Nidec Corporation ($6594)

Now let us start the press conference. Now the presenters are as follows: Ms. Takako Sakai, the Chairperson of Nidec Corporation's Nomination Committee; Mr. Mitsuya Kishida,res Director, President and CEO of the company; Mr. Masayuki Minai, Senior Vice President and Chief Compliance Officer; and Mr. Kazuo Nakagawa, Acting Chief Financial Officer of the company. I'm Keita Watanabe, General Manager of the company's Corporate Communication Department. In this press conference, first, Mr. Kishida will make his opening remarks and explain quality matters and Nidec's actions on corporate revival. Then Ms. Sakai will present the company's new Board of Directors system, followed by Mr. Kishida's presentation on the company's matters on improving Nidec's corporate value. Then the floor will be open for a question-and-answer session. Please kindly wait to ask your questions until then. Now Mr. Kishida, please.

I'm Mitsuya Kishida, Nidec Corporation's Representative Director and President. A recent inspection of Nidec Group companies led by the Nidec Corporate Reform Committee's Quality Working Group has reviewed suspected inappropriate misconduct on our company's products. We take this issue extremely seriously as quality is the very basis of the Nidec Group, which is a manufacturing company. In addition to the series of cases of accounting misconduct, we deeply apologize for the tremendous anxiety we have caused to our business partners, shareholders, investors, people of the market and the general public. We are explaining these issues to our customers and informing them of these issues in detail one by one. At this moment, no cases that affect our products, functions or safety have been identified. Today, we have launched an investigation committee that comprises outside of experts. Based on the decision, we will explain findings from this investigation to our customers sincerely and properly. and we will take necessary actions promptly. We will make sure to do everything that is right. In order to do so, we will update our improvement plan, and we will be united as a team, and we are in the process of making these improvements happen. And we have been able to identify these quality issues during this process of improvement. And we'd like to give an updated information about these activities during this press conference. With respect to the report from the third-party committee as well as the improvement plan, we will enhance our corporate functions, and we'd like to provide you with an information about the enhanced functions of the Board of Directors based on Ms. Takako's presentation. In order for us to become the true global company, we have a strategy in place. We'd like to provide you with the midterm business strategy to explain the purpose -- for the purpose. From here on, we would like to see it as we make our statement. Thank you. From here on, Mr. Kishida presents information on quality matters and Nidec's actions on corporate revival. From here on, I would like to explain to you about how to make Nidec reborn. We, together with Mr. Sakai explained this formation matter. First of all, please take a look at this page, the establishment of the investigation committee. After the establishment of the third-party committee on September 3, we established this renewal -- corporate renewal committee on October 30. We, as a manufacturer, voluntarily decided to identify any possible issues. We established this quality working group at the same time. And we started the group-wide quality inspection from January 8 this year. As for the outlook of this inspection, the period was from January 8 through the end of May, and this investigation is ongoing. There are issues related to quality, and we wanted to check for any misconducts -- possible misconduct, and we promote corrective actions to solve these matters. For details of our actions, we have hearing sessions with the individual business bases. This hearing session is now completed. And we had this voluntary checking process at individual business bases, promote the voluntary declaration. As of today, 90% of this procedure has been completed. And going forward, we will continue to collect opinions through a whistle blowing system from all the employees on the Nidec Group -- entire Nidec Group. We are to check to see if there is any suspicions for misconnects regarding quality. We'd like to collect such information from all employees within our group. And please take a look at this slide over here. Please go back one slide here. And from January 8, we started our quality inspection. And on March 3, we have had the announcement on personnel changes. And from April 4, the new management has started. After that, we have received a number of quality-related opinions as well as suggestions based on voluntary checking. As of today, this year, approximately more than 1,000 suspicious misconnects have been reported. In April, this number increased significantly. So we determined that we need to check, we need to understand what was really going on. And there have been some unauthorized changes to materials processes as well as designs made without having the approval from our customers. And as soon as we identify issues to be reported, we will take appropriate measures for them. As of today, unauthorized changes to material components, processes, designs, they account for 96.7% of all the issues. and suspicious cases account for 3.3% of the entire cases, as you can see on the slide. By business, please take a look at this slide over here. Appliances-related issues are the majority of all the issues we have identified. ASIM business unit Global Appliance, Nidec Instruments, Nidec Technomotor appliance section. With respect to automotive business, Nidec Instruments Corporation has had report some issues regarding their production-related products items. With respect to IT-related businesses, there are certain number of suspicious cases identified. We have already started talks with our customers. And we have confirmed that none of these issues are serious enough to affect our products functions or quality or safety. AI cooling system has no such issues identified. With respect to industrial infrasture and machinery-related products, no such inappropriate cases have been identified. Until today, in multiple business bases, we have identified various suspicious cases of misconduct, and we decided to promptly disclose this information to the public. And in order for us to make group-wide efforts to eliminate those issues, and we decided to launch an investigation transparently and objectively. That's the decision we have made in today's Board of Directors meeting at our company. And the purpose of this committee will be to understand the root causes of these issues and suggest recurrence prevention measures. Here are the members of the committee. These people have a wide range of expertise. They are all attorneys at law. And targeting the end of August, we would like to finish the investigation on these quality issues. And please go to the next slide. And in order to work with this investigation committee, as an executive function of the company, we decided to reshuffle or revise our corporate function. We have this improvement promotion office to be established. I will lead this office. With respect to this improvement promotion office, we will decide what type of communication will be the best type of communication we should have with our customers. We will drastically improve the way we communicate with our customers. That's the type of project we will launch. And at the same time, we have governance and accounting-related issues. These issues will be covered in this other project that you can see on the slide here. We are going to have this type of reset on our activities going forward. In these individual matters, we will check and examine our actions. We will work in group to analyze the financial impact of our actions and these issues. From here on, we would like to talk to you about the update on Nidec reform. On the 27th of April, because we have started the third-party committees Infinity started from the 3rd of September based on this final report from this committee, we issued the right version of the improvement plan, which is the second version. From now on, we execute this improvement plan for sure. And therefore, all of the employees will welcome this. Based on that, by the due date of 20th of October towards the submission of the confirmation paper, we'd like to make all that effort for each day. Furthermore, we see the quality issues identified right now. As of today, we have established the investigation committee to facilitate the dialogues with our customers to expedite the root cause analysis and issue resolution. And then around by the end of August next year or this year, we'd like to complete investigation. And then we'd like to issue the confirmation report of the internal governance under the new system and organization, we'd like to regain your trust as soon as possible. In addition to that, we'd like to the designation of the special issues. And again, all of our members and employees will work as one team, already so far, we have identified issues that is culture, systems and processes. We have shared these important points over and over again externally too. However, in order to embody these splits into our actions, we'd like to take any opportunities and occasions to reform the culture, systems and processes to be more precise. We needed to look at the communications as how we needed to how we should revise the pop culture. In addition to that, since governance is such a huge area, we have to how we can specifically work on governance issues. We needed to review organizations, and we needed to review missions. Why we are here. We needed to identify the b that way as a company. And then we can ensure that whatever we will do, everything will be right. And therefore, we'd like to work as one team, mobilizing all of the employees, including myself, though the available time is limited, we'd like to visit as many sites as possible to meet managers and nonmanagers to have direct dialogues because advices from the working level is very important. We have had so many dialogues like this. Although this has been reported to you that we have established culture transformation lab where employees are thetabolist to reform cultures. And then we need to listen to the representative voices of employees, and we have to make employees confident that once they are speaking up, their voices will be well hard to the managers and executives. Of course, the training and the education lessons are the very best for our culture. And therefore, we will make further efforts. Already more than 500 training courses has been conducted. However, this is not a one-off thing because for new Nidec, this should be the continuous efforts to ensure everything should be right all the time. And therefore, we'd like to lay the foundation to ensure such culture. under this situation, new management team is established effective of the 1st of April and the new BODs, all of the BODs got together at one site to have off-site meeting where BOD siders how we can regain the trust from stakeholders and how we should take actions every day, what we have to reform in our daily activities. There are thorough discussions on these topics. And then the direction identified in these discussions have been shared. We have made the reform statement. And then including myself, all of the members involved will work as one team to be the model of the reform. That is the current situation. From now on, Mr. Sakai as the Chief of the Committee will share the new BODs. Now Mr. Sakai, floor is yours.

