have not yet confirmed whether the actual intentional fraudulent act was committed or not. There is no confirmation on that. And there was no explanation for the PwC for the actual situation of that. Now this external audit firm act as a result of this audit firm, although the audit opinion of the appropriateness was submitted. However, a series of accounting frauds were identified every time the investigation by the internal department -- internal audit department was conducted. And there was a strong excessive pressure from the Nidec head office. And Mr. Nagamori's this style but people refrain from trying to change the way Mr. Nagamori tries to force people to achieve the company's target. I'd like to give you an example here. This is about Nidec Servo Corporation. Please take a look at Page 2 or 3 or so. Please, if you have an -- version of the document, please take a look at the page. Internal audit has confirmed various facts. Nidec Servo executives committed internal misconduct because of the excessive pressure to achieve sales targets. Despite all that, internal audit excluded such information about the department from the meeting minutes, and there was no reference made about the incident in any document. Mr. Nagamori had a favorite person. And people thought that if this issue was written in the document that would upset Mr. Nagamori according to the Nidec Servo executive. When it comes to Nidec head office, managers provided the pressure. The information -- relevant information was shared with the PwC Kyoto. NCJ, which means Nidec head office, NCJ has applied various excessive pressure that is the root cause allegedly. And the comment about such reference to the excess pressure was made. And we have hearing minute meetings was found as well. And from such executives, there was a strong pressure. Such reference was excluded from minutes or documents in meeting. According to the employees, they knew that it was necessary to achieve the target, but they had no choice but to process those negative legacies within a limited time range. There was a strong excess pressure from the Nidec head office. And we needed it. There was a comment requesting additional interviews with the NCJ executives. And there were some comments -- corrections were made to some comments as necessary in internal e-mails. NCJ's involvement was very aggressive and some corrections are made in the documents to make the situation look normal. And such comments were eventually accepted by parties concerned. We reviewed all the accounting books. We didn't do it actually. We didn't get to check accounting books. We didn't have a hearing sessions with the auditing firm personnel. We are referring to describe some objective opinions here in the document. From PwC Japan, we received a reply in paper. PwC Japan said in the document, based on the inquiry request received, as you can see here on the page here, we received -- I'm going to read that reply out, with respect to the investigation and the -- first, Senior Vice President as well as other executives, and we had NSRV, Nidec Servo acronym there. And in order to achieve the targets and such explanations from the teleconference was there, but there are some incoherent facts included in the meeting minutes. And hearing minutes were corrected to check the facts. And when it comes to this partner, in prior to fact checking, inappropriate as well excessive pressure were needed to be confirmed to be nonexistent. Such a reply was made to us. With respect to the series of these accounting misconduct, there was found some cases -- such cases were found in every single fiscal year. I'd like to explain how these facts were explained. And these facts were reported to the Audit and Supervisory Board. There was no report made about excessive pressure from Nidec head office to various group entities. There was a strong pressure from Nidec head office, but these Board members -- audit members didn't realize that there was -- the problems occurred because of the existence of excessive pressure from Nidec head office. In various areas, we have found these accounting misconnects. This is because of the excessively high sales standards set by Nidec head office. That was our notion initially. And targets were set very high by -- this is with Mr. Nagamori's management method itself. It's very difficult to fight such method head on. So such information was never shared with outside members of the Board of Directors. Next, please go to the next section of the document over there. We never found any facts about the instructions leadership taken by Mr. Nagamori about this excessive pressure. But Mr. Nagamori knew that some corrections are made to accounting information that itself will be -- could be accounting misconduct. So it's inevitable that Mr. Nagamori at least tried to -- to accept the manipulated accounting information. And there was a strong pressure once again for all the employees to achieve sales target and those pressures were coming from Mr. Nagamori himself. It's very unusual for a department to be established -- to be in charge of handling or processing accounting information. But Mr. Nagamori still continue to request everyone to achieve excessively high sales target. Mr. Kishida and others requested Mr. Nagamori to go to a structural reform several times to go -- not to use the negative legacy related to method. But Mr. Nagamori rejected such idea for reform. So therefore, Mr. Nagamori himself will be very individual to be blamed, to be responsible for all of these misconnects. There was no evidence found of Mr. Kishida's involvement. Mr. Kishida made efforts to improve the situation in my -- in our opinion. But the final decision authority was in Mr. Nagamori's hands. But due to the lack of the launch of the reform efforts, Mr. Kishida and the rest of his companies are in the current situation. Mr. Kishida himself should have being proactive in handling those negative legacy-related issues. Even in violation of Mr. Nagamori's instruction, Mr. Kishida should have acted more strongly in our committee's opinion. Mr. Kobe, who is one such a person, he has been -- long been in charge of sales operations of the company. Mr. Kobe wasn't found to be responsible for giving instructions for forcing people to achieve excessively high sales targets. There was no evidence we were able to find still Mr. Kobe even less frequently than Mr. Nagamori received -- would receive reports from people in behaving committing misconduct. Mr. Kobe was aware of such misconduct in our committee's opinion. Mr. Kobe was regarded as -- excuse me, Mr. Yoshimoto and Mr. Seki were both regarded as successor to Mr. Nagamori. There was no evidence found these 2 individuals to have been aware of such misconducts. Once again, the outside members of Board of Directors as well as members of Audit and Supervisory Board, internal audit department made reports to them. But those reports never touched the root causes of misconduct. They were doing all that because of extremely pressure for a better business performance. That's the reason for this misconduct and nobody was aware of that. And outside directors, none of them based on our committee hearing interviews. For this company, it's hard to reflect honor Mr. Nagamori's management principles and aspire always to perform higher and achievement of that target was essential. And that pressure was not recognized as anything extraordinary. And the negative legacy issues were never shared with outside directors. And out of those that we intervene amongst outside directors, they were not aware of Nidec having a longtime issues of negative legacies and those efforts to resolve that issues were carried out for quite some time under the name of structural reform of making the asset a more healthier project. Those are not recognized either. So to get to the root cause analysis, I believe that for our committee, we wanted to focus on the root causes, narrow down to the fundamental causes. The first issue is massive pressure for better business performance and that is a core reason for this fraud accounting practice. And first of all, unrealistic target was established and to achieve that target, they face enormous pressures. And that pressure started from Mr. Nagamori and that is passed on by Nidec's management executives and to all the business units and subsidiaries executives. And that, in the end, resulted in fraud accounting practice. And Nidec had this very unique internal audit entities with accounting audit dedicated division. And in that sense, compared to other companies, there are fewer opportunities to commit to account practice. But the amount of pressure is way more than those possible fraud prevention functionality that accounting dedicated internal auditing team to fulfill. And what's in that context is Mr. Nagamori is absolute power within Nidec. And all the authority decision-makers were, in fact, concentrated to Mr. Nagamori. And Mr. Nagamori is, first of all, has the ultimate authority over personnel matters for group's executives. And that is causing the accounting fraud, the enormous pressure to meet all the monthly target. And this negative legacy that they are facing for a long time, and there's been some efforts to reduce that, sometimes, but they were not drastic enough. And all that is because of this enormous pressure from Mr. Nagamori to achieve the business performance target. And in the background of that, Nagamori supposedly had a power over appointments and nomination for executives personnel matters. Regarding the divisions that were not functioning. First, accounting division. We have discovered that frauds were conducted involves accounting departments of a business division and subsidiaries. Accounting irregularities involving accounting departments at Nidec headquarters are also discovered as well. The reason why accounting department to act as -- supposed to act as a second line of defense and supposed to act to check and validate the accounting practice of the company, but that was not functioning. We have consulted with external legal firms. And as a preventative measure with external legal firm, they were asked to install a special report line at the business unit and subsidiaries accounting, but that never realized. And actually, that's mentioned in the report as well. So they were quite weak in cross-divisional functionalities. One of the typical example is to try to grasp the negative legacy, but they were not despite the fact that they are within the same group. Regarding internal audit divisions, the reason why the fraud accounting practice repeatedly happened, internal audit department recognized that the origin, the core reason relies in Mr. Nagamori, but -- and also together with that business performance pressure, but they didn't dive right into the core issues. And internal audit research reviews could not possibly delay all the business settlement fiscal year closing schedules. That was most important. And internal audit departments, auditing committee, auditing board members and regular auditors and the committee members were aware that a core reason for accounting fraud practice were because of the enormous pressure from Mr. Nagamori. And regular audit members were saying directly that because of this high aspirational target and to do the best to achieve it. And that is Nagamori's management style itself. And it was quite difficult to question that straight on. So there was no governance working at all. And external auditor, there's been some individual cases explanation in the past, but those explanations were remaining in the surface level. And so there was no core reason for this accounting fraud shared with external directors. So outside auditors were not aware of the fundamental reasons, core reason that Nidec was facing. So this issue -- this problem awareness were not aligned amongst the group. And amongst the Nidec Group at the various different sites are constantly repeatedly having a wrong accounting practice is quite abnormal. And there has been no outside director who saw some oddities in that situation. The committee concretely agrees that -- anyone with a professional knowledge, different knowledge or experience looking at such a unique situation, they may handle it differently. Because when our third-party investigation committee faced these issues, this amount of significant account wrongdoings were already discovered within the group. And we were surprised with that. It wasn't the first time they discovered it. And Nidec's executives and employee private inaccurate and misleading information in accounting firms to elicit favorable opinions. And Nidec directors were seeing personnel of PwC Kyoto as an easy one target to persuade or to give into. What's recently discovered is some of them were on extension of aggressive accounting practice. And because they saw PwC personnel, counterparts as an easy target to persuade, that also led to this nonstop practice of accounting fraud. That's also a possibility. And amongst this accounting fraud, we saw the Nidec employees hiding some of the evidences or testified test in a false manner to PwC Kyoto. But even if the auditing entities were not fully aware of those evidences, the ones who were -- they shouldn't be blamed for the wrong accounting practice. The ones who are actually doing is not the auditing entity, it's Nidec itself. Nidec bears a full -- they lack in understanding that they are fully responsible in providing the correct and accurate financial statements. And Nidec reform -- reconstruction committee head is led by the current CEO and the President. And Nidec improvement measures from our committee's perspective do have certain concerning point. But fundamentally, we believe that those measures are beneficial to prevent accounting fraud from happening again. So our assessment is that the improvement measures were valid. So on this occasion, we would like to provide additional advice from this committee. First is complete ejection of Mr. Nagamori presence. He needs to be leaving the company completely because this was a company that he founded. His management principle was permeated throughout the company. And this whole series of accounting practice cases, root causes is because of Mr. Nagamori's management styles and his governance not working in order for Nidec to reform itself, Nidec needs to exit Mr. Nagamori's presence. And in order to reduce the impact from Mr. Nagamori, other shareholders, I do believe there is a discussion that's worth doing for the possible termination or the rejection or cancellation of the shares or under some consensus to limit the certain rights exercise. But it's not something that Nidec can do through its own initiatives. But it can be a part of a preventive measure. Many of these measures that the company has put out are on the surface level. What's important for Nidec is not only Mr. Nagamori, but only the part of Mr. Nagamori's surroundings and making significant impact for the appropriate business practice. How to prevent that? The key player will be outside directors, of course. What's the problem here is a business manager may be influenced by only a certain limited number of stakeholders, right, so to properly run its business operation. And the most powerful countermeasure is by not the supervision functionality under the direction of management, but the one with legally backed up authority. That means external directors. It's easy to be said, but the external directors participating in the Board meeting only once a month. It's quite difficult to understand the root cause that is hidden behind the businesses. And even if they are recognized certain agendas that challenges the company bears, and they make a comment at the Board meeting levels, but it's quite difficult to combat the counterargument from the director who are in executive positions who are involved in day-to-day business. And given all that advices, even if we were to include accounting professional or someone with a significant management experience in external advice will not completely guarantee that any tinted color looking us when making completely independent audit responsibilities. In order to fulfill the functionality of external director as the way it should be, we believe that we need to improve the information that is shared to external director. That's essential. And also, we need to have a system where outside director can work with other external parties to strengthen his or her advices. First of all, the information, quality is essential. That's been the biggest issue here. And outside directors are legally backed to save the company in the times of emergency. So it is essential for outside director to provide advice to save and rescue the businesses to the Nidec management at the time of needs. And regarding necessary support, having a dedicated staff may not be -- maybe too excessive. But whenever external director requires some support, companies need to provide that as well. And as needed for the outside directors strengthening, it's probably beneficial for these companies to have attorneys to get advice from legal professionals. And outside director has a strong authorities, but the reality may be different because there may be a certain reservation, certain consideration paid to the regular directors, outside directors also a human too, it's unavoidable. And that's mentioned in the improvement measures taken by Nidec, but getting teams involved is essential to improve this company. One person will not be able to save this company. But if there were 3 people with aligned issues awareness, then they can cope with those issues, and then we will be able to combat those difficult challenges. So I think that is quite important. And in the end, sincerity to the investors, to the open capital market is essential, and that needs to be done thoroughly. As I mentioned in the root cause explanation section, disclosing inaccurate financial statements that are approved or disapproved by auditors is a fraud. And it's a fraud against the capital market. They need to recognize that Nidec is losing the trust of investors now. And that is the first step to Nidec to restore the trust is to show the true and honest business situation openly to the capital market, and that is essential work that needs to be carried out by CEO and CFO. And last but not least, I don't think this accounting fraud practice gives questions to Nidec's capability as a manufacturer. The issue is because they were so focused on meeting the targets and that pressure causes accounting practice. And Nidec's core business value of monozukuri company still remains. The company is not what Nagamori-san imagined to be. But if Nidec can prove to the market that the real capability as a manufacturer, I think the market can trust the Nidec again.

