MEIDENSHA REPORT
2018

CONTENTS

Meiden Group Corporate Philosophy
Corporate Mission
It defines the raison d’être and corporate mission

Illuminating a more affluent
tomorrow
We continue to create value
and technologies for the realization of a more
affluent and environmentally conscious society.

Corporate Slogan
Expressing the corporate philosophy in a single phrase

The Meiden Group Corporate Philosophy is as follows: “We seek
to delight customers by offering high quality products and services
to help solve their problems. Through these business activities, we
aim to fulfill our corporate social responsibility (CSR) by proactively
solving global environmental problems and other social issues andhelping achieve a more affluent future. We must continually tackle

Value Provisionthese challenges.”

It defines the unique value provisionand core competenceThis is our legacy from Hosui Shigemune, who founded ourcompany as a local factory to manufacture and repair electrical

For customer peace of mind
and satisfaction

machinery. His will remains our common sense of values, even as

We offer complete environmental consideration
and appropriate support for our customers. Fromproduct design to commissioning, our highly
skilled staff help customers solve various issues
and realize their dreams by providing high-quality,
socially responsible products and services.

the Meiden Group aims to grow with society and be indispensable

these have evolved with the times, and remains at the core of all
our business activities. Staying true to this Corporate Philosophy,
to it. With that as our goal, we continually take the challenge ofcreating new technologies and value.

Editorial Policy
The Meiden Group informs its stakeholders of its attitude and initiatives
relating to social responsibility through the two media of the Meidensha
Report (print edition and web edition) and the Meiden Group CSR (webedition).
With regard to the content of the reports, we work to collect andanalyze information that meets our stakeholders’ expectations and isof interest to our stakeholders, and distribute it through regular
notices, IR activities, and interviews with each department.
Furthermore, at the Meiden Group, we are working tostrategically promote future CSR by conducting communication
activities during the process of creating reports to understandchanges in the external environment and share future issues andtrends, exchanging opinions within the company based on the reportsthat have been created, and each department reflecting on its own
activities, taking into account external perspectives.

Meidensha Report print edition andweb edition (this document)
A comprehensive collection of financial
information concerning the Meiden
Group and non-financial
information such as
initiatives that contributeto improving corporate
value and management
strategies.

Meiden Group CSR web
edition (Japanese only)
A simple introduction focusing
on specific initiatives to tackle
CSR issues that the Meiden
Group considers important.

This report mainly covers initiatives taken in fiscal 2017 (April 1, 2017 March 31, 2018)
It also includes some information from prior to fiscal 2017 anduntil July 2018.

CSR Definition

Corporate Code of Conduct
This
code
defines
compliance in conducting
our CSR programs andactivities.

Build Loyalty

The report mainly covers initiatives of Meidensha Corporation and its
affiliated companies. Human resources data applies to affiliatedcompanies in Japan, while environmental reporting data applies to
Meidensha and its 37 major affiliated companies (19 in Japan and 18
overseas).

Publication• Publication of this report:• Next scheduled publication:

August 2018
August 2019

Guidelines Used as References

1

President’s CSR Policy

MEIDEN CYCLE

This policy sets forth the policyof our CSR programs andactivities in the medium term.
The Policy asks each Group
employee to implement CSR
programs and activities in their
daily work. We will draw up
specifications that reflect thegiven business climate and CSR
challenges under the current
stage of the Medium-termManagement Plan.

MEIDEN CYCLE shows theguiding spirits shared by all
members of the Group in
realizingtheGroup’s
corporate philosophy.

MEIDENSHA REPORT 2018

In order to realize our Group Corporate Philosophy, we must

• IIRC (International Integrated Reporting Council) “International
Integrated Reporting Framework”• GRI “Sustainability Reporting Standards”• Ministry of the Environment “Environmental Reporting Guidelines(Fiscal Year 2012 Version)”

identify the direction for each individual employee to aim towards

Inquiries about This Reportand provide signposts to help them proceed without losing theircalling forth the next, creating a cycle of action and growth. Based

Meidensha Corporation
Public Relations Section, Public & Investor Relations Division
ThinkPark Tower, 2-1-1, Osaki, Shinagawa-ku, Tokyo
141-6029 Japan
TEL: 81-3-6420-8100 FAX: 81-3-5745-3027

on this image, we call this the Meiden Cycle.

Disclaimer

way. To enable us to do so, we have made these five actions ourwatchwords. The actions are mutually linked, with one action

By sharing and practicing the Meiden Cycle as the ethos
underlying our actions, we seek to maximize the growth cycle foreach of our employees.

Meiden Group Businesses.........................5
Meiden Group History................................7
Overview by Business Segment.................9

Value Creation
The Meiden Group Value Creation
Process ...................................................11

Message from Management ....................13

Special Feature
1. Automobile-related Business ...............19
2. Expanding Growthof the Overseas Business ....................25
3. Strengthening the Earnings Baseof the Group’s Domestic Business .......27

Foundation for Creating ValueESG at the Meiden Group........................29

Subject Organizations
Under the Meiden Group’s
definition of CSR, “Eachand every employee shallwork to realize the Group’s
corporate philosophy sothat the Meiden Group isneeded by society.”

Corporate Slogan ......................................3

Strategy

Report Media

Reporting Period

MEIDEN CYCLE

ProfileEnvironment ............................................31
Society....................................................35
Corporate Governance ............................39

Corporate Information
Financial / Non-Financial Highlights..........45
Outline of the Meiden Group....................47

In addition to past and current facts about the Meiden Group, thisreport contains forecasts for the future based on plans, outlooks andbusiness policies and strategies in effect at the time of publication.
These forecasts are our assumptions and judgments as based on
information available at the time they were stated, and may differ from
actual business activity results and events in future owing to changes
in conditions.

MEIDENSHA REPORT 20182

Corporate Slogan

For the peace of mind and satisfaction of our customers,
and the precious lives of people beyond them,
Meiden Group quality will connect
with a more prosperous tomorrow.

For us, our “quality” is not only about the quality of our

For the peace of mind and joy of our customers, and the

products and services. There are two things that makeprecious lives of people beyond them, Meiden Group

our quality: “people” and “technology”. People atquality will connect with a more prosperous tomorrow.

Meiden Group strengthen ties with customers around theThis is our never-changing mission.

world by being truthful and flexible. Meiden Grouptechnology contributes to society with truly original
products and reliable services created with expertise.
These two attributes make Meiden Group’s uniquequality, and create new connections with the future.
Making connections with our customers, society, andpeople living in it. These connections will expand, andthe power we have built will become the energy for the
next generation.

3

MEIDENSHA REPORT 2018

MEIDENSHA REPORT 20184

Meiden Group Businesses

The present of the Meiden Group, which has been
involved with the manufacture of heavy electricalequipment and developed businesses in the fieldof social infrastructure for 120 years
Seven Meiden Electrical Technologies that Support Our Society
Transmit - transmitting electricity -Meidensha manufactures equipment for thecreation of electricity, or in other words, electricity
generation. We have a wide-ranging productlineup, from high-capacity items that are used in
power stations, such as large turbine generators,
generator equipment that utilizes renewableenergy, such as photovoltaic power generationand hydroelectric generation, and emergency
generators for use in the event of a disaster,through to portable power equipment.

Electricity generated at power stations passes
throughelectricalequipmentsuchastransmission lines, substations, and feeder lines,
where the voltage is incrementally lowered,
before being delivered to factories, buildings, andhomes. We provide products that are essential to
the safe and stable transmission of electricity,such as transformers that change the voltage ofelectricity and circuit breakers to shut off excess
current in the event of an accident.

The Meiden Group has developed its social infrastructure, industrial systems, and maintenance and servicing businesses in 13 countries.
Production Sites

Sales and Servicing Sites

TRIDELTA MEIDENSHA GmbH
(Germany)

Meidensha Behind Every Electricity Scene
Create - creating electricity -Overseas Network

MEIDEN HANGZHOU DRIVESYSTEMS CO., LTD. (China)

MEIDEN AMERICA, INC. (U.S.A.)

Transform - transforming electricity Transforming, or power electronics, refers toconverting and controlling electricity. Meidensha’s
power electronics initiatives, which began withmercury-arc valves, are now proving useful in arange of fields, including power supplies, railway
facilities, production facilities, EVs, renewableenergy, and battery storage systems, while
responding to demands such as energy efficiency
and increased reliability.
PRIME MEIDEN LIMITED. (India)

MEIDEN SINGAPORE PTE. LTD.
(Singapore)

THAI MEIDENSHA CO., LTD. (Thailand)

Domestic Network
Head OfficeMoving - moving with electricity -Protecting - protecting society -Supporting - supporting society -Connecting - connecting with society -Meidensha’s environmentally friendly
transport technology such as motors
and automated guided vehicle (AGV)systems that are valuable to increase
efficiency at manufacturing plants,
environmentally friendly EV/PHEV drive
systems, automobile testing systems
that contribute to the development
process, and elevator systems thatenable a powerful yet smooth ride,
supports more fulfilling lifestyles.

We continue to protect the peace ofmind and satisfaction of ourcustomers and the valuable lifestylesof the people that they serve throughcomprehensive services to protect
equipment, from stable supply ofelectricity and systems that enableenergy-efficienttransportation
through to installation, preventative
maintenance, regular maintenance,and replacement of equipment.

We provide components that
supportvariousproduction
equipment and services that
support the safety of workplaces.
Our mission is to stand alongside
our customers and support themto resolve their issues throughdistinctive products and services.

By connecting our experience andknowhow developed at customers’
actual worksites with ICT, we will
create efficiency and optimize social
infrastructure, leading to stable
maintenance.
We will create a more connected andvibrant future through the latest IoT
and AI technology.

Maintenance bases

Branch offices, branches, and sales offices

General research laboratories

Head Office (Shinagawa, Tokyo)

Domestic production bases

R&D Center (Shinagawa, Tokyo)
Numazu Works(Numazu, Shizuoka Prefecture)

Ohta Works (Ohta, Gumma Prefecture)

Nagoya Works(Nagoya, Aichi Prefecture)
Kofu Meidensha Electric Mfg. Co., Ltd.
(Kofu, Yamanashi Prefecture)

Features of the
Meiden GroupA wealth of technology andmanufacturing capabilities
Development capabilities
to produce environmentallyfriendly products

High-quality andextensive productlineup and the ability
to guarantee quality

Complete maintenanceservice system

System engineering
capabilities to meet
our customers’ needs

Strong trust relationships
with our customers,
partners, and employees

A number of employees (consolidated) /A number of employee breakdownby region*

Consolidated net sales (FY2017)

Group consolidated subsidiaries*

241.8

37

8,995

billion yen

Japan

79.6%

7,164

Japan

69.4%

167.6

In Japan

19

Asia

18.7%

1,687

Asia

23.0%

55.7

Outside Japan

18

Other regions

1.6%

144

Other regions

7.6%

18.4

(billion yen)

5

MEIDENSHA REPORT 2018

* As of March 31, 2018

MEIDENSHA REPORT 20186

Meiden Group History
Tradition

Expertise

A more detailed timeline may be found on our website.

http://www.meidensha.com/corporate/corp_05/index.html

Supporting social infrastructure

Flexibility

for 120 years.

UniquenessTechnology

technology in the future,
as in the pastlead to a more affluent future.
1970

s-

The

1980

s-

The

1990

s-

The

Approaching Our Centenary

Aiming to Be “Meiden a Global Company”
Today, the Meiden Group is expanding its
presence in markets outside Japan, especiallyin the ASEAN region. As part of this, wetransferred to our overseas subsidiaries astronger regional supervisory role; e.g. building
partnerships with enterprises outside Japan,
and opening training centers for local staff.
We are using IoT and AI to increase
our product competitiveness and systemtechnology. We also enhanced one-stop
service business ranging from equipment
manufacture to maintenance, inspection,and operations and management.
The world is undergoing vast change,
but Meidensha will never stop endeavoring
to contribute to the formation of an “affluent
future society.”

1903 and 1904. He continued withDuring Japan’s postwar economic boom,

In the latter half of the 1980s, economic

Meidensha celebrated its 100th anniversary

research and made prototypes in the desire

Meidensha actively expanded into the

expansion led Meidensha to boost its

in 1997. Japan’s business environment

day Japan would build its own electric

to develop more products of his own. His

industrial systems business and contributed

production

andchanged drastically after the collapse of themachinery.

Japanefforts led him to devise an induction motor

to the development of industry in Japan. In

upgrade its production system. We added

bubble economy, and management had todepended on imported products fordesign method in 1905. In the following

about 1970, society was beginning to prize

to our family of Group companies anddeal with a time of crisis. However, themuch of its industrial machinery. His

year, he started production of motors to his

quality over quantity. Likewise, Meidensha

developed a variety of businesses to makelegacy we had inherited from ourbusiness at that time was mainly repair

own design method.

switched its management strategy fromus a stronger enterprise.

predecessors,

capacityatfactories

technologies

andof electrical equipment and manufacture

Meidensha’s motor production helped

quantity base to quality base. On the technical

We grew to have three core businesswell-developed human resources, becameof switches. However, his efforts to build

to modernize Japanese industry andside, our aim was to develop new products

areas, adding mechatronics and electronics

the base for a new era of expansion as we

made-in-Japan

became the cornerstone of value-buildingthat made full use of our employees’ creativity.

to our existing power electronics field. The

hit the 100-year milestone.

at Meidensha that still persists today.

At this time, we began to cement our status asintegration of technologies from each of

gave

him

several new ideas for development ofown products.

s-

Evolving into “Meiden a System
Engineering Company”

started a factory in the belief that one

motors2010

Evolving into “Meiden a PowerElectronics Company”

In 1897, our founder Hosui Shigemune

Meanwhile,

Sincerity

Reliability

The

Founding and Birth of “Meiden a Motor Company”

Continuing to hone theof people and

The Meiden Group’s quality will
1897

PeoplefieldstocreateUpon our 110th anniversary in 2007,

a manufacturer of heavy electrical equipment,thesemanagement,

we christened ThinkPark Tower, a facility

In 1901, Shigemune successfully

having developed new products thatmonitoring, and control systems, evolves

combining our head office building with

developed a three-phase induction

combined heavy electrical technology (power)

our Group into a company known as

pleasant greenery in Osaki, Shinagawa City,

motor and sold 18 motors between

with the latest electronics technology.

“Meiden a System Engineering Company.”

Tokyo, where our company was founded.