Thank you very much. I'm the external directors, and I'm the Head of the Committee Nomination Committee. Now on the 13th of May, there is the ad hoc BOD committee meetings. And then what should be resolved for the shareholders' meeting. One of them is the new BOD members. And therefore, I'd like to share the details of these new BOD members. First of all, I'd like to explain the process and its purpose for this governance reform. We needed to enhance the supervising function in order to do that, we realize that we have to have a new BOD system, and therefore, we have to ensure to establish such new system. For example, those who have deep knowledge about accounting and governance, those external officers should be identified and nominated. In addition to that, internal directors should be identified for this matter in order to ensure good identification of the issues, we'd like to nominate the dedicated members. So through the process, we'd like to realize these 2 important focuses, including shareholders and other stakeholders. We have to regain the trust in order to do that. we have to ensure high transparency and productivity, which should be the basis for the nomination system. And therefore, we have to prepare the framework for that. And therefore, when we launched the nomination process on the 27th of March, as we have announced, independent external directors alone were allowed to be involved in this process. In addition to that nomination policy and the revision of the nomination process has been made -- now I'd like to explain the specific flow for the nomination. First of all, the new criteria for the nomination was put in place under, which more than dozens of people were identified as the primary candidates. And after the first criteria passed, the first interview was given and then sat and other qualifications in addition to the views of the current state of the corporation and how they can contribute to the reform. Those questions are meticulously confirmed with all of these candidates one by one. And then based on the interviews, we got the evaluation. In addition to that, we look into the diversity of the expertise and through the experiences and we have to see the balance of these members. And then we can identify the short list of candidates, especially the external directors, home compliance, accounting, finance, the business management experiences, expertise and the skills for the markets. These are the important points. In addition to that, they are required to understand the current state of the corporation. And then, of course, we have to take a look at excellences in the business management and then the objective for this nomination, more diverse the expertise and more enhanced oversight, governance reform and corporate value improvement for these aspects, we are confident in selecting best members. independence and execution oversight should be enhanced. And therefore, we have -- we plan to identify external parties to do this. And then I'd like to introduce 2 candidates because of the time, I cannot explain the detail of the reasons why they are identified as candidates. However, please refer to the presentation material if you're interested in the reasons for the nomination. First of all, just one person was identified and therefore, 11 candidates are the candidates for the new directors. You can see the 3 candidates for the executive internal BOD members. Regarding Mr. Kishida, he has the vanguard for the reform of the culture. And therefore, he can contribute to the improvement of the corporate value, and we can expect the continuous leadership. And because of that, we believe these 3 are the best candidates regarding Mr. Takeshi Miyake and Mr. Masayuki Minai, we expect to assume the management directors for each. And therefore, these gentlemen's leadership, we believe that they can te issues, especially for the execution. And we believe that for this aspect, these 2 are the best candidates. Next, I'd like to move on to the outside of BOD members. As you see here, these are 5 members. First of all, Mr. as the member of government, he has led many governance-related initiatives. And then Mr. Shinichi Koizumi, who has been involved in the global executives and he has rich experiences in serving as the outside members. And then Mr. Soichiro Sakuma, he is the COO and Vice President of the Nippo and Sumitomo Metal Corporation, who has been involved in the management of the major companies. And then Mr. Yujinishimura, he has led many activities at major companies. In addition to that, he has served as the Chair of the many companies. He has rich experiences and the wide range of expertise. Then Mr. Roiama Moto -- he is the President and CEO. He has been involved in the business management and the transparent governance management. Then outside members who will serve as the Audit and Supervisory Committee members. First candidate, Mr. Takeshi Mazaki at Hitachi Corporation. He has been involved in the structure reform, and he has also had the experiences and serving as the Audit and Supervisory Committee member. Mr. Hideki Amano has also had experiences as the outside auditors. And then Mr. [indiscernible] he has to the capital market. In addition to that, she has served the outside members at more than 1 company already. Then Mr. Mitsuhiro Hasegawa as the prosecutor, he has assumed many important positions in addition to the Chief prosecutor. And then the transparency of the financial report, the specialty. And then as of the 8th of June, we will have the general shareholders meeting. And once the agreement is given, we will have the 12 BOD members -- and then we also have the outside audit and Supervisory Committee members, Mr. [indiscernible]. In total, we will have the 13 BOD members. As you can check in the scheme matric, the new BOD members will have the diverse expertise and experiences without any bias in each area, each one of them has its experiences and expertise. And therefore, even already at the interview phase, they have had a very good document for the current set of the Nidec Cporation and all of them has shared the high passion to reform the company. However, they have to be braced for the huge tasks and difficulties. And we believe that all of them are ready for such difficult tasks. We believe that they are best members to enhance our corporate values with these BOD members, we are sure that we can meet the expectations of the shareholders because they can serve the tangible of the BOD members. The new BOD members will support the enhancement of the corporate value and reform continuously. And therefore, shareholders, stakeholders, if you can agree with these candidates, it's really appreciated. Thank you very much, and that's all for me.

Now we'd like to go on and explain to you our initiative to enhance Nidec's corporate value. Under even these circumstances, we are united as the Nidec Group going into the same direction. We will be having the integrity. And as the manufacturer, we will face the world. We will go forward united. This is the redefinition declaration of the Nidec Group. And this is the second funding phase of our company. We have this 5-year Nidec redefinition plan. We have a redefinition of the Nidec 5-year business transformation plan. And I have to give you details of this plan. We have 5 different pillars. We will review business portfolio. We will reorganize our group, and we will reform the company-wide IT infrastructure. We are going to have a drastic reform of these areas. We will improve our ROIC. We will maximize our corporate value. That's going to be our ultimate goal. For the purpose, what we need to do is to prevent aforementioned problems and issues from happening in the future. And as the baseline of everything, we will improve the profitability. We will improve the efficiency of the ROIC and invested capital. In order for us to become a true global company, we have reshuffled our management. We have a global headquarter. We are going to establish that including regional head offices, this will be part of the core of our global business system. We have 5 different pillars, as you can see down at the bottom of the slide. Accountability will be allocated to each one of them. And we will make sure to perform full pillar of accountability to the capital market. Based on these 5 pillar notion, we will reorganize our businesses, sales companies, factories and other entities based on these 5 pillars. not only for its own profitability, each business base needs to be able to contribute to the entire group's profitability. The factories have to be working as the guardian of the entire group's profitability. And we need to work with our customers to solve problems together, and we need to co-create values together with our customers. We will pursue the profitability of individual companies. That's what we have done. But going forward, we will continue to continue with our transition into a true global company. We will review our business portfolio based on the growth potential and profitability, concentrating on selection and concentration of our businesses. We have 5 different categories for our business bases. We have area where the structural reform is required. And we have another area for product portfolio optimization. And we have another area for continuous growth. And we have another area of new focused investment for future growth. And we have just started these initiatives, but we have major initiatives and they are all new businesses. As you can see on the far right of the slide, these are the 5 different categories that we have in place. Then at the bottom, it says business restructuring includes e-Axle. We need to redefine our businesses as we try to decide the future of this business here. actively invest in human resources development facilities and growth investment areas. Energy storing, energy saving areas, semiconductor-related factory construction, high profitability potential growth areas. These are the areas and businesses where we will invest in making wonderful products as well as wonderful solutions for our customers. That's the type of chances we like to grasp and capture. Finally, with respect to defining the new businesses, we need to define new business domains by leveraging technological and social changes. We have eVTOL, the inspection equipment reducers, et cetera. We will utilize technologies from these areas to enter into the aerospace industry. We will invest sufficient human resources there so that we can be a company to contribute to the future of the humanity. Based on the aforementioned 5 pillars, we will revise the business portfolio, and we will broadly execute the structural reform through a 5-pillar-based business structuring and portfolio review. We have a total of more than 300 business bases, and we will cover all of them in our reform. With respect to the number of business faces, we will cover sales offices. We will consolidate these sales offices as part of our business portfolio consolidation, business footprint consolidation, in other words. Today, we have accounting-related matters, and we have technological technical manufacturing related quality-related matters as well. Given the circumstance, we need a drastic reform of IT infrastructure. With respect to our operations, with respect to IT in this area, for the next 5 years, we would like to invest $100 billion for the next 5 years to establish a firm sturdy infrastructure in this area of IT. With respect to quality design and manufacturing, we have various data of various components and various design-related data. We need to consolidate the data in order to create more efficient, better designing capability. We will invest -- make a strategic investment of JPY 30 billion for the next few years. to establish a firm, enhance the firm, enhance our manufacturing infrastructure. Design concept, BOM process operations, accounting, in all of these areas, we need to do what is right as we operate our businesses. More than anything, we need to resume dividend payments as soon as possible after the completion of restatements of prior year's accounts. Based on that recognition, we will provide you with the directions of these 4 different areas that we have explained to you today. We will share information with the leaders of these areas of businesses as part of our midterm business plan, and we'd like to provide you with the final version of our midterm business plan sometime in the future. Toward autumn this year, we will make sure to assign people to be having accountability equipped with accountability of all of these 4 areas. We would like to share with you the information as well as we go forward. As I've explained at the beginning of this press conference, including quality matters identified during the turnaround process, we will thoroughly address all challenges across Nidec and implement the fundamental reforms necessary to restore trust across the group in accounting, quality, governance and corporate culture. That's the type of drastic reform we are going to launch. As I've said, accounting, quality, governance and corporate culture are the areas in which we are going to make necessary investments to make -- we make ourselves as a company to be trusted. By restoring governance and management discipline as our foundation, we will decisively enhance corporate value, build a high profit structure and evolve into a truly global company. This concludes our presentation to you today. Thank you very much for your attention. From here on, we would like to accept questions from people in the audience.

