2023

WebsiteInformation

More detailed corporate information, IR information, andinformation on CSR activities are reported on our website.
■

Dainichiseika Corporate
WebsiteCommunication Tools
Product Information
2023-2024

https://www.daicolor.co.jp/
english/■IR Information

https://www.daicolor.co.jp/
english/ir/index.html■

CSR Activities

https://www.daicolor.co.jp/
english/csr/index.html

Contact for Inquiries

Dainichiseika Color & Chemicals Mfg. Co., Ltd. Public Relations Division
1-7-6 Nihonbashi Bakurocho, Chuo-ku, Tokyo 103-8383, Japan Tel.+81-3-3662-1638 Fax. +81-3-3669-3924

Dainichiseika Integrated Report 2023

A Chemical Manufacturer
That Offers Color andBrings Ideas to Life

Dainichiseika Group is committed
to solving problems and creating
new value for a sustainable society
through colors that enriches ourlives and functions that enhance
the power of materials. Due to thenature of the company as a manufacturer of color and functional
materials, you may not see theDainichiseika brand on productsin the market. Nevertheless our
products are found in and are incorporated into a wide range of
products around the world, including

automobiles,

smartphones,

food packaging, and apparel, adding value through the color andfunctionality they provide.

01

02

Dainichiseika All Around You
Pigments and prepared pigments

Naturally-derived functional polymers●●MFPs●●Personal

computers● Cosmetics● Wastewater purification, water treatment,● Paints and printing inks
● Toner and inks for inkjet printers● LCD color filters● Construction materials, daily necessities,

etc.

paper products, etc.

Mass colorants for synthetic fibers
and textile printing agents●●Cosmetics●●LCD panels ●Books●●Toiletries(furniture, clothing)●Interior fabrics●●●●●Smartphones●●●Household goods●Home appliances

Coating agents●Synthetic leather●●Food packaging

materials●●Apparel● Vehicles and industrial materials● Interior fabrics● Apparel products● Paper, etc.

● LCD panels● PCs and office equipments● Decorative films, etc.

Colorants and functional agents for plastics(Masterbatches and compounds)

Gravure inks / flexographic inks

● Vehicles● Home appliances, daily necessities, and● Packaging materials ● Industrial andfor food and daily
necessities● Food trays● Beverage bottle
labelsoutdoor goods● Industrial materials, agricultural materials,
and construction materials● Food packaging, toiletries, etc.
Urethane resinsconstruction
materials● Cardboard andpackaging materials● Toiletries, etc.

Offset inks●●●●Vehicles● Synthetic leather (furniture, clothing)● Vehicle interior materials, construction●Beverage caps

● Electric wires, cables, and belts● Cosmetics, etc.

●Food traysmaterials, and daily necessities

03●Beverage bottle labels● Advertisements and books● Packaging, etc.

04

Revised in January 2016

Corporate Philosophy◎ Have an interest in people◎ Have an interest in something new◎ Have an interest in the future

Editorial Policy
Dainichiseika Group has published an Environmental Reportsince the fiscal year ended March 31, 2006, seeking to enhance the content disclosed in the form of a Social & Environmental Report and a Corporate Report to meet the needsof the times. From the current fiscal year, we have renewed
the report as the Integrated Report, reporting on Dainichiseika Group’s strategies and performance from both financial
and non-financial perspectives. We have also added topics
and special feature pages to make it easier to understand
Dainichiseika Group’s businesses and their growth potential.
Following deliberations at the Board of Directors meeting,this report is disclosed in booklets and electronic data.

CONTENTS
About Dainichiseika
Dainichiseika All around You

03

Corporate Philosophy / Precept / Our Business Creed05

At a Glance

07

TOP MESSAGE

09

Progress to Date

13

Corporate Value

15

Scope of reporting
Addresses the entire Dainichiseika Group.

Strategy & Technology

Reporting period

Precept

April 1, 2022 - March 31, 2023
* Also addresses certain activities outside this period.

Man is interesting,then customers as well as companies are constituted of such men.
All the economic principles and the management theories are based upon
human behavior pattern.
Have an interest in people.
New things always excite us to expectation.
Customers, marketplaces are dug up with technical innovation & productdevelopment, which makes people active.
Have an interest in something new.
It is pleasant to imagine the future.
The future is in favor of children. Thinking of the future,
we know companies as well as people shall not live all alone.
Without customers’ growth, albeit some profit is brought to us, it would never last long.
In consequence, neither we nor companies can keep alive unless admitted into thesociety.
Have an interest in the future.

IssuedPrevious: September 2022 Current: September 2023
Next: September 2024 To be determined

Reference guidelines●

JSA[ISO 26000:2010 Guidance on social responsibility]●

Ministry of Economy, Trade and Industry (METI)[Guidance on Integrated Disclosure and Dialogue for Value
Creation]●■

External Evaluation

Selected as a componentof the FTSE Blossom
Japan Sector Relative
Index

Selected as a componentof the S&P/JPX Carbon
Efficient Index

Received a gradeof B in CDP2022
Climate Change

Participation in External Initiatives

Meanwhile, we have kept a business creed “Full Achievement” established in 1968.
Being proud of this traditional creed, we shall abide by it along with the corporate philosophy set forth.
Signing the United Nations Global
Compact

Endorsement of the TCFD (Task Forceon Climate-related Financial
Disclosure)

Under our business creed “Full Achievement” each of us shallset to work with modest pride as a member of Dainichiseika
Group taking on the responsibility for Color-Age *1.
･ Work always to be achieved with aiming at the end.
･ Pursue the opportunities of expanding our products to the world with good knowledgeof products.
･ Enhance the trust of our company through business or products.
･ Have an opportunity to always cultivate ourselves, and to deepen reflection as a member of society.
･ Make Dainichiseika Group the most valuable company by performing services for thesociety through business.
05*1 Color-Age: A word coined by the founder of Dainichiseika, which implies a prosperous times led by color technology.

17

CFO MESSAGE

19

Medium-Term Management Plan

21

Financial and Non-Financial Highlights

23

Technologies Behind Our Products

27

Research and Development

28

Special Feature Contributing to the Environment through Products
29
Segment Information, Strategy and PerformanceGRI Standard (Sustainability Reporting Guideline)■

Our Business Creed, “Full Achievement”

Achieving Our Long-Term Vision and Basic Strategies

Endorsement of the Partnership
Building Declaration■

Participation in the Clean Ocean
Materials Alliance (CLOMA)31

CSR and ESG Initiatives
Our Thinking on CSR and ESG

37

CSR and ESG Materiality

38

E

Environment

Environmental Management

41

Transition Plan on Climate Change and Addressing TCFD
Recommendations

43

Management of Chemical Substances

45

S Society

Stakeholders

46

Customer Relations

47

Employee Relations

48

Supplier Relations

53

G GovernanceCorporate Governance

54

Compliance

55

Risk Management

56

Board Members

57

Dialogue with Shareholders and Investors

60

Participating Organizations

Japan Chemical Industry
Association (JCIA)

JAPAN POLYETYLENE PRODUCTS
INDUSTRIAL FEDERATION

Japan Dyestuff and Industrial
Chemicals Association (JDICA)

Japan PET Tray Association

JAPAN FASHION COLORASSOCIATION (JAFCA)

Japan Printing Ink Makers
Association

DATA
Company Profile / Basic Stock Information

61

Group Network

62

Ten-Year Summary of Key Management Indicators

63
06

About Dainichiseika

At a Glance

Global Network

Segment Overview
Color & Functional Products

̶ Pigments and pigment-processed products ̶We provide high value-added products for various fields of applications by controlling particle shape and surface properties via
Pigment Synthesis Technology, and provide colorants based on
Dispersion Processing Technology for textiles and plastics to various industries in Japan and overseas. We’re also engaged indeveloping and commercializing various functional materials
through the multifaceted application of Dainichiseika Group’s
technologies.

Pigments andprepared
pigments
Colorants and functional
agents for plastics― Masterbatches

Japan

Mass colorants
for synthetic
fibers and textile
printing agents

Polymer & Coating Material
Based on Polymer Synthesis Technology, we are working todevelop and commercialize resins, including solvent-free andwater-urethane resins that apply proprietary technologies, andbiomass urethane resins that, based on partnerships with raw
material manufacturers, address social and environmental problems. We’re also developing and commercializing materials using materials derived from natural products. We provide various
coating agents based on Dispersion Processing Technology tovarious industries.

Graphic & Printing Materials

Sales ofﬁces

Colorants andfunctional agents forplastics ― Compounds

12 ofﬁces

Total

Production andtechnical service bases

̶ Synthetic resins and specialty coatings ̶India 1base

Korea 1base

Vietnam 1base
Urethane resins

Naturally-derived
functional polymers

Coating agents

Taiwan 2bases

Americas
1base

Asia

Indonesia 1base

13 bases

Total

Offset inks

EuropeSales and Operating Income Composition Ratio(Fiscal year ended March 31, 2023)(millions of yen)07

Operating
Profit△51.7％(millions of yen)

25.5%

Color & Functional
Products

67,208Polymer & Coating
Materials

23,6491,976

Graphic & Printing
Materials

31,071△1,362

Total

122,005

2,005
75.0％

2,635

14 basesThailand 1base

̶ Inks for packaging and advertising publications ̶Gravure inks / flexographic inks

Net Sales

Total

China 4bases

Hong Kong 2bases

We provide general-purpose printing inks based on Formulation and Dispersion Processing Technology and are developing
and commercializing specialty inks and coatings that draw on
our proprietary formulation and other technologies.

Net Sales / Operating Profit by Segment

In addition to 12 sales offices and 14 production and technicalservice bases in Japan, we have 17 sales and production basesin 11 countries and regions overseas.

3 bases

Total
Fiscal year
ended
March 31,
2023

76.1％
55.1%

Netherlands 1base
Italy 2bases

19.4%■ Color & Functional Products■ Polymer & Coating Materials■ Graphic & Printing Materials

Inside:Sales to Profit Ratio
Outside:Sales Distribution Ratio

08

About Dainichiseika

TOP MESSAGE

We will contribute to therealization of a sustainable
society through innovations
that leverage ourtechnological capabilities.
President & Representative Directorof Dainichiseika, Japan

Koji Takahashi

The key issues are to innovate in ways that do not depend on existingproducts and to continuously increase proﬁtability in four strategic markets― Can you provide a review of the fiscal year

ended March 31, 2023, give your perceptionsof the business environment, and describe
progress on the current mid-term management plan?

In the fiscal year ended March 31, 2023, net sales
grew slightly, while operating income declined. The main
reasons for this were, first of all, a decrease in automobile production in Dainichiseika’s core field of products
for transportation equipment, and prolonged inventory
adjustments in products for LCDs. As a countermeasure, we reviewed our selling prices and secured an increase in revenue due in part to the weak yen. But wefailed to completely offset the steep and persisting highcosts for raw materials like resins and solvents, evenwith the price review, and operating income declined.
Entering the fiscal year ending March 31, 2024, LCDs
in particular are on a recovery track. There’s no doubtthat the profit/loss situation bottomed out in the fiscal
year ended March 31, 2023. But due to the Ukraine situation, it will take some time for the market to recover
fully. It’s become difficult to achieve the mid-term man-09

agement plan announced in August 2021.
In response, we’ve been working since this past summer on the next medium-term management plan, fully
taking into account the items that we’ve not achieved
and the points that we need to reflect on. The most important pillar of the next medium-term management
plan is to innovate without relying solely on existingproduct lines. At the same time, I believe we need toaccompany customers who are trying to realize innovation and co-create value.
― The fiscal year ending March 2024 is the fi-

nal year of the mid-term management plan.
What will be your main focus for the coming period?

In our ongoing mid-term management plan, we set
two missions embodied in the Where we want to be inten years goal. The first is to continue contributing tosociety in niche markets by leveraging our technologicalcapabilities. The second is to solve problems and create
new value to realize a sustainable society. As a basic
strategy for achieving these goals, we’ve set forth threepillars for capital efficiency-oriented management: securing a competitive advantage through technology-led
initiatives, promoting ESG-oriented management, andexpanding our worldwide business.
On this basis, Dainichiseika has established four strategic markets, including “Mobility” and “Packaging”, asmarkets for continued development by leveraging thestrengths of our existing product lines. The two newmarkets expected to grow significantly in the future are“IT & Electronics Functional Materials” and “Life Science & Personal Care.” Especially in newly developing

markets, it’s impossible to gain traction without innovations.
Our most important task in the final year of the plan is
to continuously increase profitability in these four strategic markets. We also need to work to improve our P/B
ratio and capital efficiency, which have posed challenges. We plan to incorporate measures to boldly transform
our existing financial base, such as by reducing our equity capital and eliminating cross shareholdings, into ournext mid-term management plan.

Promoting technology-driven competitive advantage in four strategic
markets and achieving signiﬁcant research results in the areas of eco andcutting-edge technologies― What are the main initiatives and topics forthe fiscal year ended March 31, 2023 in yourfour strategic markets?

Let me focus on the new products introduced in thefiscal year ended March 31, 2023.
First, in the newly developed market of IT and Electronics Functional Materials, we’ve achieved open innovations through joint research in partnership with universities. Several projects have already been adopted. In
the area of lithium secondary battery materials, we’vedeveloped products that extend the service life of batteries. In addition, we’ve developed a highly heat-resistant polyurethane adhesive that realizes flexible electronic circuit boards, thus contributing to theminiaturization and improved design of electronic devices, as well as enables to design attractive electronic devices such as foldable smartphones and VR goggles.
In the Life Science and Personal Care area, we’re exhibiting at trade shows and conducting sample work on
biodegradable and highly functional cellulose powder forcosmetics as a natural material-based product for use incosmetics. This revolutionary product will help address
the problem of microplastics, which cause marine pollution, while providing a pleasant tactile sensation comparable to conventional products. The cosmetics market issignificantly influenced by developments in Western Europe. We postponed our capital investment plans due tothe postponement of the implementation of a law regulating non-biodegradable materials in particulates usedin cosmetics. But this is a very large market, and we’re
excited.
In the Mobility area, which we positioned as a market
for continued development, we’re in the process of introducing to the market high-solids PUD (waterborne
polyurethane dispersion), a water-based version of polyurethane used in automobile interiors. This reduces environmental impact while providing texture, durability,
environmental friendliness, and other high functionalitythat has been difficult to achieve with water-based products.

In the Packaging area, the adoption of environmentallyfriendly products like biomass inks and water-based inks
is progressing. ESG products now account for 60% of
Dainichiseika’s gravure inks.
In all these areas, our research and development efforts are based on the basic strategy of our medium-term
management plan, which is to secure competitive advantages through technology leadership. We believe weare making steady progress toward achieving further innovation.
― As you look ahead to the next mid-term man-agement plan, what do you think of Dainichiseika’s strengths, which represent the foundations of the plan?

Dainichiseika’s first strength is that we’ve establishedand deepened three core technologies centered on pigments and resins: “Pigment Synthesis and Surface
Treatment Technology”,”Formulation and Dispersion Processing Technology” and “Polymer Synthesis Technology”. Since we have a strong market share in the main
products created by these technologies, we’re able tomeet customer needs as quickly as possible, respond tothem in a meticulous manner, and build relationships oftrust with our customers. I believe this is the source ofDainichiseika’s competitiveness.

10About Dainichiseika

TOP MESSAGE

In this context, I’d like to emphasize our production
site capabilities. As a chemical manufacturer, production
sites are crucial to the incorporation of ideas into products. Dainichiseika’s business cycle revolves around thiscore production site strength, along with our three coretechnologies and capacity to respond to customer
needs. As a company with production sites, it’s essential to address environmental issues and local communities. Dainichiseika’s strength lies in our cumulativeknowledge and expertise, including knowledge and expertise in these areas. In particular, as we accelerate ourworldwide business, we believe the strength of our production sites will become an extremely valuable intangible competitive edge. It’s quite likely that innovations
that have never been seen before will emerge fromthese areas.
In considering innovation, we feel that customer

needs have been expanding rapidly in recent years, especially in the areas of new technology creation in decarbonization, automated driving, and electric vehicles, inother words, eco and cutting-edge technologies, andthis area is now unavoidable. I have just introduced the
topics of our research results for the fiscal year ended
March 31, 2023, all of which are new products related to
eco and cutting-edge technologies. We plan to further
strengthen these efforts in the future.
In research and development, the Sakura Technology
Innovation Center plays a central role in promoting exchange with raw material manufacturers and customers
and joint research with universities, thereby accelerating
open innovation. New connections are being created,
including requests for tours from different industries.
We’re very much looking forward to the future.

agement plan is to promote ESG-oriented
management to realize a sustainable society.
How will you balance social contributions andprofitability?

First, as a basic premise, I believe promoting ESG-oriented management is an essential social mission for acompany and key to its survival. As mentioned earlier,
we’re already in a situation where customers will not
accept our products unless they’re eco-friendly. As achemical manufacturer, Dainichiseika will switch to a
product line that can contribute to the realization of adecarbonized and recycling-oriented society, while
avoiding cannibalization with conventional products.
For example, in our decarbonization business, we provide materials for the electrification of automobiles.
These include separators and electrodes for the lithium-ion batteries used in electric vehicles, colorants andconnectors for wiring and wiring harness coating mate-rials in automobiles, where demand is increasing due toelectrification, and light and strong plastic compounds
that help reduce vehicle weight and improve fuel efficiency. We’re also developing a number of ESG-contributing products.
In addition, to enhance electric power infrastructure
related to the use of natural energy, we provide compounds for sheathing materials for power cables. This is
another promising product, as demand is increasing for
power transmission networks from renewable energy
power generation facilities built in suburban areas to urban areas.
As for products that contribute to both a decarbonized
and recycling-oriented society, we’re promoting the development of biomass-related products such as biomass
inks and biomass polyurethane synthesized from biomass-derived raw materials.
In addition to these efforts by Dainichiseika Group, forexample, the recycling of plastics and the switch to electricity from renewable energy sources need to be addressed by the industry and society as a whole.
― I would like to ask you about the expansion ofyour worldwide business: While recovery
from the COVID-19 pandemic progressed in
the fiscal year ended March 31, 2023, we continued to face difficult times, including the
lockdown in Shanghai and the production adjustment of automobiles due to the shortageof semiconductors.

In addition to an energetic technology-driven approachin our four strategic markets, we must vigorously promote the expansion of our worldwide business. In addition, we need an worldwide business capable of reliably

11of fluorine masterbatches for electric wire and textile
masterbatches.
In the Packaging and Advertising / Publishing Inks segment, we will focus on expanding production bases, targeting the Asian market, where continued high economic growth is expected.
In addition, our product range in the mobility sector in
the U.S. will undoubtedly grow.
New product development in Japan based on innovation and the expansion of worldwide business must be
addressed as two wheels of a cart. We believe that ouroverseas strategy will surely be one of the pillars of ournext medium-term management plan.

Creating a fault-tolerant organizational culture and promoting digitalmanagement and communications to generate innovation

Developing products that contribute to the realization of a decarbonized andrecycling-oriented society and actively promoting the development of new
products and the expansion of worldwide business as two wheels of a cart
― The second pillar of the medium-term man-generating hit products.
In this sense, we’re focusing on India. I visited India
after the coronavirus pandemic, and the growth potential of the Indian market is remarkable. In India, we planto actively develop polymer products like urethane products in the segment of synthetic resins and specialty
coatings. In the long run, we will consider local production.
In the segment of pigments and secondary processed
pigment products, we’re seeking to aggressively expand sales and local production, mainly in the Europeanand U.S. markets, and promote the full-scale launch offunctional materials in the life science field. In the ASEAN, Chinese, and Indian markets, we will expand sales― Enhancing human capital is key to achieving

our long-term vision. What do you see as vitalto securing and developing human assets?

As mentioned earlier, the current medium-term management plan has four pillars: management targeting
capital efficiency; securing a competitive advantage
through technological leadership; promoting ESG-oriented management; and expanding our worldwide business. For the next mid-term management plan, we intend to add a fifth pillar: HR Strategy and DX.
My first concern is to create a fault-tolerant organizational culture that encourages innovation. We won’t
achieve groundbreaking innovations and superior performance unless we create a culture that tolerates failure.
The second is to introduce mechanisms that make itpossible to share tacit knowledge. A culture that encourages superiors and subordinates to share informationand learn from each other, not one characterized by rigid
hierarchies, has become essential.
Of course, making technical employees active and expanding their numbers are crucial to securing technology-driven competitive advantages. Beyond that, to expand worldwide business, we have to strengthen
management and sales capabilities at our overseas bases. To ensure productivity in response to a shrinking
workforce, we have to create a flexible culture that embraces diversity of age, gender, and nationality.
I believe this approach to real-world human capitalchallenges, combined with my own awareness of theissues, will help us create a new strategic human resource system.
With regard to DX, we intend to promote digitizationof management and communication. DX initiatives arecentral to the new HR system, and a digital approach tocommunication is essential for any organization seeking
to boost innovation. To give a recent example, we’re currently soliciting new Dainichiseika brand messages fromall of our employees. By visualizing everything from theapplication to the selection process, we are able to work
together to thoroughly consider what the ideal company
image should be, which is an extremely fast and smoothprocess.
In addition to these digital tools, we may also need tocreate opportunities for employee interactions, like beer
parties at each plant. We want to strengthen employee
engagement and create an organizational climate thatencourages employees to pursue even greater goals.
― Lastly, what do you think Dainichiseika needs

to do to maintain its status as an excellent
company?

Since becoming president, I’ve insisted we need tocherish the strengths cultivated over the more than 90
years since our founding while demonstrating the flexibility needed to continue changing, free of rigid adherence to past practices. It’s important to strike an effective balance between the two.
At the same time, we need to continue to address thethemes of responsible raw materials procurement, reduction in CO2 emissions at the production stage, consideration of human rights throughout the supply chain,efforts to improve the working environment in general,and especially at logistics sites, and strengthening ofcorporate governance. That’s why I bring up complianceand governance at every opportunity.
We’re committed to transparency and the open disclosure of management information to investors and otherstakeholders, and engage in robust dialogue. We believe
it’s important for management and each stakeholder tohead in the same direction and to work side by side. We
ask for your support in these endeavors.

12About Dainichiseika

Progress to Date

Dainichiseika’s logo, established in 1951, is based on the motif of an amphibious “pelican” and “the earth ”. It represents the desire of our founderand employees to be like the king of waterfowls, carrying beautiful colors, walking all over Japan and spreading its wings to the world.

Yoshihiro Takahashi, founder of Dainichiseika, believed that “it is our wish that our lives be enveloped by thecolors we love”. We have been conducting research and development to fulﬁll our customers’ wishes for “moreﬂexible coloring”.

Technical development and production
systems were established andpenetrated into the domestic market

Founded with the aim of domestically producing pigments

Founder
Yoshihiro Takahashi

After World War II, Dainichiseika made a fresh start and set
synthetic resin colorants, textile printing agents, and mass colorants for synthetic fibers as the three pillars of our postwar plan.
By 1953, the three pillars of technological development had
been established, and in 1968, the Tokai Plant (now the Tokai
Factory) was completed. It was here that we began to penetrate
the domestic market in earnest.

Since the 1980s, as Japanese companies have been aggressively expanding overseas, we’ve been expanding our deployment area to meet their needs. Today, we’ve globally 17 sales
and production bases in 11 countries and regions, and have built
a system to meet the development needs of our customers
around the world.

Net Sales
Technologies(millions of yen)

Pigment Synthesis and Surface Treatment Technology

2,000

Formulation and Dispersion Processing Technology
Urethane and Acrylic Resin Synthesis Technology

Markets entered1938 Began full-scale production of milori blue, chrome yellow,
fanal pigment, and azo pigments.

1967 Entered the polyurethane business.

1944 Entered the offset ink business.
First in
Japan

1948

1975

Developed and launched colorants for polyvinyl chloride (PVC).
Entered the plastic colorant business.

