My name is Murao, President of GS Yuasa Corporation. Let me start by offering a word of appreciation to institutional investors and analysts. Without further ado, I would now like to report on the financial results for the fiscal year ended March 2022. We registered JPY 432.1 billion in consolidated net sales, a year-on-year increase of JPY 45.6 billion. The primary reasons for this increase are as follows. A sales increase in the automotive lithium-ion battery segment was accompanied by an increase in the sale of lead-acid batteries in the overseas automotive battery segment. Additionally, a weaker yen also had a positive impact. Ultimately, GS Yuasa posted its best net sales performance in the company's history.
Operating income was negatively impacted by higher raw material prices, coming in at JPY 22.7 billion, a year-on-year decrease of JPY 2.1 billion. Profit stood at JPY 8.5 billion, a year-on-year decrease of JPY 3 billion on account of an impairment loss associated with one of our consolidated subsidiaries in China. Shown here are the factors for operating income change. We were not able to execute cost passthroughs fully reflecting the surge in raw material prices, and this difference weighed down on operating income by JPY 8.5 billion. Primarily overseas, soaring distribution costs and personnel expenses similarly negatively impacted operating income by JPY 4 billion. Next are the segment results. I shall be discussing the details next. I would now like to go over the segment results, starting with the automotive battery segment in Japan.
We registered a year-on-year decrease in net sales and operating income. The highlights are as follows. Sales volume of batteries for new automobiles decreased because of a production decrease of automakers due to the ongoing semiconductor shortage, etc. Sales volume of replacement batteries was strong due to the increase of continuing to use owned cars due to a supply shortage of new automobiles and due to an active used car market, etc. Page eight shows our market share for batteries for new automobiles and replacement batteries. Worthy of note here is the fact that our market share in batteries for new automobiles remains unchanged from fiscal year 2019 levels, pre-COVID-19. Regarding replacement batteries, our market share grew one percentage point from fiscal year 2019 levels, thanks to an increase in the ratio of shipped batteries for start and stop vehicles of JIS batteries.
Next are the results in the overseas automotive battery segment. In this segment, net sales increased while operating income decreased. The highlights are as follows. In Indonesia and Thailand, sales volume of batteries for automobiles and motorcycles increased. Sales in Vietnam recovered in the second half from the impact of COVID-19 in the first half and progressed as well as the previous fiscal year. In Europe, sales volume of replacement batteries and industrial batteries increased. In China, sales of batteries for new automobiles and replacement decreased because of more intense competition. Sales increased thanks to the impact of a weaker yen and higher selling prices because of higher prices of lead. Page 10 discusses the sales composition and market share by region globally in the overseas automotive battery segment, as well as the ratio of shipped automotive and motorcycle batteries in ASEAN.
On a global level, the sales composition share for ASEAN and Europe are on an upward trend. In particular, GS Yuasa continues maintaining a high share in markets in the various countries that make up the ASEAN region, where we are working to obtain further profitability improvements by offering high value-added products and building and putting in place optimal production systems. Next are the results in the industrial battery and power supply segment. In this segment, we registered an increase in net sales, accompanied by a decrease in operating income. The highlights are as follows. Supply of lithium-ion batteries for an interconnected system of large wind power generation in Hokkaido was completed as scheduled in fiscal year 2021. Sales volume of batteries and power supplies for backup decreased due to the impact of a shortage of components in power supplies.
Sales volume of batteries for forklifts increased due to the progress of transition from engine-powered to battery-powered. Lastly, the social infrastructure business of Sanken Electric Co., Ltd. was added to the scope of consolidation. Shown here is the trend in net sales by model and by demand source in the industrial battery and power supply segment. While long lead time items had an impact on shipping. Private sector demand for industrial batteries and power supplies, including for ESS, energy storage systems, grew significantly. Next are the results in the automotive lithium-ion battery segment. In this segment, we registered a year-on-year increase in net sales and operating income.
The highlights are as follows: Starting with Blue Energy, the sales volume of lithium-ion batteries for hybrid electric vehicles increased due to starting of trade with Toyota Motor Corporation from the previous fiscal year, and thanks to an increase in the number of vehicle models installing our batteries. Regarding Lithium Energy Japan, sales of vehicle models installing our lithium-ion batteries for plug-in hybrid electric vehicles continued strong. The main factors of profit increase for both BEC and LEJ were an increase in the sales volume. Next are the results in the segment of specialized batteries and others. The core company in this segment is GS Yuasa Technology, which manufactures and sells specialized batteries. In this segment, we registered a year-on-year decrease in net sales, accompanied by an increase in operating income.