I have to emphasize that the current investigation is still ongoing. And for my officers and the current officers, I really appreciate your support and assistance, especially for the current officers at Nidec. Please make new born Nidec and that attitude has been felt quite strongly throughout of our investigation. And therefore, on behalf of the committee, I'd like to appreciate your support. And because you are a member of Nidec and therefore, as a human as well as the manufacturing enterprise, you are the place and through strength of Nidec. And then I believe Nidec can regain the trust from the market and investigators -- the investors because of you, sorry for occupying the stage for a long time, but that's all for the result of the committee investigation. Thank you very much for your kind attention.

Thank you very much. Now I'd like to open the floor for the Q&A session. Today, we would like to receive as many questions as possible from the audience and [Operator Instructions].

[indiscernible] from Toyo Keizai. I have just one question. Now this time of investigation and its result, it's concluded that chronological responsibility should be filled out or by no means, there is no such [indiscernible] cases identified in this investigation. Sorry, it's not chronological, but criminal, that's right.

Okay. As I mentioned at the very beginning, the role of our committee is to analyze the root causes for the fraudulent accounts. At the same time, we expected to present the recommendations. Of course, there's the criminal penalties put in place based on that requisite, whether we have to ask criminal responsibility or not, that is outside the scope of our role of committee, and this was not what I have to do as the attorney at law because of the ethical issue as attorney because it's related to the ethical issue for the attorney, please understand that it's very difficult to respond to that question as an attorney or lawyer.

Okay. Thank you very much. The next question, the person in jacket at the front row, please.

Thank you very much. I'm [ Murai ] from Diamond Corporation. Now this time accounting fraudulent, when I read the report at each company, there are wide varieties of the fraudulent activities such as the avoidance of the impairment processes or the deferral of the profits and these activities were identified throughout the group companies because of the very strong aggressive pressure imposed by Mr. Nagamori, this is one of the reasons. In addition to that regarding the fraudulent accounting process, there are no cases where the instructions or orders given by Mr. Nagamori. However, regarding the disposition of the legacy liabilities or involvement of the CFO to legacy liabilities or the organization of special audit department processed and disposed regarding the legacy liabilities in a very planned manner. When I look at these activities, is that regarded as the systemic disposition of the accounting activities conducted. There's no instruction or order from Mr. Nagamori for these fraudulent cases. I read it in the report. However, special audit included disposition of legacy liabilities included each time there is actual conduct of the fraudulent accounting. And therefore, to what degree Mr. Nagamori was aware of these conduct or activities. And then based on the recognition, what kind of instructions given by Mr. Nagamori, for example, did he say that he didn't know anything?

Thank you very much for a very good question because to begin with, I should have explained it in my presentation by spending enough time. That's why I really appreciate your question. Then first of all, regarding the legacy liabilities, let me elaborate on what it is. The legacy liabilities are not caused by the fraudulent accounting necessarily. Of course, the future impairment process is necessary or the possibility of the impairment loss should be reviewed and the legacy liabilities are most of such nature. However, some of them -- some of the legacy liabilities must be disposed right now here or some legacy liabilities must have been disposed in the past. However, some of them still remain. And therefore, when you hear legacy liabilities, you believe everything is negative. However, it's kind of risky assets. However, because they are risky existing assets for each fiscal year, that is a problem because disposition is necessary. Although some of the employees believe that they wanted to dispose the legacy liabilities. However, if they did so, they could not achieve the expected performance, and they had to defer the disposition of the legacy liabilities. And because of that, they have lost a good timing. So recognition of legacy liabilities as a whole, and they should be disposed in a planned manner. However, they are not equal to the recognition of the fraud accounting. In this sense, the CFO at [indiscernible] office, he has used the planned disposal. However, it's not good because JPY 100 billion should not exist as legacy liabilities. He has to look into the details to identify which one should be disposed and which one can be remained. The order is important for these activities. And therefore, for CFO, for example, although the CFO recognized some of them as bad liabilities and they should be disposed, did hear that much? No, that level of recognition was not done by the CFO. What is your question, sorry? And then to what degree Mr. Nagamori was aware of this. Regarding this special audit, nature is different from usual audit. To be more precise, please refer the Nippon Densan Copal description in the official report. Let me see the page number. Sorry, I don't remember it, but you can see the detailed explanation for that. If you happen to have the report, I believe it's around Page 102, approximately speaking, where you can see the descriptions related to Nippon Densan Copal. Suppose that there's a certain fixed asset and it's inevitable to apply impairment accounting. However, in the process of impairment process, Mr. Nagamori himself negotiated with the counterpart. However, it's failed, and that's why the inevitable impairment process was applied. You see the detailed process were involved in the special audit report -- report was read to Mr. Nagamori. So Mr. Nagamori was aware of this, although this is just one of the examples, but regarding the special audit to its activity, we believe that Mr. Nagamori was aware of the detailed information. And therefore, based on that, we regarded that Mr. Nagamori accepted the fraudulent accounting. So that means that Mr. Nagamori himself was aware of and accepted the fraudulent accounting. Please refer to the description of the report. To begin with, he should have been instructed that these assets should be disposed immediately. However, the employee in charge of the special audit said that the special disposal was made and therefore, he accepted it. By the way, Mr. Nagamori accepted this time interview. Yes. He was interviewed. I don't remember how many times we got interviews, but I remember at least 4 or 5 interviews were made with Mr. Nagamori.

Thank you very much. Any other questions?

If I may, I have a follow-up question regarding the detailed report.

Pages 108 and 109, you can see the exact descriptions referred in this Q&A.

Thank you very much. Now the next goes to the person in the second row from the back.

I'm Sato from Morgan Stanley. First of all, thank you very much for your explanation. Then at this moment of time, investigation is still ongoing, as I heard. However, at the end of the day, the report from the investigation will be available, when can we see the report? And at that time, can we see the amount of the impact on [indiscernible] assets, net assets compared to the previous fiscal year, there is a negative impact of the JPY 139.7 billion according to the current report. And are there any possibilities that this amount may change? In addition to that, because the investigation is ongoing, the reason why the investigation is going on, what's the missing point?

Thank you very much for your question. Now let me answer to the questions where I would be the best person to reply. Final report of the investigation I assume you'd like to know when the final report will be coming out. All I can say is TBD. So nothing is determined yet regarding the timing of when the final report will come out. And then the third question, probably I should answer to the third question, but can you please state your third question once again?

I don't know when, but the JPY 139.7 billion, this is the impact on the assets -- net assets. And additionally, what your committee has to investigate?

Thank you very much for repeating your questions once again. Regarding the question 2, we have completed the root cause analysis and what remains? That is each case of fraudulent accounting investigation. We have to complete this investigation. That's why in this report, there are 12 specific cases. Although this is just part of the fraudulent accounting, However, in addition to them, there may be other fraudulent accounting. That's why our committee is still conducting investigation. However, what internal audit has done and then what audit and Supervisory committee has done and what is the special audit was. These are related to the root cause analysis, and we believe that our committee has exhausted the root cause analysis of such.

Then the second question or the first point in the original questions, probably I need to ask Mr. [indiscernible] to respond to that.

Thank you very much. So this amount of JPY 139.7 billion may change or not. Our investigation is still ongoing and just 1 week or another would be suffice to complete our investigation. I myself cannot say it clearly, but we have to wait until investigation completion and there may be further negative impact on the net assets. However, how much will it be? I cannot say it right now. However, please understand the following regarding the [indiscernible] impact on to the consolidated financial statements. Probably usually, you'd like to see the impact for each fiscal year. However, what we got this time is FY '25, the end of June, as of the end of June 2025, that is the timing of calculating the impact on to the net assets in order to disclose and publish this report. We have completed the root cause analysis, and we have confirmed almost all facts. And the committee believed that it's better to share some numbers, although it's still working in process. However, we believe it's better for us to share some numbers. And therefore, it's not a number for each year, but we'd like to share the latest number that is JPY 139.7 billion as of June of 2025. That's why from now on, we'd like to finalize the number for each year. There were some deferable. However, as a result of the investigation, we may see some deferred numbers. However, we have to wait until the investigation completes. Once we complete the investigation, we'd like to share the number. Most important point is that what is the amount of the fraudulent accounting for each year. We have to clarify the number for each year. That's why we needed to investigate those matters more.

How far -- how many years do you go back in time? -- when you do investigate -- it's from 2020 fiscal year till 2024 fiscal year, plus first quarter 2025 fiscal year. So 5 years and 3 months actually. The investigation has spanned over 6 months and your numbers are yet to be finalized. Does that mean that Nidec has not -- does not have enough information or documents or would it be because of a lack of appropriate personnel at accounting or financial departments?

Let me answer the question once again. There are quite a few factors involved here. If I may give you some information. As you can see in the investigation report, we conducted digital forensics questionnaire interviews, hotlines. We used all of these methods to understand what issues were. And there are quite a few issues we found. It's a huge number of issues we found actually. And we had the committee checked all of these issues one by one. And some issues were truly terrible. We had to cover all over the world, issues all over the world. It was difficult for us to be able to handle all of these alone. So we recommended the voluntary accounting inspection. That's the approach we took. We cover all the CFOs, accounting GMs to go back the past 6 fiscal years, starting from 2019. So they have to cover all of the 6 fiscal years to check for any problems or misconnects that they were able to find. And in order to optimize, we found various amount of schemes for misconnects and inventory assets, for example, they're overestimating the quantity or the amount all of these schemes have to be covered. So we need to come up with a checklist to cover all the related affiliates as well as subsidiaries around the world. So no one would trust you if you could do it everything yourself. You need to come up with the evidence. And we had these people provide us with evidence from the past. That way helped us to understand various relevant matters. And we had the cross-checking mode introduced as well. Our company and CFO or accounting GM were checked by equally experienced accounting personnel from another organization. We did this cross-checking at all these different business bases all over the world. And this process is almost over, and we have anything more than 1,000 issues. Cross checking is still ongoing. There are some 10% to 15% of the entire business bases that are actually finished with this approach. And Nidec head office is supporting, we're getting support from outside experts. And these experts need to check evidence. This is a triple checking method we have employed. Then we -- the third-party committee examined the results of all of this checking. It was a huge amount of volume we have to cover and schemes were various. We had to go through various people's eyes to understand the truth. This is why it took as long as 6 months or even longer. Thank you very much.

I would like to cover questions from as many people as possible. One person -- one question per person, please. The person over there, we're short.

This is [indiscernible]. I would like to ask a question regarding Mr. Nagamori powerharassing management. It was very influence from the past a long time ago. And that person was very strict about achieving a target from the very beginning and the foundation of Nidec. Since approximately when this misconduct started taking place, [indiscernible] strictness was shifted into misconduct-related approach. When will be -- when would you say with the timing?

Thank you very much for your question. To give you a conclusion first, we couldn't find that exactly when this misconnect started. Still, at least we can say that 2020 or even 2012 or even 2013, even around that time, JPY 10 billion or so negative legacies existed, that facts were checked or confirmed -- because I believe that's when the accounting misconnects were being connected back then. And Mr. Nagamori himself in hearing session with us told us as follows, Mr. Nagamori himself liked his so-called hands-on approach according to Mr. Nagamori himself. His approach according to himself was not really perfect enough. In the recent years that we have checked, I believe his hands-on approach was insufficient -- and the business targets were decided based on shareholders' perspective. Because of that, these targets were unrealistic. It was inevitable and unavoidable for such unreasonable targets to be created.

