Kurita Water Industries Ltd.
FY2017 Shareholder Relations Meeting(Securities code: 6370)

February - March 2018

Ⅰ Overview and Priority Measures of the Kurita Group

P1-9

Ⅱ Corporate Governance Initiatives of Kurita

P10-22(Reference) Efforts for Dialogue with Shareholders

P23

I. Overview and Priority Measures of the Kurita Group
Company Profile and Shareholder Composition
Corporate Data Fiscal year end: Kurita Water Industries Ltd.
 Company Name Stock Exchange Listing: Michiya Kadota, President Representative
 Paid-in Capital Date of Establishment : July 13, 1949
 Issued Common Stock Head Office Location : Nakano Central Park East, 10-1,
 Number of Shareholders
Nakano 4-chome, Nakano-ku, Tokyo

Shareholder Composition (Top 10)
Ranking

Name: March 31: First Section of the Tokyo Stock Exchange: ¥13,450,751,434: 116,200,694 shares: 22,964 (As of September 30, 2017)(As of September 30, 2017)
Shareholdings(Thousand shares)

Percentage of
total sharesissued1

Japan Trustee Services Bank, Ltd. (Trust Account)

6,508

5.60%

2

Nippon Life Insurance Company

5,979

5.14%

3

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

4,470

3.84%

4

BNYMSANV AS AGENT/CLIENTS LUX UCITS NON
TREATY 1

2,894

2.49%

5

Japan Trustee Services Bank, Ltd. (Trust Account 9)

2,452

2.11%

6

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,155

1.85%

7

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,056

1.76%

8

Japan Trustee Services Bank, Ltd. (Trust Account 5)

2,043

1.75%

9

NORTHERN TRUST CO. (AVFC) RE SSD00

1,827

1.57%

10

BANK JULIUS BAER AND CO., LTD.

1,713

1.47%

Shareholding Ratio (As of September 30,
2017)

Treasury Stock 3.1%
Individuals
10.2%

Financial
Institutions
30.7%

Securities
Firms 1.7%

Foreigners
46.6%

Other
Domestic Firms
7.6%

Note: In addition to the above, the company has 3,591 thousand shares of treasury stock.
Japan Trustee Services Bank, Ltd. (Trust Account) includes 333 thousand shares of treasury stock for performance-linked stock remuneration for directors.

1

I. Overview and Priority Measures of the Kurita Group
Framework of “The Kurita 21st Century Vision”
Study the properties of water, master them,and we will create an environment in which
nature and man are in harmony

Corporate
Philosophy
Corporate
VisionManagement
Guidelines

Becoming an advanced water andenvironmental management company(1) World’s Top-Class Water and Environment
Business(2) Creation of New Business(3) Technology-Driven Company(4) Full Use of the Group’s Comprehensive Strength(5) Enhanced Development of Human ResourcesCore Values(6) Fulfillment of Social Responsibility

Kurita Group Code of Conduct

Relationship with society and the global environment
Relationship with shareholders and investors
Relationship with customers and business partners
Relationship with employees

Note: The framework of “The 21st Century Vision” is scheduled
to be revised in April 2018.

Fairness

Transparency

Integrity

SafetyCompatibility2

I. Overview and Priority Measures of the Kurita GroupStrengthening of CSR Initiatives
CSR Policy (implemented on January 1, 2018)
Provide solutions to issues related to water andthe environment, and fulfill responsibility for the
futureInitiatives in FY2017

1. Provide highly safe services and products
2. Conduct fair business activities
3. Respect human rights



Establishment of CSR and Investor Relations
Department

Launch of E&S (Environmental & Social)Committee

4. Solve issues related to water resources
5. Realize sustainable energy use
6. Reduce waste

Evaluation of materiality

7. Advance industrial production technologies

Positioning at core of next Medium-Term Management Plan
Stakeholder engagement
Board of Directors, E&S Committee,
Divisions, Group Companies

P

D

C

A

Customers

Business
Partners

Employees

Shareholders/Investors

Local
Communities

3

I. Overview and Priority Measures of the Kurita Group
Kurita’s Business Domains
Industrial water/
groundwater

Manufacturing line
Water Treatment

Manufacturing process

Water Treatment
Facilities
 Pre-treatment
 Soft water production
 Pure waterproduction