[Operator Instructions]. We have people from the mass media as well as analysts. We'd like to take one by one. First, with the people left the person over there, second from the first one. First of all, this is of Asahi Newspaper.

With respect to the newly found quality-related matters, what about the causes of those matters? With respect to accounting matters, before you made the report published, you talked about the excessive pressure for us to have to achieve short-term targets. And reports somehow served as a backup document evidence of your statement. And that's something that I found in your report at that time. Was there any pressure on the people on the frontline employees? Was that part of the background of this quality-related issues? Is there something similar to quality issues as compared with the accounting-related issues?

Thank you very much for your question. This is something that I've said repeatedly on this type of occasions. Our corporate culture process and systems are what we need to correct as a company. With respect to the newly emerged quality issues, the direction itself remains the same as a company. With respect to root causes of these matters, the investigation committee will investigate into these issues to find their causes. Some issues may have some -- the same root causes as some accounting matters. And investigation committee will find answers to your question. And we will receive feedback from the investigation committee. And our purpose is to solve those issues, and we need to get together with our customers to solve these problems.

In order to achieve the excessively high profitability and sales targets, I believe there has been a pressure -- excessive pressure to the frontline employees. Is that the case, do you think?

Well, with respect to these issues, the more than 1,000 cases that we have identified, 96.7% of these issues are the issues are the changes made without customers' approval. These are the changes made to components, materials, processes and designs and other issues will be investigated accurately by the investigation committee.

There is one more question from me. Currently, Nidec is in a situation where you are -- your stock is designated as the special alert security status. And you will be having the audit by the Tokyo Stock Exchange throughout autumn this year. But in addition to those accounting matters, you have these quality-related matters as well. That could possibly make another huge impact on your company. I fear you have this upcoming audit by the TSE or Tokyo Stock Exchange. And we have these newly emerged found problems, what type of impact with these issues going to have on your management company?

Thank you very much for your question. These quality issues are -- matters are a huge theme for us. As we -- as the investigation committee investigated these issues, we have had many issues identified in April. It's just 1 or 2 issues. We can handle them one by one by working with our customers. However, as of today, the number is more than 1,000. So this is going to require the transparent and objective perspective of outsiders. And that's the type of decision we have made and that's the type of decision based on which we have established an investigation committee. And we will complete this process -- investigation process by the end of August so that we can go and submit our report as scheduled.

How about the impact on these issues on your maintenance of your company as a listed company on the TSE.

It's not just accounting issues. Now you have the quality matters issues. As you said, it's not just accounting issues. We have some other issues. In that regard, these newly found issues are going to have a huge impact. From the beginning, in the Nidec Corporate Reform Committee, we have had this quality investigation working group to decide to see if there is any issues to be corrected, if there is any systems to be corrected. That's what we have been trying to find out as part of this working group's activities. And after the activities are over, we now would like to address these. Thank you very much for your question. That is all from me.

Next analyst in the front row, please.

I'm Takayama from Goldman Sachs. I have 2 questions. First of all, I'd like to ask about the misconduct related to the quality because in one sense, 97% of those events are related to the change of the OM in the manufacturing industry, meaning that you did not make the notice. In addition to that, there were no complaints from the customers and therefore, probably it's not so important for the appliance and automotive. Of course, you mentioned that financial impact, which is not known right now. However, we expect that there will not be so significant issues in this aspect. Is this understanding correct? This is the first point I'd like to ask. Furthermore, how it should be because the obligation for notice, for example, appliances will be commodity products. However, if you make the notice for each one of the minor changes, it would be practically impossible. However, if you miss the notification, to what degree you have to regard these cases as a misconduct and to what degree we can regard them as the acceptable cases. Can you please share the standard for that?

Thank you very much. First of all, regarding the communication for the notice, as you mentioned as the first question, regarding the change, just because this is a change, -- just because of that, we should not regard these issues as minor. Rather than that, once we identify these cases, we have started the communications with our customers. And the customers said that why did not inform this faster. There were such feedbacks. And therefore, we have to seriously consider how we should face with customers, including communications. We have to review our interactions with the customers, and we'd like to take actions for that. Personally speaking, the level of the impact in the accounting perspective, I'm not in the position to say anything about it right now. However, based on these suggests, the accounting team has been established. in parallel with that. And therefore, including the committee, we'd like to share as much information as possible in the rapid manner. Thank you very much.

Now I'd like to ask about the actions for the enhancement of the corporate values. You have shared the 5-year plan as the overall framework. However, essence here is related to the conversion '27 in my understanding. Having said that, my impression is that the review of the business portfolio to what degree it should be drastic. For example, you have to make a very drastic selection and consideration because you have to identify where you need to grow and where you have to stop much investment. I believe the basic approach is something like that, but is this understanding correct? For example, one of the criteria for the review is 5% or 15% and 20%. However, it should be more than that. And you also mentioned humanoid to grow for the future and where your position is? Your position is good enough. I'd like to know this. In addition to that, in the midterm indicators, of course, I understand that you cannot disclose absolute numbers. However, what is the target profit margin and ROI. And of course, the timing will be different because of the midterm plan. But at least I'd like to know whether those the numerical targets are not changed, especially downward.

Thank you very much for your question. Regarding this portfolio, we have looked into this portfolio in details by having many discussions, as we pointed out, in the conversion 2027, the essence or core concepts in this conversion 27, I believe essence has not changed because essence or core points should be what we have to do. However, once we identify these accounting issues and quality issues, we need to add more actions to enhance our system and organization and not all of these aspects will be incorporated into the midterm plan. What you see in this portfolio, the growth investment area and the core area, if you combine these 2, it accounts for 60% of the current revenue. Conversely speaking, remaining 40% of our business should be reviewed to consider how we can these areas. That is my personal understanding. And therefore, including these areas, we'd like to have further discussions internally. Regarding the targets, we have made many plans and the targets. And however, it should not be the way we work and therefore, we intentionally don't mention any targets here.

Thank you very much. Now the person in the front row, the second from the right.

I'm Murai from Diamond. I'd like to ask 2 questions. First of all, this time, together with the new BOD members, you will have 5 new areas where you have vice presidents. I assume that are related to the appliance and automotive machinery and the small motors. I believe these business lines are maintained that in accordance with that, there are new changes in the executives and BPs. However, the change as well as the personnel changes in the subsidiaries. Do you have any plans for that? For example, there is a point made in the third-party report saying that you have to move away from the impact on of Mr. Nakamoi. And therefore, I assume that there are someone who is close to Mr. Nagamori. In addition to that, if I use the words of Mr. Nagamori, the assignment of his is very important internally. I understand it. Therefore, the so-called of Mr. Nagamori will be assigned to executives Vice President or the level of the trust of Mr. Nagamori is one of the criteria to assume important positions. Thank you very much for your question.

