THE STORY OF VALUE CREATION
Kurita Water Industries Ltd. Annual Report 2017
For the year ended March 31, 2017

Enter

Corporate Philosophy

Study the properties of water, master them, and we will create
an environment in which nature and man are in harmony
The Kurita Group’s History of Value Creation

Launch of the ultrapure
water supply business
Launch of service business inwhich Kurita owns, operates,
and manages facilities onbehalf of its customers, supplying them with ultrapure
water. A business model isdeveloped that represents afusion of technologies, products, and services developed
to date a cross th e w ate r
treatment chemicals, water
treatment facilities, andmaintenance services.

—Kurita treasures its corporate philosophy—
Since its establishment, the Kurita Group has provided value to its customers
by resolving water-related issues in various industries.
In 1989, in commemoration of the 40th anniversary of Kurita Water Industries Ltd.’s founding,we established our corporate philosophy, further refined the knowledge and technologies for waterthat we have cultivated since our foundation, and have expanded these into the environment field.
We have redefined our business areas and decided that water and the environment
will be our areas to focus on and develop going forward.
Establishment of this philosophy has become a driving force behind the development of today's Kurita Group.

Acquisition of a water treatment chemicals company in
the United States
Acquires Fremont Industries,
LLC, a company that manufactures and sells water treatment
chemicals in the United States.

Acquisition of water treatment-related
business in Europe
Acquires water treatment chemicals,
paper process chemicals, and aluminumcompound businesses of BK Giulini GmbH
from Israel Chemicals Ltd.; establishes Kurita
Europe APW GmbH.
Commencement of the ultrapure watersupply business in South Korea.

2017

2015

We will continue to offer optimal solutions for water and environmental problems,and provide customers with value that improves productivity,
saves energy, and reduces environmental burden.

CONTENTS
Who We Are, What We Do: An Overview of the Kurita GroupMoved to the First Sectionof the Tokyo Stock
Exchange and the Osaka
Securities Exchange.
Launches the water treatment chemicals
business (boiler water treatment
chemicals), upon which the Company
is founded
The founder of the Company starts sellingboiler water treatment chemicals based on
boiler technology for large ships.

1949
1951

Expansion of maintenanceservices
An organization specializing
in maintenance services isestablished with a view to expanding after-sales services
and maintenance operations
for water treatment facilities.

1958

Entry into the water
treatment facilities
business
Capitalizing on sales ofdeionizer for the pretreatment of boiler water supplies, the Company moves
into the water treatment
facilities business.

Listed stock on the Second
Section of the Tokyo Stock
Exchange and the Osaka
Securities Exchange.

Establishment of an overseas company for
the water treatment chemicals business
Kurita do Brasil LTDA . established to
manufacture and sell water treatment
chemicals in Brazil.

2002

2003

1991
Expansion into process
treatment chemicals
Develops chemicals that increase productivity in the pulp
and paper, petrochemical, andsteel industries, where large
volumes of water are used,as the Company broadens
the scope of its business fromwater treatment chemicals to
production process treatment
chemicals.

1973

Deployment of the tool cleaning
business
Sales channels established for theelectronics industry and chemicalcleaning technology developed todate are used for the Company’s
entry into the cleaning business fortools and jigs used in semiconductor production equipment.

Establishmentof the corporate
philosophy

The Kurita Group’s Competitive Advantages andBusiness Model

04
05
06
08

The Kurita Group’s 21st Century Vision
The Kurita Group’s Strength
Value Creation of the Kurita GroupManagement Indicators

09
10
14

100% wastewater reclamation achieved
At Japan’s largest liquid crystal
display (LCD) panel manufacturer, we succeeded in realizing wastewater reclamation
systems using a membrane
filtration and bio treatment.

1986
1975

Entry into the electronics industry
As water of a higher degree of purity
is needed to further miniaturize thesemiconductor manufacturing processes, ultrapure water production
technology is developed.

The Kurita Group’s History of Value Creation
Kurita’s Business

The Kurita Group’s Initiatives for Value Creation

1989

1965
1961 1962

01
02

Launch of soil remediation businessAs soil pollution increasingly becomesa major social issue, the Company
commenced soil remediation business
operations based on the water treatment
technology it had thus far developed.

A Message to Our Stakeholders
Interview with the President
Toward the Final Year of Medium-Term
Management Plan CK-17
16 Review of Operations and Strategies
by Segment
20 Foundation of R&D and Intellectual Property
22 Fundamentals that Support Value Creation
22 Further Strengthening of Corporate
Governance
26 Directors and Members of the Audit &		Supervisory Board
27 Initiatives that Support Value Creation
27 Risk Management / Internal Control System
28 Compliance
29 IR Activities for the Enhancement of		Corporate Value
30 Human Resources Management
32 Emphasis on Safety and Quality
34 Harmony with the Environment
36 Contribution to Local Communities
37 Financial Section
43 Investor Information
44 Corporate Data
Disclaimer
This report contains forward-looking statements from Kurita Water Industries Ltd. and its consolidated subsidiaries pertaining to plans, forecasts,
strategies, and results. These forward-looking statements are based on
currently available information, and actual results may vary significantly
from the forward-looking statements contained in this report due to arange of variable factors.

Kurita Water Industries Ltd. Annual Report 201701

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupA Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Management
Indicators

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

■ Water Treatment Chemicals ■ Water Treatment Facilities

Kurita’s Business
Soil remediation

The Kurita Group has accumulated technological know-how on water treatment since its
foundation.
To meet customers’ needs, such as improving productivity and reducing their environmental burden, the Kurita Group provides comprehensive solutions to customers by
integrating a variety of technologies, products, and services in three business areas: water
treatment chemicals, water treatment facilities, and maintenance services.

We provide comprehensive services that meet theneeds of customers, from a contamination level checkfor ground and underground water to selection andimplementation of purifying measures best suited toeach property.

Ultrapure waterproduction systems
Industrial water, river / well water

Water treatment systems
We provide systems for manufacturing waterthat meet various industrial needs, suchas purified water used in the electronics
industry as well as water for pharmaceuticaluse, including injectable drugs and eye
medications, water for manufacturing foods
and beverages, and boiler water for use in theelectric power and steel industries.

These systems produce waterthat is nearly theoretically pureby removing impurities to the
maximum possible extent. By
fully employing various water
treatment technologies—including ion exchange, reverse osmosis
membranes, electric deionization,and ultrafiltration—we provide
systems that are optimally
matched to our customers’ needs.

Maintenance of water treatment facilities
Our maintenance services prevent the performance ofwater treatment systems delivered to our customers
from decreasing, stopping problems before they ever
happen.

Wastewater treatment
chemicals
We produce chemicals that
contribute to the reductionof environmental burdens
with adequate treatment towastewater with various characteristics from factories, etc.,
which includes the removalof suspended matters, sludge
dewatering, odor eliminationand deodorization, etc.

Wastewater treatment
systems

Process treatment
chemicals
We have a range of chemicals thatmaintain and improve production
efficiency and product quality
in the manufacturing processes
for the oil refining and petrochemicals, steel, and pulp and paperindustries.

Manufacturing
process

Kurita’s water treatment
systems use a variety of technologies for the treatment ofwastewater from factories withdifferent quality and characteristics.

Cooling water treatment
chemicals
These chemicals, used for coolingsystems at factories and office buildings,
contribute to the prevention of troubles
and the increase of Legionella bacteriathat are generated in water, and to energy savings by improving the operational
efficiency of equipment.

Power generators

Air conditioning
systems

Boilers

Refrigeration systems

Cooling
towers<Utilities>

Boiler water treatment
chemicals
Our boiler water treatment chemicals areused to prevent trouble in boilers and help
them operate efficiently. We offer chemicals
that meet high safety standards in terms ofingredients as well as chemical effects.

Wastewater reclamation

Wastewater reclamation
systems
We propose the reclamation andrecycling of wastewater with waste
reduction also taken into consideration, thus contributing to more
effective use of water resources,
environmental burden reduction,and cost reduction.

Wastewater treatment

Water Treatment Chemicals
Boiler water treatment chemicals
Cooling water treatment
chemicals
Wastewater treatment chemicals
Process treatment chemicals
Packaged contracts• Cooling water / Boiler watersupply contracts• Comprehensive wastewater
treatment contracts, etc.
Chemical injection and dosing
equipment, etc.

Water Treatment Facilities
For general industries
Water treatment systems
Wastewater reclamation
systems
Wastewater treatment
systems
Soil remediation
Chemical cleaning
Maintenance services,
operation

02 Kurita Water Industries Ltd. Annual Report 2017

For the electronics industry
Ultrapure waterproduction systems
Wastewater reclamation
systems
Wastewater treatment
systems
Tool cleaning
Maintenance services,
operation
Ultrapure water supply
business

Waterway andsewage discharge

Industrial waste

Kurita Water Industries Ltd. Annual Report 201703

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

The Kurita Group’s 21st Century Vision
We sketched out Kurita’s future vision.
Within this 21st Century Vision, we have encapsulated the dreamof how we want Kurita to be, the principles we continue to cherish,and our determination to realize this vision.

Study the properties of water,
master them, andwe will create an environment
in which nature andman are in harmony

Becoming an Advanced Water
and Environmental Management
Company

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Corporate Vision

Management Guidelinesment” achieved through our state-of-the-art
technologies, products, and services, thereby
achieving “advanced management” toensure that water of appropriate quality andquantity is available whenever and wherever
it is needed.
3 We will further advance our service busi-

ness in the water field to help customers
meet their challenges, such as more safety,
higher productivity, and lower environmental burden, thereby retaining the continued trust of our customers and realizing
our own growth.

A Business Structure with Distinctive Character

R&D Capabilities (Technology-Driven Company)

Kurita provides comprehensive solutions with diverse technologies, know-how, and services of the following threebusiness areas: water treatment chemicals, water treatment
facilities, and maintenance services.

Not only having eight core technology focus areas, Kurita
also strengthens the creation ability for technology seeds
for innovative product development.
Membrane separationand filtration

Water Treatment
Chemicals

Water Treatment
Facilities

Surface treatment

Adsorption
and deionization

Industry-LeadingIntellectual
Property Portfolio

Biologicalengineering

Maintenance
ServicesCore Values

Kurita Group Code of Conduct
The Kurita Group Code of Conduct stipulates
the basic actions to be taken by all officers andemployees of the Kurita Group.

Environmental Business
2 Creation of New Business3 Technology-Driven Company
4 Full Use of the Group’sComprehensive Strength
5 Enhanced Development of
Human Resources
6 Fulfillment of Social Responsibility

Analysis

Sterilization
and bacteriostasis

Corrosion prevention
and dispersion
Coagulation and flocculation

Diverse yet Strong Business Fundamentals

High Ratio of Service Businesses

Our Water Treatment Chemicals business has a variety of
products and approximately 30,000 customers in manydifferent levels, while our Water Treatment Facilities businesstargets diverse businesses mainly in the electronics industry.

Our service businesses generate profits in a stable manneras they account for 84% of the total of the Group’s total consolidated net sales.
Water Treatment
Facilities (Hardware)¥34.5 billion

Approx.

Water Treatment
Chemicals

16%

Number of Clients
1 World’s Top-Class Water andCorporate Data

Kurita provides its customers in various fields with value, including productivity enhancement, reduction of environmental burden, and energy savings, by providing solutions for water treatment in many ways effectively using management resources that are: Kurita’s distinctive business structure of water treatment chemicals, water treatment facilities,
and maintenance services; R&D capabilities that are the fundamental to truly being a “Technology-Driven Company”;
maintaining strong, long-standing relationships with customers in various industries; a base that generates profits stably by maintaining a high ratio of service businesses; and the stretch of wide networks that spread throughout Japanand the world.

1 We will implement our corporate philoso-

phy and contribute to society by striving to
add new value and functions to water andby meeting global challenges such as theconservation of the natural environment
and effective use of resources.

Investor
Information

The Kurita Group’s Strength

2 We will further progress our “water manage-

Corporate Philosophy

Financial Section

30,000¥214.2 billion

Water Treatment
Facilities (Services)46%¥97.8 billion¥81.9 billion

38%
Ratio of Service
Businesses

84%(Fiscal year ended March 31, 2017)

A Business Network Spanning Japan and the World
We maintain well-functioning networks that include our Group companies and sales dealerships, and are also able to respondto the needs of our overseas customers in various countries and regions.

The Core Values provides that officers as well as
employees of the Kurita Group are required toshare and give priority to the five values(fairness, transparency, integrity, safety, andcompatibility) to ensure the Group is able tomaintain and enhance its good reputation to
deepen the trust of society.

Global Network

04 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201705

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Value Creation of the Kurita Group
Under the Kurita Group’s 21st Century Vision—the blueprint for Kurita’s future vision—the Kurita Group strives to provide the best solutions for issues regarding water and the environment as a leading water treatment company throughthe utilization of its considerable R&D capabilities, which the Group has been accumulating since its establishment in
1949, and the advantages of its business structure with distinctive character. In order to realize its corportae philosophy, the Group is committed to further strengthening its fundamentals and strategies that support value creation.
Kurita aims to improve its corporate value by contributing to the realization of a sustainable society through solutions
on issues regarding water and the environment.

External Environment

VisionOur Strength P.05

Management Strategy P.14

Business Model

Values that We Offer

We contributeto the realization ofa sustainable society.

Water issue

Pro

d

ns e

Prop

lo
os a

fs

ancement

Pharma- Electronics
ceuticals

Food

Oil refining
Pulp
and
Automobiles
petrochemicals and paper
Electric
power

Steel

En

erg

y sa

Optimization ofenergy use

Re

Customers

s
ol
ut
io n

po

y en henvironment
a
l
bu
rd

Waste issue

es

r

P.04

(CK-17）cyHigh Ratio of Service
Businesses

Competitive
Kurita 2017

du

vit
cti

of
on
cti
du

Diverse yet Strong Business
Fundamentals

Medium-Term
Management Plan

sues
of is
ion
at

(Technology-Driven Company)

Iden
tifi
c

gen

Corporate
Philosophy
Corporate Vision
Management
Guidelines

R&D Capabilities

nosis
iag
d
ay

E m erClimate change

The Kurita Group’s
21st Century Vision

Day
-to
-

Energy issueen

A Business Structure with
Distinctive Character

Kurita’s Water
Treatment Solutions

ving sA Business Network Spanning
Japan and the World

Reduction ofenvironmental
burdenProgress of
production
technologies
in the industries
Happiness andself-realizationof employees

P.44

Improvementof shareholder
valuesDevelopment of
information
technology (IT)Fundamentals that Support Value Creation

Further strengthening ofcorporate governance
P.22

06 Kurita Water Industries Ltd. Annual Report 2017

Shareholders and Investors / Employees / Customers / Business Partners / Natural Environment / Local Communities

All-Round
Water Management

Effective use ofwater resources

Initiatives that Support Value Creation
Risk management

Compliance

Human resourcesmanagement

Harmony withthe environment

P.27

P.28

P.30

P.34

Internal control system

IR activities for the enhancementof corporate value

Emphasis on safety
and quality

Contribution to
local communities

P.27

P.29

P.32

P.36
Kurita Water Industries Ltd. Annual Report 2017

07

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate DataManagement Indicators
Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31

Financial

Millions ofyen

Thousands of
U.S. dollars1

2016

2017

2017

Orders¥208,689 ¥195,065 ¥175,162 ¥181,951 ¥197,256 ¥186,741 ¥173,463 ¥181,282 ¥221,273¥218,730$1,952,946

A Message to Our Stakeholders

Net sales

204,875

199,706

178,520

181,234

193,792

180,143

178,137

189,398

214,372

214,187

1,912,383

The fiscal year ended March 31, 2017, was a year for the Kurita

Cost of sales

138,549

135,874

117,221

118,573

127,905

121,047

122,870

130,509

143,964

145,455

1,298,705

Group to strengthen its resolve to implement reforms.

Selling, general andadministrative expenses

35,85735,89634,941

35,52836,503

38,10640,38039,45450,57449,280440,000

Operating income

30,46827,93526,35827,131

29,382

20,98914,886

19,435

19,833

19,452

173,678

Operating income margin (%)

14.9

14.0

14.8

15.0

15.2

11.7

8.4

10.3

9.3

9.1

Net income attributable toowners of parent2

18,297

16,29917,28817,13816,548

11,476

9,352

10,434

12,577

14,506

8.9

8.2

9.7

9.5

8.5

6.4

5.2

5.5

5.9

6.8

231,498

245,406

251,620

253,298

271,141

263,580

274,925

294,492

298,107299,249

0.88

0.84

0.72

0.72

0.74

0.67

0.66

0.67

0.72

0.72

169,402177,291

192,588

198,042

208,891

207,871

217,691

222,330

227,896

227,623

Equity ratio (%)6

73.2

72.2

76.5

78.2

77.0

78.9

79.2

75.5

76.4

76.1

Return on assets (ROA) (%)7

7.8

6.8

7.0

6.8

6.3

4.3

3.5

3.7

4.2

4.9

Return on equity (ROE) (%)8

11.2

9.4

9.3

8.8

8.1

5.5

4.4

4.7

5.6

6.4

Capital expenditures

24,09756,322

8,083

5,965

8,105

6,688

5,709

12,864

19,623

10,08790,062

Depreciation and amortization

9,425

11,716

15,523

16,066

16,035

15,054

14,774

14,863

15,74915,857

141,580

R&D expenses

4,551

4,363

3,990

4,225

4,232

4,362

4,534

4,397

5,269

5,038

44,982

2008

Return on sales (%)3
Total assets
Total assets turnover (Times)4
Equity5

2009

2010

2011

2012

2013

2014

2015

Yen

2,671,866

2,032,348

U.S. dollars1

1,907.8

1,961.3

1,991.9

17.78

42.0

44.0

46.0

48.0

50.0

0.45

45.4

56.1

52.4

44.3

39.9

¥ 130.7 ¥92.4

Equity per share10

1,316.7

1,378.0

1,497.0

1,563.6

1,649.2

1,744.4

Dividends per share

32.0

34.0

36.0

38.0

40.0

Dividend payout ratio (%)

22.5

26.8

26.8

28.4

30.6

¥

78.5

¥

becoming irrelevant. Moreover, we recognize that the Company

When I was appointed President and Representative Director
in 2016, I declared the Kurita Group’s goals of earning the trustof all stakeholders and contributing to the development of society by realizing its corporate philosophy. While staying true toour philosophy, we believe that proactive in-house reforms arenecessary for further strengthening the Group’s competitive advantages. In the future, we intend to reorganize the Group while
carefully enhancing Kurita’s identity with the aim of establishing abusiness structure and value system that fits with today’s world.

Notes: 1. The U.S. dollar amounts are given solely for convenience at the rate of ¥112 to US$1, the prevailing rate on the Tokyo Foreign Exchange Market on March 31, 2017.
2. Accompanying the revision of Accounting Standards for Business Combinations, etc., the names of items presented have been changed.
			 The revised standards have been applied from the fiscal year ended March 31, 2016.
3. Return on sales = Net income attributable to owners of parent ÷ Net sales
4. Total assets turnover = Net sales ÷ Total assets (Average)
5. “Equity” represents Net assets less non-controlling interests (hereinafter, the same)
6. Equity ratio = Equity ÷ Total assets × 100
7. Return on assets = Net income attributable to owners of parent ÷ Total assets (Average) × 100
8. Return on equity = Net income attributable to owners of parent ÷ Equity (Average) × 100
9. Calculation of net income per share is based on average number of shares outstanding (excluding treasury stock).
10. Calculation of equity per share is based on the number of shares at year-end (excluding treasury stock).

Non-Financial

are concerned that Kurita’s current business model is at risk ofronment and society in its business activities.

1,826.8¥ 134.0

and Artificial Intelligence (AI).

must change by giving more consideration to the natural envi-$ 1.12¥ 134.4

tures and people’s work environments are being transformed by

In such a dramatically changing operating environment, we¥ 125.2¥ 126.7

lized political situations around the world but also challenged therapid progress in such technologies as the Internet of Things (IoT)¥ 108.2¥ 142.2

by globalism and technological advancements not only destabiworkings of modern capitalism. At the same time, industrial struc-

129,51787.8

Net income per share9

During the year, growing economic inequality brought on

As we work to reform Kurita, we look forward to the continued understanding and support of the Company’s shareholders
and other stakeholders.
July 2017

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Total CO2 emissions (t-CO2)*

22,50522,541

23,56323,941

158,121

162,748

181,149

188,543

188,709

185,435

Total waste output (t)*26,895

27,133

26,186

24,73947,181

41,56147,85954,67933,756

27,538

Number of employees

4,249

4,404

4,445

4,490

4,555

4,640

4,635

5,222

5,481

5,654

President and Representative Director
Michiya Kadota* Kurita Water Industries Ltd.'s domestic offices and domestic consolidated subsidiaries

08 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201709

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Interview with the President

Q

Please describe the Company’s consolidated financial
performance in the fiscal year ended March 31, 2017.

Vietnam to sell water treatment chemicals, which have been in short supply
in those markets, which allows us to set up organizations that can offer more
meticulous solutions. In South Korea, our ultrapure water supply business is
winning the trust of a customer by helping its plant operate stably. This busi-

For detailed information on market environment,
refer to Review of Operations and Strategies by
Segment on P.16–19.

In terms of market environment in the fiscal year ended March 31, 2017, weness is laying a solid foundation for business growth after being launched

saw signs of recovery in production activity and capital expenditures in domes-in the second half of the previous fiscal year to provide services to a large

tic manufacturing. In East and Southeast Asia, we continued to see rising de-semiconductor manufacturer.

mand for water treatment. Amidst this, the Kurita Group's revenues in yen terms

To improve profitability, we worked to add more value to the products

were depressed by the impact of a higher yen on overseas sales, and contract re-and services offered to customers by combining sensing technologies withvisions with an ultrapure water supply customer. However, disciplined cost con-

our water treatment data analysis expertise. In the Water Treatment Facili-

trols in the domestic and overseas Water Treatment Facilities business supported

ties business, we overhauled production processes and had project manag-

profitability. In the absence of the one-off expenses of the previous fiscal year

ers improve manufacturing operations and cost management. Those efforts

related to the business acquisition in Europe and retirement benefits, we weregreatly increased the profitability of water treatment facilities both in andable to effectively match the level of operating income on a year-on-year basis.

outside Japan.

Net income attributable to owners of parent rose year-on-year on the decline incorporate tax rates, which led to a lower tax burden.

Among our initiatives for creating competitive products and services, weinvested in APANA Inc., an American venture firm, with the goal of acquiring
leading-edge technologies. APANA specializes in big data analysis using IoT,

For detailed information on the medium-term
management plan CK-17, refer to Kurita Water Industries website ▶ Investor Relations ▶ Management Policy ▶ Medium-Term Management Plan.

Q

What measures were taken in the second year of yourmedium-term management plan, Competitive Kurita
2017 (CK-17), and what were the main results?

For information on combining sensing technologies with our water treatment data analysis expertise, refer to S.sensingTM: Next-generation water
treatment management service that support productivity improvements on P.17.

For information on APANA Inc.’s services, refer toP.14.

and has many accomplishments in the United States as a provider of services
that help commercial facilities conserve water. In addition, through the acquisition of a company in Europe, we improved our products for the Japanesemarket, specifically water treatment chemicals for boilers. We also launched

For information on results of the fiscal year ended
March 31, 2017, refer to P.14.

In the fiscal year ended March 31, 2017, the Kurita Group worked to expand

a standardized wastewater reclamation system, which meets the needs for

its overseas business, improve profitability, and create competitive prod-

low-cost water reclamation and recycling.

For information on the standardized wastewater
reclamation system, refer to P.14. P.19.

ucts and services.
As part of our efforts to expand overseas business, the Company acquired Fremont Industries,
LLC, which operates a water treatment chemicals

10 Kurita Water Industries Ltd. Annual Report 2017

important measures will be taken in the final
Q Whatyear of CK-17?

business in the American Midwest, in order toWith a view toward raising corporate value, we aim to “improve customer

gain a foothold in the United States. To raise oper-

intimacy by providing the best customer solutions” in the fiscal year end-

ational efficiency in the Europe, Middle East, anding March 31, 2018. By improving customer intimacy, I believe that Kurita will

Africa region, we merged Kurita Europe GmbH

become even more beneficial for customers as an essential partner. For thatwith Kurita Europe APW GmbH, combined the

purpose, we are working to respond to customers even quicker and are en-technologies and know-how of both companies,

hancing our solutions capabilities so that we can help them overcome chal-and reorganized their sales and manufacturing

lenges. To realize this, we plan to launch competitive products and services toorganizations. Furthermore, we established sub-the market that utilize Information Technology (IT) and sensing technologies

sidiaries in the United Arab Emirates (UAE) andand will reform business processes to increase operational efficiency.

For information on issues and important measures in the final year of CK-17, refer to P.15.

Kurita Water Industries Ltd. Annual Report 201711

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionFor information on the R&D center in Singapore,refer to P.20.

Value Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Meanwhile, we also aim to expand businesses that we have positioned

Today, companies are expected to play a more positive role in society be-

for growth: overseas business and the service business. We intend to speed

cause social issues and environmental problems are becoming increasingly

up overseas business expansion by having our global business network work

serious. Accordingly, it will be necessary for the Kurita Group to give greaterin unison to offer the Kurita Group’s specialized technologies, solutions, andweight to social concerns in its business activities going forward. In the fiscal

business model. In the United States, which is home to the top global compa-

year ending March 31, 2018, we are reforming working conditions for employ-nies in the water treatment chemicals industry, our aim is to become a major

ees while continuing to enhance corporate governance. As we make progresswater treatment chemicals company by conducting a series of mergers andin meeting such ESG criteria, we plan to increase the transparency of manage-acquisitions (M&As) in the future to expand our coverage area across the entire

ment by promoting dialogue with a wide range of stakeholders.

