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Kobelco Cranes to Produce Crawler Cranes in India

First Japanese crawler crane company to manufacture locally

July 20, 2010

TOKYO (July 20, 2010) - Kobelco Cranes Co., Ltd., a wholly owned subsidiary of Kobe Steel, Ltd., announces that it will construct a plant in India to produce crawler cranes. This initiative will strengthen Kobelco's involvement in the Indian market, which is anticipated to grow rapidly in the future. Investing 1.2 billion yen (600 million rupees) in the facility, Kobelco said the plant is scheduled to begin production in October 2011.

Kobelco is Japan's top manufacturer of crawler cranes, with a roughly 50% share of the domestic market. In the world, Kobelco is a leading manufacturer with an estimated 17% share. The new Indian plant will be Kobelco's first overseas production facility. In addition, among the world's major mobile crane makers, Kobelco will be the first foreign company to own a facility that specializes in the manufacture of crawler cranes.

The new crawler crane plant will be constructed in the Sri City Special Economic Zone, about 75 km north of Chennai in southeastern India. The facility will be located adjacent to Kobelco Construction Machinery Co., Ltd.'s hydraulic excavator plant. The excavator plant is currently under construction and will begin production in January 2011. The close proximity of the plants will enable the two companies to share distribution and information, which will increase the business efficiency of their Indian operations. Kobelco Construction Machinery is also a group company of Kobe Steel.

To operate its Indian business, Kobelco Cranes plans to establish Kobelco Cranes India Pvt. Ltd. (or KCI), a wholly owned subsidiary, in August 2010. The Indian company will open in September. When the crawler crane plant is completed in 2011, KCI will integrate production with sales.

KCI will manufacture crawler cranes ranging from 90 to 250 tons. Kobelco's popular crawler cranes are noted for their versatility on a wide range of job sites, from infrastructure and building construction to civil engineering projects. Heavy lift performance is balanced with smooth operations and tough durability.

The world market for crawler cranes saw a temporary drop in demand following the financial crisis in autumn 2008, but after hitting bottom, demand began to pick up again. In addition, the markets in Japan, the United States and Europe, which in the past comprised a 40% share, saw demand fall to only about 20%. On the other hand, India, China and other emerging countries saw a rapid increase in demand.

The Indian market for crawler cranes, which reached about 200 units in 2009, is anticipated to grow rapidly to 700 units in the next five years, on the back of strong infrastructure investment. The production of crawler cranes in the over-100 ton class, a category in which Kobelco excels, will enable Kobelco to maximize the advantages of local production while accurately grasping user needs. By rapidly responding, Kobelco Cranes aims to further meet demand and strengthen its presence in the Indian market.

The Kobe Steel Group in April this year launched a Medium- to Long-term Business Vision in which it said it would actively develop its overseas business. Overseas sales are anticipated to increase from the current 33% to around 50%, boosting overall sales and profits. An important initiative is to establish a presence in large markets, especially China and India.

Kobelco anticipates that in five to ten years, its overseas crane business will become a major pillar of its earnings. Ever since the Kobe Steel Group's crane business began in 1953 (when it was a division of Kobe Steel, Ltd.), production has been centered in Japan, enabling the company to polish its quality and technology. To quickly grow in the global market, Kobelco decided to start manufacturing overseas, overcoming foreign exchange risks and tariff barriers.

Outline of Kobelco Cranes India

Name :	Kobelco Cranes India Pvt. Ltd.
Head office :	Noida, outside Delhi, India
Capital :	600 million rupees (1.2 billion yen)
Equity :	Kobelco Cranes Co., Ltd. 99%, Kobelco Cranes Trading Co., Ltd. 1%
Business :	Production, sales and servicing of construction machinery
Directors :	Three from Kobelco Cranes
Employees :	Approximately 70 (at the end of 2011)
Details of the Plant
Location :	Sri City Special Economic Zone, Andhra Pradesh, India
Land area :	40,000 sq m.
Facility area :	6,900 sq m
Scope of production :	Assembly, manufacturing, painting and shipment
Start of operations :	October 2011, with full operations in 2013