It's very important for us, as we have mentioned over and over again already as the corporate, we'd like to respect the process, culture and systems. These are most important 3 imperatives for us. Mizuakai as the Chief of the Committee mentioned how we should nominate the new BODs and executives, including that process, we reviewed it too. With that, we are sure that our reform can ensure a high level of transparency. These are the 5 business pillars as you see here. You mentioned that these 5 areas follow status is au because we'd like to convert these 5 pillars under these 5 pillars, including group companies, we'd like to reform and restructure our group companies. And therefore, including those points, we'd like to continuously restructure ourselves for the future. And at the best timing, we'd like to share new structure.

Now Mr. Minai , who is in charge of the HR, would like to add some comment.

Thank you very much. I'm Mini in charge of the HR matters. On the 3rd of March, there was a report made by the committee by taking this opportunity, as you see here, headquarter business side included, we changed the leaders quite drastically. And I believe that is one of the characteristics in this time of reform. Traditionally, there has been strong leaders. However, we changed these leaders to facilitate these 5 businesses. And in order to have the strong leadership, we have new leaders. So all of them are new leaders. And therefore, together with Mr. Kishida, they will work on the team building to lead new Rboridec. Not only that, -- so far, Nidec leadership has been led by founder. However, new leaders will work as one team. such diverse leaders will be garnered across the globe. So that is our intention. And therefore, personally, there are new leaders, including new executives because we have introduced a so-called the second system where new executive candidates will be put together for the further growth. And then we can expect there will be the new generation of leaders. And that's why there are quite a lot of new members, and we are confident in having these new members. What I'd like to emphasize here is that we need to grow the next generation of leaders more and more globally. You mentioned that the Vice Head of the department. Yes, exactly right. We needed to nominate and identify the next generation of leaders to ensure their growth. And therefore, we'd like to implement so-called succession plan to collect the right human resources across the globe. So the establishment of this type of new leaders can be one of the core for the new Nidec, and we are very happy to share that. When I look at the current incumbent, including Vice President and executives as well as the presidents of the subsidiaries, do you have any plans to change them? If so, probably some of them will be close to Mr. Nagamori, but how you can ensure the distance with Mr. Nagamori rather than how close or how distant they are one thing I'd like to say is there are quite new members here in parallel with this, we established the committee to investigate accountability and responsibilities. There are third-party members involved in this committee. And if its conduct or anyone who should assume the responsibility, we needed to consider the change of such personnel. In addition to that, the results of the third-party committee got completed in April. And therefore, we now analyze the contents of the results of the third-party committee. And whenever necessary, including group companies, we are ready to change management and leaders. However, we have to consider what to do from now on. Thank you very much.

Now for the mobility and innovation. He is the President of the Mobility. In other words, the person in the group company will be the Vice President and executives. And then I see the name Nitani, and he was the President of one of the subsidiaries. However, he will assume the position of the top of this business category. And I believe that is one of the important things. As you heard already, who is closer to whom and who is under the sphere of influence those aspects are not included in the qualification aspect or the nomination criteria. As I asked this on the 3rd of March, back then Mr. Nagamori was establishing his own office nearby. However, at this moment of time, where is Mr. Nagamori, -- for example, Mr. Nagamori comes to Nidec, how you communicate with Mr. Nagamori right now? Can I ask this question to Mr. Kishida as the President? Thank you very much for your question.

Regarding the Chairperson office, there's nobody. It's totally vacant. And Mr. Nagamori does not come to the office at all. As one of the shareholders, we take appropriate action.

Thank you very much. That's all. Now I'd like to move on to the second question. Here's my second question, which is for [ Mizuakai. ] You are an outside member of the Board of Directors of the company, and there has been a very drastic shuffle -- with respect to the functions to be played by the outside members of the Board of Directors, do you realize that you have not been able to meet or play sufficient roles as the outside Board members. Is that the reason why all of these outside Board members are leaving the Board this time? There have been various issues such as the information not communicated very well to you and other Board members, but can you please comment on that, please?

Thank you very much for your comment. I would like to take the question and issue you have pointed out sincerely. As part of the Nomination Committee of the company, I'd like to say that we have received a report from the third-party committee. And based on the committee's suggestions, we wanted to secure people of diverse expertise. We need to strengthen the company's governance. We need to grow our company's capability. We have secured appropriate persons to be on the Board this time. And from the third-party committees and other organization, there have been many issues pointed out.

Do you have anything to say as part of the committee, something you have learned, for example?

I take the current situation very sincerely seriously as well as the part of the Board of the company. As a member of the Board of Directors of the company, we have -- I have made a lot of suggestions, proposals, opinions. Risk information has not been fully shared with everyone. We have not been able to understand the reality as members of the Board. In the past, we have received reports on issues in the past. We have suspected we should have made some questions regarding possible organization issues.

We like to cover as many questions as possible from the audience. So please make sure to keep your number of questions per person please.

This is Morgan Stanley Securities. I'd like to keep my questions to 2 questions. I'd like to ask you about the time line going forward. And June 18, according to you is the day of the shareholders' meeting. Is it correct to understand that you won't be able to prepare all the financial statements by then, but what is the completion rate of the financial statements? And what will be the right time for you to be able to submit all the financial statements as a company? With respect to the replacement of business portfolios, reshuffling of business portfolio, you are trying to reduce the number of business cases to 180 or so. What will be the time line for the reduction efforts?

Thank you very much for your question. To answer your first question, I'd like to have Nakagawa-san answer the question.

Thank you very much for your question. At present, -- on April 17, we received a report from the third-party committee regarding the corrective accounting work for the past 5 fiscal years. We have worked on that. In addition to that, we have now have the quality-related matters. We need -- we are currently examining the financial impact of these quality matters. We have a statutory deadline for our financial statements. And we're currently reexamining our schedule for us to submit financial summits. With respect to the submission of financial statements for the past fiscal year of 2025, we would like to take appropriate measures in accordance with the rules and regulations and extractions. With respect to business portfolio consolidation, we give ourselves a deadline up to 2030, something we can start from this fiscal year relatively soon. Those are deeply discussed as part of our midterm business plan, and we would like to share those information with you whenever the timing is right for us to do so. At this moment, you are yet to determine the exact timing for you to disclose the midterm business plan. We would like to make it happen as soon as possible before temperature decreases before winter comes. In other words, of course, our top priority is as follows. We need to submit the written confirmation of internal management system, and we need to complete our securities report first. And thus, we would like to completely solve account-related matters. With respect to consolidation of our businesses, we would like to start working on those issues in parallel to our work on account-related issues matters.

Here's my second question. With respect to the new members to the Board of Directors, they have been selected already in my understanding. With respect to R&D and business portfolio, how the Board of Directors is going to have discussions with the executive management. What type of advice should be requested to the Board of Directors or is being requested to the Board of Directors.

If I may answer the question. And I'd like to have Minai-san if he has any additional information to give you. So far, I have been stating that the proposal of the business plan and the contents of the midterm business plan are the priority -- should be the priority to discuss in the Board of Directors. As I've said before, several times, with respect to the the improvement of the business portfolio, we would like to discuss various issues -- relevant issues with the Board of Directors as well as the management executive function of the company.

This is Mr. Minai speaking. In this new -- under this new management, we'd like to establish a new firm governance system. we will have external advisers, and we would like to utilize other companies' cases as benchmarks. Based on them, we realize many issues -- there are many issues that we have that need to be solved. We need to have investment strategy compared with other companies' investment strategies, we need to have a lot to learn. We are receiving various advices from various people from the outside. We would like to learn from other companies as we try to establish and try to introduce new systems into our company under the new management rules. Thank you.

Someone from the news media, the person over there in the front row over there on the far right.

This is [ Hhiaaikkei ] Newspaper. I'd like to give you a question on quality matters. All of these issues are related to so-called foreign changes and other issues are country origin related issues and data issues. Are there any possibilities for illegal activities? I believe these are very heavy management-related issues. So how do you think about Jon as well as other executives responsibility with respect to these issues? Are there going to be any actions, penalty or disclaimary actions as a result of these?