And that is what I could say to your question. And when the sales exceeded JPY 1 trillion, for example, when the company launched the EXL business in 2020 fiscal year or so, he started explaining in a very large blueprint -- in my impression. How about what would you say to those situation events?

With respect to financial impairment, there was a huge impairment that's a fact that happened. But when it comes to accounting misconduct, I believe that occurred far before such event took place. And this is something that I've mentioned in our investigation report. Mr. Nagamori himself were talking about achieving the sales target of JPY 3 trillion or even more. Mr. Nagamori was around the 40th anniversary of the company. I believe he probably started saying something he -- this company could not achieve. Mr. Nagamori [indiscernible] that described. In our interview with him, he said that. He knew he was leading the target. He didn't say the exact words, but he was feeling that way. It's not exactly related to the academic misconnects itself themselves. But it wasn't that there was a certain trigger for all the misconnect -- academic disconnect, but there was excessive pressure for people to achieve the very accessible high targets under such circumstances and misconnects occurred.

Thank you, please. This is [ Hirai ] , a member of the committee. I'd like to add some points to Mr. [ Hira's ] point. And it was during the company's 40th anniversary, P40 and Page 40 is where this fact is measured.

Around 2023, Nidec was 40 years old. He started thinking that he was saying something that is rather unreachable as a company. Thank you.

Any other questions? Okay. On the line, the person, fourth right from the top...

This is [indiscernible]. In your explanation, Mr. Nagamori [indiscernible] really leading these negative efforts, but CFO organizations were in charge of those problematic issues. And these -- some people thought about these [indiscernible] Methods. What layers people came up with such methods? Were these people able to come up with such methods after being told of such methods by other people?

We have identified various schemes at different timings. If you take a look at the document, we have 12 different cases. These people are very various -- these people vary CFO subsidiary. And after giving approval from the subsidiaries President, he came up with the scheme for misconnects in one case. In another case, head office accounting personnel led such efforts. Therefore, as a background, people were forced to achieve the targets. The subsidiaries were forced to achieve their own targets and CFOs of head office, they need to achieve their consolidated targets of the company. And head office accounting personnel try to help subsidiaries achieve their targets based on the conversation between the head office and the subsidiaries. There are quite a few variations. So it's all part of the same background. You have the CFO of the head office, you have the executives of subsidiary Nidec Group companies and other personnel concerned were involved in these misconnects in many cases, in my opinion.

Any other questions from anyone? Okay -- that person wearing a cap or hat, the fifth row from the top.

This is [indiscernible]. Thank you very much for your efforts. And the question that I ask you the most is about the internal investigation. Mr. Nagamori was never interviewed internally. But here, you have interviewed 5 to 6 times with him. How frequently did you accept an interview from him? And he himself says, he says that he himself, it was to blame, but what type of statements did he make to your committee? Did he really apologize truly from the bottom of heart -- did he give any instructions?

There's no instruction made from him, but is forensics, et cetera. There is no live voice opinions from him. It's like the groups of wolves as well as sheep. And of the each group says various things, start various things, royal way of business management, et cetera.

Is it true that there was no instructions? My people knew that how -- what results were going to be created as a result of such instructions. Who is going to be responsible, I wonder. In that regard, I can see only -- see the 2 different groups, sheep and wolves -- about forensics. We like to know all the words of the true words spoken by Mr. Nagamori. I believe shareholders agreed with me. And our media -- we, the media are to blame, of course. You are the third-party committee. I'm not sure about your contract terms with the company, but you need to clarify the truth about Mr. Nagamori. Otherwise, this third-party committee will be meaningless in my true opinion. What do you think?

[indiscernible] Thank you very much for your question. You definitely have a point, and I appreciate your candid opinion on this topic. I personally think that those words from Mr. Nagamori, voices from Mr. Nagamori. I think it's worth sharing how much interviews have we conducted. We can't share exactly what date, but frequency-wise, I think I'm correct. I met with them. We met with them 4 to 5 times, and we spend 2 to 3 hours each time. But I am not in position to disclose all the exact words and comments shared by Mr. Nagamori. Everything that we need to disclose are within the report. That's everything, nothing more. Regarding your point about sheeps versus wolf, I think you have a point. And Mr. Nagamori talking about that traditional accounting, traditional management, mainstream, mainstream, that is true. He really wanted to have a proper management of that committee. And I -- nobody in this committee members are in a position to deny that. But it is true that he was in part acknowledging accounting fraud and that originated from enormous pressure and realistic business target put up by [indiscernible]. And I'm sure, including [indiscernible] and the media has expressed their thoughts. And I do understand your sentiment from that question too. And I do recognize there are various views against the report that we have compiled as well.

Thank you very much. We have a limited time for this session because there will be additional press conference by the company. So I would like to take 2 more questions, please.

[indiscernible] from [ Asahi ] Newspapers. I just would like to ask a question regarding to confirm. So you acknowledge the accounting fraud from 2012 time 2013 times. Is there -- is my understanding correct? I don't want to mislead anything. In our survey process, there was some story about 2013. If I say starting from 2013, that would be misleading. You can say that from the past, but from 2013, that is just simple wrong. And that it was one episode from one of the subsidiary. I'm sure what they were shared was true. So that's why I picked up in my report. But that doesn't mean that the accounting misconduct happened from 2012 to 2013. So your research scope is from investigation scope is 2020 onwards, and you believe that this kind of improper practice happened for quite some time, correct? Our survey period started from fiscal year 2020. Okay. You don't need to share the detailed numbers, exact numbers, but number of misconduct, how many cases were you aware of as a third-party committee?

Are you talking about dozens or hundreds or possibly thousands?

[indiscernible] that was fine ballpark.

Regarding number of cases of misconduct, it's quite difficult even for us to grasp. The reason for that is because we've been asking self-check by all the stakeholders. So what happens is that once the reports filed, there needs to be certain corrections regarding, for example, in journaling process in the entries like ABC on the debt size will maybe -- may need to be recorded separately because of things like this, we are unable to calculate the number of cases at this time. And furthermore, I don't think we'll be able to get an accurate picture of it either. So regarding your questions, I'm sure the number of misconduct is over 1,000...

Over 1,000. And regarding the misrepresentation of the business performance, false statements about business performance. Did it happen?

What do you mean by I would like to have an exact definition of false reporting of business performance. For example, in official performance figures that are written in, let's say, securities report, you, those are supposed to be official. I think if there was a false representation, they got to be facing administrative or criminal penalties, I believe. In the [ U-Haul, ] so you're talking about the full statements in the [U-Haul] security reports. That did happen. That's a fact. So there can be some penalties. I am not sure about what kind of disciplinary action that they will be facing.

Okay. I understand. I'd like to take the next one as the last one. Person who is sitting way back in the venue, please.

I am from [indiscernible] Automotive newspaper. Nagamori-san was considered to be an expert in M&A acquisitions. He has acquired various businesses inside Japan and outside. And in that process, PMI activities, integrating all the operations, including governance and also treasury financial accounting work too. That balance perhaps was not well done. Do you think that the failures in the PMI effort is part of the reason for this incident? Did you hear anything about that from Nagamori-san himself? If you could please share Eps, that would be great.

In that sense, we are not looking at this practice from the perspective of PMIs -- from accounting fraud, because our perspective was conducting accounting fraud. So I don't think we'll be able to answer your question 100% because the purpose of the report is different. Service is different. This is a part of our report, too. It's already publicized. But he was adamant regarding subsidiary is to manage it the way he bought it. So he's quite persistent in not doing scrap and rebuild of the businesses that they -- what he acquired. That is the reason why Nidec has over 350 subsidiaries. Of course, they are doing sub consolidation, too in the reporting entity units, the number will be less. But the accounting practice is quite complex and the business headquarter and subsidiaries are not connected apple-to-apple, so to speak. One subsidiaries are doing multiple different business units work. So those cases definitely exists. So it leads to complexity in their accounting practice. But that is not the core reason for this accounting fraud. I'm sorry, we are focusing quite a bit on accounting department. And regarding accounting department doing work across the division, that is one improvement that -- that is one organization work that they can do. Sorry, I'm not directly answering to your question about the impact of PMI. Thank you. I'm sorry, you asked me about the number of cases, and I answered a little bit. But I don't want to mislead anybody regarding the number of misfraud cases. If you could please refer to our full report, Page 163, please. Sorry, not 163. Please go to Page 155, Chapter 7 regarding the impact of consolidated financial statement. And this time, JPY 139.7 billion, and this is mispractice and also mistakes that are discovered in this self-check process. And there is a simple error in accounting. Error is not misconduct. It's not fraud. So we don't want to add fraud with errors. I don't want to mislead you with a number of cases. I definitely would -- definitely like to have all the generalists refrain from referring to the number of fraud cases in your report. That's what I ask as an accountant as well. So how would you see this situation? Rather, I would like you to notice that this kind of mispractice, fraud were happening at various different sites over multiple different systems and fashions. And from that, you can make your own assessment. It's not of one particular business unit or one particular country or the site. And there's a segment information in Page 162 [indiscernible] there's a misconduct in the small motors, there's misconduct in group companies, 6 -- all 6 places that practice were discovered. So it's not a number of cases. It's a significant diversity.

Okay. This concludes the third-party committee's press conference. Thank you very much.

Now we would like to start the press conference. First, we would like to introduce to our presenters, Mr. Mitsuya Kishida, the President and CEO of -- Nidec Corporation; Mr. Kazuo Nakagawa, Vice President and Acting CFO of the company; and Mr. Masayuki Minai, Vice President and Chief Compliance Officer. I am Keita Watanabe of Nidec Corporation's Corporate Communication Department. In this presentation, first, Mr. Kishida will give his opening remarks, followed by his presentation on the investigation report and our company's response. And we'd like to have the question-and-answer session after that. Mr. Kishida, please start your opening remarks. Thank you.