First inJapan

First inJapan

1985 Entered the natural polymer business.

1931 Founded Saika Ganryo L.P.
1939 Company renamed Saika Shikiso Kogyo Co.,
Ltd.

1940s

Bases

1944 Acquired two other companies in the same
industry and changed company name toDainichiseika Color & Chemicals Mfg. Co.,
Ltd.
1945 Head Office (Chuo-ku, Tokyo) and Tokyo
Plant begin operations. (now Tokyo
Production Plant)
1947 Opened Sapporo Office and Plant. (Later
renamed Hokkaido Dainichiseika Co., Ltd.
Merged with the Company)

1950s
1950 Opened Osaka Office. (now West Japan
Head Branch)

1985 Silicone urethane resin.
1999 Inkjet dispersions.

Undiluted colorant for vinylon and rayon fibers
Entered textile colorant business.

1957 Established UKIMA Chemicals & Color Mfg.
Co., Ltd.

1930s

1,500

1976 Entered the UV curable coating agent business.

1950 Developed and launched vinyl inks.
Entered the gravure ink business.
1953

Announced a computer color matching system in the field of plastic colorants (CCM).

1960s
1960 Opened Osaka Plant. (now Osaka
Production Plant)
1961 Listed on Second Section of the Tokyo
Stock Exchange.
1962 Opened Hong Kong Representative Office.
(now Dainichiseika (HK) Ltd.)
1963 Opened Narita Plant. (now Hi-Tech Chem
Co., Ltd.)
1964 Opened Nagoya Office. (now Central Japan
Head Branch)
1964 Established Taiyo Kako Co., Ltd. (later
renamed Osaka Kako Co., Ltd. and now
Dainichi Color Composite Co., Ltd. (Katano
Production Plant))
1967 Opened Shizuoka Office.
1968 Opened Tokai Plant. (now Tokai Production
Plant)
1968 Opened Sendai Office. (now Sendai
Branch)1968 Opened Okayama Office. (now Okayama
Branch)1969 Listed on First Section of the Tokyo Stock
Exchange.
1969 Opened Kyushu Office. (now Kyushu
Dainichiseika Co., Ltd.)
1969 Established Nagoya Kako Co., Ltd. (nowDainichi Color Composite Co., Ltd. (Togo
Production Plant))

1970s
1972 Opened Kawaguchi Plant. (now Kawaguchi
Production Plant)
1973 Established Tai Chin Chemical Industry Co.,
Ltd.
1977 Established Sambo Fine Chemicals Mfg.
Co., Ltd.
1977 Established Dainichi Plaboard Co., Ltd.
(now Dainichiseika Kako Hanbai Co., Ltd.)
1978 Opened Shikoku Office. (now Shikoku
Branch)2003 Pigments for color filters.

1980s
1983 Opened Hiroshima Office. (now Hiroshima
Branch)1984 Established Daicolor Italy S.R.L.
1985 Opened Hokuriku Office. (now Hokuriku
Branch)1987 Established Hiroshima Kako Co., Ltd. (nowmerged into Dainichi Color Composite Co.,
Ltd. (Katano Production Plant) in 2017)1988 Established Hi-Tech Color, Inc.
1989 Established Dainichi Color (Thailand), Ltd.
1989 Established Kanto Dainichiseika Co., Ltd.
(now Dainichi Color Composite Co., Ltd.
(Kazo Production Plant))
1989 Established Dainichi System Finance Co.,
Ltd. (now D.S.F. Co., Ltd.)
1989 Established Plalloy MTD. B.V.

1990s
1994 Established Color Planning Center Inc.

1994 Established Shanghai Mitsui Plastic
Compounds Ltd.
1995 Established PT. Hi-Tech Ink Indonesia.
1995 Established Dongguan Dainichi Chemical
Manufactory Co., Ltd.
1996 Opened Shiga Production Plant.
1997 Established Dainichiseika (HK) ColouringCo., Ltd.

2000s
2003 Established Daicolor Shanghai Mfg. Co.,
Ltd.
2005 Established Dainichi (Shenzhen) TradingLtd.
2006 Established Dainichi Color Vietnam Co., Ltd.
2007 Established Kyushu Kako Co., Ltd.
(Kumamoto Production Plant)
2008 Established Dainichi Color India Private Ltd.
2008 Established Dainichiseika Color &Chemicals Mfg. Co., Ltd. Europe
Representative Office.

2010s2013 Kanto Dainichiseika Co., Ltd. merged with
Nagoya Kako Co., Ltd. and Osaka Kako Co.,
Ltd. and changed trade name to Dainichi
Color Composites Co., Ltd.
2016 Converted AEOLIAN Corporation into a
subsidiary.

1,000

2020s
2020 Established Bando Production Plant.
2021 Established Sakura Technology Innovation
Center (STIC).
2022 Reclassified to Prime Market inaccordance with the reorganization of theTokyo Stock Exchange’s market
segmentation.

Leveraging the strengths developed throughout our history, we aim forfurther growth as we approach the 100th anniversary of our founding.

Yoshihiro Takahashi, the founder of the company, was concerned about the fact that most pigments were imported
before World War II, and founded Saika Ganryo L.P. in 1931 with the aim of domestically producing pigments. He
believed that pigments were difficult to use as they were and that they had to be made into an easy-to-use form topopularize them, so he began research and development.
In 1944, the company merged with Two other companies in the industry acquired and Company name changed toDainichiseika Kogyo k.k. (that is. Dainichiseika Color & Chemicals Mfg. Co., Ltd.), forming the base of the company
as we know it today.

Expanding “Domestically Produced”
technology into overseas markets

500

0

1930/3

13

1940/3

1950/3

1960/3

1970/3

1980/3

1990/3

2000/3

2010/32020/3 (FY)14

About Dainichiseika

Corporate Value
Value creation process
In 1931, Dainichiseika was founded with aspirations to produce pigments domestically, which at the time were imported,and to apply its advanced technological capabilities to bring Japanese colors to the world. Since then, we’ve expanded our business domain from colorants to functional materials and fromJapan to overseas to meet the needs of society, and as a chem-

Social issues in response
to which Dainichiseika
will take initiatives:

ical manufacturer who offers color and brings ideas to life, we’re
working with our customers in numerous markets and domains
in Japan and overseas to address social and environmental issues to realize a sustainable society and achieve sustainablegrowth.

Technologies, customer responsiveness,and production capabilities

Preventing global warming
Promoting resource recycling● Strengthening social infrastructure● Reducing environmental impact● Protecting the water environment● Promoting agriculture andreducing food loss●●

cultivated over 90 years in business

192,765 million yen
114,301 million yen
10,039 million yen, etc.

Manufacturing capital●

Number of production sites●

Capital Expenditures

Needs

14 in Japan

4,245 million yen

Giveshape toyour ideas

ctio nIntellectual capital●

Natural capital
Total energy(crude oil equivalent)● Energy and electricity●●

Water consumption

Relationships with local communities
Active participation in the local
community, environmental
beautification activities, participation
in local learning programs such as
work experience, etc.
● Cooperation with industry andacademia
Partnerships and joint efforts withmore than 10 universities including
Kyoto University

15

du

ro

Production
site capabilities

Stable supply of high-quality
products● Global expansion with 14
domestic and 12 overseas
production sites●

Wide range of products● New product development● Proposal of high value-added
materials

Solutions

111,053K kWh
2,554Km3, etc.

P●

34,674 ㎘

Social capital●s
Responsivenessto customer needseNumber of employees
3,666 on a consolidated basis in Japan● Training hours
1.48 hours/person● Training cost
4,119 yen/person, etc.
●

S al

Human Capital

PromoteESG-focusedmanagement thataims to realize asustainable
society.

Reinforceour business baseby expanding
worldwide businessToward the realization ofa sustainable society Increase of
Increase of
19％ ofIncrease
Sales of ESG-contributing
％ of
19
over
Increase％
19
34.10
products (billions of yen) 33.28
over
FY19
2021/3
28.05
％
34.10
33.28
over
FY
2021/328.05
34.10(increasing
global sales)

Contributing to society and the environment
through manufacturing
Governance

28.05
28.05

34.10

33.28
33.28

FY
FY
2021/3FY
2021/3FY
2021/32021/3FY
FY
2022/3FY
2022/3FY
2022/32022/3FY
FY
2023/3FY
2023/3FY
2023/32023/3

FYover2021/3
FY 2021/3

77％*Market35,320standard

chnologies
Te

12 in overseas

R&D investment
2,972 million yen● R&D bases
6 in Japan● Three core technologies① Pigment Synthesis and Surface
Treatment Technology② Formulation and Dispersion
Processing Technology③ Polymer Synthesis Technology

Secure acompetitive
advantage throughtechnology-initiative.

Continue to contribute to society in nichemarkets by leveraging our technologicalcapabilities.
Work to solve problems and create new value
to realize a sustainable society.

CO2 emissions from energy use by
Dainichiseika Group in Japan（t-CO2 /year）

Creating new value by deepening and integrating Pigment
Synthesis, Formulation and Dispersion Processing and Polymer
Synthesis technologies with afocus on pigments and resins

Financial Capital
Total assets● Net assets● Capital stock

Capital efficiency-oriented
management

Three coretechnologies

Capital of Dainichiseika●

Our Mission

Basic Strategies

Corporate Philosophy

35,32035,32035,320FY
FY
2021/3FY
2021/3FY
2021/32021/3Results for the fiscal year
ended March 31, 2023
Net sales

Operating income

122.0 billion yen

2.6 billion yen

ROA

ROE

1.7%

1.8%

Industrial
Materials：
14%
Information &Electronics：16%

82.0
82.0
82.0
82.0

85.0
85.0
85.0
85.0

85.2
85.2
85.2
85.2

FY
FY
2021/3FY
2021/3FY
2021/32021/3FY
FY
2022/3FY
2022/3FY
2022/32022/3FY
FY
2023/3FY
2023/3FY
2023/32023/3

Increase of
Increase of
3.2％ofIncrease
3.2
over％of
Increase
％
3.2
over
FY3.2
2021/3％
FYover2021/3
FYover2021/3
FY 2021/3

Ratio of female, foreign, andmid-career hires in
Increase of
Increase ofmanagement positions（%）
6

Packaging：
23%

Industries
to sell

11,738
11,738
11,738
11,738FY
FY
2023/3FY
2023/3FY
2023/32023/3

Waste plastic recycling ratefrom domestic
manufacturing sites（%）

Other：17%
Building
Materials andEquipment：
9%17,396
17,396
17,396
17,396FY
FY
2022/3FY
2022/3FY
2022/32022/377％
reduction
77％ toreductioncompared77％
reductioncompared
FY 2014/3toreductioncompared
FY 2014/3tocompared
FY 2014/3to
FY 2014/3

See p.49 *1

Transportationequipment：
21%

11.0
11.0
11.0
FY
11.0
FY
2021/3FY
2021/3FY
2021/32021/3

FY 2023/3 (total of domestic
and global sales)

12.1
12.1
12.1
12.1
FY
FY
2022/3FY
2022/3FY
2022/32022/3

12.0
12.0
12.0
12.0
FY
FY
2023/3FY
2023/3FY
2023/32023/3

17.0
17.0
17.0
17.0

Increase of
6 of
percentage
Increase
6overpercentage
points6overpercentage
pointsFY
2021/3
percentage
pointsoverFY
2021/3pointsover
FY 2021/3
FY 2021/3

Target for
Targetfor
FY 2031/3
Targetfor
FY 2031/3
Targetfor
FY 2031/3
FY 2031/3

Other：6%

Toward new value creation

Asia：
21%

●

Countries
and regionsof salesdestination

Japan：
73%

Improve capital efﬁciency(Achievement of ROE and ROA targets)
ROE and ROA targets: ROE over 9%, ROA over 5%

Improving proﬁtability
Realizing an excellent company● Optimizing domestic/overseas ratio●●

FY 2023/3

16Strategy & Technology

Achieving Our Long-Term Vision and Basic Strategies
Where we want to be in ten years
With the release of our medium-term management plan inAugust 2021, Dainichiseika Group has incorporated two missions and four basic strategies into a mission entitled “Where
we want to be in ten years (2031)”.
We’re seeking to enhance our corporate value by continuing
to contribute to society through niche markets, leveraging Dainichiseika Group’s technological strengths and approaching thedrive to achieve a sustainable society as an opportunity to create
new value.
We’re also seeking to achieve sustainable growth throughcapital efficiency-oriented management based on the three pillars of our basic strategy: Technology-Driven, ESG-Focused, andWorldwide Business Expansion.

Strategic direction
Where we want to be in ten years
Our mission□ Continue contributing to society in niche markets byleveraging our technological capabilities.
□ Work to solve problems and create new value to realize asustainable society.

Basic strategies

As part of our strategy for growth, we’ve set three-year and five-year numerical targets for the three pillars of Technology-Driven,
ESG-Focused, and Worldwide Business Expansion, and have been developing businesses that leverage the characteristics of Dainichiseika Group.

FY 2021 actualSales

106.6*billion yen(138.4)billion yen

Numerical targets after three years (FY 2024)

Operating proﬁt

4.9billion yen□ Implement capital efficiency-oriented management.

Sales

Operating proﬁt

125.0billion yen

8.7billion yen

132.0billion yen

12.0billion yen

128.0billion yen

5.2billion yen

ESG
Sales in three years Sales in five years□ Strengthen our business base by expanding the worldwide
business (boosting global sales).

Sales plan after three years+6.1billion yen +12.0billion yen

Sales in three years Sales in five years+18.4billion yen +25.4billion yen

Technology-driven□ Promote ESG-focused management to realize a sustainable
society.

Roadmap

Operating proﬁt

Sales plan after three years Operating profit plan after three years*Figures based on the application of accounting standards for revenue recognition□ Secure a competitive advantage through technology initiatives.

Five-year target (FY 2026)

Sales

Sales in three years Sales in five years+4.0billion yen +11.7billion yen
Sales plan after three years

Overall Sales plan after three years+21.4 billion yen
Worldwidebusiness strategy
Sales in three years Sales in five years+4.2billion yen +7.3billion yen+1.8billion yen

Sales plan after three years+10.5billion yen+8.8billion yen

Technology-Driven

We have developed a roadmap for the realization of our longterm vision, divided into three phases. The first three years after
its formulation (the period of the current medium-term management plan) have been positioned as a period for planting theseeds for growth. We have steadily recovered from the COVID-19
pandemic and laid the foundations for existing businesses, technologies, and overseas development.
By the end of the five years after the formulation of the road-map, we will build a profit structure that will form the basis for
growth, achieve results in new businesses, and develop ouroverseas market strategy.
Through this process of seeding and growth, we will reap thefruits of our efforts in ten years, and by improving capital efficiency and profitability, and optimizing the ratio of domestic to overseas operations, we aim to realize our vision of becoming an
excellent company.

Growth Scenarios and Ten-Year Positioning(Billions of yen)
2,000

We have sought to develop technologies and products and expand sales with a focus on four target areas. Although the prolonged
impact of infectious diseases and shrinking demand caused by the Ukraine crisis have stalled the adoption of some newly developed
products, we’re making steady progress in technological development of environmentally-friendly products that are in high demandby society, such as water-based urethane and natural material-based cellulose powder for high-performance cosmetics.

ESG FocusedWorldwide Business Expansion

The adoption of environmentally-friendly products, which
Dainichiseika Group positions as ESG contribution products, isprogressing, and we are already on track to achieve a 19% increase in sales compared to our target of a 20% increase insales for the fiscal year ended March 31, 2021, which we set for
the fiscal year ending March 31, 2024.

In addition to launching high value-added products targetingdeveloped countries, we’re expanding sales of products thathave earned a good reputation in Japan in high-growth GDP markets. Although our business was affected by the decrease indemand due to behavioral regulations in China and Indonesia
and the automobile production adjustment due to the shortageof semiconductors, investment and demand are expected to
grow in the future, such as the expansion of a plant (in Thailand)
to meet the increasing demand for automotive electrical components and food packaging materials, and the increased adoptionof water-based surface treatment agents (in China).

New businesses start of full-scale achievement

1,800
1,600

Medium-term capital investment plan

1,400
1,200

Start of new business results

1,000

After three years
●
●

●

●

17

After five years

Recovery from the COVID-19 pandemic
Steady promotion of existing businesses●

Strengthening technological development(New business centering on ESG)●

Overseas market development(North America, EU, India)●

Establishment of profitable structurewith high capital efficiency
Accelerating new businessperformance
Overseas market strategy(capital alliance, M&A)

After ten years□ Improve capital efficiency(Achieve ROE and ROA targets)□ Improve profitability□ Realizing an excellent company□ Optimize domestic/overseas ratio

Medium-term investment plan

Status in the Fiscal Year ended March 31, 2023

We plan to make capital investments totaling 15 billion yen
over the three-year period from the fiscal year ended March 31,
2022 to the fiscal year ending March 31, 2024.
Of this amount, approximately 60%, or 9.1 billion yen, will beallocated as strategic investment for developing and commercializing environmentally-friendly products utilizing Dainichiseika
Group’s technologies, expanding manufacturing facilities tomeet increased demand, and developing technology development bases to support Dainichiseika Group’s technology-oriented approach. In addition, approximately 40%, or 5.9 billion yen,will be allocated as ordinary investments targeting the renewalof facilities at manufacturing plants and other maintenance necessary for the stable operation of the business. In addition, weplan to allocate 5.9 billion yen, or about 40% of the total amount,to sustainable investments.

While postponing investments in businesses and base development whose contributions to profits have been pushed backdue to changes in economic conditions and customers’ business plans, we’ve responded to changes in demand by promptly
planning additional capital investments that will contribute toimproved profitability, and prioritizing highly effective capital investments based on the economic situation.
Meanwhile, the Indonesia plant capacity expansion is now
complete and is raising production in response to strong demand for food wrapping materials. In addition, the Sakura Technology Innovation Center has begun operations in an open environment based on the theme of collaborative creation̶not justcollaborative creation among business units, but interactions
with customers and raw material manufacturers. The goal is toaccelerate open innovation within the Group.

18

Strategy & Technology

CFO MESSAGE

We will promote active
dialogue with our shareholders
and investors to help themunderstand Dainichiseika’s
technological strengths andbusiness strategies.

Aggressive investments in growth areas
and worldwide businesses to promote thethree pillars of the mid-term managementplan― What investments will you make in each busi-

ness segment to secure a technology-driven
competitive advantage?

Dainichiseika Color & Chemicals Mfg. Co., Ltd.
Senior Managing Executive Officer, Chief Financial Officer

Tatsuhiko Komada
Aiming to improve capital efﬁciency byboth securing proﬁts in strategic businessareas that leverage our strengths andimplementing our capital policy― Please tell us about your career to date andhow you plan to apply that experience to yourwork as CFO.

I came from a technical field. After transferring fromthe engineering department of a business division to the
production department, I was involved in implementing
the core system. After that, I was in charge of overseeing the stable operation of the core system and promoting data utilization. Currently, as CFO, in addition to planning and executing financial strategies based on
appropriate fund procurement, drawing on my knowledge of the manufacturing industry, I have the key responsibility of communicating my thinking with people
inside and outside the company in my own words.

19― As your basic mid- to long-term strategy, yourgoal is to achieve ROE of 9% or more and ROA of
5% or more. How do you intend to achieve management that emphasizes capital efficiency?

Capital efficiency is determined by the relationship between the denominator (capital) and the numerator(profit). We plan to analyze and study measures to improve the efficiency of the denominator during this fiscal
year in preparation for disclosure of measures to improve PBR, and announce them in the next mid-term
management plan. We plan to further improve capitalefficiency through both profit generation in our businessand capital policy.
The only way to increase numerator figures is to growour business. For this reason, the current medium-term
management plan sets forth four strategic businessfields that leverage Dainichiseika’s three core technologies, and promotes technology-led efforts to secure acompetitive advantage, develop and expand sales of
ESG-contributing products, and expand our worldwide
business.
Dainichiseika has established a body that meets
monthly to ascertain management information for eachbusiness unit and, as necessary, collaborate with related
divisions and report to management. I believe that therole of the CFO is to serve as a link between the field
and management.
As for Dainichiseika’s financial position, its DE ratio
was 0.28 as of March 31, 2023, which we consider to be
sufficiently healthy. However, there is sometimes a
trade-off between financial soundness and capital efficiency, so we keep both in mind when making decisions.

Our major policy is aggressive investment in growthareas. In our current medium-term management plan,
we planned to invest 15 billion yen in capital expenditures over three years. Of this amount, we’ve decided tobuild a new technology research center to consolidate
the R&D functions of the entire company and production facilities for biodegradable fine particles used in natural material-based cosmetics in the next mid-term business plan.
The reason for the former was to refine internal discussions on how to define the scope of technologies tobe integrated into the center. For the latter production
facility, the reason was the delay in the enactment oflaws in Western Europe, the main battleground for cosmetics. On the other hand, we made additional investments for projects that were expected to be commercialized earlier than anticipated and for markets that wewould enter together with our clients. Normal investments, like facility renewals, have also increased fromthe initial plan.
― In order to realise the mid-term management

plan, worldwide business will become more
important in the future. As CFO, what is youroutlook for worldwide business?

Dainichiseika was originally founded as an importer offoreign pigments and was the first company in Japan tomass produce pigments. We have been expanding ourbusiness overseas since the 1960s, and have actively
promoted overseas production of colorants and inks using pigments. In addition to the European and U.S. markets, we will accelerate business development in Southeast Asia and India, where populations and GDP are
increasing.
In the most recent fiscal year ended March 31, 2023,
sales significantly exceeded the mid-term management
plan, partly due to a review of selling prices and the depreciation of the yen, although volume was lower thanthe previous year due to the Shanghai lockdown and automobile production adjustments caused by the shortage of semiconductors. In particular, shipments of colorants and compounds for fluoropolymers were favorable
for high-performance colorants and functional productsin the information and electronics fields. In ASEAN,
sales of resin compounds expanded in the areas of EVs
and food packaging materials.
We plan to continue strengthening overseas development in business fields where we can take advantage of
our strengths in technologies and products cultivated inJapan and in production responsiveness.

― Can you balance ESG-oriented management

and profitability as stated in your mid-term
management plan?

In fact, around 90% of the development themes that
Dainichiseika is working on with customers as a BtoB
manufacturer are already ESG-related products. For example, many results have been achieved with biomass
inks, water-based inks and resins, and materials for rechargeable batteries.
Dainichiseika’s technological strengths are utilized todevelop products of the quality demanded by our customers, and provided through our production site capabilities. This is the source of our ability to create highvalue-added materials that meet the needs of our customers, society, and the environment. I believe it is theway to both emphasize ESG and ensure profitability.

Promote active dialogue with shareholders
and investors to better understand
Dainichiseika― The fiscal year ending March 2024 will be thelast year of your medium-term management
plan. What is your policy?

In the fiscal year ending March 2024, the final year of
our medium-term management plan, we expect orders
to increase from the second half of the year as inventory
adjustments in the supply chain come to an end. In addition, we plan to pass on to our customers, with theirunderstanding, the cost increases in raw material andenergy costs that have continued for the past two years.
Although the external environment will affect ourearnings, the most important thing is to steadily implement the basic strategies set forth in our medium-term
management plan. Of these, we believe accelerating
overseas expansion, on which we were unable to makeprogress due to COVID-19, is a key issue for this fiscal
year. In addition, as a BtoB manufacturer, we will continue to develop and produce products of the quality demanded by our customers and continue to provide products that contribute to society.
― Finally, what is your message to shareholders

and investors?

For my part, I think it is necessary to give a deeper
explanation of Dainichiseika’s current situation to shareholders and investors. In general, the chemical industry
is an equipment industry with enormous production facilities. ROE and ROA are low. We need to disclose andexplain the status of capital investment and earnings
security, including the characteristics of the industry.
Although Dainichiseika is a BtoB manufacturer andtherefore not well known to the public, its products areused in many everyday things encountered by consumers. We intend to be more proactive in our investor relations activities and to hold briefings for individual investors during the fiscal year ending March 31, 2024.
We hope you will look forward to Dainichiseika’s business activities as we maintain our stable dividend policy.

