Merger Update

Maruwa Co Ld
01 October 2004


                                                                                                1 October 2004
MARUWA CO., LTD.

3-83 Minamihonjigahara-cho, Owariasahi-city, Aichi-pref. 488-0044 JAPAN

                                                (Translation)

                                 Notice concerning the merger of a subsidiary

MARUWA CO., LTD. ('MARUWA') announced that the Board of Directors at the meeting today resolved the merger of
MARUWA KCK Co., Ltd. ('MARUWA KCK'), its 100% owned subsidiary, scheduled on 1 January 2005.  Details are as
follows;

1. Purpose of merger
MARUWA KCK, which will be merged, is a 100% owned subsidiary of MARUWA, manufacturing and developing
electronic components including EMC Components.  Through this merger, reorganizing KCK under MARUWA's
management, MARUWA aims to enhance management efficiency and business competency by unifying each
administration in a single system and generating synergetic effect in R&D activities.

2. Details of merger
     1) Schedule
        Board of directors' meeting               1 October 2004
        Sign of contract                          1 October 2004
        Shareholders' meeting
        - MARUWA CO., LTD.                        Not to be held (*Note)
        - MARUWA KCK Co., Ltd.                    20 October 2004
        Date of merger                            1 January 2005
        Registration                              7 January 2005
      (*Note) MARUWA will not hold a shareholders' meeting for an approval of the merger contract pursuant to
      the provisions of 3-1, Article 413 of the Commercial Code of Japan.

      2) Method
        MARUWA, as a going concern, will absorb MARUWA KCK, which will be dissolved.

      3) Rate of merger
        As MARUWA owns 100% shares of MARUWA KCK, there will be no issuance of new shares and increase of
        capital.
      4) Cash payment
        There will be no cash payment due to the merger.


3. About MARUWA and MARUWA KCK                                                           (As of 31 March 2004)
     Name                                  MARUWA CO., LTD                      MARUWA KCK Co., Ltd.
     Business field             Manufacturing and sales of            Manufacturing and sales of electronic
                                ceramic materials for electronics and components.
                                industrial appliances, and electronic
                                components.
     Date of incorporation      5 April 1973                          20 November 1998
     Head office                3-83 Minamihonjigahara-cho,           1-4 Fukuda-cho, Joestu-city,
                                Owariasahi-city, Aichi-pref. Japan    Niigata-pref. Japan
     Representative             Sei Kanbe                             Sei Kanbe
                                Representative director               Representative director
     Paid-in capital                                6,683 million yen                  700 million yen (*Note)
     Number of shares issued                        11,050,000 shares                            20,000 shares
     Shareholders' equity                          21,535 million yen                          657 million yen
     Total assets                                  24,436 million yen                        5,237 million yen
     End of fiscal year         31 March                              31 March
     Number of employees        220                                   151
     Main customers             ROHM CO., LTD.                        MARUWA CO., LTD.
                                Matsushita Electronic Components Co.,
                                Ltd.
                                TDK Corporation
     Principal shareholders/    K Maruwa Co., Ltd.             28.69% MARUWA CO., LTD.                    100%
      shareholding ratio        Lombard Odier Darier Hentsch &  3.71%
                                Cie                             3.69%
                                Japan Trustee Services Bank,    3.44%
                                Ltd.                            2.59%
                                The Master Trust Bank of
                                Japan, Ltd.
                                Sei Kanbe
     Main financing banks       UFJ Bank Limited                      The Hokuriku Bank, Ltd
                                The Bank of Tokyo-Mitsubishi, Ltd.
                                The Chuo Mitsui Trust and Banking
                                 Company, Limited
     Relationship between       Capital     MARUWA owns 100% issued shares of MARUWA KCK.
      MARUWA and                Personnel   Directors and employees of MARUWA have doubled or been temporarily
      MARUWA KCK                            transferred to MARUWA KCK as directors and employees of MARUWA
                                            KCK.
                                Trading     MARUWA purchases 100% of products of MARUWA KCK.
     (*Note) MARUWA KCK reduced capital to 400 million yen on 6 September 2004.

     Financial results for the last three fiscal years                                         Millions of yen
     Name                                      MARUWA CO., LTD                    MARUWA KCK Co., Ltd.
     Fiscal year ended 31 March            2002        2003           2004       2002         2003        2004
     Net sales                           7,331        7,689          9,390      3,222        2,564       2,264
     Operating income (loss)             (468)           71            207      (391)         (72)       (115)
     Net income (loss)                   (190)          173             71      (597)        (142)       (200)
     Net income (loss) per share       (17.25)        15.14           5.86 (74,670.03)  (17,728.65) (10,023.99)
     (yen)
     Dividend per share (yen)            14.00        14.00          14.00          -            -           -
     Shareholders' equity per         1,978.92     1,971.75       1,970.60  49.947.45    32,218.79   32,863.53
     share (yen)

4. About MARUWA after merger
     Name                          MARUWA CO., LTD.
     Business field                Manufacturing and sales of ceramic materials for electronics and industrial
                                   appliances, and electronic components.
     Head office                   3-83 Minamihonjigahara-cho, Owariasahi-city, Aichi-pref. Japan
     Representative                Sei Kanbe, Representative director
     Paid-in capital               6,683 million yen
     Total assets                  24,298 million yen
     End of fiscal year            31 March
     Effect on operating results   There will be no considerable effect on operating results due to the
                                   merger.


END


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