So I'd like to have Minai-san explain the first part of the question first, followed by my own answers to your question.

With respect to illegal issues, we do not we have not identified or we have not received any report on illegal acts with respect to the aforementioned. -- is why we need to talk to discuss with the external experts about these issues to find out if there is any illegal activities or not.

This is Mr. Kishida speaking. Based on the result of the previous report, I decided to return 100% of my executive compensation to the company for a while. With respect to the recently identified quality matters, we need to do what is right. We definitely need to address all of these issues. We need to understand any and every issue that we need to identify. That's the issue that we need -- I need to work on.

Here's my second question. With respect to your business policy, how your upcoming measures is going to prevent the future issues from happening -- future problems from happening? The accountability to be on these business basis leaders will be very different from Mr. Nagamori's person dependent style. And I believe that, that will increase the level of responsibility of these individual business pillars and basis. How are you going to -- can I ask your opinions about how you're going to prevent these issues from happening in the future?

Here's what I'd like to say to you in response to your question. We have this convergence 2027. In addition to that, we need to further improve governance functions as well as doing what is right. These are the major points of our midterm business plan. One thing that I'd like to say that as you have pointed out, the -- it's not just one person looking over everything, monitoring everything. It will be a group of people, leaders monitoring individual businesses. With respect to CFO function, for example, we have a CFO of each of these businesses. They will be directly reporting to the CFO of Nidec head office. We have legal leaders of these business bases will be directly talking - communicating to the CLO, Chief Legal Officer of Nidec head office. That will be a huge governance merit under this new system. As I've explained to you today, with respect to system-related issues, quality-related matters, for example, with respect and form changes, for example, if you try to reduce the cost of component, you may replace component with another one that will require design change. We need to understand that everything is connected with each other constantly consistently. and firm certificate will be necessary under such a process. And we like to establish such a system where everything is connected. And no one can qualify the data by making unauthorized changes. Thank you very much.

Someone from the analyst, please. The person over there.

This is Hirata of US Securities. I would like to give you 2 questions. Here's my first question first related to the quality issues. How are they going to impact your company's performance? You said the main business are what we are doing very good successfully with our main businesses. But under the current situation, how are these main business going to be impacted? And what will be the type of impact that you are expecting from your customers? With respect to this number, 1,000, how much percentage of the entire sales is going to be with respect to the 1,000 issues?

Nakagawa-san please start thinking about answering the question. I'd like to answer the first question from you.

As of today, we have been communicating these issues with our customers. As I've said, many of these issues are regarding -- in relation to our appliance issues. And with respect to automotive businesses, it's one of the issues is with the cockpit plastic material. Many issues are like that. because we have been recommended complained by our customers saying how come we are so late to inform them of such issues. Going forward, we will have a very proper communications with our customers to provide them with accurate information so that we can do business with our customers sincerely. As of today, with respect to our sales, so far, there has not been negative impact on our sales because of these problems or issues. But going forward, we may end up in losing the customers trust in us. We need to avoid the situation. We would like to handle these individual issues one by one very politely, and we are currently communicating with our customers as of now today.

Now let me explain from Nakagawa, actions for the [indiscernible] issues. There were no clear actions yet. However, as we have explained, some of them are related to appliance businesses and the ratio to the total revenue will be calculated from now on.

Regarding the second question, this is actually the confirmatory question. You mentioned that you are reconciling the overall time line. However, if you consider the due date of the securities report as well as this due date for the confirmation documents, there are some due dates you have to follow. For these matters, you will follow the plan that you have already shared with us. if there are any changes, please let us know those changes.

First of all, Mr. Nakagawa, please.

Thank you very much. Regarding the due date for the securities report. We have to identify the level of impact due to the quality issues. In other words, we have to identify the impact level of the misconduct and the quality. We have to identify the level of impact as soon as possible. That's why we have established the investigation committee. They are not third-party committee because we needed to get the information and feedback timely. And therefore, together with the investigation committee members as the financial group, we needed to identify the level of impact as soon as possible. That's all for me. Thank you very much.

The person from the Amedia, the second from the left, I think you were in the front.

I'm Mori from Toyo Keizai. There were quality issues at Technomotor and other companies. When it comes to the Tekomotor in June 2022, Daikin, Mitsubishi, LGD, Johnson and Hitachi Johnson Control these are the companies related to the motors for coolers and without any acceptance from the customers, without any consent from customers, you made changes. And I believe you are the executives, Mr. Kishida, and you are aware of that.

Yes, I were aware of the reports. However, when it comes to the direct control over those issues, in that sense, I didn't know those issues. However, when it comes to the report, yes, I'm aware that there are reports on that, and we have taken action to that. So instead by identifying these issues in the reform process. When whistleblowing was made, you have already known this regarding the quality issue for Technomotor in June 2022, including the bank customers, we tried to resolve the issues. And then regarding the issues that have been identified at this time, this Technomotor issue is not included. So back then, including the group companies, there was no acrosse-board inspection. Unfortunately, there was no such overall review of the quality issues involving all of the group members, group companies. Therefore, together with the establishment of the reform committee, there's a group-wide quality investigation committee. And therefore, once this committee was established, we finally are aware of the important reports and quality issues in April. So that means that up until now since the quality issue in 2022, there was no awareness of such issues, including whistleblowings. If Mr. Minai could comment further more with growing back then. Can I ask for your comments?

Sure. There are similar issues involving 4 changes. And each time, we have investigated them. And whenever necessary, we have taken appropriate action. And needless to say, we have explained the situations well as part of our actions.

Thank you very much. Now let me move on to the second question, and this goes to Mr. Sakai because you mentioned that you should have been more proactive to ask for what happened in the sense in 2022 and '23, including Diamond, there are many reports related to the governance issues. And once again, because with the report, why you did not believe that you had to investigate the company's issues in more depth.

Thank you very much for your question. I'd like to take this -- your comment very seriously. It's the fact that the information was not appropriately shared. And whenever it report was raised, we should have taken capital actions, and we have to do that duly. In addition to that, we have to confirm whether the capital plan was executed. We need to check the progress from time to time. So there is a pressure from Mr. Nagamori, and are you aware of pressure issue. information regarding excessive pressure from Mr. Nagamori was not shared actually.

Thank you very much. Now someone from the analyst. Thank you very much. Now I'd like to open the floor for the entire Q&A session.

Now first of all, can I ask for your question? Thank you very much. This is Nagai from Nippon Kizai. Now this goes to you, Mr. Kishida, because you mentioned that finally, you could understand the quality issues in April. However, working Group itself was established in the 8th of January, but why so many reports were raised in April -- what's your take?

Thank you very much for your question. We needed to see the result of the entire issues. However, on the 3rd of March, we have made announcement or matter and then new structure or new organizational structure started to launch in April. And we ensure that everyone should be able to speak up more openly. We have taken such initiative to do everything right and therefore, as the first step to do right things in the right manner. I believe that's why there were so many reports raised.

Now this question is related to the question of Asahi newspaper. Now the date for the confirmation document is 28th of October. However, the investigation of the committee is expected to be completed by the end of August, meaning that the schedule is very tight. Now regarding the issuance or submission of the confirmation document of the internal control slated for the 28th of October, how you can ensure this due date because lead time is quite short. If you need to wait for the report from the investigation committee slated for the end of August, for example, the continuous review is to pursue the lift of the securities on a lot.

Thank you very much for your question. Yes, on the 20th of October, this is due date of the submission of the plan for the internal control. There's no change for this at all. Because of that, regarding the invitational committee, you said that the investigation should be completed by the end of August. However, whenever issues are identified, feedbacks will be made to resolve issues one by one. And then we believe that we can resolve the quality issues. And then we can see the due date of the end of August. Regarding the interactions with the authority, can I ask you, Mr. Minai, to share your view?