Process Treatment
Chemicals Process treatment

Power generation
systems

Air conditioning
systems

Cooling
tower
Refrigeration systems

Water Treatment
Ultrapure Water
Production Systems
 Ultrapure waterproduction

Cooling Water
Treatment Chemicals
 Cooling water treatment

BoilerBoiler Water Treatment Chemicals■ Boiler, vaporizer■ Condenser water treatment

Utilities

Wastewater
Reclamation
Wastewater
Reclamation Systems

From Factory Entrance to Exit

Wastewater
treatment
Wastewater
Treatment Chemicals
Wastewater
Treatment Systems

Industrial
waste

Waterway andsewagedischarge

4

I. Overview and Priority Measures of the Kurita Group
Status of Competition and Kurita’s Strengths
A Company with a Good Balance of Two Businesses
Water Treatment Chemicals

Water Treatment Facilities

EcolabOvivo（Nalco）

KemiraSuez

SolenisBuckman
Miura
HakutoNomura Micro
Science

KuritaEvoqua

Hitachi

Kobelco Eco Solutions
Organo5

I. Overview and Priority Measures of the Kurita GroupNet Sales and Business Mix
Service Business Sales in the Water
Treatment Facilities Segment

Water treatment chemicals
Water treatment facilities (services)(Billions of yen)

Water treatment facilities (hardware)
100(Billions of yen)

98.9

235.0

240

214.4

31.6

32.2

90.7
189.7
179.7

182.6

154.9

150.4

81.9

83.7

60.0

58.8
120

214.2

189.4

178.1

8.1

97.8

32.0

28.8

6.3

6.4

99.0
27.0
6.6

97.8

27.7

34.5

31.8

34.5

45.3

03/201403/2015

03/2016

03/2017

03/2018
Projection

Tool cleaning

50
Maintenance,
etc.

99.0

98.9

Ultrapure watersupplybusiness

8.3

Servicebusiness
sales

94.9

91.5

0

91.5

94.9

0

51.8

54.4

03/201403/2015

60.6

62.6

65.4

03/2016

03/2017

03/2018
Projection

 The service business is achieving sustained growth.
 Service business sales accounts for 81% of total sales (projection for the year ending
March 2018)
6

I. Overview and Priority Measures of the Kurita Group
Priority Measures
1

Business organizational reform
Until March 2017

From April 2017

Water Treatment Chemicals

Domestic

Overseas

Overseas
Water
Treatment
Chemicals

Water Treatment Facilities
Ultrapure watersupplyEPC

Maintenanceservices

Overseas

Water
Treatment
Facilities

Domestic Water

Treatment
Chemicals Maintenanceservices Ultrapure

water supply
 EPC

7

I. Overview and Priority Measures of the Kurita Group
Priority Measures2

Increase value offered
Provide value to customers
and society

Existing technology andknow-how
EnergysavingWater
conservation

Increase
efficiency of
manufacturing
processes

Recycle andreuse ofwaste
products

IoT / AI
Waste
product
reduction

Stable utility
operations

Business process
reformContract model

New technologies &new tools

Smartfactories
Water risk
management

8I. Overview and Priority Measures of the Kurita Group
Priority Measures
3

Expansion of the overseas businessfoundations

Seeking expansion in North America
Expanding the water treatment businessusing M&A

Bolstering business in South Korea

Expanding the production system in Europe
Decided to acquire the paper and pulp process
treatment chemicals production base of Akzo Nobel
in France.
Aims to expand KEG’s paper and pulp process
treatment chemicals business and improve
profitability.

Turned equity method affiliate Hansu
Co., Ltd. into a consolidated subsidiary

Developing the business base
 Close cooperation within the Group Use of alliances and M&A
9II. Corporate Governance Initiatives of Kurita
Basic Concept and Basic Policies
Basic Concept

Basic Policies (5 Items)

Corporate Philosophy
Study the properties of water, master them, andwe will create an environment in which nature andman are in harmony(1)

Ensuring the rights and equality of shareholders(2)

Appropriate level of cooperation with stakeholders
other than shareholders(3)

Ensuring appropriate information disclosure andtransparency of information(4)

Duties of the Board of Directors and the Audit &Supervisory Board, etc.

(5)

Dialogue with shareholders and investors

Establishment of Corporate GovernancePurpose Transparent, fair, prompt and decisive decisionmaking
 Highly effective management supervision

Policies (16 Items)
Sustainable Growth and Medium- and Longterm Enhancement of Corporate Value
Respect for the rights and position of stakeholders
and meeting their expectations
Customers

Business
Partners

Review the Policies at least once a year orwhen necessary.
Note: Criteria for Judging Independence were revised in FY2017.