Meiden Group History
1897 Company founded as a privately operated factory for electrical machinery

1967 Electronics Device Factory opened in Numazu

1995 Head Office moved to Chuo-ku, Tokyo

2009 Capital and business alliance with Ono Sokki Co., Ltd., for the automotive testing systems business

1913 Osaki Factory established1968 Technical transfer agreement with General Electric for vacuum interrupters

1997 Celebrated 100th anniversary

2012 Japan AE Power Systems Corporation joint venture dissolved

1917 Private operation incorporated as “Meidensha”

1969 Technical transfer agreement with SEVCON for electrical equipment for forklift trucks

2001 Japan AE Power Systems Corporation established2013 Dissolved Meiden Foundry Industrial Co., Ltd.

2003 Merger with Meiden Engineering Corporation2014 Stake acquired in Prime Electric (now PRIME MEIDEN LIMITED.)

2005 Work started on a development project near the West Exitof Osaki Station

2015 Maintenance and after-sales service businesses reorganized into Meiden O&M Corporationand Meiden Engineering Corporation

1935 Nagoya Works establishedTechnical transfer agreement with AEG for thyristor rectifiers and processing lines1937 Shinagawa Works established1973 Technical transfer agreement with General Electric for high-frequency thyrister inverters

1939 Nishio Works established1976 Gotanda Office opened

1950 Kofu Meidensha Electric Mfg. Co., Ltd. established1977 Ohta Works established1955 Technical transfer agreement with AEG for air circuit-breakers and transformers

1979 MEIDEN SINGAPORE PTE. LTD. established1958 Opened the Head Office in Ohtemachi, Chiyoda-ku, Tokyo

1987 Technological exhibition held to celebrate the company’s 90th anniversary

1961 Numazu Works established1993 R&D Center completed

2006 Motor development and manufacturing business merged into
Kofu Meidensha Electric Manufacturing Co., Ltd.
2007 Our 110th anniversary
ThinkPark Tower completed and the head office moved
to Shinagawa-ku, Tokyo

Tridelta (now TRIDELTA MEIDENSHA GmbH) acquired from Tridelta GmbH
Formulation of the Medium-term Management Plan V120
2017 Our 120th anniversary
2018 Formulation of Medium-term Management Plan 2020

Technical transfer agreement with ASEA for turbine generators

7

MEIDENSHA REPORT 2018

MEIDENSHA REPORT 20188

Overview by Business Segment

Overview by Business Segment in Fiscal 2017
Net Sales (consolidated)

241,832
230,2992014

Social Infrastructure Systems Businessmillionsof yen241,832

237,404
220,141

2015

2016

2017 (FY)We manufacture and sell equipment for emergency andnon-emergency power generation, hydroelectric power
generation, and power transmission and distribution facilities, topower companies, government agencies, railways, and buildings
and factories in Japan and abroad. The product offerings include
power quality stabilization systems and power generation
systems such as solar power and small and medium-sized hydropower, as well as energy solution services such as smart grid
systems. We are also involved in the fields of drinking water andsewerage treatment for local governments in Japan. Our activities
include manufacturing and sales of electrical facilities for water
processing systems and process control systems and information
networks. We also offer solutions services such as contract facility
management services for drinking water treatment plants.

Operating Income* (consolidated)Industrial Systems Business

11,381

We manufacture and sell motors and inverters for elevators,
textile machinery, industrial vehicles, and electric vehicles. Other
products include vacuum capacitors and industrial computers
for makers of semiconductor manufacturing equipment. We
also manufacture and sell dynamometers and other testing
systems for automobile manufacturers, and logistics support
systems for factories and warehouses.

11,381

10,517

9,997

millionsof yen

8,849

2014

2015

2016

Net sales in the segment rose 16.2% over the previous fiscal year to¥147,049 million, while operating income grew 23.8% to ¥4,080 million.
In our electric power and social infrastructure system business,
although there was a fall in solar power products, products for powercompanies remained steady and there was a recovery in equipment forJapanese companies’ production bases overseas, which resulted inincreased revenue year on year.
In the railway system business, although there was a trend towards
intensifying competition in the domestic market, sales of large overseas
rail projects firmed, which resulted in increased revenue year on year.
In the water and environmental system business, amid difficult businessconditions, such as lower demand arising from difficulties in implementing
regional fiscal policies due to reduced budgets and the declining population,
revenue increased year on year due to a rebound in orders for renewal
projects due to improvements to proposal-related activities.

Net sales in the segment remained steady from the previous fiscal year at¥56,000 million, while operating income grew 77.8% to ¥4,384 million
over the previous fiscal year.
In the motor and drive business, motors and inverters for
EVs/PHEVs firmed, resulting in increased revenue year on year.
In the electronic equipment business, against a backdrop ofvigorous growth in the semiconductor manufacturing equipment market,
vacuum capacitors and pulse power supplies, etc., were especiallystrong, resulting in increased revenue year on year.
In the dynamometer and logistics systems business, orders areshowing signs of recovery due to renewed investment in testing facilities
automobile manufacturers, and increased investment in the logistics
industry; however revenue was down year on year due to the effect of
reduced orders in the previous fiscal year.

Maintenance and Servicing BusinessWe provide services relating to the remote management andmonitoring of facilities and the proposal of measures for extending
the life of facilities, energy conservation, and other services related
primarily to the maintenance of products we supply.

Net sales in the segment rose 2.8% over the previous fiscal year to¥33,962 million, while operating income dropped 5.1% to ¥3,587 million,
due to one-stop service initiatives, conducting diagnostics and making
proposals, etc., from walk-throughs of private plants and facilities, andenhancing staff training and R&D to enable this.

Segmental Sales Breakdown (FY2017)
Other
7.1%

1.3%
Maintenanceand Servicing

Social Infrastructure
Systems
56.8%

Real Estate BusinessWe offer property rentals, including office spaces at ThinkPark
Tower (Osaki, Shinagawa City, Tokyo).

We are engaged in the real estate leasing business, centering on theoffice and commercial building ThinkPark Tower (Osaki, Shinagawa City,
Tokyo). Net sales in the segment remained steady from the previous fiscal
year at ¥3,463 million, while operating income was ¥1,337 million.

13.1%
Industrial
Systems
21.6%

9

MEIDENSHA REPORT 2018

Net Operating Income(Millions of yen)

(Millions of yen)

147,049

141,014 140,585

5,243

126,530

4,080

3,971
3,297

2014

2015

2016

2017 (FY)2014

61,09020162017 (FY)

4,384

4,030

55,552 56,000

55,414

2015

3,023
2,465

2014

2015

2016

2017 (FY)

2014

2015

2016

2017 (FY)

3,781

3,587

2017 (FY)* Operating income for fiscal 2014 has been
retroactively restated due to a change inpresentation. (Starting in fiscal 2015,
consolidated Group expenses associatedwith employees on loan are stated as“operating expenses” instead of“non-operating expenses.”)

Real Estate

Net Sales

Other BusinessThis sector includes marketing companies that handle a wide
range of products, welfare services for employees, and others.

This segment includes categories not included in any of the above
segments, such as manufacturing and marketing of electrochemicalmeasuring equipment and electric insulation materials, welfare services
for employees, and goods merchandising. Net sales in the segment
declined 4.3% from the previous fiscal year to ¥18,327 million, andoperating income increased 7.1% to ¥497 million.

33,962
29,773 31,007 33,044
2,550

2014

2015

2016

2017 (FY)

3,289

3,386

3,452

3,463

2014

2015

2016

2017 (FY)

2014

2015

2016

2017 (FY)

1,240

1,280

1,340

1,337

2014

2015

2016

2017 (FY)

493

464

497

2015

2016

2017 (FY)20,467 19,712 19,155
18,327

378

2014

2014

2015

2016

2017 (FY)2,921

MEIDENSHA REPORT 201810

The Meiden Group Value Creation
Process

Aiming for sustainable developmentof the Meiden Group and society
Customers

The Meiden Group

Society

Solving social issues by providing

Value provided to society

value to customers• Stable supply of electricity

Research andDevelopment• Energy efficiency• Safe access to water resources• Creation of employment

Sales

Electricalpower

Financial
capitalStrategy
Medium-term Management Plan 2020 (fiscal 2018 to fiscal 2020)■ Growth businesses: Overseas business and automobile-related business• Expanding the scale of businesses in line with market growth

The business environment in which the Group operates (anticipated)• Declining population• Slumping economic• Environmental regulations• Automobile electrification

growth rate
• Difficulty in implementing
national and local
government fiscal
policies• Building Trust from
Customers andSociety

Identifying Social Problems

Optimal Capital Allocation and Strengthening
Management Foundations

11 MEIDENSHA REPORT 2018

Identify business risks
and understandsocial issues

Active response

Ensure competitive
superiority
Secure business
opportunities

Logistics

Plant
constructionengineering

Maintenance

Sustainable Development Goals (SDGs)

P19~28P29~30Construction
and Installation

P31~44• Understanding Diverse Business Risks andFormulation of the Medium-termManagement Plan that will lead toestablishing competitive superiority andsecuring business opportunities.
The Meiden Group’s business activities are
subject to a range of risks and the impact ofsocial issues; however, proactive engagement
will lead to establishing competitive superiority
and securing business opportunities. We
formulated Medium-term Management Plan
2020, which covers fiscal 2018 through to fiscal
2020, with awareness of this. Under
Medium-term Management Plan 2020, which
has a period of three years, we are now in aphase of taking a “powerful step” for a jump
forward in the future, and we are actively
investing and strategizing with regard to facilities,
human assets, research and development, andstrengthening business partnerships, etc.

Manufacturing

Strengthening management foundations(investment in equipment and people, etc.)

P13~18Strategy

ICT
production

Automobile
testingsystems

P03~04

Human capitaland digitalization• Development of the IoT
and AI

DesignWater andenvironmental
systems

Improvement of capital efficiency through optimal allocationof capital, and strengthening the management foundations
that support businesses
Over 120 years, the Meiden Group has ceaselessly continued toadapt, and optimally allocated the various capital that supportsbusiness activities, which has been accumulated throughout its
history. Medium-term Management Plan 2020 aims to efficiently
inject capital to support businesses and achieve financial targets.

Production strategy

Dealing withhuman assets
development, work
style reform

R&D strategy

Implementing five key measures to support its growth strategies
Building a robust financial base

Improving the quality of thefoundation for business operations

Maintenance• Further honing of quality • Challenge to create new technologies and value
Providing Value to theCustomerBusiness Activities
Providing value that contributes to improvementsin the customer’s corporate value
Consideration for the environment, a comprehensive
customer support system, and high-quality services areforms of value that increase a company’s value for its
customers, and they are also Meidensha’s strengths.
These forms of value also win trust from customers andgenerate robust financial underpinnings, creating a virtuous
cycle that further strengthens management foundations.

• Optimal engineeringthat considers thecustomer’s
perspective

Considerationof theenvironment• Conservation of energy• Conservation of resources• Securing of water
resources• Safe, secure,and efficientequipment
operation

Comprehensive High-quality
customerproducts andsupportservices• High-quality• High-performance• High-efficiency

Improving Corporate ValueContributing to the realization of a sustainable
society by providing value to customers

Value provision

Contributing to greater
corporate value for customers

Winning trust from customers/
Robust financial underpinnings

Stronger managementfoundations

Enhancing strengths andstrengthening foundations

in developing
countries• Increased
infrastructure
demandofpeople and technology

Social capitalIntellectual
capital• Increasing population

issues, including Sustainable Development
Goals (SDGs), through business activities■ Strengthening business foundations• Manufacturing, development and business promotion capabilities,
human assets fostering and financial strategies

Business Key Words

Contribution to the solution of social

Natural capital

Capital allocation

Domestic Market• Shareholder returns

Railwaysystems

Sales Engineering

Manufacturing
capital■ Earnings-base businesses: Public infrastructure business andmaintenance and servicing business• Strengthening earnings power through generation of new values

Overseas Market

EnergyThe Meiden Group’s corporate mission is“illuminating a more affluent tomorrow” and we areconducting corporate activities according to thecorporate philosophy of “for customer peace ofmind and satisfaction.” By continuing to improve
the quality of people and technology, which is thedriving force behind all of our business activities,
we will provide unique products and reliable
services, and contribute to society as appropriate
for the age and the market. Through this, we aim
to provide increased value to the customer byimplementing a business strategy that integrates
development, production, sale, and maintenancewhile strengthening our foundations, and achievesustainable development for both the Meiden
Group and society.
MEIDENSHA REPORT 201812

Message from Management

Increasing theof people andtechnology, supporting the future of social
infrastructure and industrial advancement,
and creating a better lifestyle for people going
forward.
My name is Takeshi Miida, and I took on the role of Representative Director and President inJune 2018. Since its establishment in 1897, Meidensha has produced a range of technologies,
products, and services and contributed to the development of a sustainable society in its role
as a manufacturer. In 2017, it celebrated its 120th anniversary. I would like to once more express
my gratitude for the many customers that have given Meidensha their trust and their patronage.
Last year, the Meiden Group formulated its new corporate slogan, “Quality connecting thenext,” based on the Group’s corporate philosophies of “Illuminating a more affluent tomorrow”
and “For customer peace of mind and satisfaction.” We aim to increase the quality of people andtechnology, support the future of social infrastructure and industrial advancement, and create abetter lifestyle for people going forward.
In 2018, we formulated “Medium-term Management Plan 2020” as a “powerful step” for a
jump. Amid the changing business environment, we will increase the scale of growing businesses,
such as the overseas transformer and railway business and the automobile-related business,and use IoT and AI technology to create new value, with the aim of becoming a company thatgrows even further.

Takeshi Miida
Representative Director and President

13 MEIDENSHA REPORT 2018

MEIDENSHA REPORT 201814

■ Looking Back on Fiscal 2017

■ Overview of V120 and the Business Environment

We worked to strengthen the earnings base of theGroup’s business in Japan and expand the overseas
business, which resulted in sound performance for theGroup.

We were able to thoroughly improve results, basedon the basic policies of “enhancing the productcompetitiveness,” “strengthening the earnings baseof the Group’s business in Japan” and “expanding the
growth of overseas business.”— Looking back on fiscal 2017, how do you think it went?
— Please give us an overview of V120.
Under the V120 Medium-term Management Plan (fiscal 2015 tofiscal 2017), we listed “enhancing the product competitiveness,”“strengthening the earnings base of the Group’s business inJapan” and “expanding the growth of overseas business” asaims, and continuously worked to implement key measures suchas “developing new business partnerships” and “giving direction
to the business,” which led to solidly improved results.
As a result, we have achieved solid growth by creatingworld-acclaimed products through enhancing productcompetitiveness, receiving increased orders in the hydroelectricrelated business and the maintenance and servicing businesses,
promoting partnerships, such as those with Prime Meiden Ltd. inIndia, and Tridelta Meidensha GmbH in Germany, and achieving
an overseas sales ratio of 30% for the overseas business.

