Shanghai Factory Expansion Constraints, Future Relocation and Environmental Issues
First written in FY2017-Q2. 5 of 9 entries say "Materialised", first in FY2019-Q2. Latest entry: FY2024-H1.
Nichirin moved to the "Worse" side of this theme in 2019.
1 other company's latest entry also says "Mitigated".
- FY2024-H1MitigatedAnnual report
「上海日輪汽車配件有限公司, formerly a consolidated subsidiary of the Company, completed the distribution of its remaining assets in May 2024 through liquidation procedures, and registration procedures for its cancellation were initiated locally. As completion of the liquidation was expected shortly, it was excluded from the scope of consolidation from the current interim consolidated accounting period. The prescribed procedures were completed on 8 July 2024, and the liquidation of 上海日輪汽車配件有限公司 was completed.」
In response to the Shanghai plant's expansion constraints and relocation issues, the liquidation procedures for 上海日輪 were completed on 8 July 2024, following the transfer and shutdown of production. - FY2021-Q3MaterialisedAnnual report
「At a meeting of the Company's Board of Directors held on 30 September 2021, the Company resolved to dissolve and liquidate its consolidated subsidiary 上海日輪汽車配件有限公司. The dissolution and liquidation are expected to be completed once the necessary procedures under local laws and regulations have been completed.」
In response to the Shanghai plant's expansion constraints and relocation issues, the Company proceeded from the transfer of operations and production shutdown to a resolution to dissolve and liquidate 上海日輪. - FY2020RestatedAnnual report
「In the Chinese market, customers suspended production simultaneously from early February due to the impact of COVID-19, but recovery progressed steadily from April. Net sales were ¥10,613 million, compared with ¥11,058 million in the previous consolidated fiscal year. Although productivity temporarily deteriorated in the first quarter in connection with the transfer of operations from 上海日輪汽車配件有限公司, which ceased production at the end of 2019, to 蘇州日輪汽車部件有限公司, improvement progressed from April. Operating income was ¥865 million, compared with ¥867 million in the previous consolidated fiscal year.」
The Company describes the improvement from April onward in the temporary deterioration in productivity following the transfer of operations from Shanghai to Suzhou, as well as the achievement of operating income for the full fiscal year. - FY2020-Q3MitigatedAnnual report
「In the Chinese market, customers suspended production simultaneously from early February due to the impact of COVID-19, but recovery progressed steadily from April. Net sales were ¥6,960 million, compared with ¥8,178 million in the same quarter of the previous year. Although productivity temporarily deteriorated in the first quarter in connection with the transfer of operations from 上海日輪汽車配件有限公司, which ceased production at the end of the previous year, to 蘇州日輪汽車部件有限公司, improvement progressed from April. Operating income was ¥338 million, compared with ¥760 million in the same quarter of the previous year.」
The Company states that the temporary deterioration in productivity following the transfer of operations from Shanghai to Suzhou improved from April onward. The China segment remained profitable, although operating income declined year on year. - FY2020-Q2MaterialisedAnnual report
「In the Chinese market, customers suspended production simultaneously from early February to early March due to the impact of COVID-19. As a result, net sales were ¥3,990 million, compared with ¥5,287 million in the same quarter of the previous year. In addition, temporary deterioration in productivity associated with the transfer of operations from 上海日輪汽車配件有限公司, which ceased production at the end of the previous year, to 蘇州日輪汽車部件有限公司, together with higher logistics costs and other factors, resulted in an operating loss of ¥154 million, compared with operating income of ¥569 million in the same quarter of the previous year.」
Following the transfer of production from Shanghai to Suzhou, temporary deterioration in productivity and higher logistics costs occurred, resulting in an operating loss in the China segment. - FY2019MaterialisedAnnual report
「As of the end of the current consolidated fiscal year, the transfer of production had been completed and production at SNA had ceased.」
The Shanghai plant's expansion constraints, relocation and environmental issues have materialized as the completion of production transfer, the production shutdown, special retirement allowances of ¥615 million and an impairment loss of ¥54 million. - FY2019-Q3MaterialisedAnnual report
「SNA completed the land acquisition and plant construction for the new company SZN during the second quarter of the current consolidated fiscal year and decided to begin transferring production from the end of August 2019. Completion of the production transfer and the shutdown of production at SNA were expected by the end of the current consolidated fiscal year. During the first nine months of the current consolidated fiscal year, special retirement allowances of CNY39,000 thousand (¥619 million) were recorded as economic compensation associated with the agreed termination of employment contracts with employees, agreed on 28 June 2019. In addition, the carrying amount of machinery and other equipment expected to be disposed of was reduced to its recoverable amount, and an impairment loss on fixed assets of CNY3,234 thousand (¥51 million) was recorded during the first nine months.」
As a response to the relocation and environmental issues at the Shanghai plant, production transfer to the new Changshu company began at the end of August 2019, and the expected production shutdown at the end of 2019 was disclosed. Employee compensation of ¥619 million and an impairment loss of ¥51 million were also recorded, showing these risks as actual restructuring costs and losses. - FY2019-Q2MaterialisedAnnual report
「SNA was established on 3 December 1996. Its business has expanded, creating a need to strengthen production capacity to accommodate further growth in orders. However, more than 20 years after its establishment, urbanization has progressed in the surrounding area. To address the relocation and environmental issues arising from the Shanghai land-use plan, the Company established the new company SZN in Changshu, Jiangsu Province, on 19 December 2017 and decided to transfer production to it. Completion of the production transfer and the shutdown of production at SNA were expected by the end of the current consolidated fiscal year. The asset group was expected to be dismantled and disposed of following the shutdown of production at 上海日輪汽車配件有限公司 at the end of the current consolidated fiscal year. Its carrying amount was reduced to its recoverable amount, and the reduction was recorded as an impairment loss on fixed assets under extraordinary losses.」
The production transfer addressing the Shanghai plant's expansion constraints, relocation issues and environmental issues became concrete, and an impairment loss on fixed assets of ¥56 million was recorded. Economic compensation of ¥631 million for employees following the production shutdown was also recorded as special retirement allowances. - FY2017-Q2First statedAnnual report
「The business of 上海日輪 is expanding, and it needs to strengthen production capacity to accommodate further growth in orders. However, more than 20 years have passed since its establishment, urbanization has progressed in the surrounding area, and expanding the plant site has become difficult. Depending on future urban planning, concerns also exist regarding the need to address relocation and environmental issues.」
For 上海日輪, the Company describes the current difficulty of expanding the plant site as a result of urbanization more than 20 years after establishment. It also identifies potential relocation and environmental issues associated with future urban planning, leading to plans for a new plant and the transfer of operations.