The segment highlights are as follows: Sales of lithium-ion batteries for submarines decreased due to the relaxation of standards for progress of construction works. On the other hand, sales of lithium-ion batteries for aircraft increased because replacement sales for airlines progressed steadily despite a slowdown in OEM sales for new aircraft. Next is the balance sheet. The highlights are as shown in the text boxes. We registered a significant increase in working capital, primarily on account of an increase in inventories. We offset this increase in working capital primarily through borrowings and our own capital. The company views the need to reduce working capital, especially inventories, as an issue to be tackled during the current fiscal year. Investments and other assets increased by JPY 9.9 billion year-on-year, primarily due to an increase in retirement benefit assets.
In terms of the breakdown, we registered an increase in valuation gain on retirement benefit trust shares and the accumulation of retirement contributions. Foreign currency translation adjustments had a positive impact of JPY 6.7 billion, resulting from the significant depreciation of the Japanese yen. I would now like to discuss the cash flow statements. The highlights are as follows. Despite ensuring JPY 19.2 billion in profit before income taxes, operating cash flow totaled JPY 12.9 billion due to an increase in inventories and trade receivables. The impact of production cuts on the part of OEM manufacturers resulting from the ongoing shortage in semiconductors and longer lead times for the procurement of parts in the industrial battery and power supply segment led to an increase in inventories.
Investing cash flow came to JPY -30.2 billion due to the capital investment in Blue Energy's number two plant, et cetera. Free cash flow came to JPY -17.3 billion. However, the company withdrew cash and cash equivalents and enforced long-term debt to allocate to shareholder returns. Page 17 contains an overview of capital investment, depreciation, and R&D costs. We registered a significant increase in capital investment associated with the number two plant for Blue Energy, which manufactures lithium-ion batteries for hybrid electric vehicles. This translated into a year-on-year increase of JPY 5.9 billion in capital investment in the automotive lithium-ion battery segment. I would now like to discuss the financial results forecast for fiscal year 2022 and initiatives going forward.
Fiscal year 2022 marks the final year of the fifth midterm management plan, and we expect to meet the consolidated operating income target as initially outlined. In order to achieve this, GS Yuasa will carry out efforts to maintain an appropriate production and sales structure and execute price revisions when adequate, and through this, improve profitability. In terms of priority initiatives in the overseas business, our subsidiary of İnci GS Yuasa in Turkey has been added to the scope of consolidation, with the objective of using it as a supply base for the regional markets of Europe and the Middle East, expanding sales primarily of lead-acid batteries for automobiles, and allowing us to further enhance our business. In the automotive lithium-ion battery segment, the demand for batteries for hybrid electric vehicles continues to grow at a strong pace.
In addition to the start of operations at the new plant, we will simultaneously consider and review an adequate production framework, allowing us to address an anticipated further increase in demand. Additionally, toward the sixth midterm management plan starting in fiscal year 2023, we will also carry out efforts to put in place a structure to accelerate the development of lithium-ion batteries for battery EVs. We forecast to JPY 520 billion in consolidated net sales, JPY 28 billion in operating income, and JPY 28 billion in operating income before the amortization of goodwill, a record performance. The profit forecast is JPY 12 billion, as we anticipate a year-on-year increase. Next is a year-on-year comparison between the actual operating income results for fiscal year 2021 and the fiscal year 2022 forecast.
Positive change factors are improved operations due to an increase in sales of new automobiles, a sales increase of lithium-ion batteries for HEVs, and an increase due to the consolidation of our company in Turkey. Negative change factors are an increase in expenses due to manufacturing expenses from an increase of sales volume and higher distribution costs. Despite this, we are forecasting a year-on-year increase of JPY 5.1 billion in operating income before the amortization of goodwill, which we expect will reach JPY 29 billion. Next is a comparison with fifth midterm management targets. The factors of difference between the fiscal year 2022 forecast and the target are as follows. First is the launch of Blue Energy's No. 2 plant, which is expected to lead to an increase in sales and profit.