VisionIdeal state of
being
JUMP

V120
(FY2015-2017)

Powerful
STEP(FY2018-2020)

Investment in facilities andhuman assets for major growth■ Enhancing its product competitiveness■ Enhancing earnings power■ Clarification of growth areas

15 MEIDENSHA REPORT 2018

■ Powerful Step:● Investments for growth andsteady expansion in businessperformance

As basic policies under the current medium-term management
plan, the Group categorizes its business areas into the following
three to attain optimal distribution of its resources and will
implement necessary strategies for each of them:
The first area is “growth businesses.” The Group defines
businesses for which markets are expected to grow further,including overseas and automobile-related businesses, as“growth businesses” and will proactively divert resources tothese domains to ensure their expansion.
The second area is “earnings-base businesses.” The Groupdefines businesses that serve as a base to generate earnings in astable manner as “earnings-base businesses,” which include thewater treatment/public infrastructure, electric power/renewableenergy and maintenance/servicing businesses. The Group aims
to sharpen its earnings power by revamping its business models
and improving its productivity.
The final area is “new growth businesses.” The Group will
make investments into businesses associated with semiconductor
manufacturing equipment–new growth businesses which are
expected to grow further–and try to generate new enterprises.
Based on these policies, we will make proactive investments
and work to enhance earning potential with the aim of further
increasing corporate value.

■ Medium-Term Management Plan 2020: A “Powerful Step”
for a Jump

— What about the strategies in each business segment?

— Medium-term Management Plan 2020 has been put inplace. Please tell us about the concept behind it.

Powerful Step for a Jump

Medium-termManagement
Plan 2020

The Group faces various market factors today. In the Japanesemarket, there has been a steady demand for renewing or
extending the lifespan of aging facilities and for installing energysaving equipment at the existing facilities, while demand for
new projects is on the decline owing to the nation’s shrinking
population and other factors, exerting downward pressure on theprices of products. With regard to the public sector, municipal
governments are diversifying how they provide their infrastructureservices, such as collaborating with neighboring municipal
governments or the private sector to provide such services
together.
In the overseas market, demand for infrastructure suchas electricity, railways, water supply, and sewerage continued
to grow in developing countries, particularly in Asia, due topopulation growth and urbanization.
Furthermore, global trends such as stricter environmental
regulations, the advent of automobile digitalization and electricvehicles, and the advancement of technologies related to theInternet of Things (IoT) and artificial intelligence (AI) present
prime opportunities for the Group to expand its businesses. It
is necessary for the Group to study how these trends will unfold
and respond to them soundly and swiftly.

We have designated the current phase as a “powerfulstep” towards a future “jump” forward, and we areinvesting in future growth and steadily increasing
performance.

Medium-term Management Plan 2020 (FY2018-2020)

HOP— Please tell us about the basic policies of Medium-termManagement Plan 2020.

Next
and ensuring
management
plans(FY2021-2024)

Realization of“high-quality” growth■ Expansion of business scale■ “High-quality” growthWell-balanced compositionof business operations● Enhanced profit margin●

A heavy electricmachinery maker that
supports the future ofsocial infrastructure
and industrial
advancement, while
realizing sustainablegrowth anddevelopment

Meidensha has now commenced implementing Medium-termManagement Plan 2020, which covers the three-year period fromfiscal 2018 to fiscal 2020. Under Medium-term Management Plan
2020, which is defined as the phase “powerful step” the Groupwill proactively invest and take measures to make its facilities,
human assets, research and development, and strengthening
business partnerships with other more robust parties.
In the “jump” phase that follows the current management
plan, the Group aims to attain “high-quality” growth by realizing abalanced composition of different businesses and enhancing theoverall profit ratio.

(1) Social infrastructure business segment
With regard to growth businesses, the Group’s strategies in theoverseas electric power field are as follows. It will aim to enter theelectric power markets in Southeast Asia by further advancing
partnerships with local companies in the region–efforts whichhave been made since the previous medium-term management
plan. It will concentrate on expanding the sales of its worldacclaimed products, such as vacuum circuit breakers and surgearresters in European and North American markets. Furthermore,
Prime Meiden Limited, an India transformer manufacturer that is
now a consolidated subsidiary of the Group, will play a leadingrole in carrying out the strategies in India, by accelerating efforts
to enter local electrical power utility markets and to win contracts
for high-speed rail projects. It also aims to enter markets westof India. In the overseas railway field, the Group will steadily
carry out large projects, including work to renew facilities thatare part of Singapore’s MRT North-South and East-West lines.
It will also try to strengthen its corporate preparedness to copewith vigorous future demands for urban transportation and highspeed railways.

Promotion of business strategies to cope with environment changes & evolution of business base
Growth businesses Overseas and automobile-related businesses

Changes in businessenvironment

Looking back on the previous fiscal year, I feel that it was a year
in which the Japanese economy continued its mild recovery, withfactors such as improved business performance and increased
capital investment. On the other hand, if you look at the global
economy, although the outlook is unclear with factors such as
US policy and geopolitical risks relating to the Korean Peninsula
and the Middle East, the US economic recovery is continuing,
and signs of economic recovery can be seen in the Asian region.
Against this backdrop, the Meiden Group has devoted its
energy to increasing product competiveness and thoroughly
promoted “strengthening the earnings base of the Group’sbusiness in Japan” in the Japanese infrastructure business,
and worked towards “expanding the overseas business” inaccordance with the growth of developing countries, with aneye to accomplishing the V120 Medium-term Management Plan,
which was in its final year.
As a result of the above, the Meiden Group’s results wereas follows: Consolidated sales amounted to \241.832 billion (up9.9% year on year); operating income amounted to \11.381 billion(up 28.6% year on year); ordinary income amounted to \9.992
billion (up 21.7% year on year); and net income attributable toowners of parent totaled 7.056 billion (up 22.9% year on year).
In major managerial indicators, compared to the previous
period, our equity ratio rose 0.7 points to 30.3%, ROE rose 1.0
points to 9.2%, and ROA based on operating income rose 0.9
points to 4.4%.

— What do you think about the business environment inwhich the Meiden Group operates?

Takingadvantage

Expanding the scale ofbusinesses in line withmarket growth■ Expanding businesses in emerging ASEAN economies■ Expanding businesses in and west of India■ Dealing with the advent of electric vehicles anddigitalization

Earnings-base busineeses Public infrastructure, maintenance/servicing businesses
Reforming

Evolving

New growthbusinesses

Growth expansion,
creation of businesses

Strengthening earnings ■ Sharpening product competitiveness■ Using IoT and AI technologies
power throughgeneration of new values ■ Catering to new needs
Manufacturing, development and business promotion capabilities, human assets fostering and financial strategies
MEIDENSHA REPORT 201816

With regard to earnings-base businesses, the Group will try
to reduce the cost of products through discontinuous innovation
or drastic changes in design, materials and manufacturing
processes and revamp its business models for business
operations in water treatment, public infrastructure and electric
power/renewable energy. It will aim to attain automation andlabor-saving in operational control by pairing its accumulated
product data and know-how with loT and AI technologies. It will
also aim to beef up its capability to make proposals and build a
corporate structure to better cater to the new needs of municipal
governments. Many such entities are now providing infrastructureservices together with neighboring municipal governments,
engaging in cross-field endeavors in energy and water projects
and tying up with the private sector. In its business operations
catering to the private sector, the Group will try to ensure thatit better meets demands by a drastic reduction in the cost of
high-voltage, low voltage switchgear and improved businesspromotion efficiency through cooperation with the maintenanceand servicing business operations.
(2) Industrial systems business segment
With regard to growth businesses, In the automobile-related
field, the Group will aim to win new mass production contracts
by making capital investments to cope with increased
production of motors and inverters for electric vehicles andstrengthened manpower for product development. In theautomotive testing systems business, it will strengthen its
engineering capabilities that can deal with the proliferation ofelectric vehicles, digitalization of vehicles and introductionof model-based development by promoting its partnershipstrategy, while pursuing the synergy effects with its motor andinverter business for electric vehicles.
With regard to earnings-base businesses, in the industrial
motors and drives business, the Group will boost the earning
power of existing products while creating new products throughpartnerships or other means. In the automated guided vehicle
systems business, the Group will collaborate with a system
integrator to generate world-acclaimed products for improved
earning power.
With regard to new growth businesses, in the field related
to semiconductor manufacturing equipment, the Group willcontinue capital investments to deal with increased production
demand, as the market is projected to make steady growth. It
will also try to secure growth by developing new products. The
Group projects continued growth in the market for ceramic flat
membranes, thanks to increased demand for reclaimed waterand strengthened environmental regulations. It will aim to expand
the business by strengthening its sales structure in collaboration
with other companies.
Furthermore, it will aim to create new growth businesses
through operations by the Business Development Division, which
was established in April 2017, as well as its Silicon Valley Office
set up in August 2017.
(3) Maintenance and servicing business segment
In the maintenance and servicing business, the Group will provide
one-stop services based on life cycle engineering. It will also try todevelop this business into facility management business at a time
when Japan’s population is declining and municipal governments
are increasingly experiencing financial dire straits. It plans toprovide preventive maintenance services through enhanced fault
prediction and detection technologies that use loT and AI, as
well as the provision of low-cost, labor-saving, maintenance andservicing operations.

17 MEIDENSHA REPORT 2018

Powerful Step for a Jump
Growth businesses

Earnings-base businesses

Production
strategy

Dealing withhuman assets
development, work
style reformNew growth businesses

R&D
strategy

Implementing five key measures tosupport its growth strategies
Building a robust
financial base

Improving the qualityof the foundation forbusiness operations— Please tell us about key measures.
In order to affect our strategies, we are implementing specificmeasures in the five key areas of “production strategy,” “humanassets development and work style reform,” “research anddevelopment strategy,” “building a robust financial base,” and“improving the ‘quality’ of the foundation for business operations.”(1) Production strategy
The Group will make capital investments to expand the scaleof operations or to increase production in the growth and new
growth businesses. For example, it will introduce automatedproduction for high-volume products and automated inspection
processes to enhance its productivity. In the earnings-basebusinesses, the Group will concentrate on boosting earning
power for system products. It will sharpen the competitive edgeof its products by building so-called smart plants with the use ofloT and AI, making investments in automated product design,
etc. and optimizing the supply chains.
(2) Human assets development and work style reform
The Group will further strengthen the development of humanassets, as the basis for supporting business development. It will
institute improved technological training, use overseas training
centers and promote exchanges with national staff members inoverseas operations to foster next-generation human assets for
the Group.
Firstly, in the “growth businesses”, the Group will concentrateon nurturing national staff members engaged in overseas railway
projects or securing or nurturing human assets capable ofdeveloping motors and inverters for electric vehicles, whosemarket is expected to grow. In the “earnings-base businesses”,
the Group will build a cross-sectional business promotion regime,
develop human assets for business promotion and enhance its
capability for making business proposals.
The Group will tackle work style reform by stipulatinga new action plan, called “Smart Work 2020.” It will reformthe production processes and invest in the streamlining offacilities and increase productivity through the use of robotic
process automation, while taking steps to realize diversity in theworkplace, including expanded or improved support systems forchild rearing and nursing care.
(3) Research and development strategy
While reaping the fruits from the “V120”, the Group will further
strengthen basic and product technologies with the aim ofgenerating next-generation products and systems.
The Group will concentrate on developing new products
by diverting resources to the “growth businesses” related tothe overseas power generation and automobile sectors, whileboosting its digital technologies associated with loT and AI, etc.,

to give new added values to the “earnings-base businesses.” In
addition, to speed up research and development, the Group will
introduce new methods, such as front loading design and model
based development. At the same time, the Group will use its
Silicon Valley Office and strengthen tie-ups with outside research
institutes to promote open innovation.
(4) Building a robust financial base
For a further leap forward, the Group will proactively makenecessary investments. At the same time, it will realize a robust
financial base by enhancing its net worth through improvement of
its earning power and by boosting its cash generation capability
through the streamlining of its assets to build a foundation for asustainable growth. In addition, it will diversify fund procurement
methods to ensure the Group has a stable financial base.
To realize the above, the Group will set financial targets andmake all-out efforts to have a solid financial base to attain thesetargets.
(5) Improving the “quality” of the foundation for business
operations
The Group will make continued efforts to improve the quality of
products, systems, and services as a corporation that supportssocial infrastructure. In addition, it will proactively improve the"quality" of activities that serve as the foundation for business
operations, such as the eradication of industrial accidents andfull implementation of corporate governance.
Furthermore, Goal 13 of SDGs (Sustainable Development
Goals) is “climate action,” which we understand is a major
management issue facing the Company, and the Group has
been promoting environmental conservation by offering ecofriendly products and services at a time when the world faces
threats of natural resources depletion and global warming. Goingforward, the Group aims to slash the emissions of global warminggases associated with its business operations by 30 percent
from the fiscal 2017 1evel by the end of fiscal 2030 through theeco-conscious operations mentioned above. The Group will aim
to materialize ideas infused into its corporate slogan, “Quality
connecting the next,” through the aforementioned activities.

— What about the financial targets?
The Group will aim to achieve ¥280 billion in net sales, ¥14 billion
in operating income, ¥13.5 billion in ordinary income and ¥9.4
billion in current net income attributable to owners of parent infiscal 2020, the last year in Medium-term Management Plan
2020. It has set the following targets: a return on equity (ROE) of
10%, a return on invested capital (ROIC) of 7% and an operating
profit margin of 5%. Achieving these targets, the Group willrealize highly efficient management, make investments for a leap
forward and build robust financial base.

We will continue to actively challenge ourselves to create
new technologies and new value, in order to contribute to therealization of a more affluent and environmentally conscious
society.

Financial targets (consolidated)(In billion yen)

Fiscal 2017 (results) Fiscal 2018 (forecast) Fiscal 2020 (targets)
Net sales

241.8

245.0

Operating income

11.3

11.5

14.0

Ordinary income

9.9

10.8

13.5

Current net income attributable toowners of parent

7.0

7.5

9.4

280.0

(In billion yen)

Fiscal 2017 (results) Fiscal 2018 (forecast) Fiscal 2020 (targets)Socialinfrastructure
Industrial

147.0

142.0

Operating income

4.0

3.5

4.8

Net sales

56.0

63.0

77.0

Net sales

157.0

Operating income

4.3

4.9

5.5

Maintenance and Net sales
servicingOperating income

33.9

35.0

39.0

Real estate
OthersTotal

Net sales

3.5

3.8

4.4

3.4

3.5

3.5

Operating income

1.3

1.3

1.3

Net sales

1.3

1.5

3.5

Operating income

(2.0)

(2.0)

(2.0)

Net sales

241.8

245.0

280.0

Operating income

11.3

11.51

14.0

Profitability
Fiscal 2017 (results) Fiscal 2018 (forecast) Fiscal 2020 (targets)
ROE

9.2%

9.2%

■ To Our Stakeholders

ROIC

—

—

7%

Aiming to be a company that is trusted and needed bysociety

Operating profit margin

4.7%

4.7%

5%

Investment Plan
Fiscal 2017 (results)

FY 2018~2020 Cumulative amount over three years— Finally, please send a message to our stakeholders.

Capital investment¥7.5 billion¥30 billion

The resources for value creation, and the strengths of the
Meiden Group, are a powerful sense of duty to support the social
infrastructure that has been developed through longstanding
relationships with our customers, connections such as ourcustomer network and cooperation within the group, and speedy
and flexible responsiveness to the wishes and issues of ourcustomers. Going forward, we aim to maximize corporate value
by continuing and further developing these three strengths.