I am Kishida, the company's President and CEO. It was September 3 last year that we launched a third-party committee on a series of issues. For the following 6-plus month period, the committee conducted objective and comprehensive investigations to identify those issues, root causes, make proposals for recurrence prevention purposes, et cetera. And on February 27, which was last week, Nidec Corporation received the committee's initial investigation report. We are truly grateful to the members of the committees. As they explained the report in detail already, I will explain how Nidec will regard this report. The investigation revealed numbers of inappropriate accounting practices at many of Nidec Group's business bases. The identified inappropriate accounting practices and errors will make a financial impact on our net assets by approximately JPY [ 137.9 billion ] on Nidec's consolidated financial statements as of the end of fiscal 2025 first quarter. The aforementioned findings include inappropriate accounting practices were conducted based on unrealistic business targets and under excessive pressure to achieve them. The company's management could not correct the circumstances and accounting and internal audit departments could not perform their check and balance functions. And further, employees submitted the wrong information and disclosed inaccurate financial statements to the auditing firm, acting in sincerely to the shareholders and investors in the market. We take extremely seriously the fact that we caused such serious accounting misconduct. To all people concerned, we deeply apologize about the fact that we disclosed inaccurate information and failed to meet the expectations of shareholders, investors and people of the market, that the inappropriate accounting practices have been causing anxiety and trouble among our business partners and that we have caused anxiety and trouble to society. To all the people concerned, we deeply apologize to the -- from the bottom of our hearts. We are truly sorry. Now please allow the presenters to see on the chairs. Mr. Kishida explains how Nidec will [indiscernible] the investigation report and the company's actions going forward. From now on, I would like to explain our response to the investigation report. Please take a look at this document back in September 27, we received the actual report, and we did some masking and other adjustments. The investigation by the committee is still ongoing. We will continue to be fully cooperative and fully committed to cooperating with the members of the committee members. And as soon as we receive the final version of the document, we will disclose its contents. The investigation is currently still ongoing. Many of our business bases in our proper accounting practices have been identified and avoidance of recognizing valuation losses, avoidance of impairment losses based on the sales plans and low profitability of achievement and the impact on consolidated net sales as of the end of first quarter of fiscal year 2025 resulting from the correction of misconduct and errors [indiscernible] to date is approximately net JPY 139.7 billion. We extremely seriously take this effect, and we will launch following appointments of our personnel. Please take out the middle section of this slide. I will remain committed to doing our -- my very best to reform Nidec. And in order to have the current status of special [indiscernible] status lifted, we will do everything we can. I will return 100% monthly base compensation until submission of the written confirmation of the internal management system. As of today, March 3, Mr. Kobe, the Chairman; Mr. Kitao, Executive Vice President; Mr. Samura, Senior Vice President; Mr. Nishimoto, Executive Consultant -- they have resigned from office as of today. In addition, first Senior Vice President [indiscernible] has his job suspended and his retirement process has started as of today. As of CPO, Chief Performance Officer will be abandoned as a position as of today. And you can see the compensation will be reduced as follows beginning in March 2026. First Senior Vice President, Senior Vice President and Vice President, 50% of monthly base compensation for 4 months with respect to the members of the Board of Directors, outside of Board members 30% monthly based compensation for 4 months. And based on voluntary request, this compensation reduction will take place. Based on these personnel actions as of 1st of March and as of April 1, there will be a major change to our personnel system. And based on the third-party committee's report and these personnel changes, all the business places in and outside of Japan, we will make sure to make our company transparent, and we will rebuild Nidec. To be more specific, Michael Briggs will be in charge of ASM and MOM business units. And Mr. Wada will be in charge of AMX business unit. And we have the senior GM system and some people will be promoted to the Vice President level from the level of senior GMs. This will be one joint step for our bright future as a company. I, as a CEO, will take strong leadership to unify this company. We need to regain trust from all of our stakeholders. As a company, we need to rebuild -- fundamentally rebuild our governance system. We will check the configuration of the Board by inviting individuals with corporate management experience and accounting expertise. We will build a management oversight structure that combines professional expertise with diverse perspectives. We will establish a truly sufficient and mandatory supervisory system. In this third-party committee's report, we have received some factual information. We will establish -- properly establish the responsibility investigation committee. And we will target the current and former directors and executive officers. We will investigate whether they bear any legal responsibility, including whether they breached their duties in execution of their responsibilities. The timing of the committee's establishment and its overview will be promptly disclosed once determined. As last year, after October 30 that we established a Nidec Corporate Reform Committee and based on improvement plan and status reports, specific improvement measures are currently being reviewed and implemented. And based on the latest report from third-party committee, we are promoting highly effective measures to prevent recurrence by making timely revisions to the improvement plan. With respect to restoring the market trust, we will complete the establishment of our internal control system and submit the written confirmation of internal management system to the Tokyo Stock Exchange. As our upcoming schedule. But before that, I would like to give you some more information to share on this slide. As of fiscal year 2025, the first half and second half year, we will have no division, year-end division. The investigation is still ongoing and based on the material impact. And this, I believe, will be the right decision for us to make as a company. First of all, to restart the division process, we will stay unified. Please go to the next slide. Dividend will be provided and hopefully -- and please look at this document impairment losses. There is a possibility that additional impairment losses may need to be recognized as derivative impacts of downward revisions to past fiscal year's profits and losses based on the findings of the third-party committee. This has been disclosed just today. Next slide, please. As of our business situation, I would like to give you a brief summary of that.

Since last time, we've been continuing to communicate with you that under any circumstances, we will not have disruption with our existing customers and our suppliers. And regarding business overview, our sales, manufacturing status and also about our filing, I would like to give a brief update. The current order status is -- remains strong, and there's been no major changes to our existing production plan. And on the right-hand side of this table, under Q3, what used to be JPY [ 652.2 billion ] in sales in the last year Q3 has increased to JPY [ 677.7 billion ] at a total of JPY 1.98 trillion levels as a cumulative total. And our production base are operating normally and have maintained supply capacity. Then on the bottom right, regarding our financing situation. And regarding interest-bearing debt, you can see from Q2 to Q3, we are at JPY 1 trillion -- and JPY [ 1.2 ] trillion against JPY 112 billion. So that means that reshuffling of the debt, we have cash in hand of JPY 500 billion plus cash and cash equivalent is at JPY 344.5 billion became JPY 890 billion, but that is a borrowing of JPY 500 billion itself plus cash flow on operation improvement of JPY 50 billion. So JPY 550 billion improvement is included. Then Q3 is JPY 890 billion. And we are not tempering any commitment line of JPY 600 billion regarding this cash situation versus additional note. And various disclosure that we shared on the February 27 and March 3. This is our company's response, and we are waiting to receive the third-party committee's final report to continue to enhance our improvement measure. And we plan to file -- submit a confirmation of our internal control system on upcoming [ October 28 ]. Thank you. Now we'd like to take questions from the floor. [Operator Instructions]. We have analysts and we have a press present in this venue. So I would like to nominate one each. I would like [indiscernible].

I'm [ Hiraoka ] from [ Nikkei ] Newspaper. Thank you for your presentation. Regarding the scope of a possible impairment loss of JPY 250 billion, if you could please give additional information on that, what that will be in the relationship with our current -- this time accounting inappropriate practice regarding the timing of this impairment loss.

Okay. I would like to have Nakagawa explain, then I will provide additional explanation to -- as needed.

Thank you for your question. The third-party committees reported -- I mean, we are reporting at the same time, so it can be confusing. First of all, this JPY 250 billion is separate from JPY 139.7 billion that came from inappropriate accounting practice that impact our equity. That is a separate thing. This third-party investigation on our wrong accounting practice will continue, not finalized yet. But at the moment, the loss will be JPY 139.7 billion. So the third party will continue to work to deliver the final results, and we would determine the impact for every year. Then we will conduct impairment loss check tracking back to the past. That's what you're seeing right now. So at this moment, we don't know by when and how much. So we would like to first set a certain premise as a hypothesis and made the simulation based on that. So this is not necessarily a final amount. When we close our book once more time, and we will do a calculation once again, then we would scrutinize again about the amount of impairment loss.

Let me add to that. As I mentioned in the beginning, this has nothing to do with an appropriate accounting practice. This time, JPY 139 billion loss that we would go back to the past. That is a rough impairment loss scope that we have recognized now.

My second question, within your -- the third-party report, there was an explanation about the negative legacy. That is the same as President Kishida's comment. How is that situation today right now? What is your -- what's your awareness levels?

Well, negative legacy doesn't necessarily equal to inappropriate accounting practice. And that was mentioned in the third-party investigation report press release -- press conference as well. It's a list of assets which can contain risk assets. For example, I was in charge of Automotive business, and we were discussing a few times about how to recognize such negative legacy in our book in this time's investigation report. I -- it's our first -- it's a news for me that this kind of discussion were taking place in various different parts of the company, too. But we need to put that in the right practice in terms of having a formal process, and have a systematic approach so that we won't repeat this kind of a misconduct to happen again. So that's my understanding.

So regarding negative legacy, what is the scale in terms of amount currently? And what kind of policy do you have regarding how to handle the negative legacy?

Regarding how much is remaining as negative is not something that we have a clear understanding. But in future, we will have appropriate accounting practice in accounting timing. And like self findings, or plan postponement to have a phased approach in the impairment loss is not something that we would do everything to avoid. We'll be working together with the global operation teams to make sure that we will have a firm process to prevent from this kind of practice to happen again.

Next question is from -- we need to take from analyst, person in the back seat, please.

I am Takayama from Goldman Sachs. I have some question about numbers to make sure that there's no misunderstanding on my side. This JPY 250 billion, this is of the past, and you have studied every year's impact and this is amount of scale. It's not a wrong practice or errors. It's legal, but this is something you should have done. Is that how you're seeing it? And is there an overlap to so-called negative legacy to this asset scope of that is a -- this is a scope for the impairment loss of JPY 250 billion. Please let me know your thoughts. And in the additional press release, it says additional loss of [ JPY 23 billion ]. I'm not sure whether it's something that will come in the future or of the past?

Let me first answer, Nakagawa, to take the first part of the question and for the future from Minai. Now this assessment for the impairment loss this time, it has nothing to do again with inappropriate accounting practice. We have went back to the past because actual figures are being replaced. So when looking at the future with the new figures, we now have revisited the forecast. Of course, we are validating the necessary impairment loss every year, but our financial statement was fixed, revised this time. So we have to go back in the past and to check again. And regarding when we would impair each asset, that is yet to be decided. So what we have discovered under the scope of investigation period, for example, the asset at the end of June end in 2025, how much of that we should book as an impairment loss? That amount is JPY 250 billion. I hope my answer is clear.

So this is because you need to revise the [indiscernible] of the past, in addition to JPY 139.7 billion, you would need to record an impairment loss of JPY 250 billion. There will be more of that?

It really depends. We first went back to the first fiscal year and looked at impairment loss booking was appropriate or not. We keep going back all the way to the 5 years in the past. So this is based on our simulations.

And regarding additional tariff impact of JPY 23 billion, this is still yet to be seen. I mean, we are still investigating. This has to do with FIR misconduct, having to pay for additional tariff. We are investigating to see whether similar practice was taken by other overseas entities. With those errors found, we would need to pay additional tariff. And that amount is JPY 23 billion, that we will be paying in future. To whom is -- against what is regarding past 5 years of import, we were paying a wrong amount of tariff. So this is JPY 23 billion for the wrong filing of tariff duties of the past. So when we investigate -- investigation completed, and then when we know for which year we should have paid this amount of tariff, then we would match impairment loss. So we have a provision for that to be ready for that payment.

Okay. So my assumption is that there will be a major negative hit to the OP levels, right?

And as you can see on our earnings call, we -- there has been some sudden impairment losses. And based on that, we would like to mitigate those volatility. So we need to have a regular booking of impairment losses when needed. That's why we are doing checks after checks, and we're doing that as soon as possible. So when we reflect the revision necessary for the past financial statement, this is a probability amount that we need to book as a loss. And of course, we will need to get external auditing regarding this cost.

Are there still more negative legacy remaining after this JPY 250 billion loss that you're going to book?

As our President, Kishida mentioned earlier, our current negative legacy will be solved all the way to cover to June 2025. That's what the final report will clarify. Then at that time, we will know how much is left. So that's something that we need to give it another try. What I mean is, as Kishida mentioned, how much risk asset we have right now will take the stock count. Then we'll have involved the export too with our internal accounting team, our auditors and auditing and supervisory committees included, will disclose the negative asset and what to do about it. Of course, we are doing business. So when there's risk in order to minimize that risk, what kind of countermeasures we can implement. And that's the first thing that we'll think about. But once we are determined that we need to have a right accounting practice process and to book it as a loss, we will. And amount is not something that we know now. If I say one word, we can mitigate the risk for the future quite precipitously in our commission.

[Operator Instructions] Now this from [indiscernible]. Person from second the left and third from the front row.

[indiscernible]. Thank you very much for your presentation. Regarding the third-party committee presentation, I've found the key that is for the [indiscernible] one of them is going away from Mr. Nagamori's [indiscernible]. But the [indiscernible] this will be very difficult and it cannot be achieved overnight. However, the way Mr. Nagamori should be put behind. However, how are you going to do that? Sorry for talking about the very severe point.

No, not at all. This is a very important point. When we established the rehabilitation committee and as we have mentioned in the previous meetings, we have to be Nidec. We have to be who we are based on the corporate cultures and philosophy, and we have to respect them. And some of them should be handed over to the future in our recognition because for us, we need to add more. That is we have to do anything in the right manner all the time. And therefore, based on this concept, the recommendations, including the improvement document submitted by the rehabitation committee or the reform committee, we'd like to apply this concept to a split. And because we are going to do anything right, the processes, including the way we have done the business in the past should be abundant. However, we have to do it courageously because doing right, this should be the basis for the corporate culture to be at the center of whatever we are going to do. And I'd like to share this split. Mr. Minai, do you have anything to add?

No, no, not at all. I totally agree with you. First of all, doing right. This should be applied to all of the activities in daily businesses in order to practice this split. We can consider what we have to do in what way. As you heard in our improvement plan that we have shared the other day, we will implement this improvement plan, but we have to walk the talk, meaning that all of the employees have to do their work in the right manner, and we have to check the actual status. And then across the globe, all of the colleagues in the Nidec Group can follow this by getting aligned on this concept. And this is what we have to do.

Thank you very much. In the interest of time, I can raise just one question. Right now, even now, Mr. Nagamori is one of the major shareholders. And therefore, do you see how you can eliminate the negative influence of Mr. Nagamori and what kind of countermeasures you are going to take, if any?