Second is the completion of the supply of large wind power generation in Hokkaido, which is expected to lead to a decrease in sales and an increase in profit. Third is the acquisition of the social infrastructure business of Sanken Electric Co., Ltd., which is expected to lead to an increase in sales and profit as we believe synergy benefits will come into play this fiscal year. Last is the consolidation of our company in Turkey, which is expected to lead to an increase in sales and profit. Next is the segment results forecast. I shall be discussing the details next on a per segment basis. First is the automotive battery segment in Japan, for which we forecast an increase in sales accompanied by a decrease in operating income.
We believe the focal point for the current fiscal year will be how soon we are able to execute cost passthroughs to reflect the surging raw material prices we saw last fiscal year. Regarding batteries for new automobiles, we have a lead price sliding scale plan with the OEM manufacturers we count as clients, so we don't believe there will be any problems on this front. Additionally, for batteries for replacement as well, we executed a price increase of 10% or more for lead-acid batteries for automobiles, starting with the February 1st, 2022 shipment. As such, we believe swift cost passthroughs executed in the current fiscal year will contribute to an increase in operating income. Next is the overseas automotive battery segment, for which we forecast an increase in sales and operating income. Here are the priority initiatives in this segment.
Converting our joint venture company in Turkey into a consolidated subsidiary will be making a sales and profit contribution. This subsidiary carries out the development, manufacture, and sale of lead-acid storage batteries for automobiles and forklifts. In fiscal year 2022, we expect to raise GS Yuasa's investment ratio to 60%. Starting this fiscal year, we will be leveraging the technological support and implementation we have carried out in this subsidiary to start in earnest a sales promotion targeting the markets of Europe and the Middle East under the GS Yuasa brand. The sales forecast for the site in Turkey is approximately JPY 35 billion with approximately JPY 3.5 billion in operating income. Next is the industrial battery and power supply segment, for which we forecast an increase in net sales and operating income.
I will first be discussing initiatives for regular use, which is an area we believe will show strong growth going forward. The first initiative is the introduction of new lithium-ion batteries for industrial use, offering even greater price competitiveness. We will be enhancing our efforts toward the capture of demand for renewable energy for achieving carbon neutrality with a fiscal year 2022 sales target of approximately 100 MWh. Additionally, we will develop products to strengthen greater price competitiveness, making progress in the development of ESS, energy storage systems, integrated with new type batteries and containers.
The second initiative is responding to demand for solutions to strengthen the adjustability of electric power systems. Within this, we will be strengthening orders received for ESS, leveraging subsidies to accelerate the introduction of renewable energy. The third initiative is strengthening the maintenance and inspection services business utilizing DX.
Within this, against the backdrop of intense price competition in the market of regular use, we will aim to maintain an advantage by offering GS Yuasa's superior services. GS Yuasa boasts over 100 service sites nationwide, and this network of service sites is a competitive advantage compared to overseas manufacturers. Next are the initiatives for emergency use. Here, we intend to maximize synergy with Sanken Electric's social infrastructure business, which was added to GS Yuasa's scope of consolidation last fiscal year.
More specifically, this involves the self-manufacture of batteries, strengthening power supplies for the telecommunication field, and the integration of sales models, among other initiatives. We are also considering a demand expansion for backup batteries and power supplies for emergency use in the form of demand for BCP, demand for building national resilience, and demand for data centers.
Within emergency use as well, we intend to make progress in carrying out adequate cost passthroughs in response to rising raw material prices. Next is the automotive lithium-ion battery segment, for which we forecast an increase in net sales accompanied by a decrease in operating income. First are the initiatives for lithium-ion batteries for hybrid electric vehicles, which have delivered a strong sales performance. Blue Energy's number two plant started operations in April of this year, and this will allow us to raise production capacity to 50 million cells annually so that we can address the significant demand for this product. Next are the initiatives for lithium-ion batteries for electric vehicles and plug-in hybrid electric vehicles. Regarding batteries for PHEVs, we will aim for supply stability for existing customers and to develop new customers.
We will aim for the stable supply of lithium-ion batteries for commercial EVs and seek to reduce costs. Lastly, this fiscal year, we will be establishing a department in the lithium-ion battery business unit for focusing on lithium-ion batteries for battery EVs. Through this, we seek to accelerate our development efforts. Next is the segment of specialized batteries and others, for which we forecast a decrease in net sales and operating income. The main initiatives to be carried out in this segment in fiscal year 2022 are as follows. First is the stable supply of lithium-ion batteries for submarines. Second is an increase in orders received for batteries for use in satellites and ocean-based applications. Another initiative is developing batteries for lunar rovers. The final initiative is receiving orders of lithium-ion batteries for Gateway, a manned lunar orbit station.