Growth investment budget¥0.5 billion¥20 billion

Research and development
expenditure¥9.4 billion

More than ¥30 billion

10%

Net worth / Dividend ratio
Net worth
Consolidated dividend
payout ratio target

Fiscal 2017 (results)

Fiscal 2020 (targets)¥80.2 billion¥100.0 billion

28.9%

Stably at 30.0%

MEIDENSHA REPORT 201818

Special Feature 1:
Automobile-related BusinessHistory of electric vehicles-Providing support as a drive system pioneer
History of Meidensha’s automobile-related
business
Meidensha has greatly contributed to the development of
automobile technology, such as by delivering Japan’s firstelectric dynamometer in 1920, delivering Japan’s first chassis
dynamometer in 1927, and developing the roller dynamometer,
which received the OHM Technology Award in 1985.
Meidensha has delivered numerous testing systems thathave contributed to global automobile environmental strategies(fuel consumption reform, gas emission, noise reduction, etc.)
focusing on the Ministry of Land, Infrastructure, Transport
and Tourism and the Ministry of Economy, Trade and Industry,
etc., research institutions, and Japanese automobile andparts manufacturers. According to the ever-changing needsof the times, Meidensha has conducted joint developmentwith various automobile manufacturers to evaluate thefunctions of new automobiles, and has a record of deliveringover 3,500 systems, placing it among the leaders of theindustry. Furthermore, as a range of regulations concerning

1900

1908
Model T Ford(mass production)

1940

1937
Establishment of
Toyota Motor
Corporation

Dynamometers

1920
10 horse power DC dynamometer- Tokyo Technical School(first dynamometer in Japan)
1897
Establishment of
Meidensha
One horse power
three-phaseinduction motor

Meidensha’s industrial motors and inverters have been
adopted for a number of purposes in various locations andenvironments, and Meidensha has accumulated a range oftechnologies in the process. Based on these technologies,
Meidensha started developing motors and inverters for EVs
in the 1990s. Meidensha’s motors and inverters have been
adopted for a number of concept cars, such as the EV,“IZA,” which was jointly developed by Tokyo Electric Power
Company, Inc. (now Tokyo Electric Power Company Holdings,Inc.) in 1991. Meidensha currently provides products for thei-MiEV and OUTLANDER PHEV, which are vehicles on themarket produced by Mitsubishi Motors Corporation, and has
an extensive record of producing over 230 thousand vehicles
in total. In addition, incorporating the knowledge gained fromthis record in our products is the most important source ofimproved reliability.
From a development perspective, in addition to continuous
basic development, which is constantly focused on the future,
Meidensha also has a system to develop products that are mostappropriate for vehicles under development, by being involved
with design from the early stages of the customer’s vehicle
development. From a production perspective, Meidensha isconstantly working towards automation of production lines andquality control, and providing highly reliable products.

1960

1948
Establishment of
Honda MotorCo., Ltd.
1958
ECDY series(first ECDY*1 in Japan)• Dynamometer systems• Motor/Inverter technology and EV drive systems

fuel consumption efficiency and exhaust gas have been
implemented, Meidensha has been developing and delivering
testing equipment in line with these regulations.
At present, labor hours for design and development havebeen increasing for power trains that have been diversifying
due to more advanced functionality of automobiles (electronic
control, safety driving support systems, connectivity, etc.)
and tightening environmental regulations around the world.
Against this backdrop, it has become even more important
to shorten development periods while maintaining quality,
and in order to deal with this issue, importance has beenplaced on model-based development (MBD) as an automobile
development and evaluation method. MBD is a method to
reduce the testing and trial frequency of testing vehicles andparts components and conducting development in an efficientmanner, by evaluating functions, etc., through simulations
that utilize CAE, etc. By integrating models created with CAE,
etc., into the MBD process, Meidensha is working to develop
efficient testing systems.

1920

1934
Establishment of
Nissan Motor
Company Ltd.

EV

Meidensha’s History
with Automobiles

History ofAutomobiles

1904
First automobile
in Japan

Technologies and strengths developedsince Meidensha’s foundation

1965—
Profusion of
automobiles

1980

Meidensha is able to provide products, systems, andengineering for automobile development, from subcontractingof testing equipment such as for engines, transmission, andcompleted automobiles, and research and development,
through to coordination of products and systems, andconstruction such as testing buildings, laboratories, andincidental equipment. Furthermore, Meidensha has anintegrated production process at its domestic location(Dynamometer System Factory, Ohta City, Gunma Prefecture)that encompasses research, development, and design,
through to manufacturing (machinery, control systems, andoperation and design equipment, etc.), and it is able to provide
customers with high-quality, highly functional products incollaboration with Group companies and partner companies.
Meidensha has testing buildings in two locations: Japan(Ohta, Gunma) and the US (Michigan), where various tests arecarried out on commission and research and developmentof next-generation products is conducted. Through the useof these testing buildings, Meidensha not only conducts joint
verification, which contributes to the research and developmentof customers, but also creates new technologies and new value
together with customers and partner companies according to
the needs and issues uncovered through testing.

2000

2018

2005
ZEV*3 regulations(California, USA)2018
Tightening of
ZEV regulations
2019
NEV*4 regulations(China)1970
Regulation of 1979
gas emissions
Formulation of
fuel-efficiency
standards
1978
Ministry of Transport NTSELCHDY*2 for automobile
certification testing

1996
Dynamometer for FWD
vehicles - PM dynamometer(world first)

2002—
Contingent valuation system(VRS) virtual reality simulation
technology

First mass-produced
EV in the world

1991
TEPCO - IZA in-wheel motor(176 km/h)

2009
Mitsubishi i-MiEV

2003
Keio University - Eliica
in-wheel motor(370 km/h)*1 Eddy Current Dynamometer2018 Model-based development- Japan Automobile Research Institute Environmental automobile and EV testing
systemFirst mass-produced
PHEV in the world
2013
Mitsubishi
OUTLANDER PHEV

*2 Chassis Dynamometer*3 Zero Emission Vehicle*4 New Energy Vehicle

19 MEIDENSHA REPORT 2018

MEIDENSHA REPORT 201820

Special Feature 1:
Automobile-related Business

Aiming to further miniaturize motors andinverters
Motors and inverters are integral components of EVs. In order toachieve higher efficiency and lighter weight, as well as achieve
vehicles with a flat floor and a roomy interior, there is strong
demand for further miniaturization of components.
In order to achieve miniaturization, for motors, we areworking to improve the performance of permanent magnets
and limit energy loss (iron loss) in the motor core. For inverters,
we are working to miniaturize capacitors, which are one of thecomponents used to improve cooling technology. To achieve
further miniaturization, units that integrate motors and inverters
are under development. By including motors and inverters
in a single case, cabling is reduced, required installation
space is reduced by 30%, and weight is reduced by 15% incomparison to motors and inverters being installed separately.
From 2017, we will be able to display prototypes at exhibitions
and commence mass production at will. There are instancesin which it is better to install motors and inverters separately;
however, if the structure is optimized for integration, the meritsof integration are considerable.
Through these measures, we plan to increase the output
volume of inverters to five times the level of 2009 by 2020.
By 2025, we aim to increase the output volume to 15 times
that of 2009 by replacing the current silicone (Si) power
semiconductors used for inverters with silicone carbide (SiC).

The proliferationof EVs presents abusiness opportunity
Tackling challenges presented by theaccelerating new age of automobiles head on

Market size prediction for motor inverters for
EV drive system (EV and PHEV)

The environment surrounding the automobile
industry and future technological trends
The accelerating shift from gasoline and diesel vehicles to
EVs has been labeled a once in a hundred-year upheaval.
The tide of electrification of automobiles is rising around theworld, such as the future prohibition of sales of gasoline anddiesel vehicles in Europe, and China promoting EVs/PHEVs
on a national level. From a technological perspective, there
have been improvements in battery performance, and we are
gradually creating the foundation for the rapidly expanding
electric vehicle market.

OUTLANDER PHEV (Mitsubishi Motors Corporation)

In this environment, (1) miniaturization, (2) improved output
density, and (3) reduced cost are required for future EV drive
systems. It is important to work towards miniaturizing andlightening components and minimizing loss in order to extend
the range per charge. Furthermore, because the cost of electricvehicles is higher than gasoline-powered vehicles, the national
government is providing subsidies. In order to make the costof electric vehicles on par with gasoline-powered vehicles, it isnecessary to work to reduce the cost of EV drive systems.

Future technological developments(increasing power density)

5x

30,000Inverter-Integrated
Motor Units with
SiC

Helping to maximize
interior space &extend cruising distance

20,000

2.5 x
10,000Inverter-Integrated
Motor Units

Rapid expansion of the global EV / PHEV market

0
2015
2020
*Meidensha’s estimate

21 MEIDENSHA REPORT 2018

15 x

(Power density)(100 million yen)

2025

2030

2035

(Year)

20０９

2016

2020

2025

(Year)MEIDENSHA REPORT 201822

Special Feature 1:
Automobile-related Business

Once in a hundred-year
automobile revolution
Aiming to transform into an engineering
manufacturer for the EV age

Anechoic chamber and a dynamometer system for testing EV drive systems (Numazu Works)

What testing systems are required in theelectric and digital age?
The automobile is undergoing a once in a hundred-year
upheaval, and we are increasing investment in next-generation
technology with a focus on CASE*1, in medium to long-term
preparation for the electric and digital age. With this in mind,
research and development initiatives are also necessary fortesting equipment, in order to respond to new needs.
The first of these initiatives is “model-based development.”
Model-based development is a method that shortensdevelopment lead time and increases efficiency by conducting
development through simulations, without manufacturing
actual prototypes if possible. The second is “improving theperformance of high-speed dynamometers, battery simulatorsthat mimic batteries, and testing equipment for electric vehicles,
such as charge-discharge devices to evaluate batteries,
etc.,” as electrification accelerates. The third is “enhancing
engineering capabilities.”

23 MEIDENSHA REPORT 2018

Speed is becoming even more important in order to
respond to an environment in which these kinds of technology
and products are becoming more widespread and complex.
Therefore, we will enhance our business partnership strategy,
which includes companies in the same industry as well as
those in other industries.
*1 CASE: Connected Autonomous Shared Electric

Creating new value through the merger of
products and testing equipment
Meidensha is the only company in the world that has botha product business and testing equipment system businessfor EV/ PHEV motors and inverters, making us a pioneer inthe field. Medium-term Management Plan 2020 designates
automobile-related businesses as growth businesses, andaims to ensure the expansion of both businesses by proactively
investing resources.

In the future, the global market for automobile
electrification is expected to grow rapidly, and Meidensha
considers automobile electrification to be important for global
environmental conservation, safety measures such as reducing
road deaths to zero, and solving social issues to achieve amobile society where all people can move freely.
The history of EV/PHEV-related testing devices isapproximately 10 years. In 2009, sales commenced for the
EV and HEV testing system EVREVO. In 2011, Meidensha
installed an anechoic chamber and a dynamometer system fortesting EV drive systems (Numazu Works, Shizuoka), and in
2013, Meidensha added a testing building at Kofu Meidensha
Electric Mfg. Co., Ltd.
In addition, in 2011, Meidensha announced testing
technology that used the Mitsubishi Motors i-MiEV (joint
announcement with Ono Sokki Co., Ltd. at the Society ofAutomotive Engineers of Japan, Inc.), and we are working
on measurement and testing of sound and vibration, etc., tofurther improve the quality of motor and inverter products for
EVs and PHEVs.
In 2018, Meidensha delivered EV testing systems that cantest whether electric vehicles and environmental automobiles
that have undergone the WLTP*2 for the Japan Automobile
Research Institute meet environmental standards. Goingforward, we aim to expand the scale of our businesses by
speeding up research and development at Meidensha’s productbusinesses and further improving quality and mass-production
technology capabilities, through improved performance andenhanced engineering, centered on simulation and analysis.
*2 WLTP (Worldwide harmonized Light vehicles Test Procedure): International standard
for testing methods to calculate gas emissions and fuel efficiency

MEIDENSHA REPORT 201824

Special Feature 2:
Expanding Overseas BusinessTowards enhanced development of thesocial infrastructure business andcreation of new businesses

Strengthening partnerships

The Medium-term Management Plan 2020, designates the overseas business as a growth business, and aims for
expansion of the scale of businesses in the fields of railways, electric power companies, and the private sector, in
accordance with the growth of the respective markets. Demand for infrastructure such as power plants, railways, watersupply, and sewage treatment continues to grow in emerging countries, mainly in Asia, due to population growth andurbanization. In addition, new social demands are appearing, such as heightened environmental awareness around theglobe, and accelerated innovation due to new technologies such as the IoT and AI technology.
In response to this situation, Meidensha is accelerating implementation of its global strategies to strengthen partnerships
with its subsidiaries based in 13 countries around the world and local companies in Southeast Asia, to participate in urban
transit projects and high speed rail projects which are rapidly increasing, and to enter new markets and new businesses.
We will introduce these strategies below, along with our fiscal 2017 results.

Policies by region●

Strengthen expansion of social infrastructure businesses, taking advantage of increased demand forinfrastructure due to population increase and urbanization, etc., in emerging countries, particularly inSoutheast Asia.

●

Create new businesses that address new social trends such as heightened environmental awarenessaround the globe, and accelerated innovation due to new technologies such as the IoT and AI technology.

China:
Stable growth of an enormous
marketIndia:

Expand the industrial systems business,by responding to demand forelectrification and labor-saving
solutions.

North America:
Environment and innovation
Acquire environmental andcutting-edge technologies andcreate new business fields.

ASEAN:High economic growth
Strengthen the business expansion of
PRIME MEIDEN LIMITED. by responding
to vigorous infrastructure investment
against a backdrop of high economic
growth.

Advancing population growth and urbanization
Strengthen the social infrastructure business focusing
on electric power and railways by responding toincreasing demand for infrastructure due to advancing
urbanization.

First delivery of a 400kV transformer to an Indian state power company

In July 2017, PRIME MEIDEN LIMITED., a transformer
manufacturer and engineering company, delivered a
400kV 315MVA transformer to India’s Transmission
Corporation of Andhra Pradesh Limited (APTRANSCO).
This product is the highest voltage transformer
manufactured by the Meiden Group. Meidensha expects further
business expansion into the Indian electric power market.
PRIME MEIDEN LIMITED., which had previously focused on
the production of medium-size transformers, has shifted toward
the production of large-size 400kV transformers to expand
business in India, where demand for substations is expected
to increase rapidly. The 400kV transformer for APTRANSCO
represents the first supply to a state-owned power company
for PRIME MEIDEN LIMITED. and the second supply of largesize transformers in India, following a 270MVA transformer that
had been supplied to a power generating company in March
2017, which has opened the way for further orders of ultra-highvoltage transformers.
Currently, major international as well as local manufacturers
are dominating the global transformer market. Meanwhile,

Meidensha has increased its share capital in PRIME MEIDEN
LIMITED. and taken over the control of the company to makethe best use of the company’s geographical advantage
and accelerate its business expansion. Meidensha expects
sustainable growth in the substation business in India as wellas potential opportunities for export to Africa and ASEAN
countries through the Meiden Group’s network.