Investor
Information

Corporate Data

country. In addition, we established an R&D center in Singapore in April 2017with the goal of bolstering the Group’s global R&D network. The center will
work to acquire advanced technologies by collaborating with universities andresearch institutions in Singapore.
To expand our service businesses, in addition to ongoing efforts to growthe ultrapure water supply business in South Korea, we plan to make use of
APANA’s IoT wireless transmission technology to develop water conservation
services in Japan, and to extend our service business model to the Chinese
market, supplying pure water, wastewater reclamation, and other services.

explain the Company’s policy for paying
Q Please
dividends and improving capital efficiency.
The Company’s dividend policy is to continuously increase dividends to the
maximum extent possible while aiming for a payout ratio between 30% to50%, calculated on a five-year basis. For the fiscal year under review, the Company paid an annual dividend of ¥50 per share, comprised of an interim andDividends per Share
Thirteen consecutive years of increased dividends
per share since the fiscal year ended March 31, 2005

a year-end dividend of ¥25. That amount was an increase of ¥2 per share over¥50

the previous fiscal year, and marked the 13th consecutive year of increased

Q

What will the Kurita Group need in the future toprovide a means for creating value?

dividend payments.
Furthermore, we are striving to raise capital efficiency while, at a minimum, keeping the return on equity (ROE) above the cost of shareholders’

For information on corporate governance, refer toP.22–25.

For information on compliance, refer to P.28.

I think stronger initiatives for meeting environmental, social, and governanceequity. When drawing from internal reserves entrusted by shareholders, we(ESG) criteria will be essential for ensuring the sustainable growth of the Kurita

give the highest priority to investing in promisingGroup.

businesses, such as the ultrapure water supply

With respect to corporate governance, in order to improve the effective-

business and M&As. In accordance with our poli-

ness of deliberations by the Board of Directors, we held discussions during

cy of keeping the growth of shareholders’ equity

the fiscal year ended March 31, 2017 about the appropriateness of mattersin check, the Company acquired 3,586,300 of its

subject to decisions by the Board along with related organizational design andown shares over the period from March 2 to May

systems, and changed the compensation plan for directors and members of

25, 2017. In order to erase any concerns about thethe Audit & Supervisory Board. Furthermore, with a view to increasing man-dilution of share value among shareholders, onagement efficiency, we verified the Company’s shareholdings in other listed

April 6, 2017, the Company cancelled 2,963,900

companies and sold off a portion of such shares. Turning to compliance, now

shares of treasury stock that existed before thethat Kurita is expanding its overseas business, we have established the Kurita

acquisition. We hope that our shareholders findGroup Code of Conduct, which stipulates basic standards of behavior to bethese equity-related measures to be agreeable.

¥18

2005

2017

followed by all officers and employees of the Group.

12 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201713

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Toward the Final Year of Medium-Term Management Plan CK-17
In the fiscal year ended March 31, 2017, the Kurita Group worked to “expand its overseas business,” “improve profitability,” and “create competitive products and services.” The basic policy of the fiscal year ending March 31, 2018, is to“improve customer intimacy* by providing the best customer solutions” in order to further strengthen Kurita’s value.
* Customer intimacy means more than just physical and / or temporal closeness with customers. It also includes the level of enterprise value offered as an essential
partner for customers.

Results of the Fiscal Year Ended March 31, 2017

The Final Year of CK-17: Establishing the Fundamentals
of a New Medium-Term Management Plan

01 Overseas Business Expansion

In the fiscal year ending March 31, 2018, the final year of CK-17, we will strive to establish the fundamentals of a new
medium-term management plan by solving the following issues with a basic policy that is to “improve customer intimacy by providing the best customer solutions.”

Kurita EuropeGmbH

Establishment of a businessbase in North America
through M&A

Fremont Industries, LLC

Head Office of Kurita Water
Industries Ltd.

Kurita Turkey Kimya
A.S.

Reformbusiness process
and promotecomprehensive
solutions

Developing service business models,
including the ultrapure water supply business
and wastewater reclamation

Establishment of Kurita
Middle East FZE

Establishment of Kurita-GK
Vietnam Co., Ltd.
A new water treatment chemicals
plant in Malaysia

Establishment of Kurita R&D Asia

United States: In order to accelerate business development activities in the United States, the Company has acquired Fremont
Industries, LLC, a manufacturer and sales company for water
treatment chemicals, which becomes our business hub in thecentral west of the United States.
Europe / Middle East / Africa: To raise operational efficiency
in the Europe, Middle East, and Africa region, we merged Kurita
Europe GmbH with Kurita Europe APW GmbH, combined thetechnologies and know-how of both companies, and reorganized their sales and manufacturing organizations.

of Competitive Products
03 Creationand Services

We will seek to strengthen our problem-solving capabilities in order to resolve
customers’ issues and to improve the speed at which we respond to customers
by reforming business processes that provide the best value to our customers(value chains), so as to further enhance our business quality and efficiencies.
We will promote comprehensive solutions that are achieved using technologies and know-how on water treatment chemicals, water treatment facilities,
and maintenance services while introducing competitive products and services produced using IT and sensing technologies.

Technology, business model, goods

Middle East and Vietnam: We established Group companies in the
United Arab Emirates (UAE) and Vietnam to sell water treatment chemicals, which have been in short supply in those markets, which allows
us to set up organizations that can offer more meticulous solutions.
South Korea: The ultrapure water supply business, launchedin the second half of the fiscal year ended March 31, 2016, for amajor semiconductor manufacturer, was successful in establishing fundamentals for its business expansion as the business has
contributed to the smooth operation of the customer’s plant,
which has led to us receiving a second round of orders.

02 Improvement of Profitability
Water Treatment Chemicals: We worked to offer better services to customers by applying our unique sensing technologies and know-how on water treatment data analysis to existing
technologies and products.

01

Water Treatment Facilities: We were successful in improving
profitability in construction as we focused on jobs that we canoffer high added-value creation while reviewing and standardizing operational processes in production.

02
Invest in focused
growth areas andreorganization ofbusiness

03

We will continue to concentrate our business resources on overseas businessas it has been positioned as a growth area. Along with the establishment andconstruction of our business base through M&As, we will accelerate the expansion of overseas business by mutually supplying technologies, products, andservices as well as business models that are advantageous to each area.
We will attempt to make our Water Treatment Facilities business even more
service-oriented. While expanding investment activities in the ultrapure watersupply business in Japan and overseas and working to develop and promote a
service-type business model in the fields of pure water supply and wastewater
reclamation, we will move forward to create a new contract business by effectively using the know-how on operational management and maintenance inthe energy and infrastructure markets.
In the Water Treatment Chemicals business, profitability will be improved byspeedily providing products and services that meet the needs of each customer, from those in large-scale businesses to small-sized customers, after reviewing the systems for sales operations and service in Japan.

Overview of APANA’s Water-Saving Service
APANA has made it possible to save water using their unique logics to analyze
big data, which is obtained using sensors placed within large-scale facilities as it
responds to the structure of water pipes and purposes of water supply.
Detection by sensors

We succeeded in developing a new standardized wastewater
reclamation system, which was designed after combining ourown water treatment system and the underlying technologies
for water treatment chemicals that contribute to the reuse ofwastewater. We also started drafting a new service in cooperation with APANA Inc., a U.S. venture firm running services inNorth America that save water at commercial facilities by analysing big data using IoT.

Sewagewater

Enhancecompetitive
advantage andreduce risk bystepping up CSR
activities

The Kurita Group aims to achieve sustainable growth and an enhancement ofbusiness value from a long-term viewpoint.
We also strive to minimize potential risks by responding to the needs of society while providing solutions on social issues through our business activities.
We will ensure that all of our employees are happy and satisfied in both theirprivate and work life by promoting work style reform, and will strengthen ourcompetitiveness by securing talented personnel, increasing motivation, promoting learning, and boosting talents.

Commercial facility

14 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201715

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Review of Operations and Strategies by Segment
Water Treatment Chemicals
Driven by growth in existing and new markets,
we are accelerating the establishment of a
global platform built on four pivotal regions.
To enable us to provide customers with the best solutions, we
strengthened the foundations of the business as we worked
toward further growth. Specifically, this included organizational
reforms, aggressive development of our global operational
infrastructure, and international M&As.

Koichi Iioka
Executive Senior Managing Director and Representative Director
General Manager of Global Business Division and in charge of the chemicals business

Overview of the Fiscal Year Ended March 31, 2017Market Environment

In Japan, orders and sales both increased, driven by a gradual
recovery in capacity utilization at customers’ plants, and thepromotion of solution-focused proposals that leveraged new
products and services. Specifically, boiler chemicals returned
to growth, and there was growth in cooling water treatment
chemicals and process chemicals for the steel industry. In
overseas operations, although sales increased on a localcurrency basis, owing to appreciation of the yen, sales ofoverseas operating subsidiaries shrank when translated into
yen, and overall orders and sales declined.
Operating income increased due to the elimination of a
one-time expense that had been booked in the fiscal year
ended March 31, 2016. This elimination accompanied therevision of costs initially allocated for the acquisition of abusiness in Europe.
Overseas sales have now become a major factor affecting operating results of the Water Treatment Chemicals segment. We believe that this situation reflects the increasing
global presence of the Kurita Group. In April 2017, Kurita
received a Distinction Award at the Global Water Summit—aworldwide gathering of companies involved in the water
treatment field. This award recognizes the global businessdevelopment carried out by the Kurita Group up to the fiscal
year ended March 31, 2017.

We see plant and equipment investment in the Japanesemanufacturing sector as continuing its gradual upward trend.
In overseas markets, we anticipate a continuation of robust
investment in China, centering on liquid crystal displays(LCDs) and semiconductors. In Europe and the United States,
we intend to focus on business expansion in regions where
the Kurita Group’s market share is still low. At present, in anenvironment where the effective use of water resources is
becoming a key issue worldwide, needs are increasing in thearea of wastewater reclamation and reuse technologies—asphere in which the Kurita Group excels. There are growth
opportunities across a diverse range of regions. Against thisbackdrop, we are working to strengthen our product development structure for water treatment chemicals related toseawater desalination and wastewater reclamation and reuse.
To achieve this goal, in April 2017 we established an R&D center in Singapore.

Growth Strategy
Pursuing best solutions
Kurita naturally seeks to contribute to the enhancement of
productivity and stable operations at its customers’ plants. To
stay one step ahead, we aim to become an essential partner forour customers as they seek to generate business innovation.

Orders (Millions of yen)

Sales (Millions of yen)

Operating Income (Millions of yen)

For the years ended March 31

For the years ended March 31

For the years ended March 31

83,440 82,118

83,680 81,883

9,268
8,334

56,748 56,040

2012

2013

59,413 59,353

2014

2015

56,443 56,091

2016

2017

16 Kurita Water Industries Ltd. Annual Report 2017

2012

2013

7,954 7,877

58,844 59,999

2014

2015

7,231
6,467

2016

2017

2012

2013

2014

2015

2016

To realize this objective, we implemented organizational
reforms to ensure that we are able to offer the best solutions
for our customers. These reforms primarily focused on integrating the previously separate organizational units responsible for solutions based on water treatment chemicals andsolutions based on water treatment facilities. Underpinned bythese measures, we anticipate sales increases of approximately 2–3% in Japan, China, and South Korea in the fiscal year
ending March 31, 2018, based on market share expansion byexisting businesses in each region. In Europe, we are working
to achieve business expansion at Kurita Europe GmbH (KEG),
whose operations also include the Middle East region. In the
United States, we are pursuing growth through M&As andstrategic alliances.
Promoting a global structure based on four pivotal regions
The Kurita Group is promoting the development of a businessplatform for the Water Treatment Chemicals segment underpinned by the four pivotal regions of Japan, Asia, Europe, and
the Americas. At the same time, we are seeking to generatesynergies across these four regions. By bolstering local humanresources and organizations, we are accelerating the move toward sales based on highly competitive technologies cultivated in Japan and optimized to meet the needs and standardsof each local market.
In the fiscal year ended March 31, 2017, we establishedlocal subsidiaries in the UAE and Vietnam to enhance ourability to respond to the needs of customers in the Middle East and Southeast Asia. In January 2017, we acquired
Fremont Industries, LLC, a company based in the U.S. stateof Minnesota that manufactures and markets water treatment chemicals. This acquisition brings to the Kurita Groupan array of valuable management resources that we canleverage as we aim to move to the next stage of growth.
These include a sales network catering to customers in the
Midwest region of the United States, a workforce with awealth of experience, and manufacturing facilities. We see
this acquisition as an important foothold on the way tofulfilling our goal of becoming a leading player in the U.S.
water treatment chemicals market. We are promoting astrategy that envisages further M&As targeting companies
with strong ties to local regions and companies that possess
differentiated technologies and products.
Expanding sales of highly competitive products
We are pursuing expanded sales of such mainstay products as
DReeM PolymerTM used in boiler water treatment chemicals,
which possesses dual properties for scale dispersion and removal, as scale buildup is a problem that occurs in boilers that
inhibits heat exchange, and of water treatment service thateliminates Legionella bacteria from cooling water systems
and prevents Legionella bacteria propagation. In addition, weare also working to increase sales of such products as reverse
osmosis (RO) membrane treatment chemicals. The valueof DReeM PolymerTM has been appraised highly within thechemicals industry. For example, DReeM PolymerTM received
an environmental technology award from the Japan Chemical
Industry Association (JCIA) for its originality and remarkableeffectiveness in reducing environmental burden. We intend tocontinue leveraging these and other significant competitive
advantages that we have nurtured.
We are also striving to further upgrade the functions
offered by S.sensingTM, our water treatment management
service, and begin a full-fledged rollout of the service globally.
S.sensingTM combines IT and sensing technologies as a meansof contributing to the stable operation of customers’ facilities.
We executed an early launch of the S.sensingTM service in
China and Southeast Asia, and are now looking to expand
service provision to customers in 30 countries, including inEurope and the Americas, in the near future. This represents a
potential combined market of approximately 10,000 plants.

S.sensingTM: Next-Generation Water Treatment Management Service that Supports
Productivity Improvements
Kurita leverages IT and sensing technologies as it continues to pursue water treatment services not offered byother companies. One of the leading examples of suchservices is S.sensingTM, which was launched in 2013. S.sensingTM is a system that monitors water quality changes inreal-time as well as provides optimal chemical dosing control in real-time. Sensing instruments are installed within
facilities at customers’ plants that use water treatment
chemicals or process chemicals. The system combines
measurement, analysis, and control technologies. The
value of S.sensingTM lies in its ability to utilize data acquired
to solve problems based on clarification of the relationship between the operating status and performance of acustomer’s facilities and water quality. We are constantly
working to strengthen the system’s functions. As an example of the successful application of this system, in 2016 at a
corrugated cardboard factory we discovered a correlation
between operational data accumulated by the customer

and data gathered by the S.sensingTM system. This led to reductions in the defective product ratio and manufacturingcosts. S.sensingTM can provide services across a very broad
sphere of a customer’s operations, including not only
cooling water but also such areas as wastewater and paper
manufacturing processes. The Kurita Group will leverage
the strengths of S.sensingTM as it strives to establish competitive advantage in the global market.

Overview of S.sensingTM
Customers’facilities
S.sensing instruments

Operational data accumulatedby the customer

Measurement

Data accumulated
by S.sensing

S.sensing
Real-time water treatment
management

Control

AnalysisAnalysis of causes
by Kurita
Customer’s productivity
improvements

2017
Kurita Water Industries Ltd. Annual Report 201717

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Review of Operations and Strategies by Segment
Water Treatment Facilities
We identify new needs and contribute to ourcustomers’ businesses through our solution
proposal capabilities.
Overall, we achieved an increase in sales by making up for a fall insales to the electronics industry through growth in sales to generalindustries. As an essential partner for our customers, we will strive
to strengthen our existing businesses and create new businesses.

Toshitaka Kodama
Managing Director
General Manager of Sales II Division and in charge of the facilities business

Overview of the Fiscal Year Ended March 31, 2017

began to increase from the second half of calendar 2016.
Accompanying liberalization of the electricity market, we arereceiving orders for water and wastewater treatment facilities
from customers entering the electric power generation business. In other areas, we are seeing a rise in such developments
as logistics warehouses and large-scale shopping malls,
reflecting the increasing liquidity of land on the outskirts ofurban areas. This is leading to emerging needs for soil remediation. Plant and equipment investment in such industries as
beverages and foodstuffs as well as pharmaceuticals remains
robust. In the medium term, we anticipate rising needs relating to the replacement of aging facilities in such industries
as petrochemicals and steel, as well as investment aimed at
efficiency improvements and energy savings. However, when
considering strategy in Japan, it is vital that we diligently
observe capital investment trends in each industry amongcustomers that manufacture competitive products.
In overseas markets, in China and South Korea—where
customers are centered on LCD and semiconductor manufacturing—we anticipate that plant and equipment investment will remain at a high level. In particular, in the Chinese
electronics industry, where the Kurita Group holds a highmarket share, we believe that the brisk capital investment
climate seen in recent years has been buoyed by expectations of the provision of subsidies as a part of national policy.

In business operations catering to the electronics industry, orders for the sector overall declined. This reflected such factors
as the completion of the recent cycle of orders for large-scalewater treatment facilities overseas, as well as revisions in contractual conditions in a portion of the ultrapure water supply
business. Although sales rose overseas, sales to the sector
overall decreased, reflecting the impact of changes in theultrapure water supply business.
In business operations catering to general industries, orders
increased. This was driven by such factors as the winning oflarge-scale project orders in fields including water treatment
facilities for thermal power plants and soil remediation, as well
as a robust performance by maintenance services. Sales to general industries increased overall, underpinned by sales growthin such areas as soil remediation and maintenance services.
In operating income for the segment as a whole, although
there was an improvement in the profitability of water treatment facilities, maintenance services, operating income decreased owing to the impact of lower sales from the ultrapure
water supply business.

Market Environment
In Japan, large-scale plant and equipment investment projects in semiconductor and smartphone-related industries
Orders (Millions of yen)

Sales (Millions of yen)

Operating Income (Millions of yen)

For the years ended March 31

For the years ended March 31

For the years ended March 31

140,507

137,832 136,611

130,700
114,049

137,348
124,052

121,928

119,292

129,399 130,692 132,304

20,127

13,366

12,641

11,56012,220

6,934

2012

2013 2014

2015

2016

2017

18 Kurita Water Industries Ltd. Annual Report 2017

2012

2013

2014

2015

2016 2017

2012

2013

2014

2015

2016

In addition, driven by stricter wastewater regulations, needs
are increasing in the area of facilities for wastewater reclamation and recycling. Having identified such trends, the Kurita
Group has already developed a new standardized wastewater reclamation system, which is targeted at markets wherewater resources are scarce, such as China, Southeast Asia,
and Singapore.

Growth Strategy
Becoming a company that boasts a high degree of flexibility
Recently, general pure water facilities and wastewater treatment facilities are becoming increasingly commoditized.
Within this environment, to maintain Kurita’s significant differentiation from other market participants we are working
to enhance the proposal capabilities, cost competitiveness,and customer response capabilities that we have cultivated
to date. In April 2017, we launched sales activities based ona newly designed organizational structure, which is aimed
at providing customers with the best solutions. As with theultrapure water supply business, we support large-scale plantand equipment investment based on the customer’s longterm management plan. Furthermore, as a company capableof providing services with a high degree of flexibility, we are
striving to enhance customer satisfaction. Specifically, in response to discussions with and requests from customers, we
speedily provide solution proposals.
At present, the entire Company is involved in efforts toadvance the Kurita IT strategy. By increasing the efficiency of
our operations through the utilization of IT, employees will beable to concentrate more fully on preparing and presenting
proposals for customers. Simultaneously, we believe that theapplication of IT will also lead to improvements in productand service quality. For example, by migrating our design operations to 3D computer-aided design (CAD) and other digitaltechnologies, we will work strenuously on measures to raise
productivity and cost competitiveness.

New business creation
The Kurita Group is strengthening its programs for developing new businesses across a wide range of fields. The use of
biomass as a new energy source is receiving significant attention as a means of realizing a low-carbon society. Kurita has
already developed dry methane fermentation technology,
which recovers biogas generated by waste, and is providing
this technology to facilities in Japan that have the potential
to use it as fuel or for electricity generation. In our existing
businesses also, we see potential for growth. For example,
there may be opportunities to develop the ultrapure watersupply business in industries outside of semiconductors and
LCDs. Furthermore, we may be able to expand the scale of ourbusinesses through collaboration with other companies. We
are determined to turn such ideas into reality.
Responding to next-generation customer needs
The Kurita Group has developed the ultrapure water supply business over many years. We believe that Kurita cancontribute to factory innovation through water treatment
facilities, driven by the rapid progress currently taking placein such technology spheres as IoT and AI. Such equipment
as network cameras and robots are being introduced into
customers’ plants, and computer-controlled production isadvancing. In these evolving factories, we envisage that
customers’ plants of the future will need to be capable ofswitching production instantaneously from one product toanother. This will also require water treatment to be modified in real-time. By utilizing sensing technologies and data
analysis, reconfiguration of water supply, water treatment,
and other parameters can be automated, thus meetingnext-generation customer needs for flexibility. I believe that
we must collaborate closely with our customers to realize
this service model of the future.

Standardized Wastewater Reclamation System Created through the Integration ofChemical and Plant Technology
There is a large potential market for wastewater reclamation systems in regions overseas where water resources are
scarce. Such systems make it possible not only to reduce
the quantity of water and wastewater but also realize
reductions in the volume of such inputs as electricity andsteam. Hence, wastewater reclamation systems offer awide array of advantages for the customer. In response tosuch needs, in 2017 Kurita developed a standardized, simple, low-cost, wastewater reclamation system. This system
is comprised of the following four elements only: pretreatment chemicals; ultrafiltration membrane; reverse osmosis(RO) chemicals; and RO membrane. The system not only
provides high functionality in its constituent units but alsoenables selection of membranes and chemicals to cater toa diverse range of input water qualities. As such, one of thesystem’s major advantages is the ability to flexibly optimize
it. Compared with conventional systems, the system realizes substantial reductions in both initial cost and runningcosts. In the Chinese market, customer requirements are
exceptionally demanding. A system must not only fulfill
the need for compatibility with wastewater regulations
and environmental conservation but also provide economic advantages based on wastewater reclamation. Kurita will work to strengthen its sales programs for this systemwith China as the main target market.
Standardized wastewater reclamation system

2017
Kurita Water Industries Ltd. Annual Report 2017

19

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Foundation of R&D and Intellectual Property
The Kurita Group strives to be a Technology-Driven Company. Aiming forthe realization of its corporate philosophy, the Group is working to develop technologies that will resolve the challenges faced by industry and society as a whole from the perspective of reducing environmental burden,
recycling resources, and improving industrial productivity.

R&D Activities under Medium-Term Management Plan CK-17
During the period of the CK-17 plan, the Kurita Group aims to develop technologies
that will strengthen such core business fields as ultrapure water production, boiler andcooling water treatment, and wastewater reclamation. The Group is also working tofurther cultivate its core technology fields of analysis technologies and new materials
development. The Kurita Group aims to raise its brand power in the water treatment
market outside Japan and to expand its overseas business by holding world-leading
technology in each field.
A business acquisition in Europe in 2015 added the European Water Treatment
Chemicals Research Center of Kurita Europe GmbH to the Kurita Global Technology
Center in Japan, making the Kurita Group’s R&D structure a two-base system. Lively
discussions took place when Kurita Europe gave presentations at the R&D Conference
and R&D Workshop. In April 2017, Kurita established Kurita R&D Asia Pte. Ltd. in Singapore as a new company to conduct research and development. Singapore has numerous universities, research institutions, and corporate R&D centers involved in waterand environmental technology. By establishing an R&D center here, Kurita will beable to obtain in a timely manner the latest technical information related to seawater
desalination and wastewater reclamation and reuse, which will speed up technology
development and lead to higher competitiveness of products and technologies.

R&D Conference

R&D Workshop

Membrane separationand filtration

Adsorption
and deionization

Surface treatment

Utilization of Intellectual Property
The Kurita Group strives to secure and properly manage intellectual property with theaim of increasing the competitiveness of its core products and technologies in Japanand overseas.
In the fiscal year ended March 31, 2017, the number of patent applications tosecure the rights on new products and technologies was maintained while Kurita
narrowed down its patents held in Japan to those that are useful in business. Outside
Japan, the number of patents held by the Group increased substantially due to thefocus placed on securing intellectual property rights abroad with the expansion of
the Kurita Group’s overseas business. The Group also strove to establish a centralized
global intellectual property system and strengthened its centralized management ofintellectual property activities to cope with global business expansion, such as establishing a policy on the handling of employee inventions at Group companies, including those overseas, and development of a system for dealing with patent litigation risk
outside Japan.
In addition to these initiatives, Kurita worked to increase Group employees’ awareness of intellectual property, including by conducting e-learning on intellectual property rights and starting intellectual property training for the employees of overseas
Group companies in China and Europe, in order to reduce the risk of infringement onother company’s intellectual property rights.
Going forward, Kurita will aim to secure rights for future core technologies together with the strengthening of its overseas business and solutions business. At the sametime, it will strive to reduce intellectual property risk in its global business by expanding intellectual property training for the employees of overseas Group companies.

Number of Patent Applications andPatents Held
For the years ended March 31

2,000
1,800

1,804

1,783

698

756

153

143

155

59

63
2016

52
2017

800
600

1,704

529

400
200
0

2015

Domestic
Patent registrations

Patent applications

Overseas
Patent registrations

Patent applications

Main R&D Results in the Fiscal Year Ended March 31, 2017
Water Treatment Chemicals Business

Biologicalengineering

Focused CoreTechnology Fields

Sterilization
and bacteriostasis

R&D Staff

Approx.