Yes, we ensure good communication with the authorities. And then at the end of October, we can issue the information document. However, as you pointed out, from now on, we have only 5 months to go. Therefore, time is limited. Still, we have to ensure resolution. That's why we'd like to work together with the improvement promotion office as well as the investigation committee to ensure speedy actions. Results coming from the investigation committee should be shared in a timely manner. There were improvement plans already submitted. If actions captured in this improvement plan is not sufficient, we will prepare the additional actions to seek for timely resolution. And then we believe we can resolve all of the remaining issues at the end of October. Just a confirmation, Mr. Kishida, and this is the 20th of October, you need to proceed this approach to lift the securities on alert.

That's right. In order to achieve the list of securities on alert, we'd like to take these actions, and that's why we have to follow the due date of the 20th of October when we have to submit the internal control document. Thank you very much.

Now the person in pink shirt.

I'msukaoka from Nikkei CrossTech. Thank you very much for your time. You mentioned that changes were not so important. However, regarding the component change and changes, I believe all of these changes are significant. And therefore, why you can say that there's no negative impact on the functions and safety. Based on what you can say that, especially from the technological perspective, can you explain why there's no negative impact on the safety and functions? The other point is related to the number of the misconduct. Someone mentioned that the event of the changes in 2022 and this 2022 issue is not included in the 1,000 issues. And therefore, I'd like to know the period where you identified these 1,000 cases. For example, around in FY '16, '17, the the huge issue on the quality in Japan and there's a fortified document related to the quality back then. So I'd like to know whether there were any due date. And if there was a clear due date, I'd like to know how and why you set a due date to resolve the quality issues.

Thank you very much for your question. We didn't mean that issues are not significant. We didn't mean it at all because changes are very significant that we have to take actions, and we will take actions too. So that is the first point I'd like to emphasize. Now regarding the investigation this time, this investigation is conducted in parallel with the improvement promotion of establishment. And therefore, the target of the investigation is from FY '20 to FY '25. And for this target period, we made interviews and we try to identify all of the issues. However, the timing alone is sufficient to make a report, especially for the quality issues. No, it's not sufficient. We don't draw the line to identify any quality issues. In other words, whenever the suspicious cases are identified, we ask relevant people to make the report. Of course, we needed to wait for the result of the committee when the specific issues happened and how. We said that 96.7% are related to MH and many of them are related to the appliance business, especially within the appliance many of them are related to cost reduction of the parts and components because when parts are changed, should be changed and therefore, BOM and BOM should be changed in accordance with them. In this sense, design verification should be done. And then when parts and components are changed, technical verification should be implemented. And of course, we have implemented the verification of the technological verification. However, together with customers, we'd like to review whether our actions are appropriate. In addition to that, as we have explained in the organizational structure, the technological -- and then the back then right or not, we'd like to it too. Thank you very much for your question.

The person in front of the previous speaker, please go ahead.

This is Taka-san Electricity and Electric newspaper. I'd like to give you one question only. If you can go to Slide #26, where you talked about the structural reform. And you said you will focus your energy on this work. And you talked about these 5 pillars, including mobility innovation on Slide #24. I believe details are something you're going to disclose going forward. In the automotive area so far, you have focused on E-Axle among others. Going forward, are you going to shrink this business? You used to say that you work on motors, individual motors, production of individual motors, et cetera. Or are you going to focus on different types of products and services such as solutions? Can you possibly provide us with your latest information about what you would like to focus on?

Thank you very much for your very precious question, a very important question. The e-Axle will be the first thing that will come to our mind with respect to the automotive business. That's something we need to be very reflective of. If you take a look at the chart here on the slide, mobility innovation includes e-Axle as well as on the blue section of the electronic commercial vehicle, automotive motors. And on the green section, 2-wheel vehicles, flying vehicles, this is going to be our next step as we try to do business going forward, that's the type of mobility innovation that we'd like to achieve. With respect to e-axle, we are in a struggle. As we speak today, we are in a struggle. We have been struggling up until today. But through this process of a struggle, we have been able to understand and acquire power based on the trinity of different capabilities. And we have been able to learn from making highly sophisticated products. And with respect to NATO and other projects, we have been able to learn many lessons as well. With respect to eAxle, I'd like to say that the vehicle technology, car technology is going to continue to evolve. We like to be involved in this process. Thank you very much for your question once again.

On to the far right, the person who is wearing the cap, please.

This is [ Miyajima ] of Mas Fact Magazine. With respect to this Nidec instance, it is supposed to be due to Mr. Nagamara's excessive pressure. And all the elements are supposed to be gone and there has been excessive pressure based cost reduction. That's something easy to imagine. How come in the accounting investigation, how come this issue was not revealed fully. Sakai-san and Kishida-san both said that towards the end of the last fiscal year, these issues came to light. It doesn't convince me at all. Sakai-san has been in charge of this type since 2020. That's I believe your negligence of your duty. Kishida-san you are originally from Sony. The making changes and authorized by customers is the betrayal of the customers. You talked about the 3 people organization is going to solve everything within half 6 months or so. I don't -- that doesn't really impress me at all. And with respect to more respect to incidents that are impactful to the society, are you going to make any investigation based on findings? Are you going to -- are you really sure that you are going to regain trust from the market? And how many people have you received? And those are not really part of your explanation at all. Kishida-san, I would like to ask this is, I believe, is the gross negligence. You're making huge mistakes on 2 different phases. You have the issues found at this phase of the investigation. And by betraying or by sacrificing trust of the customers in Nidec, you have grown so far. So I don't think you are -- I don't think you are understanding reality very clearly, Sakai, especially, don't you think what you did to as the very negligence of your responsibility.

Thank you very much for your comment. I take this responsibility very seriously. And these issues themselves represent the fact that the something we have -- we should have never let to happen. Based on the lesson we have learned, we have started the voluntary inspections from this past January. And in this investigation, we will do our very best to identify and address these issues as fully as possible. And we have this notion as the basis of our manufacturing, and that's a part of our improvement going forward. Sakai, what you said is these are the people of a very different background. But you are an outside member of the Board of Directors. You should have done a better job. And Mr. Nagamura should be here talking to us, giving us an explanation about how things were back then.

And outside directors are here, and Mr. Nagamori should be here talking to us. Otherwise, I'm not going to be convinced at all. It makes me wonder how the TSE is going to forgive Nidec. And based on Sakai-an's lessons, I believe these people have been chosen, but I really don't quite understand the actions you have taken.

Thank you very much for your comment. I take this responsibility very seriously. With respect to quality, quality is the basis of our company as a manufacturer. As the investigation conducts its investigations, I believe everything will be clear in the future.

Any other questions from anyone? The person wearing glasses over there has been raising their hand for a long time.

This is [indiscernible] newspaper. I'd like to ask a question regarding the changes made to components without approval of the customers. in the area of appliances, what type of products, what type of components were replaced by what type of components? Can you give us any example?

I will have Minai-san answer the question.

And I would like to provide you with some additional information as necessary. I'm talking about the mold renewal, having additional malls, these were done without approval of our customers. With respect to resin components, for example, malls became too old and have to be renewed. That's one of the examples that I can give you. And we need to make the mold production more efficient. And in order to do that, we had to add more. Such addition was done without approval of the customers. Another example is that we -- when we were trying to automate the manufacturing process, part of the process was automated without approval of the customer. Another example would be the change in the manufacturing product and a partial change to the production process. These were some of the cases among all the cases we have found identified.

With respect to material changes, did they happen as well? With respect to material changes, there are some cases with respect to material changes. So those changes -- unauthorized changes were never reported in the past. durability declaration, et cetera, could happen as a result of these unauthorized changes. At this point, we have never been reported of such changes that affect -- that make such effects. We will find out as the investigation goes forward. That's my second question.

There are some issues with the inaccurate testing results or testing data. Was that intentional falsification of data or intentional change of country of origin. In shipping inspection, for example, data from the inspection or the substandard data were judged as accurate or sufficient data. That will be part of the investigation committee investigation so that we can prevent from such cases from having in. That is all for me.

Any other questions from anyone? The persons second from the left, lady over there.

This is Tkuda Keizai. And majority of these 1,000 cases are related to appliances. Can I ask why that is? Is that due to the structure of the business that so many cases have happened? Or is it a specific person that have caused such issues?