Orders received for power supply systems for Singapore’s MRT* North-Southand East-West lines

Executing large-scale
overseas railway projects

In February 2018, MEIDEN SINGAPORE PTE. LTD., a
Singapore subsidiary of Meidensha, received an orderfor power supply systems for Singapore’s MRT NorthSouth and East-West lines from Singapore’s Land
Transport Authority.
The MRT North–South and East–West lines are extensionsof the first urban railway opened in Singapore. Since Meidensha
supplied the power supply system for the line opened in 1987,
the company has been renewing feeding substations to deal withincreasing train traffic. This time, MEIDEN SINGAPORE PTE. LTD.
received a package contract for electrical system design, supplyof equipment (feeding transformers, railway distribution panels,
AC circuit breakers, surge arresters, etc.), renovation of existing
equipment, and on-site installation and testing, for the 75 existing
substations on the MRT North-South and East-West lines.
Since the initial construction was completed in 1988, theMRT has progressively been extended, and it has become
an important means of transport for residents, connecting

downtown residential areas, industrial areas, and the airport,
from north to south, east to west. The Meiden Group has
continuously been conducting maintenance and replacement
for the North-South line and the East-West line since the MRT
commenced operation.
Just like thirty years or so ago, there was fierce competition
for this project from other bidders from Europe, the US, etc.
However, MEIDEN SINGAPORE PTE. LTD. received the orderdue to the Meiden Group’s highly-evaluated track-record andengineering capabilities. The Meiden Group has delivered
electrical power equipment for many projects both in Japanand overseas. We will leverage our track-record and knowhow
accumulated over many years to respond to the growing
demand for railway infrastructure, particularly in the ASEAN
region, and contribute to the growth and development ofvarious countries and regions by providing safe and reliableequipment and facilities.
* MRT: Mass Rapid Transit

North-Southline

Development of new businesses

Establishment of the Silicon Valley Office

In August 2017, Meidensha established the Silicon
Valley Office in San Jose, California, as a business site
for its subsidiary, MEIDEN AMERICA INC., in order toexpand its business in the North American market. To
date, MEIDEN AMERICA INC. has mainly been selling
dynamometer systems for automobile-related companies,
semiconductor-related products such as vacuum capacitors,
and ceramic membranes for water supply, wastewater, and

25 MEIDENSHA REPORT 20183

industrial wastewater treatment, etc., primarily in Michigan. By
establishing an office in the Silicon Valley region, where there
are many semiconductor-related customers, many leading
companies, universities, and research institutes from aroundthe world, Meidensha aims to collect cutting-edge information
about rapidly advancing ICT and environmental technology,
etc., and create new business models based on its uniquesocial infrastructure technology developed over many years.

Singapore
City center

ChangiInternational
AirportEast-West line

Total distanceNorth-South line:

45.0 kmEast-West line:

57.2 km
MEIDENSHA REPORT 2018
明電舎レポート 201826
4

Special Feature 3:
Strengthening the Earnings Base of
the Group’s Domestic Business

Enhancing profitability throughincreased productivity and changes
to the business modelSocial infrastructure businesses

Enhancing product competitiveness through a new production strategy

Designing and manufacturing products efficiently is important to solidify the market dominance of our social infrastructurebusiness, which mainly undertakes production of order-made products.
Under the Medium-term Management Plan 2020, the Meiden Group aims to conduct capital investment forincreases in business scale and production, improve production efficiency, such as by automating production andautomating inspection processes for mass produced products, and thereby increase profitability. We will now showcase
enhancements to product competitiveness through production strategies such as smart factories that utilize IoT and AI
technology and automation of design.
Aiming for enhanced product competitiveness throughthe introduction of the IoT to create smart factories
Meiden Plant Systems Corporation aims to reduce estimate
costs by 50% by the end of 2020, through greatly reduced
lead times and increased
Target:production due to revisions
to production mechanisms,
Estimate costs
through improvement andtransparency of production% reduction
processes, such as throughutilization of the IoT.
Although Meiden Plant Systems Corporation carries
the Meiden brand, it is responsible for the manufacture andsale of low-cost high and low voltage control boards. In
terms of improvements to production processes throughthe introduction of the IoT, we have increased efficiency by
discovering and eliminating unnecessary tasks by introducing
a real-time positional detection system that is capable ofchecking flow and work status by fitting ID tags to workers’
helmets and products. Through this system, we have achieved
improved work efficiency by increasing transparency of thehistory of workers and conducting improvements, by applying
the system to component defects, design flaws, and tasks
other than assembly, to which distribution of parts cannot
keep up. We have achieved distribution on a paperless basis
for each engineering codeand each level, and thereby
increased
work
efficiency,
through the introduction of
distribution trolleys, kit boxes,and parts distribution tablets on
ID tag inside a worker’s helmet
a per engineering code basis.
Other than the introductionof the IoT, we are conducting
improvements such as bychanging factory layout withawareness of the workflow of
the manufacture of a single
Display of work conditions
switchboard and the introductionof a mizusumashi (fixed-course pick-up) system, and creatingtransparency of work progress by changing assembly fromthe batch method to the cell method. Our target is to reduce
the amount of time it takes to complete each product by
40% through these process improvements, including the
introduction of the IoT. Going forward, we plan to successively
convert our 8 main domestic factories to smart factories.

50

27
3 MEIDENSHA REPORT 2018

Target:Time to completion of
product

Introduction of a mizusumashi system

40% reduction

Optimization of the supply chain through creation of adesign database
Meidensha is greatly improving efficiency of design tasks
and optimizing the supply chain by centrally managing andcreating a database of design information that is exchanged invast quantities during the production process.
Until now, correspondence between design andmanufacturing staff has mainly occurred by paper; however
it is now possible to conduct digital correspondence throughcentralized management and creation of a database fordesign information. Furthermore, by creating a master of eachcomponent, linking those masters with design information,and centrally managing them, it is possible to reduce costs
through bulk purchase of components, stay on top of thestatus of insufficient components such as if procurementof components is difficult due to a disaster, and consider
replacements. Going forward, we will utilize product lifecycle
management, which utilizes design databases even more
effectively (utilization for operation and maintenance), as well
as AI technology, to create design assistance mechanisms.
We will also implement new design methods such as modular
design, standardized design, automated design (design that
follows patterns and rules), and cellular design.

Maintenance and servicing business

Expanding the business to include facility management to meet theneeds of customers

As the environment undergoes dramatic changes, such as labor shortages as the working population declines, theaging workforce, and difficulties for local governments to implement fiscal policies, there are many private factories thatare 30 to 40 years old, and dilapidation of facilities is becoming a more pressing issue. However, in the public sphere,inter-municipal projects and municipal amalgamation are increasing, and there is a trend to outsource maintenance,
inspection, operation, and management to private companies as a package.
We provide preventative maintenance services that utilize sophisticated diagnostic technology that incorporated
IoT and AI technology and labor-saving, low-cost operation in response to our customers’ needs such as “wanting
to use equipment for as long as possible,” “wanting to manage symptoms and remaining life to prevent issues fromoccurring,” and “wanting to know optimal operation conditions and operate equipment in an energy-efficient manner.”
Going forward, we aim to further enhance our one-stop service centered on lifecycle engineering, and expand thebusiness to include facility management.
Improvement of maintenance utilizing AR (augmented
reality)
In order to achieve efficientmaintenance, we aim to increase
efficiency and ensure accuracy
through the introduction of AR. AR
is mostly used in the three areasof “daily inspections,” “periodic Daily inspections:
An arrow indicates the locations
inspections,” and “emergencies.” to inspect
By overlaying inspection locations,inspection history, and work
procedures, etc., on an imageof the equipment on a tablet,
maintenance can easily be
conducted by a worker who is not a Periodic inspections:specialist in the relevant equipment Dismantling procedures are shownwith a 3D animation
or by an inexperienced worker. In
an emergency, it is expected that
increasing accuracy and efficiency,such as by communicating witha remote maintenance specialist
and sharing information written on
Emergencies:
the tablet screen, will lead to quick The screen is shared with a remote
maintenance specialist
restoration of function.
Prediction of failures through remote monitoring anddiagnostics of the equipment location through the IoT
and AIBy sending data from existing monitoring devices installed by
Meidensha and sensors affixed to equipment to Meidensha’s
cloud system, and gathering and analyzing that data, we aredeveloping failure prediction technology to prevent emergency
shutdowns of equipment.

We aim to visualize the status of the customer’sequipment, run diagnostics on operational efficiency and failure
risk, improve equipment availability, and reduce maintenancecosts, etc., by collecting multiple forms of data in the cloud,such as electrical current, temperature, and vibration datacollected by sensors, and analyzing it using AI. Furthermore, if
we are able to understand past failures and abnormalities, we
expect to be able to quickly dispatch maintenance staff to thesite to minimize the impact of any abnormality.
As the number of veteran engineers declines, it isessential to rapidly establish high-precision equipment
diagnostic technology. Going forward, we aim to proceedwith the introduction of remote monitoring and diagnostic
services for local governments, reduce costs and labor, createtransparency of energy usage, and provide optimal solutions.

Diagram of Meidensha’s remote monitoring anddiagnostic services

Cloud[Customer’sequipment location]
Monitoring
devices[Meidensha]

Deliveredequipment

Data analysis using AI

Sensors to measure electricalcurrent, temperature, andvibration, etc.

If an abnormality is
confirmed, workers aredispatched to the site

MEIDENSHA REPORT 2018
明電舎レポート 201828
4

Foundation for
Creating Value

ESG

Goal

Major business activities contributing
to solution

Relevance●★

ESG at the Meiden Group

Transformer business and railway systembusiness in Southeast Asia (Thailand,
Indonesia, etc.): Through these businesses,
we contribute to the development of the rail
and transformer industries, increase accessto railroads for the impoverished, and help
build resilience

Workplace safety and health: We actively
work to prevent workplace accidents andharm to health, for example by offering
hands-on safety experience training (toincrease sensitivity to hazards) using VR
technology within and beyond the Group● Electric power/energy: We contribute toelectric power supply stability with, forexample, cogeneration systems for medical
facilities

Goal

★★★

President’s CSR Policy Statement

Environment

E

Promote strategic environmental management
We contribute to society through the offering ofproducts and services for the environment andenergy. At the same time, we will work to reduce
the environmental impact of our business activities.

SocietyS

G

Provide values needed by society
We accept our responsibilities as good corporate
citizens through many initiatives, including: resolutionof customer issues; promotion of community
involvement and proactive communication; proper
information disclosure at the correct time, etc.

Human resources
Produce work that gives pride to ouremployees and creates positive working
environments
We will tackle these issues: create a positive working
environment that brings out the best potential andunique talents of each employee; promote better
work-life balance; and develop abundant anddiverse talent, as human resources are precious to
the Group.

Management foundation of ourbusiness activities
Compliance, Corporate Governance, Risk
Management
By strengthening these building blocks ofmanagement foundation, we hope to further
cultivate the corporate culture necessary for CSR
management.

29 MEIDENSHA REPORT 2018

We appoint local staff to management
positions at overseas affiliates★★★

elements of “compliance,” “corporate governance,” and “riskmanagement,” we ensure our sustained growth and offer
value to society through our business.
By carrying out the President’s CSR Policy Statement, wehelp solve social issues and achieve a more prosperous future.

By donating school facilities (Thailand)and endowing courses (Thailand andIndia), we help create educational
opportunities for young people● We hold “manufacturing workshops” andscience teaching sessions and support
education with internships for university
and technical college students

Reasons Why ESG Initiatives Increase
Corporate Value

★★

●

★★★

Increased corporate value leads to sustained growth and isa positive thing for all stakeholders. Employees are treatedbetter and thus more satisfied, while other outcomes are good
relations with business partners, greater customer satisfaction,and returns to our shareholders and investors.
Increase in sales and profits / Reduction in costs●★★★

Creation of business opportunities
Business risk avoidance and reduction
Strengthening trust in stakeholder relationships /brand image improvement★★★

We contribute to safe water supplies
by providing one-stop service for watersupply and wastewater infrastructure,from equipment manufacturing tomaintenance, inspection, maintenancemanagement, and operation
management. Specific examples include
the substation equipment and monitoring
and control systems essential to watersupply and wastewater infrastructure,cloud services to support operation
management, and flat-sheet ceramic
membranes with outstanding filtering
performance

We help build a carbon-free society by
manufacturing, selling, and supplying
power generation systems for renewableenergy sources like solar power andsmall-to-medium size hydro power● We contribute to the electrification of
automobiles by manufacturing andselling motors and inverters for electric
forklifts, PHEVs, and EVs★★★

Relevance of Meiden Group Business
Activities to the SDGs★★★

●

We practice work style reform and makework more efficient by implementing
RPA*

We help achieve leading-edge
technology and contribute to thedevelopment of a prosperous society
through technological innovation insemiconductor and FPD manufacturing
equipment components (vacuum
capacitors, industrial controllers, pulse
power supplies, etc.)● We contribute to technologicalinnovation in the automobile industry
with our industry-academic-government
partnerships, by developing and selling
test devices for automobile research
institutes, universities, and manufacturersof automobiles and auto components★★★

We provide eco-friendly products andservices and contribute to reducing GHG
emissions● We help build disaster prevention platforms
for local governments and support
disaster prevention through our urban
flooding monitoring service (flash flood
countermeasures using manhole antennas)
●

★★★

●

★★

●

★

Water treatment systems: We provide cleanwater with our water treatment plants andprevent water pollution with our wastewater
treatment plants

We reduce the use of printing paper and ink
by implementing managed print services(e.g., increasing the number of multifunction printers)★★

We communicate the principles of CSR(including prohibitions on child labor,
corruption, bribery, and other acts) andthe Meiden Group’s CSR approach to ourbusiness partners and conduct supplierevaluations★★

We promote partnerships with local
businesses in Southeast Asia (transformer
business, switchgear business, etc.)● We provide sustained water supply service
that is both good and inexpensive throughpublic-private partnerships

●

●

★★

We promote eco-friendly design by making
products smaller and more efficient,controlling chemical content, practicing life
cycle assessment (LCA), etc.
● We provide 24-hour support of customer
equipment operation (troubleshooting,responding to inquiries, remote monitoring
service)●●

Increase employee loyalty /Build up technology, experience and expertise

At the UN Sustainable Development Summit in 2015, theworld adopted common goals known as the Sustainable
Development Goals (SDGs). The SDGs are challenges theinternational community is addressing over the 15 years from2016 to 2030.
The targets of the SDGs are very compatible with the
President’s CSR Policy Statement and business activities ofthe Meiden Group. They include many areas where we cancontribute to a solution with technologies and expertise wehave cultivated over the years. Thus, to really learn and takeadvantage of the opportunities and challenges presented by
the SDGs, we laid out the effects that our business activities
have on the environment and society. This process considered
the entire value chain and issues specific to the countries
where we do business. It even included any negative impactsof our business activities.
The Meiden Group will continue to pursue manufacturing
excellence that benefits society, create value, and help solve
social issues that include those addressed by the SDGs.