20Strategy & Technology

Medium-Term Management Plan
Results & review
Technologies

Secure competitive advantages through technology-initiative

ESG

Promote ESG-focused management to establish a sustainable society

Approach under the medium-term management plan

Approach under the medium-term management plan
We will deepen three core technologies of ours and focus our development efforts on the Mobility and Packaging areas andmarkets, which we have been continuously addressing, and the Functional Materials for IT & Electronics and Life Science & Personal Care areas and markets, which we are newly addressing, with actively investing funds and human resources to build a“technology oriented” system to secure competitive advantages through technology-initiative.

Target areas and markets corresponding to core technologies
Issue solving and new value creation for a sustainable society

We recognize that ESG initiatives remain a critical issue for the entire supply chain surrounding Dainichiseika Group. We will
promote the development and sales promotion of ESG-contributing products, address climate change, promote resource recycling, biodiversity conservation, deepen our commitment to corporate governance, and further promote social contributions
throughout the life cycle of our products, from the raw material procurement phase to the final disposal of products incorporating
Dainichiseika’s products.
*For more information on ESG initiatives, please refer to P.37 - P.60.

TOPICS for the current termchemical substances, quality control, responsible raw material procurement,
and sustainable logistics operations.

▲

Initiatives for environmental issues

・We actively promoted the development of secondary battery materials, elec-

Four target areas
New development markets

Continuous development markets

Functional Materials for IT and Electronics

MobilityLife Science & Personal Care

Packagingtrically conductive materials, thermal conductive materials, and biomass-derived products from the perspectives of preventing global warming, promoting resource recycling, protecting water resources, and reducing food loss.

・Relations with employees: We have enhanced our personnel system in terms of・We further decarbonized our operations by switching to electricity derived

・Relations with local communities: We have placed the safety and security of

improving work-life balance and furthering activities of women, foreign nationals and mid-career hires.

from renewable energy sources, replacing the gas cogeneration system that
had been in operation at the Tokai Production Plant.

our production bases in the vicinity as our top priority, conducting disaster prevention activities, giving greater consideration to the local ecosystem, reducing
our environmental impact, and striving to preserve the natural environment.

・We have started to calculate and disclose Scope 3 categories 1-8 for ourdomestic group companies.

▲

Corporate governance initiatives

・We accelerated our response to the shift of raw materials for plastic prod-・To ensure thorough compliance, we’ve continued to communicate messages

ucts to biomass, while curbing waste plastic emissions and promoting recycling.

▲

Initiatives for social issues

Three core technologies
Pigment Synthesis andSurface Treatment
Technology

Formulation and
Dispersion Processing
Technology

TOPICS for the current termfrom management, receive feedback from employees, and worked to improve
the internal environment so that each and every employee can view and act onmanagement strategies as their own personal goals.

・Relations with customers: We have conducted appropriate management of

Polymer Synthesis
Technology

Future outlook

Strengthen our business base by expanding worldwide business; boosting global sales

Approach under the medium-term management plan

Life Science & Personal Care
We are working to improve the performance of biodegradable microparticles andto establish a cost reduction method. We have begun performance evaluations ofmushroom-derived chitosan and natural product-derived biodegradable resin
based on sample work.

Life Science & Personal Care
We plan to establish a pilot-scale production system and promote
R&D to continuously introduce items that meet market needs.

▲

Mobility
With respect to urethane, acrylics, silicone polymers, and lightweight and highstrength resin compounds, we’ve established a mass production system for items
for which product design with enhanced environmental friendliness has been
completed. We’ve begun sample work for high-strength resin compounds thatincorporate recycled materials.

Mobility
We will promote development of applications and introduction of
new production facilities with the aim of actualizing, boosting production, and expanding sales of products with enhanced environmental friendliness and products using recycled materials.

▲

Promoting local production for local consumption
and expanding overseas bases
We promoted sales expansion activities in response to requests for
local production of environmentally-friendly urethane resin products
and other environmentally-friendly products that have beenstrengthened by the COVID-19 pandemic, and also promoted activities with a view to local production of products for which demandcan be anticipated.

Packaging
The adoption of environmentally-friendly products like biomass ink and water-based ink increased, and ESG products accounted for 60% of gravure inks.

PackagingWe will accelerate the development of new inks, with a focus onenvironmentally-friendly products.

Creating new businesses
We established a stable supply system for new businesses in theengineering plastics business and built a stable supply system tomeet increasing demand for digital printing in the commercial printing field in Europe and other regions.

▲

Functional Materials for IT and Electronics
With respect to secondary battery materials, conductive materials, thermally conductive materials, functional polymers, and high-value-added pigments and dispersions, we strengthened open innovation and industry-academia joint efforts,
steadily introduced new technologies, and improved our basic technological capabilities.

▲

We will continue to promote local production for local consumption based on the recognition that the source of Dainichiseika
Group’s earnings and growth exists both in Japan and overseas and that we need to develop our business in countries with highGDP growth in a balanced manner. In addition, targeting growth markets, we will study market entry through local production of
specific products and expand our overseas bases for such purpose.

▲

Functional Materials for IT and Electronics
We will establish production technology for acquired items andpromote R&D for further performance.

Overseas strategy

TOPICS for the current term▲

Launching high value-added products
targeting developed countries
EU●●

High tech
Life science
USA

▲

INDIA

●

▲

Polymer
products▲▲

Positioned as a priority
strategic region

ASIA
CHINA

●
●

●
●

High tech
Life science

Social infrastructures
Daily necessities

Expand sales of products highly regardedin Japan in high-growth GDP markets

The medium-term management plan and its progress are summarized in the Company’s presentation materials and financial results presentation materials,
which are available on Dainichiseika’s website.
https://www.daicolor.co.jp/english/ir/index.html

2122

Strategy & Technology

Financial and Non-Financial Highlights
Consolidated financial highlights
Net sales (millions of yen)
170,394

155,108

138,491

Consolidated non-financial highlights
Rate of return on equity (%)
6.5

121,933

122,005

4.1

Environment
Sales of ESG contributing products (billions of yen)

5.9

4.2

Recycling rate of waste solvents (%)

34.10

33.28

99.78

99.99

99.95

119th Period

120th Period

118th Period

119th Period

120th Period

28.05

1.8
116th Period 117th Period 118th Period 119th Period 120th Period
2019/32020/32021/32022/32023/3116th Period 117th Period 118th Period 119th Period 120th Period
2019/32020/32021/32022/32023/3*Adoption of the Accounting Standard for Revenue Recognition
from the fiscal year ended March 31, 2022

Operating profit (millions of yen)
8,718

2021/3

Ordinary profit to total assets (%)
4.7

7,446
4,850

118th Period

4,920

2019/32020/32021/32022/32023/3

85.2

85.0

82.0

2022/32023/3

PRTR (including VOCs) emissions (air, water, soil) (t)
206.7

198.3

178.8

168.4

2.9

152.3

1.7

2,635

116th Period 117th Period 118th Period 119th Period 120th Period

2021/3

Recycling rate of waste plastic (%)
4.2

3.0

2023/32022/3116th Period 117th Period 118th Period 119th Period 120th Period
2019/32020/32021/32022/3118th Period2023/3119th Period2022/32021/3116th Period 117th Period 118th Period 119th Period 120th Period

120th Period

2019/32023/32020/32021/32022/32023/3

Water consumption
Ordinary profit (millions of yen)
9,264

Payout ratio (%)
73.7

5,613

40.7

3,373

2019/32020/32021/32022/32023/3

24.0

119th period

120th period

Groundwater（thousand m3）

2,021.4

2,127.1

2,065.0

2,264.7

3）2,057.92021/32022/32023/3

Water supply（thousand m

147.2

140.2

137.3

136.4

135.3

Industrial water（thousand m3）

268.0

285.2

305.0

277.7

239.2

116th period

117th period

118th period

119th period

120th period

20.1

8.7

6.6

5.4

6.4

116th period

117th period

118th period

119th period

120th period

998

143

595

247

308

ー

14.3

416.1

41.5

124.7

120th period

COD (water pollution load)

116th Period 117th Period 118th Period 119th Period 120th Period
2019/3118th period

2020/336.2
13.2

116th Period 117th Period 118th Period 119th Period 120th Period

117th period

2019/3

8,315
5,582

116th period

2020/32021/32022/32023/3

2019/3COD（t）

2020/32021/32022/32023/3

CFC leakage (CO2 equivalent)
Profit attributable to owners of the parent(millions of yen)
6,343
3,876

2019/3

Capital expenditures (millions of yen)

t-CO2
％

9,001
6,789

6,166

7,396
4,965

4,245

23

2020/32021/32022/32023/3116th Period 117th Period 118th Period 119th Period 120th Period
2020/32023/3116th period

117th period

118th period

119th period

NOx(t)

7.7

15.9

9.5

13.0

6.1

Sox(t)

0.9

0.9

0.7

0.8

0.2

2019/3

2019/32022/3

Nitrogen oxide (NOx)/Sulfur oxide (SOx) émissions (air pollutants)

2,007

2019/32021/3*including CFC substitutes

3,977

116th Period 117th Period 118th Period 119th Period 120th Period

2020/32021/32022/32023/32020/32021/32022/32023/324

Strategy & Technology

Financial and Non-Financial Highlights
Targets and results of major waste management initiatives

Human resource data

Initiatives:

Improve yields and reduce generation of nonconforming products in manufacturing processes, andreduce sludge generation in wastewater treatment

Targets:

Increase recycling rate by 1 percentage point from the previous year, and reduce final disposal by 1%
from the previous year

Results:

Recycling rate up 0.7 percentage points from the previous year; final disposal volume down 11%(89.0%) from the previous year

Reducing waste generation by improving manufacturing processes to increase yields●

Reducing waste generation by suppressing the generation of defective products●

Promoting recycling through waste separation and collection

Total waste (hazardous + non-hazardous)
116th period
2019/3117th period
2020/3118th period
2021/3119th period2022/3120th period2023/3

Amount generated (t)10,59010,001

8,417

10,1698,626

Amount discharged from factories (t)10,59010,001

8,417

10,1698,626

Recycled amount (t)

6,688

6,299

5,785

6,279

5,379

Amount landfilled (t)

3,049

2,833

2,144

3,239

2,885

Effective utilization rate (%)

63.2

63.0

68.7

61.7

62.4

Society
Number of fatalities and injuries due to occupational
accidents (domestic group)

Number of process accidents/process accident rate
(domestic group)■ Number of fatalities due to work-related accidents (persons)■ Number of accidents (cases)■ Number injured due to non-lost workday accidents (persons)Accident rate (cases/200,000 hours)■ Number injured due to lost-workday accidents (persons)Total Recordable Injury Rate <TRIR> (persons/million hours)

9.55

9.13

7.82

5.1

18
6

31
18

28
0

4

0.06

5

0.28
5

3

27
0

2021/32020/3

3

15

2

16

0

33

1

18

0

0

116th Period 117th Period 118th Period 119th Period 120th Period
2019/3

0.17

4.87
33
5

12

0.37
0.17

2022/32023/3116th Period 117th Period 118th Period 119th Period 120th Period
2019/32021/32020/32022/32023/3

Number of lost-workday accidents/Incident intensity rate/Incidence of lost-workday accidents
116th period
2019/3117th period
2020/3118th period
2021/3119th period2022/3120th period2023/3

6

5

2

4

15

Intensity rate (%)

0.034

0.003

0.001

0.038

0.031

Incidence of lost-workdays (person/million hours)

1.70

1.45

0.61

1.01

4.15

Number of lost workdays (cases)

Male
FemaleOverallMale*1
FemaleAverage age (years)
OverallMale*1
FemaleAverage years of service (years)
OverallMale
FemaleNew graduate hires (persons) *2
Overall
Percentage of female employees among new graduate hires (%) *2
Percentage of female employees (%) *2 *4
Male
Retention rate for new graduate hires after three years
Female(%) *2Overall
Male
Percentage of mid-career hires (%)
FemaleOverallMale
Number of employees who retired (for personal
Femalereasons excluding those who retired at retirementage) (persons) *2 *5
OverallMale
FemaleTurnover rate due to voluntary resignation (%) *2 *5
OverallMale
Total number of employees granted the right to takeFemalechildcare leave (persons) *2 *4 *6
OverallMale
Total number of employees who took childcare leave
Female(persons) *2 *4 *7
OverallMale
Total number of employees who returned to work
Femalefrom childcare leave during the reporting period*2*4*8(persons)
OverallMale
Total number of employees enrolled in the company atFemalethe end of 12 months after returning to work from*2
*4
*9childcare leave (persons)Overall
Male
Percentage of employees returning to work after
Femalechildcare leave (%) *2 *4 *10
Overall
Male
Retention rate for employees after parental leave (%)
Female*2 *4 *11
OverallMale
Number of employees using shortened working hours
Femalefor childcare (persons) *2 *4 *12
Overall
Ratio of female, non-Japanese, and mid-careerhires in management positions (%) *2
Average annual salary (yen) *1
All workers
Difference in wages between male and female
Full-time employees
workers (%) *1 *13
Part-time andfixed-term employees
Percentage of all employees covered by collective bargaining
agreements (union membership rate) (%) *14
Tokyo
Osaka
Aichi
Shiga
Comparison of standard entry-level salaries to regional
Ibarakiminimum wages (comparison to minimum wages) (%)
Shizuoka*2 *15
Saitama
Chiba
Kumamoto
Fukuoka
Total number of employees (persons) *1

Environmental Management System (EMS) initiatives●

116th period Fiscal
Year Ended Mar. 2019

1,219
220
1,439
43.6
35.9
42.4
19.9
12.6
18.8
44
13
57
23
16
98
100
99
48
44
47
33
11
44
2
3
2
63
12
75

117th period Fiscal
Year Ended Mar. 2020

118th period Fiscal
Year Ended Mar. 2021

12
12

1,225
238
1,463
43.5
35.9
42.3
19.8
12.4
18.6
54
27
81
33
17
96
94
95
36
41
38
44
9
53
2
3
2
37
18
55
1
18
19

13
13

14
14

12
12

13
13

100.0
100.0

100.0
100.0

12
12
100.0
100.0
100.0

100.0
100.0
8
36
44

100.0
100.0
8
34
42

85.7
85.7
10
49
59

̶

̶

̶

̶

̶

̶

̶

̶

̶

1,230
253
1,483
43.0
35.6
41.8
19.2
12.2
18.0
63
22
85
26
17
93
92
93
34
21
31
37
10
47
2
3
2
49
12
61
6
12
18
6
17
23
̶

̶

119th period Fiscal
Year Ended Mar. 2022

1,180
263
1,443
42.4
35.8
41.2
18.6
12.2
17.4
42
22
64
34
18
91
100
94
34
12
28
32
7
39
2
2
2
56
11
67
17
11
28
16
14
30
6
16
22
100.0
100.0
100.0
100.0
94.1
95.7
15
47
62

120th period Fiscal
Year Ended Mar. 2023

1,178
273
1,451
42.9
36.1
41.6
19.0
12.6
17.8
40※3
27※3
67※3
40※3
19
84※3
100※3
88※3
39
10
30
41
12
53
2
3
2
52
10
62
33
10
43
30
9
39
15
14
29
100.0
100.0
100.0
93.8
100.0
96.7
21
40
61

12.5

12.0

11.0

12.1

12.0

7,768,405
67.6
71.3

7,533,598
66.6
68.7

7,123,158
68.1
69.9

7,073,496
69.0
70.5

7,363,199
69.8
70.9

59.1

60.1

60.8

60.1

63.7

99.0

99.6

98.5

99.4

99.6

151.7
159.0
165.0
175.5
178.6
172.3
164.8
165.3

̶*1６

164.4

*1 Non-consolidated *2 Domestic Group *3 As of April 1, 2023 *4 All forms of employment *5 Full-time employees only *6 For males, the number of employees whose child was born within the fiscal year; forfemales, the number of employees whose maternity leave ended within the fiscal year *7 For male employees, only the first acquisition is counted; for female employees, the number of employees whose childcare
leave started on the day after the maternity leave ended within the fiscal year *8 Number of employees whose childcare leave ended on the day after the childcare leave ended within the fiscal year *9 Numberof employees enrolled 12 months after “Total number of employees who returned to work from childcare leave during the reporting period” in the previous fiscal year. *10 Return-to-work ratio = total number of
employees whose childcare leave was completed during the fiscal year and who have returned to work since the following day *11 Retention rate = total number of employees enrolled in the company at the endof 12 months after returning to work from childcare leave ÷ total number of employees who returned to work from childcare leave during the reporting period. Date of completion of parental leave falls within
the previous year and total number of employees enrolled after 12 months. * 12 Employees who worked shorter hours for the purpose of using childcare or who used the childcare flex system for a period of time
during the relevant fiscal year *13 Calculated as the ratio of average monthly wage of women to average monthly wage of men. Fixed wages including basic wages, premium wages for overtime and holiday work,and bonuses are included; retirement and commuting allowances are excluded *14 Percentage of employees who are members of labor unions among those who have the right to join *15 University graduates.
Minimum wage is calculated based on the Tokyo minimum wage (1,072 yen/hour) as of March 2023, assuming an 8-hour workday and 20 days per month. The legal minimum wage is observed, and a gender-uniform
remuneration system is applied for the same qualifications and job level. Including life plan allowance of 25,000 yen *16 No starting salary is set because no new graduates were hired.

ロケーション基準■ 国内Scope1 ■ 国内Scope2 ■ 海外 Scope1 ■ 海外 Scope2
（千 t）

25

100

88

80
60

51

38

81
4

34

70
3

33

83
38

75
2

33

26

Strategy & Technology

Technologies Behind Our Products

Research and Development

3 Core Technologies

We aim to contribute to a sustainable society by building on our
three core technologies to target four developing markets.

Our technology began with the synthesis of high-quality, highly functional pigments, evolved to the stable dispersion of pigments in various materials to improve their coloring and functionality, and then to the acquisitionof the technology to synthesize the synthetic resins themselves that form the base of such dispersions. Our
technological strength lies in its ability to create colorants and functional materials that are unique to our groupand that carefully meet the needs of our customers through the interplay of these three technologies as a comprehensive capability.

Pigment Synthesis and Surface
Treatment Technology

Formulation and Dispersion
Processing Technology

Pigment synthesis is a technical fieldthat makes comprehensive use ofknowledge of physical chemistry andinterfacial chemistry, with centering incoloration theory of chemical substances and chemical bonds. In addition to
improving dispersibility and colorationfrom the perspective of coloring, we
also have the technology to chemicallytreat pigment surfaces to add special
functions, like pigments for color filters
in LCD panels.

Dispersing pigments that are insoluble in water or oil evenly and stably inthe target material requires a great dealof know-how. We have a wide range ofdispersion processing technologies for
all types of materials. We apply this Dispersion Processing Technology not justto coloring but also to imparting functions such as electrical conductivity,
flame retardance and strength to provide materials with added functionality.

Polymer Synthesis Technology
We have extensive knowledge of raw
materials such as urethane resins, imide
resins, acrylic resins, and natural product-derived polymers, as well as resin
design and resin synthesis technologies
to match target performance. Ourstrength lies in our ability to provide
high value-added products that matchthe needs of our customers using thistechnology and being able to provide integrated production to the final product.

By analyzing three core technologies of Dainichiseika Group’s from the perspectives of “seeds” and “needs,” andby aggressively investing funds and human resources in four target areas and markets with potential for development and growth, our goal is to secure a technology-driven competitive advantage.

Roadmap realized by deepening our three core technologies
Functional Materials for IT and Electronics
Secondary battery materials, electrically conductive materials,
thermal conductive materials, functional polymers,
high added value pigments and dispersions

Newly developed markets

Mobility

Packaging

Polyurethane, acrylics, silicone polymers,
lightweight and high strength resin compounds

Continued development markets

Seeds

Needs

Joint research and creation of new technologies through open innovation

Focus on products that contribute to ESG efforts

Three core technologies

Agglomerated

Dispersed

To secure a competitive advantage through technology-initiative

Dainichiseika Group has returned to the basics of creating new value and contributing to society
for our sustainable growth, and is actively working to become a chemical manufacturer that proposes solutions to customers’ problems by strengthening its business foundation to respond quickly
to the changing economic environment. In formulating the measures of the medium-term management plan announced in August 2021, we’ve placed the highest priority on contributing to social
needs (ESG) and have reorganized our four existing focus areas (environment, energy, personalcare, and IT & electronics), and are focusing our product development efforts on the following two
new development areas: (1) Functional Materials for IT and Electronics and (2) Life Science & Personal Care, and two ongoing development areas: (3) Mobility and (4) Packaging. The R&D organization of Dainichiseika Group consists of the Synthesis Research Division 1, Synthesis Research DiRepresentative Senior Executive
vision 2, Dispersion Research Division 1, and Dispersion Research Division 2, which are corporate
Director, Head of R&D Structure
research divisions, the Technologies Management Division, which is a staff division, and the TechYoshitaka Koshiro
nologies Management Department of each business division. In order to speed up and improve theefficiency of new business and product development, we will consolidate company-wide technologies, select priority themes,
and concentrate resources (human, material, financial, and information) to promote development.

Formulation and
Dispersion Processing

Polymer Synthesis

New business creation and open innovation
We are focusing on research and development of battery materials and biomass resins with theaim of creating new businesses that solve issues faced by the functional materials field for IT andelectronics and the mobility field. We’re also pursuing research and development of new tribological materials for sliding and mechanical components using open innovation methods. This includes promoting the development of functional materials through living radical polymerization incollaboration with external research institutions and establishing an industrial manufacturingmethod for concentrated polymer brushes (CPB) through joint research with domestic and foreign universities.

Discussion at open innovation center

Participation in various exhibitions

Activities to create new development themes

We have resumed our participation at exhibitions, previously
curtailed due to COVID, to provide opportunities for customers
to experience new products and developments of Dainichiseika
Group. Through these exhibitions, we’re also striving to win appreciation for Dainichiseika Group products and to identify andunderstand new needs.
In the fiscal year ended March 31, 2023, Dainichiseika Group
had booths at the New Functional Materials Expo and the Tokyo
International Packaging Exhibition, where both engineers in research and development and sales representatives participatedand listened to the real
voices of customers.

Dainichiseika Group is committed to a two-front approach totechnological management through deepening and exploring
new technological fields while deepening its three core technologies.
In the activities to create new development themes, teams
consisting of members of various ages, who were self-recommended by applicants, formulated themes from the perspectiveof integrating growth markets, external technologies, and coretechnologies of Dainichiseika Group. Each theme is tested andverified by the activity teams. Following evaluations based on
in-house presentations, new development themes are adopted.
We will continue our activities to study and develop technologies that help mitigate climate change (achieve decarbonization)and that bring us closer to a circular economy (recycling-oriented
society). Both are associated with high market demand.

TOKYO PACK 2022
- Tokyo International
Packaging Exhibition
2022 -

27

Gas barrier inks, recyclable inks,
biomass inks

Target areas / markets

Pigment Synthesis andSurface Treatment

Voice

Life Science and Personal Care
Biodegradable fine particles, cosmetic materials

The employment information page of our corporate website includes
project stories of our staff members dedicated to research and development, although this is only available in Japanese at present.

28

Strategy & Technology

Contributing to the Environment throughProducts ＜ESG Contribution Products＞

SpecialFeatureBiodegradable fine particles for cosmetics (RUBLALEAF® KCX)●

Background of development●

In 2019, the European Chemicals Agency (ECHA) published a draft regulation on microplastic beads in the EU region. This has generated demand for alternatives to synthetic resin beads. The Pigments Division,
which has a proven track record in industrial resin beads (RUBCOULEUR), began development of a biodegradable natural material-based
beads (RUBLALEAF® KCX).
●

Voice of development engineers

Product features

Dainichiseika’s technology has improved the sphericity and surface
smoothness of cellulose powder (beads), which is difficult to shape andprocess. The product has a smooth and moist feel to the touch. Various
grades are available for various applications, such as surface-treatedproducts and products containing different materials.

