At the MRC, we are working to expand the scope of our carbon fiber business, which is one of the key components of our core operations on acrylonitrile (AN) field within the acrylics business segment. We are undertaking continuous production, beginning with AN monomers, precursor, carbon fiber tows and pre-preg (pre-impregnated composite fibers) through to finished product such as golf shafts and other processed products.

MRC formed a business alliance with SGL in 2005, in anticipation of growth in demand for carbon fibers in Europe. Through this tie-up, it secured a sintering base in Europe, with SGL undertaking the sintering of precursor, and the two companies have enjoyed a good relationship since then.

Looking ahead to the new market for automotive-related Joint Venture, namely ''Carbon Fiber JV'' between BMW Group and SGL, MRC and SGL have both recognized the need to further expand the scope of collaboration, specifically to supply the precursor securely for this Joint Venture. To this end, the two companies will establish a Joint Venture to produce precursor and to provide it securely over the long term. The intended Joint Venture will be held 2/3 MRC and 1/3 SGL of the shares and located at Otake production site of MRC with operated by MRC.

The contract closing is targeted for the end of 2009. Talks between MRC and SGL are expected to make smooth progress. More details will be announced when it close.