ANNUAL REPORT

30. FINANCIAL RISK MANAGEMENT AND RELATED INSTRUMENTS
Exposures to a variety of financial risks and market risks arise in the normal course of the Company’s business. As a diversified
holding company, the Company faces a combination of risks resulting from the commercial activities of its portfolio holdings and
specific risks as a diversified holding company. The portfolio holdings are exposed to risks related to the level of indebtedness such as
liquidity and interest rate risk and risks inherent to the nature of their commercial activities such as credit risk and foreign currency
exchange risk. As a holding Company, RHJI is further exposed to risks associated with general, economic and market conditions, such
as the risk of fluctuating interest rates and currency exchange rates, liquidity risk and risks related to the stock market, all of which
may have a significant effect on the value of the Company’s assets.
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.
For purposes of managing the risks associated with the Company’s portfolio holdings, the Company generally relies on the individual
businesses’ risk assessment and monitoring programs to manage the exposure to these and other risks. These programs have been
designed based on the specific nature and size of the individual businesses’ activity. While the Company monitors these programs and
attempts to mitigate the negative effects from any of these risks through its representation on the businesses’ Boards of Directors
and through the implementation of certain reporting mechanisms, the Company may face negative consequences from inadequate
risk assessment and ineffective control systems of risk detection and prevention at the level of each of the individual businesses.
This note presents information about the Company’s exposure to each of the above risks.
30.1.Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company’s trade receivables.
30.1.1. Trade receivables
The Company’s credit risk is primarily attributable to its trade receivables. The Company’s exposure to credit risk is influenced mainly
by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of
the industry and country in which customers operate, has less of an influence on credit risk.
The amounts presented on the balance sheet are the amounts, net of allowances for doubtful accounts, estimated by the management
of the respective consolidated businesses based on the prior credit loss experience and the current economic environment.
The Company’s largest customers accounted for approximately 21% and 24% of trade accounts receivables as of March 31, 2009 and
2008, respectively. At March 31, 2009 and 2008 respectively, the largest customer of the Company accounted for approximately 7 %
and 9% of total trade receivables.
The table below shows the outstanding balance of and revenue from the five major customers as of and for the fiscal year ended
March 31,
(in JPY millions) 2009 2008
Rating Balance Revenue Rating Balance Revenue
Nissan Motor Co BBB 2,510 23,507 BBB + 6,461 29,053
Mitsubishi Fuso Truck and Bus Corporation
(1)
1,428 29,702
(1)
3,768 35,246
Chrysler CC 1,141 22,582 CC 992 37,331
Ford CCC - 981 24,477 B 1,104 33,171
ZF Group
(1)
906 20,916
(1)
1,258 30,585
(1) No rating available
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