Employees

Shareholders/Investors

Local
Communities

10II. Corporate Governance Initiatives of Kurita
Corporate Governance System Chart
Company with the Audit & Supervisory Board
General Meeting of Shareholders
Election &Dismissal

Consultation

Nomination andRemuneration
Advisory Council

Board of Directors
Advisory

Audit & Supervisory Board

Audit

Members of the Audit &Supervisory Board

Resolution,
Election &Supervision

Discussion & Report

Business
Operations

Election &Dismissal

Audit Report

Executive Committee

Cooperation

Accounting Auditor
Cooperation
Cooperation

Audit

President

Election &Dismissal

Internal Auditing
Department

ReportE&S (Environmental & Social)Committee, Investment
Committee & Various Other
Committees

Discussion& Report

Internal Audit

Instruction

Accounting Audit & Internal Control Audit

Operating
Divisions[Size and Structure of the Board of Directors]
Current Board of Directors



There are at least three directors on the Board of
Directors, of which two or more are external
directors. The inclusion of external directors ismeant to ensure the independence and objectivityof the Board of Directors.



The Board of Directors consists of humanresources with high level of expertise in businessareas, corporate planning, finance, accounting,legal affairs and technologies, etc.

Current Audit & Supervisory Board

Number of directors

10

Number of members of the
Audit & Supervisory Board

3

Number of directors
who are external
directors

2 (Designated as independent
officers)

Number of external membersof the Audit & Supervisory
Board

2 (Designated as
independent officers)

Term of office

1 yearTerm of office

4 years11

II. Corporate Governance Initiatives of Kurita
Capital Policy
1

Uses of Cash (policy)
Utilize debt
Reduce assets

M&A
Share buybacks
M&A

Operating cash flow

Source of funds

Capitalexpenditures

Capitalexpenditures
Dividends

Dividends

Use of funds(if small amount)

Use of funds(if large amount) Proactively invest funds in promising businesses and reduce assets.
 Consider introducing capital efficiency indicators.
12II. Corporate Governance Initiatives of Kurita
Capital Policy
2

Past ROE
Return on equity (ROE)

Equity(Billions of yen)

(%)
18

192.6

198.0

9.3

8.8

9

208.9

207.9

217.7

222.3

227.9

238.0

227.6

8.1

7.9
5.5
4.4

4.7

3/20143/2015

5.6

240.0

120.0

6.4

0

0.0

3/20103/20113/20123/20133/20163/20173/2018
Projection

Notes: * Equity = Net assets - Non-controlling interest* For ROE, equity is calculated using the average from the beginning to the end of the period. The forecast value is shown for equity as ofMarch 31, 2018.

13

II. Corporate Governance Initiatives of Kurita
Capital Policy
3

Dividend Policy
Dividend per share

Dividend payout ratio

(Yen)
60

(%)
60

56.1
52.4

Rough standard of dividend
payout ratio is the average of
30 to 50% over five years

50

50

44.3

45.4

39.9

40
30

40

25.1

26.9

25.4

26.8

10
0

18
3/200522

3/2006

28.4

30

22.5

20

28

26.8

31.9

30.6

32

34

36

38

40

42

44

46

48

50

52
20
10

3/20073/20083/20093/20103/20113/20123/20133/20143/20153/20163/20173/20183/2018
Projection

0

Projection

Dividends are forecast to increase for the 14th consecutive year
14

II. Corporate Governance Initiatives of Kurita
Overview of the Compensation System for Directors and Members of
the Audit & Supervisory Board
Paid at retirement(1) Directors (excluding external directors)

Fixed compensation

Contribution toshareholding
schemePerformancelinked component

Performance-linked
stock
compensation

Evaluation indicator

Evaluation indicators- Common ⇒ Consolidated operating income- President, General Manager of Corporate Planning Division, General Manager of Group
Administrative Division ⇒ ROE- General Manager of Research and Development Division ⇒ Orders received for products
developed- General Manager of Business Divisions, General Managers of Sales Divisions ⇒ Year-on-year
growth of consolidated sales of own division- Profit attributable toowners of parent(2) External directors, Members of the Audit & Supervisory Board

Fixed compensation

Contribution
toshareholding
scheme15

II. Corporate Governance Initiatives of Kurita
Evaluation of the Board of Directors
Implementation Method

Evaluation Results(Period Covered: January - December 2016)

 Average of self-evaluations generally good in all 6 items.

