0

Foreign Direct Investment in Russian Regions

( KOMATSU in Yaroslavl)

Sept.2008

KOMATSU CIS LLC

1

Date of establishment: May 13th, 1921

Net sales: $ 22,430 million

Assets total: $12 737 million

Construction ans mining equipment

82.8％

15.7％

Construction and mining Equipment sales, by region

Industrial equipment, transport vehicles, etc.

Electronics

1.5％

Japan

The Americas

Europe & CIS:

15.2%

25.4%

21.8%

Asia & Oceania:16.7%

Middle East & Africa:11.6%

China: 9.3%

Komatsu Group: 141 company

in Japan: 67 abroad: 74

Number of employees: 39 267

Sales Distribution

1．Key Figures of Komatsu Group (as of March 31, 2008)

2008/9/10 PROFILE 2

2．Main Products

Manufacturing Bases of Construction EquipmentManufacturing Bases of Construction Equipment

Products line upProducts line upProducts line up

Hydraulic excavator (Crawler-type)

Hydraulic excavator (Wheel-type)

Wheel loader

Dump truck Articulated dump truck

Bulldozer Motor grader

(1)Construction Equipment

2008/9/10 PROFILE 3

Manufacturing Bases of Mining EquipmentManufacturing Bases of Mining Equipment

Wheel loaderHydraulic excavatorBulldozer

Dump truck Mine fleet management system

2．Main Products

(2)Mining Equipment

Products line upProducts line up

2008/9/10 PROFILE 4

Manufacturing Bases of Utility EquipmentManufacturing Bases of Utility Equipment

Backhoe loader

Skid steer loader

Telescopichandler

Mini excavator Mini wheel loaderMidi excavator(Crawler-type)

Midi excavator(Wheel-type)

Forklift truck(Electric)

Forklift truck(Internal combustion)

2．Main Products

(3)Utility Equipment

Products line upProducts line up

2008/9/10 PROFILE 5

• Forging and stamping presses• Sheet-metal machines• Machine tools• Temperature-control equipment

Machining center

[NIPPEI TOYAMA Corp.]

Crankshaft miller

[Komatsu Machinery Corp.]

Press brake

[Komatsu Industries Corp.]

Temperature-control unit for dry etching process

[KELK Ltd.]

Large AC servo press system

[Komatsu Ltd.]

2．Main Products

(4)Industrial Machinery

6

* KAC: Komatsu America Corp.

L&T-Komatsu

Komatsu Indonesia

Komatsu Bangkok

Chattanooga, KAC

Newberry, KAC*

Candiac, KAC*

Komatsu Brazil

Komatsu Shantui

Komatsu ChangZhou

Komatsu Zenoah Shandun

Plants marked with an asterisk (* ) are so-called “mother plants”, able to develop independently.

Plants by regions

Americas Europe China Asia Japan

6 5 3 4 7

Total

25Assembly

4 3 4 5 5 21Components

10 8 7 9 12 46Total

Komatsu Hanomag

Komatsu Forest

Komatsu Mining Germany

Komatsu Forest

Peoria, KAC*

Komatsu Utility Europe

Komatsu UK

Komatsu Zenoah

Mooka, KLTD

Osaka, KLTD

Awazu, KLTD

Rokko, KLTD

3. Global production network: assembly plants

7

Machinery delivery to Russia and CIS (1969 - 2007)

0500100015002000250030003500

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Machinery delivery (Year)

Mac

hine

ry q

uant

ity (u

nits

)

HD1200 Dump TrucksLog forwarders KNW12T1st Komatsu project

signing

4. Komatsu business in USSR and Russia

8

KOMATSU CIS

ISTK-Center

Sumitec Spb

KOMEK

Sumitec

Sumitec FE

KOMEK KZ

Guneykaya

Russia

Kazakhstan

Turkmenistan

MACR

Modern

as of August, 2008

5. Komatsu DB CIS network

Far-Eastern FD

Siberia FD (Eastern Siberia)Urals FD

(Western SiberiaSouthern FD

Volga FD

North-West FD

Moscow, Central FD

9

6. Komatsu Plant and Parts Warehouses network

10

370700

10801870

3500

6119

0

1000

2000

3000

4000

5000

6000

7000

2002 2003 2004 2005 2006 2007

●Demand for excavators in Russia

25004900

6400

9900

17000

25000

0

5000

10000

15000

20000

25000

30000

2002 2003 2004 2005 2006 2007

◆Demand for forklifts in Russia

Units/year Units/year

＊Exclude Russian made machine

7. Recent Demand Expansion in Russia

＊Exclude Russian made machine

11

Place: Yaroslavl (Yaroslavl Region, Russia)Land area: 500.000 sq. m. (50 ha)Building square: 44.000 sq. m.

Place: Yaroslavl (Yaroslavl Region, Russia)Land area: 500.000 sq. m. (50 ha)Building square: 44.000 sq. m.

Models: medium-sized hydraulic excavators, forklifts,

skid-steer loaders

Production Capability:

excavators: 3,000 units/year

forklifts: 7,000 units/year

Models: medium-sized hydraulic excavators, forklifts,

skid-steer loaders

Production Capability:

excavators: 3,000 units/year

forklifts: 7,000 units/year

8. Outline of the New Plant [plan]

12

Investment Agreement with Yaroslavl region signed on February 29th

Ground-breaking Ceremony held on July 21st

9.Investment Agreement and Ground-breaking

13

10. Map of the Central Federal District

14

Selection

Criteria

for the regions

Local economy and business environment

Labor and Education

Transportation, Logistics

Degree of industrial development for manufacturing machinery

Potential suppliers

Availability, cost and quality of local labor

Quality of professional education

Logistics costs of components and products

Access to the market

Availability of real estate to meet conditions

Electricity, gas, water and sewage

Local transportation

Support of Local authorities

Support of local administration and regional incentives

Political stability of the region

Living standard forJapanese specialists

11. Why has Komatsu selected Yaroslavl ?

15

１．Underdeveloped infrastructure of transportation

Underdeveloped federal highways

2.Lack of industrialparks with utilities

Lack of information

3.Time-consumingprocedure to getconstruction andoperation permissions

Large volume of design documentation

4.Limited supply ofskilled labor High rate of labor turnover

Capacity of seaports and Siberian railway

Lack of green fields with energy and water supply

Negotiations with monopolists

Commissioning permit

●Major problems that foreign investors are facing in Russia

12. Major Problems