Coagulationand flocculation

Analysis

Corrosion prevention
and dispersion

200

20 Kurita Water Industries Ltd. Annual Report 2017

New chemicals and a water
treatment control support
system for power boilers
Kurita developed a highly safe
film-forming corrosion inhibitor as an alternative to the conventional oxygen scavenger
for medium- to high-pressureboilers, such as power boilers,
which are increasing in Japanand abroad. It also developed
a water treatment control support system to prevent trouble
by detecting signs of boiler
facility malfunction.

Solid cartridge-type coolingwater treatment chemicals
Kurita developed solid
cartridge-type water treatment
chemicals that prevent thegrowth of Legionella bacteria
and are effective for reducing
the adhesion of dirt and inhibiting corrosion in small cooling towers over a long time
just by placing the cartridge inthe tower.

Dehydrating agent for
tunnel construction
Kurita developed a dehydrating agent that reduces thetotal slurry treatment cost in
the slurry shield method usedin tunnel construction workby increasing the performanceof slurry dehydration and thefiltration rate.

Water Treatment Facilities BusinessStandardized wastewater
reclamation system
Kurita developed a space saving, low-cost standardized
wastewater reclamation
system that is easy to design
and install, as it consists mainlyof membrane treatment
units. Stable operation isachieved by combining Kurita’s
unique chemical treatment
technologies.

Highly efficient treatment
technology for highconcentration nitrogenwastewater
Kurita developed technology that is highly efficient attreating high-concentration
nitrogen wastewater frommethane fermentation. The
technology is for facilities
that conduct biogas power
generation through methane
fermentation of liquid wastefrom the food industry.

Reducing the cost of ultrapure water production
By improving the performanceof functional materials thatmake up the ultrapure waterproduction system, revising
the purifying method while still
maintaining quality, Kurita wasable to achieve cost reductions
throughout the entire production system as well as maintainthe water standards requiredby a major semiconductor
manufacturing company.

Kurita Launches Japan's First Continuous One-Step ANAMMOX Process
The treatment of wastewater containing nitrogen compounds consists of two steps. The first step is nitrification, in whichammonia (NH4+) as a nitrogen component in wastewater is oxidized into nitrite (NO2-) and then into nitrate (NO3-). The second step is denitrification, which converts nitrate into nitrogen gas (N2). The cost of these steps used to be a problem, as thenitrification process requires a large amount of electricity to feed a substantial quantity of oxygen to stimulate growth of
nitrifying bacteria, and because the denitrification process generates surplus sludge as waste. ANAMMOX bacteria that canconvert ammonia and nitrite into nitrogen gas innovate this wastewater treatment process. In March 2017, Kurita launched
Japan’s first continuous one-step ANAMMOX process, which has a more efficient and stable reaction than the conventional
process and can meet a wide range of needs, including utilization for the treatment of large-amount flow wastewater with
low nitrogen concentration. Kurita aims to promote the sale of this process as a system that will support energy recovery
and the recycling of food waste. This includes its application for the dehydration and filtration process of wet-type methane
fermentation in biogas power generation, which is anticipated to expand on the back of such factors as the Feed-in Tariff
Program for renewable energy.
Reaction Path in Denitrification Using ANAMMOX Bacteria
Oxygen-NO3 Nitrate

Organic matter

Nitratation
Oxygen-NO2 Nitrite

Denitrification

Nitrogen

Nitritation+
4

NH

Anaerobic ammonium oxidation

Ammonia
Processes and materials not required by ANAMMOX

N2
-

NO3

ANAMMOX reactor

ANAMMOX bacteria

Kurita Water Industries Ltd. Annual Report 201721

The Kurita Group’s
History of Value
Creation

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionKurita’s Business

Value Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Fundamentals that Support Value Creation

Further Strengthening of Corporate Governance
Overview of Corporate Governance Structure (As of June 29, 2017)
Company with an audit & supervisory
board
Number of directors
Number of external
directors (within the
total above)

10
2

Voluntary Advisory
Committees

Nomination & Remuneration Advisory
Council

Term of office of directors

1 yearIncentive payments todirectors

Remuneration and bonuses linked tobusiness results

Based on its corporate philosophy, the Kurita Group works toenhance corporate governance with the aim of carrying out
transparent, fair, prompt, and decisive decision-making andhighly effective management supervision in order to achievesustainable growth and raise corporate value. Accordingly, inthe fiscal year ended March 31, 2017, we worked on a varietyof governance reforms.

Reinforcing Functions of the Board of Directors
In the evaluation of the effectiveness of the Board of Directorsthat took place in the fiscal year ended March 31, 2016, it wasconsidered as an issue to implement further reinforcement
so that the Board of Directors intensively discuss importantmatters, such as setting longer-term targets and drawing
up strategies. Accordingly, in the fiscal year ended March 31,
2017, the Board of Directors discussed the possibility of its
transition to either a company with a nominating committee,etc., or a company with an audit & supervisory committee,

Size and Composition of the Board of Directors
Disclosure of individual
remuneration of directors
Number of members of
the Audit & Supervisory
Board
Number of external
members of the Audit &Supervisory Board (within the total above)
Number of independent
officers

4 (External directors: 2, External membersof the Audit & Supervisory Board: 2)

Accounting auditor

Grant Thornton Taiyo LLC

Adoption of executive
officer system

Yes

Disclosure is restricted to persons with¥100 million or more.
3

2

as well as its basic approach to the task of improvement in
operations execution systems and validity of matters to beresolved at Board meetings.
As a result, while it was determined that the audit &supervisory board system continues to function effectively,
we will continue to consider a change in our organizational
design. As well, in order to intensively discuss importantmatters at Board meetings, part of the decision-making authority was transferred to the Executive Committee, whichis composed of management executives, and operating
divisions from the Board of Directors. At the same time, withregard to the status of operational execution, the numberof matters to be reported at Board meetings was reduced.
From April 2017, with the Investment Committee established to consider and examine business strategies andfinancial matters prior to discussion on investment projects
at Board meetings, we strove to further ensure the effectiveness of discussions at Board meetings.

The Board of Directors comprises three or more members, ofwhich two or more are external directors, ensuring the independence and objectivity of the Board. As of June 29, 2017,
the Board has 10 directors, of which two are external directors.
To carry out oversight functions regarding the execution ofbusiness, the Board has members from each business segment
as well as specialized personnel from corporate planning,finance and accounting, legal affairs, technology, and otherfields, creating a structure that augments the knowledge andexperience needed by the Board as a whole to make decisions.
The term of office of directors is set to one year. This is intended
to facilitate flexible changes to the management structure in
response to changes in business conditions.

Nomination & Remuneration Advisory Council
Kurita Water Industries Ltd. has in place a Nomination &Remuneration Advisory Council, a voluntary committee
to increase transparency in the decision-making process
regarding remuneration for directors and nomination of
directors and members of the Audit & Supervisory Board.
The Council, which mainly comprises external directors
and external members of the Audit & Supervisory Board,is consulted about candidates for officers and their remunerations, and submits a report on appropriateness thereof
to the Board of Directors. Through the application of these

Election & Dismissal

Nomination &Remuneration
Advisory Council

Consultation

Board of Directors
Advisory
Discussion &ReportBusiness
Operations

Resolution
Election &Supervision

President
Executive Committee

ReportE&S Committee &Various Committees

Discussion &ReportInstruction

Operating Divisions

Audit

Election &Dismissal

Audit &
Supervisory Board Cooperation
Accounting Auditor
Members of the Audit &Supervisory Board

Audit

Cooperation
Audit Report

Form of corporate
governance

Results

Discussion on the transition to a company with an audit & The transition was not accepted for the fiscal year ended Marchsupervisory committee
31, 2017. The Company continues to discuss other options.
Refining subjects to be resolved and reported at Board of Increase in the number of discussions on corporate
Directors’ meetings
governanceSize and compositionof the Board of
Directors

Transferring decision-making to the Executive Committee
Invigorated discussions at Board of Directors’ meetings
regarding business execution
Securing effectiveness of discussions on investments

Established the Investment Committee

Consideration on size and composition

Discussions on reducing the number of Board members
and possibly changing up member composition

Consideration of enhancement of diversity

Discussions on female candidates as external directors

Profile of Nomination & Remuneration Advisory Council (April 2016–End of June 2017)
Constituting member

Cooperation

Internal Auditing
Department

The roles that the Kurita Group expects its external directors
to perform are to increase rationality and transparency indecision-making by the Board of Directors by checking management from viewpoints which internal people do not have,with insight cultivated through managerial experiences andknowledge in special fields.
The Board of Directors valued the increased dynamism
of its deliberations following the appointment of Mr. Seiji
Nakamura in June 2013. Therefore, the number of external
directors became two, with Mr. Tsuguto Moriwaki appointed in June 2015. Since assuming office, both of them haveattended all of the Board meetings held, actively made comments, and provided a wide range of recommendations on
reinforcing functions of the Board of Directors, some of whichhave been adopted by the Board of Directors.
The standard of their consecutive reappointments is set
at three times as the Company expects the external directors
to make comments on and point out issues from external
and fresh perspectives. In June 2017, Mr. Nakamura resigned
at the expiration of his term of office. Ms. Ryoko Sugiyama, an
expert on the environment and waste, took office.

Initiatives

Corporate Governance Structure (As of June 29, 2017)

Election & Dismissal

Activities of External Directors and Reasons for
Appointment

Continuous Reform of the Board of Directors (April 2016–End of June 2017)Management oversightand business execution

General Meeting of Shareholders

processes, the effectiveness of improvements in transparency will be verified.

Nomination

Internal Audit
Accounting Audit & Internal Control Audit

Results

Candidates for directors
Candidates forrepresentative directors
Candidates for
executive directors

Two external directors
One full-time external member of the Audit &Supervisory Board
President

Determining the appropriateness of all
candidates for director
Abolishing honorary advisor

Candidates formembers of the Audit &Supervisory Board

One full-time external member of the Audit &Supervisory Board One full-time member of the
Audit & Supervisory Board General Manager of theGroup Administrative Division President General
Manager of the Corporate Planning Division

Determining the appropriateness ofcandidates for members of the Audit &Supervisory Board

Two external directors
One full-time external member of the Audit &Supervisory Board President

Performance evaluation of directors

Remuneration* Job titles are stated as of after April 2017.

22

Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201723

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Status of External Directors and External Members of the Audit & Supervisory Board (As of June 29, 2017)
Post

Name

Number of meetings of the Board of Directors
and the Audit & Supervisory Board attended(Fiscal year ended March 31, 2017)

Directors
Tsuguto Moriwaki

Ryoko Sugiyama
Newly elected

Members of
the Audit &Kenjiro Kobayashi
Supervisory
Board
Shigekazu Torikai
Newly elected

Disciplinary Rules for Investment

Reasons for electing him / her as a director or a memberof the Audit & Supervisory Board

Board of Directors’ meetings:
11/11

Mr. Tsuguto Moriwaki is an individual who possesses a great deal of knowledge about manufacturing
and corporate reform and has held important positions such as representative director in other companies. The Company judged that he was capable of delivering opinions from an outside perspective,
taking advantage of his knowledge and experience, and increasing the rationality and transparencyof the Company’s management.

—

Ms. Ryoko Sugiyama is an expert on the environment and waste and has held important positions
such as a university professor and an external director of listed companies. The Company judgedthat she was capable of checking the Company’s management from an outside perspective, different from those within the Company, and increasing its rationality and transparency.

Board of Directors’ meetings:
11/11
Audit & Supervisory Board
meetings: 11/11

Mr. Kenjiro Kobayashi is an individual who has played an active role in different areas of theGroup’s businesses and has high expertise and a wealth of international experience in the areasof finance, corporate planning, new business development, and M&As, etc. As he is capable ofreflecting his expertise and experience on the audit of the Company.

—

Mr. Shigekazu Torikai has special knowledge as well as considerable experience and deep insight
into corporate legal affairs as an attorney. The Company judged that he was expected to conduct ahigh-quality audit from an outside perspective, using his specialty, experience, and insight.

Adoption of the Audit & Supervisory Board System
Kurita Water Industries Ltd. is a company with an audit & supervisory board. The Audit & Supervisory Board currently comprises
three members, of which two are external members. Individual
members of the Audit & Supervisory Board monitor the status ofexecution of duties by directors and the status of performance ofoversight duties by the Board of Directors. They also conduct asset status surveys of the entire Kurita Group including subsidiaries and audit the development and operation of internal control
systems implemented by the directors. The individual membersof the Audit & Supervisory Board attend important meetings
including Board of Directors’ and Executive Committee meetings
and audit execution of duties by directors.

Appropriate Cooperation among the Internal Auditing Department, the Audit & Supervisory Board, and
the Accounting Auditor
Kurita Water Industries Ltd. has an Internal Auditing Departmentthat is independent from operational execution functions andreports directly to the president. The Internal Auditing Department conducts internal audits of Group companies, identifies
issues and problems in operational execution, and provides
recommendations to the president on improvement measures.
The Company has appointed Grant Thornton Taiyo LLC as
its accounting auditor. The Audit & Supervisory Board nominates candidate accounting auditors, and makes decisions on
proposed resolutions regarding appointment, dismissal, andrefusal of reappointment of the accounting auditor. In addition, members of the Audit & Supervisory Board, the Internal
Auditing Department, and the accounting auditor share information with one another on audit plans and concerns andwork to engage in close collaboration.

Remuneration System for Directors and Members of
the Audit & Supervisory Board
The Company’s remuneration system for directors excluding
external directors is composed of fixed remuneration as baseremuneration, and incentive remuneration reflecting business

24 Kurita Water Industries Ltd. Annual Report 2017

results. The fixed remuneration system is adopted for external
directors and members of the Audit & Supervisory Board,
who perform oversight functions. An amount of the fixed
remuneration is decided for each job title in case of directors
and for each working style in case of members of the Audit& Supervisory Board. Part of the remuneration is paid to the
Directors’ and Members’ of Audit & Supervisory Board Shareholding Scheme and allocated for purchasing the Company’s
shares. The incentive remuneration consists of short-term
incentive remuneration according to a degree of achievement in an annual business plan and evaluation of duties
for which a person is responsible, and long-term incentive
remuneration according to business performance and job
title during the term of office. From June 2016, the Company
increased the proportion of remuneration accounted for by
performance-linked remuneration for directors excluding external directors, and introduced a performance-linked stockcompensation program that grants stock at the time of theirretirement as a long-term incentive. The purpose of this system is to increase motivation to contribute to a continuous
growth of the Group and an improvement in corporate value,by sharing profits and risks caused by stock price fluctuation
with the shareholders.

When making an investment, the Kurita Group evaluates
profitability of the investment and makes a decision on theinvestment, setting a hurdle rate in consideration of individual risks for each investment project in addition to the cost ofshareholders’ equity, in accordance with the policy of striving
to maintain return on equity (ROE) at levels above the cost ofshareholders’ equity.

Shareholdings in Other Listed Companies
Kurita Water Industries Ltd. may hold shares of other listedcompanies for strengthening business relationships and other purposes. We verify the economic rationality for respective
stocks we have held and the risks of holding those stocks, aswell as relationships with companies whose stock the Company holds periodically and at other times as necessary, andreview the appropriateness of holdings. In the fiscal year ended March 31, 2017, deciding to sell stock of two companies
through resolutions at Board meetings, we sold stock of threecompanies including stock of a company decided to be soldin the fiscal year ended March 31, 2016.

Evaluation of the Board of Directors
Each of Kurita’s directors and members of the Audit & Supervisory Board completed an analysis and evaluation of theeffectiveness of the Board of Directors.
Evaluation
methodThis evaluation was conducted via a written survey, witheach of the respondents identified. The aggregate results
were discussed at Board meetings and helped members tobetter identify problems as well as decide future measures.

Assessment
items

Six areas: (1) Roles and responsibilities of the Board of
Directors, (2) Collaboration with external directors andexternal members of the Audit & Supervisory Board, (3)Composition of the Board of Directors, (4) Operation of
the Board of Directors, (5) Contributions of individual directors and members of the Audit & Supervisory Boardand (6) Dialogue with shareholders.

Evaluation
periodFrom January to December 2016

Change in the Remuneration System for Officers

Review by an External Director

Previous system
Fixed remuneration

Payment toShareholding
SchemePerformancelinked
remuneration

After alteration
1 Directors(excluding external directors)

Fixed remuneration

Payment to PerformanceShareholding
linkedSchemeremuneration

Performancelinked stockcompensationplan

2 External directors and members of the Audit & Supervisory Board

Fixed remuneration

Payment toShareholding
SchemeEvaluation Results
The average self-evaluation of the directors and membersof the Audit & Supervisory Board was generally good in all
six areas, and a determination was made that the Board of
Directors is functioning effectively. Especially with regard to“contributions of individual directors and members of the
Audit & Supervisory Board” and “collaboration with external
directors and external members of the Audit & Supervisory
Board,” the evaluation was high, without substantial disparities among the self-evaluations of the directors, the external
directors, and the members of the Audit & Supervisory Board.
Meanwhile, “dialogue with shareholders,” “roles and responsibilities of the Board of Directors,” and “operation of the Boardof Directors” were evaluated relatively low, especially by theexternal directors. Based on these evaluation results, issues
were identified and measures were decided, as follows:
Issuesa. In relation to business strategies for a long-term improvement of corporate value as well as involvement with theenvironment and society that would lead to long-term
growth, it is necessary to discuss these issues more deeply
throughout the entire Kurita Group.
b. In order to increase the level of discussions at Board meetings, it is necessary to enhance a prior examination onmatters to be discussed at the meetings so as to further
improve the accuracy of considerations.
c. It is necessary for the Board of Directors to share a consistent theme and message with regard to dialogue withshareholders.
Measuresa. With an eye on prospects 5–10 years in the future, wewill review our corporate vision, set more specific targets
regarding involvement with the environment and society,and reflect these in the Company’s medium-term management plan.
b. We will enhance our system to review investment projects,
and thoroughly narrow down points of discussion andissues.
c. We will improve the level of dialogue by clarifying themes
and messages to be communicated to shareholders.

Grants stock at
the time of
directors’
retirement

External Director

Tsuguto Moriwaki

While discussions at Board meetings are becoming more active each passing year, I feel that thetime allotted for discussions regarding the Company’s long-term strategy could be improved. Our
vision should be clarified through Company discussions regarding strategies over the next 5–10
years. It is expected that this will have a positiveeffect on the behavior of our employees on thefrontlines of business. We expect discussions tobecome even more active moving forward.
At Board meetings, it is important that I keep
in mind the thoughts and opinions of shareholders and that I say what is maybe difficult forinternal directors to say. In the fiscal year ended
March 31, 2017, we pointed out the need toestablish an Investment Committee so that internal experts can better consider and examine
investment projects. The formation of this committee was approved by the Board of Directors.
As the Investment Committee is able to narrow down points of discussion for Board meetings and help maintain focus, allowing problems
that were perhaps overlooked in the existing
decision-making process to be addressed, we
believe that the Committee will contribute to
the Board becoming even more effective.

Kurita Water Industries Ltd. Annual Report 201725

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Fundamentals that Support Value Creation

Initiatives that Support Value Creation

Directors and Members of the Audit & Supervisory Board

Risk Management / Internal Control System

Investor
Information

Corporate Data

Risk Management

Directors

President andRepresentative
Director

Executive Senior
Managing Director
and Representative
Director

Managing Director

Michiya Kadota

Koichi Iioka

Kiyoshi Itou

2016 President and Representative
Director (to present)2014 Director
2013 Executive Officer
1983 Joined Kurita Water Industries Ltd.

2017 General Manager of Global Business
Division and in charge of the chemicals
business (to present)2016 Executive Senior Managing Director andRepresentative Director (to present)2013 Managing Director
2011 President and Representative
Director, Kuritec Service Co. Ltd.
2007 Director
2005 Executive Officer
1975 Joined Kurita Water Industries Ltd.

2017 General Manager of Group
Administrative Division (to present)2013 Managing Director (to present)
2009 Director
2007 Executive Officer
1979 Joined Kurita Water Industries Ltd.

Managing Director

Director

Director

Toshitaka Kodama

Yoshio Yamada

Ikuo Ishimaru

2017 General Manager of Sales I Division(to present)2014 Director (to present)
2011 Executive Officer
1982 Joined Kurita Water Industries Ltd.

2017 General Manager of Group Quality& Production Division (to present)2016 Director (to present)2013 Executive Officer
1984 Joined Kurita Water Industries Ltd.

2017 General Manager of Sales II
Division and in charge of the
facilities business (to present)2016 Managing Director (to present)2014 Director
2011 Executive Officer
1977 Joined Kurita Water Industries Ltd.

External Director

Managing Director

Takahito Namura
2016 Managing Director (to present)2014 General Manager of Research andDevelopment Division (to present)
2011 Director
2009 Executive Officer
1977 Joined Kurita Water Industries Ltd.

Director

Hirohiko Ejiri
2017 General Manager of Corporate
Planning Division (to present)2016 Director (to present)2014 Executive Officer
1985 Joined Kurita Water Industries Ltd.

External Director

Tsuguto Moriwaki

Ryoko Sugiyama

2015 External Director of Kurita Water Industries Ltd. (to present)
2004 President and Representative Director of Shinsho Corporation
2002 Executive Vice President and Representative Director of Kobe Steel, Ltd.
1999 President and Representative Director of Kobelco Construction Machinery Co., Ltd.
1967 Joined Kobe Steel, Ltd.

2017 External Director of Kurita Water Industries Ltd. (to present)2015 External Director of UACJ Corporation (to present)2010 External Director and Audit and Supervisory Committee Member of LECIP
Holdings Corporation (to present)2010 Professor at the Faculty of Social and Environmental Studies of Fuji Tokoha
University (current Tokoha University)
2007 Director of Sugiyama & Kurihara Environmental Consultants, Inc. (to present)
1996 Established Sugiyama & Kurihara Environmental Consultants, Inc., Representative Director

Members of the Audit & Supervisory Board

Member of the
Audit & Supervisory
Board

External Memberof the Audit &Supervisory Board

Shiro Hayashi
2012 Member of the Audit &Supervisory Board (to present)
2009 General Manager of Personnel andLabor Relations Department,
Administrative Division1977 Joined Kurita Water Industries Ltd.

Kenjiro Kobayashi
2016 External Member of the Audit &Supervisory Board (to present)2010 Representative Director andExecutive Vice President of Japan
Industrial Solutions Co., Ltd.
1977 Joined Japan Development Bank
(current Development Bank ofJapan Inc.)

26 Kurita Water Industries Ltd. Annual Report 2017

External Member of the
Audit & Supervisory
Board (Part time)

Shigekazu Torikai
2017 External Member of the Audit & Supervisory
Board (part time) (to present)2015 External Director of United Super Markets
Holdings Inc. (to present)
1994 Established Torikai Management Law Office(current Torikai Law Office)1990 Registered as an attorney

The Kurita Group defines risk as any event that makes its sustainable growth and enhancement of the Group’s corporate
value uncertain. We identify risks that need to be addressed
while minimizing losses and damage caused by risks bytaking measures to avoid and mitigate risks, so that we cancontinue securing business opportunities for further growth.
The General Manager of the Corporate Planning Division is the officer responsible for monitoring risks andimplementing risk management within the Kurita Group.
The General Manager regularly conducts risk analysis andevaluation to relevant companies, conducts ongoing monitoring, and takes steps to prevent risks from occurring. If
a risk that could have a serious impact on management
occurs, the General Manager formulates systems with those
responsible for responding to the risk, obtains approvals
from the president, and immediately issues orders. Those
responsible for responding to the risk promptly take actions
and report to the president and the General Manager of
the Corporate Planning Division regarding the status of theeffects of the risk, remediation, and measures to prevent
reoccurrence.

Among serious risks, those related to compliance are theresponsibility of the head of the E&S (Environmental & Social)Committee, while those related to hygiene, safety, and disasters are the responsibility of the head of the Safety / Hygiene
Committee of the Headquarters. The general manager of
each business division is responsible for responding to risks
directly associated with day-to-day business operations. Also,
responding to commonly seen risks relating to quality, theenvironment, information security, export controls, and so on
are handled by the respective divisions responsible.
The General Manager of the Corporate Planning Division,
the head of each committee, and the general managers ofbusiness divisions report periodically to the Board of Directors
on the status of risk management implementation, and reportas necessary to the Board of Directors and the Audit & Supervisory Board on the occurrence and effects of serious risks.
In addition, the Board of Directors of each Group company
regularly report to Kurita’s Management Division and Business
Division on the progress of risk management. Monitoring of
the execution status and improvement status of risk management is conducted by the Internal Auditing Department.

Internal Control System
The Kurita Group endeavors to enhance its internal control
with the “Basic Policies for Constructing an Internal Control
System,” established by the Board of Directors in May 2006
in response to the enforcement of Japan’s Companies Act.
These policies are updated as necessary according to thedecisions of the Board of Directors.
The internal control system of the Kurita Group is roughly
divided into two: A system that ensures the accuracy ofbusiness operations, and a system that ensures the effective
auditing of the Audit & Supervisory Board. These systems are
established and appropriately operated. The former system
is: (1) to ensure that the execution of the duties of directors
and employees conforms with laws, regulations, and thearticles of incorporation, (2) to store and manage information
about the execution of the duties of directors, (3) to ensure
regulations and other systems for managing the risk of loss,(4) to ensure the efficient execution of duties by the directors,and (5) to ensure the accuracy of operations in a corporategroup consisting of the Company and its subsidiaries. The
latter system clarifies: (1) matters related to staff that assist
the duties of the auditor, and (2) a system for the directors
and employees of the Company and Group companies toreport to the Audit & Supervisory Board.
In order to conduct financial reports in an adequate
manner, the Kurita Group has established and now operates
the internal control reporting system in accordance with
the Financial Instruments and Exchange Act. Monitoring,recommendations for improvement, and support for improvement for the operation of the system is implemented
by the Internal Auditing Department. In addition, the Accounting Department in the Corporate Planning Division
shares responsibility for monitoring, recommendations for
improvement, and support for improvement related to the“operations process control within the Company” and the“financial reporting process control of consolidated subsidiaries from a Company-wide perspective.”
Kurita Water Industries Ltd. Annual Report 201727

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Initiatives that Support Value Creation

Initiatives that Support Value Creation

Compliance

IR Activities for the Enhancement of Corporate Value

Investor
Information

Corporate Data

In order to establish a transparent and fair relationship with its stakeholders, the Kurita Group fully enforces thepractice of conduct based on compliance with laws, regulations, and social ethics in its daily business activities.