KCX seriessystem diagram

KCX-5000 Highlybiodegradable
spherical cellulose
powderStearic acid treatment(natural processing
agent)

Alumina encapsulation
treatment

KCX-5000L1 Highemulsification stability
cellulose powder

KCX-6000 Highlyhydrophobic cellulose
powder

KCX-7000 Highsoft-focus cellulose
powderPotential products■ Liquid foundation, etc.

Potential products■ Foundation■ Loose powder andother base makeup
items

From left: Abe, Takagamo, and Eguchi, Pigments Division

Background of development

Reproduces high functionality difﬁcult to achieve with water-based PU.
Texture(softness)

Durability

Environmentally-friendly

×

×

×
○

○

Voice of development engineers

Product features

Flexographic inks work well with paper and films such as stickers andlabels that are not very smooth, and have excellent print reproducibility.

［Gravure inks]

From left: Tanaka, Shirasugi, and Yoshida, Gravure Inks Division
Yoshida: Our customers appreciate the wide range of colors we can
express and our superior technology for reproducing ideal colors. We
plan to continue developing inks with excellent printing suitability thatcannot be found anywhere else.
Shirasugi: We’ve entered a transition period from solvent to water-based printing and from gravure to flexographic printing. Even if
we resolve one problem, other problems will come up. But we aren’tbound by conventional wisdom. If an idea comes to mind, it’s important to try it out without hesitation.
Tanaka: The market for water-based flexographic inks isn’t matureyet. So we’re struggling to keep up with the level of production,
which is rising day by day, but we’re very happy when our products
are adopted.

［Water-based
ﬂexographic inks]

Comparison of printing on beverage labels(Actual label enlarged approximately seven-fold)■■●(1) Non-yellowing grade
While maintaining the excellent ［Conventional ［Developed
lightfastness of conventional PU,
product]
product]
the heat discoloration resistance,
NOx gas discoloration resistance,and chemical resistance have been
improved, which had been considered an issue compared to solvent-based PU.
(2) Yellowing-resistant gradeThis water-based PU achieves excellent chemical resistance compaChemical resistance test:
rable to that of Dainichiseika’s solChemicals are applied, heatedvent-based PU. Lightfastness, oncefor 24 hours, then wiped off.
a weakness, is now a key strength.

○●

Potential products

Voice of development engineers●

From left: Suzuki, Hoshiyama, Sekizawa, and Matsuoka, Advanced Polymers DivisionMatsuoka: It was hard to achieve the required performance while
dispersing and stabilizing urethane resin in water due to the properties of urethane resin, which isn’t compatible with water. Throughtrial and error in material selection, ratio, and formulation, we wereable to achieve satisfactory performance.
Suzuki: We want to continue to design marketable products with agood balance of performance, productivity, and cost. We will also be
conscious of creating products that contribute to the reduction of
supply chain emissions, which will become more important in the
future.

Potential products
Automobile interiors■

Furniture and fabrics

Background of development●

As electronic devices become more sophisticated and compact, likesmartphones, televisions, next-generation high-speed 5G and 6G communications, and self-driving cars, the materials used in electronic devices are also required to have higher performance. Dainichiseika is approaching issues that could not be solved with epoxy resins, which arecommonly used in adhesives for electronic device substrates, based on
the characteristic flexibility of urethane resins, and aims to contribute toimproving the convenience of the information society.
●■

Food packages (e.g., confectionery paper packages)■ Sanitary products (e.g. diapers)
Beverage labels

Highly heat-resistant polyurethane adhesives

Product features

Solvent-based PU
Conventional water-based PU
Developed water-based PU

Background of development

Dainichiseika launched water-based flexographic inks in 2004. Gravure
inks had dominated the market in Japan from that time. Productivity andprint reproducibility were important considerations. Water-based flexographic inks, which were in the technological development stage, showedpromising. With growth in environmental awareness, the technology forwater-based flexographic inks has improved dramatically over the past
decade, and is now equivalent to that of gravure inks. The switch fromgravure inks to water-based flexographic inks is steadily progressing, as
evidenced by the achievement of VOC content of 2-3% or less, which
was quite a challenge from an environmental standpoint.

mainly made of natural materials, was a great challenge, because its
design orientation differs significantly from that of petroleum-based
resin beads, which use a variety of materials to achieve specific physical properties. And the shift to natural materials makes it hard to respond to user demands on a case-by-case basis.
Eguchi: Limitations involving materials and manufacturing methods
pose special challenges with regard to beads made of natural materials and used for cosmetics. We want to develop products that meetthe functions demanded by users to differentiate our products fromthose of other companies.

The impact of volatile organic compound (VOC) emissions on the environment and other factors has emerged as a key issue. Regulations
governing solvents are being tightened, primarily in Europe and China,
accelerating the shift to water-based and solvent-free products. However, the polyurethane (PU) used in synthetic leather for vehicles is primarily solvent-based, which is superior in terms of performance and cost,
and water-based PU has not been able to meet market demands. In response to industry reluctance to adopt water-based PU, launched developments intended to achieve breakthroughs.
●●●

Durable water-based polyurethane resins●

Water-based flexographic inks

Abe: Developing biodegradable beads for cosmetics, which are

Lecithin treatment(natural processing
agent)

Potential products■ Moisturizing cream■ Emulsion, etc.

Dainichiseika is developing environmentally-friendly products as ESG contribution products. These include water-based products, biodegradable particulates, biomass-derived products, and resins made from CO2 that help
bring us closer to a zero carbon society. We also contribute to customer efﬁciency improvements by developing
products that reduce energy consumption and waste. By eschewing use of conﬂict minerals, we seek to contribute to ESG not just within Dainichiseika Group, but throughout the supply chain.

Voice of development engineers

Product features

The introduction of functional groups*1 by a reaction different from thatof conventional urethane resins has overcome the weakness of urethane resins, namely, low heat resistance. The optimal structure for highheat-resistant adhesives was selected and commercialized using Dainichiseika’s expertise in designing urethane resins.
■ Strong adhesive strength■ The flexibility of the urethane resin is maintained, while achieving highheat resistance, formerly a weakness.
■ Provides the flexibility required to fit tight spaces within electronic
devices, which are growing smaller and smaller.
■ Combines softness with the high durability required of electronic components.

Cracking
occursConventional
product

Bendable
Dainichiseika
developed
product

From left: Iino, Miwa, Yaguchi, and Takahashi, Advanced Polymers Division
Iino: We’re struggling to keep up with the fast pace of developmentin this field due to model changes and other factors, but we have asmall team that is able to respond in a timely manner. I would like tocontribute to the realization of a highly convenient society by developing new products that do not exist in the world.
Miwa: We challenged the electronics field, where we’d never usedurethane resin, and established our own testing methods and approaches one by one while still exploring. I think it is a big step forward for us that we were able to achieve heat resistance in urethane
equivalent to that of epoxy resin.

Potential products

Smartphones and other electronic devices
Smartwatches, VR glasses, smart glasses, high-speed
high-capacity communications■ Next-generation automobiles (ﬂying cars, self-driving)■■*1 Atomic groups and bonding patterns that characterize the unique properties and reactions of organic compounds are called functional groups. The carboxyl group, which
reacts with epoxy in a curing reaction, can be used in combination with epoxy resins to achieve flexibility while maintaining the inherent properties of epoxy, like heat
resistance.

29

30

Strategy & Technology

Segment Information, Strategy and Performance

Color & Functional Products
̶ Pigments and pigment-processed products ̶Sales composition ratio

55.1%

Segment strategy
Review of the Fiscal Year Ended
March 31, 2023

Net
sales

OperatingprofitActual results for the fiscal
year ended March 31, 2023

Actual results for the fiscal
year ended March 31, 2023

67.2billion yen 2billion yen

Business overview

Sales of pigments and dispersions for the informationand electronics industries continued to recover for officeequipment applications, but sales for display applications
were weak due to inventory adjustments of LCD panels
and a decline in demand from people staying at home.
Sales of compounds and colorants for the consumer electronics OA equipment and vehicle industries were weak inJapan due to sluggish automobile production caused bysemiconductor shortages and other factors, but global
sales were strong in Southeast Asia and India.

Risks and opportunities
●

Risks

・Decrease in demand for plastics due to prevention ofmarine pollution and transition to a recycling-oriented society
・Rising raw material prices, higher energy and transportation costs●

Opportunities

・New demand for biomass plastics, biodegradable plas-

tics, and recycling-related businesses
・Increased demand in Asian countries with high GDP

Business description

growthThis segment is engaged in the manufacture and sale of pigmented colorants for fibers, colorants for plastics, resin compounds*1, pigment dispersions, and functional materials, with a focus on pigments and secondary processed products ofpigments.

Pigments
Inorganic and organic pigments
and prepared pigments *3 used in awide range of applications, including
paints, printing inks, and information
displays and recording materials.
*2

Specialty Colors

Plastics and Colorants

Colorants for a wide range of industrial applications, including mass colorants for synthetic fibers prior to spinning, pigment textile printing agents*4,
colorants for paper manufacturing,and colorants for construction materials.

Colorants and functional materials
used for various resins such as polyvinyl chloride resins, commodity resins,and engineering plastics.

Main products
Colorants andfunctional agentsfor plastics― MASTERBATCHES

Colorants andfunctional agentsfor plastics― COMPOUNDS
Pigments and prepared pigments

・Growth of semiconductor market

Initiatives
In this segment, we provide high value-added products forvarious applications by highly controlling particle shape and surface properties via Pigment Synthesis Technology, as well as
colorants for synthetic resins and various compound processing
technologies using Dispersion Processing Technology in various
industrial fields in Japan and overseas. We’re also engaged indeveloping and commercializing functional materials by deploy-

ing the technologies of Dainichiseika Group in a multifacetedmanner. Backed by these technologies, Dainichiseika Group’s
strength lies in its ability to propose and provide high value-added products in a variety of industrial fields by establishing a system that allows us to accurately and meticulously identify customer needs and promptly expand production and sales.

Business results
Results for the fiscal year Results for the fiscal year Results for the fiscal year
ended March 31, 2021
ended March 31, 2022
ended March 31, 2023

Forecast for fiscal year
ending March 31, 2024

Net sales* (billions of yen)

91.5

70.2

67.2

70.5（＋4.9%）

Operating profit (billions of yen)

1.5

4.9

2.0

2.9（＋44.6%）* Effective from the fiscal year ended March 31, 2022, the “Accounting Standard for Revenue Recognition” has been applied.

Mass colorants for synthetic fibers and textile printing agents*1 Resin compound: A molding material in which additives such as pigments and reinforcing agents are kneaded into plastic.
*2 Inorganic/organic pigments: Pigments, which are the elements of color, include inorganic pigments made of inorganic materials such as metals and organic pigments
made of organic materials.

31

・Diffusion of electric vehicles

In pigment products, we’re developing high-grade products like pigments for color filters, inkjet inks, and color
toners, and at the same time, we’re working to develop
pigment dispersions and masterbatches by combining elemental technologies through collaboration among ourtechnical divisions. We will also continue to focus on thedevelopment and improvement of environmentally-friendly
products to address social issues, like cosmetic materials
derived from natural products and inorganic composite
materials with high thermal conductivity and heat dissipation functions as thermal control materials for electronic
components.
In the area of secondary processed pigment products, in
response to diversifying needs, we’re actively designing
processed pigment products in pellet, liquid, and powder
forms to meet various applications, and at the same time,
we’re working to expand sales to a wide range of industries, including textile, information, and electronics applications, by developing products focusing not just on color
but also on functionality. In addition, to respond to increasingly sophisticated plastic materials and composite materials, we will develop tailor-made products and new processing technologies, and promote the development of
products that meet new demands, like environmental contribution, nanomaterials, and super engineering plastics
represented by fluoropolymers.

*3 Prepared pigments: Since pigments are insoluble in water or oil or hard to be soluble, dispersion processing requires a dispersion technology that takes advantage of thecharacteristics of pigments. Prepared pigments are products created by such dispersion technology.
*4 Mass colorants and textile printing agents: Mass colorants are colorants adding color to resin before spinning. Textile printing agents are materials used for printing on cloth.

32

Strategy & Technology

Segment Information, Strategy and Performance

Polymer & Coating Materials
̶ Synthetic resins and specialty coatings ̶

Segment strategy
Review of the Fiscal Year Ended
March 31, 2023

Business overview

Sales of urethane resins were generally sluggish in theautomobile industry and in the clothing and accessories industry due to inventory adjustments by major customers.
Sales of coating agents for LCDs in the information andelectronics industries remained sluggish due to a decline indemand from people staying at home and other factors.

Sales composition ratio

19.4%

OperatingprofitNet
sales

Risks and opportunities
●

Risks

・Tightening of environmental regulations and increasing

Actual results for the fiscal
year ended March 31, 2023

Actual results for the fiscal
year ended March 31, 2023

23.6billion yen 1.9billion yen

Business description
This segment is primarily engaged in the manufacture and sale of synthetic resins and specialty coating agents, UV-andelectron beam curable coating agents*1, urethane resins, and polymers derived from natural products.

Fine polymers

Chemical biology

Coatings

Urethane resins and colorants
used for synthetic leather and molded
products, special coating agents andadhesives that impart functionality,
and imide resins representing heat-resistant resins.

Chitosan *2 made from crab shells
and other natural polymers with active ingredients extracted from various marine organisms and natural
products.

UV- and electron-beam curable
coatings and design/functional coating agents used in the information/
electronics, automotive, and interior
construction materials fields.

Main productssocial demands (de-plasticization, recycling, solvent-free
and water-based products, CO2 emission regulations)・Rising raw material prices, rising energy and transportation costs●

Opportunities

・Increasing demand for ESG-contributing products, likebiomass synthetic resin raw materials and water-based
and solventless products, in response to rising global environmental awareness・Expanding demand in Asian countries with high GDP
growth・Market expansion of heat-resistant resins due to the miniaturization and higher functionality of electronic devices
・Expanding demand for coating agents due to the progress of mono-materialization

In the area of synthetic resin products, we’re developing
a series of products centered on urethane synthesis technology, and we provide synthetic leather, urethane formoisture permeable and waterproof materials, surface
treatment agents and colorants for vehicle interiors, urethane adhesives, thermoplastic polyurethane elastomers(TPU), urethane-silicone copolymer resins, and heat-resistant polyurethane adhesives. In recent years, we’ve been
focusing on the development of solvent-free and water-based urethane resins, which are ESG-contributing
products, against the backdrop of increasing environmental awareness. In addition, we’re developing and launchinga new environmentally-friendly urethane resin material
that uses CO2 as a raw material (HPU).
In the area of coating agent products, we’re developing
and improving UV/electron beam curable coating agentsthat contribute to energy saving in the manufacturing process based on our compounding technology for the IT andelectronics functional materials fields, like flat panel displays and touch panels, and the interior building materials
field, like flooring materials and fixtures.

Initiatives
We are working on developing and commercializing our mainstay urethane resins, centered on resin synthesis technology. In
particular, we will focus on developing ESG-contributing products centered on water-based and biomass products against the
backdrop of growing global environmental awareness, and expanding sales of high heat-resistant polyurethane adhesives forflexible substrates used in electronic devices, which are becoming smaller and more sophisticated. These products will be used
to expand business in the growing overseas market, with threebases around the world (Japan, North America, and China) at thecore, and lead to growth.
Based on our accumulated compounding and dispersion processing technologies, we provide coating agents to various industrial fields in Japan and abroad. We’re also good at developing original and customized products utilizing our technology,
and we will propose and provide highly unique products thatmeet the needs of our customers through our technology, knowhow, and the development of domestic and overseas bases.

Business results
Results for the fiscal year Results for the fiscal year Results for the fiscal year
ended March 31, 2021
ended March 31, 2022
ended March 31, 2023

Urethane resins

Natural product polymers

Coating agents*1 UV-and electron beam curable coating agent: An ink or coating agent that undergoes a chemical reaction under the energy of ultraviolet or electron beams, instantly
changing from a liquid to a solid.

33

Forecast for fiscal year
ending March 31, 2024

Net sales* (billions of yen)

19.7

23.6

23.6

25.0（＋5.7%）

Operating profit (billions of yen)

2.6

3.3

1.9

2.7（＋36.6%）* Effective from the fiscal year ended March 31, 2022, the “Accounting Standard for Revenue Recognition” has been applied.

*2 Chitosan: A naturally occurring material found in the shell skins of arthropods and crustaceans such as crabs and shrimps. It is a substance obtained by alkali treatmentof polysaccharides whose chemical structure resembles cellulose. Dainichiseika also manufactures allergen-free chitosan isolated from mushrooms.

34

Strategy & Technology

Segment Information, Strategy and Performance

Graphic & Printing Materials
̶ Inks for packaging and advertising publications ̶

Segment strategy
Review of the Fiscal Year Ended
March 31, 2023

Business overview

In gravure inks for the packaging industry, sales in Japanremained strong for beverage label applications and otherapplications. Overseas, sales increased significantly due tothe calming of the COVID-19 pandemic at an Indonesiansubsidiary. Sales of offset inks remained sluggish due todeclining demand.

Sales composition ratio

25.5%

OperatingprofitNet
sales

Risks and opportunities
●

Risks

・De-plasticization as part of a recycling-oriented society,

Actual results for the fiscal
year ended March 31, 2023

Actual results for the fiscal
year ended March 31, 2023

31.0billion yen -1.3billion yen

simplification of packaging, and reduction of packaging
and container volume in response to food loss issues.
・Soaring raw material prices and rising transportation
costs●

Opportunities

・Increased demand for environmentally-friendly products

In gravure ink products, we provide inks and coatings forthe packaging field as well as for construction and industrial material applications. As products that contribute to reducing environmental impact, we’ve launched water-based
flexographic inks that reduce VOC emissions, water-based
gravure inks, biomass inks that replace petrochemical materials with plant-derived materials, inks that do not use
toluene or MEK, and alkaline desorption inks that contribute to a recycling-oriented society. We’re also developing
products using urethane resin (HPU), which is made from
CO2. We will continue to focus on efforts to realize a
low-carbon society.
In the area of offset ink products, we primarily provide
commercial offset inks, but we are also working to expand
and develop distinctive product lineups for special paper
printing applications, like varnishes with antibacterial andantiviral functions and metallic inks with excellent design
properties, which are in growing demand in the market.

like biomass inks and water-based flexographic inks
・Increased demand for packaging due to population

growth in emerging countries

Business description
This segment develops, manufactures, and sells a wide range of gravure inks and offset inks for various applications, witha focus on packaging and advertising publication inks.

Gravure inks

Offset inks

Gravure printing inks, coatings, and flexographic inks thatcan be used for printing on a variety of substrates.

Offset printing inks and special inks used for paper media
such as newspaper inserts, flyers, books, and packaging
materials.

Initiatives
We are developing and commercializing special gravure inksand coatings with excellent printability based on our dispersion
processing technologies. Based on our network and knowledge
cultivated through partnerships with a wide range of industries,
we can offer integrated proposals for inks, coatings, adhesives,and other materials for diverse applications, including food packaging materials, construction materials, and industrial materials.
As the domestic market is reaching maturity, we will focus on
the information/electronics and industrial materials fields, where
growth is expected, using our coating processing technology.

Business results
Main products

Results for the fiscal year Results for the fiscal year Results for the fiscal year
ended March 31, 2021
ended March 31, 2022
ended March 31, 2023

Forecast for fiscal year
ending March 31, 2024

Net sales* (billions of yen)

26.9

28.0

31.0

32.5（＋4.6%）

Operating profit (billions of yen)

0.6

△0.8

△1.3

△0.4（ ）* Effective from the fiscal year ended March 31, 2022, the “Accounting Standard for Revenue Recognition” has been applied.

Gravure inks / flexographic inks

35

Offset inks

36

CSR and ESG Initiatives

Our Thinking on CSR and ESG

CSR and ESG Materiality

The world’s interest in sustainability has grown rapidly in recent years. As a chemical manufacturer, we believethat the key to sustainable growth lies in working to solve today’s social issues such as climate change and biodiversity loss, while identifying business opportunities and creating new value that focus on these issues. Basedon this belief, Dainichiseika Group regards as key management issues our efforts to develop human assets capable of grasping global changes and active problem-solving and to strengthen engagement by improving theinternal environment.

Materiality identification process
STEP

2

July 13, 2022) This CSR and ESG Basic Policy applies to the entire Dainichiseika Group,
CSR and ESG Basic Policy (Adopted
including Dainichiseika, Japan

will strive to maintain and strengthen relationshipsof trust with our stakeholders as a good corporate
citizen with high ethical standards, not to mention
respect for human rights and compliance with laws,
regulations, and social norms, both within and outside of Japan. We will also strive to enhance corporate value by building an appropriate governance system and promoting the growth and success of eachand every employee.

STEP

3

Validation

Environmental Policy■

Health and Safety Policy■

Human Asset Development Policy■

Quality Policy
■

P.47

■

Purchasing Policy

Human Rights Policy
P.48

■

■

■

4

Formulation of
measuresP.48

Ehttps://www.daicolor.co.jp/csr/policy/index.html

Environmental

Promotion structureInternal Audit OfficeBusiness Structure, Business Promotion Structure, R&D
Structure, Plant Operation Structure, and Group Companies

S
SocialPresident and Representative Director

CSR/ESG Promotion Group Headquarters● Ensuring compliance● Occupational safety and health improvement● Pandemic and BCP

measures● Human capital investment andhuman asset development● Preserving biodiversity

Importance to Dainichiseika Group

Product development
capability / New
business promotion(Eco-friendly products)

In order to realize a sustainable society, we will contribute to society throughour business and make company-wide efforts based on the recognition thatboth society and the environment, as well as Dainichiseika Group, need toachieve sustainable growth.

Climate change
countermeasures(Global warming
countermeasures)

We recognize that the impact of climate change on the global environment isa critical social issue and are actively addressing it.

Very highG
Corporate
GovernanceRelevant SDGs

Please refer to P.43 for “Approach to TCFD Recommendations.”

Circular economy
promotion

As a company that uses raw materials derived from limited fossil resources,
we’re committed to reducing the environmental impact of waste and establishing a circular economy that safeguards against resource depletion.

Preserving biodiversity

In addition to efforts to combat climate change and promote a circular economy, we will work to minimize the environmental impact of our business activities throughout the entire product life cycle and strive to protect and restore the ecosystem.

Chemical safety
management

Cooperation

Supervisingand Auditing

ReportingExecutive
Division

Supervising

Cooperation

Accounting audit

Periodic
Cooperation Report(Quarterly)

countermeasures (Global
warming countermeasures)● Circular economy promotion

Reasons for selection, activity policy

Occupational safety andhealth Improvement

Semiannual
and as-needed Reporting
reportingInternal Control Committee on Financial
Reporting● Environment Committee● Corporate Health and Safety Committee● Chemical Substances Control Committee● Export Control Committee● Quality Control Committee● Information Management Committee● Harassment Prevention Committee● Diversity and Inclusionmaterials
procurement● Climate change

Materiality

Board of Directors●

Auditing

Mutual cooperation

Accounting
Auditor

Audit &
Supervisory Supervising
Board
Instructions● Sustainable raw

HighAppointment
and dismissal

Internal Control System
Appointment and dismissal

37

General Meeting of Shareholders
Appointment
and dismissal● Chemical safety management

Description of the main materialities and related SDGs

Multi-stakeholder Policy

Please refer to this website for the respective policies of Dainichiseika Group. (Japanese Only)

Dainichiseika Group has established an internal control system to ensure the soundness and efficiency of our business activities, address social issues, and create value throughout the
lifecycle of Dainichiseika Group products as a chemical manufacturer. For CSR and ESG-related initiatives, measures are formulated by the CSR/ESG Promotion Division under the direction of
the President. Deployment activities are assigned to each execution mechanism. The activities of each execution mechanism
are supervised and audited by eight committees chaired by directors and executive officers, with regular liaison meetings
among these committees. The results of activities are reported
from each committee to the Internal Audit Office and the Boardof Directors for evaluation and supervision from various perspectives, including the suitability of each activity from a sustainability perspective, effective management of management
resources, and consistency with business strategies.
In addition, we operate a system to incorporate performanceon climate change and other ESG issues into our personnel performance evaluation system and reflect this performance in evaluations. For the fiscal year ended March 31, 2023, the weightingof ESG issues was set at 10% (for management positions).