I would now like to discuss a number of topics pertaining to R&D. GS Yuasa was selected for NEDO Green Innovation Fund's next-generation storage battery development project, and we will be accelerating development. Within this scope, we are carrying out research and development of high-performance storage batteries, more specifically toward the quick commercialization of all-solid-state batteries. Our target is to more than double current energy density to reach levels of more than 700-800 watt-hour per liter.
To this end, we will pursue high performance by utilizing proprietary high-performance solid electrolytes and surface processing technology of materials and combining various types of positive and negative electrode materials. Additionally, we will be establishing a specialized department to promote the technological development of all-solid-state batteries. We will establish a specialized department within the R&D center and accelerate development toward quick commercialization of all-solid-state batteries.
Next are the capital investment, depreciation, and R&D cost forecasts for fiscal year 2022. The forecasts are JPY 32 billion in capital investment, JPY 18 billion in depreciation, and JPY 13 billion in R&D costs. Next is the financial status. We expect total assets to increase due to the conversion of our joint venture company in Turkey into a consolidated subsidiary and due to capital investment for Blue Energy's No. 2 plant. Concurrent with this, we intended to maintain financial security. The forecast to year-end cash flow position for fiscal year 2022 is as shown here. Last, I will be discussing initiatives for TCFD, Task Force on Climate-related Financial Disclosures. The governance structure is as shown here.
In terms of the backdrop of changing social conditions, in a 1.5 degrees Celsius warming scenario, we expect declining prices resulting from an expansion in demand for batteries, structural changes in the automobile industry and expanded electrification, expanded demand for renewable energy and backup applications, and lastly, expanded demand for lithium resources and intensifying competition in securing raw materials. Here, we outline the risks and opportunities.
Additionally, our business strategies under 1.5 degrees Celsius warming scenario are as follows: We intend to capture demand for batteries used in electric vehicles, including next generation batteries, and also demand for ESS, energy storage systems, in the push to achieve carbon neutrality. Last are the metrics and targets. GS Yuasa has committed to the GY 2030 long-term greenhouse gas target of reducing CO2 emissions by at least 30% by 2030 compared to a fiscal year 2018 baseline.
We have already converted electric power usage at our Kyoto head plant to 100% renewable energy. Furthermore, starting this fiscal year, we carry out internal carbon pricing. GS Yuasa has set the price at JPY 8,600 per ton of CO2, and we use this metric as information when making investment decisions regarding energy saving and renewable energy measures. We will be creating a new business based on partnerships with various industries toward achieving decarbonization targets. Going forward, we would like to offer solutions to challenges and roadblocks to be tackled in each industry and play a supporting role in decarbonization initiatives on the part of companies. GS Yuasa will aim to become a recycling-oriented company, making a positive social contribution.
This concludes my presentation. Thank you for your time.
We would now like to start today's Q&A session. Mr. Sugimoto with Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. will be posing the first question.
My name is Sugimoto, and I'm with Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. I have three questions for you. First, could you please elaborate a little bit further on the topic of lithium-ion batteries for EVs? GS Yuasa will be establishing and operating a specialized department, and last November, you mentioned the company would be allocating a significant amount of development resources to this field. At the time, you also showed an illustration of the allocation of the share of development resources in fiscal year 2023. What are the plans for fiscal year 2022, and could you give us a progress update on this front? This concludes my first question.
Thank you for your question. On the status of our efforts in terms of automotive lithium-ion batteries, as you can see on page 30 on the bottom right corner, we established a battery for BEV development department. Up until now, we have had an organization carrying out development work on lithium-ion batteries for use in EVs in the form of the Lithium Technical R&D Center, but it was outside the scope of our business departments. However, this fiscal year, in response to full-scale entry to the market of LIB for EVs, we established a specialized organization within the scope of the lithium-ion battery business unit. Currently, this department has a headcount of only 20 employees, but we intended to gradually allocate more and more resources to this department for development specialized in EVs, not HEVs or PHEVs. Thank you.
Would it be reasonable to assume we will be able to hear more details regarding this initiative to move these development efforts within the scope of the lithium-ion battery business unit, as well as regarding the capital expenditures associated therewith?