Thank you very much for your question. As you see in the report from the [indiscernible] about the investigation committee report. Yes, Mr. Nagamori is still one of the major stakeholders, and this may not change. However, for us, we have many stakeholders, including shareholders. Therefore, all in all, we have to consider how we can operate our businesses soundly. This is the most important thing for the company because we should not focus only on the part of the stakeholders because the partial stakeholders should not distort our operations and businesses along the smooth operation of the businesses, and that is the best for us to establish process and schemes, and we take this as a mission for us.

Thank you very much. Now the analyst over there. I saw your hands up.

I'm Sato from Morgan Stanley. I really appreciate your explanation. But on the 14th of November, when the financial statements were announced, there were some discrepancies between those numbers and this time numbers. First of all, JPY 87.7 billion impairment loss was registered in the first quarter. In addition to that, JPY 139.7 billion and JPY 260 billion losses happened and therefore, how they have impact on the net assets at the end of the first quarter of this fiscal year, that is JPY 1.167 trillion and then we have to subtract JPY 139.7 billion. This calculation is right? This is the first question. And the second question is related to the change in the cash flow. Are there any changes in cash flow? I understood there's no change in cash flow, but please confirm these 2 questions.

Yes, we have announced the financial statements on the 14th of November due to the impairment loss for the first quarter. However, this is the result of the third party. However, this number may change depending on the result of the third-party committee and we said it in the disclaimer. However, after the tax, this JPY 877 billion have the impact to the net asset, and this has been already incorporated. And therefore, regarding the next step. This time, JPY 139.7 billion will be offset internally in addition to that JPY 250 billion, although the timing is not clear, but this will have the impact on the equity at the future day.

How about cash flow?

Both of them don't have any impact on to the cash flow.

Now the second point, I'd like to know when the next -- the announcement of the financial statements will come? Although you said it's TBD. However, towards the next announcement, President Kishida, are you going to issue the internal governance report as the demonstration that your internal governance is sound and good?

Thank you very much for your question. We'd like to share our financial statements as soon as possible in the correct manner for each quarter, and we'd like to share the update for each quarter. And we'd like to return to such -- they should be [ status ] as soon as possible. However, as of today, as you heard in the third-party committee meeting, the final report timing is not finalized yet. However, we'd like to make sure that everything would make it in time to ensure there are no delay with this report toward the shareholders' meeting slated for June, we'd like to make all our effort to realize it.

Now regarding the internal governance report, you will make the description that there's no problem in the internal governance in that report?

We have not finalized that much. However, what we'd like to pursue regarding such targets. We'd like to hold the meeting to share the financial statements, or financial results for the FY '25 as soon as possible, and we'd like to make all our effort to realize it.

The next question, we'd like to take the gentleman in the blue tie.

I'm [indiscernible] from Asahi Newspapers. I'd like to ask about governance. The report of the third-party committee says that the diversity is not sufficient, including the outside officers of -- there are many people who had experiences at the bureaucrat. At the same time, there are not so many people who had an expertise in accounting and management and how this structure is accepted, or why this -- the open [indiscernible] sort of structure was accepted? Although there is no enough diversity, especially the former bureaucrats, for example, to direct establish better interpersonal relationships by hiring the former bureaucrats? And are there any influences over the Mr. Nagamori?

Thank you very much for your question. We'd like to reform our organizational structure from the very bottom and we'd like to reflect it in our partner change. And you see it in the partner change in the executives and officials, and we have to respect the expertise, especially in the business management and accounting. They are essential. And therefore, as soon as possible, we'd like to proceed our reform to reflect this concept. Why we have had such organizational structure? For this matter, from my perspective, I myself would like to reform this structure. That's what I say.

How about the intention of Dr. Nagamori? Was -- did his view reflected on this?

Needless to say, Mr. Nagamori has served as a representative of Nidec. In addition to that, he has assumed all of the responsibilities for the management and so is for the structures and members of the executives and officials. And then the reason why there were so many former bureaucrat and how Mr. Nagamori's intention was reflected, for example, 2 person from the [ MOFA ] another 2 person from [indiscernible] and why those former bureaucrats were hired.

Are there any criteria to hire former bureaucrats?

Regarding the selection of the outside officers, there's a so-called knowledge metrics, capability list put in place. And therefore, we refer to determine the members of the executives, and we have made it very open.

Regarding the responsibilities of the outside officers. What do you think about that?

We see the handling of the executives. However, there are different treatments for officers and executives. And I know there are background reasons. And regarding the outside officials, what would you do, including outside officials, responsibilities of the executives, we need to consider them even for the future. As you saw in today's presentation, you saw the change in the executive structure. And therefore, as you said already, in the future, we'd like to assign a person who has good experiences in the business management, as well as expertise in the accounting. We'd like to reinforce our top management structure. And that's why, as you saw in the previous presentation, we'd like to establish the responsibility investigation committee in the very near future where we'd like to investigate how the person involved has taken his or her responsibilities legally. So we'd like to investigate it. And based on that result, we'd like to take the robust actions. The target is the former and current executives. So all of the top executives should be covered by this investigation. Therefore, in the future, we'd like to take these opportunities to explain the accountability and the legal responsibility objectively. And in order to do that, we'd like to conduct good investigations. Sorry for being so persistent about it. However, regarding the existing executive because of the commitment to the accounts, depending on that, there are different treatments. For example, self-resignation as well as the suspension of the duty, these 2 are obliged to the overseas executives. Because of the local requirements, legal requirements, we have to take these actions. This is the reason. And those who resign him or herself, there were a severe commitment into the accounting misconduct. That's why he resigned on his own. I didn't understand what you'd like to know exactly. However, regarding the suspension of the duty, as well as self explanation, I believe that influence is the same. That is our recognition. As he mentioned, regarding the suspension of the duty, we have to comply with the local applicable laws and regulations. And that's why we didn't say in a self resignation because this is in compliance with the local legal requirements.

Now the next turn is for an analyst.

I'm Akizuki from Nomura Securities. I have two questions. First of all, this amount of JPY 139.7 billion, you said there was no breakdown that you could share this time. On the other hand, however, the target of impairment loss is mainly from the Automotive businesses. And therefore, this amount of JPY 139.7 billion in order to get a clear [indiscernible] if you can share the segments as well as the target businesses, if you can share those information, that's really helpful. The other question is in addition to the question one, this amount of JPY 139.7 billion of assets, or the assets will be reduced because of the impairment loss. In addition to that additional JPY 250 billion reduction happens. And then I don't know the level of the profit. However, ROIC must be really high, operating profit is right. And then based on this prerequisite, ROIC should be very high because usually, especially for the manufacturing companies, your ROIC must be higher than usual conversely speaking. Probably your [indiscernible] loss is too aggressive, that is the outside view. However, this accounting treatment, it can be a arranged. However, I believe there are some people leaving the office. And therefore, as a negative aspect, I believe there will be a future possibility for such assets to be calculated. How are you going to secure profitability in the future?

Nakagawa, please go ahead.

First of all, in terms of scale of profitability in which area of businesses. Please go to Page 163 of the document. You can see the amount in individual businesses. Small business model business, JPY 1.3 billion, attraction and AMEC organic, JPY 5.74 billion; JPY 8.6 billion, ACIM, JPY 15.7 billion [indiscernible]; group companies, JPY 39.3 billion. And that's the breakdown of JPY 139.7 billion. And you can see how much additional amount will be made based on this. When it comes to JPY 250 billion, which is the second amount, is approximately JPY 250 billion to be subject to financial impairment. And we need to recalculate and reexamine the exact situation in detail to understand the exact amount of the assets to be subject to the financial impairment. We need to go back in the past to understand a proper way of doing businesses, and we need to discuss with our auditors to come to conclusion. I'm not sure about this, the correctiveness of this term aggressive or not aggressive, but these are what we are doing. As has been explained by Mr. Kishida a few minutes ago, this is basically primarily in connection with the Automotive business. If there is any financial impairment, there was significant reduction in the future amount of such impairment. A goodwill is also included, if I may add.

There is one more question from me. You, I believe, announced the midterm business plan and the plan was unrealistic according to the comment by the third-party committee. You may not want to hear this, but did you announce the midterm business plan, realizing the plans will be unrealistic from the outsiders, and those will be looked very aggressive, but as an analyst, I thought part of the plan was rather unrealistic. As you announced the midterm business plan, objectively speaking, did you think that the plan was unrealistic? Or did you accept the plan as such in order for you to -- and are you willing to achieve the target at the time?

That was a very deep question. Thank you very much for that. So far, in the third-party committee's report, there is a reference to that from a different perspective. With respect to the midterm report we submitted, Mr. Nagamori said that it's a very conservative plan. And [indiscernible] direction, we should have a slightly stretched target. Back then, we thought that if we stretch ourselves a little bit, we will be able to achieve the target. That's what I though, back then. And I believe you understood some points we have made in the past. In addition to active investments, infrastructure in IES, for example, to connect information with a piece of information. Looking back now, I believe that -- and we have to cover more than 300 business basis as has been explained by third-party committee. We need to build the infrastructure to connect all of these basis. That was actually the basis of our midterm business plan. We believe that's part of our target at this moment as well. But when it comes to figures, given the current circumstances, we need to reexamine and we will be able to provide you with the realistic figures in the future. That is all from me.

Thank you. Next question, someone from the mass media. From your right, the person in the front, male person up here.

I'm [indiscernible] I'd like to ask you about Mr. Nagamori. He resigned the office from the Chairperson Emeritus. How is it now? When he became Chairperson Emeritus, he was a non full-time executive. What is the difference between then and now? I believe the Chairperson's office is now gone. And as Chairperson of Emeritus, she was receiving a salary, but not anymore, I believe. What are the major differences between then and now about Mr. Nagamori? And what type of thought feelings do you have now about this third-party committee's report? You have worked with Mr. Nagamori. You became President after being promoted by Mr. Nagamori after giving a positive evaluation by him. But now Mr. Nagomari is being accused, criticized. You were taught by Mr. Nagomori in one way, I believe. What thoughts do you have about Mr. Nagomori?

Thank you very much for your question. [indiscernible] differences, physical differences between then and now. Mr. Nagamori is no longer Chairperson Emeritus. He is no longer receiving money salary from the company. And his former office, based on his will, is now being reorganized. It will be removed from the company somewhere outside the company, that will be my understanding. Not so major physical changes between then and now about Mr. Nagamori. It's been 4 years since I joined the Nidec. In the first year, I was overseas. I became working closely to him and having a conversation with him only after I became President 2 years ago. In fact, he taught to me a lot. And in this company, it was totally different from my previous occupation. I learned a lot. I learned a lot about this company's corporate culture. I need to understand what to master. I received several important lessons from him. Still, now we have received this report from third-party committee. So it's a very candid, straightforward report about him. I honestly was surprised. My own mission, as I've said at the beginning of my presentation, is to unify very strong technological capabilities with sincerity of Nidec employees. We need to make this company more global and better company. I would like to dedicate myself for the purpose. That's what I have thought so far, and I'm going to have to thought more strongly than before.

Mr. Nagamori is gone, as you said. Going forward, in the past, Mr. Nagamori as the founder of the company, he would like to visit the company sometimes when the timing is right, et cetera, as the founder of the company. Is there going to be such interactions between you and Mr. Nagamori going forward?

There is no -- it has been such that there is no plan like that.

When did you met -- see Mr. Nagamori last time?

When he quit Chairman Emeritus in the morning of December 19, I was contacted by him. That was the end. That was the last time that I communicated with him.

Are you going to meet with him?

Not in my schedule as there a such there such a plan to meet with him.

Someone in analysts? Someone in -- from the mass media? From your left, second row, or the fifth row, lady over there.

I'm [indiscernible] Tokyo. I'd like to give you two questions, Mr. Kishida. First of all, about the contents of this midterm business report. And what are you going to review based on the third-party committee's report? There are quite a few points made by the third-party committee's report, the departure from Mr. Nagamori's business [indiscernible], among others. In addition to all the points you have made already, what are the additional points you would like to make as changes or improvement?

Thank you very much. First of all, in the third-party committee's report, we have this improvement plan. I believe the direction of the improvement plan has been endorsed. It's a very -- that's something that is recognized very strongly. In addition to that, what we need to achieve is a shift from Mr. Nagamori's company to a different and better company. We need to establish a process for the shift. And that's an important mission theme for us. [indiscernible] Mr. Nagamori in the third-party committee's report, but we, as a company, we need to improve our corporate culture. We need to improve our corporate systems. That's our major and largest mission for us. And some of those actions may take time, but we need to do everything correctly. That's the center of our mission. As we go forward, we would like to brush up our improvement plan as we go forward. Do you have anything else to add [indiscernible].