Targets and measures to achieve
them are developed for each issue.

Information Security Policy

Internal Environmental Improvement Policy

capabilities and new
business promotion● Information security measures
STEP

The following policies have been established as guidelines for promoting sustainability activities.
■

Under the direction of the president,
confirm the appropriateness of materiality to be prioritized at a specialized internal meeting.

● Product development● Stakeholder communicationHigh

Based on our corporate philosophy of “Have an interest in people”, “Have an interest in something new”,
and “Have an interest in the future”, the Dainichiseika
Group recognizes that contributing to the realizationof a sustainable society will lead to the creation of
new value, and aims for sustainable growth together
with society by working to preserve the global environment and solve social issues.
In the development of our business activities, wePriority
assessment

Risks and opportunities of the issues
are analyzed, and priorities are evaluated both from the perspective of
stakeholders who have a high impact
on each issue and from the perspective of Dainichiseika Group’s business.

● Environmental solutions ● Social solutions ● Governance solutions

Importance to stakeholders

STEP

Issues are extracted from the previous year’s activity review, policies
and market trends related to society,the environment, and the SDGs.

Very high１Issue Extraction

Materiality matrix

We will work to minimize risks to the environment and human health fromraw materials handled by Dainichiseika Group, as well as risks such as fire in
our operations, over their lifecycle.

Diversity and inclusion

We aim for sustainable growth by respecting the diversity of our human assets and their different sense of values, and by creating a workplace in which
all people involved in Dainichiseika Group can play an active role.

Human capital
investment and humanasset development

We promote human capital investment and human asset development basedon an understanding of the current state of skills and human capital required
to realize management strategies. We will also strive to create an internal
environment that creates a virtuous cycle of increased engagement by deepening the linkage between management strategy and personal goals, and byenabling employees to actively engage in their work and receive appropriate
evaluations.

Ensuring complianceTo enhance the trust of our stakeholders, we will not only comply with laws
and regulations, but also actively engage in social contribution activities.

Information security
measuresTo ensure the trust of our stakeholders and the stability of our business activities, we will work to strengthen our defense and resilience against cyber-attacks which have been increasing in recent years.

38

CSR and ESG Initiatives

CSR and ESG Materiality

CSR and ESG activity evaluation and targets for the next fiscal year
Under the direction of the President, the CSR/ESG Promotion
Group Headquarters and each implementing unit analyze risks
and opportunities and set main issues. The status of these initia-

tives is reported to the Board of Directors on a quarterly basis.
Based on the results, the following issues are set. For the fiscal
year ended March 31, 2023, we have added biodiversity preser-

vation as a major issue. From the perspective of both risk andopportunity, in line with the TNFD framework, we will promote
both management activities that reduce emissions of chemical

substances with the potential to be detrimental to the environment and product development that reduces the environmental
impact of Dainichiseika Group products at the stage of use.
Excellent: ★★★, good: ★★☆, passing: ★☆☆, failing: ☆☆☆

Materiality

Main issues

Activity plan and targets for FY ended March 2023

Corresponding SDGs

Activity results for FY ended March 2023

Evaluation

Number of registrations of ESG contributing products increased and net sales increased by 19% compared to
FY2021● Domestic Group CO2 emissions (Scope 1 + Scope 2) 77% reduction from FY2014● Specific energy consumption: 4% increase (domestic group)● Partial postponement of energy-saving equipment installation due to unsuitable investment conditions● Installation of solar panels● Improved efficiency in production processes● In-house carbon pricing in operation● Converting in-house gas-generated electricity to electricity from renewable energy sources● To reduce the amount of leaked CFCs, air conditioning equipment was upgraded to use environmentallyfriendly refrigerants★☆☆

Increased use of biomass-derived raw materials in product lines
Industrial waste generation decreased 13% from previous year due to lower production volume● Recycling rate improved by 0.2 percentage points from previous year
● Final waste disposal volume decreased by 9.2% year-on-year● Promoted sorting of waste plastic at domestic group companies Waste plastic generated: 2,095 tons
Recycled: 1,785 tons
Recycling rate improved by 3.2 percentage points from the fiscal year ended March 31, 2021, to 85.2%● Recycling rate for waste solvents in the domestic group remained almost unchanged at 99.95%★★☆

●

Climate change
countermeasures(Global warming
countermeasures)

Contribute to the prevention of global warming through our business.
● Expand sales of products that contribute to a decarbonized society● Reduction of greenhouse gas emissions from business activities● Risk countermeasures against natural disasters

Circular economy
promotion

Promote resource recycling mainly to prevent depletion of fossil resources and reduce
environmental impact.
● Expand sales of products that contribute to resource recycling● Promote reduction and recycling of waste generated by business activities● As a business that generates significant volumes of industrial waste, including plastic
waste, we will work to reduce the volumes of waste plastic generated and to recycle
the waste plastic generated.

Preserving
biodiversity

In addition to climate change countermeasures and efforts to promote a circular
economy, we will work to minimize the impact of our business activities on ecosystems
throughout our supply chain and strive to protect and restore ecosystems.
● Reduction of emissions of substances that pollute the air and water and proper
operation of abatement facilities● Promote the development and marketing of products that reduce pollution of air andwater

Promote development of products that contribute to ESG and energy saving
Target: 1% reduction in energy consumption per unit of production from the previous year
Systematic introduction of energy-saving equipment● Introduction of renewable energy● Study on energy saving in production processes●●●

Strengthen a chemical substance management system to conserve the environment andensure people’s healthy lives.
● Improve and maintain a chemical substance management system● Strengthen management of hazardous chemicals in products

Quality assurance

Contribute to people’s health through the manufacture and stable supply of high-quality
products.
● Establishment of a system for unified QMS operation● Appropriate supplier management

Occupationalsafety and healthimprovement

Work on improvement of safety measures and safety awareness to create acomfortable work environment and prevent accidents.
● Compliance with laws and regulations related to occupational health and safety● Reduce the number of occupational accidents

Promote development and sales of ESG-contributing products (including non-climate change related
products)
Target: Increase sales by 20% in FY2024 compared to FY2021● Reduce GHG emissions by procuring electricity from 100% Substantially Renewable Energy
Target: Reduce domestic Group GHG emissions (Scope 1 + Scope 2) by 70% in FY2024 compared to
FY2014● Continuously promote efficient use of energy in accordance with the Energy Conservation Act
Target: 1% reduction in energy consumption per unit of production from the previous year
● Internal implementation of carbon pricing
P.43
●

●

Promote development of products that contribute to ESG and resource recycling● Improve waste recycling rate
Target: 1 point improvement from the previous year
● Reduce final waste disposal volume
Target: 1% reduction from the previous year●

This item was not set as a materiality issue for FY2023.

Management of chemical substances through the introduction of a new chemical
substance management system
Development and appropriate maintenance of the system● To strengthen management of hazardous chemical substances in products
・Implementation of measures to comply with the partial revision of the enforcement
order of the Act on the Evaluation of Chemical Substances and Regulation of Their
Manufacture, etc.
・Conduct internal audits on management of environmentally controlled substance● Implementation of enlightening employees on chemical substance management●

This item was not set as a materiality issue in FY2023.

Promote the introduction of a new chemical substance management system
Implemented measures to comply with the partial revision of the enforcement order of Act on the Evaluationof Chemical Substances and Regulation of Their Manufacture, etc.
● Information sharing regarding the partial revision of the enforcement order of the Law concerning Pollutant
Release and Transfer Register● Conducted internal audits on the management of environment-related controlled substances● Implemented employee education using the Chemical Risk Forum●

Reduce the amount of waste plastic and solvents disposed of; maintain and improve recycling rate
Target: As medium-term targets for recycling rates of waste plastic and solvents,(1) Improve recycling rate for waste plastic by 3 percentage points in FY2024 compared to FY2021(2) Improve the processes to achieve 99.9% recycling rate of waste solvents by FY2024, and study on
introduction of recycling facilities●

Promote efficient use of water resources.
Target: 1% reduction in water consumption per unit of production from the previous year
Reduce the ecological impact of potentially harmful chemicals.
Reduce the volume of wastewater and properly operate and manage wastewater treatment facilities.
Target: Reduce emissions of PRTR substances by 1% from previous year●●

Chemical safety
management

Mid-term or FY ending March, 2024 activity plan and targets

Promoting the Introduction of a New Chemical Substance Management System
To strengthen management of hazardous chemical substances in products
・Implementation of measures to comply with the partial revision of the enforcement order of the Law
concerning Pollutant Release and Transfer Register
・Implementation of internal audits on management of environment-related substances to becontrolled● Implementing employee training on chemical substance management
P.45
●

●

●

●

★★☆

Deployment of QMS company-wide unified manual throughout the company and preparation for its
operation● Verification of effectiveness of corrective actions for past complaints● Confirmation of QMS operation in divisions and affiliated companies
Thoroughly standardizing work, analyzing of quality control data, checking outsourcing management,
etc.
P.47
●

Diversity andinclusion

Aim for sustainable growth by having employees with diverse perspectives and values
who have different knowledge, skills, experience, abilities and attributes play a role inmanagement.
● Active recruitment of women, foreign nationals, and mid-career hires and promotionof employees who can make the most of their diversity● Increase the ratio of women, foreign nationals, and mid-career hires in managerial
positions toward management that makes the most of diversity

Ensuring
compliance

Comply with not only relevant laws, regulations, and ordinances, but also internal rules
and codes of ethics, and strive to act in a fair and transparent manner.
● Compliance awareness and education

Information
security measures

Prevent damage and improve operational efficiency in the digital society● Strengthen defense and resilience against cyber attacks● Promote digitization to improve operational efficiency

Community

Activities for coexistence with neighboring communities● Active participation in community contribution activities

Risk management

Identify risks that require management action and take measures to avoid risks andreduce their impact.
● Periodic risk assessment and response to major risks● Formulate BCP (Business Continuity Plan)

Implementation of company-wide unified operation of QMS and mutual internal audits
Implemented appropriate purchasing management by revising Off-Quality Notice● Implemented education on quality (basic training, training to cultivate internal auditor)●●

Preparation of QMS company-wide unified manual
・Conducted internal audits of related departments● Revised and implemented Off-Quality Notice● Implemented basic quality training and training to cultivate internal auditors (online)●★☆☆

Review personnel systems and promote diversity in work styles so that women and foreign
nationals can play an active role over the long term.
Ratio of female new graduate hires: 30% or more
● Paid leave utilization rate of 70% or more
● Utilization of on-the-job training and off-the-job training directly related to the acquisitionof daily work skills●

Examined and implemented safety measures for equipment to prevent small fires and injuries● Implemented improvements to some rotating machinery● Conducted risk assessment of chemical substances and confirmed exposure prevention measures●★☆☆

Implementation of compliance training● Implementation of compliance audits● Disseminate compliance messages from the president●

Continuation and improvement of information security management system
Maintenance of information security infrastructure, including network monitoring andvirus countermeasures● Maintenance of incident countermeasures
●
●

●
●

●
●

Participation in neighborhood greening and beautification activities
Contribution to neighborhood council activities
Risk management of the entire group
Review of BCP and actually addressed

P.51

★★★

Develop the following action plans and targets to create a work environment where personnel can work
for a long time regardless of gender.
● Ratio of female new graduate hires: 30% or more
Survey of current situation and exchange of opinions on how to improve issues● Paid leave utilization rate of 70% or more
Survey of current situation and interviews with workplaces facing challenges● Ratio of female, foreign nationals, and mid-career hires in management positions：
P.49
Improve by 6 percentage points by FY2031 (compared to FY2021)

Conducted compliance training for employees at the time of hiring then at milestone years
Conducting compliance audits of working departments and workplaces through questionnaires to ensure that
there are no compliance violations● The president himself sends and receives a monthly compliance message in both directions for thorough internal awareness★☆☆

Comply with laws, regulations, ordinances, internal rules, code of ethics, etc., and strive to act in a fair
and transparent manner.
● Implementation of compliance training● Implementation of compliance audits
P.55● Compliance awareness and education

Continue information security management system and provide information security education for employees
Implemented network monitoring and virus countermeasures, etc.
● Early detection of unauthorized access events and implementation of countermeasures★☆☆

Continue efforts to prevent damage and improve operational efficiency in the digital society.
● Improvement of information security infrastructure● Improvement of incident countermeasures● Improvement of security measures in line with DX promotion

Many municipalities were not active due to the COVID-19, but voluntary beautification and other activities
were carried out★☆☆

Continue to engage in activities aimed at coexistence with neighboring communities● Actively participate in neighborhood greening and beautification activities

Conducted risk surveys for actual working divisions of the entire group, and establish a system to examine
efficient countermeasures against major risks in consideration of priorities● Actual business continuity measures, including infection control and procurement activities in the COVID-19★☆☆

Continue to take measures to avoid management risks and reduce their impact, and promotetransformation into a resilient company● Risk management for the entire group● Review and implement business continuity measures

Female percentage of new graduates: 40% (Domestic Group)
Annual utilization rate of paid leave: 70% (Domestic Group)
Male percentage taking childcare leave: 70% (Non-consolidated)● Promoted opportunities to promote female employees to manufacturing and sales positions to which
relatively few female employees were previously assigned● Implemented a personnel system with transparent evaluation system and fair opportunities for promotion
●
●
●

●

39

Propose improvement measures through company-wide health and safety patrols and horizontally
expand the measures throughout the company● Raise awareness of on-site managers and personnel● Implementing compliance with revised laws and regulations●

Implement and disseminate chemical substance risk assessments● Strengthening fail-safe operation of rotating machinery equipment● Thoroughly enforce equipment maintenance and operating procedures
●

●

●
●

●

●

P.56

P.56

40

CSR and ESG Initiatives

E Environmental Management
Promotion system

Material balance of business activities

The environmental management of Dainichiseika Group isbased on the Environmental Policy and is implemented by the
EMS (Environmental Management System) of each execution
division (manufacturing sites, branches, and offices) under the
direction of the President.
The activities of each division are managed by the Environmental Committee and regularly reported to the Board of Directors for auditing and supervision, and the results are used forcontinuous improvement activities.
In the fiscal year ended March 31, 2023, there were no instances of punishment under environmental laws and regulations, either in Japan or overseas.
Please refer to this website for our “Environmental Policy.”

Waste recycling rate and final disposal volume■ Domestic■ Overseas■ Domestic final disposal volume ■ Overseas final disposal volume(1,000㎘)
40

39.0

30

15.3

13.6

0

23.7
2019/3

22.3

13.4

(t)
10,000

63.2

63.0

7,500

45.6

44.1

5,000
22.5

19.5

2020/3

34.7

14.9

12.6

20
10

37.4

2021/321.3

2022/32023/3

2,500
(FY)

0

68.7
39.8

4,132
1,083

3,983
1,150

3,049

2,833

3,305
1,161
2,144

2019/32020/32021/3

Domestic recycling rate
61.7
44.9
4,435
1,197
3,239
2022/3

FY 2022
170,763 t

FY 2023
144,351 t

Resins

83,674 t

68,855 t

Solvents

27,322 t

23,385 t

Pigments

14,344 t

12,414 t

Additives

45,423 t

39,697 t

Total amounthttps://www.daicolor.co.jp/english/csr/csr/policy/index.html

Energy consumption (crude oil equivalent)

32.1

OUTPUT

Total material input (Japan) *Environmental impact data

35.9

INPUT

Products(domestic / overseas own-plant production)
FY 2022

Breakdown

Total energy(domestic / overseas) (crude oil equivalent)
FY 2022

Breakdown

Breakdown

FY 2023
34,674 ㎘

37,418 ㎘(92.7% vs. the previous year)

Domestic

22,536 ㎘

21,310 ㎘

Overseas

14,882 ㎘

13,364 ㎘(thousand t-ＣＯ2)
100
80
60
40

38

4

34

70
3

33 2

31

25

23

21

19

17
2019/317
2020/3142021/3

2014/3

57

48
0.4
0.06
38
33
2
2
17
12
2022/3 2023/3 (FY)

*Scope 2 emission factors are calculated according to GHG Protocol Market-based method.
*Data in FY2014 is just subject to domestic bases due to lack of data in some overseas bases.

GHG supply chain emissions are calculated in accordancewith the “Basic Guidelines for Calculating Greenhouse Gas
Emissions through Supply Chains (ver. 2.4)” of the Ministry of
the Environment and the GHS Protocol Guidelines of the World
Resources Institute.

481,866
t-CO2
Scope3 - Category 1
90.8%

968 ㎘

1,050 ㎘

7,150 K Nm3

4,811 K Nm3

LPG

112 t

165 t

Heavy oil A

79 ㎘

16 ㎘

Kerosene

32 ㎘

50 ㎘

3㎘

5㎘

109 ㎘

112 ㎘

City gas

244 K Nm3

329 K Nm3

LPG

27 t

22 t

Heavy oil A

0㎘

0㎘

Kerosene

22 ㎘

20 ㎘

Scope1 : 2.4%

Diesel oil

610 ㎘

579 ㎘

Scope2 : 0.0%

Gasoline

59 ㎘

57 ㎘

Scope3 - Category 2 : 3.1%
Scope3 - Category 3 : 1.5%
Scope3 - Category 4 : 1.2%
Scope3 - Category 5 : 0.6%
Scope3 - Category 6 : 0.2%
Scope3 - Category 7 : 0.2%
Scope3 - Category 8 : 0.0%

Scope 2 calculation conditions: GHG Protocol Location-based method

Specific energy consumption (ℓ/t) and production volume (thousand tons)

Scope1 : 2.3%

■ Domestic production output ■ Overseas production output
Domestic energy intensity
Overseas energy intensity(ℓ/t)(Thousand tons) 200.5
212.6
193.9
193.1
185.6
200
500
105.1
100.5
101.3
98.0
96.6
400
100
275.4
269.3
300
246.7
234.7
226.1
0
200
154.0
151.2
136.4
129.6
125.6
-100
100
121.4
118.1
110.3
105.1
100.5
0
-200
2019/32020/32021/32022/32023/3 (FY)

Scope3 - Category 2 : 3.0%
Scope3 - Category 3 : 1.4%
Scope3 - Category 4 : 1.1%
Scope3 - Category 5 : 0.5%
Scope3 - Category 6 : 0.2%
Scope3 - Category 7 : 0.2%
Scope3 - Category 8 : 0.0%

Overseas

FY 2022

Breakdown

FY 2023
111,053 K kWh

111,462 K kWh(99.6% vs. the previous year)

Domestic

56,330 K kWh

61,722 K kWh

Overseas

55,132 K kWh

49,331 K kWh

Water consumption (domestic / overseas)
FY 2022

Breakdown

Domestic

FY 2022185.6 ℓ/t

FY 2023
193.1 ℓ/t

Overseas96.6 ℓ/t

98.0 ℓ/t

FY 202257,657ｔ-CO2

FY 2023
47,527ｔ-CO2 (82.4% vs. the previous year)

Scope 1

16,944ｔ-CO2

11,731ｔ-CO2 (69.2% vs. the previous year)

Scope 2452ｔ-CO2

7ｔ-CO2(1.6% vs. the previous year)

Subtotal

17,396ｔ-CO2

11,738ｔ-CO2(67.5% vs. the previous year)

Scope 1

2,267ｔ-CO2

2,365ｔ-CO2 (104.3% vs. the previous year)

Scope 2

37,561ｔ-CO2

33,424ｔ-CO2 (89.0% vs. the previous year)

Subtotal

39,827ｔ-CO2

35,789ｔ-CO2 (89.9% vs. the previous year)

Scope 2 calculation conditions:
GHG Protocol Location-based method

Sales
and
marketingactivities

FY 202282,724ｔ-CO2

FY 2023
74,662ｔ-CO2 (90.3% vs. the previous year)

Scope 1

16,944ｔ-CO2

11,731ｔ-CO2 (69.2% vs. the previous year)

Scope 225,518ｔ-CO2

27,142ｔ-CO2 (106.4% vs. the previous year)

Subtotal

42,462ｔ-CO2

38,873ｔ-CO2 (91.5% vs. the previous year)

Scope 1

2,267ｔ-CO2

2,365ｔ-CO2 (104.3% vs. the previous year)

Scope 2

37,561ｔ-CO2

33,424ｔ-CO2 (89.0% vs. the previous year)

Subtotal

39,827ｔ-CO2

35,789ｔ-CO2 (89.9% vs. the previous year)

GHG emissions intensity(domestic / overseas energy-related CO2 emissions)

FY 20222,554 Km3

2,801 Km3

(91.2% vs. the previous year)

Domestic

2,679 Km3

2,432 Km3

Overseas

123 Km122 Km30.21 t-CO2/t(92.1% vs. the previous year)

Per million yenof sales

0.47 t-CO2/million yen

0.39 t-CO2/million yen

Net income
per million yen

9.35 t-CO2/million yen

23.68 t-CO2/million yen

0.193 t-CO2/t

Total amount
generated

12,349 t

10,723 t

Recycling rate

59.1 %

62.5 %

Final disposal

4,440 t4,027 tEfﬂuent volume (domestic / overseas)

ESG investment amountFY 2022
2,766 Km3

FY 2023
2,506 Km3 (90.6% vs. the previous year)

Domestic

2,656 Km3

2,397 Km3 (90.3% vs. the previous year)

Overseas

110 Km3

109 Km3 (98.9% vs. the previous year)(environmental measures and pollution prevention;
occupational health and safety; diversity; legal compliance)
FY 2022
848million yen

FY 2023

Per tonof production

Waste recycling rate and ﬁnal disposal amountFY 20233

136,393ｔ

Scope 2 calculation conditions:
GHG Protocol Market-based method

Energy & power (domestic / overseas)

Scope2 : 5.3%

Scope3 - Category 1
86.0%

Overseas
City gas

Gasoline*Scope 2 emission factors are calculated according to GHG Protocol Location-based method.
*Data in FY2014 is just subject to domestic bases due to lack of data in some overseas bases.

509,020t-CO2

5,789 ㎘

Diesel oil

Scope 2 calculation conditions: GHG Protocol Market-based method

41

Domestic

Supply chain emissions breakdown

Location-based■ Domestic Scope1 ■ Domestic Scope2 ■ Overseas Scope1 ■ Overseas Scope2(thousand t-ＣＯ2)
100
88
83
81
75
80
70
38
38
34
60
51
4
33
3
33 2
2
2
40
32
29
26
27
23
27
20
19
17
17
17
14
12
0
2014/3
2019/3 2020/3 2021/3 2022/3 2023/3 (FY)

Breakdown(73.7% vs. the previous year)

8,367 ㎘

Breakdown

077

Scope 1-2-3 Domestic Breakdown for FY2023

Domestic

9,335 ㎘

Production
activities
Research
activities

Domestic Overseas

20

50

84

GHG supply chain emissions

153,973ｔ

Scope 2 calculation conditions:
GHG Protocol Market-based method

BreakdownMarket-based■ Domestic Scope1 ■ Domestic Scope2 ■ Overseas Scope1 ■ Overseas Scope2

110,343ｔ

Overseas(domestic / overseas energy-related CO2 emissions)

Domestic Overseas

Greenhouse gas emissions (thousand t-CO₂)

FY 2023
6,839 ㎘

121,390ｔ

GHG emissions

Energy & fuel(domestic / overseas) (crude oil equivalent)
FY 2022(89.6% vs. the previous year)

Domestic

Energy intensity(domestic / overseas) (crude oil equivalent)*Estimated values (The top 80% of purchased raw materials by weight
are surveyed by item, and the remaining 20% are calculated based on
the composition ratio of the top 80% by item)
Overseas recycling rate
(%)
70
62.4
60
45.5
50
40
4,027
30
1,142
20
10
2,885
0
2023/3 (FY)FY 2023
246,736ｔ

275,363ｔ

FY 2023
351million yen

Breakdown

42

CSR and ESG Initiatives

E Transition Plan on Climate Change andAddressing TCFD Recommendations

Assumed risks and ﬁnancial impact

2℃ scenario

Increased demand for products contributing todecarbonization● Promotion of EVs and self-driving vehicles
8.8 billion yen● Promotion of vehicle weight reduction
increase in sales of● Increased demand for power infrastructure
ESG contribution
products
Changing demand for a circular economy● Accelerated recycling of plastic resources● Increased demand for biomass-derived products

Dainichiseika Group is committed to companywide efforts based on the recognition that addressing climatechange is a key issue̶an issue with direct consequences for the sustainable growth of the company and society.
To undertake this initiative efﬁciently and effectively, we have endorsed the TCFD *1 recommendations in November 2021. We also participate in the CDP *2 climate change program to strengthen our internal structures. For theﬁscal year ended March 31, 2023, we formulated a transition plan to achieve carbon neutrality by 2050 based on
the 1.5°
C scenario of the 6th IPCC *3 report.