Indeed. I am not at liberty to discuss the details, but discussions with a number of companies are already underway. We at GS Yuasa believe the generalized perception of the inevitability of the shifts toward EVs to be correct. However, as it stands, there are multiple choices available to consumers in the form of EVs, plug-in hybrid electric vehicles, and hybrid vehicles. With that being said, and also in preparation for the sixth midterm management plan, we want to allocate more resources to R&D for battery EVs, and this is the reason we established this department and integrated it into the lithium-ion battery business unit.
My second question pertains to the company's existing automotive lithium-ion battery business. As you mentioned earlier on page 29, the fiscal year 2022 forecast for this segment is of an increase to JPY 70 billion in net sales and a decrease to JPY 1 billion in operating income. Could you elaborate further on this?
The costs associated with the launch of Blue Energy's number 2 plant will start weighing down on results, and additionally, lithium prices have surged. I would like to hear your thoughts on potential negative impacts from these factors and on the backdrop of this anticipated increase in net sales and decrease in operating income.
Blue Energy has been successful in increasing quantity volume for orders received, and these are very positive efforts.
The main reason behind the forecast of higher net sales and lower operating income was the establishment of the battery for BEV development department within the scope of the lithium-ion battery business unit. This means R&D costs slightly higher than before at the business unit level, so we expect this to translate into a year-on-year decrease in operating income. Whether it's Blue Energy or Lithium Energy Japan, we expect these existing businesses to post a strong performance as they did in the previous fiscal year.
Thank you for your answer. The overall R&D cost forecast for fiscal year 2022 is JPY 13 billion, representing a year-on-year increase of JPY 600 million from the preceding fiscal year. This increase is somewhat limited, so do you expect a significant R&D cost burden within the lithium-ion battery business unit?
That is correct. In addition to this, we will also be shifting a significant amount of resources from lead-acid batteries toward lithium-ion batteries. I am not at liberty to give you a detailed breakdown, but while the forecast amount is an increase of JPY 600 million, the breakdown marks a significant shift in the R&D framework toward lithium-ion batteries.
Thank you for your answer. My last question pertains to the task of reducing inventories, which is something the company has identified as a challenge to tackle during the current fiscal year. Could you please give us more details regarding the framework and initiatives to address this area?
First, inventories expanded considerably last fiscal year, and this expansion impacted operating cash flow. One of the reasons for this increase was the fact that the ongoing semiconductor shortage prevented us from supplying lead-acid starter batteries to OEM manufacturers in the volumes we had originally planned. We manufactured a certain quantity, but realized shipments still fell short of the forecast. Another factor was a similar impact from the semiconductor shortage on the industrial battery and power supply segment, combined with impact from the arrival of long lead time parts. We therefore had to store it as inventory due to the fact that the final parts or components needed to assemble our products did not arrive in time. Consequently, this inventory slipped into the current fiscal year. These were the main factors.
Regarding the industrial battery and power supply segment, up until now, we had one or two companies as suppliers, but toward the end of last fiscal year, we made improvements by diversifying over a number of companies to allow for the smooth procurement of long lead time parts. Additionally, we want to adopt a more flexible framework in terms of OEM of automotive starter batteries. With that being said, while our plants can adapt to a positive or negative variance of, say, 10%, it's much more challenging with a variance of 20% or 30%, as it is difficult to predict when the supply of semiconductors will start flowing again and automobile production on the part of OEM new automobile manufacturers will resume again. As such, we would like to prepare a framework incorporating an accurate understanding of this.
In light of this, on the topic of reducing inventories, we will be adopting a flexible approach while keeping a close eye on market movements.
Thank you for your answer.
Mr. Naruse with Okasan Securities will be posing the next question.
My name is Naruse, and I'm with Okasan Securities. I have three questions I would like to ask you. First, starting with the segment results forecast on page 26. I couldn't catch something you said when discussing the conversion of the joint venture company in Turkey into a consolidated subsidiary. Regarding the impact of this consolidation, according to the presentation materials, GS Yuasa expects a sales growth to JPY 35 billion in the site in Turkey and to JPY 3.5 billion in operating income before the amortization of goodwill, JPY 2.5 billion after.
I believe these figures to be accurate, but I am not entirely certain. My question therefore pertains to how much will be subtracted from this as equity method profits, and also over how many years will goodwill be amortized?
Thank you for your question. Allow us to address each question one by one. First, I will be yielding the microphone to CFO Nakagawa.