Based on the Management Guidelines, which specify “management that respects shareholders,” the Kurita Group
proactively listens to the opinions of shareholders and continuously establishes structures and takes measures topromote constructive dialogue with shareholders so that we can contribute to sustainable growth and raise corporate
value over the medium to long term.

Framework for Promotion

System for Promoting Dialogue

The Company has established the E&S (Environmental &Social) Committee, which is chaired by the director, and theGroup E&S Committee, which is also chaired by the abovementioned director and whose members are representative
directors of Group companies. In these committees, theGroup sets out policies and important measures for compliance activities, and conveys them to all employees throughsubcommittees at each headquarters division, business division, and Group company.

Establishment of the Kurita Group Code of Conduct
On October 1, 2016, the Kurita Group Code of Conduct wasestablished as a model for compliance with laws and fortaking appropriate actions according to social ethics. With
Kurita’s business continuing to expand globally, the Code defines actions to be taken
by all Group officers andemployees beyond any
gaps that may exist due
to language, custom, or
culture. As thorough understanding of the Codeis a priority, it has been Briefing session held at an overseas
translated into 15 different Group company
languages.

Reinforcing the Kurita Group’s Anti-Bribery Initiatives
The Kurita Group reinforced its Anti-Bribery Policy on March
1, 2017, in order to promote fair business activities within theGroup. This policy defines basic items related to the Group’s
bribery prevention systems. Under this policy, the Company
and each Group company defines items to be complied withas rules and works on the reduction of the risk of the occurrence of bribery.

Initiatives to Prevent Bid-Rigging and Cartels
The Kurita Group actively works to avoid the re-occurrenceof bid-rigging. In 2006, the Kurita Group withdrew, in principle, from all construction projects ordered by the national
government and local public entities. However, exceptions
to this principle are limited to cases where no existence ofcompliance risks are confirmed to projects involving facilities delivered by the Company that are subject to ongoing
maintenance and management work by a Group company,
which are executed by obtaining the approval of the Boardof Directors on a case-by-case basis. We also forbid participation and membership of trade associations in order to
exclude all dealings with associates that can easily connect
to bid-rigging and cartels.

28 Kurita Water Industries Ltd. Annual Report 2017

Initiatives to Establish Healthy Relationships with
Suppliers
Since 2008, the Company has been conducting Surveys on
Transactions with Kurita Water Industries Ltd. once a yearwith suppliers who fall under the category of subcontractors
as provided in the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors (the Subcontract Act).
The Company is promoting fairer transactions and building
relationships of mutual trust and cooperation by continuously improving its transactions and its methods of transactions
based on the opinions and suggestions voiced by its suppliers. We also request subcontractors to thoroughly comply
with laws and regulations, as the procurement guideline
regarding respect for basic human rights stipulates an adequate wage as well as hours of labor.

Overview of the Kurita Group’s Whistle-Blowing
SystemThe Company and its domestic Group companies maintainconsultation desks within each company as well as at outsideorganizations in an effort to protect persons who consult or
make reports and to achieve early detection of dishonest practices. Starting in April 2016, we commenced operation of theKurita Global Helpline, which allows the employees of overseas Group companies to make reports to a consultation desk.
As well, we also have the Supplier Helpline, which suppliers can call for consultation and reporting. This helpline isoperated by an external organization.
Updates on operation of the Group’s whistle-blowing system are reported to the Board of Directors on a regular basis.

Questionnaires on Compliance
Questionnaires on compliance are conducted once a year for
all Group employees. The Company monitors the results ofcompliance activities through the questionnaire results, andissues that become apparent through analysis are reflectedin compliance activity plans for the following year.

Response to Anti-Social Forces
The Company takes a firm stance against anti-social forcesthat threaten the order and safety of society, and we are
vigilant that we never accept illegal requests from such forces. Upon reaching a basic agreement for business with ourcustomers, we obtain a written statement from each supplierstating that they have no relationships with such anti-social
forces.

The General Manager of the Corporate Planning Division
has overall responsibilities for constructive dialogue withshareholders and investors. A specialized Investor Relations(IR) section has been established within the Corporate Planning Division, at which staff specialized in IR are assigned.
The General Manager of the division is involved in dialogue
with shareholders and investors. As well, he / she attempts
to organize such dialogue between the president and otherofficers and shareholders and investors.
In regard to important information on matters within
the Company, the General Manager of the division ascertains, collects, and controls it adequately, and discloses it
in a timely and appropriate manner. He / She also provides
feedback to the Board of Directors concerning the opinions
and concerns of shareholders learned through such dialogue
periodically and as necessary.
Purpose ofKurita’s IR Activities
Obtain evalution andrequest from
capital market

on a regular basis except during quiet periods. During the
fiscal year ended March 31, 2017, over 200 meetings and telephone meetings were held.
For foreign shareholders and investors, the president
and the General Manager of the Corporate Planning Division
conduct roadshows in Europe, North America, and Asia. In
addition, the General Manager of the Corporate Planning
Division participates in domestic conferences organized by
securities companies. In the fiscal year ended March 31, 2017,
we visited 54 shareholders and investors overseas and held
28 meetings in Japan.
In recognition of our efforts for these activities, Kurita waschosen by the “Awards for Excellence in Corporate Disclosure
by Securities Analysts,” conducted by The Securities
Analysts Association of Japan, as a “Company with
the Notable Level of Disclosure Improvement” andreceived a commendationfrom the association.
Commendation by The Securities
Analysts Association of JapanIR Activities for Individual Investors
Enhance corporate
value through dialogue

Disseminate
quality information
in a timely manner

Reflect feedback
quickly inmanagement andIR activities

IR Activities for Institutional Investors
In activities taken for institutional investors in the fiscal year
ended March 31, 2017, Kurita held financial results briefings
at the time of its second-quarter and full-year financial
results, at which the president and the directors of the
Accounting Division and the Corporate Planning Division
explained the Company’s results and answered questions.
Teleconferences were also held at the time of the Company’s
first- and third-quarter financial results, during which the
General Manager overseeing the IR department explained
the results and answered questions. The materials used atthese briefings, as well as summaries of the questions andanswers, have been posted on the Company’s IR website toensure the timely and fair disclosure of information.
In addition, IR staff conduct individual meetings with securities analysts and institutional investors in Japan and overseas

For individual investors, a shareholder briefing is held after the
General Meeting of Shareholders, and a company briefing is
conducted at the branches of securities companies in themetropolitan areas as well as at venues in rural cities. In thefiscal year ended March
31, 2017, we shared withover 800 people the outline of the Company andorganized opportunities forthe exchange of opinions.
The materials used at thesebriefings are available on
Individual investor briefing session
the Company’s IR website.

Communication with Shareholders
In Japan, our IR staff visit major domestic shareholders as wellas the hubs of foreign shareholders in Japan in order to create
opportunities to communicate with the persons in charge of
exercising voting rights. We at Kurita explain the direction ofmanagement and report on the implementation and statusof improvement of corporate governance, while shareholders
express their opinions and requests regarding managementand discuss policies on the exercise of voting rights. Feedback
regarding the opinions and requests expressed is provided
to the president and other directors, and those opinions andrequests are reflected in various management policies.
Kurita Water Industries Ltd. Annual Report 201729

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Initiatives that Support Value Creation

Human Resources Management
The Kurita Group believes that sustainable growth requires enabling employees to choose employment styles that
support self-realization according to their stage in life, the ability to work with passion, and allowing employees toplay their roles in the right place. Consequently, we conduct human resource development and create systems toachieve these objectives.
Development of Human Resources
The Kurita Group has traditionally recommended that employees tackle the challenges of extending their own capabilities at all stages of their careers, and we are enthusiastic
in the development of human resources that support our
global business strategies. We strive to enable employees togrow into professionals so that they can create and develop
Kurita’s proprietary products, technologies, and services as
they find solutions to the issues facing customers and society.
Self-Reporting System
Kurita Water Industries Ltd. has established a system where
employees can report their preferred working style andcareer formation to the Company. Once a year, employees
discuss the suitability of their current duties, their preferredpath for the future, their family situation, and more with theirsuperiors so that the Company can better understand thethinking of each individual, which is then utilized in training.
Opportunities for Personal Development
In business areas where the Company has a need, Kurita
Water Industries Ltd. has a paid study sabbatical system inplace that provides employees with opportunities to study at
educational and research institutions in Japan and overseas.
Additionally, we offer more than 200 distance learning andclassroom-based courses to enable employees to acquire awide range of knowledge and skills.
Measures to Enhance Human Resource Capabilities
Kurita Water Industries Ltd. believes that the enhancementof human resource capabilities is necessary to strengthen
the fundamentals of its business. Therefore, in addition tolecturers for each skill level and position, we implement
training programs for selected participants including global
training programs, the purpose of which is to nurture humanresources that are capable of working at a global level. We
Number of Trainees(including employees of some domestic and overseas Group companies)

also enthusiastically work on the development of humanresources that are the core of the management of overseas
Group companies, and implement training for future executives among local employees and managers.

Promotion of Diversity
The Kurita Group seeks to employ diverse personnel, placing
the right person in the right job, so that each employee canfully exhibit their capabilities.
Measures to Promote Active Female Participation
Kurita Water Industries Ltd. has traditionally had a low percentage of female employees because of the nature of its
business, and the percentages of women hired as recent
graduates and women in management positions are lower
than the average of other companies. Despite this, the promotion of active female participation is essential for the sustainable growth of the Kurita Group. In the fiscal year ended
March 31, 2017, the Company held training programs that
support the career development of female employees as wellas established a work-suspension system for those whose
husband is transferred overseas. We maintain a labor systemthat actively encourages female employees to continue theircareers at Kurita as long as possible.
Employment of Personnel with Disabilities
In Japan, the Kurita Group provides a wide range of employment opportunities for people with disabilities. In April 2013,
With Kurita Ltd. was established with the goal of securing
employment opportunities for people with disabilities. Asof May of the same year, With Kurita has been approved as a
special subsidiary company under the Act on Employment
Promotion, etc. of Persons with Disabilities. As of April 1, 2017,
the Company’s disabled person employment rate is 2.22%.
Second Career Support System
We have a second career support system that offers preferential treatment to support employees who wish to try to workin a field different from their present one. Employees mustsatisfy certain conditions to qualify for this system.

Securing Employment Opportunities for Senior
Personnel
In conjunction with the enforcement of the amended Act
on Stabilization of Employment of Elderly Persons from2006, Kurita Water Industries Ltd. has established a system
to secure employment opportunities for people who haveretired having reached the mandatory retirement age. These
employment opportunities are offered for up to a maximum
or five years from the time of mandatory retirement (60 years
old) in accordance with the 2013 amendment to the Act on
Stabilization of Employment of Elderly Persons.
Between April 1 2006 and April 1, 2017, a total of 319
retirement-age personnel secured employment opportunities. As of April 1, 2017, there are 73 retirement-age
employees who have secured employment opportunities
at the Company.

Supporting a Proper Work–Life Balance
The Kurita Group is taking measures to enhance systems andstructures intended to support a proper work–life balance by
employees and create pleasant workplaces.
Preventing the Occurrence of Long-Hours Labor
As a result of initiatives in the fiscal year ended March 31,
2017, Kurita Water Industries Ltd. and the domestic Group
companies were successful in reducing the amount of overtime hours by promoting such measures as “No OvertimeDay” and the “Regulation on the Period of Use of Company
Facilities.” We will continue to prevent the occurrence of longhours labor by reviewing the quality of output resources,
operational processes, and the amount of work.
Supporting a Balance between Work and Child Raising
Kurita Water Industries Ltd. has established an environmentthat makes it easier for employees to balance work withraising children in accordance with the Act to Promote
Measures to Support Fostering the Next Generation. In
principle, employees can take childcare leave until the childreaches one year and six months of age, but the period canbe extended in certain specified conditions. The program

Volunteer Leave System
At Kurita Water Industries Ltd., all employees are eligible totake leave for volunteer activities. Employees can take paid
leave for up to two days each fiscal year for such activities.

Activities Related to Human Rights
The Kurita Group Code of Conduct, established in October
2016, states that the Group respects the Universal Declarationof Human Rights and takes actions according to the Declaration. It is common knowledge throughout the Kurita Group
that, for the benefits and the employment of employees andany other business activities, no discrimination is acceptable
regarding nationality, race, skin color, gender, religion, political view, country of origin, place of origin, physical ability,
sexual orientation, etc. As well, child labor and forced labor
are not permitted in any form in any business activity.
Kurita Group companies in Japan adopted guidelines andestablished a consultation desk in order to prevent various
types of discrimination and harassment within the Kurita
Group in Japan and strive to raise awareness of human rights
issues through such measures as periodic human rights training programs.

Ratio of Employees in Each Region(Cumulative total number from the fiscal years ended March 31, 2015 to 2017)(As of March 31, 2017)(Persons)

Name of the system

346*

Training for executives and managers

237*

Training for female employees

15

Global training

22

Nursing Care Leave System
Nursingcare leave Work Less Hours for Nursing Care
SystemTraining for staff of overseas Group
companies

26

Others30 Kurita Water Industries Ltd. Annual Report 2017

Nursing Care Leave and Shortened Working Hours for
Nursing CareAt Kurita Water Industries Ltd., employees with a family member who needs nursing care and who wishes to continue towork after taking nursing care leave, may take nursing careleave for a cumulative total of up to one year (365 days) in
principle. In addition, employees may use the shortened
working hours system for a cumulative total within 12
months per family member depending on the condition of
the family member requiring care.

Number of Employees Who Have Used the Leave System

Training for those in each ranking* Cumulative total number of persons in the fiscal year ended March 31, 2017

for shortened working hours for childcare was reviewed in
April 2016 and changes were implemented to make it eveneasier for employees with multiple children to balance workwith raising children.

Parental
leave

Number of
employees who
took leave

Parental Leave System

24

Work Less Hours for Parenting System32
00Leave System Due to Spouse Being
Transferred

1

Volunteer Leave System

4

EuropeOthers

3.9%
(221)

11.2%
(636)

Asia

11.3%
(641)

China

6.6%
(375)

Japan

66.9%
(3,781)

Kurita Water Industries Ltd. Annual Report 201731

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Investor
Information

Financial Section

Corporate Data

Initiatives that Support Value Creation

Emphasis on Safety and Quality
The Kurita Group believes that earning the confidence of customers by providing technologies and services with thelevels of safety and exceptional quality that they expect leads to the development of a solid management foundation.

Structures and Policies for Health and Safety

Health Management
The Company and its domestic Group companies actively
promote health management of both body and mind, toensure that employees are able to work enthusiastically. We
pursue a deep understanding of health and attempt to raiseawareness by offering opportunities for employees to refresh
their body and mind by reducing their work hours and encouraging the use of paid holidays. As well, we hold lectures
on mental health and events related to health over 50 times ayear. In addition, we conduct a Stress Check, which is a survey
given to all employees and carried out under the guidance ofthe stress check systems designed by the Ministry of Health,Labour and Welfare according to the Industrial Safety and
Health Act. The Company supports the implementation ofthese activities at Group companies with less than 50 employees, even though there is no obligation to by law.

PICK UP
Safety Patrols
As part of safety activities at worksites, Kurita Water Industries Ltd. implements safety
patrols in order to stop unsafe activities and environments. Risk detection and improvement are implemented from different expert viewpoints through safety patrols
conducted jointly by special divisions of the Water Treatment Chemicals business andthe Water Treatment Facilities business, as well as safety patrols performed by invited
external specialists.These activities are being expanded to overseas sites as well.

Plan: Make Plans

The Kurita Group’s Quality Policy

Distribution of policy
control activities
throughout the Company

Outline and Structure of Our Quality Management
SystemWith regard to product quality management, we have established a Quality Assurance Department to work on quality
control from production to final receipt of the product. Committees have been established in the Water Treatment Chemicals business and the Water Treatment Facilities business tocontrol quality improvement activities in each business, inorder to form systems that allow us to improve quality in aproactive and sustainable manner and to maintain a quality
management system.
In the fiscal year ended March 31, 2017, the Water Treatment Facilities business saw relevant departments implementing mutual checks to evaluate the efforts on quality
management, and conducted quality improvement activities
including discussions on investigating the cause of issues
and distributing issue-prevention measures throughout theentire Company.
Control Structure of Quality Management System

Establishment of activity policies

Electric Power Quality
Management Committee

Do: Implementation

Agreement(Contracted specifications)・Clarifying the requestingof items
・Planning and control
of operations
・Design review,
examination, andchecking adequacy・Outsourcing
management
・Product audit andmeasurement

Basic design / Precise design
Purchasing / Quality assurance
Construction → Delivery

Check: Evaluation

Audit and measurement(Customer satisfaction / Each process data)
Internal audit / Acquisition and update of ISO 9001 certification(External audit)

Data analysis

Application /Managementof resources

Continuous improvement of the quality management system

The Kurita Group works diligently to prevent work-related
accidents by maintaining safe work environments at its
construction and worksites. The Water Treatment Chemicals
business has focused efforts on enhancing safety control atworksites and on maintaining sustainability by giving lectures
to each division on the topic of risk assessment at worksites. In
addition, the business has been implementing evaluations atworksites according to the Risk Assessment Sheet, which defines safety measures necessary for each work process. At thesame time, the Water Treatment Facilities business conducts
activities to promote danger predictions that follow safetycycles at worksites and takes measures to prevent expansionof a work-related accident by illustrating work-related accident
cases to its workers and subcontracting companies working at

Kurita Water Industries Ltd. is eager to conduct educational
activities on work safety as it implements various educational
activities, which take place over 100 times a year, and conducts lectures to encourage workers to obtain unique Kurita
certifications. Among others, we conduct safety training for
new employees through hands-on exposures to dangers inorder to raise their awareness of risks.
In the Water Treatment Facilities business, divisions that are
involved in production, construction, and maintenance invite
cooperating companies to participate in “Safety Conferences.”
These conferences consist of lessons given by external lecturers on safety and other activities that raise the awarenessof staff using lessons learned on previous accidents. Similar
Safety Conference activities are held overseas in order to raise
shared awareness and share topics among participants.

(Kurita Water Industries Ltd. Department related to electric power plant)

・ Human resources
・ Infrastructure
・ Operational environment

Prevention of Work-Related Accidents

Safety Education

Map of Quality Management System

As the Kurita Group expands its overseas business, quality
improvement has become an even more important concern.
To further enhance the quality of the solutions that we offer
our customers, under the Kurita Group’s Quality Policy we
implement quality management, which focuses on the flowfrom establishment, implementation, and evaluation to improvements in the quality of our products, technologies, andservices.

Customer

The Kurita Group believes that safety is an essential basis ofvalue creation when providing customers with technologies,
products, and services.
As part of the establishment of its health and safety management structure, under the Headquarters Health and Safety
Committee, which is a committee under the direct control ofthe president, each office and division of Kurita Water Industries Ltd. establishes a Health and Safety Committee while
each Group company also establishes a Health and Safety
Committee. This allows us to develop and enhance safe andhealthy work environments. A special department has been
established to promote safety within the worksite, and it plans
and takes active measures to prevent work-related accidents.
The department also follows up on the activities of the Healthand Safety Committee.
As a policy of the fiscal year ended March 31, 2017, theGroup established a goal that states, “every one of us must
become more aware of the possibility of risk occurrence andfully remove any potential risks at worksites.” As such, we haveendeavored to prevent work-related accidents and to promote health management.

a site to fully understand causes and measures as well as implementing emergency response training so that appropriate
measures can be taken when work-related accidents occur.

Quality Management

Act: For improvement

Acts for evaluation, prevention, and correction
Management review

Board of Directors

ISO 9001 Certification
President and Representative Director

Executive Committee(Chemical related)
Quality Management
Committee

Quality Control Division
Quality Management
Organization

Divisions / Organizations

There are quality assurance systems based on the ISO 9001
international standard for quality management systems inplace, and being worked on, in certain departments of Kurita
Water Industries Ltd. related to electric power plant and in
the domestic Group companies of Kurita Chemical Manufacturing Ltd., Kurita Engineering Co., Ltd., Kuritaz Co., Ltd., andKuritec Service Co. Ltd.

(Facility related)
Quality Management
Committee

Initiatives to Improve Technical Skills
Kurita Water Industries Ltd. has established the T&C (Technical & Career) Support Center toperform technical training and human resource development relating to water treatment
plants. The Center oversees technical and safety education and conducts training for theGroup as a whole including not just employees of the domestic Group but also overseas
employees. In addition to lectures held at the Head Office, the Center conducts practicalskills training using actual systems at the Yamaguchi Center, and plays a role in the global
expansion of the Kurita Group’s safety and quality.
Training held at the T&C Support Center

32 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201733

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Investor
Information

Financial Section

Corporate Data

Initiatives that Support Value Creation

Harmony with the Environment
The Kurita Group aims to realize its corporate philosophy by resolving water and environmental challenges throughits business activities.
Study the properties of water, master them,and we will create an environment in which
nature and man are in harmony.

Corporate Philosophy

Basic Environmental
Improvement Policy

Activity Guidelines

The Kurita Group will conduct business activities based on its corporate philosophy andwill endeavor to resolve water and environmental issues with the aim of making broad
contributions to society.
1. We will contribute to the realization of asustainable society by developing new
products and technologies conducive toenvironmental improvement.
2. We will work with customers to improve theenvironment by providing products, technologies, and services that boost productivity, reduce environmental burden, and offer
innovative energy solutions.
3. In conducting daily business activities, wewill reduce environmental burden throughoperational improvement and innovation.

The Three Aspects of Kurita’s
Environmental Improvement
Activities
Technological Innovation

Initiatives that contribute to thecreation of a sustainable society by
developing new products and technologies that support environmental
improvement.

Customers’ Needs

Initiatives that contribute to the environmental improvements wanted bycustomers through products, technologies, and services.

Internal Change

Initiatives that continuously reduce
environmental burden through improvement of and innovation in ourbusiness operations.

Internal Change Initiatives
The targets and results for environmental burden reduction initiatives at all of the Kurita Group’s sites in Japan were as follows.

Reducing Energy Consumption
As a main initiative in the fiscal year ended March
31, 2017, we reduced heating fuel and water used
for cooling by revising and improving the efficiency of the operations management of equipmentthat treats waste liquid at a high temperature
at some ultrapure water supply sites. Also, we
reduced electricity and fuel consumption by updating equipment, for example, to LED lighting
and high-efficiency boilers, at production sitesof Kurita Water Industries Ltd. In this way, weachieved our reduction targets for per-unit energy
consumption and absolute energy consumption.

Item

Target for the fiscal year ended
March 31, 2017

Result in the fiscal year ended
March 31, 2017

Below 92,232 kl

91,914 kl

Energy consumption(A Production sites*1)<Reference CO2 emissions>(t: Tons)(t: Tons)

Item

Results in the fiscal year
ended March 31, 2016

Results in the fiscal year
ended March 31, 2017

Year on year

CO2 emissions

188,709 t

185,435 t

98.3%

182,529 t

179,794 t

98.5%

Breakdown B Production sites*

4,392 t3,856 t87.8%

Non-production
sites*3

1,788 t1,786 t99.9%

A Production sites
2

Note: CO2 emissions include Scope 1 and Scope 2 emissions in the concept of supply chain emissions and are calculated using a coefficient for conversion from the consumption of such energies aselectricity and fuel oil.

*1 Kurita Group companies which are specified business operators and designated energy management factories of Kurita Water Industries Ltd.
*2 Companies and sites manufacturing water treatment chemicals and water treatment facilities*3 Non-production sites: Kurita Group companies and sites other than those listed above

Results of Environmental Improvement Activities in the Fiscal Year Ended March 31, 2017
Technological Innovation Initiatives
Through these initiatives, we try to contribute to the development of a sustainable society by creating new products and technologies for environmental challenges that are difficult to resolve with existing technology. Development results in the fiscal year
ended March 31, 2017 were as follows.
Improvement targets

New Products and Technologies

EnergyWater treatment chemicals for industrial power boilers that use materials that
do not fall under the PRTR Law●

Solid chemicals for small cooling water tanks that is effective for removing
Legionella bacteria, inhibiting corrosion, and preventing scale●

Sludge dehydrating water treatment agent for sludge that is difficult todehydrate

Waste

●
●

Water treatment chemicals for large seawater desalination plants to inhibit
pollution deriving from microorganisms●

Compact wastewater reclamation technology compatible with diverse water
qualities●

Wet-type methane fermentation system for low-energy, low-waste biogas power
generation using ANAMMOX (anaerobic ammonium oxidation) bacteria●●

Tools that help minimize water and heat usage in LCD and semiconductor
manufacturing processes●●

Tools that support proposals to reduce environmental burden in water
treatment facilities●

34 Kurita Water Industries Ltd. Annual Report 2017

Water pollutants●

Dehydrating agent for slurry generated during underground tunnel
construction

Initiatives for Meeting Customers’ Needs
Through these initiatives we try to contribute to the reductionof environmental burden and the detoxification of harmful
substances in customers’ plants and offices through provision of
the Kurita Group’s products, technologies, and services. Resultsin the fiscal year ended March 31, 2017, included fuel reduction

Substances ofenvironmental
concern●

We cut waste volumes substantially comparedto the previous fiscal year, achieving our targets.
The main factor in this achievement was the reduction of substances of environmental concern
contained in wastewater emitted from customers’
plants at some ultrapure water supply sites. The
recycling rate target was not achieved due to thefact that all the waste reduced at the abovementioned ultrapure water supply sites was subject torecycling and the fact that the volume of waste
increased with a revision of wastewater standards
to comply with environmental laws at a production site.