Frequency

Once a year

MethodSelf evaluation
Discussion of written survey (withrespondents identified) and tabulated
results

Evaluation
Items

1. Board of Directors roles andresponsibilities
2. Collaboration with external
directors and external membersof the Audit & Supervisory Board
3. Board of Directors composition
4. Board of Directors operation
5. Contributions of individual
directors and members of the
Audit & Supervisory Board
6. Dialogue with shareholders

 Of these, the evaluations of 2 and 5 are particularly high.
 Meanwhile, the evaluations of 1, 4 and 6 were relatively
low, and evaluations by external directors wereparticularly low.

Issues and Initiatives
 Revision of corporate vision for contributing to longterm improvement of corporate value andestablishment of specific targets concerning theenvironment and society.

 Strengthening of evaluation system for increasing
the quality of discussion of investments in the Boardof Directors.
 Clarification of themes and messages to beconveyed to shareholders.

Note: The evaluation of the Board of Directors covering the period from January to December 2017 is currently underway.

16

II. Corporate Governance Initiatives of Kurita
Continuous Board of Directors’ Reforms
FY2017 Initiatives

Directing Management
Strategy

Improve discussion aimed at long-term
improvement of corporate value

Actions



Revised corporate vision

Establishment of CSR PolicyFormulation of new Medium-termManagement Plan

The following began to be implemented in FY2017
Management Oversightand Execution

Transfer business execution authority to the
Executive Committee



Reduce matters to be reported concerning thestatus of business execution

Invigorated discussions in the Board of
Directors

Board of Directors Size
and Composition

Secure diversity in the Board of Directors

Appointed a female external director

Board of Directors andExecutive Committee
Operation

Establish an Investment Committee for conducting
advance screening of investments

Improved quality of discussion

Director and Audit &Supervisory Board
Member Training

4 workshops inviting external instructors
Add training menu

3 on-site tours and workshops on businessfor external directors

17II. Corporate Governance Initiatives of Kurita
Independent External Directors
Role and Duties

Tsuguto Moriwaki

 Evaluating the outcomes of the management
actions of the Kurita Group

1967

Joins Kobe Steel, Ltd.

1999

Becomes Managing Director of Kobe Steel, Ltd.
Becomes President and Representative Director of Kobelco
Construction Machinery Co., Ltd.

 Evaluating how directors and executive officers run
businesses Expressing opinions from the standpoint ofsustainable growth and the medium-to long-term
enhancement of corporate value Expressing opinions on important decision-making
matters, including the selection of candidates for
director and deciding on the remuneration of
directors, etc.

2002

Becomes Executive Vice President and Representative Director of
Kobe Steel, Ltd.

2004

Becomes President and Representative Director of Shinsho
Corporation

2010

Becomes Adviser to Shinsho Corporation/Retires in 20122015-

Becomes Director of the Company (present post)

Ryoko Sugiyama
1996

Term of Office and Restrictions on Serving Concurrently
on Other Companies’ Boards or Committees

2007

Establishes Sugiyama & Kurihara Environmental Consultants, Inc.
Becomes Representative Director of Sugiyama & Kurihara
Environmental Consultants, Inc.
Becomes Director of Sugiyama & Kurihara Environmental
Consultants, Inc. (present post) Appointment term is 1 year, generally up to 4
years in succession

2010

Becomes Professor of Fuji Tokoha University(current Tokoha University)

 Can serve concurrently at up to 3 listedcompanies, including Kurita

2010

Becomes External Director and Audit andSupervisory Committee Member of LECIP Holdings Corporation(present post)2015

Becomes External Director of UACJ Corporation (present post)2017-

Becomes Director of the Company (present post)