Thank you very much for your question. The essence of these issues will be identified in the investigations -- investigation committee investigation, in my opinion. We have automotive businesses, part of the IT businesses. In some areas, we can decide -- we can make decisions on our own. In some other areas, we need to work with our customers to go forward. And there are some structure and structure restrictions that are applying to us in some areas of our business. you could call it the degree of freedom in appliance section, there is such a degree of freedom as to making changes. And investigation committee will clarify those and other issues as well.

And here's my second question to you, Mr. Sakai. With respect to these talented people that are candidates to the Board of Directors, even if however talent they may be, they need to be able to express their opinions freely. And one of the previous questions to you was that you neglected to understand the issues in Nidec Group. What type of criteria did you use to select these candidates? And how come -- why -- what makes you confident about these people, the best candidates?

Thank you very much for your question. In selecting these candidates, we utilized the governance improvement and one more important element, corporate culture improvement, et cetera, were the elements we focused on. And we wanted to choose the best candidates for the company, and that's what we did, I believe. For example, pressure resistance as related to better identification of the potential risks. I believe these are the important software powers and is that included as one of the criteria? Yes, because we have meticulous interviews, we got very good observations. As we pointed them out, we believe that they are the best BOD candidates who can take actions for those matters, too. Thank you very much.

The person over there.

I'm Katsura from SMBC Nikko Securities. I have just one question. Now direction for the reform involving the culture system and the process to make sure everything is right. However, depending on the people, culture can be born naturally. However, the corporate culture should be created intentionally. This is the common concept. And if you look at the Slide 6, I can see portfolio 26. Of course, now you will review them from time to time. And then you have to consider the external human resources and existing employees. There may be many people inside Nidec. However, if you try to enhance your corporate values, what are the messages you'd like to share to promote changes while enhancing corporate value. Now can I ask this question to Mr. Kishida to share your message to everyone.

Thank you very much for your question. To me, under this situation, we needed to consider what we can do. And actually, we have thought about it for more than 6 months. What are the values for Nidec -- and with that values, where we have to move on, we have consided these topics. And then we have identified that splits and split. These are very important. And therefore, we'd like to maintain these 2 splits. Not only with the company, we have to look at the world, and we have to work with partners, customers and employees to move forward. You can see that in our message mission. And therefore, under this mission, we'd like to develop the midterm plan. if we reset everything to do right. And then it's not about just the next step. But personally speaking, Nidec itself should be redefined. And that's why we have made the declaration of redefinition.

I have one follow-up question. If you consider current status, revenue has been good. And that is only one communication we got. However, you are going to change portfolio and then the way the company exists will change inevitably. And therefore, portfolio alone will not be the important piece because Mr. Nagamoi established a huge threshold or hurdle of JPY 10 trillion, and that has been the starting point. I don't know whether the future plan entails 5 years, 10 years or 15 years. The important thing is what KPIs you appreciate. I expect that you can share the clear KPIs.

Thank you very much for your suggestion. Thank you very much.

Now person second from the right. Yes, the person in the post.

This is Sakurai from NHK. Now I'd like to ask this question to Mr. Kishida. First of all, misconduct for the quality issues. The number of such cases is more than 1,000 according to the presentation material is at the right side. For example, it's not about 2,000, 3,000 or 10,000. So if you say more than 1,000, all of them within the category, I'd like to know the level of the numbers of those cases and how many vendors and suppliers are related to these quality issues. And then if you consider the final products and the appliance domain, what are the typical final products?

Can I answer to your question first? Yes. First of all, the number of quality issues, more than 1,000. Roughly speaking, the number is about 1,000. That is the size of the issues in our understanding. Then next point, impact to the customers. Actually, we are still in the discussion with the customers. And in addition to that, there's the contractual issues. And therefore, please allow me to reclaim from replying to this question. For example, it said 3.3%, meaning that it's around 30% to 40% I believe that is the right level.

So first of all, the population number is more than 1,000. And then how about the final product of appliance domain, air conditioners, refrigerators, what are the final products?

Actually, these are used in many products. For example, one motor can be used in many places. And therefore, regarding final products, together with customers, we'd like to determine what we are going to do. And we are in the process.

Now the second point, that is the background of the misconduct. I understand that the detailed investigation will be conducted from on. But so far, I believe you have conducted interviews with employees. Through the interviews, what are the major reasons or background why these quality issues occurred? If it's possible, can you please share the results of the interviews with employees?

Minai, can I answer to this question first?

These issues have been identified in the wide range of investigations and inspections. And that's why we needed to ask the investigational committee to identify the root causes of these issues. But what we have so far is similar to the background for the accounting misconduct, but we needed to look into more whether the root cause is limited only to that or more than that, we'd have to wait and see the results of the investigation committee report. I believe Mr. [indiscernible] mentioned that the root cause are similar to the ones in the accounting misconduct, but why you have reached to that conclusion? -- the major -- main objectives of the change related to the cost of reduction, and this is really me things for the manufacturing industry. Actually, we had to do this because we should be able to offer the same value with lesser cost. However, we should not be trapped by the cost reduction alone. That is my personal principle at any rate, we'd like to wait and see the results, elabate investigations and I'd like to share the results with you. Speaking of changes, changes should be informed with your customers. And all you have to do is to do it, but you do it due to the cost reductions, that's alone. Probably cost is one of the pieces. However, because our production capacity is limited, but the orders are really huge. And then we had to consider how we can make certain high orders. And then there were requests from customers asking us to reduce costs as much as possible, and we have taken initiatives. And because of that, sometimes we do not make the duly notice of the OMs at any rate. We'd like to take right actions based on the results of the investment committee.

Now the second from the left in the [indiscernible] lady please?

This is from [indiscernible] newspaper. First of all, quality issues and its misconducts. I assume that the product related to the misconducts are motors in my understanding. However, are there any products related to the quality misconduct? The second point is related to the number of cases, 1,000 as we mentioned. However, this is a result of the inspection. However, regarding the number of products where quality misconducts were involved, how many of them or how widely the products are related to the quality issues?

Regarding the product related to the quality issues, we understood all of them are motors and where those motors are used. And then there were wide diverse products, and we have not identified which products are related to those motors, and that's why we have to wait for the result of the investigation committee. Speaking of motors, there are many types of motors, small motors and midsized motors. All you can say is a wide range of motors or many of them are related to the small motors. Within this category, for instance, motors for home appliances, then we can see a certain level of sizes. In addition to that, some IT products are related to the suspicious cases of the misconduct. However, in the IT domain, the size of motors are quite small. However, we have already started discussions with the customers for IT domain and therefore, some of the actions, including good solutions are being taken.

Thank you very much. Although we plan to conclude the session at 7:00, but there were some people who needed to ask questions. Therefore, let us continue. Thank you very much.

This is Kai from Yi newspapers regarding the background of how the quality issues were identified. You mentioned that the inspection of the NT Corporate Committee have identified these issues. However, the committee was established to list the securities on a lot nomination. However, the inspection for these qualities should be deeper because someone should take the lead to study the quality issues because there have been very similar quality issues happened. That's why you launched such an inspection and investigations.

Thank you very much for your question. The Head of the performance committee in order to assume this position, we had to consider the core of our business, that is monozuk manufacturing. That's why we needed to prevent anything wrong from happening in the quality domain similar to accounting misconduct. That's why quality working group was established under the reform committee within this working group, what Nidec has to do to prevent the misconduct from happening just like the accounting misconduct in order to do that, we need to know the global situation. Then through the discussions within the working group, we have determined to conduct a group-wide inspection. And that's why we have started the group-wide quality inspection starting this year.

So when you came up with that idea because of the previous cases, that's why you have reached to this action?

No, no, not at all. Just because of the several past cases, we have determined the quality committee. No, we need to return on deck, meaning that we have to look at many aspects related to the monukle manufacturing going beyond accounting because monukally the core of our business. So we needed to review the system process and the scheme. We needed to identify the necessity for that. And that's why we have established a quality working group within the reform committee. Thank you very much. Now this investment committee is expected to complete their tasks by the end of August. However, when I look at the previous cases, investigations of the quality misconduct, sometimes it takes a long time, longer than 1 year. And the past cases, 3 months will be very short. However, just like the Party committee, final report will be issued or all of the necessary tasks will be completed by the end of August. This will be a group-wide effort when it comes to this investigation committee. With respect to this investigation committee, these attorneys who are the members of this committee are professional in their respective areas. They have expertise and they have transparency and they have enough knowledge that are appropriate for this committee. Every time there is a problem, we will take appropriate actions, and we'd like to finish everything by the end of August. This invest period will be -- investigation will be targeting from 2020 in the previous investigation was used -- launched to cover from 2020 through 5 years or so. But what about this committee? We will cover this 1,000 cases. We are going to start to discuss how much or how we would like to discuss the range of the investigations going forward. Thank you.

