Exchange rate risks are income-related risks that arise when assets or liabilities in a foreign currency are converted into the currency used in the accounting year-end financial statements. They also include risks relating to foreign currency denominated credits or debts that arise from fluctuations in the exchange rate before the time of settlement.
In inventory asset trades between MHM, MCI, MCIC, and PP Japan, MHM buys raw materials from PP Japan in JPY, and the product is sold to MCI and MCIC in JPY and USD, respectively. For the transaction with third parties, MHM buys raw materials from third party suppliers mostly in THB, and sells the finished products in JPY, USD and THB. As a result, MHM bears the related exchange rate risks.