This is CFO Nakagawa speaking. Allow me to answer your question. Your analysis pertaining to sales and operating income is close to company forecasts. Additionally, as you are aware, the impact on profit for the period in question is dependent on factors affecting non-operating income, factors such as exchange rate and interest fluctuations. Assuming current exchange rate levels, we will register neither foreign exchange gains nor losses, and this is the assumption we made in our forecast for fiscal year 2022.
In terms of interest levels, interest rates are high in Turkey, so we expect this to weigh down on operating income somewhat. I am not at liberty to discuss specific figures, but what I just outlined forms the basis for the forecast. This concludes my answer.
Thank you for your answer and for your cooperation over the years. The pleasure is all mine, and I look forward to your continued coverage. My second question pertains to the automotive battery segment in Japan on page 23. As was mentioned earlier, the company uses a lead price sliding scale plan and executed a price increase of 10% or more for replacement batteries. The company's expecting a year-on-year decrease in operating income. Although changes in terms of the mix in replacement batteries are probably a factor at play, it would appear profits have decreased significantly in this area compared to previous fiscal years. Could you please elaborate on the cause for this in the current fiscal year and on the profit level outlook over the medium to long term?
Once again, this is CFO Nakagawa speaking. Allow me to answer your question. As President Murao mentioned earlier, we employ a lead price sliding scale plan, which for the most part allows us to execute cost pass-throughs on the sale of batteries for new automobiles to OEMs. However, as we have mentioned on previous occasions, using a sliding scale plan means determining the price for the following six months using the price of lead over the preceding six months.
As such, given the continued and pronounced increase in the price of lead in recent months, we experienced an impact from this time lag in fiscal year 2021, and which we expect will continue through to around the first half of fiscal year 2022. On the other hand, and this has perhaps both positive and negative aspects to it, there is a differential of approximately 10% for our absolute market share for the GS Yuasa brand and to the Panasonic brand combined between batteries for new automobile OEMs and replacement batteries. The share for batteries for new automobile OEMs is therefore slightly higher when compared to other battery manufacturers. This means that trust has grown even further on the part of automakers when it comes to the technology behind our lead-acid batteries over the past number of years.
Consequently, this has translated into an increase in market share for new automotive batteries in advance. In light of this, while profit margins have perhaps dropped somewhat, we believe these developments will, over time, have a positive impact on the market share in terms of replacement batteries. As such, I believe stakeholders have reasons to be hopeful about a recovery in profit margins over a longer time horizon. This concludes my answer.
Thank you for your answer. Last is my third question, which pertains to the content on page 30. The takeaway I got from this is that annual production capacity for batteries for hybrid electric vehicles will grow to 50 million cells during the course of the current fiscal year. That over a medium to long-term horizon, this number could further increase to 70 million as part of the company's shift in this direction. Is this assessment correct?
Additionally, GS Yuasa has long been mentioning a large number of business inquiries for its batteries for use in EVs. However, against the backdrop of a sizable number of announcements in the industry, I am yet to see news of companies starting to adopt these from GS Yuasa, so I would ask you to give us an update on this front. Lastly, batteries for commercial EVs is an area I am not very familiar with, so could you please expand upon the topic in the second bullet point on page 30?
Thank you for your question. On the topic of hybrid electric vehicles, Blue Energy's number one plant currently operates four production lines with an annual production capacity of between 20 million and 25 million cells per year, depending on the type of cell.
The number two plant is now operational, with the first of two lines having gone online this month of April. Additionally, we expect the second line to enter operations around October, by which time we expect to have an annual production capacity of 50 million cells. Furthermore, based on business inquiries we have already received, we expect to increase capacity to 70 million cells per year between around 2027 and 2030. These figures are close to being finalized, but as it stands, we have finished carrying out investment to raise capacity to 50 million cells. Going forward, we would like to consider a number of things toward raising this number to 70 million cells. However, as it stands, it is still too early to discuss a shift to these batteries.
One thing we can say for certain is that we have received business inquiries from numerous OEM auto manufacturers. Next, on the topic of EVs, we currently supply domestic OEM auto manufacturers with batteries for EVs, and we additionally supply batteries for commercial vehicles traveling short distances over fixed routes. I am not at liberty to discuss the details, but going forward, we intend to carry out definite efforts toward capturing business orders on this front.
Furthermore, on the topic of battery EVs as well, I am not at liberty to discuss the details, but after discussions with numerous companies, we expect a significant increase in the sales volume of batteries for BEVs. We are currently carrying out discussions in the development phase as we have started working out the specifics on numerous items pertaining to R&D. We therefore request your understanding that we cannot offer any further details at this point. This concludes my answer.