Mr. President, this is absolutely right. And in addition, if I may add something from the third-party committee report, there is a strong mention about particular emphasis on the [indiscernible] and restraint. I believe that's quite important. And especially our auditors and outside auditors and all the internal auditing department personnels, they would need to strengthen the governance within our company and work together, integrate and to strengthen the problem awareness mindset. When they need support, those outside resources needs to be available. So that kind of working environment needs to be better prepared. And we do recognize as a company, we need to create a better place to work for those who are in charge of auditing activities. I myself is deeply feeling that we need to rely more heavily on outside directors' opinion and also we need to seek experts as well. Outside directors bears legal responsibility as well. And also in this third-party dialogue, including audit, we need to strengthen this, the quality of the information that we pass to auditing entities. That needs to be a part of improvement idea.

Thank you Second question Hiroshi-San mentioned in the third-party committee report that he has uncovered so many numbers of mis -- accounting mis-practice -- malpractice. And even under the significant pressure from Nagamori-san who was the President for the entire company, this fraudulent accounting was a common place for the entire company, and it's become your entire corporate culture. I think that concept is already permitted within ingrained in the companies. Is that something you can change?

I'm taking this report from the third-party committee quite seriously. And I understand that from a long time in the past that this kind of accounting practice, wrong accounting practice were done at many different sites of our companies. And as a company, we must develop measures to prevent this kind of practice from happening ever again, and to respond to the capital market and all the partners and all the suppliers and all of our stakeholders, we need to respond to their needs sincerely and taking this report firmly to come up with solid improvement ideas and act accordingly.

President Kishida, this fraud on accounting has taken a root already with your organization. What do you think about that? Are you aware of that?

Well. There are many new discoveries for me after receiving this report. So as the President and CEO, I was not fully grasping the scope of this kind of practice taking place within our organization. I regret that quite seriously. So I need to look at this fact straight on so that I can implement the improvement measures and systemize it so that we would never repeat this kind of incident to happen again.

Now I'd like to take questions from the floor.

I'm [indiscernible] from [indiscernible]. In the investigation report says what's the key for the improvement, is outside directors, strengthening outside directors' governance? And there are many outside directors they needed. And they didn't recognize there is such a significant pressure coming from the top of the organization. And regarding this significant amount of negative legacies, they want to fair either. So I think they were not doing their job. It's clearly the re-election of duty. So I think you need to clarify the kind of penalties that you would be requesting to the outside directors because they were not doing the job. I don't think otherwise, you can start your revitalization process in a proper way. I think they need to file the resignation letters, or all these retirees from tax agencies and the Ministry of Finance, all those people. They have created some group of superpowers. That's what the report says. And one more thing. And the presidents were back then before you were reporting to the Chairperson, but they're being ignored. But at that time, usually, President should consult with outside directors, but they aren't doing that. That's a wrong governance. The governance is not working. So this is really equal to breach of the outside directors' duty. It's -- they're not doing breach of duty of care. So I would like to clarify about the kind of penalties that you need to impose to those people who are not doing their jobs. Usually, when a company faces serious instance like this, usually directors go to outside director for consulting, but didn't happen.

Thank you very much for you to point out, this is a very important point. It's very serious. I myself do recognize that I need to consult and leverage our experts outside directors' opinions. As this report mentions, the quality of information that our companies were providing to the outside directors were not all that great, didn't raise the alert concerning mindsets amongst outside directors. So I myself did not act enough to seek support from outside directors. And all the directors included, including outside and full time, including legal responsibilities, we would investigate what kind of penalties would be -- needs to be imposed once we establish the responsibility Investigation Committee, including legal responsibility, too.

I'm Furukawa from Bloomberg. I have two questions to President Kishida. Before you start this press release, this securities investigation surveillance Commission announced that there's been a possible infringement. It may violate the Financial Instruments and Exchange Act. And third-party investigation committee from [indiscernible] mentioned that there is a misrepresentation in the statements in [ Yu Hu ] as well. Is that your understanding as well?

Regarding the first point of the questions, I have no ideas about us infringing this Financial Instruments and Exchange Act. I would look at this report and to confirm what is the situation, what's the claim. And second point regarding [ Yu Hu's ] security reports, are we going to go back to the past report and make the revision. And as Committee Chair, Hirao mentioned, I do recognize that when the [ Yu Hu ] needs to be revised, we will, we need to. So after receiving this time the investigation report, once we know the amount and the timing of the revision necessary, we would like to conduct a change.

So you think that the current mis conduct would require changes to the [ Yu Hu ] Securities report?

If necessary, we will.

The second question regarding these currently implementing various reform because you are determined to maintain being listed. I would like to ask Mr. President, do you think that being a listed company is essential? If so, why?

Thank you for your questions. I myself and for the company today, for October 28 report that we need to file to the authorities, we are working to get delisted from the security -- our stock as a security on special alert. And there are certain choices of going private too. And I think some companies who are in similar troubles did consider such measures too. At the moment, we are designated as a security on special alert. So our first effort is to be delisted, designated as security on special alert.

I'm sorry. My whole question is the reason for maintaining the listing in the stock exchange. What is the real reason?

Well, so that we maintain large extensive fundraising capabilities and also resulting in a broader business canvas, I would say. If you have anything else to add, please?

I'm okay. Thank you. You are comprehensive.

I'm from [indiscernible] Asahi Newspaper. I would like to ask questions regard to confirm. Chairperson Kobe 4 for others are resigning on the press release. But resigning from the position that will still have a position in the company?

They all resign from the company. They still do have some roles in the subsidiaries. So including those roles as subsidiary, they would exit from our group.

So they don't have any seat in your company as of today?

Correct.

My next question is, regarding the legal responsibility of your directors to pursue that, you will establish the responsibility investigation committee. And you said swiftly by when you are going to launch that? And what kind of study this investigation -- Responsibility Investigation Committee will study? And what will be the scope? Would Nagamori-san be a part of the investigation as well?

Let me give a first try in answering it, and please get the -- provide additional information. So now that we are receiving this external party, third party committee report and existing and the past director executive officers, we will study the legal responsibility of those management levels, including the opinions from outside experts with objective viewpoint. We are already selecting the nominees, people's makeup for this investigation committee, responsibility investment committee. So as long as we know more, we will share with you.

So are you going to possibly file for possible damages before possibly face a claim for something that is driven by shareholders [indiscernible] lawsuit?

Thank you. We are considering various options.

One more question. In this report, there was a comment about President Kishida regarding the settlement of negative liabilities, process of negative liabilities in 2024. Keita-san mentioned to Nagamori-san about the need to process negative legacies many times, but Nagamori-san said no. What does that mean? What really happened, Kishida-san, would you please explain with your own words?

Thank you very much for your question. So what is negative legacy? That's something that we explained already. It's not that the entire negative legacy equals all the misconducting accounting practice. I myself, since I joined this company regarding the businesses that I was leading had a certain structural reform. At that time, I didn't know there were over 300 subsidiaries. Back then, various businesses we had to complete some of the manufacturing plants. That need is definitely there as a business unit leader. So under this slogan of structural reform, I kept mentioning about the need of that many times to Mr. Nagamori. And this time, the third party committee report mentioned is about the one of Nidec business, about the Automotive business, regarding the processing of structural reform outside our operating profit layers. It will be the extraordinary loss, if any. It won't be within the -- above the OP line. So it will be outside this OP target under this enormous pressure. So a part of what should have been processed was not something that was executed within that given fiscal year. That's what I mentioned.

So whether everything is a result of the accounting misconduct or not, it's not clear. However, as a result of all of these activities, there were legacy liabilities. However, you are aware of that as the person in charge of the businesses. And therefore, what kind of wording phases did you use to appeal for the necessity to disposal? Can you please explain the situation?

Regarding the situation, including interviews and forensics, this is part of the investigation. Therefore, actually seen and what kind of discussions went on, everything was captured in the report by the investigation committee. And therefore, there's nothing I have to add or I can add.

[Operator Instructions] Now the person in the front row here.

I'm [ Takaichi ] from NHK. Thank you very much for including Mr. Kobe. There are 4 people who resigned the company. But this time regarding Mr. Kobe, based on the points identified by the third-party committee Mr. Kobe should be regarded that he was aware of the misconduct, accounting misconduct in a planned manner. That's why this treatment was given. However, including other executives and officials regarding the fraudulent accounting as well as the recognition of those misconducts, did they recognize all of them, or because there are high involvement, and that's why these people had to resign the company.

Thank you very much for your question. Regarding the report issued by the third-party committee, if you see the actual name, all of them are basically the executives and therefore, nonexecutives such as the officers, I cannot explain the specific descriptions. However, at the executive side, we reviewed the contents of the report. And based on that, we made this decision, and we have shared that decision today.

The other point regarding President Kishida, you made the recommendations over and over again to Mr. Nagamori. And despite of those repetitious recommendations, all of your requests were turned down. And therefore, how did you feel about them after being turned down your request, there's nothing conducted. And therefore, even though it's kind of the objection or opposition to Mr. Nakamori's intention, however, you had to proceed with the proceeding according to the report by the third-party Investigation Committee. What did you think -- what do you think?

Thank you very much for your question. Right now, I deeply regret that I should go further more because for 4 years after joining Nidec, I tried to normalize the asset quality of the company towards the future sound operation of the assets. And I'd like to lay the foundation for the future growth. However, every time, everything I tried to do was not executed. In addition to that, I had to go deeper to give the in-depth insights. And then probably I should have been able to do something more, this is very regrettable in order to prevent such things from happening in the future. I'd like to make my resolution new.

Thank you very much. Now the person over there in pink shirt.

I'm [ Tsukaoka ] from . Now regarding the selection of Mr. Nagamori is to nurture the copy of Mr. Nagamori, and that is the process for promotion. And that concept is represented by President Kishida sitting over there. So because there are many Nagamori or the copied Nagamori is mainly the executives and officials. And then there are many people still remain in the company. And therefore, I wonder whether you can eliminate all of the misconduct, including fraud accounting. And there is no more Mr. Nagamori. Still Nidec can maintain high profitability by growing furthermore, both at top line and bottom line.

Thank you very much for your question. I take the situation quite seriously. Of course, the company should be business concern. And therefore, can we eliminate anything totally to move on to the next step? It's impossible because there are something we have to inherit, especially in the manufacturing company. And therefore, we have to make the selection and concentration to determine what we have to take over. And then I believe we can achieve the high profitability. And I myself would like to stick to that concept. And then I believe we can turn Nidec highly profitable company once again. So you have to set a high target. Otherwise, you cannot expect growth. And therefore, how you define the high target regarding the growth, if the target is high enough, can we achieve that high target? No way because we are a manufacturing company. And therefore, we have to sophisticate our technologies through the discussions and dialogues with our customers. And then we can generate something new, totally new that has not yet existed in the world. And we have to generate such noble products. And in order to do that, we have to develop our technologies and human talent. And then I believe that Nidec can be the highly profitable company after reverse. It's interesting. However, there are many impairment loss related to the automotive business.

And I believe this is actually related to E-Axle. And therefore, what is the actual situation of E-Axis right now? It's an , however, you have stopped new development. I don't know whether it's fact or not. But right now, this E-Axle as part of the automotive business, can you please explain that because we see so much development in the EV. And did you see the sales increase or the increase of the production units? There was no such announcement. And therefore, I'd like to know the current status of the E-Axle.

Thank you very much for your question. There are mainly 2 sites for the businesses of the E-Axle. One is at the joint venture . This is a joint venture where the manufacturing and the business development were done for E-Axle. The other site is in the joint venture with Kuka in China. We call this company GACC. So joint venture of GACC is the other manufacturing site for E-Axle. Now regarding the production in China, as of today, Japanese company related to the joint venture with a Chinese company. And then right now, production level has been stabilized. And therefore, based on this site in China, probably Japanese company or Indian company can be a partner to develop new products for our customers.

So you still work on new development. Is that right?

That's right. We don't discontinue the new product development.

Thank you very much. Now the person in the third row over there. The second from the right, yes. Thank you very much for raising your hand.

I'm [ Tokuda from Toyo Keizei ]. Now first of all, as you mentioned, there were 5 officials resigning the company. Then because there are influences -- negative influences of the corporate culture will be huge. That's why company has determined to ask them to leave the company. Is that right?