(t: Tons)

Targets for the fiscal year ended
March 31, 2017

Item

(Based on results in the fiscal year ended
March 31, 2016)

Waste generation
C Production sites*
Breakdown

4

D Production sites*

5

Results in the fiscal year
ended March 31, 2017

Below 33,756 t

27,538 t

Below 32,044 t

25,687 t

Below 1,462 t

1,550 tBelow 250 t

302 t

80.0% or more

89.9%

C Production sites

80.2% or more

92.1%

D Production sites

78.7% or more

67.3%

Non-production sites

46.1% or more

42.7%

Non-production sites*

6

Recycling rate

Breakdown*4 Kurita Group companies and sites where the amount of waste generated is influenced by the production activities of specific customers*5 Kurita Group companies and sites engaged in R&D and the manufacture of water treatment chemicals and water treatment facilities*6 Kurita Group companies and sites other than those listed above

●
●
●
●

Waste Reduction and an Increased Recycling Rate●by increasing the efficiency of boilers and cooling water systems
through water treatment chemicals, water savings through awastewater reclamation system, and reduction of electricity consumption in customers’ plants through power generation using
gas generated from anaerobic wastewater treatment.

PICK UP
DReeM PolymerTM Wins Environmental Technology Award
Kurita Water Industries Ltd.’s multifunctional polymer
DReeM PolymerTM won the Environmental Technology
Award at the 49th JCIA Technology Award, hosted by theJapan Chemical Industry Association (JCIA). Applicationof DReeM PolymerTM to boiler water leads to a reductionof fuel used in boilers by removing scale in boilers, thereby maintaining the heat transfer rate, and by enabling

the reuse of steam condensed water containing scale
components such as calcium, which is often disposed,
as boiler feedwater. The award recognized that DReeM
PolymerTM has this kind of environmental improvement
effect and that it has contributed to the progress of science and technology.

Kurita Water Industries Ltd. Annual Report 201735

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Initiatives that Support Value Creation

Contribution to Local Communities
The Kurita Group strives not just to contribute to society through its business activities but also to actively return
to society the insight and expertise that Group companies have gained through business in order to establish afavorable reputation within society.
Promotion of Science and Technology Relating to
Water and the Environment
Kurita Water Industries Ltd. established the Kurita Water andEnvironment Foundation in 1997 with the aim of contributing to the promotion of science and technology relating
to water and the environment. The Company and domestic
Group companies make contributions to the Foundationeach year to provide operating funds, and the Foundation
uses these contributions as its operating expenses for research and studies relating to water and the environment aswell as international exchange support.
Its main activities include publicly soliciting research
applications and then provision of subsidies to domestic andoverseas researchers. In the fiscal year ended March 31, 2017,
subsidies were given to 125 projects, which were selected
through examination. The Foundation also launched a research subsidy project in Thailand, Vietnam, and Indonesia in
the fiscal year ended March 31, 2016, with the subsidy presentation ceremony for this project being held in Indonesia
in the fiscal year ended March 31, 2017. The Foundation has
subsidized a total of 1,285 projects, amounting to roughly¥642 million, since its establishment through to the end of
March 2017.
Celebrating the 20th anniversary of its establishment in2017, the Foundation is planning to provide subsidies for research projects and offer scholarships for the purpose of thedevelopment of researchers in a multilayered way in Southeast Asian regions and the establishment of networks.

customers, with the Kumamoto Sales Department of the
Facilities Division of the Company operating as the centerfor these efforts. With the amount of damages varying by
customer, it was extremely difficult to determine the overalllevel of damage and danger. While lifelines, supply chains,
and transport routes were cut off, the Kurita Group worked
to secure the safety of its employees and their families
and carried out reconstruction work to recover the supply
chains and transport routes of the Group including its suppliers and vendors. As a result, we were able to complete thereconstruction work earlier than customers were expecting
without accident or injury. Through this, we were able tosucceed in upgrading the aseismic strength of customers’facilities as well as strengthen the close relationship between us and our customers.
The Kurita Group also donated ¥10 million through theJapanese Red Cross Society and supplied 12,096 liters ofmineral water produced by a Group company to local governments in the disaster-stricken areas as relief aid to assist
those affected by the earthquake and support recovery in theaffected region.

Financial Section
38 Management’s Discussion and Analysis
48 Consolidated Balance Sheets
50 Consolidated Statements of Income and Consolidated
Statements of Comprehensive Income
51 Consolidated Statements of Changes in Net Assets
52 Consolidated Statements of Cash Flows
53 Notes to Consolidated Financial Statements
78 Report of Independent Certified Public Accountants

Regional and Community Activities
The Kurita Group strives to be accepted as a member of thecommunity and to develop along with the local communities in regions where the Group has business sites. Regionaland community activities consist of (i) activities relating tolocal cleanup and preservation of the natural environment,(ii) activities relating to the promotion of health and welfare
within the community, and (iii) activities relating to disasterand crime prevention within the community.
In the fiscal year ended March 31, 2017, the Company
conducted local cleanup activities in the area surrounding
the Kurita Global Technology Center and engaged in various
other activities with strong local ties.

Subsidy presentation ceremony in Indonesia

Support for Disaster-Stricken Areas
The Kurita Group has a policy of providing support todisaster-stricken areas when a major natural disaster occurs
in a country in which the Group has a business sites. In
response to the Kumamoto Earthquake on April 14, 2016,
the Group provided help with the reconstruction of plantsthat were damaged by the earthquake in response to its

36 Kurita Water Industries Ltd. Annual Report 2017

Local cleanup activity

Kurita Water Industries Ltd. Annual Report 201737

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Investor
Information

Financial Section

Corporate Data

MANAGEMENT’S DISCUSSION AND ANALYSIS
Business Overview

business. Nevertheless, because of improved profitability as a result ofOrders by Segment

During the fiscal year ended March 31, 2017, the U.S. and European

strict cost management of water treatment facilities and the elimination

economies continued to recover, and China and other emerging

of previously incurred one-off costs associated with retirement benefits

Years ended March 31(Millions of yen)economies in Asia shifted to economic recovery due largely to economic

and the acquisition of a company in Europe, we were able to maintain

policies. As a result, the global economy overall grew gradually.

operating income at almost the same level as the previous fiscal year.

The Japanese economy continued to grow, though not vigorously,

Consolidated net income attributable to owners of parent increased

because of a gradual pickup in consumer spending, improved corporate

because of a reduced tax burden attributable to a revision to theearnings due to the slowdown in yen appreciation in the second half,

corporate tax rate.

and moderate growth in overseas economies.
Looking at the market environment surrounding the Kurita Group,

Operating Results

signs of recovery were seen in production in the Japanese manufacturinga) Ordersindustry, but capital expenditures have plateaued because of worries about

In the Water Treatment Chemicals segment, since the rate of operation of

the future due to the stronger yen in the first half. Overseas, demand forcustomer factories in Japan recovered moderately and problem-solving

water treatment continued to grow in East and Southeast Asia.

proposals using new products and services were promoted, not only did

In this environment, based on its three-year medium-term man-orders for boiler water treatment chemicals shift to growth, orders for cool-

agement plan Competitive Kurita 2017 (CK-17) begun in the fiscal year

ing water treatment chemicals and process treatment chemicals for ironended March 31, 2016, the Group focused on expanding its overseas

and steel expanded and the amount of orders increased. Overseas, thebusinesses, improving profitability, and creating competitive products

yen equivalent amount of orders taken by overseas subsidiaries decreased

and services.

because of yen appreciation, and the overall amount of orders fell.

Regarding expanding our overseas businesses, to accelerate ourIn the Water Treatment Facilities segment, for the electronics

business development in the United States, the Group purchased Fre-

industry, in addition to slow orders for large, overseas water treatment

mont Industries, LLC, a U.S. limited liability company that manufactures

facilities, due to revisions of contracts with a customer in the ultrapureand sells water treatment chemicals, thereby acquiring a business basewater supply business, the overall amount of orders decreased.

in the American Midwest. Also, to increase its management effectivenessin Europe, the Middle East, and Africa (EMEA), the Group merged Kurita

As a result, total consolidated orders were ¥218,730 million, aWater Treatment Chemicals
Water Treatment Facilities

221,273 218,730
186,741

173,463

181,282

130,700 114,049 121,928 137,832 136,611

56,04059,41359,35383,44082,118

2013

2014

2015

2016

2017

Sales by Segment
Years ended March 31(Millions of yen)
Water Treatment Chemicals
Water Treatment Facilities

214,372 214,187
180,143 178,137

189,398

decrease of 1.1% compared with the previous fiscal year.

Europe GmbH and Kurita Europe APW GmbH and worked to unite theirpossessed technology and know-how and to reorganize their salesb) Net Sales

and manufacturing systems. It also decided to establish in Singapore

In Japan, sales of water treatment chemicals, maintenance services, anda new company that carries out research and development in order tosoil remediation increased, but domestic net sales decreased slightly

speed up technological development related to seawater desalination

because sales were down for our ultrapure water supply business.

and wastewater reclamation and reuse and to gather information on

Overseas, sales by consolidated subsidiaries fell in yen terms because ofleading-edge technology.

the strengthening of the yen, but sales of water treatment facilities to

As for improving profitability, the Group worked hard to combine
its proprietary sensing technology and water treatment data analysis
expertise with existing technology and products to improve its ability
to propose solutions to customers. Moreover, the Group improved thethe electronics industry in China and Korea increased, leading to a slight

56,091

58,84459,99983,68081,883

2013

2014

2015

2016

2017

70,407

68,73220162017

As a result, total net sales amounted to ¥214,187 million, a decreaseof 0.1% compared with the previous fiscal year.

could add a large amount of value, while promoting the revision andc) Cost of Sales and Gross Profit

standardization of processes in its manufacturing work.

Cost of sales increased 1.0%, from ¥143,964 million in the previous fiscal

Group developed a standardized wastewater reclamation system that

129,399 130,692 132,304

increase in overseas sales.

profitability of its installation projects by focusing on those in which it

Regarding the creation of competitive products and services, the124,052 119,292

Gross Profit
Years ended March 31(Millions of yen)

year, to ¥145,455 million. Cost of sales as a percentage of sales came to67.9%, compared with 67.2% in the previous fiscal year.

combines the elemental water treatment equipment and chemicals
technology it possesses and contributes to water reuse. The Groupd) Selling, General and Administrative (SG&A) Expenses

also invested in APANA Inc., an American venture firm, which is rolling

SG&A expenses were ¥49,280 million, down 2.6% from the previous fiscal

out a service in the United States that contributes to saving water in

year’s ¥50,574 million. As salaries and bonuses increased, retirement

commercial and industrial facilities through big data analysis using IoT,

benefit expenses and R&D expenses decreased.

59,09655,26758,889and is considering a new service business collaboration with APANA.
Factors behind reduced net sales for the Group include a drop in theconverted yen amount of overseas sales due to appreciation of the yen
and revisions of contracts with a customer in the ultrapure water supply

38 Kurita Water Industries Ltd. Annual Report 2017

2013

2014

2015

Kurita Water Industries Ltd. Annual Report 2017

39

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupA Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Management
Indicators

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Investor
Information

Financial Section

Corporate Datae) Operating Income

SG&A Expenses

However, because of reduced income for our ultrapure water supply

Operating Margin by Segment

Owing to the factors mentioned above, consolidated operating income

Years ended March 31(Millions of yen)business, segment operating income decreased 8.6%, to ¥12,220 million.

Years ended March 31(%)

totaled ¥19,452 million, down 1.9% compared with ¥19,833 million in
the previous fiscal year. The operating margin fell to 9.1%, from 9.3% in

50,574the previous fiscal year.
f ) Results by Business Segment

38,10640,38049,280g) Overseas Sales

14.9

Sales by Region
Overseas sales for the fiscal year under review were ¥64,199 million (an39,454increase of 0.5% over the previous fiscal year). The overseas sales ratio

Water Treatment Chemicals

within consolidated net sales increased to 30.0%, from 29.8% in theOrders and Sales

previous fiscal year.

In Japan, in addition to customer factories’ rate of operation recovering,

Regional Breakdown
Asia: Up 5.6%, to ¥39,899 million; 62.1% of total overseas sales

and services, there was a shift to an increase in sales of boiler waterNorth America: Down 22.5%, to ¥1,885 million; 2.9% of total
overseas sales

treatment chemicals, cooling water treatment chemicals, and process
Overseas, despite the accounting period of businesses consolidated

EMEA*: Down 4.5%, to ¥19,774 million; 30.8% of total overseas sales
2013

2014

2015

2016

2017

Other regions: Down 11.1%, to ¥2,641 million; 4.1% of total

consolidation purposes, orders and sales of overseas subsidiaries fell inamount of sales also decreased.

h) Other Income and Expenses

As a result, segment orders decreased to ¥82,118 million, a 1.6%

Other income and expenses–net came to income of ¥1,013 million,

reduction over the previous fiscal year, and segment sales declined toOperating Income by Segment

liquidation of business recorded in the previous fiscal year and a ¥391

Segment operating income was up 11.8%, to ¥7,231 million, because

Years ended March 31(Millions of yen)million gain on sales of investment securities that was not in theprevious fiscal year.

Water Treatment Chemicals

Orders and Sales

19,833

19,452

12,641

11,56013,366

12,220previous fiscal year.
j) Net Income Attributable to Owners of Parent

8,334

7,954

7,877

6,467

7,231

2013

2014

2015

2016

2017

attributable to owners of parent of ¥14,506 million for the fiscal year
ended March 31, 2017, an increase of 15.3% compared with ¥12,577
million in the previous fiscal year. This was due to a reduced tax burden

previous fiscal year. The net income margin rose to 6.8%, from 5.9%.
Return on equity (ROE) increased to 6.4%, from 5.6%.

treatment facilities otherwise and for maintenance services, resulting inover the previous fiscal year, and segment sales expanded to ¥132,304

4.1%

Overseas Sales

30.8%

¥

64,19962.1%

2.9%
Asia .....................................................................¥39,899 million
North America................................................¥1,885 million
EMEA .................................................................¥19,774 million
Other regions..................................................¥2,641 million

Net Income per ShareYears ended March 31(Yen)

125.23108.24
92.43
78.48k) Policies on Shareholder Returns

87.81

Kurita’s basic policy is to pay stable dividends on an ongoing basis.
Setting a payout ratio of 30–50% as our target, we will continuously

million, a 1.2% increase over the previous fiscal year.

work to increase dividends, making decisions based on the payout

Operating Income

ratios for the most recent five years to respond flexibly to fluctuations

Profitability improved for water treatment facilities and maintenancein business performance each year. With regard to the use of excess

services because sales increased and costs were thoroughly controlled.

internal reserves, we prioritize business investment for growth, after

40 Kurita Water Industries Ltd. Annual Report 2017

Overseas Sales by Region

from a revision to the corporate tax rate.
Net income per share increased to ¥125.23, from ¥108.24 in the

As a result, segment orders were ¥136,611 million, a 0.9% decrease

2017

interests from pretax profits, Kurita recorded consolidated net income

maintenance services. In the same sector, while sales decreased foran overall increase in revenue.

2016

After deducting income taxes and profit attributable to non-controlling

thermal power plants and soil remediation, orders also increased forwater treatment facilities for electric power, sales increased for water

2015

compared with ¥20,411 million in the previous fiscal year.

6,934

orders were favorable in the previous fiscal year. Nevertheless, sales

addition to large orders being taken for water treatment facilities for

2014

Fiscal year ended March 31, 2017

Income before income taxes increased 0.3%, to ¥20,465 million,
The pretax profit margin increased to 9.6%, from 9.5% in the

14,886amount of orders fell for overseas water treatment facilities, for which

Orders increased for the general industries sector because in2013

million

19,435

Water Treatment Facilities

with a customer.

Water Treatment Facilitiesi) Income Before Income Taxes
20,989sales declined due to contract periods ending and contract revisions

Total

Water Treatment Facilities

tion in Europe were eliminated.

business, although sales were recorded for new contracts, orders andWater Treatment Chemicals

The main reason was the elimination of a ¥176 million loss on

Operating Income

increased, centered on large projects. In the ultrapure water supply

7.7

9.2
9.1
8.8

5.8

compared with ¥578 million in the previous fiscal year.

¥81,883 million, a 2.1% reduction over the previous fiscal year.

Regarding orders and sales for the electronics industry sector, the9.3* EMEA includes Europe, the Middle East, and Africa.

yen terms because of yen appreciation, and the amount of orders andwith a review of the initial allocation of the cost of the business acquisi-

10.2

10.2

overseas salesin Europe being increased by one month over the previous fiscal year for

temporary expenses that arose in the previous fiscal year in association

10.3
8.4
8.9

through problem-solving proposals that make use of new products

treatment chemicals for iron and steel.

13.1
13.5

11.7

2013

2014

2015

2016

2017

Kurita Water Industries Ltd. Annual Report 201741

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creationsecuring precautionary funds to prepare for working capital and rapid

Return on Equity

savings, environmental burden reduction, and productivity enhance-

fluctuations in the operating environment. If excess funds remain, weYears ended March 31(%)

ments. Other development activities include diagnostic technology forconsider a buyback of our own stock, taking the share price into consid-

The segment’s main achievements during the fiscal year were as
follows.

shareholders.
6.4

During the fiscal year under review, the Company paid dividendsof ¥50 per share, including an interim dividend of ¥25. This amount
5.5• Kurita developed a highly safe film-forming corrosion inhibitor as
an alternative to the conventional oxygen absorber for medium- to

5.6

high-pressure boilers, such as power boilers, which are increasing in

4.7

use in Japan and abroad. It also developed a water treatment control

4.4

Capital Expenditures

support system to prevent trouble by detecting signs of boiler facility

The Kurita Group is committed to making investments necessary formalfunction.

technological innovation and production capacity expansion, and to• Kurita developed solid cartridge-type water treatment chemicals thatenhancing competitiveness in response to intensified sales competition.
In the fiscal year ended March 31, 2017, capital expenditures totaled¥10,087 million, a decrease of ¥9,536 million compared with the previous

2013

2014

2015

2017

2016

Note: Return on equity = Net income attributable to owners of parent ÷Equity (Average) × 100
Equity is defined as net assets less non-controlling interests.

million compared with the previous fiscal year.

a long time just by placing the cartridge in the tower.

work by increasing the performance of slurry dehydration and theDividends per Sharefiltration rate.

Years ended March 31(Yen)

R&D expenses for the Water Treatment Chemicals segment for the

The Water Treatment Facilities segment carried out capital expenditures totaling ¥7,911 million, mainly for the installation and expansionof facilities for the ultrapure water supply business. This represented a

the adhesion of dirt and inhibiting corrosion in small cooling towers overtreatment cost in the slurry shield method used in tunnel construction

The Water Treatment Chemicals segment undertook capital expenchemicals production facilities. This represented a decrease of ¥259

prevent the growth of Legionella bacteria and are effective for reducing• Kurita developed a dehydrating agent that reduces the total slurryfiscal year, mainly due to the acquisition of business facilities.
ditures totaling ¥2,175 million, mainly for upgrading water treatment

Corporate Datachemical effectiveness.

eration, and take steps to improve capital efficiency and return profits tocorresponds to a ¥2 increase from ¥48 per share in the previous fiscal year.

Investor
Information

Financial Section

42.00

44.00

46.00

48.00

50.00

fiscal year ended March 31, 2017, totaled ¥2,123 million.
In the Water Treatment Facilities segment, Kurita is taking up thechallenge of realizing further advances in the quality of ultrapure water¥9,277 million decrease compared with the previous fiscal year.

that will contribute to productivity improvements in such industries

Depreciation and amortization increased 0.7%, to ¥15,857 million.

as electronics. The Group is also pursuing development in wastewater
Research and Development

treatment to stay ahead of the curve vis-à-vis environmental regulations.

The Kurita Group engages in technological development to reinforce

Another focus area is the development of technologies to meet theits core businesses. These include technologies related to boiler andneeds of a recycling-oriented society. These include wastewater recla-cooling water treatment, ultrapure water production, water andmation and reuse technology, and sludge reduction technology.
The segment’s main achievements during the fiscal year were as

wastewater treatment, water reclamation, and soil and groundwater
remediation. We also strive to deepen our understanding of the assay

2013

2014

2015

2017

2016

follows.

and analysis technologies that underpin our technologies, as well as new• Kurita developed a space-saving, low-cost standardized wastewater

materials development and other basic technologies. Furthermore, we

reclamation system that is easy to design and install, as it consists

are engaged in development to promote new ventures.

mainly of membrane treatment units. Stable operation is achieved

Going forward, we will proactively engage in product and technology development that meets the broad-ranging needs of industry

Capital Expenditures andDepreciation and Amortizationand society from the perspectives of environmental burden reduction,

Years ended March 31(Millions of yen)resource recycling, and productivity improvement. We will also aggres-

Capital expenditures

sively pursue research and development involving new water functions

Depreciation and amortization• Kurita developed technology that is highly efficient at treating
high-concentration nitrogen wastewater from methane fermentation.

Kurita’s R&D activities are performed mainly by the Research andfor 3.6% of overall Group employees. In the fiscal year ended March 31,• By improving the performance of functional materials that make up

14,774 14,863
12,864

4,534

4,397

2014

2015

while still maintaining quality, Kurita was able to achieve cost reductions throughout the entire production system as well as maintain the

10,087
6,688

4,362

5,038

the ultrapure water production system, revising the purifying method
15,857

15,7492017, Kurita’s R&D expenses totaled ¥5,038 million, equivalent to 2.4% of
net sales.

5,269

through methane fermentation of liquid waste from the food industry.
19,623

15,054R&D Expenses
Years ended March 31(Millions of yen)

The technology is for facilities that conduct biogas power generationthat will lead to new business developments.
Development Division. R&D staff number approximately 200, accounting

by combining Kurita’s unique chemical treatment technologies.

water standards required by a major semiconductor manufacturing
company.

5,709

R&D expenses for the Water Treatment Facilities segment for the
fiscal year ended March 31, 2017, amounted to ¥2,914 million.

In the Water Treatment Chemicals segment, Kurita is engaged in thedevelopment of chemicals for water treatment, environmental improvement, and production processes, which contribute to customers’ energy

42 Kurita Water Industries Ltd. Annual Report 2017

2013

2014

2015

2016

2017

2013

2016

2017

Kurita Water Industries Ltd. Annual Report 201743

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Position

liabilities due to the recording of long-term debt of overseas consoli-a) Assets

dated subsidiaries.

Investor
Information

Financial Section

Corporate Data

As of March 31, 2017, Kurita had total assets of ¥299,249 million, an
increase of ¥1,142 million compared with ¥298,107 million as of Marchc) Net Assets

31, 2016.

Net assets totaled ¥228,758 million as of March 31, 2017, a decrease of¥206 million from ¥228,964 million as of March 31, 2016.
This was primarily due to an increase of ¥3,602 million in

Breakdown of Assets
Current Assets

shareholders’ equity and a decrease of ¥3,875 million in accumulated

Current assets as of March 31, 2017, totaled ¥155,930 million, an increaseother comprehensive income. The main factors behind the increaseof ¥5,384 million compared with March 31, 2016. This rise was primarily

in shareholders’ equity were an increase of ¥8,797 million in retained

attributable to an increase of ¥7,413 million in cash reserves—cash andearnings, mainly due to net income attributable to owners of parent

time deposits and marketable securities—which outweighed a decreaseof ¥14,506 million for the fiscal year under review, which exceededof ¥2,734 million in notes and accounts receivable, trade due to thedividend payments of ¥5,693 million—the sum of year-end dividends

smooth collection of them.

for the previous fiscal year and interim dividends for the fiscal year underreview—and a ¥5,195 million rise in treasury stock (net assets fell) mainly

Investments and Long-Term Receivables, Property, Plant andthrough market purchases due to a resolution of the Board of Directors

Equipment, and Intangible Assets

dated February 28, 2017, and acquisitions accompanying the introduction of a performance-linked stock compensation system for directors.

As of March 31, 2017, investments and long-term receivables came to¥43,972 million, a decrease of ¥998 million from ¥44,970 million as of

Total Assets and Return on Assets

Accumulated other comprehensive income declined, chiefly reflecting

March 31, 2016.

Years ended March 31(Millions of yen) (%)

a ¥2,975 million decline in foreign currency translation adjustments due

Property, plant and equipment, net as of March 31, 2017, amounted
to ¥74,036 million, a decrease of ¥4,352 million compared with ¥78,388
million as of March 31, 2016.

to the stronger yen, and a decrease of ¥1,269 million in unrealized gains

Total assets
Return on assets

263,580

274,925

294,492 298,107 299,249

million as of March 31, 2017, an increase of ¥1,142 million compared¥1,106 million compared with ¥24,202 million as of March 31, 2016.
The decrease in investments and long-term receivables was mainly

4.3

due to lower unrealized gains on investment securities due to drops in

4.9

4.2

3.7

Equity76.1%, down 0.3 percentage point from 76.4% a year earlier. Net assets

Years ended March 31(Millions of yen)

compared with ¥1,961.30 as of March 31, 2016.

The decrease in property, plant and equipment was attributablechiefly to the recorded amount of depreciation of facilities for the ultra-

while we posted ¥2,609 million in amortization of intangible fixedwith ¥298,107 million as of March 31, 2016. Kurita’s equity ratio was
per share as of March 31, 2017, were ¥1,991.91, an increase of ¥30.61

3.5

the market prices of the shares held by the Group.