We create positive working environmentsby considering human rights and labor(including practicing fair employment,
honoring diversity, and giving training on
human rights and diversity)

We prevent equipment breakdown by
diagnosing the early signs of irregularities inlarge motors, generators, transformers, andswitchgears and make optimal equipment
upgrades● We help make communities resilient todisaster with mobile power supply cars,
building power generators, and otheremergency power generation equipment●●

The Meiden Group Corporate Philosophy is as follows: “Weseek to delight customers by offering high quality products andservices to help solve their problems. Through these businessactivities, we aim to fulfill our corporate social responsibility(CSR) by proactively solving global environmental problems
and other social issues and helping achieve a more affluent
future. We must continually tackle these challenges.”
The President’s CSR Policy Statement sets out three key
issues for the Meiden Group to address: environment, society,and human assets (resources). By taking on these three key
issues, with initiatives built on the fundamental management●●

ESG initiatives are the foundation of sustained growth at the
Meiden Group and the very embodiment of the Meiden Group
Corporate Philosophy.
The Meiden Group’s Approach toStrengthening ESG

Major business activities contributing
to solution

Relevance●* RPA (robotic process automation): The use of robots to make work more efficient.
Programming robots to do white color work and other tasks that humans have always
done helps to automate typical, repetitive tasks. By teaching robots a set of rules,
it is possible for them to do work that includes decision-making based on certain
standards. Software robots are being used to automate typical PC operation withoutchanging existing systems.

MEIDENSHA REPORT 201830

Foundation for
Creating ValueE NVIRONMENT

Strategic Environmental Management
Fiscal 2018 Environmental Targets (Japan)

Environment

Strategic Targets
Contribute to environment
through products andservices

Initiatives to Enhance Corporate Value

Initiatives

Major aspects ofcorporate valueenhanced

Increase in sales
and profits /Reduction in costs

Creation of business
opportunities

Business risk avoidance
and reduction

Strengthening trust in
Increase employee loyalty /stakeholder relationships /Build up technology,
brand image improvement experience and expertise●

Expansion of products’
contribution to the environment●●

Reduction in the environmental
impact of business operations

●

●

●

●

Promotion of environmental
management

●

●

●

●

Improvement of employees’
environmental awareness

●

●

●

●

Environmental Vision
As a medium-term guideline to assist us inadvancing environmental management, theMeiden Group has formulated an Environmental
Vision that indicates the stance that we should
adopt and the appropriate direction for ourenvironmental activities. We seek to contributeto the realization of a sustainable society bymeans of the reduction of the environmental
impact resulting from our business activities andthe deployment of the businesses, products andtechnologies that we have developed to datein the fields of energy and water treatment tosupport social infrastructure.
Our Environmental Vision identifies the
mitigation of climate change, the building ofa recycling society, and the conservation of
biodiversity as the missions of a 21st century
company, and establishes targets for how weshould perform in our business activities andwhat we should aim for in our products. We
work to implement environmental managementwith a corporate culture that highly values theenvironment as the foundation that helps us toachieve these targets.

Deployment of Action Plans

What wecan do forPlanetEarth

Mitigating
ClimateChangeConserving
biodiversity

Realize arecyclingsociety

Meiden Group Environmental Vision
A. Mitigating Climate Change
B. Conserving Resources (Building a Recycling Society)
C. Conserving biodiversity

Meiden Group Environmental Vision
A Corporate Culture that Highly
Values the Environment

D. Foster a corporate culture that highly values the environment
Develop to
Action Plans

Promote environmental
management

Fiscal 2018 Environmental Targets (Japan)
Contribute a 800,000 t/year reduction in CO2 emissions by ECBs

Promote environmentally conscious
designIncrease percentage of Green Products (as measured by Meidensha’s standards)

Reduce greenhouse gas emissions

Total emissions (Scope 1+2): –1% (compared to FY2017)Manage chemicals properly

VOC emissions: 80 tons or lessTotal wastes: –1% (compared to FY2017)

Promote the 3Rs

Zero emissions*1 at 9 sites*2

Maintain water resources

Measure and analyze water data: 4 main manufacturing sites*3

Maintain biodiversity

Survey of ecosystems (plants, etc.): 4 main manufacturing sites*3

Strengthen value chain management

Green procurement rate (as measured by Meidensha’s standards): 80% or
greater*1 Meiden Group definition of zero emissions: To achieve a non-recycling rate of less than 1.0% of the total volume of waste (including industrial waste, general waste, and saleable waste,
but excluding construction sludge, etc.).
*2 Scope of zero emissions initiatives: manufacturing sites in Japan (Numazu Works, Ohta Works, Nagoya Works, Kofu Meidensha Electric Mfg. Co., Ltd., Meiden Chemical Co., Ltd.
(Sagami Works), Hokuto Denko Corporation (Atsugi Works)), Engineering Service Business Units and Construction Service Business Units*3 Main four manufacturing sites: Numazu Works, Ohta Works, Nagoya Works, and Kofu Meidensha Electric Mfg. Co., Ltd.

Risk Management
The Meiden Group has appointed a Group-Wide Risk Management Committee (RMC) to respond cross-organizationally to risks tothe survival of our businesses. Working through the RMC, the Meiden Group Environmental Committee collaborates with various
other committees concerned with compliance, security trade control, information security, quality, product technology, safety andhealth, pandemics, and more.
The Meiden Group identifies environment-related risks and opportunities and implements a variety of initiatives.
Responding to Environmental Risks and Opportunities

Medium-term Management Plan 2020, an Action Plan for Fiscal 2018–Fiscal 2020
Strategic Targets
1. Contribute toenvironment throughproducts and services

Actions

Phenomena (issues) related to environment

Corresponding “Environmental
Vision”

Government(political)
Laws and
Regulations◦Revision of Feed-in Tariff Scheme for
Renewable Energy◦Deregulation of electric power industry,
revision of power supply structure◦Flow of processes to implement carbon
pricing◦Energy conservation regulations& standards (business operations,products)◦Stronger regulations on hazardous
chemical substances

Economy◦Expanded ESG investment◦Price competition (low cost, premium
pricing)

Society◦Spread of responsibility to entire value
chain (upstream and downstream)◦Improvement of employment /labor conditions

Technology◦Enhanced efficiency of electric power
conversion◦Advancement of ICT, IoT technology◦Development of new energy / alternative
energy technology

Reputation /Needs◦Demand for information disclosure(accountability)◦Lifestyle changes (ecology-oriented)

NaturalEnvironment◦Changes of temperature andprecipitation volume◦Increase of local disasters (sudden
downpours, tornadoes, etc.)◦Ecosystem irregularities (increase oforganisms that carry infectious disease)1) Expand businesses that contribute to the environment2) Promote environmentally conscious design
3) Manage chemicals in products
1) Reduce greenhouse gas emissions

2) Manage chemicals properly
2. Reduce theenvironmental impact of 3) Promote the 3Rs (reduce, reuse, recycle)
business operations
4) Maintain water resources

A. Mitigating Climate Change
B. Realize a recycling society
C. Conserve biodiversity

5) Maintain biodiversity
3. Promote environmental 1) Disclose information, conduct PR
communication
2) Contribute to sustainable society
1) Strengthen management of Meiden Group companies
4. Improve employees’
environmental awareness 2) Strengthen value chain management
5. Reform environmental
awareness

1) Develop environmental management personnel
2) Conduct environmental training and awareness raising

D. Foster a corporate culture thathighly values the environment

Targets that Express Our Environmental Vision
A. Mitigating Climate Change

C. Conserving biodiversity

1 Contribute to the reduction of CO2 emissions through the sale of energy-related
products and systems (i.e., products for renewable energy resources, etc.)

1 Contribute to securing water resources through our water processing systems
business.

2 Promote environmentally conscious product design and reduce CO2 emissions in the
product life cycle.

2 Conduct risk management on chemical materials and promote the reduction of veryrisky hazardous chemical materials, as well as initiatives to find alternative materials
on a basis to reduce or replace harmful chemicals.

3 Reduce CO2 emissions in our production activities.

B. Conserving Resources (Building a Recycling Society)

D. Foster a corporate culture that highly values the environment

1 Promote the 3Rs (Reduce, Reuse and Recycle) of waste materials in the various
stages of the product life cycle.

1 Promote environmental communication: Actively disclose our environmental activities
and results and promote two-way communication with our stakeholders.

2 Promote zero emissions of waste products from our production activities.

2 Foster environmental awareness: For mitigating Climate Change, increase
environmental literacy to promote environmentally conscious R&D and productdevelopment and cultivate the Group’s individuals who actively perform local
community and social contribution programs by acting on their own initiative.

31 MEIDENSHA REPORT 2018

Reduce the environmental
impact of business
operations

Actions

Risks

Opportunities

Carrying out initiatives

Short-term cost increases◦Rising cost of energy increases
our costs (procurement, shipping,
manufacturing, scrapping, etc.)
directly and indirectly.

Growth of new markets◦Markets for products and services
related to renewable energy andenergy conservation are growing.

Expand products’ contribution to
the environment◦Expand sales of products related
to renewable energy and energy
conservation (wind, hydroelectric,
and solar power equipment,
EV/PHEV electric equipment,
transformers, motors, inverters,etc.)◦Develop environmentally conscious
products, implement newtechnologies (which are morecompact, lightweight, efficient,energy-conserving, etc.)

Decline of product competitiveness◦It will get harder to sell productsthat do not meet environmental
regulations and standards.
◦We will lose share if we cannot
meet the needs of a market looking
for environmentally conscious
products.
Decline of corporate value◦Our image, evaluations (credit
ratings, etc.), and share prices will
decline if our business is not seen
as environmentally conscious.
Increase of local disasters◦Flooding and other disasters canstop operations and cut the supply
chain.

Differentiation with environmentallyconscious products◦Being among the first to bringproducts that meet regulations,etc., to market and offering lowenvironmental impact products andservices make us more competitive.
Better business performancethrough environmental
management◦By running businesses that help
solve environmental issues, we canenhance our corporate value andbusiness performance.
Responding to natural disasters◦Demand for flood control anddisaster prevention and response(e.g., securing the power supply) isrising.

Reduce the environmental impact
of business operations◦Promote energy conservation(capital investment, visualization,
etc.
◦Promote the 3Rs, eliminate harmful
chemicals◦Maintain water resources, consider
biodiversity
Promote environmental
management◦Promote business risk management◦Strengthen value chain
management◦Practice environmental
communication (information
disclosure, etc.)
Deploy infrastructure-support
products during disaster◦(emergency power supply
equipment, mobile power supply
cars, UPSs, remote monitoring
systems, etc.)

MEIDENSHA REPORT 201832

Foundation for
価値創造の
基盤 Value
Creating

Environment

Fiscal 2017 Initiatives

Overview of Environmental Impacts by Our Business Activities (Fiscal 2017)

Following is a summary of how well we achieved our targets for fiscal 2017, the final year under the V120 Medium-termManagement Plan.
We are examining further measures based on our target achievement status and will incorporate this information into
future plans.

Our rate of use of major resources (INPUT) and our environmental impacts from our business activities (OUTPUT) are shown
below.

Fiscal 2017 Environmental Target Achievement Status (Japan)
Strategic Targets
Contribute to environment
through products andservices

Reduce the environmental
impact of business
operations

Actions

Fiscal 2017 Results

Contribute a 800,000 t/year reduction in CO2 emissions by ECBs

733,000 t/year

×Disclose LCA data in each product category

Conduct LCA evaluation〇

Reduce greenhouse gas emissions△〇

Promote reduction of waste
discharge by the 3Rs (Reduce,
Reuse, and Recycle)

SF6 emissions (against purchased volume): less than 3%
Zero emissions*1 at 9 sites*2
Waste emissions per unit of production*3 (against that of fiscal 2014):
reduce by 8%

3.6%
Achieved at all 9 sites

×〇

Reduced 0.2%

×VOC emissions: 80 tons or less
Conduct water conservation initiatives: four main manufacturing sites*

Promote value chain management
Promote maintenance of biodiversity
and management of green zones

×91.8 tons
4

Support our suppliers to acquire EMS certifications: an accumulated total of
70 companies have acquired certifications
Manage green zones giving due consideration to biodiversity: at the 4 main
manufacturing sites*4

The Meiden Group aims to benefit the environment by using
renewable energy like solar, wind and hydroelectric power andby supplying products and services that are more efficient andthus energy saving.
In fiscal 2017, we aimed to provide environmental
contribution (the expected curbing effect of CO2 emissions fromproducts sold) of about 800,000 t/year. However, emissions
were reduced by 733,000 t/year of CO2, in part because
shipments of products like solar power conditioners andhydroelectric power equipment were not as great as planned.
Reducing CO2 Emissions Caused by Products(10,000t-CO2)
100

Inverters
80

Wind powersales businessElectrical components
for electricvehicles

733,000 t/year
reduction in
CO2 emissions

52,52812,045

MWh

Fuel oil

1,265

156

kL

Fuel gas

2,746

134

1,000m³

Heat

3,589

–

GJ

Japan

1,000m³

Industrial water78

15

1,000m³

Groundwater

1,068

–

1,000m³

VOC

Japan

48

t

Overseas

20,953

SF6

Wastes

10,450kg

34,669

8,344

t-CO2

Wastewater

1,914

53

1,000m³

1,977

778

t-CO2

BOD

6,404

–

kg

SF6

759

167

kg

0.3

–

t

Conducted at all sites

〇

SOx
NOx

5.8

–

t

Transportation

Japan

Overseas

Japan

Overseas

Amount not recycled

61

159

t

Product weight

50,00347,321t

Amount recycled

7,069

1,706

t

2,027

1,900

t-CO2

Construction sludge

65

–

t

CO2 release bytransportation

Climate Change Countermeasures
Medium- to Long-Term Environmental Targets at the
Meiden Group
The Meiden Group seeks to reduce GHG emissions from ourbusiness activities by 30% (compared to fiscal 2017) by fiscal
2030. We are starting by aiming for a 4% reduction by fiscal
2020 under the Medium-term Management Plan 2020, andwill reconsider our targets periodically going forward.
We chose this target taking account of the Paris
Agreement*1 and its Science Based Targets (SBT) of 2°C.*2 Wework with stakeholders in the Meiden Group’s supply chain,including customers and business partners, to set common
objectives for the challenges we share.
Under the Medium-term Management Plan 2020,
our targets for fiscal 2018, fiscal 2019, and fiscal 2020 are
reductions of 1%, 2%, and 4%, respectively (compared toemissions in Japan in fiscal 2017). These steps were decided
to help us achieve our aims for 2030.
*1 Paris Agreement: A new framework for tackling global warming from 2020, adopted
by the 21st Conference of the Parties (COP21) to the UN Framework Convention on
Climate Change.
*2 2°C target: The target of keeping the increase in average temperatures to within 2°C
of what they were before the Industrial Revolution.

