KOMATSU : Komatsu to Merge Its Consolidated Subsidiary

At the Board of Directors' meeting held on July 12, 2004, the Board of Komatsu Ltd. made a resolution to merge Komatsu Building Co., Ltd, a wholly owned subsidiary of the Company, to be effective on October 1, 2004. Pursuant to the simple merger method set forth in Article 413-3 of the Commercial Code, the merger will be completed without having to obtain approval for the merger agreement at a general shareholdersf meeting of the Company.
The details of the merger are described below.

1. Purpose of the Merger

Komatsu Building Co., Ltd., the predecessor, has engaged in leasing and management of real estate, including the Komatsu Building. As Komatsu Building has downsized the scale of business by selling its real estate, the company has decided a merger with Komatsu Ltd. in order to facilitate concentration and efficiency of management resources of the Komatsu Group.

2. Summary of the Merger

1) Schedule:
July 12, 2004: The merger agreement approved by the Board of Directors of the Company
July 12, 2004: Signing of the merger agreement
July 27, 2004: General shareholders' meeting of Komatsu Building Co., Ltd. to approve the merger agreement
October 1, 2004: Merger date (planned)
October 1, 2004: Merger registration (planned)
2) Merger procedure:
Komatsu Ltd. will complete the merger through an absorption and merger, with Komatsu Ltd. being the surviving company. Komatsu Building Co., Ltd. will be dissolved upon completion of the merger.
3) Merger ratio:
The merger is a merger with a wholly owned subsidiary, and Komatsu Ltd. will not issue new shares for the merger.
4) Amount of money delivered due to merger:
No money will be delivered due to the merger.

3.Outline of the Companies Concerned

1) Name:	Komatsu Ltd. (Merger company)
2) Main Lines of Business	Manufacture and sales of construction equipment, industrial machinery and other various machinery and equipment
3) Date Established	May 13, 1921
4) Address of Head Office	2-3-6, Akasaka, Minato-ku, Tokyo 107-8414, Japan
5) Representative	Masahiro Sakane, President and Chief Executive Officer
6) Capital	¥70,120 million
7) Total Number of Shares Issued and Outstanding	998,744 thousand shares
8) Shareholders' Equity	¥462,185 million
9) Total Assets	¥755,988 million
10) Fiscal Year-End	March 31
11) Number of Employees	5,520
12) Main Customers	Manufacturing and sales subsidiaries and affiliates worldwide
13) Major Shareholders and Their Equity Participation (As of March 31, 2004)	Japan Trustee Services Bank, Ltd. (Trust Account):7.1% State Street Bank and Trust Company:6.5% Taiyo Life Insurance Company:5.7% The Master Trust Bank of Japan, Ltd. (Trust Account):5.1% Nippon Life Insurance Company:3.5%
14) Main Banks	Sumitomo Mitsui Banking Corporation Mizuho Corporate Bank, Ltd. The Bank of Tokyo-Mitsubishi, Ltd.
15) Relationship	Equity: The Company owns 100% shares issued and outstanding of the predecessor company. Personnel: Executives and employees of the Company double or are on loan to the predecessor company serving as its executives or employees. Transaction: Komatsu Ltd. rents buildings from the predecessor company.

1) Name	Komatsu Building Co., Ltd. (Predecessor company)
2) Main Lines of Business	Lease of real estate
3) Date Established	March 14, 1964.
4) Address of Head Office	2-3-6, Akasaka, Minato-ku, Tokyo 107-8414, Japan
5) Representative	Toshitaka Hagiwara, President
6) Capital	¥30 million
7) Total Number of Shares Issued and Outstanding	60 thousand shares
8) Shareholders' Equity	¥2,815 million
9) Total Assets:	¥10,098 million
10) Fiscal Year-End	March 31
11) Number of Employees	7
12) Main Customers	Komatsu Ltd. and its subsidiaries
13) Major Shareholder and Its Equity Participation (As of March 31, 2004)	Komatsu Ltd.:100%
14) Main Bank	Resona Bank, Limited.

4. Business Results for the Three Most Recent Fiscal Years

Komatsu Ltd. (Merger company)

Millions of yen (except per share amounts)

Komatsu Building Co., Ltd. (Predecessor company)

Millions of yen (except per share amounts)

5. Status after the Merger

1) Name	Komatsu Ltd.
2) Main Lines of Business	Manufacture and sales of construction equipment, industrial machinery and other various machinery and equipment
3) Address of Head Office	2-3-6, Akasaka, Minato-ku, Tokyo 107-8414, Japan
4) Representative	Masahiro Sakane, President and Chief Executive Officer
5) Capital	¥70,120 million
6) Total Assets	Minor impact of the merger is expected on the Company's total assets.
7) Fiscal Year-End	March 31
8) Impact on Operating Results	Minor impact of the merger is expected on the Company's business results for the fiscal year ending March 31, 2005.

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Information in the news releases is current on the date of the announcement and is subject to change without notice.