The increase in intangible assets chiefly reflected the fact that

capital gains for investment securities.
As a result, total liabilities and net assets amounted to ¥299,249

Intangible assets as of March 31, 2017, were ¥25,308 million, up

pure water supply being greater than the amount of capital investment.

on available-for-sale securities associated with a decline in unrealized

Note: Equity is defined as net assets less non-controlling interests.

2013

2014

2015

2016

2017

Note: Return on assets = Net income attributable to owners of parent
÷ Total assets (Average) × 100

Net cash provided by operating activities during the fiscal year ended
March 31, 2017, totaled ¥33,941 million, an increase of ¥7,359 millionof ¥20,465 million, depreciation and amortization of ¥15,857 million
including goodwill amortization, a decrease of ¥2,030 million in tradereceivables, and an increase in trade payables of ¥1,525 million werepartially offset by an increase of ¥866 million in other assets and income

86,820¥1,348 million compared with ¥69,142 million as of March 31, 2016.

77,8552015

from the previous fiscal year. Inflows from income before income taxes

Property, Plant and Equipment, Net
Years ended March 31(Millions of yen)b) Liabilities
As of March 31, 2017, liabilities totaled ¥70,490 million, an increase of

2014

Cash Flows from Operating Activities

of Fremont Industries of the United States during the fiscal year underof ¥1,983 million.

222,330 227,896 227,623

Cash Flows

assets including mainly amortization of goodwill, with the acquisition
review we posted goodwill of ¥2,096 million and customer-related assets

207,871

217,691

75,03378,38874,036

2013

2016

2017

taxes paid of ¥6,893 million.

Current Liabilities

Cash Flows from Investing Activities

Current liabilities as of March 31, 2017, amounted to ¥44,410 million, an

Net cash used in investing activities amounted to ¥1,119 million, a decline

increase of just ¥3 million from ¥44,407 million as of March 31, 2016.

of ¥32,053 million from the previous fiscal year. Net cash decreased mainly
because an increase in time deposits, net of ¥13,959 million was offset byLong-Term Liabilities

payments for purchase of property, plant and equipment totaling ¥10,156

Long-term liabilities were ¥26,080 million as of March 31, 2017,

million, including capital expenditures for the ultrapure water supply

an increase of ¥1,345 million from ¥24,735 million as of March 31,
2016. This was mainly due to a ¥1,213 million rise in other long-term

44 Kurita Water Industries Ltd. Annual Report 2017business; and payments for acquisition of business of ¥4,506 million (after
2013

2014

2015

2016

2017

deducting cash and cash equivalents included in acquired assets).
Kurita Water Industries Ltd. Annual Report 201745

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Cash Flows from Financing Activities

Cash Flows from Operating Activities

4. New Product Development

Net cash used in financing activities came to ¥10,154 million, an increase

Years ended March 31(Millions of yen)

The Group continuously endeavors to develop new technology andof ¥4,447 million from the previous fiscal year. The main cash outflows

33,941

were cash dividends paid of ¥5,694 million, payments for purchaseof treasury stock, net of ¥5,195 million and a decrease in short-termborrowings, net of ¥665 million, which were partially offset by proceeds

27,276

29,666

Investor
Information

Corporate Data

appealing new products.
The success of new technology and product development efforts
cannot be guaranteed. The Group may not be able to offer new technol-

26,582ogies and products that meet the needs of its customers or launch new

23,314from long-term loans payable of ¥2,329 million.

Financial Section

products in a timely fashion. The Group may also fail to keep pace with rapid
technological innovation and changing customer needs. If the Group wereCash and Cash Equivalents at End of Yearto fail to develop outstanding new products, this could hamper its future

As of March 31, 2017, Kurita had cash and cash equivalents totaling

growth and profitability or otherwise affect its financial results.

¥65,438 million, an increase of ¥21,846 million compared with ¥43,591
5. Intellectual Property

million as of March 31, 2016.

The Group recognizes the importance of intellectual property andBusiness Risks
The following are summaries of major foreseeable risks present incontinually seeks to register its own intellectual property while avoiding
2013

2014

2015

2016

2017

infringing the intellectual property rights held by third parties, boththe business environments in which the Kurita Group operates.

in Japan and overseas. Given the wide scope of the Group’s business,

Forward-looking statements herein are based on judgments madehowever, there is potential for the Group’s intellectual property rights toby management as of March 31, 2017.

be infringed and potential for the Group to infringe the rights held by
third parties. Such occurrences may affect the Group’s financial results.

1. Economic and Market Conditions
The Group’s Water Treatment Chemicals and Water Treatment

6. Dependence on Information Systems

Facilities businesses are affected by economic conditions in JapanThe Group’s use of information systems is increasing, as is the impor-and countries and regions outside Japan where the Group operates.

tance of information systems to the Group’s business. If a computer

Demand in the Water Treatment Chemicals business fluctuates

virus or some other factor were to obstruct the functions of the Group’s

in response to factory capacity utilization rates in industries suchinformation systems, the Group’s business activities, financial results, andas steel, petroleum refining and petrochemicals, and pulp andfinancial condition could be negatively affected.

paper—the main areas of demand for the business. Such demand
fluctuations may affect the Group’s financial results. Demand in the

7. Large-Scale Natural Disasters

Water Treatment Facilities business fluctuates in response to trends in

If an earthquake, typhoon, or other kind of natural disaster were tocapital expenditure in electronics—the main area of demand for the

directly or indirectly upset the Group’s business execution, the Group’sbusiness—and other industries. Such demand fluctuations may affectbusiness activities, financial results, and financial condition could be

the Group’s financial results.

negatively affected.

More intense competition with rivals in the Group’s businessdomains could lead to declines in prices of products and services, which
could lower the Group’s profitability.
2. Materials and Parts Procurement
The Group procures raw materials and parts from outside the Groupfor the manufacture of products and fabrication of facilities. The pricesof raw materials and parts fluctuate based on changes in market
conditions, and this may affect the Group’s financial results.
3. Overseas Business Development
The Group is striving to expand its business outside Japan. In contrast
to the Japanese market, doing business in overseas markets involves anumber of inherent risks, including the risk of changes to local laws andregulations, the risk of political and economic instability, and the risk offoreign exchange rate fluctuations. If such risks materialized, the Group’s
financial results could be affected.

46 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201747

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate DataCONSOLIDATED BALANCE SHEETS
Kurita Water Industries Ltd. and Consolidated Subsidiaries
As of March 31, 2017 and 2016

Thousands of
U.S. dollars

Millions of yen

Assets2017

2017

Current assets:¥ 72,750¥ 58,374$  649,553

68,282

71,016609,660

Allowance for doubtful accounts

(246)

(185)

(2,196)

Marketable securities (Notes 4 and 5)

603

7,566

5,383

Inventories (Note 7)

9,525

9,254

85,044

Deferred tax assets (Note 9)

1,568

1,652

14,000

Other current assets

3,447

2,866

30,776

155,930

150,546

1,392,232

Cash and time deposits (Notes 3, 4 and 6)
Notes and accounts receivable, trade (Note 4)		Total current assets

Investments and long-term receivables:
Investment securities (Notes 4 and 5)

32,15734,324

287,116

Investments in unconsolidated subsidiaries and affiliates (Note 4)

2,687

2,739

23,991

Deferred tax assets (Note 9)

4,275

4,232

38,169Other investments

5,042

3,879

45,017

Allowance for doubtful accounts

(189)

(204)

(1,687)43,972

44,970392,607

Land (Note 12)13,881

13,941

123,937

Buildings and structures

62,093

61,278554,401

Machinery and equipment

121,311

109,735

1,083,133

Construction in progress

2,852

8,586

25,464

Other facilities

13,755

13,105

122,812

Leased assets

8,352

8,315

74,571

222,247

214,964

1,984,348(148,210)(136,575)(1,323,303)

74,03678,388661,035

Goodwill

15,04915,114

134,366

Other intangible assets

10,2599,088

91,59825,30824,202225,964¥299,249¥298,107$2,671,866

		Total investments and long-term receivables

Property, plant and equipment, at cost (Note 15):

		TotalAccumulated depreciation		Property, plant and equipment, net

Intangible assets:

		

Total intangible assets

		Total assets

Millions of yen(Note 1)

2016

Thousands of
U.S. dollars(Note 1)

Liabilities and Net Assets

2017

2016

2017

Current liabilities:
Short-term borrowings and current portion of long-term debt (Note 8)
Notes and accounts payable, trade (Note 4)
Accounts payable, other
Income taxes payable
Advances received
Accrued employees’ bonuses
Provision for product warranties
Provision for loss on construction contracts
Other current liabilities
		 Total current liabilities¥  1,646
23,426
8,019
2,875
1,934
2,361
801
81
3,263
44,410¥  2,300
22,780
6,897
3,705
1,496
2,365
768
284
3,809
44,407$   14,696
209,160
71,59825,66917,26721,0807,151
723
29,133
396,517

4,339
16,054
25
1,119
4,540
26,08070,4904,763
15,467
57
1,119
3,327
24,735
69,142

38,741
143,339
223
9,991
40,535
232,857
629,375

13,45010,993
205,586

13,45010,993
196,788

120,089
98,151
1,835,589(13,891)
216,138(8,695)
212,536(124,026)
1,929,803

14,792670(380)(3,593)(3)
11,484
1,135
228,758¥299,249

16,061
398
(380)
(618)
(101)
15,3601,067
228,964¥298,107

132,071
5,982(3,392)(32,080)(26)
102,535
10,133
2,042,482$2,671,866

Long-term liabilities:
Long-term debt (Note 8)
Net defined benefit liability (Note 10)
Accrued retirement benefits for directors and corporate auditors
Deferred tax liabilities on revaluation of land (Note 12)
Other long-term liabilities (Note 8)
		 Total long-term liabilities
		Total liabilities
Net assets:
Shareholders’ equity (Note 11):
Common stock, 2017 and 2016
		 Authorized: 531,000,000 shares
		 Issued: 119,164,594 shares
Capital surplus
Retained earnings
Treasury stock, at cost		2017—4,890,513 shares		2016—2,967,674 shares
		 Total shareholders’ equity
Accumulated other comprehensive income:Unrealized gains on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land (Note 12)
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Note 10)
		 Total accumulated other comprehensive income
Non-controlling interests
		 Total net assets
		 Total liabilities and net assets

The accompanying notes are an integral part of these statements.

48 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201749

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate DataCONSOLIDATED STATEMENTS OF INCOME ANDCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

CONSOLIDATED STATEMENTS OF INCOME
Thousands of
U.S. dollars

Millions of yen

Net sales (Note 18)
Cost of sales (Note 13)
Gross profit
Selling, general and administrative expenses (Note 14)
Operating income (Note 18)
Other income (expenses):
Interest and dividend income
Foreign exchange losses
Interest expense
Equity in earnings of unconsolidated subsidiaries and affiliates
Gain on sales of properties (Note 15)
Gain on sales of investment securities
Acquisition-related costs
Loss on liquidation of business
Other, net
		 Other income, net
Income before income taxes
Income taxes (Note 9):
Current
Deferred		 Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent(Note 1)

2017
¥214,187
145,455
68,73249,28019,452

2016¥214,372
143,964
70,40750,574
19,8332017$1,912,383
1,298,705
613,678440,000
173,678

671
(39)
(187)
175
—
391
(259)
—
260
1,013
20,465

710
(102)
(276)
145
148
—
(221)
(176)
348
578
20,411

5,991(348)(1,669)
1,562
—
3,491
(2,312)
—
2,321
9,044
182,723

5,996
(193)
5,803
14,661155¥ 14,506

7,027
626
7,654
12,757180¥ 12,577

53,535(1,723)51,812130,901
1,383$   129,517

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions of yen

Net income
Other comprehensive income (Note 16):
Unrealized gains or losses on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted for using equity method
		 Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests(Note 1)

2017
¥14,661

2016¥12,7572017$130,901(1,263)271—(2,897)97(83)(3,876)¥10,784

1,293
332
62
(2,113)
(109)
(86)
(621)
¥12,136(11,276)
2,419—(25,866)
866(741)(34,607)$ 96,285¥10,649
134¥11,997138$ 95,080
1,196

Balance as of March 31, 2015 ¥13,450 ¥10,980 ¥189,693 ¥   (7,705) ¥206,419
Changes during the year
(5,469)(5,469)Cash dividends paid
Net income attributable to12,577
12,577owners of parent
Acquisition of treasury stock
(990)
(990)
Changes in equity interest
1212
in consolidated subsidiaries
Other
(13)
(13)
Net changes of net assets otherthan shareholders’ equity
Total changes during the year
—
12
7,094
(990)
6,117
Balance as of March 31, 2016 ¥13,450 ¥10,993 ¥196,788 ¥   (8,695) ¥212,536
Changes during the year
(5,693)(5,693)
Cash dividends paid
Net income attributable
14,506
14,506
to owners of parent
Acquisition of treasury stock(5,195) (5,195)
Changes in equity interest in—consolidated subsidiaries
Other
(15)
(15)
Net changes of net assets other—than shareholders’ equity
Total changes during the year
—
—
8,797
(5,195)
3,602
Balance as of March 31, 2017 ¥13,450 ¥10,993 ¥205,586 ¥(13,891) ¥216,138¥14,768¥ 66¥(442) ¥    1,510¥    8 ¥ 15,911

Total net
assets¥1,147 ¥223,478(5,469)12,577
(990)
12
(13)

1,293

332

1,293
¥16,061

332
¥398

62

(2,129)62(2,129)¥(380) ¥    (618)

(109)

(551)

(109)
(551)
¥(101) ¥ 15,360

(79)

(630)

(79)
5,486
¥1,067 ¥228,964(5,693)
14,506(5,195)—(15)(1,269)271(1,269)¥14,792

271
¥670

—

(2,975)—(2,975)¥(380) ¥(3,593)

97(3,875)97(3,875)¥       (3) ¥11,484

67(3,807)67(205)¥1,135 ¥228,758

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Unrealized Deferred
Foreign Remeasure- Total accumugains on
gains or Revaluation currency ments of lated other
Total
NonCommon Capital Retained Treasury shareholders’ available-for- losses on reserve for translation defined comprehensive controlling
sale securities hedges land (Note 12) adjustments benefit plans income
equityinterests
stock surplus earnings stock
Shareholders’ equity (Note 11)

Balance as of March 31, 2016 $120,089
Changes during the year
Cash dividends paid
Net income attributableto owners of parent
Acquisition of treasury stock
Changes in equity interest inconsolidated subsidiaries
Other
Net changes of net assets otherthan shareholders’ equity
Total changes during the year—
Balance as of March 31, 2017 $120,089$98,151 $1,757,035 $    (77,633) $1,897,642$143,401$3,553$(3,392)$    (5,517)$(901) $137,142

Total net
assets$ 9,526 $2,044,321(50,830)(50,830)(50,830)

129,517

129,517

129,517(46,383)(46,383)——(46,383)
(133)

(133)

(133)

—

(11,330)

2,419—(26,562)866(34,598)—
78,544(46,383)
32,160$98,151 $1,835,589 $(124,026) $1,929,803(11,330)$132,071

2,419$5,982—$(3,392)(26,562)$(32,080)

866(34,598)$  (26) $102,535

598(33,991)598(1,830)$10,133 $2,042,482

The accompanying notes are an integral part of these statements.

U.S. dollars

Yen

Per share of common stock (Note 20):
Net income
Cash dividends applicable to the year

Thousands of
U.S. dollars

Millions of yen
Accumulated other comprehensive income
Unrealized Deferred
Foreign Remeasure- Total accumugains on
gains or Revaluation currency ments of lated other
Total
NonCommon Capital Retained Treasury shareholders’ available-for- losses on reserve for translation defined comprehensive controlling
sale securities hedges land (Note 12) adjustments benefit plans income
equityinterests
stock surplus earnings stock
Shareholders’ equity (Note 11)(Note 1)

2017

2016

¥125.2350.00¥108.24
48.00

2017
$1.12
0.45

The accompanying notes are an integral part of these statements.

50 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 2017

51

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

CONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Kurita Water Industries Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2017 and 2016

Kurita Water Industries Ltd. and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen(Note 1)

2017

2016

2017

¥20,465
15,857
646
(143)
(175)
(671)
187
26
(391)
—

¥20,41115,749
1,587
(842)
(145)
(710)
276
(74)
(23)
20

$182,723
141,580
5,767(1,276)(1,562)(5,991)
1,669
232(3,491)—

Interest and dividends received
Interest paid
Income taxes paid
Others, net
		 Net cash provided by operating activities

2,030
(144)
(866)
1,525
1,890
60
40,297835(325)(6,893)27
33,941(4,473)
(249)
282
2,293
(274)
360
34,189710(276)(8,264)223
26,582

18,125(1,285)(7,732)
13,616
16,875535
359,794
7,455(2,901)(61,544)241
303,044

II. Cash flows from investing activities
Increase (decrease) in time deposits, net
Payments for purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchase of intangible assets
Payments for purchase of marketable securities and investment securities
Proceeds from sales and redemption of marketable securities and investment securities
Payments for acquisition of business (Note 3)
Others, net
		 Net cash used in investing activities

13,959(10,156)
30
(791)
(240)
1,380
(4,506)(795)(1,119)(10,138)(17,693)
156(772)(9,585)
9,027(3,857)(309)(33,172)

124,633(90,678)267(7,062)(2,142)
12,321(40,232)(7,098)(9,991)

(665)
2,329
(223)
(5,694)(67)(637)(5,195)

339
1,256
(15)
(5,474)
(77)
(626)
(990)

(5,937)
20,794(1,991)(50,839)(598)(5,687)(46,383)

I. Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Increase in net defined benefit liability
Decrease in other allowances
Equity in earnings of unconsolidated subsidiaries and affiliates
Interest and dividend income
Interest expense
Loss (gain) on sales and disposal of properties
Gain on sales of investment securities
Loss on valuation of investment securities
Changes in assets and liabilities:
		 Decrease (increase) in trade receivables
		 Increase in inventories
		 Decrease (increase) in other assets
		 Increase in trade payables
		 Increase (decrease) in other liabilities
Others, net

III. Cash flows from financing activities
Increase (decrease) in short-term borrowings, net
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Cash dividends paid to non-controlling shareholders of consolidated subsidiaries
Payments for lease obligations
Payments for purchase of treasury stock, net
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
		 Net cash used in financing activities

—

(119)

—

(10,154)(5,707)(90,660)

IV. Effect of exchange rate changes on cash and cash equivalents
V. Net increase (decrease) in cash and cash equivalents
VI. Cash and cash equivalents at beginning of year
VII. Increase in cash and cash equivalents from newly consolidated subsidiary
VIII. Cash and cash equivalents at end of year (Note 3)(821)
21,846
43,591—¥65,438

154(12,143)
55,67559¥43,591(7,330)
195,053389,205—$584,267

The accompanying notes are an integral part of these statements.

52 Kurita Water Industries Ltd. Annual Report 2017

Corporate Data

1. Basis of presentation of consolidated financial statements �����������������������������������������������������������������������
Kurita Water Industries Ltd. (the “Company”) and its domestic subsidiaries maintain their booksof account and prepare their financial statements in accordance with accounting principles
and practices generally accepted in Japan, while its foreign subsidiaries maintain their booksof account and prepare their financial statements in conformity with those of the countriesof their domicile. Certain accounting principles and practices generally accepted in Japan are
different from International Financial Reporting Standards and standards in other countries incertain respects as to application and disclosure requirements. Accordingly, the accompanying
consolidated financial statements are intended for use by those who are informed about
Japanese accounting principles and practices.
The Company’s consolidated financial statements, prepared in accordance with accounting
principles and practices generally accepted in Japan, were filed with the Japanese Ministry of
Finance and the Tokyo Stock Exchange as required by the Financial Instruments and Exchange
Law of Japan.
Certain reclassifications of accounts and modifications have been made in the accompanying
consolidated financial statements to facilitate understanding by readers outside Japan. In
addition, certain reclassifications have been made in the 2016 financial statements to conform tothe classification used in 2017.
All figures in the consolidated financial statements and notes are stated in millions ofJapanese yen by discarding fractional amounts of less than ¥1 million. As a result, the totals shownin the consolidated financial statements and notes in yen do not necessarily agree with the sumof the individual amounts.
The translation of yen amounts as of or for the year ended March 31, 2017 into U.S. dollars is
included solely for the convenience of readers and has been made, as a matter of arithmeticalcomputation only, at the rate of ¥112 to US$1, the prevailing rate on the Tokyo Foreign Exchange
Market on March 31, 2017. The translation should not be construed as a representation that yen
amounts have been, could have been or could in the future be converted into U.S. dollars at theabove or any other rate.

2. Significant accounting policies �������������������������������������������������������������������������������������������������������������������������
(1) Consolidation
Scope of consolidation
The consolidated financial statements included the accounts of the Company and its significant
subsidiaries (together, the “Group”). For the years ended March 31, 2017 and 2016, 49 and 45
subsidiaries were consolidated, respectively.
Under the control concept, those companies in which the Company, directly or indirectly, isable to exercise control over operations are fully consolidated.
All significant intercompany transactions and balances have been eliminated in consolidation.
Names of principal consolidated subsidiaries:
		 Kurita Europe GmbH		 Kurita Water Industries (Jiangyin) Co., Ltd.
		 Hansu Technical Service Ltd.
		 Kuritaz Co., Ltd.
		 Kurita Engineering Co., Ltd.
		 Kuritec Service Co. Ltd.
		 Kurita Chemical Manufacturing Ltd.
From the year ended March 31, 2017, Kurita Polska SP. z. o. o., Kuritaz Hokuriku Co., Ltd., Kurita
America Holdings Inc. and Kurita-GK Vietnam Co., Ltd. were newly included in the scope of
consolidation due to incorporation, and Fremont Industries, LLC was also included due to acquisition.

Kurita Water Industries Ltd. Annual Report 2017

53

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Kurita Europe GmbH was excluded from the scope of consolidation due to absorption by
Kurita Europe APW GmbH, a consolidated subsidiary. Kurita Europe APW GmbH changed its nameto Kurita Europe GmbH.
Fiscal years of consolidated subsidiaries
The fiscal years of all of the foreign consolidated subsidiaries (Kurita (Singapore) Pte. Ltd. andothers) end on December 31. For these consolidated subsidiaries, the financial statements as ofDecember 31 were used for consolidation purposes. However, material transactions that haveoccurred during the three-month period from January 1 to March 31 of the following year havebeen adjusted as necessary for consolidation.
Amortization of goodwill
Goodwill is amortized using the straight-line method over a reasonable number of years, notexceeding 20 years, on a case-by-case basis, except for minor amounts that are charged toincome in the period of acquisition.
(2) Equity method
Scope of equity method application
Under the influence concept, significant investments in unconsolidated subsidiaries and affiliates
over which the Company has the ability to exercise significant influence with regard to theoperating and financial policies of the investees are accounted for by the equity method. For
the years ended March 31, 2017 and 2016, 5 and 5 companies were accounted for by the equity
method, respectively.
Name of principal company applying the equity method:
		 Matsuyama Safety Water
Investments in the remaining unconsolidated subsidiaries and affiliates were stated at cost. If
the equity method of accounting had been applied to the investments in these companies, theeffect on the accompanying consolidated financial statements would not be material.
Fiscal years of companies accounted for by the equity method
The companies accounted for by the equity method that have different closing dates are includedin the consolidated financial statements based on their respective fiscal year-end.
(3) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows are composed of cashon hand, readily available bank deposits and short-term investments with an original maturity of
three months or less and subject to a minor risk of fluctuations in value.
(4) Available-for-sale securities
Available-for-sale securities that have available fair values are stated at fair value at the balance
sheet date, with resulting unrealized holding gains and losses reported as a separate componentof net assets. Available-for-sale securities with no available fair values are stated at cost computedby the moving-average method. The cost of sold securities is computed by the moving-averagemethod.
(5) Inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost
determined by the moving-average method, except for work in process determined by the
specific-identification method, or net selling value.