I see. Thank you for your answer. Like I said, I'm not very familiar with the area of batteries for commercial EVs, so this was a very informative answer. Please keep us abreast on any new developments when these arise. Thank you.
Mr. Sakae with Daiwa Securities will be posing the next question.
Thank you. My name is Sakae, and I'm with Daiwa Securities. I have two questions, the first of which pertaining to the social infrastructure business that GS Yuasa acquired from Sanken Electric. By how much do you expect sales and profit to increase this fiscal year resulting from unlocking synergies?
Thank you for your question. Regarding the process of integrating the Sanken Electric social infrastructure business, the first step is insourcing batteries. In other words, previously, Sanken Electric would purchase batteries and power supplies from third parties, and now these will be replaced by batteries self-manufactured by GS Yuasa. This business was added to the scope of consolidation last year, but this is not something that can be done at a moment's notice.
As such, we'll be seeing developments on this front starting this fiscal year. There are power supplies for the telecommunication field, an area in which Sanken Electric possessed a significant competitive advantage. Through the exchange of technology between both companies, we will be able to further enhance our advantage in this field. Finally, there is the integration of sales models. Last fiscal year, we already exchanged information and considered avenues for integration, and we decided to start production in areas that allowed us to leverage this competitive advantage. As such, we expect to unlock synergies. Next is a discussion of concrete figures.
This is CFO Nakagawa speaking. Perhaps we mentioned this back when the transfer of the social infrastructure business from Sanken Electric to GS Yuasa took place, but the transfer was premised on just over JPY 10 billion in annual sales for the relevant business and limited profits, but not dipping into negative territory. This business entered the scope of consolidation in May of last year, so excluding the month of April, that comes to 11 months. Despite this being 11 months instead of a full fiscal year, this business already delivered net sales in excess of JPY 10 billion and also several hundred million JPY in operating income. This fiscal year, we are hoping for a further net sales increase of 10% or perhaps 20% on a 12-month basis.
Additionally, we will execute production output and sales activities, allowing this business to hopefully break the JPY 1 billion mark in terms of operating income. I am not at liberty to go into the specifics, but the general idea is how I outlined here.
Thank you for your answer. My second question pertains to the automotive lithium-ion battery segment. What characteristics and competitive advantages does GS Yuasa intend to leverage in order to win and maintain current position in the market for batteries for EVs? Late last year, GS Yuasa announced the successful development of a nitrogen-containing sulfide solid electrolyte, so I would like to inquire about progress in terms of patent registration for this technology.
Thank you for your question. GS Yuasa's competitive advantage when it comes to BEVs within the scope of the automotive lithium-ion battery segment is the fact that we possess a platform.
In other words, we were the first company in the world to develop mass-produced batteries for EVs, so we have extensive know-how. Additionally, while batteries for BEVs made only a fraction of overall sales, we continued carrying out R&D from the time we initiated mass production and executed foundational research throughout this period. Against this backdrop, we want to leverage new concepts in the field of batteries for BEV. I am not at liberty to discuss the details pertaining to current liquid electrolyte LIBs, but we have extensive experience, so going forward, we want to carry out initiatives in conjunction with OEM manufacturers. Additionally, on the topic of all-solid-state batteries, GS Yuasa dispatches researchers to participate in LIBTEC, making a contribution to ensuring a competitive advantage for Japanese technology.
Furthermore, one of our departments is doing work with sulfide solid electrolyte technology, so we have plans and formulated goals toward practical use, starting from specialized batteries in the latter half of the 2020s. GS Yuasa was selected for participation in NEDO Green Innovation Fund's next-generation storage battery development project, with the Ministry of Economy, Trade, and Industry covering approximately two-thirds of the R&D costs through a government grant.
In this area, we believe GS Yuasa's competitive advantage to be in high-function solid electrolytes and in terms of conductivity and water resistance. The fact that we were selected for this next-generation storage battery development project means we will be accelerating our efforts, and we also want to concentrate significant resources in this area as well. We are making definite progress on the patent front, but I am not at liberty to discuss any specifics.
Thank you for your answer.
There appear to be no further questions, so this concludes today's Q&A session and financial results briefing. Thank you for taking the time off your busy schedules to participate in today's financial results briefing.