Governancenature of these risks, each organization and related department,
which is the execution division, is instructed to perform risk response operations. Under the direction of the President andCEO, we are also undertaking risk analysis based on the IPCC
Fifth Assessment Report, the IPCC Sixth Assessment Report,
and the commentary on the IPCC Assessment Report by the
Ministry of the Environment. Our goal is to contribute to climatechange countermeasures as a member of the supply chain. We
are working on risk assumptions and analysis based on a 2°
C
scenario to limit the rise in global average temperature to lessthan 2°
C, and then to achieve a 1.5°
C scenario to limit the increase to less than 1.5°
C, and to set new targets and transition
plans toward carbon neutrality in 2050.
Risks and opportunities from each scenario are prioritizedbased on their impact and likelihood of occurrence, and are incorporated into Dainichiseika Group’s product development andbusiness strategies, and we will continue to closely monitor various trends, regularly evaluate and review them, and disclose
information.

Dainichiseika Group considers company-wide activities related to climate change risks and opportunities to be one of its
most important management issues, and under the instructionof the management, the Group is working to address these issues through the CSR and ESG concepts and promotion system
shown on P.37.

Risk management / opportunity
analysis and strategy
CSR/ESG Promotion Group Headquarters considers the risks
arising from climate change as transition risk, which refers to thestrengthening of regulations and changes in the supply-demand
structure due to revisions of laws and regulations and changes
in industry trends, and physical risk, which refers to the strengthening of resilience to natural disasters and the deterioration of
the labor environment due to global warming. Depending on the

Measures to take (development and sales promotionof the following products)

Risk
classiﬁcation

Changes in lifestyles and supply-demand structure due to risingtemperatures● Changes in building specifications to cope with heat
● Increased demand for beverage containers
4℃ scenario

Growing demand for products to expand projects of strengthening
infrastructure in preparation for severe natural disasters● Growing demand for renewal of power and telecommunications
infrastructure● Growing demand for building renovation projects

Products for rechargeable batteries
Wiring harness-related products for vehicles● Products contributing to vehicle weight reduction● Products for solar cells● Polyurethane resins made from CO₂●●

Deinking inks for flexible packaging materials
Resin beads made from biomass-derived raw materials● Inks and adhesives made from biomass-derived raw materials●●

Heat Shielding Paint for energy-saving air conditioning inbuildings● Ink-related products for flexible packaging for beverages●

Colorants for coating materials for high-speed, high-capacity
communication lines
Coloring materials for high weatherability coatings for building
exteriors● Colorants for high-strength and high-durability fibers●●

Indicators, targets, and progress■

Indicator (KPI): Greenhouse gas emissions from energy consumption at domestic sites (Scope 1 + Scope 2)
Target: 70% reduction in FY March 2024 compared to FY March2014 *4
Progress: 77% reduction from FY March 2014 in FY March 2023

CO₂ emissions of Dainichiseika Group in Japan(domestic Scope 1 + Scope 2)■

Aim to increase sales of products that contribute to ESG (including
climate change action) by 20% in FY March 2024 vs. FY March
2021.
Progress: Sales results for ESG-contributing products ( P.29) for
FY March 2023 increased by 19% vs. FY March 2021
Sales of ESG contributing products*Calculated using the emission factor after adjustment by type of power purchase contract.
2)2)
(t-CO
(t-CO
60,00060,00077%77%reduction
reduction

70%
70%reduction
reduction(billions(billionsofofyen)
yen)
40
40

19%
19%increase
increase

30
30

40,00040,00020
20
20,00020,000Stricter regulations to reduce GHG emissions●

Increased GHG reduction requirements from customers●

Difficulty in procuring raw materials derived from fossil resources●

Moving to decarbonize raw materials●

Loss of business opportunities due to changes in the supplydemand structure●

Promptly deploying internal measures reflecting industry trends toenhance business activities●

Impact of stagnation of business activities due to supply chain
disruptions caused by natural disasters●

Diversify raw material procurement regions and sources
Inventory management to reduce impact on logistics●

Deterioration of the work environment at manufacturing sites andresulting increase in capital expenditures●●

Strengthen product development capabilities to respond to changes ● Promptly disseminate industry and market trends internally andin the supply-demand structurereflect them in product development and business planning

Physical
Risk●

Making efficient capital investments that contribute to improving
the work environment and production efficiency

Promoting facility renovation in accordance with hazard maps
Decentralization of production sites● Implementing measures to prevent the release of hazardous
substances in the event of torrential flooding●●●

Increased capital investment to improve the deteriorating work
environment at manufacturing sites*Internal implementation of carbon pricing (for domestic Dainichiseika Group)
Set unit price: 8,000 yen/t-CO2
Impact:311 million yen for CO2 emitted by our domestic group
Maximum estimated amount: 2 billion yen for CO2 emissions in the supply chain●

Preventing a decline in production efficiency by investing inequipment to reduce heat and human workload at manufacturing
sites

Example of use:Business profitability analysis.
Included in the amount of improvement effect whenintroducing energy-saving equipment to promote
investment.

*1 TCFD: Task Force on Climate-related Financial Disclosures*2 CDP: Carbon Disclosure Project. An international NGO that conducts research and evaluation of climate change measures throughout corporate supply chains.
*3 IPCC: Intergovernmental Panel on Climate Change

43

To prepare for flood damage, which has increased in recent
years, we assume risks at our manufacturing and sales bases
based on hazard maps and other information provided by local governments. For facilities at high risk, we have implemented facility countermeasures, preparation of first-response manuals, and other BCP measures.
In addition, to protect water resources and safeguard against
water pollution, our manufacturing sites recycle the water used
for production and perform appropriate wastewater management. At Tokai Production Plant, one of our most water-intensive

FY
FYMarchMarch2023
2023
Results
Results

FY
FYMarchMarch2024
2024
TargetTargetsites, we have reduced the amount of water pumped from wells
by approximately 5% from the previous fiscal year. We purify
wastewater discharged from our manufacturing sites beyond
mandatory effluent standards through the effective use of treatment facilities, including wastewater treatment facilities basedon the activated sludge method. We thoroughly recycle the water used at our manufacturing bases (Shanghai, China; Vietnam;
India) located in regions where water stress and drought risks
are high or higher, according to the Aqueduct Water Risk Atlas.*5

Corresponding ESG contribution products
Climate change (global warming)▼

4℃ scenario

Impact of stagnation in business activities due to damage tofacilities caused by large-scale natural disasters● Loss of product and raw material inventory due to flooding during
torrential rains (estimated amount calculated but undisclosed)●

Reducing GHG emissions and financial impact by procuring
renewable energy at appropriate prices● Ongoing energy conservation measures●

FY
FYMarchMarch2021
2021
asasBenchmark
BenchmarkMaterials for rechargeable batteries andsolar cells
Resin products that contribute to vehicle
weight reduction
UV/EB inks and coating agents
Materials made from CO ₂
Heat Shielding coatings for energy saving inbuildings, and resin products for highinsulation windows

Circular economy support
Biomass-derived products (inks, urethane
resins, resin powders)
Deinking inks for flexible packaging
recycling
Natural polymers (chitin and chitosan)

Other items for social contribution
▼

●

00

▼

Increased financial burden due to introduction of carbon tax(estimated cost increase of approx. 300 million yen*)▼Transition
Risk

●

FY
FYMarchMarch2024
2024
TargetTargetWater risk response and effective use of water resources▼

PhysicalRisk

Measures to take

FY
FYMarchMarch2023
2023
Results
Results*GHG supply chain emissions FY2023 Scope 1, 2, and 3 data are shown in “Environmental Management” on P.41▼

2℃ scenario

Transition
Risk

Assumed risks and ﬁnancial impact

FY
FYMarchMarch20142014
asasBenchmark
Benchmark▼Risk
classiﬁcation

00▼

Global warming becomes more serious, causing changes in demand structure and impacts on the working environment due to rising average temperatures. Business activities will be frequently affected by large-scale natural disasters.

▼

Acceleration of tighter regulations to prevent global warming and changes indemand structure that contribute to global warming prevention. Assumes
that the impact of natural disasters will need to be more focused than atpresent.

billionyen
yen
33.3
33.3billion

1010

2 2
t-CO
11,738
11,738t-CO▼

4℃ scenario assumption summary▼

2℃ scenario assumption summary

20%
20%increase
increase

Adhesives for gas barrier flexible packaging
materials, which help reduce food loss.
Materials for high-voltage transmission line
sheathing, which help reinforce electric
power infrastructure
Colorants for coating materials forhigh-speed, high-capacity communicationlines, which help strengthen communication
infrastructure*4 Calculated using the adjusted CO₂ emissions factor for an electric power company that procures electricity from 100% real renewable energy sources*5 Aqueduct Water Risk Atlas: Tool for assessing water risk by basin published by the World Resources Institute (WRI), an international environmental NGO

44

CSR and ESG Initiatives

E Management of Chemical Substances
We are working with each committee to properly manage the chemical substances handled by Dainichiseika
Group and to ensure their proper and safe use. We are also working to develop a system that enables us topromptly provide safety data on chemical substances.

Introduction of new chemical
substance management system
For more efficient management ofchemical substances
Chemical substance management is becoming increasingly
important as regulations on chemical substances becomes
stricter. In order to make these operations more accurate andefficient, Dainichiseika Group is establishing a new chemical
substance management system.
This new system will make it possible to quickly search for
information on the chemical substances found in each productand the information associated with chemical substances on a
product-by-product and chemical substance-by-substance basis.
This, in turn, will make it possible to provide information in compliance with various regulations more accurately and in a more
timely manner than ever before. In addition, centralized management achieved through a unified system will allow all concerned
parties within Dainichiseika Group to quickly collect and respondto all necessary information. In conjunction with the introductionof the new chemical substance management system, we will
review our operations to improve operational efficiency still further.

Strengthening chemical substancemanagement throughout the supply
chain
To address legal and social chemical substance issues
throughout the product lifecycle from manufacturing to disposal
after use, Dainichiseika Group promotes chemical substancemanagement through a variety of initiatives, including the development of internal systems to ensure compliance with domestic and international chemical substance-related laws and regulations, and the provision of information on product safety andapplicable laws and regulations to our customers.
To reduce the environmental impact of our products, we haveestablished a department dedicated to collecting accurate information on chemical substances found in the raw materials weuse. At the same time, we collect information on enactment andrevision of laws and regulations, ensure appropriate response,and provide information on chemical substances found in products to our customers. Through these activities, we strive tostrengthen our chemical substance management and minimizerisks throughout the supply chain.
In the fiscal year ended March 31, 2023, there were no instances of legal violations or other punishments.

Please refer to this website for our “Chemical Substance Management.”
https://www.daicolor.co.jp/english/csr/csr/management/index.html

45

Toward better management of
hazardous substances
Strengthening the management of
information on chemical substances
found in raw materials
Recently, laws and regulations related to chemical substances
have been revised one after another in Japan. Dainichiseika
Group has also taken actions in accordance with the revision of
the Act on Confirmation, etc. of Release Amounts of SpecificChemical Substances in the Workplace and Promotion of Their
Management. In addition, we are also working to comply withthe revision of the Industrial Safety and Health Act.
The basic concept of the comprehensive management ofchemical substances is shifting toward reducing the risk of individual chemical substances. In response to this change, we areworking to ensure that information on chemical substances
found in raw materials is collected at the raw material adoption
stage and to strengthen our hazard and toxicity checks, including
checks of health and environment effects. In addition, we areworking to maintain and strengthen our chemical substancemanagement by conducting regular internal audits on chemical
substances to check the management system and operational
status related to chemical substance management, and requesting improvement measures as necessary.

Knowledge enhancement througheducation on chemical substancemanagement
In terms of chemical management education, we provide education to related divisions and group companies to accurately
respond to chemical substance laws and regulations.
In the fiscal year ended March 31, 2023, we held in-houseseminars on domestic laws and regulations on chemical substance management and regulations on food contact materials
to improve staff knowledge level and prepared an environmentthat allows staff to learn about the latest legal and regulatory
trends.

More efficient operations and more
appropriate management of chemical
substances
In order to manufacture and export chemical substances, it isessential to have a good understanding of the systems of eachcountry where we operate and deal with them. Therefore, we
comply with the laws and industry standards of all countries andregions where we do business, and we are working to properly
manage chemical substances in order to fulfill our social responsibility as a company.
As a result, there were no violations of laws and regulations
regarding registration and notification of chemical substances inJapan or overseas during the fiscal year ended March 31, 2023.

S Stakeholders
Dainichiseika Group has established a “Basic Policy on Corporate Governance,” which states that we “cooperate
as appropriate with our stakeholders, including our shareholders, employees, customers, suppliers, creditors,
the local community, and a variety of others.” Through various dialogues with our stakeholders, we listen to theiropinions and appropriately reﬂect them in our business activities in order to earn the trust of the many people
with whom Dainichiseika Group interacts.
Period covered: April 1, 2022 - March 31, 2023

Stakeholders

Customers

Dialogue opportunities
・Sales activities
・Various exhibitions
・Consultation services, such as websites
・Quality assurance support
・Group Intranet
・Message from the President at the beginning of theyear and on the anniversary of the company’s founding

Employees

Business
partners

・Labor-management council
・Company social gathering
・Training by job level
・Periodic personal interviews (twice a year)
・Internal reporting・Harassment Consultation Desk・Communication through individual transactions
・Various exhibitions
・Joint research through open innovation

・General meeting of shareholders

Shareholders ・Financial results briefing (2nd quarter, fiscal year end)・Individual meetings
and・Visits to institutional investors
investors
・Teleconference

Society(community,
government,
school)・Industry-university cooperative projects
・Interaction at community events
・Service activities in the neighboring communities
・Dispatch of lecturers for lectures and educational

opportunities

・School visit
・Acceptance of work experience

Communication tools
・Product brochures
・Company introduction video
・PR magazines
・Corporate report
・News releases
・Release of appropriate publicity to the media
・Website・Company introduction video
・PR magazines
・Corporate report
・News releases
・Employee surveys
・Website・Questionnaire survey on the status of CSR promotion
・Feedback sheet
・Conflict Minerals Reporting Template
・Extended Minerals Reporting Template・PR magazines
・Corporate report
・Website・Brief Report of Financial Results
・Quarterly report
・Annual securities report・Timely disclosure・Notice of convocation of general meeting ofshareholders

・Shareholder newsletters (Interim report)
・Corporate governance report
・News releases
・Company introduction video
・PR magazines
・Corporate report
・Website・Company introduction video
・PR magazines
・Corporate report
・News releases
・Newspaper
・Magazines
・Website

TO P I C S
In July 2022, Dainichiseika Group established a Human Rights Policy based on its CSR and ESG Basic Policy. The Group is committed
to dialogue and consultations with stakeholders to recognize andimprove the effectiveness of its human rights efforts. In addition, inlight of the growing importance of value co-creation with diverse
stakeholders, we articulated a Declaration of Partnership Building in
our Multi-Stakeholder Policy established in March 2023.

Please refer to this website for our PR magazine“People, Something New, Future”. (Japanese Only)
https://www.daicolor.co.jp/csr/newsletter/newsletter_Vol2.pdf

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CSR and ESG Initiatives

S Customer Relations

S Employee Relations

Quality assurance

Concept of human capital

To ensure that our customers can use Dainichiseika Group’s products with conﬁdence, we are working to develop a company-wide quality assurance system that considers not only the performance of our products, but also
all of our corporate activities up to the delivery of products and services to our customers as “Quality.”

Relationship between management
strategy and human asset strategy

Approach to quality assurance

Ensuring safety

Dainichiseika Group, at every stage from product design
through manufacturing and inspection to delivery of products tocustomers, comply with all laws and regulations, and recognizethat maintaining and improving the reliability and safety of our
products and services are a social requirement, and always
place the highest priority on providing the quality demanded bycustomers.
Dainichiseika Group’s products are used in a wide range offields, including information and electronics, automobiles,
books, industrial materials, stationery, and packaging, and thequality demanded by our customers varies. Dainichiseika Groupaims to establish a system promising to provide products andservices that satisfy our customers at all times and to establish
a system that allows us to disclose appropriate product information.

Dainichiseika Group makes every effort to ensure thoroughgoing compliance with applicable laws, regulations, and internal
rules regarding the display of information on product quality andsafety. In accordance with our QMS, we check laws and regulations and product information from the development stage.
No quality or product safety violations arose during the fiscal
year ended March 31, 2023.

Quality Policy
To provide the products and services satisfying our customers demand,
Dainichiseika has established a quality policy, the fulfillment of which
will build its trust and contribute to society.
1. We provide the products and services satisfying our customers demand.
2. We comply with all statutory and regulatory requirements.
3. Our managers and all employees aim to improve product quality.
4. We continue to promote the activity that improves product quality.

Quality assurance system
Dainichiseika Group has acquired ISO 9001 certification, aninternational standard that stipulates a system for the continuous improvement of the quality of products and services provided to customers at the business units and group companies thatare the executive units for product manufacturing and sales, andmakes use of a Quality Management System (QMS hereinafter).
In recent years, there has been a growing awareness of theneed for an organization to develop a group-wide quality assurance system. In 2013, we established the Quality Control Committee, a company-wide organization, and in 2019, the Corporate
Quality Assurance Department, which is responsible for the
management and operation of the Group QMS, to maintain andimprove the quality control system throughout the company.
As a groupwide effort, we conduct various training programs
to improve the level of quality assurance, review the management system of raw material suppliers and contract manufacturers, promote active cooperation and communication among organizations, undertake mutual internal audits among
departments, and implement audit quality inspections by the
Corporate Quality Assurance Department of the entire company
to improve customer trust and satisfaction.

47

Mechanisms for reflecting customer
feedback
Dainichiseika Group strives to respond promptly and appropriately to customer complaints. On receiving quality complaints orinformation on problems, each division and group company investigates the corresponding causes and takes thorough measures to prevent their recurrence. The information obtained in
the process is continuously applied to the development and improvement of products and services, leading to higher customer
satisfaction.
Information on quality and product safety and measures toprevent the recurrence of such problems is disseminated groupwide through the Quality Control Committee to prevent the recurrence of similar quality problems.

Dainichiseika Group promotes a human assets strategy islinked to the management strategy. The measures and initiatives
to realize the Mid-term Management Plan (disclosed in August2021) are as follows.
Indicators and targets for each theme will be reviewed as appropriate in light of the status of the project.

Management strategy: Secure competitive
advantages through technology-initiative
Means of realization
・Strengthening

recruitment ofengineers
・Training engineers
・Promoting theacquisition of
intellectual property
and developing
intellectual to meetmarket needs

Initiatives
・Creating attractive research themes
・Implementing flexible management of compensationlevels and systems
・Strengthening the of R&D expenditures
・Enhancing research facilities (industry-academia joint

efforts) and work environment
・Operating a personnel evaluation system centered on
the demonstration of skills
・Promoting information exchange within and outside thecompany, with engineers as the hub
・Actively develop intellectual property strategies.

Management strategy: Strengthen businessfoundation for worldwide business expansion
Means of realization

Initiatives
・Strengthening the mid-career recruitment of foreign・Strengthening theoverseas sales force

nationals and people with expatriate experience
・Providing opportunities to improve overseas businessskills・Creating corporate culture that recognizes diversity

・Strengthening themanagement
・Accumulating and transferring overseas business skills
capabilities ofand know-how
overseas subsidiaries(training)

Management strategy: Ensuring productivity inresponse to a declining domestic workforce
Means of realization

Initiatives
・Maintaining and improving a corporate culture thateliminates prejudice against age, gender, nationality,
and religion
・Securing human・Promoting mid-career hires who can be effective
assets for growth
immediately
・Passing on
・Drawing on veteran employees to pass on skills
knowledge and skills ・Promoting labor productivity improvement and a shift
away from “gentrification” through the use of IoT andby skilled workers
DX.
・Promoting the acquisition of skills necessary for new
ways of working: reskilling
・Preventing workplace ・Training on-site leaders

accidents at
manufacturing sites

・Strengthening the management of occupational healthand safety

Human asset development andutilization
Dainichiseika Group recognizes that the corporate values demanded by society are changing with the changing times, and iscommitted to ESG management with an awareness of sustainability to enhance corporate value and create new value.
Creating new value requires new ideas, and “people power”
is essential for this. Recognizing that people are the assets of acompany that create value, Dainichiseika Group describes people not as “human resources” but as “human assets” and iscommitted to drawing out people’s strengths and developing
people. By having all employees share the same goals, we will
create a virtuous cycle between the growth of Dainichiseika
Group and the growth of our human assets, thereby increasing
engagement.

Approach to human asset development
Recognizing the importance of investing in human capital andintellectual property and developing human assets to achieve
the goals of the Medium-Term Management Plan, Dainichiseika
Group established the Human Assets Development Policy andInternal Environment Development Policy in April 2023.

Human Assets Development Policy
The Dainichiseika Group understands that the growth of a company isbased on its people, and the growth of its people is based on the company, and that the relationship between the two is one of mutual improvement. For this reason, we consider the development of “humanassets,” our assets, to be essential for improving corporate value andone of our important management issues.
Based on the corporate philosophy of “Have an interest in people”,“Have an interest in something new”, and “Have an interest in the future”, the Dainichiseika Group respects the diversity of its employees
and their views on work, while sharing a vision in which the company
and its employees mutually enhance each other and steadily refine
each other to achieve the vision of what they want to be.

Internal Environment Development Policy
The Dainichiseika Group is committed to the following internal environmental improvements to realize our human assets development policy andto become an attractive company, so that each and every employee canfully demonstrate his or her abilities to achieve our companywide goals.
● We support the attitude of self-learning regardless of generation.
● We will undertake appropriate evaluations of and dialogue with our
employees regarding their achievements.
● We are committed to creating opportunities for knowledge and cultural exchange within and outside the company.
● We are committed to promoting a personnel system that encourages
employees to achieve and contribute to the company.
● We are committed to promoting a personnel system that respects diversity and values and makes the most of our human assets.
● We are committed to promoting a workplace environment and human resource management system that will enable employees towork for a long time.

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CSR and ESG Initiatives

S Employee Relations
About the personnel system

Training system

Dainichiseika Group promotes the creation of a workplace
where each and every employee can realize their full potentialand experience growth.
To realize this goal, we operate a personnel system centeredon a career path system that enables self-realization while respecting diverse work styles, a personnel evaluation systemthat can be used as a tool for human assets development basedon goal management, and a wage system that appropriately reflects roles and contributions.

Dainichiseika Group provide a training curriculum tailored toeach employee’s job level to maximize the effectiveness of training at each workplace. Through the accumulation of training foreach level and on-site practice, we develop human assets capable of exercising leadership in the workplace, leading to the improvement of organizational capabilities.
Combined with the career path system, this ensures a sufficient transition period and an environment conducive to thetraining of successors.