54 Kurita Water Industries Ltd. Annual Report 2017

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

(6) Derivative transactions
Derivative transactions are measured at fair value in principle.
(7) Depreciation of property, plant and equipment
Property, plant and equipment is depreciated by the declining-balance method for the Company
and its domestic consolidated subsidiaries, except for buildings (other than building equipment)
acquired on and after April 1, 1998, building equipment and structures acquired on and after April
1, 2016 and ultrapure water supply equipment located at clients’ sites, for which the straight-line
method is applied. The straight-line method is applied by foreign consolidated subsidiaries.
The estimated useful lives of these assets are as follows:		 Buildings and structures: 2–65 years
		 Machinery and equipment: 4–10 years(Change in accounting policies)
Effective from the year ended March 31, 2017, due to amendments to the Japanese Corporation
Tax Act, the Company and its domestic subsidiaries adopted “Practical Solution on a Change inDepreciation Method due to Tax Reform 2016” (Accounting Standards Board of Japan (“ASBJ”)
Practice Issue Task Force No. 32, June 17, 2016) and changed the depreciation method for building
equipment and structures acquired on and after April 1, 2016 from the declining-balance method
to the straight-line method.
The effect of this change on profit and loss for the year ended March 31, 2017 was immaterial.
(8) Intangible assets
Intangible assets are amortized by the straight-line method.
(9) Impairment of long-lived assets
The Company reviews its long-lived assets for impairment in accordance with the accounting
standards for impairment of fixed assets whenever events or changes in circumstances indicate thecarrying amount of an asset or asset group may not be recoverable. An impairment loss would berecognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted
future cash flows expected to result from the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the discounted cash flows fromthe continued use and eventual disposition of the asset or the net selling price at disposition.
(10) Accrued employees’ bonuses
The Company and its domestic consolidated subsidiaries accrue the amount of employees’
bonuses based on the anticipated bonus payments to employees.
(11) Hedges
Gain or loss on derivatives designated as hedging instruments is deferred until the gain or loss on
the underlying hedged items is recognized.
The Company uses forward foreign exchange contracts only in order to manage certain risks
arising from fluctuations in foreign exchange rates and do not use derivative transactions for
speculative purposes.
The Company evaluates the effectiveness of its hedging activities by comparing cumulativechanges in cash flows on the hedging instruments with those of the related hedged items.
Hedging instruments:
Hedged items:

Forward foreign exchange contracts
Forecasted transactions denominated in foreign currencies
Kurita Water Industries Ltd. Annual Report 2017

55

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17(12) Accounting method for employees’ retirement benefits
The straight-line method is used as a method of attributing expected benefits to be paid to thecurrent period in calculating retirement benefit obligations.
Actuarial differences are subject to amortization over a period of 1–2 years from the year
when they are incurred.
(13) Leases
Finance leases which do not transfer ownership are capitalized to recognize leased assets andlease obligations in the consolidated balance sheets. Leased assets are depreciated using thestraight-line method over the respective lease periods without residual value.
(14) Consumption taxes
Consumption taxes are accounted for separately from transaction prices and are not reflected in
the consolidated statements of income.
(15) Construction contracts
The percentage-of-completion method has been applied to the contracts if the outcome of theconstruction activity is deemed certain for the percentage of performance of the contractor’s
obligation at the end of the balance sheet date, otherwise the completed-contract method isapplied. The percentage of completion is determined using the cost incurred to the estimatedtotal cost.
(16) Foreign currency translation
Monetary receivables and payables denominated in foreign currency are translated using the spot
exchange rate prevailing at the balance sheet date, and the differences are charged to income as
foreign exchange gains or losses.
Foreign subsidiaries’ assets and liabilities are translated using the spot exchange rate at theirbalance sheet dates, and their income and expenses are translated using the average exchange
rate during the year. The translation differences are recorded in “Foreign currency translation
adjustments” and “Non-controlling interests” in net assets.
(17) Appropriation of retained earnings
The accompanying consolidated statements of changes in net assets reflect the appropriations ofretained earnings of the Company in the fiscal year in which the appropriations are approved at
the general shareholders’ meeting.
(18) Earnings per share
Earnings per share are computed by dividing net income attributable to common shareholders ofparent by the weighted-average number of common shares outstanding.

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Investor
Information

Financial Section

Corporate Data

Performance-linked Stock Compensation Plan for Directors
The shareholders’ meeting of the Company held on June 29, 2016 resolved to introduce a
performance-linked stock compensation plan for directors (excluding outside directors; the same
shall apply hereinafter) to increase motivation to work toward the Group’s continued medium- tolong-term growth as well as to contribute to increasing the value of the Company. The plan was
implemented as proposed.
(1) Outline of the plan
The plan is a performance-linked compensation plan whereby the Company will grant points todirectors according to their position and performance and, at the time of their retirement, will
distribute to them such number of shares of the Company’s stock as would be equivalent to the
cumulative number of points granted to them.
In introducing the plan, the Company adopted a structure of a Stock Distribution Trust for
Officers (the “Trust”) that is created with money the Company contributes.
(2) The Company’s stock remaining in the Trust
The Company’s stock remaining in the Trust is presented as treasury stock in net assets on the
consolidated balance sheets. The carrying value and the number of shares of the Company’s stock
held by the Trust are ¥779 million ($6,955 thousand) and 339 thousand shares at March 31, 2017.
(20) Reclassifications
Certain reclassifications have been made in the 2016 consolidated financial statements toconform to the 2017 presentation. These reclassifications had no impact on previously reported
results of operations.

3. Reconciliation between cash and cash equivalents��������������������������������������������������������������������������������������
(1)	The reconciliation between the fiscal year-end cash and cash equivalents (See Note 2 (3)) in
the consolidated statements of cash flows and cash and time deposits in the consolidatedbalance sheet items is as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Time deposits with original maturity of morethan three months
Certificates of deposits included in marketable securities,
excluding deposits maturing over three months
Commercial paper included in marketable securities,
excluding paper maturing over three months
Cash and cash equivalents(Note 1)

2017

2016

2017

¥72,750¥58,374$649,553(7,915)(21,783)(70,669)

603

7,000

5,383

—

—

—

¥65,438¥43,591$584,267(19) Additional information
Implementation Guidance on Recoverability of Deferred Tax Assets
Effective from the year ended March 31, 2017, the Company and its domestic subsidiaries
adopted “Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No.
26, March 28, 2016).

56 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 2017

57

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17(2)	The details of assets and liabilities of a newly consolidated subsidiary due to acquisitionof shares
For the year ended March 31, 2017
The details of assets and liabilities in relation to acquisition of Fremont Industries, LLC, a
manufacturer and distributor of water treatment chemicals, and reconciliation between
acquisition costs of Fremont Industries, LLC and net payment for the acquisition are as follows:
Millions of yen

Thousands of
U.S. dollars(Note 1)

Current assets¥  880$ 7,857

Non-current assets

2,133

19,044

Goodwill

2,096

18,714Current liabilities(350)(3,125)——

Total acquisition costs
Accounts payable, other in relation to the acquisition ofbusiness
Cash and cash equivalents

4,760

42,500(136)(1,214)(171)(1,526)

Net payment for the acquisition of business¥4,451$39,741

Non-current liabilities

4. Financial instruments and related disclosures ����������������������������������������������������������������������������������������������
(1) Policy for financial instruments
The Group invests its funds in low-risk financial assets (deposits, etc.) in principle. With respect tocustomers’ credit risk of notes and accounts receivable, trade, the Company is making efforts toprevent them from damages and to improve the soundness of the transactions by monitoring of
the level of transaction within the predetermined transaction limit and regular collection of credit
information based on the Credit Control Policy and Manual. Investment securities are primarily
comprised of stocks and the fair value of listed stocks are reviewed on a quarterly basis. With
respect to derivatives, forward foreign currency contracts are used only for actual demand, andnot for speculative purposes.
(2) Nature of financial instruments and their related risks
Trade receivables such as notes and accounts are exposed to customer credit risk. Certain tradereceivables denominated in foreign currencies arising from overseas operations are exposed tothe market risk of fluctuation in foreign currency exchange rates.
Marketable securities and investment securities are exposed to the risk of market pricefluctuations and business risk of the investees.
Payment terms of trade payables such as notes and accounts are mostly less than one year.
Lease obligations under finance lease transactions are mainly related to the ultrapure watersupply business and its payment term is 12 years (13 in 2016) later at maximum.
(3) Risk management system for financial instruments
Credit risk management (customers’ default risk):
The Company manages its credit risk involved in trade receivables based on the Credit Control
Policy and Manual. The Control Division of each business unit and the Legal Departmentcollect credit information on a regular basis and control the payment terms and outstandingbalances by customer, and the Company is making efforts to prevent them from damages andto improve the soundness of the transactions by monitoring the default risk of customers dueto the deterioration of their financial position at an early stage. The consolidated subsidiaries

58 Kurita Water Industries Ltd. Annual Report 2017

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

are also making efforts to reduce credit risk by controlling payment terms and outstandingbalances of customers. Counterparties of forward foreign currency contracts to be used to avoid
foreign exchange risk when necessary are limited to high-credit-rating financial institutions and,accordingly, we believe there is very little credit risk.
Market risk management (foreign exchange risk and interest rate risk):
The Company and certain consolidated subsidiaries utilize forward foreign currency contracts
to hedge the market risk of fluctuations in foreign exchange rates involved in trade receivables
and payables by currency and by month. Forward foreign currency contracts are executed andcontrolled by the Finance & Accounting Department after the individual contract is approved inaccordance with the predetermined rule.
The fair value of marketable securities and investment securities and the financial positionof the issuers are regularly reviewed. The Finance & Accounting Department of the Company
executes and monitors each of the forward foreign currency contracts individually, followed byappropriate authorization procedures prescribed in the internal rules.
Liquidity risk management (risk that the Company may not be able to settle on the payment
due date):
The Finance & Accounting Department of the Company and its consolidated subsidiaries prepare
and update the fund management plan every month based on reports from each business unit
and hold a sufficient amount of liquidity in hand and manage the liquidity risk.
Carrying amounts, fair values and unrealized gain (loss) of financial instruments at March
31, 2017 and 2016 were as follows (financial instruments whose fair values cannot be reliably
determined are not included in the following tables):Millions of yen
At March 31, 2017

Carrying
amountFair value

Cash and time deposits¥ 72,750¥ 72,750¥—

68,282

68,282—32,44832,448—¥173,481¥173,481¥—

Notes and accounts receivable, tradeMarketable securities and investment securities
Available-for-sale securities
Total assets

Difference

Notes and accounts payable, trade¥ 23,426¥ 23,426¥—

Total liabilities¥ 23,426¥ 23,426¥—

Derivatives¥  1,042¥  1,042¥—

At March 31, 2017

Thousands of U.S. dollars (Note 1)
Carrying
amountFair value
Difference

Cash and time deposits
Notes and accounts receivable, tradeMarketable securities and investment securities
Available-for-sale securities
Total assets$  649,553$  649,553$—

609,660

609,660—

289,714289,714—$1,548,937$1,548,937$—

Notes and accounts payable, trade$  209,160$  209,160$—

Total liabilities
Derivatives$  209,160$    9,303$  209,160$    9,303$—$—

Kurita Water Industries Ltd. Annual Report 2017

59

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupA Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Management
Indicators

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Carrying
amountFair value

Cash and time deposits¥ 58,374¥ 58,374

71,016At March 31, 2017

Due in one
year or less¥—

Deposits$  649,276

$—

$—

$—

71,016—

Notes and accounts receivable, tradeMarketable securities and investment securities
Available-for-sale securities with maturities(Certificates of deposits)
Marketable securities and investment securities
Available-for-sale securities with maturities(Money trusts)
Total

609,660

—

—

—

—

—

—

—

5,383

—

—

—

$1,264,330

$—

$—

$—

Difference

Notes and accounts receivable, tradeMarketable securities and investment securities
Available-for-sale securities
Total assets

41,80041,800—¥171,190¥171,190¥—

Notes and accounts payable, trade¥ 22,780¥ 22,780¥—

Total liabilities¥ 22,780¥ 22,780¥—

Derivatives¥    757¥    757¥—

Notes:
a. Computation method of fair values
Cash and time deposits and notes and accounts receivable, trade:
Fair values approximate carrying amounts because of their short maturities.
Marketable securities and investment securities:
	Fair values approximate carrying amounts because of their short maturities since marketable securities
consist of certificates of deposits and money trusts. Fair values of investment securities are determinedbased on the quoted market price of the stock exchange.
Notes and accounts payable, trade:
Fair values approximate carrying amounts because of short maturities.
Derivatives:
Details and information are discussed in Note 6.
b. Financial instruments whose fair values cannot be reliably determined are as follows:
Thousands of
U.S. dollars
Millions of yen(Note 1)

Unlisted equity securities (Unlisted shares)
Investments in capital
Shares of unconsolidated subsidiaries and affiliates

2017

2016

2017

¥  321¥   90$ 2,785

585

410

5,223

2,687

2,739

23,991	These securities are not included in “Marketable securities and investment securities” above since their fairvalues cannot be reliably determined.
c. Maturities of monetary receivables and securities after the balance sheet dateMillions of yen
Due after one Due after fiveDue in one
year through years through Due after ten
At March 31, 2017
year or lessfive years
ten years
years

Deposits
Notes and accounts receivable, tradeMarketable securities and investment securities
Available-for-sale securities with maturities(Certificates of deposits)
Marketable securities and investment securities
Available-for-sale securities with maturities(Money trusts)
Total

Corporate Data

Thousands of U.S. dollars (Note 1)
Due after one Due after five
year through years through Due after ten
five years
ten years
years

Millions of yen
At March 31, 2016

Investor
Information

Financial Section¥ 72,719

¥—

¥—

¥—

68,282

—

—

—

—

—

—

—

603

—

—

—

¥141,605

¥—

¥—

¥—

5. Marketable securities and investment securities ������������������������������������������������������������������������������������������
(1) Available-for-sale securities with fair value at March 31, 2017 and 2016 are summarized as follows:
Millions of yen
At March 31, 2017

Carrying
amountAcquisition cost

Difference

Carrying amount exceeding acquisition cost:
Stocks¥31,844¥11,574¥20,270

Bonds

—

—

—

Other
			

Subtotal———

31,844

11,574

20,270Carrying amount not exceeding acquisition cost:
Stocks

—

—

—

Bonds

—

—

—

Other
			

Subtotal

Total
At March 31, 2017

—

—

—

—

—

—

¥31,844¥11,574¥20,270

Thousands of U.S. dollars (Note 1)

Carrying amount exceeding acquisition cost:
Stocks$284,321$103,339$180,982

Bonds

—

—

—

Other

—

—

—

284,321103,339

180,982

—

—

—

			

Subtotal

Carrying amount not exceeding acquisition cost:
Stocks
Bonds

—

—

—

Other

—

—

—

			
Total

Subtotal———$284,321$103,339$180,982

Note: The above table does not include unlisted shares (value on consolidated balance sheets: ¥312 million(US$2,785 thousand)), investments in unaffiliated companies (value on consolidated balance sheets: ¥585
million (US$5,223 thousand)) and money trusts (value on consolidated balance sheets: ¥603 million (US$5,383
thousand)).

60 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 2017

61

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

Millions of yen
Carrying
amount

At March 31, 2016

Acquisition cost

Difference

Carrying amount exceeding acquisition cost:
Stocks¥34,138¥11,898¥22,240

Bonds

—

—

—

Other

—

—

—

34,138

11,89822,240			

Subtotal

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

At March 31, 2017

Stocks

95

140

(44)

—

—

—

Other

—

—

—

95

140

(44)

¥34,233¥12,038¥22,195

Subtotal

Total

Note: The above table does not include negotiable deposits that have not been assigned a market value (value
on consolidated balance sheets: ¥7,000 million), unlisted shares (value on consolidated balance sheets: ¥90
million), investments in unaffiliated companies (value on consolidated balance sheets: ¥410 million) and money
trusts (value on consolidated balance sheets: ¥566 million).

¥27$7,705

Total gains on sales

391

23

3,491

Total losses on sales

—

—

—

6. Derivatives ������������������������������������������������������������������������������������������������������������������������������������������������������������
Derivatives for which hedge accounting was not applied at March 31, 2017 and 2016 are as follows:
Currency related
Hedging instrument

Currency swaps:
Receive Yen, Pay Korean Won

At March 31, 2017

Hedging instrument

Currency swaps:
Receive Yen, Pay Korean Won

At March 31, 2016

Hedging instrument

Currency swaps:
Receive Yen, Pay Korean Won¥2,913Contract
amount$26,008

Millions of yen
Due after one
year
Fair value¥2,099¥111$18,741$991

Hedged item

Forecasted
transactions
Receive Yen, Pay Euro
denominated inforeign currencies
Forecasted
transactions
Receive Yen, Pay Korean Won
denominated inforeign currencies
Total

At March 31, 2016

Millions of yen
Due after one
year¥11,011¥ 9,635¥1,111

2,799

2,574

(180)

¥13,810¥12,209¥ 931

Thousands of U.S. dollars (Note 1)
Contract
Due after one
amountyear
Fair value

Hedging instrument

Hedged item

$ 98,312$ 86,026$9,91924,991

22,982(1,607)$123,303$109,008$8,312Contract
amountMillions of yen
Due after one
year

Receive Yen, Pay Euro

¥111

Total

Forecasted
transactions
denominated inforeign currencies

Contract
amount¥11,011¥537¥12,388¥11,011¥537

Note: Fair value is based on the prices provided by the counterparty financial institutions.

7. Inventories ������������������������������������������������������������������������������������������������������������������������������������������������������������
Inventories at March 31, 2017 and 2016 consist of the following:Thousands of
U.S. dollars$991¥3,566¥2,913¥220

Note: Fair value is based on the prices provided by the counterparty financial institutions.

Unrealized
gains (losses)¥220

Fair value¥12,388

Millions of yen
Millions of yen
Due after one
year
Fair value

Fair value

Currency swap contracts:

Unrealized
gains (losses)

Thousands of U.S. dollars (Note 1)
Due after one
Unrealized
year
Fair value
gains (losses)

Contract
amountCurrency swap contracts:

2017

¥863

Hedging instrument

At March 31, 2017

(Note 1)

2016

Sales amountAt March 31, 2017

Hedged item

Forecasted
transactions
denominated inforeign currencies
Forecasted
transactions
Receive Yen, Pay Korean Won
denominated inforeign currencies
Total

Thousands of
U.S. dollars

Millions of yen

2017

Corporate Data

Currency swap contracts:(2) Available-for-sale securities sold during the years ended March 31, 2017 and 2016 aresummarized as follows:

Contract
amountHedging instrument

Receive Yen, Pay Euro

Bonds

Investor
Information

Financial Section

Derivatives for which hedge accounting was applied at March 31, 2017 and 2016 are as
follows:
Currency related

Carrying amount not exceeding acquisition cost:			Initiatives that
Support Value
Creation(Note 1)

2017

2016

2017

Finished products¥3,114¥3,130$27,803

Raw materials

2,229

2,433

19,901Work in process
Total

4,181

3,690

37,330¥9,525¥9,254$85,044

Inventories and provision for loss on construction contracts related to construction contracts
that are likely to incur losses are presented as is and are not offset. The amount of inventories(work in process) corresponding to the provision for loss on construction contracts is immaterial.

62 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 2017

63

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

8. Short-term borrowings and long-term debt ��������������������������������������������������������������������������������������������������
(1) Short-term borrowings and current portion of long-term debt
The short-term borrowings and current portion of long-term debt at March 31, 2017 and 2016
consist of the following:Thousands of
U.S. dollars

Millions of yen(Note 1)

2017

2016

2017

¥  650¥1,617$ 5,803

Current portion of long-term borrowings

403

61

3,598

Current portion of lease obligations

592

621

5,285

¥1,646¥2,300$14,696

Short-term borrowings

Total

The weighted-average annual interest rate of short-term borrowings for the years ended
March 31, 2017 and 2016 were 3.92% and 4.51%, respectively.
(2) Long-term debt
Long-term debt at March 31, 2017 and 2016 is summarized as follows:
Thousands of
U.S. dollars

Millions of yen(Note 1)

2017

2016

2017

¥3,279¥1,081$29,276Less current portion of long-term borrowings

(403)

(61)

(3,598)Long-term borrowings (Excluding current portion)¥2,876¥1,019$25,678

Lease obligations¥4,931¥5,384$44,026

Long-term borrowings

Less current portion of lease obligations
Lease obligations (Excluding current portion)

(592)

(621)

(5,285)¥4,339¥4,763$38,741

The weighted-average annual interest rate of long-term borrowings for the years ended
March 31, 2017 and 2016 were 3.24% and 0.98%, respectively.
Annual maturities of long-term borrowings at March 31, 2017 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

¥403

$3,598

2019

300

2,678

2020

462

4,125

2021

462

4,125

2022

428

3,821

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(3) Other long-term liabilities
Other than the short-term borrowings, long-term borrowings and lease obligations describedabove, ¥701 million (US$6,258 thousand) and ¥682 million of interest-bearing long-term deposits
received were included in other long-term liabilities as of March 31, 2017 and 2016, respectively.
The weighted-average annual interest rates for such deposits received for the years ended
March 31, 2017 and 2016 were 0.36%.

9. Income taxes ��������������������������������������������������������������������������������������������������������������������������������������������������������
Significant components of the deferred tax assets and liabilities as of March 31, 2017 and 2016 are
as follows:
Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:
Excess depreciation of property, plant and equipment
Net defined benefit liability
Loss on revaluation of investment securities
Excess provision for accrued bonuses to employees
Tax loss carry-forward of consolidated subsidiaries
Accrued enterprise taxes not deductible
Impairment loss
Unrealized gains on sales of property,
plant and equipment
Excess provision of allowance for product warranty
Other		Subtotal		Valuation allowance
		 Total deferred tax assets
Deferred tax liabilities:
Unrealized losses on available-for-sale securities
Tangible and intangible assets identified due
to business combinations
Estimated income taxes pertaining to retained
earnings of foreign consolidated subsidiaries
Capital gains on properties deferred for tax purposes
Other
		 Total deferred tax liabilities
		 Deferred tax assets, net(Note 1)

2017

2016

2017

¥ 5,914
4,697
834
724
145
191
247

¥ 5,778
4,431
1,008
693
316
286
233

$ 52,803
41,937
7,446
6,464
1,294
1,705
2,205

250

264

2,232

230
1,647
14,885(1,218)13,667211
1,836
15,060(1,244)
13,816

2,053
14,705
132,901(10,875)
122,026(5,471)(6,113)(48,848)(631)(1,096)(5,633)

(777)

(712)

(6,937)

(538)
(433)
(7,851)¥ 5,816

(539)
(166)
(8,628)¥ 5,187(4,803)(3,866)(70,098)$ 51,928

Annual maturities of lease obligations at March 31, 2017 are as follows:
Years ending March 31

Millions of yen

Thousands of
U.S. dollars(Note 1)

2018

¥592

$5,285

2019

542

4,839

2020

510

4,553

2021

434

3,875

2022

389

3,473

64 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 2017

65

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A reconciliation between the normal effective statutory tax rate and the effective tax rate as apercentage of income before income taxes for the years ended March 31, 2017 and 2016 was asfollows:
Normal effective statutory tax rate
Non-deductible loss on valuation of marketable securities
Expenses not deductible for income tax purposes
Withholding tax withheld from foreign subsidiaries’ dividends
R&D expense tax credit
Reversal of deferred tax liabilities on retained earnings of 				 foreign consolidated subsidiaries
Dividend income not taxable for income tax purposes
Difference in statutory tax rates of foreign subsidiaries
Reduction of deferred tax assets due to tax rate change
Per capita inhabitant taxes
Other
Effective tax rate

2017

2016

30.9%
(0.2)
0.3
0.2
(1.5)

33.1%
(0.7)
0.3
0.4
(1.5)

(0.1)

0.1

(0.3)
(0.8)
—
0.5
(0.6)
28.4%

0.1
(0.7)
3.5
0.5
2.4
37.5%

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(3) Reconciliation between retirement benefit obligations and net defined benefit liability
Thousands of
U.S. dollars

Millions of yen(Note 1)

2017

2016

2017

Retirement benefit obligations¥16,054¥15,467$143,339

Net liability on the consolidated balance sheet¥16,054¥15,467$143,339

Net defined benefit liability¥16,054¥15,467$143,339

Net liability on the consolidated balance sheet¥16,054¥15,467$143,339(4) Net periodic benefit costs
Thousands of
U.S. dollars

Millions of yen

2017

10. Retirement benefits and pension plans ��������������������������������������������������������������������������������������������������������
Defined benefit plans
The Company and certain consolidated subsidiaries provide lump-sum retirement benefit plansfor defined benefit plans. Also, the Company and certain consolidated subsidiaries provide
defined contribution pension plans. Certain consolidated subsidiaries use the simplified method
for computing retirement benefit obligations.

(Note 1)

2016

2017

Service cost¥   798¥  695$ 7,125

Interest cost

65

132

580

Amortization of actuarial differences

424

966

3,785

Net periodic benefit costs computed by simplified method

200

214

1,785

18

17

160

¥1,507¥2,026$13,455

Other
Net periodic benefit costs(5) Remeasurements of defined benefit plans, before income tax effect in other comprehensive
incomeThousands of
U.S. dollars(1) Movement in retirement benefit obligations, except plans applying the simplified method
Thousands of
U.S. dollars

Millions of yen

2017

Actuarial differences¥140¥(158)$1,250

Total

¥140

¥(158)$1,250¥12,364$124,383

798

695

7,125

Interest cost

65

132

580

Actuarial differences incurred

283

1,125

2,526

Benefits paid

(501)

(365)

(4,473)

Other

(72)

(20)

(642)

¥14,503¥13,931$129,491(2) Movement in net defined benefit liability for plans applying the simplified method(Note 1)

2017

2016

2017

¥1,536¥1,385$13,714

Net periodic benefit costs

200

214

1,785

Benefits paid

(186)

(161)

(1,660)

Increase due to newly consolidated subsidiaries
Balance at end of year

66 Kurita Water Industries Ltd. Annual Report 2017(6) Remeasurements of defined benefit plans, before income tax effect in accumulated othercomprehensive income
Thousands of
U.S. dollars

Millions of yen

2017(Note 1)

2016

2017

Unrecognized actuarial differences¥(5)¥(146)

$(44)

Total

¥(5)

¥(146)$(44)

Thousands of
U.S. dollars

Millions of yen

Balance at beginning of year

2017

2016

¥13,931

Balance at end of year

(Note 1)

2016

2017
Service cost

Balance at beginning of year

Millions of yen

2017(Note 1)—98—

¥1,550¥1,536$13,839(7) Assumptions for actuarial calculation
The Company uses multiple weighted-average discount rates determined by reflecting theestimated periods of retirement benefit payments.
Defined contribution pension plans
The amount to be contributed to the defined contribution pension plans by the Company andits consolidated subsidiaries was ¥851 million (US$7,598 thousand) and ¥852 million for the years
ended March 31, 2017 and 2016, respectively.

Kurita Water Industries Ltd. Annual Report 2017

67

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
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Initiatives that
Support Value
Creation

Investor
Information

Financial Section

Corporate Data

11. Shareholders’ equity �����������������������������������������������������������������������������������������������������������������������������������������

13. Cost of sales ��������������������������������������������������������������������������������������������������������������������������������������������������������

Japanese companies are subject to the Companies Act. A summary of the sections of theCompanies Act that affect financial statements and accounting matters is as follows:

Provision for loss on construction contracts included in cost of sales were ¥(202) million(US$(1,803) thousand) and ¥(728) million for the years ended March 31, 2017 and 2016, respectively.