Amount of GHG emissions from business activities■ Scope 1 (city gas and fuel combustion, etc.) ■ Scope 2 (electric power, etc.)
1%
reduction2%
reduction

4%
reduction

30%
reduction

Trends in CO2 Emissions (Japan)(t-CO2)

Automobile fuel

Energy usage

50,00039,264 39,792

40,000

1,834

1,813

37,43037,9792011

2012

42,319 41,015
40,113 38,375
1,910

1,857

1,850

20,00040,40939,1582013

2014

36,646

1,860

1,977

38,26336,51534,669201520162017 (FY)30,00010,0000* The electric power CO2 coefficient used was the CO2 emissions coefficient proposedby the Electric Power Council for a Low Carbon Society. For figures through fiscal
2016, we used the adjusted factor for each fiscal year; for fiscal 2017, we used theadjusted fiscal 2016 factor.

Reducing Water Consumption
We are concerned about the possibility of water leaks fromburied water supply pipes and wells on factory grounds as
our facilities age. We are systematically updating pipes andplacing more pipes above ground for easy maintenance andinspections.
(1,000m³)
2,000

100
83

40

Greenhouse gases

Overseas425

Overseas

CO2 (energy)

〇

%

38

Japan

t

* Comparison against
equivalent earlier
Meiden productJapan

Release into public water area

48

This industrial inverter is used on steel manufacturing lines
and the like. It has enhanced vector control and the flexibility towork with a variety of system configurations.
Following are features of this product, with comparisons
to an earlier Meiden product, the THYFREC VT310.
◦ Main circuit power modules and control system revised,
reducing energy consumption 25% (compared at 80 kVA
capacity)◦ Meets RoHS Directive

57

Overseas

92

A Meiden Green Product registered in fiscal 2017
Product: THYFREC VT350 high-function generalindustrial inverter

Tap water

Release to air

VOC

Any time we develop a new product, we evaluate it for energy
and resource conservation, recyclability, environmental safety,
and more as based on our Product Environmental Assessment
Standard. If a product meets those standards, we certify it as a
Meiden Green Product.

Overseas

Meiden Group〇

Development of Environmentally
Conscious Products

Chemical substancesJapan

OUTPUT

74 suppliers certified
cumulatively

83

60

Electricity

Conducted at all 4 sites

Life Cycle CO2 Emissions

CO2 emission reduction
target – 800,000 t/year

Water

Overseas

CO2 (automobile fuel)*1 Meiden Group definition of zero emissions: To achieve a non-recycling rate of less than 1.0% of the total volume of waste (including industrial waste, general waste, and saleable waste,
but excluding construction sludge, etc.).
*2 Scope of zero emissions initiatives: manufacturing sites in Japan (Numazu Works, Ohta Works, Nagoya Works, Kofu Meidensha Electric Mfg. Co., Ltd., Meiden Chemical Co., Ltd.
(Sagami Works), Hokuto Denko Corporation (Atsugi Works)), Engineering Service Business Units and Construction Service Business Units*3 Waste emissions per unit of production is the amount of waste disposed (t) divided by a unit value of production (million yen)
*4 Main four manufacturing sites: Numazu Works, Ohta Works, Nagoya Works, and Kofu Meidensha Electric Mfg. Co., Ltd.

Promoting Business that Contributes
to the Environment (“Eco-contributing
Businesses” (ECBs))

EnergyJapan

Achievement

Energy consumption per unit of production (against that of fiscal 2014):
2.0% worse
reduce by 3%
5.1% reduction
Total energy consumption (against that of previous fiscal year): reduce by 1%

Eliminate hazardous chemical
substances in products
Respond to water risks (drought,
flooding, pollution, etc.)
Promote environmental
management

Legend: ○ Achieved △ Not achieved (better than previous year) × Not achieved

V120 Targets (Fiscal 2017 Targets)

Expand products and businesses
that contribute to the environment

INPUT

1,500

1,404

1,493

1,390
1,183

1,238

1,203

2015

2016

2017

1,000
20

0

2017
(Benchmark year)

2010
result2011
result2012
result33 MEIDENSHA REPORT 20182013
result2014
result2015
result2016
result2017
result(FY)

This product Previous product(developed in FY1997)

FY2018FY2019FY2020

FY2030To address emissions stemming from energy consumption, we are working thoroughly
to conserve energy through production streamlining, capital investments, etc., andconverting to renewable energy. In addition, we are practicing strict control and making
technological innovations to address direct emissions of GHGs like SF6 gas.

500

0

2012

2013

2014

(FY)

MEIDENSHA REPORT 201834

Foundation for
Creating ValueS OCIETY
Human Resources Management

Initiatives to Enhance Corporate Value
Major aspects ofcorporate valueenhanced
Initiatives

Increase in sales
and profits /Reduction in costs

Creation of business
opportunities

Promoting diversity
management●●

Work style reform●

HR development●

Occupational safety
and health●Business risk avoidance
and reduction●●●

Strengthening trust in
stakeholder relationships /brand image improvement

Increase employee loyalty /Build up technology,
experience and expertise

●

●

●

●

●

●

●

●

Basic Approach

Promoting Diversity Management

As issues facing our customers and society as a whole
become increasingly complicated and unclear, it is importantto have personnel with the abilities to think flexibly and act
courageously, creating the value necessary to solve theseissues in order to enhance corporate competitiveness. For thisreason, we are determined to achieve sustainable growth byfocusing on employing and developing competent personnel
and creating an environment where each person can derive
pride and fulfillment from their work.
In order for the employees to maximize their abilities, it
is important to promote diversity management and createa workplace in which a diverse range of employees canparticipate with a healthy mind and body. Specifically, by
engaging as a group in initiatives such as achieving a work-lifebalance, and improving occupational health and safety, we will
enhance the corporate value for the entire group.

Diversity vision

Promotion of Respect for Human
RightsBased on a fair and just employment system, we are creating
workplaces that are conducive to work, and where each of the
Meiden Group’s employees showcase their abilities as muchas possible.
Furthermore, we are conducting staff education inconsideration of “protection of freedom of association andthe right to collective bargaining,” “prohibition of forced labor,”“abolition of child labor,” and “elimination of discrimination in
respect of employment and occupation,” which are among the
ILO’s* core labor standards.
* ILO (International Labor Organization): A UN organization that gives recommendations
and guidance to national governments with regard to improving labor conditions andsocial welfare.

35 MEIDENSHA REPORT 2018

A company that continues to innovate by gathering
the experiences, ideas, and individuality of diverse
personnel with different attributes for “a more
prosperous tomorrow” and “for customer peace ofmind and satisfaction”
In order to fulfill our business strategy, we will promote
diversity as a contribution to the attainment of the Group’sbusiness strategy and the improvement of corporate
competitiveness through the optimal allocation of humanresources and the operation of various systems thatleverage the individuality inherent in diversity.

Removing bias towards organizations and people
with differences, and granting equal opportunities for
Basic Policy
personnel to challenge themselves rather than giving
preferential treatment

Aims①	We aim to be a company that allows contributions
from diverse personnel②	We aim to be a company that evaluates people
based on ability rather than personal attributes③	We aim for a group of people that will overcome
global competition

Three reasons to promote diversity
There are three reasons why the Meiden Group promotes
diversity. The first is to “accelerate the implementation of global
management.” As global competition increases, there are
increasing opportunities for technological collaborations withother companies, foreign and domestic, as well as working
with people who have different viewpoints or abilities. Diverse
abilities and viewpoints must be integrated for increased
corporate performance, and the Meiden Group must perform
at its best in order to compete in the global market.
The second is a “declining working population.” It is said
that the working age population (ages 15 to 64) will drop to
approximately 50% (45.95 million people) by 2055 due tothe declining birth rate and aging population. We must allow

contributions from women, the elderly, and foreigners, rather
than focusing on male Japanese employees as we have donein the past. In order to do this, we must create a workplaceenvironment by introducing a new personnel system andchanging the workplace culture, so that all employees canutilize their abilities.
The third is the “diversifying customer base and consumer
market.” In the heavy electrical equipment industry, there is anincreasing number of overseas customers, and a contractionof infrastructure in the Japanese market, so both customers
and markets are changing significantly from those in the past.
In order to achieve further growth in the global market, wemust provide services that meet the needs of customers
and create new values; we believe that promoting diversity isessential to this end.

Promotion of opportunities for and participation byfemale personnel
We have systems in place, such as “expansion of taking
accumulated leave in half-day or quarter-day increments,”“expansion of people eligible for childcare leave,” “expansionof the infertility treatment leave system,” and “establishmentof the system of shortened work hours for infertility treatment”
in order to achieve an environment where diverse workers
such as those who require childcare, nursing care, or infertility
treatment, irrespective of gender, can choose from a numberof work styles according to their employment needs and lifecycle, etc.
Going forward, we will formulate an action plan inaccordance with the intent of the Act on the Promotion of
Women’s Participation, and promote policies such as thepromotion of accessing childcare leave for men and actively
hiring and training female technology-related staff.

Work Style Reform
Rolling out “Smart Work V120”- Working towards a reduction in annual total hours worked An employee survey showed that many employees havestrong opinions concerning matters that relate to long working
hours, such as “insufficient number of staff,” “consciousnessreform,” and “operations review.” As such, we have identified
the issue of long working hours as a business challenge. With
that in mind, during the three-year period of the V120 Mediumterm Management Plan (fiscal 2015 to fiscal 2017), we havedeveloped the working hours reduction plan “Smart Work
V120,” which sets a target of reducing the annual total hours
worked in fiscal 2017 to less than 2,000 hours.
Based on the basic policies of Smart Work V120, we areengaged in initiatives to reduce the annual total hours worked,
including the improvement of business efficiency throughwork-style reforms, and increasing the rate of paid leave taken,
in addition to promoting and advancing employee health, aswell as enhancing the hiring of mid-career staff.
Basic policies of “Smart Work V120”❶
Take the issue of long working hours as a businesschallenge and address it in all the departments working
together❷
Uncover root causes by understanding the current
work operations in the workplace, and then implement
specific measures to deal with them
❸ Reform the mindset by moving away from the thinking,culture, and attitudes of the past, which accepted
overtime as a matter of course

Specifically, we conducted a campaign to promoteleaving work at the designated time and accessing of paid
leave as an awareness raising exercise, we implemented anumber of initiatives, such as a company-wide enhancementof management, with the aim of having no workers that work
more than 80 hours of overtime per month as a means tomanage work hours, and we established the Office for the
Promotion of Work Style Reforms in fiscal 2017 to further
promote reforms.
Also, in order to reward employees’ successes and efforts
under Smart Work V120, we used the funding to reduce
overtime to provide smart work bonuses, which were added
to the 2018 first half bonuses to increase employee motivation.
Under the new medium-term management plan, we will
enhance initiatives aimed at production efficiency, such asincreasing business efficiency through RPA (Robotic Process
Automation), etc., and revising production processes, underthe banner of “Smart Work 2020.”

HR Development
We implement many training programs to encourage employee
growth in different aspects as employees, members of society,and professionals.
In fiscal 2017, we enhanced technical education byadding upskilling training and training to develop leadersamong technicians to the product foundational technology
training that was already in place, in order for employees toacquire even deeper knowledge about products. Furthermore,
we held voluntary training sessions, which were attended
by 114 employees, with the themes of problem solving andstrategy implementation. We offer a full range of training tosupport employee development where each employee directs
their own learning. We train personnel to be able to implement
and promote our business strategy.
Data concerning professional development
Item

FY2016FY2017

Total education andtraining expenses*

84,108 thousand yen

92,473 thousand yen* Excludes personnel expenses for trainers and operational expenses for training
facilities.

Occupational Safety and Health
The Meiden Group develops the “President’s Safety and
Health Management Policy” each year, and globally rolls out
occupational health and safety activities based on this.
In fiscal 2016 we introduced “VR Hands-on Safety
Experience Equipment” that allows people to experiencemock workplace accidents through virtual reality (VR) withCG content, and we conduct safety experience education
in locations around Japan using
this and other safety experience
content. In fiscal 2017 we newly
developed
fiveexperiential
programs for VR safety education
for factory-related work, including
forklift operation and work in highsafety experienceplaces, in order to raise the level of Hands-on
education using VR
experiential training.

Hands-on safety experience truck

MEIDENSHA REPORT 201836

Foundation for
価値創造の
基盤 Value
Creating

Society

Quality Management

Supply Chain Management

Initiatives to Enhance Corporate Value

Initiatives to Enhance Corporate Value

Major aspects ofcorporate valueenhanced
Initiatives

Increase in sales
and profits /Reduction in costs

Creation of business
opportunities

Business risk avoidance
and reduction

Strengthening trust in
stakeholder relationships /brand image improvement

Increase employee loyalty /Build up technology,
experience and expertise

Initiatives to improve quality

●

●

●

●

●

Understanding customers’
needs

●

●

●

●

●

●

●

Training programs for quality
management technology as
well as workmanship andtechnical skills

Major aspects ofcorporate valueenhanced
Initiatives

Increase in sales
and profits /Reduction in costs

Creation of business
opportunities

Strengthening trust in
stakeholder relationships /brand image improvement

Increase employee loyalty /Build up technology,
experience and expertise

Promotion of CSR activities
that involve the entire supply
chain and minimization of
procurement risks
Communication withbusiness partners
Enhancing groupprocurement systems

Basic Approach

Understanding Our Customers’ Needs

Basic Approach

The Meiden Group must continue contributing to the solutionsof customers’ problems by providing high-quality products andservices at all times, in order to continue to be relied on andchosen by customers and society. To do this, it is importantthat we implement the following three things: “initiatives toimprove quality,” “understanding our customers’ needs,” and“training programs for quality management technology as
well as workmanship and technical skills.” As our customers’
partner, the Meiden Group aims for all employees to listen
to customers, act quickly, and improve quality, in order toincrease customer satisfaction.

In order to provide products and services that satisfy ourcustomers, we are gathering and analyzing the needs of ourcustomers on a daily basis, including information and requests
provided by customers, complaints, and market trends, andimplementing activities that lead to concrete actions such as
proposing solutions, developing new products, and engaging
in servicing and various improvement activities.
In development, sales, engineering, manufacturing,and local construction departments that have contact
with customers, we work to improve our activities throughthe PDCA cycle, by reviewing and evaluating tasks being
conducted at each department, creating a plan for the next
fiscal year in each fiscal year, and conducting self-evaluation of
the results of activities.