Active promotion of women, foreign
nationals, and mid-career hires

Major training results for the year ended March 31,
2023 (Domestic Group)

In July 2022, Dainichiseika Group established the Human
Rights Policy, and are to eliminate human rights violations in hiring and promotion, and provide equal opportunities to play anactive role.
The percentage of female employees among new graduates
hired in the last three years increased to 32%. By expanding
opportunities for female employees to be promoted to production sites, where the number of female employees assigned has
been low, and by reviewing the personnel system to ensure diversity in work styles, the number of female employees who are
active over the long term is increasing year by year.

Percentage of female employees among newly hired
graduates (domestic group)
FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

23％

33％

26％

34％

40％

Percentage of female employees (domestic group)
FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

16％

17％

17％

18％

19％

In addition, from the viewpoint of prioritizing the early onset ofa “chemical reaction among human assets” by hiring a wide
range of people with different experiences, backgrounds, skills,
and attributes, we are reviewing our personnel system, including human assets development and internal environment improvement policies, and actively providing opportunities for hiring without distinction of gender, nationality, or time of hiring.
Through appropriate use of on-the-job training and off-the-job
training directly linked to the acquisition of skills for daily work, ahighly convincing and accurate personnel evaluation system,
and fair opportunities for promotion, we will gradually increase
the ratio of women, foreign nationals, and mid-career hires inmanagerial positions above the section manager level from
12.0% in FY March 2023 to 17% in FY March 2031.

Total numberof trainees

Total traininghours

Training cost(excluding tax)

Individual training

195 persons

1,765 hours

2,311,303 yenGroup harassment
training

486 persons

1,560 hours

6,923,340 yen

Subtotal

681 persons

3,325 hours

9,234,643 yen

1.48 hours/person

4,119 yen/person

Per employee

Comfortable work environment
Dainichiseika Group recognizes that promoting workplace development from the perspective of both job satisfaction andease of work will lead to employee retention and success, productivity, and business performance improvement.
Specifically, we are working to reaffirm the significance andimportance of work through periodic interviews with supervisors,
conducting hearings to prevent mismatches in initial assignments, and fulfilling transfer requests. We will continue to create
an environment in which employees can easily seek advice, conduct mental health checkups, and manage leave accrual to createa workplace environment in which employees can work in ahealthy manner, both mentally and physically, and will continue toimprove the environment to realize employee wellbeing.

Diversity & inclusion

Voice

Aiming to create a more
comfortable workplacethrough interactive
communication

After graduating from the Department of Information
Technology at a technical college, I wanted to be involved in the IT field at a business company, so I joined
Dainichiseika, which is expanding its business in myhome country of China.
I’m currently in charge of procurement of PCs usedby employees, overseeing their installation, etc., andproviding support services including PC peripherals.
Since I had been in Japan for a long time, I was notworried about my Japanese, but when I joined the company, there were many things I didn’t know, including
business etiquette, corporate culture, and rules, and I
didn’t know how to behave. However, my supervisorsand senior staff taught me everything from the rudimentary to the meticulous, and now, in my second yearwith the company, I’ve been able to build good relationships both inside and outside the company.
Whenever I’m confused about something or unsureof a decision, I try to seek advice from my supervisor orsenior staff. I feel that the reason why we have this kindof relationship where we can easily consult with eachother is because we haveformed an open working
environment through daily two-way proactive
communication.
In the future, I would
like to be involved in infrastructure-related security
management at overseas
locations like China. I
would like to take on thechallenge of system deInformation Systems Divisionvelopment.
QIAN ZHIREN
Joined the company in 2021

Support for diverse work styles
We believe that each employee’s ideal work style changes depending on his or her lifestyle and life stage. We respect the diverse work styles envisioned by our employees and have introduced various systems to enable them to realize their ideal work
styles.

Employment of people with disabilities
Dainichiseika’s employment rate of persons with disabilities(non-consolidated) for the fiscal year ended March, 2023 was
2.54%. We will continue to make efforts to achieve long-term
employment for people with disabilities, taking their aptitudes
into consideration.

Childcare and nursing care system
To enable employees to balance childcare and nursing carewith work, we are working to improve the employment environment by making it easier to take childcare and nursing careleave, introducing reduced hour work and flextime systems, etc.
In the fiscal year ended March 31, 2021, we will extend thescope of the childcare flextime system until the child reaches the
fourth grade of elementary school, and enable employees towork both shorter hours and flextime systems. In addition, in thefiscal year ended March 31, 2023, we established a system formale employees to take childcare leave in installments. We arealso working to create a culture that encourages male employees to take childcare leave by sharing their experiences within
the company.
In the fiscal year ended March 31, 2023, 70% of male employees (non-consolidated) and 100% of female employees tookchildcare leave. A total of 61 employees took advantage of the
reduced work hours and flextime systems, showing a steadyincrease in the number of male as well as female users of thesesystems.

Reemployment system after retirement
We have introduced a system to pass on (inherit) the skills
and wisdom gained through years of work experience, utilize
human assets, and support the life plans of employees approaching retirement age by providing them with one-year temporary employment contracts until they reach the age of 65 after
their retirement at 62. In the fiscal year ended March 31, 2023,
the number of employees using the retirement reemployment
system was 82.
In certain cases, employment may extend beyond the age of
65 based on the employee’s wishes and workplace conditions.

Ratio of female, foreign nationals, and mid-careerhires in managerial positions*1 (domestic group)
FY 2031
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 (target
figure)
12.5％

12.0％

11.0％

12.1％

12.0％

17％

*1 We do not set targets for women, foreign nationals, or mid-career hires because we believe that excellent employees should be promoted to management positions
without preference for women, foreign nationals, or mid-career hires , and that setting numerical targets by attributes violates the equality of opportunity. We haveset a mid-term target for the promotion of women, foreign nationals, and mid-career hires to managerial positions as a total figure and are monitoring the situation.

49

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CSR and ESG Initiatives

S Employee Relations

Creating a safe, comfortable, and productive workplace for longer
working lives
In compliance with laws and regulations and based on the Responsible Care Code, Dainichiseika Group is engaged in continuous improvements to create a safe, comfortable, and productive workplace with the aim ofeliminating industrial accidents, preventing accidents from occurring, and promoting health. We have also established a basic safety and health policy and strive to create a rewarding work environment for all employees.

Classification

Mental health

OthersPromotion system

occupational accidents and incidents. Each workplace discusses
the causes of and countermeasures against accidents and disasters by replacing them with their own workplaces to raiseawareness of the parties involved and disseminate the discussions throughout the company. We are striving to ensure accident-free and disaster-free operations by holding study sessions
to prevent fires ignited by static electricity and providing simulated hazard experience training using virtual reality (VR) at some of
our workplaces.

The President and the director in charge of the Plant Operation Structure exercise leadership and share risks and countermeasures with the Safety and Health Committee at each production site to improve occupational safety and health andsafety and disaster prevention. The status of these efforts is audited by the Internal Audits Division and the Company-wide
Safety and Health Committee.

Targeting zero accidents and zero
occupational injuries

Occupational accident incidents
In FY2023, there were 15 lost time injuries with a frequency
rate of 4.15 and an intensity rate of 0.031. There were no occupational illnesses or fatalities.

At Dainichiseika Group production sites, we ensure risk assessment of chemical substances and evaluate the hazards andtoxicity of each chemical substance handling process to prevent
Dainichiseika domestic group

Manufacturing industry

Chemical industry

2021/32022/32023/3

2020

2021

2022

2020

2021

2022

2

4

15

̶

̶

̶

̶

̶

̶

Frequency rate

0.61

1.01

4.15

1.21

1.31

1.25

0.93

1.07

1.16

Intensity rate

0.001

0.038

0.031

0.07

0.06

0.08

0.03

0.02

0.06

Number of lost-time

Number of lost-time: Work-related accidents that force workers to be absent from the day after the accident. Frequency rate: The number of casualties due to occupational
accidents per million total actual working hours, which indicates the frequency of accidents. Intensity rate: The number of days lost from work per 1,000 actual working hours,
indicating the degree of severity of the accident. Manufacturing Industry: Average of companies with 100 or more employees. Chemical Industry: Average of companies
with 100 or more employees. Data source: Ministry of Health, Labor and Welfare’s Survey of Occupational Accident Trends (2020-2022)

Safety and Health Committee
The Health and Safety Committee, consisting of experts fromeach business site, meets once a month to discuss issues toimprove the workplace environment and to resolve problems
raised by health and safety patrols. In addition, the Company-wide Safety and Health Committee, chaired by the director
and executive officer in charge of the Plant Operation Structure,
meets twice a year to exchange opinions with other businesssites and discuss issues to be addressed on a company-widebasis, in an effort to create a comfortable work environment.

Safety and health patrols
Each workplace undertakes
various patrols related to safety,
health, and disaster prevention
to prevent accidents and disasters by taking countermeasures
to address issues pointed out.
We conduct company-wide
health and safety patrols once a
year with the participation ofoutside directors and membersof other business sites, and hor-

Health and safety patrols byoutside directors

izontally disseminate the matters pointed out and opinions for
improvement to equalize and improve health and safety activities.

Health promotion initiatives
In the periodic health checkups of our employees conducted
every year, we conduct more extensive examinations than thoserequired by law. We are striving to manage the health of ouremployees by introducing a system to centrally manage healthcheckups at all of our locations.
In addition, aiming to reduce mental health problems, wehave been implementing stress checks for employees’ mental
health, as well as strengthening support for employees by providing counseling by a clinical psychologist on a regular basis.
Furthermore, we are working to raise the mental health level ofthe entire organization and thereby revitalize the workplace andimprove productivity by aggregating and analyzing individual results by groups of a certain size and providing feedback to workplaces with information that takes into consideration personal
information.

Initiatives

Contents

Follow-up based on health
Health promotion
checkup results

To prevent serious illnesses through early medical checkups, we actively recommend secondary medical checkups
based on the results of health checkups.
Stress checks are performed at each site, regardless of the obligation to conduct them, for the purpose of preventing
mental health problems. After implementation, we recommend that high-stress individuals be interviewed by a
Implementation andphysician, and that follow-up interviews are also conducted by a clinical psychologist. With the aim of improving
follow-up for stress checks
productivity by realizing a comfortable work environment, individual results are compiled and analyzed for eachgroup of a certain size, and the information is fed back to the workplace in consideration of personal information.
Efforts to prevent
We promote the prevention of infectious diseases through such measures as mass vaccination against influenza.
infectious diseases
Follow-up through theestablishment ofConsultation services for mental health and harassment are available both inside and outside the company.
consultation service

Logistics
Since the establishment of the Japan Responsible Care Council (JRCC) in 1995, we have been a member of the
JRCC and have been working to prevent accidents and disasters in logistics as well as to promote environmental initiatives.

Approach to safety and quality

Promotion system for safety and quality

Dainichiseika Group selects logistics partners in accordancewith our safety and quality standards. We share necessary information with our logistics partners in a timely manner, and ensure that the information is linked to risk assessment and safety
management on the front line.

We collaborate with logistics partners with whom we have3PL*1 contracts, and promote centralized management by utilizing the core system SAP and WMS*2 introduced in October
2018. We have sufficient cooperation with divisions or offices toensure appropriate operations related to safety and quality.

Building sustainable logistics
We strive to build sustainable logistics based on the principle of safety first.
Classification

Initiatives

Environmental
measures

Compliance with revised energy conservation law●

Formulate logistics strategies to curb CO2

Promoting a modal shift●

Shift to transportation methods with less environmental impact

Review of business practices
Logistics
Improving logistics efficiency
problem in 2024
Behavioral change of shippers
Logistics valueenhancement
ComplianceContents

Review ancillary operations ● Reduce time spent waiting for cargo
Receive appropriate freight rates● Secure delivery lead times● Moderate differences between busy and off-peak periods● Raise management awareness● Implement education on logistics●●

Efforts to optimize logistics costs●

Efforts to improve logistics quality●

Hold quality subcommittee meetings with logistics partners

Compliance with laws and regulations●

Comply with laws and regulations such as the Fire Service Act and the Trucking Business Act

Thorough enforcement of yellow cards●

Implement emergency measures in the event of accidents

Plan and implement logistics measures

Labor-management relations
Labor-management council

Asset formation assistance

To maintain and improve sound labor-management relations,
Dainichiseika Group holds labor-management council meetings
on a regular basis to foster a relationship of trust based on dialogue (eight meetings were held in the fiscal year ended March
31, 2023). At the labor-management council meetings, management information and workplace issues are shared, and working
conditions are improved through active exchange of opinions.
Dainichiseika Group’s labor union membership rate (union
membership rate of employees with the right to join a labor
union) is 99.6%.

Dainichiseika Group has introduced a funded defined-benefit
pension plan and a lump-sum retirement allowance provided by
the company as retirement benefits. Furthermore, we support
employees’ voluntary efforts in asset building by combining
measures such as an employee-choice defined contribution pension plan, a property accumulation savings plan, and an employee stock ownership plan.

*1 3PL (Third-party Logistics): Comprehensive outsourcing of logistics operations*2 WMS (Warehouse Management System): Warehouse management system

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CSR and ESG Initiatives

G Corporate Governance

S Supplier Relations
Approach to CSR procurement

Appointment
and dismissal
Accounting auditor

Financial Audit

Cooperation

Reporting

Cooperation

Operating Committee of Top Management＊3

Auditing

Outside Director and
Auditor Liaison Committee＊2

Supervising

Nomination andRemuneration Committee＊1

Cooperation

Appointment
and dismissal
Audit & Supervisory Cooperation
Board

AdviceAnnual Ordinary General Meeting of Shareholders
Appointment
and dismissal
Instruction
Supervising
Board of Directors
Semiannual reporting
As-needed reporting
ReportHarassment Prevention
Committee

Information Management
Committee

Dainichiseika Group supports and respects international
norms on human rights, such as the International Bill of Human
Rights, which sets forth the principles of respect for fundamental human rights, the ILO Declaration on Fundamental Principles
and Rights at Work, established by International Labor Organization (ILO), the Guiding Principles on Business and Human
Rights, and the Ten Principles of the UN Global Compact, established by the United Nations, and has established its Human
Rights Policy based on the CSR and ESG Basic Policy.
In the “CSR Procurement Standards,” we are committed torespecting fundamental human rights, eliminating discrimina-

Quality Control Committee

Prevention of child labor andforced labor

The survey was conducted using the Conflict Minerals Reporting Template (CMRT) for tin, tantalum, tungsten, and gold,
and the Extended Minerals Reporting Template (EMRT) for cobalt and mica, both templates of which are found in the Responsible Minerals Initiative (RMI) template.
From the fiscal year ended March 31, 2022, eight substances,including natural mica, have been added to the list of surveyed
substances, for a total of 13 substances.

Supervising andauditing

Export Control Committee

https://www.daicolor.co.jp/company/purchase/index.html(Excerpt below from the CSR Procurement Standards)
8. Engage in the responsible procurement of minerals.
1) Never use conflict minerals that cause the infringementon human rights, environmental destruction, and otherconflicts and become the source of funding for armed
groups.
2) Make efforts to procure minerals from conflict-freesmelters selected by organizations such as the RMI(Responsible Minerals Initiative).
3) If, in the unlikely event that the use of conflict-minerals
financing armed groups comes to light, make prompt
efforts to remedy such a situation.

Corporate governance structure

Chemical Substances
Control Committee

Please refer to our website for “Purchasing Policy” and “CSR Procurement
Standards”. (Japanese Only)In December 2020, the CSR Procurement Standards were revised to include “Responsible Mineral Procurement.”

The results are reported to the Representative Director andPresident and the Board of Directors twice a year on a regularbasis, or as needed depending on the nature of the case, and at
the same time, the Representative Director and President is given instructions on how to respond. In addition, the Internal Audits Division conducts audits of operations and reports the results to the Representative Director and President and the Boardof Directors.

At Dainichiseika Group, not only does the Board of Directors
supervise the Representative Director and President, who playsa central role in business execution, and at the same time the
Auditors and Audit & Supervisory Board supervise the Directors
and Board of Directors, but eight independent committees supervise and audit the Representative Director and President andother departments in business execution in cooperation with
the CSR and ESG Promotion Division.

Corporate Health and
Safety Committee

To achieve sustainable procurement, Dainichiseika Group conducted a survey of its suppliers in the fiscal year ended March
31, 2023, using the CSR Procurement Self-Assessment Questionnaire (SAQ) created by the Supply Chain Subcommittee of
the Global Compact Network Japan (GCNJ), and received responses from approximately 80% of suppliers. Through this initiative, we reconfirm the strengths and weaknesses of eachsupplier’s CSR activities and request that the survey results be
fed back to the supplier for corrective action to encourage themto continuously improve.
We will continue to implement monitoring activities and audits to expand our CSR initiatives throughout the supply chain,and strive to improve the satisfaction of all Dainichiseika Groupcustomers.

Responsible mineralprocurement

Corporate governance system

Environment Committee

Conduct CSR survey(Excerpt below from the CSR Procurement Standards)
1. Respect basic human rights; eliminate discrimination,
forced labor, and child labor; and make efforts to improve the labor environment.
3) Prohibition of forced labor and child labor
Never force labor through threats, restraints, or othermeans. Furthermore, never use child labor at any stageof the manufacturing process.
4) Ensuring a (safe and healthy) work environment Comply with laws on labor, safety, and health; ensure a safe,
healthy, and comfortable work environment for all persons involved in the company’s business activities; andmake efforts to maintain and improve such an environment.

To win the trust of stakeholders, we must not merely comply with laws and regulations, but establish and continue to improve corporate governance that enables both higher-level checks and transparency. Recognizing
ESG activities as active CSR activities, we are linking them to prompt and well-controlled decision-making andbusiness execution through the accurate operation of the ESG promotion system.

Internal Control Committee
on Financial Reporting

Dainichiseika Group strives to resolve social issues throughout its supply chain with regard to human rights, labor environment, and environmental conservation. To provide the products
and services our customers demand and to remain a company
trusted by our stakeholders, we revised and implemented ourPurchasing Policy in April 2019. The CSR Procurement Standards
established based on these standards specify the CSR requirements of each supplier and promote sustainable procurement
together.
We open our doors to new suppliers and select suppliers andprocurement items based on fair and impartial evaluations of
product quality, safety, performance, price, delivery time, stablesupply, and CSR initiatives such as human rights, labor environment, compliance, and environmental conservation, among other criteria.
In March 2023, we endorsed the Declaration of Partnership
Building by the Cabinet Office and the Small and Medium Enterprise Agency, among others. We will focus on coexistence andco-prosperity throughout the supply chain and new partnershipsthat transcend size and affiliation and compliance with promotion standards to promote cooperation and coexistence with
suppliers and value-creating businesses.

tion, forced labor, and child labor, and improving the working environment.

Cooperation
Representative Director
and PresidentInternal Audits Division＊4

CSR/ESG Promotion Group Headquarters
Operating Control Committee＊5

Management Liaison Committee＊6

Officer in Charge
Business Structure, Business Promotion Structure, R&D Structure, Plant Operation Structure, and Group Companies*1 The Nomination and Remuneration Committee, with the aim of strengthening the fairness, transparency, and objectivityof its procedures, deliberates and reports mainly on decisions concerning the nomination and remuneration of directors
and titled executive officers of the Company, based on consultations with the Representative Director and President or the
directors. The Nomination and Remuneration Committee is composed of three or more directors by resolution of the Boardof Directors, a majority of whom are outside directors, and the chairperson of the committee is selected from among theoutside directors by mutual vote of the committee members.
*2 The Outside Director and Auditor Liaison Committee consists of Independent Outside Director and all Independent Audit& Supervisory Board Member, and serves as a forum for sharing information on the management and supervision of Dainichiseika Group, with a focus on matters to be discussed or reported at the Board of Directors, and for Independent Outside
Director to exchange information from an independent standpoint.
*3 Operating Committee of Top Management: This committee is convened and chaired by the Representative Director andDecision making and business execution
systemDainichiseika’s Board of Directors consists of eight directors,
three of whom are appointed from outside the company (one ofwhom is a woman) for a term of one year to strengthen themonitoring and supervision of decision-making from the perspective independent of management. Prior to the Board of Directors meeting, important matters identified through dialogue
and information exchange with stakeholders, as well as mattersrelated to the basic strategies of Dainichiseika Group, such as
the formulation, progress reporting, and evaluation of the resultsof the medium-term management plan, etc., are fully deliberated by the Operating Committee of Top Management as necessary. Individual investment projects are verified in advance by
the Operating Control Committee. Internal regulations havebeen established for the implementation of business operations

President as occasion demands, and is held with the participation of the President & Representative Director, Directors at
the managing director level and above, and other relevant parties involved in the deliberations as necessary.
*4 The Internal Audits Division, as an independent division of Internal Audit, is composed of staff members who are familiar
with and have a high level of expertise in the business, and objectively verifies and evaluates the business from theviewpoint of legality and rationality.
*5 The Operating Control Committee is deliberating in an agile manner on Dainichiseika Group’s medium-term management
plans, budgets, and capital investments, and manages the profit and loss of business plans, flexibly convening the relevant
directors and representatives of divisions or offices depending on the issue.
*6 The Management Liaison Committee informs the heads of each structure of the decision-making process and confirms theexecution policy of each organizational unit with respect to the decision-making process, and receives reports on the statusof business execution from each organizational unit to verify appropriateness.

and to clarify the scope of responsibility according to job level
and appropriately delegating authority to enable prompt decision-making.

Audit system
The Audit & Supervisory Board regularly exchanges information with the accounting auditor and Internal Audits Division toensure the systematic and efficient implementation of the Auditing & Supervisory function.
Corporate auditors also attend Board of Directors and important internal meetings, seeking explanations and expressing theiropinions as necessary. In addition, they inspect important approval documents, such as minutes and approval documents, toaudit the execution of Directors’ duties and ensure that Dainichiseika Group’s operations are being conducted legally and appropriately.

*1 “Child” used in this provision is defined as anyone under the age of 15, or under the age for completing compulsory education, or under the highest of the lowest
working ages stipulated by local laws and regulations.

5354

CSR and ESG Initiatives

G Risk Management

G Compliance
Dainichiseika Group believes that compliance goes beyond mere compliance with laws, regulations, and internal rules and means, in the broad sense, meeting and contributing to the needs of society and stakeholders
through good-faith and equitable corporate activities that comply with social norms and ethical standards. Under the direction of the President and in cooperation with a committee chaired by the director in charge of the
CSR/ESG Promotion Division, the committee conducts promotional activities to develop and maintain a compliance adherence system.

In order to manage group-wide risk issues across the board, Dainichiseika has organized the CSR/ESG Promotion Group Headquarters, headed by a director, to oversee overall risk. They identify risks that could signiﬁcantly impact the group’s management, assign management and oversight responsibilities, and work to ensure thatrisks are controlled and that countermeasures and responses are appropriately implemented as they emerge.

Risk management system
Promotion activities
The CSR/ESG Promotion Group Headquarters plays a central
role in company-wide promotion activities, focusing on awareness-raising and education.
The main activities are as follows;● To raise awareness among all employees, we regularly distribute Compliance Letters and Compliance Mini Tests that address problems of compliance in their daily lives.
● Compliance training for new employees and post-employment
milestone years.
● Harassment training for management-level employees.
● As a mechanism for easy consultation to maintain a favorable
work environment, all locations have one Harassment Counselor for each gender.
● Training for local employees of overseas group subsidiaries toraise compliance awareness.
In consideration of effectiveness and efficiency, we utilize
face-to-face group training as well as video training throughe-learning. In addition to these awareness-raising and training
programs, we conduct periodic compliance audits in the form ofquestionnaires for all departments.

PLALLOY MTD B.V.
Compliance training

Compliance with Antitrust andSubcontracting Laws
We strive to ensure fair trade by stipulating compliance with
the Antimonopoly Law in the Code of Conduct for Officers andEmployees and by providing training based on the Action Guidelines for Compliance with the Antimonopoly Law.
In addition, in order to promote proper and fair subcontracting
transactions and compliance with laws and regulations, theCompany regularly holds briefing sessions on the Act against
Delay in Payment of Subcontract Proceeds, Etc. to employees incharge of production, purchasing, and other divisions, and conducts e-learning education. In addition, we promote participationin external seminars sponsored by the Fair Trade Commission
and the Small and Medium Enterprise Agency.
No violations of the Antimonopoly Law or the Subcontract
Law arose during the fiscal year ended March 31, 2023.

