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Following its establishment in 1934 as a member of the Toshiba Group, Tungaloy's growth and development were supported by other members of the Group and, naturally, by the parent corporation. However, very few of the other members of the Toshiba Group are involved in fields bearing any relation to our area of carbide tools, and as Toshiba increased its focus on other areas and consolidated its business, it became increasingly apparent just how different Tungaloy's objectives were from those of the rest of the Group. Rethinking our relationship with the Toshiba Group, including the issue of shareholdings, therefore became an urgent matter. In the background was also an environment of increasingly severe competition between manufacturers that had been induced by the overseas transfer of domestic production bases and long-term economic sluggishness; mergers and acquisitions by major overseas manufacturers were changing the configuration of the Group, and there was a growing trend towards corporate restructuring in the form of mergers and separations.
This environment required the company to establish a management system that was both independent and capable of rapid response. In seeking to establish this system, we gave serious consideration to a wide range of factors, including ensuring management independence, enhancing our relationship with our customers, maintaining employment and considering the needs of our shareholders. As a result of these deliberations, we decided to use the new method of a management buy-out to acquire our company and achieve independence from the Toshiba Group with NPF as our sponsor, enabling us to independently manage the company and achieve growth and development as a specialized manufacturer of carbide tools.
We actually applied a management and employee buy-out to establish ourselves as an independent company, enabling both employees and management to become shareholders. The new Tungaloy company was established on the basis of complete unity between management and employees as well as to increase corporate value and enable us to be relisted on the stock market.
Our primary concern was how customers would respond to our becoming independent from the powerful Toshiba Group, and there was in fact some unease. When we carried out the MBO, we used factory tours among other methods to indicate to our customers that we were accelerating the pace of reforms that would make us a competitive enterprise capable of rapidly, efficiently and continuously developing, manufacturing and marketing products that would stand out from the competition and exceed our customers' expectations. In the future, we will continue our efforts to ensure that the reforms take root and that customers can clearly see the benefits, with all our employees firmly behind the philosophy of "Attack, Speed, Self-renovation."
Nomura has an outstanding grasp of the trends in our business, and their way of thinking is closely compatible with the objectives of our management team. Nomura's deep respect for our desire to maintain management independence and their understanding of our decision to conduct an MEBO were the major reasons for choosing Nomura as our partner. We also feel that the ability to rapidly propose and implement medium- to long-term business strategies with the backing of Nomura's management resources and global network will make a major contribution to our long-term development. There is no doubt that the enthusiasm of Nomura's youthful staff and of our key executives were key factors in our decision to proceed with the MBO.