Yes. The people who resigned the company this time is a result of our managerial decision because their influences are quite huge. Regarding the operation of the business, they have had high influence of the businesses and in order to change our operations in a new way, their resignation is essential, and that is the business management by considering many things comprehensively.

Now next, I'd like to ask about the future generation because pruning may happen. However, thanks to M&A, you have grown this much. However, when I refer the improvement plan, you said regrettably that the management of many, many M&As were poor. And therefore, for the future, you have to be lean. And do you do anything to be a more lean organization, including BUs and the sites?

Thank you very much for your question. I believe the previous question is quite similar to yours. In our midterm plan, for the bigger scale M&A and further growth should be there. But before that, we have to integrate and eliminate unnecessary manufacturing sites and the businesses to be more lean. In addition to that, we have to make system investment. And then we can put together necessary information that should be the basis for the future growth. That is our intention. And you can see that policy in the report or even after receiving the investigation committee report, this policy will be maintained and then when I look at the message of Mr. Nagamori as the Chairperson Emeritus, he will work on the human development as one of the . And therefore, as Nidec, he will still be involved in the human development or there's no involvement. How Mr. Nagamori will be involved or not involved regarding the human development at Nidec. No, it's not their intention. He has schools and the other educational organizations. And therefore, we assume that he will focus on these institutions, not Nidec.

Thank you very much. Any other questions? Yes, person in the fifth row on this side, thank you very much for raising your hands.

I'm [ Nomura from TV Tokyo ]. Regarding the recognition or awareness of the accounting misconduct, President Kishida was described as he didn't recognize the misconduct -- the accounting misconduct, but how about Mr. Nakagawa, is that true? I suppose that you didn't recognize the accounting misconduct, but how you should assume the responsibility as executive.

First of all, I'd like to answer to your question. And after that, Mr. Nakagawa will answer to this question. First of all, to me, I believe I have to assume the managerial responsibility. That's why regarding this time scandal, I'd like to give a much deeper thought to take actions or I should have to get involved deeper to take appropriate actions. And therefore, including this regarding my own policy, I spontaneously or voluntarily return my remunerations 100%. Still, I'd like to get involved in the management of this company. Now Mr. Nakagawa, please.

According to the report, yes, there has been the huge pressures imposed on to all of the employees. However, I don't have any personal recognition of this accounting misconduct. I tried to reduce the financial costs as main activities to the financial personnel. And therefore, I was immune -- I was immune to that pressure. Thank you very much. It's my term. I don't have a recognition of accounting misconduct regarding the pressure for the business performance. Yes, I'm aware that the pressure to better performance was very strong. However, whether that is related to the attitude of that or not, I was aware of that pressure.

You mentioned that there has been strong pressures across the board. But to you, what kind of pressure you are exposed to, including how you felt at that time? Can you please share the specific wording and how you felt?

Because I'm a member of administrative department, and therefore, I don't have a direct pressure regarding the performance. However, every year, I saw that all of the business units had to set up really high targets each year. That's how I feel. Thank you very much.

I see many people still raising their hands, but I'd like to cover you . First of all, the person in this row, please.

I'm Yamamoto from . I'd like to ask 2 questions to Mr. Kishida. First of all, toward October, sorry for asking qualitative questions, but are you sure that you can get away from the current status in October. Now regarding the cultural change, it's really hard to capture it quantitatively and therefore, how the organization structure should be and how the corporate culture changes, not only the structure, but also you have to walk the talk and how do you take it? Just one question.

Thank you very much for your very precious question. When it comes to the exact date, October 28, we will make sure to achieve our task by that date. There are quite a few hurdles go over towards the goal, but we need to cooperate working together with other people concerned as we go towards the goal. We need to change our culture, corporate culture as a company. It will take time. I do realize that. First of all, in our improvement plan and towards the line of October 28, for the next 8 months, there are things we need to do, and there are quite a few things for us to do in the next 2 to 3 years. We have -- we need to make such a road map we need to share the road map firmly among those concerned. That's what's important in my opinion. We need to visualize status. We'd like to share information with everyone involved in this process. Thank you very much. And related to my previous speakers question, you need to bring some masculinity. You need to make your organization stronger. You -- as necessary, you borrow some capability, some help from the outside. Do you already have any specific plan for that? Thank you very much for your question. In that regard, we have gone through M&As, and we have constantly been growing as a company. That's the history of our company Nidec. During this time, we need to be firmly steadfast and committed to our belief to understand what we need to do. We need to introduce our new ROIC system based on that perspective as well. We need to review our management system, and we need to make sure to work on those various issues. Are you going to differentiate the core businesses from noncore businesses? Yes, exactly. As part of our midterm business plan, we have core businesses and noncore businesses. We have future hurdles to go over. We need to understand what's currently profitable as businesses. But beyond that, as a manufacturer, we need to understand we need to anticipate the future. And towards our future goal, we will make firm steps going forward.

And from your right, the person over there, the far right.

This is Naito of Citigroup Securities. I would like to give you 2 questions. First of all, with respect to AMEC business unit, what was the problem with the business unit? What will be your opinion about for improvement? According to the third parties committee's report, and improvement plan. And I believe the major problems lies with the AMEC business unit. We have been tracking AMEC business unit profitabilities. Do you think you have to make downward revisions about AMEC's profitability? What will be the major reasons for the current struggles that of this AMEC business unit? What's the reason for you to have to have incurred negative legacies? Can you provide us with your opinions?

With respect to AMEC automotive motor business, the scales of investment is huge compared with the other businesses. The financial impact is huge is that it tends to be regarded as issue generators, problem generators. They are in a very currently very severe competitive situation. In the past, we have been trying to reform the business unit, AMEC business unit. And we are continuingly making efforts to improve the business. As a motor business, we have automotive motors. You have to have high-quality motors, high quality performance level performance as well. Technologically, it's very difficult to make these automotive motors. We will continue to produce those motors together with the other motors that are difficult to make. That will be part of our product portfolio. We need to reexamine. I believe the purchase company have had some problems in the AMEC business unit. Well, it's not that the M&A has had problems. Within purchased companies, within this JPY 250 billion, goodwill is included. Goodwill as of M&A could become 0 in value. Not only our own business, but there are quite a few purchased businesses whose issues have to be solved.

And there is one more question, which is related to the previous speaker's question. With respect to cost, it's about strategic investment is very important, as I understand. In order to make yourself a very new, are you going to make investment in human resources or infrastructure? What type of cost increases are you expecting to see occur in the future?

In the end, we need to be able to disclose our midterm business plan. That will be the right time for us to answer your question in detail. But my gut feeling as of today is that present infrastructure investment in human resources, for example, we have this more than 300 business entities. We need to consolidate them. We need to educate people to do the right thing when they work as they work, we need to increase our investment in such infrastructure. That's what we need to discuss internally.

And the second person from the right, the person fourth person.

And this is [ Ivan ] with TVS News Broadcasting. There's a huge financial impact, and that will make a huge impact in your own company as a whole. But as you try to reveal, you may decide to shut down factories, you may lay off people. Would that be a possibility?

Thank you very much for your question. Production facilities and the large-scale consolidations, we are not making any of that yet. But in our day-to-day operations, we may decide -- we will continue to work on consolidations and improvement of our business operations. With respect to business consolidations, portfolio reviewing will take place. And we may realize a larger scale of need for reforming portfolio. We will have no sanctuary as we go forward with our reform efforts.

And a person from there and the third person from the top.

I'm . I have 2 questions for you. First of all, I'd like to know what has been done secret audit report or investigations. Based on Mr. Nagamori's secret request, there was a person on the special missions. This part is very black in my opinion. Nothing is very clear in other words. I believe there are some facts hidden here. As of now, as a company, what did you find? And what information do you have about this special mission?

Special mission audits, I do not know anything about them. I do not know anything more than the report by the third-party committee.

It may be difficult for you, but do you have any plan to investigate into these special audits as a company?

With respect to the contents of special audit, I do not have any plan or thoughts about it.

And my second question is as follows. With respect to the negative legacies, according to your explanation rhetoric, you do not understand any misconnects. Of course, the third-party committee says not everything was a misconnect. But with respect to the negative access as a whole, there are quite a few issues and problems. Mr. Kishida, you yourself had some very strict request to Mr. Nagamori. Did you really not recognize the misconduct, but did you think that to some extent, such misconducts will be okay? Did you have such a recognition or did you not have such a recognition at all?

And that's a very important point that you pointed out. And in the third-party committee's report, I am referred to there as one of the individuals to be mentioned in the report. I need to make one step further. I should have made one step further to try to address those issues. That's something that I'm reflective of. In order to prevent the recurrence of such misconnects, we'd like to build a new Nidec as a group-wide project.

There is one more question from me related to the first question. With respect to the corporate reform, corporate culture reform, we have people from Diamond Publishing and from us, Toyo Keizai Publishing. And some of us have been prohibited from contacting you or visiting you. And now we are allowed to be here, and we are grateful to be part of this press conference. Are you going to try to -- I believe Mr. Nagamori's personality was to refrain from communicating with such a highly critical mass media outlets. I don't want to do that, Mr. Kishida. Can you ask about -- can you ask your opinions about this? It's a very important opinion.

Thank you very much. In this meeting as well, we'd like to have as many people as possible. We'd like to have many opinions from as many people as possible as we try to operate our businesses. That's my strong determination. Going forward, we'd like to have opinions from as many people as possible. Thank you very much.

[ Yoto ] From Nikkei Business. I would like to ask you about how you recognize the need for governance. In the third-party report, it says up to August 2025, your power was quite limited. And the final decision-making, especially in the personal matters were given to Mr. Nagamori. So the President and CEO's authority were quite small. And did you ever question about the level of governance? And did you and any other management levels ever questions all the powers concerted to Nagamori-san?

I became the President in April 2024. And in June 2024, we became a Representative Director and President and Executive Officer. And until August 2025, third-party report states that all the final decisions were made by Mr. Nagamori. That is true. But from 2024 June onwards, I was on role as Representative Director, President and Executive Officer. So I have no intention to indicate that kind of responsibility and the task that I told all me were anything small. I do believe that I will fulfill my role as a CEO. And in order for this company to truly revitalize itself, I would like to put my all in this effort once again.

This is a question to Mr. President Kishida as well as all the top management levels. Final decisions belongs to Mr. Nagamori. That was a common sense. How was it perceived by all?

First year of becoming a President is really a transitional year in many ways. I do recognize there were issues in our company and actually starting to make change to our internal approval systems. That started around that time. But actually, the time that the response was given to me was not until the 2025 August time. But there's been a discussion that how to transition and pass this decision-making power from Nagamori-san to myself. It's been discussed for quite some time. So under the new management leadership, how to manage and how to set the right decision-making authority. And we need to established operations and systems and processes based on the learning.

I am [ Kishi ] from Major Market. Regarding getting delisted, that is an option for some companies too. Then if that's the case, I think that the investment plan are activated. I wonder whether they are making only special proposals like that. You would like to maintain the position of a listed company. But going forward, I wonder whether you are saying definitely no to going private?

What I can say is upon the filing of the internal audit plan, structure confirmation documentations, we are aiming to be designated as the security on a special alert. That is our first priority, and we have no intention of going private at this moment.

I'm Kato, I'm a free journalist. I have a question regarding audit. First one is in the third-party report, the parent report, this honest report information shared to the audit firms. CFO is now resigned, but -- and the report says that there are comments like many incidences like that misinformation were found from various different parties. And it looks like it's a corporate culture. I wonder 3 of you have recognized the same. What do you feel finding the current accounting firm as an easy target to persuade.

I have no sense like that against .

I echo the same opinion as the President.

Okay. Thank you very much. Another question related to audit. And you have switched from a company with Audit and Supervisory Board to a company with a committee. 10 years ago, you have established Audit and Supervisory Committee. And they're supposed to do organization audit. Does that mean that shifting to committee level was mistake for you? It would have been better to depend the audit responsibility to a single person, highly independent Board of Directors. Don't you think?

I also needs to improve my capability as an auditor, as a member of the Audit and Supervisory Committee and taking on the lessons learned from the report of third-party committees, we would like to carry out the various improvement measures to manage this business.

[ Toshima ] From Diamond. I have a question to President Kishida. Regarding your responsibility as Business Executive Officer regarding business execution. You joined Nidec in 2020, then you became VP or CEO of Europe of AMEC business. And this time, impairment scope, the biggest one is against the AMEC business. You can't be forgiven just by saying no, I didn't know. I think you were in charge of meeting the business target. And I understand that the relationship with Mr. Nagamori deepened only after you stepped up as a President. But regarding your execution responsibilities, I wonder what were difference between those who resign and you remaining as a President.