55

Prevention of corruption andbribery
In light of the global expansion of our business and the tightening of regulations on bribery around the world, we have beenpromoting enlightenment of Group employees through the formulation of our Basic Anti-Bribery Policy and Anti-Bribery Regulations and the distribution of our Anti-Bribery Handbook in order
to comply with anti-bribery regulations. In addition, we provide
education on anti-corruption as part of our e-learning compliancetraining for employees in their post-employment milestone year.
As a result of these efforts, no corruption, bribery or disciplinary action occurred in Dainichiseika Group in the fiscal year
ended 31 March 2023.

Internal reporting system
The Corporate Ethics Hotline has been established by the
CSR/ESG Promotion Group Headquarters, Audit & Supervisory
Board Member, and a law firm as a third-party contact for the
purpose of early detection and correction of any violation or potential violation of laws, regulations, internal policies, or rules in
the course of the corporate activities of Dainichiseika Group. The
hotline accepts consultations and opinions from officers andemployees via a dedicated telephone number and e-mail address, and the personal information of the person consulting andthe content of the consultation are strictly managed to ensurethat the person consulting will not be treated unfairly. Two internal reporting cases arose in the fiscal year ended March 31,
2023. Both cases were related to labor issues and involved noserious violations of laws, regulations, or company rules.

Dainichiseika Group has established Risk Management Regulations as internal rules. Each organizational unit in charge ofbusiness operations and management handles various risks.
Risks assumed in the course of business activities are recognized by the Risk Management Committee based on regular internal surveys and interviews with management; risks better
addressed as priority issues are identified and reported to theBoard of Directors.
In addition, due to the nature of Dainichiseika Group’s business of handling a wide variety of chemical substances and producing products, the committee promotes audits, supervision,and countermeasures as risks that should be addressed on an
ongoing basis.

Potential risks in business activities＜Strategic risks＞

1. Responding to changes in demand structure
2. Risks related to worldwide business activities
Risks related to political and geopolitical changes
3. Financial risks
Foreign exchange risk
Interest rate fluctuation risk
＜Operational risk＞

1. Risks related to purchasing
Raw material procurement risk, raw material and energy
price fluctuation risk
2. Risks related to compliance
Chemical substance control risk, quality control risk
Product liability and indemnification risks
3. Information security risk
4. Risk of shortage of personnel and human assets＜Hazard risk＞

Tax compliance
Dainichiseika Group complies with the tax-related laws andregulations of each country and region, and strives to pay theappropriate amount of tax. Although tax planning that benefits
cash flow is implemented, we do not engage in any activities
that are intended to avoid taxation, such as profit shifting to lightly taxed countries (tax havens). For international transactions,
we prepare transfer pricing documents in accordance with thelaws and regulations of each country, based on arm’s length pricing in accordance with the OECD transfer pricing guidelines, andallocate profits appropriately according to the business risks
borne by the group companies and the functions and assets
held by the group companies. We conduct a thorough review oftax risks in advance and seek to mitigate tax risks by providing
expert advice and guidance as necessary.

1. Natural disasters, epidemics, etc.

BCP measures
Dainichiseika Group has established Crisis Management Regulations as internal regulations for responding to management
crises, including large-scale disasters and the spread of infectious diseases, and has established a crisis management system and an initial disaster response system at its business sites.
We are progressively developing alternative systems for major
businesses and product supply, etc. However, based on lessons
learned, such as the fact that circumstances do not always turnout as expected in the event of a large-scale disaster, we aredeveloping business continuity measures through drills to ensure that we can respond quickly to various situations.

Approach to information
security
Dainichiseika Group handles a wide range of information assets, including those related to our business partners, productformulations and manufacturing methods, company management, and personal information of officers and employees.
Based on the Information Security Policy, we handle information
assets with care and strive to raise awareness of information
security through various training programs under an appropriate
management system.
In the fiscal year ended March 31, 2023, no incidents of leakage of corporate or personal information arose within Dainichiseika Group.

Management system
Based on the Information Security Policy, Dainichiseika Grouphas established the Information Security Management Regulations and implements organizational measures, measures to befollowed by officers and employees, and information security
measures for information equipment.
As a management system to ensure the implementation ofthese measures, we have appointed a person in charge of Information Security Implementation for each division and businesssite that conducts the actual operations, an Information Security
Manager to oversee the Information Security Implementation
Manager, and a Chief Information Security Officer to oversee
the entire Dainichiseika Group, thereby clarifying responsibilities
and roles.

Initiatives
To transform our business, organization, operations, and processes, and to establish a competitive advantage in the future,
Dainichiseika Group is promoting DX and implementing security
measures, including appropriate access rights management, authentication and authorization for information systems, and computer virus countermeasures for information equipment.
In the fiscal year ended March 31, 2023, we conducted a security diagnosis through an outside professional business to objectively verify the adequacy of these efforts. As a result, wehave recognized various areas for improvement and are working
to improve productivity and reduce the risk of information leaks
by promoting education and environmental improvements to ensure that executives and employees handle information appropriately based on sensitivity and by balancing the use of IT andinformation security measures.

56

CSR and ESG Initiatives

G Board Members

11

12

5

8

4

List of directors, corporate auditors and titled executive officers (as of June 29, 2023)

Representative Director andPresident
Representative Senior
2
Executive Director
3Managing Director

Office of the President, Secretarial Office, Internal Audits Division, and CSR/ESG Promotion Group Headquarters Administrator Chief Information
Security Officer

Yoshitaka Koshiro

Head of R&D Structure

Masahiko Aoba

Head of Plant Operation Structure Plant Operations Headquarters, Tokyo, Osaka, Tokai, Kawaguchi, and Bando Production Plants, Sakura Production Plant(UKIMA Chemicals & Color Mfg. Co., Ltd.), Composite Plant Engineering & Planning Division Administrator
Head of Business Structure Pigments Division, Coating Materials Division, Gravure Inks Division, Advanced Polymers Division, New Business
Development Division, and Offset Inks Division Administrator
Head of Business Promotion Structure Personnel & General Affairs Division, Public Relations Division, Central Purchasing Division, Overseas Business
Division, East Japan Head Branch, Central Japan Head Branch, and West Japan Head Branch Administrator, IR Administrator

Name

Status

CSR/ESG/Compliance

Finance/
Accounting/Tax affairs

IT/Information
systems●●

Koji Takahashi

Representative Director
and President●●

Yoshitaka Koshiro

Representative Senior
Executive Director●●

Masahiko Aoba

Managing Director

Osamu Takeda

Managing Director●

Managing Director

Osamu Takeda

5

Director

Koji Sato

6

Outside Director

Yoshiaki Nakagawa

7Outside Director

Akiko Nagahama

8

Outside Director

Susumu Kawase

Koji Sato

Director●

Audit & Supervisory Board
Member (Standing)
Audit & Supervisory Board
Member (Standing)Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Senior Managing Executive
Officer

Yoshiro Gamo

Yoshiaki Nakagawa

Outside Director●

Shuichi Murata

Akiko Nagahama

Outside Director

Susumu Kawase

Outside Director

Tatsuhiko Komada

Sub-Head of Business Promotion Structure Corporate Planning & Control Division, Corporate Finance & Accounting Division, Information Management
System Division, Chief Financial Officer

Tatsuhiko Komada

Senior Managing
Executive Officer

Managing Executive Officer

Taiyo Aoyagi

Taiyo Aoyagi

Managing Executive
OfficerManaging Executive Officer

Toshio Tani

Sub-Head of R & D Structure Organic Synthesis Research No. 1 Division, Organic Synthesis Research No. 2 Division, Application Research No. 1
Division, Application Research No. 2 Division, Technical Coordination Division
Sub-Head of Plant Operation Structure Narita Production Plant (Hi-Tech Chem Co., Ltd.), Kazo, Togo, Katano Production Plant (Dainichi Color Composite Co., Ltd.),
Kyushu Production Plant (Kyusyu Dainichiseika Co., Ltd.), Kumamoto Production Plant (Kyushu Kako Co., Ltd.)

Toshio TaniManaging Executive
Officer

Takahiro Shoda

Managing Executive
Officer

1011
12Managing Executive Officer

Hidemi Yamaguchi
Ichiro Wakabayashi

Takahiro Shoda

Sub-Head of Business Structure Specialty Colors Division, Plastic Colors No. 1 Division, Plastic Colors No. 2 Division

1

3

9

10

2

Knowledge/Experience/Skills and Fields expected
Corporate
management/
Businessstrategy/
Leadership

4

9

57

Koji Takahashi

6

Skill matrix of directors and titled executive officers (as of June 29, 2023)

In accordance with Dainichiseika Group’s corporate philosophy, vision, values, and code of conduct, we strive to maximize sustainable
development and corporate value through fair business activities.
1

7

Personnel
affairs/
Labor affairs/
Human asset
development

Industry andindustry trends/
Supply/Internationality/
Marketing/
Manufacturing
DiversityNewbusinesses

●
●

●
●
●

●

●

●

●

●

●

●

●
●

●

●
●

●
●

●

●

●

●

●

●
●

●

●
●

●

SCM/Logistics

●

●

●

Technologicaldevelopment/
Technologicaldevelopment
management

●

●
●

●
●

●
●

●

●

●

58

CSR and ESG Initiatives

G Dialogue with Shareholders and Investors

G Board Members
Officer’s remuneration
Based on recognition of the method for determining the basic
policy regarding director remuneration as a key management
matter, the Operating Committee of Top Management, comprised of the Representative Director and President and directors at the rank of managing director or higher, examines thedesign content of the remuneration system. The Company thenconsults the Nomination and Remuneration Committee, which
consists of three or more directors, the majority of whom are
independent outside directors, and makes a resolution at theBoard of Directors’ meeting after obtaining its report.
Our basic policy is to pay director remuneration based on an
appropriate level that takes into account their performance, professional abilities, duties, experience, and insight, and also takes
into account consistency with the treatment of employees. Director remuneration excluding outside directors consists of 1)
Basic remuneration (monetary remuneration) paid as a fixedamount every month, and 2) Stock remuneration based on a restricted stock remuneration system. Remuneration for outside
directors consists of 1) Basic remuneration only. In determining
the details of individual monetary and stock remuneration, theRepresentative Director and President makes proposals in accordance with the Remuneration Regulations for Directors andCorporate Auditors, which are subject to consultation and reportby the Nomination and Remuneration Committee, and the Representative Director and President is entrusted with the decision

by a resolution of the Board of Directors. The Board of Directors
confirms that the consultation and report by the Nomination andRemuneration Committee are fully respected with respect toindividual director remuneration, etc., and that the remuneration
is in accordance with the executive remuneration rules resolvedby the Board of Directors. In addition, as performance-linked remuneration, executive bonuses can be paid if annual performance improves and profits significantly exceed plans, will be
proposed by the Representative Director and President, consulted and reported by the Nomination and Remuneration Committee, and then submitted to the General Meeting of Shareholders.
The Company’s basic policy regarding the remuneration of Audit & Supervisory Board Members is to pay them based on an
appropriate level in consideration of their performance, duties,
experience, and insight. The policy is consistent with their treatment of employees, as well as the remuneration of directors.
Specifically, basic remuneration is determined based on discussions among the Audit & Supervisory Board Members in accordance with the Remuneration Regulations for Directors and Corporate Auditors, and the amount of remuneration for eachindividual is determined based on discussions among the Audit& Supervisory Board Members. In addition, the Company may
pay executive bonuses to Audit & Supervisory Board Membersin the same manner as directors.

Total remuneration paid for the ﬁscal year ended March 31, 2023, total remuneration by type of remuneration,and number of directors and ofﬁcers covered by the plan

Classification

Total remuneration, etc.
(millions of yen)

Total amount of remuneration, etc. by type(millions of yen)
Basic remuneration(fixed remuneration)

Bonus (monetary
remuneration)

Stock remuneration(non-monetary
remuneration)

Number of directors
and corporate auditors
subject to the plan
(persons)

Directors (of which, outside
directors)

213（23）

199（23）

̶
（̶）

14（̶）

9（4）

Audit & Supervisory Board
Member (of which, outside
corporate auditors)

45（13）

45（13）

̶
（̶）

̶
（̶）

4（2）

Total
(of which, outside officers)259（36）

Promotion structure
Dainichiseika Group believes that constructive dialogue withshareholders and investors contributes to both shareholder andcorporate value enhancement and utilizes their feedback in management. As part of our internal structure, the director in chargeof IR plays a central role. Through joint efforts among all relevant
divisions, we share information and promote dialogue, with the
Public Relations Division serving as the point of contact.

Since the announcement of the medium-term management
plan in 2021, we have actively promoted IR activities, including
company briefings and individual interviews. Through direct dialogue with shareholders and investors, we will promote understanding of Dainichiseika Group’s business and strive to be a
corporate group that is trusted by and has a long-lasting relationship with our shareholders and investors.

IR calendar

1st quarter2nd quarter3rd quarter

4th quarter

Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.
Ordinary General
Meeting of
Shareholders

Earnings
announcement

2Q financial
results briefing

Announcement of
1Q financial results

Announcement of
3Q financial results

Announcement of
2Q financial results

Financial results briefing

Dialogue results for the fiscal year ended March 31, 2023
To provide institutional investors and sell-side analysts
with a better understanding of Dainichiseika Group’s business activities and ESG management initiatives, we held financial results briefings in June and December for the fiscal
year ended March 31, 2023, to explain the progress of our

medium-term management plan, technology development
strategy, ESG product sales expansion strategy, and overseas strategy, respectively. We aim to continue enhancing
opportunities for dialogue and to disclose information in a timely, appropriate, and equitable manner.

Company brieﬁng / Financial results brieﬁng
TypeDainichiseika correspondents

TargetNumber of participating
institutional investors, etc.

June
2022

Financial results
briefing

Representative Director and President, Executive
Officer in charge of Accounting and Finance, etc.

Institutional investors, analysts,
financial institutions, mass media

29 persons

December
2022

Financial results
briefing

Representative Director and President, Executive
Officer in charge of Accounting and Finance, etc.

Institutional investors, analysts,
financial institutions, mass media

19 persons

Date

Meetings with individual institutional investors
244（36）

̶
（̶）

14（̶）

* Includes one outside director who retired at the conclusion of the 119th Ordinary General Meeting of Shareholders held on June 29, 2022.

13（6）Holding period

Number of meetings (total)

From April 2022
to March 2023

13 times

Dainichiseika correspondents
Representative Director and President, Executive
Officer in charge of Accounting and Finance Division,
Head of Accounting and Finance Division, etc.

Number of participating institutional investors (total)
Overseas investors: 2 companies
Domestic investors: 10 companies
Securities companies: 1 company

Please refer to this website for the contents of the dialogue andfeedback received. (Japanese Only)

Financial Results Briefing for the Fiscal Year Ended March 31, 2022

59

https://www.daicolor.co.jp/ir/stock/conversation/index.html

60

DATA

Group Network

Company ProﬁleCompany name

Dainichiseika Color & Chemicals
Mfg. Co., Ltd.

Head Office

1-7-6 Nihonbashi Bakuro-cho,
Chuo-ku, Tokyo 103-8383 JAPANContent of
Business

Manufacturing and sales of:- inorganic, organic, and preparedpigments- colorants for plastics and textiles- printing inks, coating agents, andrelated equipment- synthetic leather materials andother polyurethane- polymers derived from natural
substances- functional materials and CCM
systems

Founded

October 16, 1931

Representative

Koji Takahashi, Representative
Director and President

Capital10,039 million yen(Tokyo Stock Exchange, Prime
Market)Number of
employees

Dainichiseika 1,451
Including subsidiaries 3,666(As of March 31, 2023)

Organizational
schematic

Domestic

Overseas

Sales bases Total 12 bases

Asia Total 13 bases

East Japan Head Branch Sales

Dainichiseika（HK）Ltd. Sales

Hokkaido Branch Sales Production

Dainichiseika（HK）Colouring Co., Ltd. Sales

Information Management System Division

Sendai Branch Sales

Dainichiseika（Shenzhen）Trading Ltd. Sales

Public Relations Division

Shizuoka Office Sales

Dongguan Dainichi Chemical Manufactory Co., Ltd.

Personnel & General Affairs Division

Fuji Office Sales

Sales Production

Central Purchasing Division

Central Japan Head Branch Sales

Daicolor Shanghai Mfg. Co., Ltd. Sales Production

Hokuriku Branch Sales

Shanghai Mitsui Plastic Compounds Ltd. Sales Production

West Japan Head Branch Sales

Tai Chin Chemical Industry Co., Ltd. Sales Production

Plastic Colors No. 1 Division

Okayama Branch Sales

AEOLIAN Corporation Sales Production

Plastic Colors No. 2 Division

Hiroshima Branch Sales

Sambo Fine Chemicals Mfg. Co., Ltd. Sales Production

Coating Materials Division

Shikoku Branch Sales

PT. Hi-Tech Ink Indonesia Sales Production

Kyushu Branch (Kyusyu Dainichiseika Co., Ltd.) Sales Production

Dainichi Color Vietnam Co., Ltd. Sales Production

As of June 29, 2023

Office of the President
Secretarial Office
Corporate Planning & Control DivisionCorporate Finance & Accounting Division

Business
Promotion
Structure
Board ofDirectors

Overseas Business Division

Representative
Director andPresidentInternal
AuditsDivision

CSR/ESG
Promote Group
Headquarters

Pigments Division
Specialty Colors Division

Business
Structure

Advanced Polymers Division
Audit &
Supervisory
Board

New Business Development Division

Offset Inks Division

Production and Technical Service Bases Total 14 bases

Organic Synthesis Research No. 1 Division

Hokkaido Branch Sales Production

Organic Synthesis Research No. 2 Division

Bando Production Plant Production Engineering

Application Research No. 1 Division
Application Research No. 2 Division

Plant
Operation
Structure

61

Tokai Production Plant Production Engineering

Europe Total 3 bases

Production Plants

Osaka Production Plant Production Engineering

Daicolor Italy S.R.L. Sales

Composite Plant Engineering &Planning Division

Shiga Production Plant Production Engineering

Plalloy MTD B.V. Sales Production

Sakura Production Plant (Sakura Production Plant, UKIMA
Chemicals & Color Mfg. Co., Ltd.) Production Engineering

Dainichiseika Color & Chemicals Mfg. Co., Ltd.
Europe Representative Office OtherOne year from April 1 of each year to
March 31 of the following year

Stock code

4116

Ordinary
General Meetingof Shareholders

June every year

Industrial
classification

Chemical

50,000,000 shares

Total number ofshares issued

18,613,110 shares(Treasury stock 122,030 shares)

Number ofshareholders

5,059 (as of March 31, 2023)

Hi-Tech Color, Inc. Sales Production

Plant Operations Headquarters

Settlement date

Total number ofauthorizedsharesAmerica 1 base

Tokyo Production Plant Production Engineering

Tokyo Stock Exchange, Prime Market

100 shares

Kawaguchi Production Plant Production Engineering

Dainichi Color India Private Ltd. Sales Production

Technical Coordination Division

Listed market

Trading unit ofsharesDainichi Color (Thailand) Ltd. Sales Production

Gravure Inks Division

R&D
Structure

Basic Stock Information(As of June 29, 2023)

Record date forshareholder
determination

March 31 every year

Method ofpublic notice

Dainichiseika uses electronic public
notices.
(Dainichiseika’s website is https://www.
daicolor.co.jp/english/ir/index.html) In
the event that we are unable to makeelectronic public notices due to an
accident or other unavoidable circumstances, public notices will be posted in
the Nikkei.

Narita Production Plant(Hi-Tech Chem Co., Ltd.) Production Engineering
Kazo Production Plant (Kazo Production Plant, Dainichi
Color Composite Co., Ltd.) Production Engineering
Togo Production Plant (Togo Production Plant, Dainichi
Color Composite Co., Ltd.) Production
Katano Production Plant (Katano Production Plant,
Dainichi Color Composite Co., Ltd.) Production
Kyushu Branch(Kyusyu Dainichiseika Co., Ltd.) Sales Production
Kumamoto Production Plant(Kyushu Kako Co., Ltd.) Production

Affiliated Companies
D.S.F. Co., Ltd. Other
Dainichiseika Kako Hanbai Co., Ltd. Other
Color Planning Center Inc. Other

62

DATA

Ten-Year Summary of Key Management Indicators(Consolidated)
Fiscal Year
Ended March
31, 2014

Fiscal Year
Ended March
31, 2015

Fiscal Year
Ended March
31, 2016

Fiscal Year
Ended March
31, 2017

Fiscal Year
Ended March
31, 2018

Fiscal Year
Ended March
31, 2019

Fiscal Year
Ended March
31, 2020

Fiscal Year
Ended March
31, 2021

Fiscal Year
Ended March
31, 2022

Fiscal Year
Ended March
31, 2023

159,899

162,999

160,770

157,185

167,446

170,394

155,108

138,491

121,933

122,005

Operating income (millions of yen)

8,686

9,265

9,954

11,982

13,079

8,718

4,850

4,920

7,446

2,635

Ordinary income (millions of yen)

9,404

10,017

10,37912,204

13,774

9,264

5,582

5,613

8,315

3,373

Net income attributable to owners of the parent(millions of yen)

6,015

5,662

3,946

9,950

8,361

3,876

3,977

6,343

6,166

2,007

Comprehensive income (millions of yen)

10,912

12,166△376

13,51910,177

658

1,267

9,165

8,210

5,343

Total assets (millions of yen)

165,044

177,458

173,744

188,248

200,948

190,701

187,296

197,717

196,709

192,765

Net assets (millions of yen)

66,777

77,18476,09388,43997,026

96,055

95,675

103,660

110,487

114,301

39.3

42.2

42.3

45.9

47.3

49.3

50.1

51.5

55.1

58.1

Cash ﬂows from operating activities (millions of yen)

7,176

5,673

6,246

12,981

11,953266

12,82911,522

7,579

3,002

Cash ﬂows from investing activities (millions of yen)

△6,243△2,555△2,720△2,732△8,624△6,925△3,552△3,769△6,643△2,195

Cash ﬂows from ﬁnancing activities (millions of yen)

△3,357△3,937△6,180△3,520△4,810△1,183△3,026△358△11,424△3,836

Cash and cash equivalents at end of period(millions of yen)

26,16026,181

24,38031,117

29,683

21,41927,63634,43824,87923,103

Net assets per share (yen)699.49807.57791.434,650.77

5,114.07

5,068.65

5,052.36

5,516.08

5,868.51

6,060.11

Net income per share (yen)

64.79

60.99

42.51

535.98450.33208.81214.24341.95333.70108.58

7.4

10.1

10.6

7.0

9.7

14.5

11.0

7.2

6.2

16.4

Dividend per share (yen)

60.00

65.00

70.00

77.50

85.00

85.00

77.50

45.00

80.00

80.00

Dividend payout ratio (%)

18.5

21.3

32.9

14.5

18.9

40.7

36.2

13.2

24.0

73.7

Return on equity (ROE) (%)

9.9

8.1

5.3

12.5

9.2

4.1

4.2

6.5

5.9

1.8

Return on Assets (ROA) (%)

5.9

5.8

5.9

6.7

7.1

4.7

3.0

2.9

4.2

1.7

3,628

3,722

3,698

3,888

3,943

3,904

3,871

3,809

3,750

3,666

Profit and Loss
Net sales*1 (millions of yen)

Financial Position

Equity ratio (%)

Cash FlowsPer share information*2

Price earnings ratio (PER) (multiples)

Other Indicators

Number of employees (persons)*1 Effective from the fiscal year ended March 31, 2022, the Company has adopted the Accounting Standard for Revenue Recognition.
*2 Adjusted for the effect of reverse stock split.

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