18

II. Corporate Governance Initiatives of Kurita
Criteria for Determining Independence
Criteria for Judging Independence
A candidate for independent external director or any of his/her close relatives *1 must not fall under any of the following items.
a. A person who currently executes the operations of the Company or its subsidiary or has executed such operations in the past 10
years
b. A person whose major business partner is currently the Company*2 or was the Company at some time during the past year, or anindividual who executes the operations of this partyc. A current major business partner of the Company*3 or a major business partner at some time during the past year, or a person who
executes the operations of the major business partner
d. A consultant, an accountant, or a legal professional who currently receives or has received at some point during the past year a lot ofmoney or property*4 other than remuneration for officers from the Company
e. A current major shareholder of the Company*5 or a person who executes the operations of a major shareholder

f. A person who executes the operations of an organization in which an external officer also currently assumes office (the person only)
g. A person who executes the operations of an organization to which the Company currently makes a donation (the person only)*1 The term “close relatives” means relatives within the second degree of kinship.
*2 The term “person whose major business partner is the Company” means a person whose sales in transactions with the Company make up 2% or more ofthat person’s consolidated net sales.
*3 The term “major business partner of the Company” means a business partner with whom the Company’s sales in transactions make up 2% or more of theconsolidated net sales of the Company, or a business partner from which borrowings make up 1% or more of the consolidated total assets of the Company.
*4 The term “a lot of money or property” means money and other property that are equivalent to 10 million yen or more per year, other than remuneration for
officers.
*5 The term “major shareholder of the Company” means a shareholder who has voting rights that account for 10% or more of the voting rights of the Company.
Note: The yellow marking indicates sections revised in FY2017.

19

II. Corporate Governance Initiatives of Kurita
Composition and Actions of the Nomination & Remuneration
Advisory Council
Members
 Candidates for
directors
 Candidate forrepresentative director
 Candidates for
directors with special
titlesNomination Candidates formember of the Audit &Supervisory Board







Remuneration

2 external directors
Full-time external member of the
Audit & Supervisory Board
President

Full-time external member of the
Audit & Supervisory Board
Full-time internal member of the
Audit & Supervisory Board
President
General Manager of Corporate
Planning Division
General Manager of Group
Administrative Division

2 external directors
Full-time external member of the
Audit & Supervisory Board
President

FY2017 Actions

Decided the suitability of all candidates
Abolished honorary advisor

Decided the suitability of Audit &Supervisory Board candidates

Evaluated directors’ performance
Deliberated the appropriateness of ROE
level



The Chairman of the Nomination and Remuneration Advisory Council is an external director20II. Corporate Governance Initiatives of Kurita
Roles and Achievements of the Investment Committee

Roles



Evaluation of investments and financing to be submitted to the Board of Directors or
the Executive Committee for deliberation



Reporting of the evaluation results to Directors and Members of the Audit &Supervisory Board

ChairmanMembers

Members

Deputy General Manager of Group Administrative Division(person in charge of financial administration)
General Manager of Corporate Planning Department, General Manager of
Accounting Department, General Manager of General Affairs Department,
General Manager of Group Project Integration Department (Finance, Tax and
IFRS Establishment)

Investment and M&A deals

FY2017 Actions

Number ofcases
reviewed

Capital expenditure projects
Borrowing and funding
Establishment of corporations

8
4
4
1

Total of 17(April - December 2017)

Results

Improvement of quality of discussions in Board of Directors and Executive
Committee21II. Corporate Governance Initiatives of Kurita
Holding of Listed Shares Owned for Policy Purposes
In some cases, Kurita Water Industries Ltd. holds stock of listedcompanies as strategic cross-holdings in order to strengthenbusiness relationships

Policies

FrequencyOnce a year and as necessaryIf the total of the business profits and the dividends received fallshort of expectations for 5 consecutive years

Scandals, etc.



Sold 9 of 46 stocks

Review of Holdings

Criteria

FY2017 Activity

22

(Reference) Efforts for Dialogue with Shareholders
New Efforts
 Providing more detailed information in General Meeting of Shareholders
convocation notice2017 NoticeStatement of investment standards and corporate governance initiatives (results of evaluation of effectivenessof Board f Directors, sale of shares owned for policy purposes, etc.)

Current Matters of Focus
 Results briefing for institutional investors (four times a year)
 Implementation of roadshow overseas (three times a year) Early forwarding of the convocation notice

June 1999-

 Adoption of the platform for the electronic exercise of voting rights of ICJ, Inc.

June 2006-

 SR visit

November 2011- Preparation of the convocation notice (reference materials) in English

June 2013-

 Preparation of English translation of CG report

October 2016-

 Quick disclosure before sending out General Meeting of Shareholders convocation
noticeJune 201623

■ U R L ■h t t p : / / i r. k u r i t a . c o . j p /■ M A I L ■ir@kurita.co.jp

Forward-looking Statements
The plans and values contained in this document are decided based on information available at thepresent time. They contain risks and uncertainties, and therefore may differ from actual results.