Next person. The person seem right behind the previous speaker.

This is Yam of Toyo Keizai. While ago, Mr. Mori asked you about the Tchnomotor-reated question. And other than that, there are 10-plus some whistleblown cases. And according to what we were told, all of these issues were solved one by one. And all of this is solved and these issues are not included as part of the present investigation that is ongoing. are there going to be any chances for these past cases to be disclosed in the future? Back then, these past issues were solved, but never disclosed. Is that the correct understanding? And 20,000 other companies have similar issues. It could be too late for me to talk about this, but how come Nidec didn't disclose such issues back then. When they were trying to solve these issues internally, can I ask a comment about this whistlebling cases, trying to reveal these cases to the public. We launched a group-wide quality checks. We established whistleblowing tools. We have voluntary checking. It's not whistleblowing through which we found that these cases. It's not that we solved this issue internally, but we discussed these issues with our customers to solve these issues eventually. That's the first point that I'd like to make.

When I say internally, it's -- even if you solve these issues in communication with your customers, is it correct to say that these issues were never disclosed to the public? With respect to these 4 changes, your understanding is correct. Those past issues were never disclosed. Looking back all those solved issues or issues solved with your customers, do you have any plan to disclose those past issues that are already solved? When it comes to how to disclose what issues we would like to discuss with the investigation committee.

Here's my second question. In addition to accounting issues, you have quality matters, part of which we have already reported. Now all these issues are out in the open. Now it makes it clear that more -- makes it more necessary for Mr. Nagamori to come out and explain all of these issues. Is it possible for Mr. Nagamori to come out on the stage to make an explanation? What is your comment on that, Mr. Kishida.

As I've said before, as a company, we need to improve corporate culture, processes and systems. That's where we are focus should be. We're not going to trying to find someone to be responsible. Mr. Nagamori is no longer with us. He's completely away from us, and that's how we would like to continue to treat Mr. Nagamori. Please make sure to keep your number of questions up 2. About what is the current status of Mr. Nagamori's memorial hall? Can I answer the question? Yes, please. Please go ahead. The construction has halted is halted with respect to Mr. Nagamori's memorial hall.

Next question, please. a person on the back over there who has been raising his hand for a long time.

This is Harigama of Asahi Newspaper. I'd like to ask a question about the personal assignments of the Board of Directors. One person resigned from the office based on his or her own will. Can you explain that point, please?

Please correct me if I'm wrong. All the other ones have had their tenures expiring. This person in question has been one of the Corporate Auditing Committee and this person has decided to leave before his tenure expires. What's the reason for this person to have decided to leave the office? -- we have decided to reach out for the members of the Board of Directors replaced by -- to be replaced by many new people. And we decided to have this new group of people replacing -- to replace the existing members.

And this person who decided to leave office before the tenure expires, is they feeling responsible? Or can you please be more specific about the reason about this person's departure? This person's departure is based on his or her own decision. I'd like to ask a question, Mr. Sakai. What type of person was he to you? Thank you very much for your question. As I became the member of the Board, Mr. Nagomor was CEO of the company. And up until his resignation from Avis, he was one of the executives who are leading the company. That's not answering my question. What is your assessment of Mr. Nagomor as the Board of Directors?

Well he grew Nidec to be a JPY 2 trillion company after found this company himself. Has your assessment changed somehow now? Well, she has constantly aimed to hire that attitude has created excessive pressure in people below him. And information about excessive pressure hasn't fully communicated to me.

What is your assessment of this person as a leader? All of these questions are related to it. Mr. Mitsusaka has already expressed her view. So you I'd like to talk about the skill metrics, finance, accounting, legal compliance, et cetera. We have 3 people have a circle on this chart for finance and accounting. And in this new metrics, we have so many different cycles here. What is the evidence for the skill assessment criteria? How do you assess these new people?

With respect to changes in criteria, Minai-san, who is the Chairperson of the Nomination Committee, will provide you with an answer, followed by Mizuakai.

This is Minai speaking. I'd like to provide you with an answer to the question. With respect to finance and accounting, there is no change in the criteria. Criteria remain the same. And people who have a very good experience with the financial background have been selected as candidates. That is all from me. Sakai-san, would you like to say anything? If not, that is okay. If I may add one thing here. With respect to accounting and finance, there is no existing member of the Board who is an expert in these areas. And the Nomination Committee has been able to identify such people. There are circles for the skill metrics. Are these people not experts, even though they have a struggle? Such ambiguous criteria, I believe, is the reason for Nidec confuse struggle at this moment. -- thank you very much.

This is Ms. Sakai speaking. I believe your comment is right. With respect to the creation of the skill metrics, we checked definition of each of these works, jobs to see if these candidates are the right persons for these jobs. Proper accounting standards are what we need to be pursued by these candidates. these candidates need to have experiences in these areas, and we need to have a very -- these people need to have a very good expertise as well in these areas. And we are trying to see if these persons are truly correct or not.

And these 2 people will be the final people to -- for us to answer the questions for -- the person on the far right.

This is of CTech. At the end of March, there has been the litigation raised by one of the shareholders. It has been 60 days pretty much. And please provide us with any information about the impact of the newly emerged matters with respect to the litigation.

We are aware of the litigation. And we have established a responsibility investigation committee. And based on the proceedings procedure of the investigation -- status of the investigation, we would like to discuss what best approach measures to launch. What is your second question? And could that litigation request impact the asset quality issues? With respect to the current issues, we'd like to make a decision based on the status of the investigation by the investigation committee.

The person on the far back, please.

This is Nomoto of Nikkon Newspaper. That's my first question. With respect to the accounting matters, these are not going to impact your actual business operations, but I believe some business partners of yours are complaining about your companies in the group. If you think about the impact of those current issues on your current businesses, and I believe some people are saying that you should have noticed these business partners earlier. What type of risks are you taking into account now?

Thank you very much for your question. and quality is the issues that is the very basis. And these issues are the very -- that affect the very basis of our company. As soon as we found out these issues matters, we communicate with our individual customers one by one in detail. And we'd like to change the way we work with our customers. That's what we conveyed to our customers as a part of our messages. That's what we like to do as part of our reform. As of today, exact financial impact, et cetera, are yet to be able to be told to the press or any part of the public, but we would like to make sure to continue to work on as a part of the business management. This is spring, and I believe this is a season of price negotiations. Is there any impact of the current issues on price negotiations of your company? At this moment, there is no such problem that I'm aware of, but we will receive some comments in one way or another from our customers. At this moment, -- and going forward, we would like to continue to address those issues with our customers. Thank you very much.

Now I'd like to move on to the second question, which is related to the business portfolio. As we have already discussed, so that is the area for the structural reform. Before the identification of the misconduct, there were some businesses who had seen the difficulties. And therefore, you said that you'd like to prioritize the profitable businesses. However, what's your energy about the business domains that will grow drastically?

Thank you very much for your question. This is related to the direction of how each business should be reinvented or redeveloped. We have discussions internally. For example of the existing businesses that can grow drastically is related to the joint venture in China and France. Furthermore, in addition to what you see here, we'd like to increase the Japanese customers, and we'd like to incorporate Japanese customers' perspectives into our businesses. However, there's no businesses that have been defined. And therefore, we will be in the world where we can create new values together with our customers. Are there any domain, there any plan to withdraw from e-Axle. And of course, we have to cost risk structuring and we'd like to retain all of the possibilities to identify the future direction. So including the withdrawal from a certain business, we needed to have wide views. Of course, it does not mean that an e-Axle is classified in such a business.

Thank you very much. With this, we'd like to conclude the press conference. Thank you very much for your time. Thank you very much.