(1) Distribution of dividends to shareholders
Under the Companies Act, if companies meet certain criteria, dividends can be paid at any time
during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’meeting. Semiannual interim dividends may also be paid once a year upon resolution by the
Board of Directors’ meeting if the articles of incorporation of the company so stipulate.
The Companies Act provides certain limitations on the amounts available for dividends and/or the purchase of treasury stock. The limitation is defined as the amount available for distribution
to the shareholders, and it is calculated mainly based on capital surplus other than paid-in capital,
retained earnings and treasury stock, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.

14. Selling, general and administrative expenses ���������������������������������������������������������������������������������������������

(2) Increases/decreases; transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as alegal reserve (a component of retained earnings) or as additional paid-in capital (a component of
capital surplus) depending on the equity account charged upon the payment of such dividends.
However, such appropriation may not be made if the aggregate amount of legal reserve andadditional paid-in capital exceeds 25% of the common stock. Under the Companies Act, this legal
reserve and additional paid-in capital may be reversed without limitation.
The Companies Act also provides that common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be transferred among the accounts under certain
conditions upon resolution of the shareholders.
(3) Treasury stock
The Companies Act provides that companies may purchase, hold or dispose of such treasury
stock by resolution of the Board of Directors’ meeting. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders which is determined by aspecific formula.
The number of treasury stock at March 31, 2017 includes treasury stock of 339 thousand
shares (entrusted for the performance-linked stock compensation for directors) held by the trust
account of Japan Trustee Services Bank, Ltd.

Selling, general and administrative expenses for the years ended March 31, 2017 and 2016
consisted of the following:Thousands of
U.S. dollars

Millions of yen

Salaries and allowances(Note 1)

2017

2016

2017

¥19,160¥19,021$171,071

Provision for employees’ bonuses

1,334

1,318

11,910Retirement benefit expenses

1,440

2,001

12,857

Travel expenses

2,767

3,023

24,705

Research and development expenses

5,038

5,269

44,982

Other

19,537

19,939174,437

Total¥49,280¥50,574$440,000

15. Other income (expenses) ���������������������������������������������������������������������������������������������������������������������������������
Gain on sales of properties for the years ended March 31, 2017 and 2016 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2017(Note 1)

2017

2016

Buildings and structures

¥—

¥ 29

$—

Machinery and equipment

—

108

—

Leased assets

—

6

—

Other (Tools, furniture and fixtures, etc.)

—

3

—

Total

¥—

¥148

$—

12. Revaluation reserve for land ���������������������������������������������������������������������������������������������������������������������������
The Company implemented a revaluation of land for business use in accordance with the Land
Revaluation Law (enacted on March 31, 1998). The revaluation difference, net of taxes is stated as“Revaluation reserve for land” in accumulated other comprehensive income in net assets. The tax
equivalent is stated as deferred tax assets or liabilities in long-term liabilities.
When any revaluated land is sold, the related unrealized gain or loss on revaluation of land istransferred to retained earnings.
Revaluation method: The revaluation of land was computed in accordance with Article Two,
Item One of the Land Revaluation Law Enforcement Order.
Revaluation date: March 31, 2002

68 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 2017

69

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupA Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
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Segment
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Management Plan CK-17

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Financial Section

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Information

Corporate Data

16. Comprehensive income �����������������������������������������������������������������������������������������������������������������������������������

17. Business combinations ������������������������������������������������������������������������������������������������������������������������������������

The components of other comprehensive income for the years ended March 31, 2017 and 2016
are as follows:Business combination through acquisition
1. Overview of business combination(1) Name and description of the business of the acquired companies
Name:				Fremont Industries, LLC (“Fremont”)
Description of the business:		Business related to the manufacturing and sales ofwater treatment chemicals(2) Main reasons for the business combination
	Fremont is a water treatment chemicals manufacturing and sales company that provides
various types of water treatment chemicals in a broad range of areas including hospitals andoffice building air-conditioning, mainly in markets with growth potential such as biofuels andthe food industry. Fremont has built local area-centric operating bases and systems in the
Midwest Region of the U.S.A. Kurita expects to expand sales of products and technologies of
the Kurita Group and to develop new markets by taking advantage of the customer base andsales network of Fremont.

Thousands of
U.S. dollars

Millions of yen(Note 1)

2017

2016

Unrealized gains or losses on available-for-salesecurities:
Amount arising during the year¥(1,512)¥1,852$(13,500)

Reclassification adjustments to profit or loss

(391)

38

(3,491)(1,903)

1,891(16,991)

639

(597)

5,705

(1,263)

1,293(11,276)

Amount arising during the year

390

465

3,482

Reclassification adjustments to profit or loss

—

—

—

Amount before income tax effect
Income tax effectSubtotal

2017

Deferred gains or losses on hedges:(3) Date of the business combination
January 3, 2017

Amount before income tax effect

390

465

3,482

Income tax effect

(119)

(132)

(1,062)

Subtotal

271

332

2,419

(4) Legal form of the business combination
Acquisition of business with cash as consideration

—

62

—

(5) Company name after the business combination
Fremont Industries, LLC

Revaluation reserve for land:
Income tax effectForeign currency translation adjustments:
Amount arising during the year

(2,897)(2,113)(25,866)

Remeasurments of defined benefit plans:
(5)

(146)

(44)

Reclassification adjustments to profit or loss

146

(12)

1,303

Amount before income tax effect

140

(158)

1,250

Income tax effect

(42)

48

(375)

Subtotal

97

(109)

866

Amount arising during the year(6) Ratio of voting rights acquired
100%(7) Main grounds to determine the acquirer
The Group acquired the business with cash as consideration
2. The period of business results of the acquired companies included in the consolidated
financial statements
Only the balance sheet as of January 4, 2017 was considered for the year ended March 31, 2017.
3. Acquisition cost of the business acquired

Share of other comprehensive income ofentities for accounted using equity method:Amount arising during the year

(83)

(86)

(741)

Reclassification adjustments to profit or loss

0

0

0

Subtotal

(83)

(86)

(741)

		Total¥(3,876)¥ (621)$(34,607)

Millions of yen

Consideration for acquisition
Acquisition cost

Cash

Thousands of
U.S. dollars(Note 1)

¥4,760$42,500¥4,760$42,500

4. Major acquisition-related cost
Millions of yen

Advisory fees, etc.

70 Kurita Water Industries Ltd. Annual Report 2017

¥123

Thousands of
U.S. dollars(Note 1)

$1,098

Kurita Water Industries Ltd. Annual Report 2017

71

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
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Corporate Data(2) Methods for calculating sales, income and loss, assets and liabilities, and other amounts byreportable segment
Accounting methods applied in the reportable segments are consistent with the methods
applied in preparation of the accompanied consolidated financial statements. Segment income
represents operating income. Intersegment sales and transfers between the Group reflect values
based on market price. Intersegment sales and transfers between the Company’s divisions are
based primarily on book values.

5. Amount, cause, amortization method and amortization period of goodwill recognized(1) Amount¥2,096 million (US$18,714 thousand)(2) Cause
Due to an excess earnings capability expected in the future(3) Amortization method and amortization period
Straight-line method over 15 years(3) Sales, income and loss, assets and liabilities, and other amounts by reportable segment
Millions of yen

6. Major components of assets acquired and liabilities assumed on the business combination
dateMillions of yen

Thousands of
U.S. dollars(Note 1)

Current assets¥   880$ 7,857

Non-current assets

2,133

19,044

Total assets¥3,013$26,901

Current liabilities¥   350$ 3,125

Non-current liabilities
Total liabilities——¥   350$ 3,125

7. Estimated amount and method of calculation of the impact of the acquisition of businesson the consolidated statement of income for the year ended March 31, 2017 on theassumption that the acquisition of business had been completed on April 1, 2016
Not stated as it is difficult to calculate the estimated amount.

Year ended March 31, 2017

Sales
1) Sales to outside customers
2) Intersegment sales
Total
Segment income
Segment assets
Segment liabilities
Other items
Depreciation and		 amortization
Impairment loss
Increase in property,		 plant and equipment
		 and intangible assets

18. Segment information ���������������������������������������������������������������������������������������������������������������������������������������
(1) Overview of reportable segments
The Company’s reportable segments are components of the Group about which separate
financial information is available. These segments are subject to periodic examinations to enable
the Company’s Board of Directors to decide how to allocate resources and assess performance.
The Company’s business divisions are based on product and service categories. Each of thedivisions conducts business based on comprehensive strategies formulated for the products
and services that they handle in Japan and overseas. The Company’s consolidated subsidiaries
conduct business under the supervision of the relevant business divisions.
The Group’s operations are therefore classified into two reportable segments, the Water
Treatment Chemicals segment and the Water Treatment Facilities segment, based on the products
and services handled by each of the divisions.
The Water Treatment Chemicals segment manufactures and sells water treatment chemicals
and equipment and provides maintenance services. The Water Treatment Facilities segment
manufactures and sells water treatment equipment and facilities, provides ultrapure water,
chemical cleaning, tool cleaning, soil and groundwater remediation services, and provides
maintenance services that encompass operation, maintenance and management of water
treatment facilities.

72 Kurita Water Industries Ltd. Annual Report 2017

Year ended March 31, 2017

Sales
1) Sales to outside customers
2) Intersegment sales
Total
Segment income
Segment assets
Segment liabilities
Other items
Depreciation and		 amortization
Impairment loss
Increase in property,		 plant and equipment
		 and intangible assets

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total¥81,883242¥82,126¥ 7,23180,12024,759¥132,304
191¥132,495¥ 12,220134,623
45,786¥214,187
434¥214,621¥ 19,451
214,744
70,545—(434)¥   (434)¥     084,504(54)¥214,187—¥214,187¥ 19,452
299,249
70,4902,926

11,95014,877—

14,877

—

—

—

—

—

2,175

7,911

10,087—

10,087

Water
Treatment
Chemicals

Adjustments Consolidated¥  

Thousands of U.S. dollars (Note 1)
Water
Treatment
Facilities
Total
Adjustments Consolidated$731,098 $1,181,285 $1,912,383
2,160
1,705
3,875
$733,267 $1,182,991 $1,916,258$ 64,562 $ 109,107 $  173,669
715,357 1,201,991 1,917,357
221,062
408,803629,866$        — $1,912,383(3,875)—$     (3,875) $1,912,383$      0 $  173,678
754,500 2,671,866(482)
629,375

26,125

106,696

132,830—

132,830

—

—

—

—

—

19,41970,63390,062—

90,062

Kurita Water Industries Ltd. Annual Report 2017

73

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupA Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Management
Indicators

Year ended March 31, 2016

Sales
1) Sales to outside
customers2) Intersegment sales
Total
Segment income
Segment assets
Segment liabilities
Other items
Depreciation and		 amortization
Impairment loss
Increase in property,		 plant and equipment
		 and intangible assets

Water
Treatment
Facilities

Total

Adjustments Consolidated¥83,680¥130,692¥214,372¥     —

¥214,372

235¥83,916¥ 6,467
79,36524,142

158¥130,850¥13,366
142,564
45,060394¥214,767¥ 19,834
221,930
69,202(394)¥    (394)¥           (0)76,176(59)—¥214,372¥ 19,833
298,107
69,142

2,613

12,068

14,682—

14,682

—

—

—

—

—

2,434

17,188

19,623—

19,623

Notes:“Adjustments” represents the following:
1. Sales: Elimination of intersegment transactions
2. Segment income: Amount resulting from eliminations of intersegment transactions
3.	Segment assets: Mainly corporate assets of ¥84,550 million (US$754,910 thousand) and ¥76,237 million
as of March 31, 2017 and 2016, respectively, unallocated to reportable segment assets (cash deposits,
securities in trust and long-term investments)
4. Segment liabilities: Amount resulting from eliminations of intersegment claims and liabilities

Sales

Year ended March 31, 2017

Sales

Year ended March 31, 2016

Sales

Asia

¥149,988¥39,899

Asia

Japan

Asia

¥150,495¥37,778

Millions of yen
North
America
EMEA

Year ended March 31, 2017

Japan

Asia

Sales

¥62,387¥8,881

Year ended March 31, 2017

Sales

Japan

Asia

$557,026$79,294

Year ended March 31, 2016

Japan

Asia

Sales

¥68,993¥6,790

Corporate Data

Millions of yen
North
America
EMEA

Other

Total

¥147

¥682

¥74,036¥1,939Thousands of U.S. dollars (Note 1)
North
America
EMEA
Other$1,312$17,312

Millions of yen
North
America
EMEA¥21¥2,038

Total$6,089$661,035

Other

Total

¥544

¥78,388(Information by major customer)
Year ended March 31, 2016

Millions of yen

Reportable segment¥23,097

Water Treatment
Facilities

Sales to:Sharp Corporation

For the year ended March 31, 2017, information by major customer is omitted because there
are no outside customers individually accounting for 10% or more of net sales reported on the
consolidated statement of income.

Other

Total

¥1,885¥2,641¥214,187¥19,774

Year ended March 31, 2017

Thousands of U.S. dollars (Note 1)
North
America
EMEA
Other$1,339,178 $356,241$16,830$176,553$23,580

Total$1,912,383

Millions of yen
North
America
EMEA

Other

Total

¥2,431¥2,970¥214,372¥20,698

Note: Sales are allocated to regions based on the location of the customer to which the products or services
are delivered or provided. EMEA includes Europe, the Middle East and Africa.

74 Kurita Water Industries Ltd. Annual Report 2017

Investor
Information

Millions of yen

Japan

Japan

Financial Section

Information about amortization and unamortized balance of goodwill

Related Information(Information by geographic region)(1) Net sales
Year ended March 31, 2017

Initiatives that
Support Value
Creation(2) Property, plant and equipment

Millions of yen
Water
Treatment
Chemicals

Fundamentals
that Support
Value Creation

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

Corporate/
Elimination

Total

Amortization¥   980¥—¥   980¥—¥   980

Unamortized balance

15,049—15,049—15,049Year ended March 31, 2017

Water
Treatment
Chemicals

Thousands of U.S. dollars (Note 1)
Water
Treatment
Corporate/
Facilities
Total
Elimination

Total

Amortization$  8,750$—$  8,750$—$  8,750

Unamortized balance

134,366—

134,366—

134,366

Millions of yen
Year ended March 31, 2016

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

Corporate/
Elimination

Total

Amortization¥ 1,066¥—¥ 1,066¥—¥ 1,066

Unamortized balance

15,114—

15,114—

15,114

Kurita Water Industries Ltd. Annual Report 201775

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

19. Subsequent events �������������������������������������������������������������������������������������������������������������������������������������������
Appropriation of retained earnings
The following appropriation of retained earnings for the year ended March 31, 2017 was approvedat the ordinary general meeting of shareholders of the Company held on June 29, 2017.
Millions of yen

Cash dividends (year-end dividends)¥2,865

Thousands of
U.S. dollars(Note 1)

$25,580

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Corporate Data

20. Per share information ���������������������������������������������������������������������������������������������������������������������������������������
U.S. dollars

Yen

Net assets per share
Net income per share (EPS)(Note 1)

2017

2016

2017

¥1,991.91¥1,961.30$17.78125.23108.24

1.12

The basis of calculation for net assets per share is as follows:

Note: The total amount of dividend approved at the ordinary general meeting of shareholders of the Company
held on June 29, 2017 includes dividends of ¥8 million ($71 thousand) to treasury stock of 339 thousand
shares (for performance-linked stock compensation trust for directors) held by the trust account of Japan
Trustee Services Bank, Ltd.

Thousands of
U.S. dollars

Millions of yen

Net assets
Cancellation of treasury stock
The Company acquired 2,963,900 shares of treasury stock by resolution of the Board of Directors’
meeting held on January 30, 2015. The resolution also determined that disposal of treasury stock
would not be decided for the time being in preparation for using as consideration of future M&A
and the final decision would be made by March 31, 2017. The Board of Directors’ meeting held on
March 30, 2017 resolved that the Company will cancel the treasury stock.

Investor
Information

Financial Section(Note 1)

2017

2016

2017

¥   228,758¥   228,964$2,042,482

Amounts excluded from net assets

1,135

1,067

10,133(Non-controlling interests on the above)
Net assets attributable to common shareholdersof parent
Number of common stock at the year-end used
for the calculation of net assets per share(1,135)(1,067)(10,133)

227,623

227,896

2,032,348

114,274,081

116,196,920

The basis of calculation for EPS is as follows:
1. Type of shares to be cancelled
Common stock of the Company
2. Book value¥8,525 million (US$76,116 thousand)3. Number of shares to be cancelled
2,963,900 shares
4. Date of cancellation
April 6, 201776 Kurita Water Industries Ltd. Annual Report 2017

Thousands of
U.S. dollars

Millions of yen

Net income attributable to owners of parent
Net income attributable to commonshareholders of parent
Average number of shares outstanding(Note 1)

2017

2016

2017

¥    14,506¥    12,577$129,517

14,506

12,577

129,517

115,837,837

116,197,479

Note: The number of treasury stock, which is deducted from the average number of shares outstandingfor calculation of per share information for the year ended March 31, 2017, includes common stock of 339
thousand shares held by a trust account of Japan Trustee Services Bank, Ltd. (entrusted for performance-linked
stock compensation for directors).

(The Company has no dilutive shares.)

Kurita Water Industries Ltd. Annual Report 2017

77

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

Report of Independent Certified Public Accountants

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Fundamentals
that Support
Value Creation

Initiatives that
Support Value
Creation

Financial Section

Investor
Information

Corporate Data

Investor Information
Stock Exchange Listing
Common Stock

Number of Shareholders
Independent Auditor
Transfer AgentFirst Section of the Tokyo Stock Exchange
Authorized: 531,000,000 shares
Issued: 119,164,594 shares(Stock trading unit: 100 shares) (As of March 31, 2017)25,995 (As of March 31, 2017)
Grant Thornton Taiyo LLC
NMF Aoyama 1-chome Bldg. 5F, 8-1-22, Akasaka, Minato-ku, Tokyo 107-0052, Japan
Sumitomo Mitsui Trust Bank, Ltd.
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Major Shareholders

Distribution of Shares
Individuals

Treasury Stock

Shareholdings(Number of shares)

Percentage
of totalshares issued(%)

Japan Trustee Services Bank, Ltd.
(Trust Account)

6,355,300

5.33

Nippon Life Insurance Company

5,979,883

5.01

Kurita Water Industries Ltd.

4,550,713

3.81

The Master Trust Bank of Japan, Ltd.
(Trust Account)

4,124,700

3.46

BNYMSANV AS AGENT / CLIENTS LUX UCITSNON TREATY 1

2,788,900

2.34Japan Trustee Services Bank, Ltd.
(Trust Account 9)2,542,900

2.13Japan Trustee Services Bank, Ltd.
(Trust Account 5)2,175,000

1.82

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,155,826

1.80

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,056,131

1.72

Treasury Stock b

4,550,713

3.8

NORTHERN TRUST CO. (AVFC) RE SSD00

1,827,674

1.53

Total

119,164,594

100.0

Financial Institutions

Securities
Firms
Foreigners

Other Domestic Firms
Shareholdings(Number of shares)(%)

Financial Institutions b

36,015,880

30.2

Securities Firms b

1,601,527

1.3

Other Domestic Firms b

9,321,971

7.8

Foreigners b

54,738,749

45.9

Individuals b

12,935,754

10.9(As of March 31, 2017)(As of March 31, 2017)

Stock Price Range and Trading Volume (Tokyo Stock Exchange)
Stock price (Yen)

40,0003,000

30,0002,000

20,0001,000

10,0000Jan. ’15

Stock price

78 Kurita Water Industries Ltd. Annual Report 2017

Trading volume (Thousands of shares)

4,000

Jan. ’16

Jan. ’170

Trading volume
Kurita Water Industries Ltd. Annual Report 2017

79

The Kurita Group’s
History of Value
Creation

Kurita’s Business

The Kurita Group’s The Kurita Group’s
21st Century
Strength
VisionValue Creation of
the Kurita GroupManagement
Indicators

A Message to Our Interview with the Toward the Final Year Review of Operations Foundation of R&D
and Strategies by
and Intellectualof Medium-Term
Stakeholders
President
Segment
Property
Management Plan CK-17

Corporate Data
Company Name
Address
Paid-in Capital
Date of Establishment
Number of Employees

Osaka Office:2-22, Kitahama 2-chome, Chuo-ku,
Osaka-shi, Osaka 541-0041, Japan
Tel: 81 (6) 6228-4800
Other Offices:
Shizuoka, Tohoku, Nagoya,
Hiroshima and Kyushu

Kurita Water Industries Ltd.
10-1, Nakano 4-chome,
Nakano-ku, Tokyo 164-0001, Japan
¥13,450,751,434
July 13, 1949
5,654 (on a consolidated basis);
1,536 (parent company)
Overseas Office

Major Domestic Offices Head Office:10-1, Nakano 4-chome,
Nakano-ku, Tokyo 164-0001, Japan
Tel: 81 (3) 6743-5000
Kurita Global Technology Center:
1-1, Kawada, Nogi-machi,
Shimotsuga-gun, Tochigi
329-0105, Japan
Tel: 81 (280) 54-1511

Overseas Consolidated Subsidiaries and Affiliated Companies

Water Treatment Chemicals

Taiwan Branch:
5F-3, No. 295, Section 2,
Kuang-Fu Rd.,
Empire Commercial Bldg.,
Shinchu, Taiwan, R.O.C.
Tel: 886 (3) 575-1157

Investor
Information

Corporate Data

Sale of water treatment chemicals■

Kurita BMS Co., Ltd.

■

Paid-in Capital(Millions)

EquityOwnership (%)

1 Kurita Water Industries (Dalian) Co., Ltd.

1995

¥550

90.1

4 Kurita Water Industries (Jiangyin) Co., Ltd.

2015

US$16

100.0

5 Angang Kurita Water Treatment Co., Ltd.

2015

RMB55

50.0

6 Hansu Co., Ltd.

1974

W2,50033.2

8 Kurita (Taiwan) Co., Ltd.

1987

NT$20

100.0

9 Kurita (Singapore) Pte. Ltd.

1978

S$11

100.0

10 Kurita-GK Chemical Co., Ltd.

1989

BAHT204

85.0

11 Kurita-GK Vietnam Co., Ltd.

2016

US$0.585.0

12 P.T. Kurita Indonesia

1986

US$2

92.5

1994

RM$0.6100.0

14 Kurita Europe GmbH

2014

EUR20

100.0

15 Kurita France S.A.S.

2015

EUR5

100.0

16 Kurita Iberica SL2015

EUR0.003

100.0

17 Kurita Turkey Kimya A.S.

2015

TRY5.7100.0

18 Kurita Sverige AB

2015

SEK0.1

100.0

19 Kurita Polska SP.z.o.o.

2016

EUR3.2100.0

20 Kurita Middle East FZE

2016

AED2

100.0

Operation & maintenance of systems and facilities

21 Kurita America, Inc.

1996

US$3

100.0

Kuritaz Co., Ltd.

22 Fremont Industries, LLC

2017

US$0.01

100.0

Soil remediation services

23 Kurita do Brasil LTDA.

1975

R$6.9

100.0

2001

¥30

100.0

Land Solution Inc.

Kurita Chemicals Hokkaido Ltd.
Kurita Chemicals Kantou Co., Ltd.

Year of
Establishment

13 Kurita Water (Malaysia) Sdn. Bhd.

Water Treatment Facilities

Kurita Buil-Tech Co., Ltd.

■

Chemical cleaning services

Water Treatment Facilities

Kurita Engineering Co., Ltd.

2 Kuritec (Shanghai) Co., Ltd.

Miyoshi Industries Co., Ltd.

3 Kurita Water Industries (Suzhou) Ltd.

2004

¥530

100.0

Tool cleaning services

7 Hansu Technical Service Ltd.

1988

W26,400

100.0

Kurita Chemicals Sanyo Ltd.

Kuritec Service Co. Ltd.

9 Kurita (Singapore) Pte. Ltd.

1978

S$11

100.0

Kurita Chemicals West Japan Ltd.

San-ei Industries Co., Ltd.

12 P.T. Kurita Indonesia

1986

US$2

92.5

Kurita Chemicals Oita Ltd.

Nippon Fine Co., Ltd.

13 Kurita Water (Malaysia) Sdn. Bhd.

1994

RM$0.6100.0

Kurita Chemicals Kumamoto Ltd.

Sun Kako Co., Ltd.

21 Kurita America, Inc.

1996

US$3

100.0

Kurita Chemicals Tokai Ltd.
Kurita Chemicals Hokuriku Ltd.
Kurita Chemicals Kansai Ltd.

■Aoi Industries Co., Ltd.

Manufacture of water treatment chemicals
Kurita Chemical Manufacturing Ltd.

■

Financial Section

Water Treatment Chemicals

Main Domestic Consolidated Group Companies (As of March 31, 2017)■

Initiatives that
Support Value
Creation

Main Overseas Group Companies (As of March 31, 2017)(As of March 31, 2017)■

Fundamentals
that Support
Value Creation■■ Water Treatment Chemicals■ Water Treatment Facilities

Other

Other

Kurita Meiki Ltd.

Kurita Analysis Service Co. Ltd.

Kurita Creation Co., Ltd.
14

Kurita Analysis Service Co. Ltd.
15
16

18
19

5
1 7
6
4
3
2
11
8
10

17
20

13

22
21

9
12
23

80 Kurita Water Industries Ltd. Annual Report 2017

Kurita Water Industries Ltd. Annual Report 201781

10-1, Nakano 4-chome, Nakano-ku, Tokyo 164-0001, Japan
Tel: 81 (3) 6743-5000

URL: http://www.kurita.co.jp/english/

This report was printed on FSC-approved paper using vegetable oil ink.
Printed in Japan