I don't think it was something that some people are forcing everyone to come up with those numbers and some were bringing. I don't think it's as simple. I joined the business actually in 2022. Ever since I joined this group, I've been proposing various structural reform and try to drive that effort myself, too. The first business that I joined is Europe, Nidec. And then I was given a specific task to handle various claims, and we have been continuing to do so until today. And I would like to go one step further and to revisit some of the measures that I have implemented. I could have done a step deeper I need to do it differently. And that's something that I take quite seriously. I will continue to work toward the soundness of this company's assets management and make operations more efficient.

And my second question is related to the first one. From outside perspective, for us, when trying to revitalize a new company, I think it would only make sense to bring in a new person to the entire organization. But Mr. Kishida, someone called you as a manager of Nagamori. You are appointed by Mr. Nagamori. I think you are considered a person that undoubtedly who helped encourage Nagamori the way he works. So I wonder what sort of feeling do you have against those claims?

I never saw myself as the manager of Nagamori or copies of Nagamori. My most important effort is to re-designate Nidec stock as currently under security on special alert. And that is the most important theme for our management. That's what I am fully consistent on achieving.

In this report, there were quite a few hard comments against Mr. Nagamori. And it makes sense because he was head of your organization. But it also can be read as if Nagamori-san is the only one who's doing this wrongdoing. What about the response of outside directors, I have a question by my colleagues and what about existing management, including President Kishida, your business execution responsibilities or each business responsibilities head, I wonder whether you are purposely directing all the response to be concentrated to Nagamori.

I understand your point of view, but I personally think that this report is not about that only blaming an anomaly. Rather, for us, the business manager, it contains a lot of the ideas or suggestions and improvement measures, advices. The starting point of the proper accounting practice started from Mr. Nagamori. And -- but regarding company structure and mechanism process and culture, what kind of those things led to these incidents were mentioned clearly in this report. So we will take this report of serious lessons learned and try to work as one unit, the entire company together to turn this company around.

I'm Kurokawa from Sankei Newspaper. I don't mean to repeat my colleagues' questions. But regarding this responsibility, investigation committees future activities, and how Mr. Nagamori and how other people who led to improper accounting practice, this committee will in embrace legal responsibility. And once they were found guilty, is it true that there may be actions taken such as filing a lawsuit seeking damages.

Let me take that question. Thank you for your question. And that is very much the task of the Responsibility Investigation Committee, and we would -- the scope is all the Director and Executive Officer of present and the past and including Nagamori. And what to do with our finding is not yet decided.

Thank you. Now one more question. This is a bit outside my specialty. I hope I'm not asking your question completely off the tangent. This first conference started at 08:00 p.m. and is already close to 10:00 p.m. Why didn't you decide to start this press conference earlier, it's quite a difficult time for even the media to cover. Why did you choose this late evening to hold this press conference.

The other point, I would like to thank you for gathering at this such late time of the day. And the timing of disclosing this committee's report and I wanted to -- we wanted to have a press conference soon after this kind of official venues to make sure I address to all of your concerning point in the Q&A questions. So we wanted to piggyback one after the other, first from a third-party committee report then our own press release. And I apologize for having you attend to our press conference until very late evening.

Thank you very much for your explanation and presentation. I am Takasago from Electronic Device Industry newspaper. I have a question from a different angle. Your order taking manufacturing is on track according to your forecast and plan. Okay. So business is proceeding as usual. But regarding CapEx plan for the future, I believe you are planning to spend JPY 140 billion, majority of that is for India. And currently, I think for your plan, you are trying to build 6 new plants in India. And out of that, the 4 plants are already in construction. And there's JPY 140 billion of CapEx budget. Is this something that you are progressing as planned? Or perhaps you are postponing or suspending some of those CapEx plan. That's my first question, please.

Thank you very much for a very important question about our business. Regarding CapEx budget of JPY 140 billion because of the current circumstance. What is most important for us is secure our cash on hand. So right after Nidec stocks being designated as a security on special alert, we have a strict scrutiny of every single investment. So this year, we will not be able to exercise our entire JPY 140 billion on CapEx and budget. But within the India's CapEx, 4 plants plus 2 more. Those are AMEC business plans for India market and also compressor plants for white goods. Those constructions or studies or land surveys are conducting as planned. And demand in the India market is progressing as we have forecasted. And we are carrying out the investment to India market as planned.

You mentioned that in order to secure the cash, you will spend less than JPY 140 billion CapEx. But of course, you haven't closed the year. So it's quite difficult to ask for you to disclose the details. But to what extent do you spend this CapEx?

It's not that we have revised our plan for the entire budget for the CapEx, we haven't suspended any of the major CapEx projects. But we are trying to control that spend, and we would prioritizing that spend as well.

The other question is related to the automotive business because if I recall correctly in China, magnet of E-Axle will be launched in China in 2028, before that in 2027, 7 in 1 will be launched. There were such specific plans presented that the exhibitions and so on. For example, the magnet free component in 2028, all of these automotive-related plans will go on as planned? Or are there any changes in those plans?

Now let me explain the current status us for the development men. [ 7 in 1 ] has already been launched, meaning that it's already available on the market. Then the next item, magnet item. This has a really hard hurdle. That's why including research institutes, all of the research activities has gone well. Thank you very much for your question.

The other point regarding the financial statements, when the next statement will be issued according to your explanation regarding the quarter 3, based on today's press release. That's all. And then we have to wait for the shareholders' meetings slated for June. And then we will see more information related to the financial statements. Is this understanding correct? Now I would like to ask Mr. Nakagawa to respond to that.

Thank you very much for your question. Regarding the third quarter, its estimate not to finalize financial statements. And therefore, we would like to share the revenue and the profit at the third quarter official report. Therefore, please wait until the end of March because we will close our books. And then usually towards the announcement in June, we prepare for the official financial statements, and we'd like to follow this time line.

Thank you very much. It's only passing the 10:00 in the morning. And therefore, we would like to take this question as the last question for today's press release conference. Now on the right-hand side, the person in the front row, please.

I'm [indiscernible]. Those who resigned including those people, how you take the legal responsibilities. Are they accruing responsibilities or civil responsibility?

If you want to mind, [indiscernible] would like to respond to this question. Yes, we have to post all the possibilities. So including criminal procedures, yes, the criminal cases should be considered.

Now next question is related to the impairment loss because you mentioned that the amount would be around JPY 250 billion but is that possible that impairment loss will be 0?

Now regarding JPY 250 billion, this amount. If I strictly answer to this question, this is the amount subjected to the impairment loss. And therefore, yes, it can be 0. However, once again, as we explained, we needed to go to duly processes to finalize the exact amount for the impairment loss.

Thank you very much. Now how about you, the person on the back.

[indiscernible]. My question goes to President Kishida because I'd like to know the relationships between Nidec and the accounting firm. According to the report by the third-party investigation committee, the explanation shared with the accounting firm was different from the fact and inconvenient truth was not shared by the accounting firms according to the report. This may be the problems on your side. On the other hand, regarding the accounting misconduct count is more than [indiscernible] as you found in this investigation. In addition to that amount is also huge. Therefore, I believe there must be the problems on the side of accounting firm because they need to do what they have to do as the accounting firm. I assume your accounting firm is PwC Kyoto. Actually, this PwC Kyoto was working for the KDDI where the misconducts were identified. However right now, it's become a PwC Kyoto and that's why they can work for you as accounting firm. Now I'd like to ask your evaluation or assessment of PwC Kyoto. In addition to that, this problem or the scale of the issue is still huge. And therefore, you may want to consider to change your accounting firm? And if so, can you please share your plans?

Thank you very much for your question. First of all, regarding good assessment of our accounting firm, we are not in the position to do that. And therefore, they please refrain from making any comments for that. Because for us, all the time, to accounting from, we have to face the market. We're going to have to disseminate the correct information over the time, this is a very basic point, and that's why we have to go back to this starting point to review our operations and the way we work. In addition to that, whether or not to be direct to change the accounting firm from PwC Kyoto, no intention of such.

Thank you very much regarding the report issued by the third-party Investigation Committee. It's stated the very aggressive comment made by Mr. Nagamori, for example, he said that everyone is not motivated at all and I direct all of them to resign the company. And it's way out of the day, that's why Mr. Nagamori's business style was criticized as the power harassment. Now when you Mr. Kishida looked at the comments and the statements of Mr. Nagamori and his business style, do you think it's a power harassment. And President Kishida, did you have such experiences regarding the divestment, probably it may be regarded as the harassment, when I look at these actions and behaviors and statements described in the report. They may be regarded as harassment.

I saw some examples in the report. It's not an investigation for harassment. And therefore, please bear with me of not talking about anything.

How about you, yourself?

Me, including myself, e-mail correspondence is described in the third-party committee reports. And therefore, I understood that there were such correspondences via e-mail.

Thank you very much. Now the person wearing the tie over there.

I'm Kanai from [indiscernible] newspapers. Let me make a follow-up question. In the improvement report issued in January, it's not done by only 1%. But due to the corporate culture, the series of problems were caused and the most important person who has to have ultimate responsibility is Mr. Nagamori. And then President Kishida, when he was in Nidec, you may frequently see such behaviors and statements. Back then, did you say that Mr. Nagamori, you have done too much or what you have done is outside out of the time. Did you make such comments to Mr. Nagamori?

Thank you very much for your question. I myself said in the previous similar conferences, regardless of the cause of the pressure how the person perceives those statements and behaviors it's very important because no matter how strong the pressure would be, how the person should perceive it because that person should be able to change it for the positive way and whether we can do that or not. That is a very important basic point. And therefore, we'd like to incorporate it in our improvement plan, and then we can execute it. Actually, as you saw, whether I myself was exposed to the pressure including arrestment in daily businesses, I myself did not have such experiences. And when I look at the history, long history of the company, I now recognize that associations have happened. And I found it by reading the reports. Now going away from Mr. Nagamori's influence regarding this point, internally and externally, there were organizations, institutions that had the name of Mr. Nagamori. For example, foundation would be totally irrelevant to the businesses. However, there are name included the title of the organizations and institutions. And therefore, in this sense you cannot eliminate the image of Mr. Nagamori. Of course, not you alone, Nidec alone cannot do anything. However, what to do with those names content. And Mr. Nagamori, for example, Nagamori Gallery, Nagamori Institute, do you consider a change of the names of those institutions and organizations?

I'd like to ask Mr. Minami to respond to that.

Thank you very much for your question. Honestly, we have to consider them from now on. Doing right. That should be the corporate culture we have to pursue. And the split, we needed to identify what way we have to do and include all of the relevant people in the company, we'd like to determine what to do for those organizations and the institutions.

Thank you very much. Now this will be the last question. The person in the back.

I'm from TV Asahi. Now I'd like to ask a question to Mr. Kishida because this time report said that Mr. Nagamori's engagement was so huge, although he has already resigned the company. However, Mr. Nagamori and [ Mr. Komori ] are not here because of the company decision, I assume. And therefore, do you think that is the right decision at the company? How about you, Mr. Kishida?

Thank you very much for your question. Actually, I -- how to reflect this. And I said this in the similar occasions over and over again, starting in the April of 2024. I have assumed the position of CEO and Presidency. And therefore, what happens at the Nidec, I have to explain it as the CEO representing the company. Furthermore, regard to Mr. Nagamori is totally irrelevant to the company and therefore, based on the result of the third-party investigation committee what the company is going to do. That is the main objective for this press conference. And that's why I have to stand up to explain it. And therefore, what you said or what you recognize is correct.

Last question. Mr. Nagamori has resigned as the Chairperson Emeritus with the statement, and this statement includes his dreams and hopes for the future. However the scandal happened. And because of these big dreams and so on, these statements do not reflect the regret and do you think that it will be risky and dangerous for the company Nidec?

Thank you very much for your point. Once again to the Chairperson Emeritus. This is the last message from Mr. Nagamori, and that's how our company has perceived and that's why we have disclosed his statement externally. That means that there is no modification amendment after receiving his message we perceive that, that is a last message from Mr. Nagamori in the capacity of the Chairperson Emeritus. And that's why we have shared that statement.

Thank you very much. With this, we'd like to conclude today's press conference despite it's very late at night, but thank you very much for your participation and attention. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]