It is important to build equal and fair relationships that allow
for mutual growth with suppliers, in order to provide better
products and services to customers consistently. On the other
hand, while procurement risks in the supply chain become
greater as globalization of businesses and business activities
continues, it is necessary to identify potential risks in advanceand to minimize them.
The Meiden Group is working to build good partnerships
with suppliers and a sound and strong supply chain, by
promoting “CSR activities involving the entire supply chain
with a minimization of procurement risks,” “communication
with business partners,” and “enhancing group procurement
systems.”

Initiatives to Improve Quality
In Meidensha, we have determined items to be managed
from each viewpoint of “not letting in” “not creating” and “notletting out” defects, in order to improve quality and we conduct
activities accordingly. We improve the quality of productdevelopment and designs through mechanisms to incorporate
quality into designs, as well as multifaceted design reviews(DR).
In particular, we are strengthening activities relating to thequality of such development and design that has the risk of adefect with potential widespread influence.
DR
Meidensha

Activities◯ = Particularly relevant

Business risk avoidance
and reduction

Partner companies

Development, design,and manufacture

Testing andinspection

Do not let in

Do not create

Do not let out

3H measures○○

DR quality improvement○○

Backlog management○○

Applying lessons frompast defects○

Implementing andcomplying with standards
and procedures○○

4M-change management○…

Auditing and instructing○○○

Training Programs for Quality
Management Technology as well as
Workmanship and Technical Skills
At the Meiden Group, we believe that it is important foreach employee to have a fundamental knowledge of quality
management in order to provide high-quality products andservices. Therefore, we implement training programs for
quality management technology at each level, such as for new
employees, young employees, and mid-level leaders. These
training programs are also conducted for staff who are notdirectly involved with work at manufacturing departments.
At the technology center adjacent to Numazu Works, we
conduct training programs for workmanship and technical skills
maintenance engineers. We raise engineers who contributeto the stable, safe, and efficient operation of customers’
equipment through practical training using real equipment.
The curriculum is formulated to allow participants to touchand experience actual equipment, such as extra high-voltage
and high-voltage receiving substation equipment, computers,
power converter equipment, generators, and rotatingmachinery. Maintenancetraining is conductedeach year for customers
to whom Meidensha’s
products have been
supplied.

Technical training (protective relays)

37 MEIDENSHA REPORT 2018

Promotion of CSR that Involve theEntire Supply Chain and Minimizationof Procurement Risks
The Meiden Group practices CSR to maintain equal andfair relationships that allow for mutual growth for material
procurement. Based on CSR that are promoted throughout
all business activities, the Meiden Group requests that its
business partners and their suppliers promote CSR, including
such issues as “human rights, labor, health and safety, and theenvironment.” In order for them to understand our approach
to CSR supply chain management, we have prepared the“Meiden Group Supply Chain CSR Promotion Guidebook”*1
and distributed it to approximately 1,800 of our business
partners in Japan.
We provide the Supply Chain CSR Promotion Guidebook
to all new business partners (100%) at the time of the firsttransaction, and we request that it is disseminated and applied.
To promote CSR procurement, we also request for ourbusiness partners to cooperate in responding to a CSR survey(including environmental activities survey) so that we canunderstand their CSR activities and environmental activities
and eventually can minimize procurement risks.
*1 The Meiden Group Supply Chain CSR Promotion Guidebook is based on the
Supply Chain CSR Deployment Guidebook produced by the Japan Electronics andInformation Technology Industries Association (JEITA) (published in August 2006)

Promoting Communication with
Business Partners and Activities to
Reduce Environmental Impact in the
Supply Chain
We believe that sharing awareness concerning CSR withcooperating business partners and working together with themwith the aim of promoting CSR activities throughout the supply
chain will lead to mutual prosperity. The Meiden Group invites
its main business partners to biannual meetings held at eachmanufacturing site to explain our production plans, where we
provide information on the plans and current statuses of ourbusinesses on both company and departmental levels.
In fiscal 2017, the Eco-Action 21 environmental
management system study group (greening program) forsmall and medium-sized enterprises without environmental
management systems, which is endorsed by the Ministry of theEnvironment, has been held in the Meiden Group’s five regions,and we promoted and supported certification and registration.
As a result, 26 participating trading partners received
certification, and we held a ceremony to confer certification andregistration certificates at each production location.
Continuing from last year, we conducted an education
program for the 49 companies that had received certification
up to 2016, and created opportunities for exchange of opinions
and sharing of information that include educators. We willcontinue providing support forour business partners in relation
to Eco-Action 21 certification
and registration activities, andaim to spread environmental
management systems andenvironmental improvements
ceremony in the Numazu
throughout the entire value Certification
district
chain.

Enhancing Group Procurement Systems
We conducted educational programs for internal procurement
divisions at all sites to ensure compliance and risk management,
following the implementation of the revised basic purchasing
agreement in fiscal 2014. We hold periodic Meiden Group
Procurement Meetings as a forum to share information, including
actual cases of assessment purchasing and centralizedpurchasing by Meidensha, and affiliates’ CSR initiatives, thus
forging cooperation among different sites to achieve global anddomestic expansion and enhance compliance.

MEIDENSHA REPORT 201838

Foundation for
Creating ValueG OVERNANCE
Corporate Governance

Basic Approach
Under our corporate mission of “illuminating a more affluent
tomorrow” and our corporate philosophy of providing thevalue “for customer peace of mind and satisfaction,” ourgroup of companies takes the basic stance that we maintain
fair and steady business activities with respect for people andthe global environment, operate businesses focusing on profit
while constantly pursuing new technology and high quality,and endeavor to contribute to prosperity of society. In order toimplement this basic stance, we formulated the “Basic Policy
to Improve the Governance to Secure Fair Business Practices”
at the regular Board of Directors meeting held in May 2006
(this basic policy was later amended at the regular Board of
Directors meeting held in May, 2015, to reflect the revision of
the Companies Act).
The Company will work to further improve the efficiency
and fairness of management by promoting initiatives toenhance corporate governance in accordance with the
Corporate Governance Code.

Corporate Governance Structure: Supervision and Management and Internal Control System② Composition of Directors

General Meeting of Shareholders
Appoint / dismiss

Board ofDirectors

Appoint / dismiss

Directors(includes two outside directors)

Audit

Appoint / dismiss

Board of Corporate
Auditors
Corporate Auditors(includes two outside auditors)

Oversee

Executive
Officers

Oversee Representative

Directors

Internal
Auditing Unit

Audit

Accounting Auditor

Audit

Supervise

Each Business Unit

Compliance Committee
Compliance Manager

MonitorCompliance Hotline

Internal reporting line (Compliance Office)Corporate Governance Structure andInitiatives
Meidensha clearly separates important management
decision-making and operational decision-making in the rulesof the Board of Directors and the rules of internal approval
procedures, and ensures flexible executive functions.
The executive committee, comprised of representative
directors and executive officers, has been instituted for executive
decision-making, and the committee decides matters stipulatedby the rules of internal approval procedures, as well as mattersthat require discussions from a company-wide perspective.
Also, we have established a management committee as
an advisory body that operates separately from the decisionmaking committee structure. The management committee iscomprised of the representative directors, who discuss andconsider matters relating to all aspects of management.

39 MEIDENSHA REPORT 2018of the Board of Directors and separated the “decision-making
and supervisory functions” and the “executive functions” thatthe Board of Directors used to have. The former functions
were assigned to the Board of Directors and the latter to therepresentative directors and executive officers to whom theduties were delegated by the representative directors.
Executive functions for business operations are carriedout according to resolutions and decisions of the executive
committee, which is a decision-making body for executivefunctions, and the executive directors and executive officers,
who have the authority to carry out executive functions, under
the supervision of the Board of Directors. In this way, business
operations are executed autonomously, flexibly, and swiftly.
Furthermore, with the Board of Directors having broadly
assigned authority to conduct executive functions to the
executive officers, directors and executive officers in chargeof operations are required to submit status reports on theexecution of operations to the Board of Directors at least once
every three months in order to ensure that the supervisory
function of the Board of Directors properly works.

External reporting line (law firm)

Outline of Corporate Governance Structure
Form of organization

Company with corporate auditors

Directors

Number of directors (outside directors): 10 (2)Corporate auditors

Number of corporate auditors (outside
corporate auditors): 4 (2)Number of independent
officers

4 (2 outside directors and 2 outside
corporate auditors)

1 Features of Institutional Design① Executive Officer System

Meidensha introduced an executive officer system in June 2003
in order to streamline the Board of Directors so as to “speed
up corporate decision-making and enhance its supervisory
function.” At the same time, we strengthened the functions

There are currently ten directors, and we believe that thisnumber is appropriate to ensure thorough consideration to
make appropriate and swift decisions to address the drasticallychanging business environment.
Furthermore, two of the ten directors are outside directors
who carry out a supervisory function for execution of operations
in order to strengthen corporate governance.
Meidensha’s outside directors satisfy the requirements of
independent directors as stipulated in the rules of the Tokyo
Stock Exchange.

2 Effectiveness Evaluation of theBoard of Directors
Meidensha has a mechanism in place to conduct an analysis
and evaluation of the effectiveness of the Board of Directors
in order to strengthen the supervisory function of the Boardof Directors.
With regard to the activities of the Board of Directors
in fiscal 2017, all the directors and auditors, including theoutside directors and outside corporate auditors, conducted
an effectiveness evaluation of the Board of Directors and aself-evaluation, and the following discussions took place at themeeting of the Board of Directors in May 2018.

i. Items EvaluatedComposition and operation (resolution and deliberation
methods, etc.) of the Board of Directors, effectiveness of theBoard of Directors, self-evaluations, other opinions

ii. Outline of Analysis and Evaluation Results
The results of the evaluation of each director and corporate
auditor were collected, and after deliberation by the Board of
Directors, it was determined that the quality of operation anddeliberation is sufficient, sufficient opinions and advice havebeen received from outside directors and outside corporate
auditors, and the effectiveness of the Board of Directors iscurrently secure.
There were people of the opinion that they would liketo have more of an opportunity to exchange opinions apartfrom meetings of the Board of Directors, and we are giving

consideration to holding a meeting to exchange opinions
as described below and further expanding the content of
introductory sessions, etc.

Training of Directors and Corporate Auditors
Legal training is conducted for officers on an annual basis,for the purpose of improving the effectiveness of the Boardof Directors and internal control. In fiscal 2017, we promoted
risk management at each department and conducted training
relating to monitoring for our officers as part of internal control
activities conducted at all companies. The Meiden Group
conducted training on the Companies Act for new officers of
Meidensha and affiliated companies.

3 Initiatives to Utilize Outside
Directors
Meidensha seeks active participation in management byoutside officers, in order to enhance the supervisory functionof the Board of Directors. As such, we are conducting thefollowing initiatives to ensure free and active debates.

① Initiatives at the Board of Directors
i. Circulation of Board of Directors Meeting Materials
in Advance
Meidensha distributes meeting materials to the board members
in advance so that they are able to check the agenda prior toparticipating in Board of Directors meetings.
We accept questions, etc., in advance, if any are relating
to the agenda and prepare an explanation to be given at themeeting of the Board of Directors.

ii. Timely and Appropriate Sharing of Information
Besides the agenda for the meeting, Meidensha provides
briefings on current topics relating to the company at meetingsof the Board of Directors, with the aim of timely and appropriate
sharing of information with outside directors, so that they canshare the status of the Company in a timely fashion.

② Initiatives Outside of the Board of Directors
i. Introductory Sessions
Primarily for newly appointed outside directors and outside
corporate auditors, we provide opportunities for them tounderstand the Company’s business.
The officers or general managers in charge of eachbusiness explain their business and Meidensha’s governancesystem to the outside officers, answer their questions andexchange opinions with them. In fiscal 2017, we organized five
introductory business sessions and one factory tour.

ii. Meeting for Exchange of Opinions
Besides legally-required board meetings, we organize monthly
meetings for an exchange of opinions in order to best use
the knowledge of the outside directors and outside corporate
auditors.
In these meetings, participants vigorously exchange
opinions, mainly concerning matters relating to corporate
governance and the Company’s management issues andstrategy. The meetings also serve as preliminaries to discussmatters prior to passing resolutions at the Board of Directors.

MEIDENSHA REPORT 201840

Foundation for
価値創造の
基盤 Value
Creating

Corporate
Governance

Board of Directors & Executive Officers as of July, 2018
4 Corporate Auditors and the Board of
Corporate Auditors
Meidensha is a company with corporate auditors. Eachcorporate auditor (two of the four corporate auditors areoutside corporate auditors) performs his assignment of duties
in accordance with the auditing policies and the auditing rules
for corporate auditors stipulated by the Board of Corporate
Auditors. They communicate with directors, the internal auditing
department, and other relevant departments, attend meetingsof the Board of Directors and other important meetings, andinvestigate the business and financial conditions, in order to
audit the execution of directors’ duties.
The Company also has Internal Auditors Office to assist
the Board of Corporate Auditors under the direct control of
the Board.

5 Internal Auditing System
We have an internal auditing division under the direct control of
the President. The Internal Auditing Division conducts internal
audits to check the effectiveness and efficiency of business
operations, the reliability of financial reporting, the status ofcompliance with laws and regulations, and the maintenanceof assets, covering the Company and all Group companies athome and abroad.
In fiscal 2017, we instituted CSA (control self-assessment)
and promoted initiatives to maximize and enhance auditing
functions, with the aim of achieving group-wide risk
management.

Officers’ Remuneration
Policy for Determining Remuneration
In fiscal 2017, we established a voluntary Remuneration
Committee comprising two outside directors (independent
officers) and two inside directors, chaired by an outside
director, in order to increase the transparency of the content ofofficers’ remuneration and decision-making processes.
In fiscal 2018, we are revising the remuneration system(annual wages) in order to further clarify the management
responsibilities of directors. Directors’ remuneration comprises
basic remuneration and incentives. Of these types of
remuneration, incentives comprise remuneration that is linked
to business performance as a short-term incentive and stock
as a medium to long-term incentive.
The Remuneration Committee confirms and considers
the content of the remuneration system and the amount of
remuneration from an objective perspective (remuneration
is calculated in accordance with the standards of the new
remuneration system, and it is within the total limit determinedby the General Meeting of Shareholders) prior to determinationby the Board of Directors.

Representative Directors
Amount of Remuneration for Directors and Corporate
Auditors in Fiscal 2017
NumberRemuneration(million yen)

Directors (outside directors)

10 (2)

375 (12)

Corporate auditors (outside
corporate auditors)

5 (2)

52 (8)

Position

Notes 1. The amount of the above remuneration, etc., includes directors’ bonuses of
65 million yen.
2. The amount of remuneration paid to directors that concurrently serve as
employees does not include the amount of remuneration paid to them as
employees.

Composition of the Remuneration Committee
Name

Position

Chairman

Yuji Hamasaki

Representative Director, Chairman

Takeshi Miida

Representative Director, President

Hiroyuki Takenaka

Director (Outside/Independent
Officer)

Junji Yasui

Board Director (Outside/Independent
Officer)

Yuji Hamasaki

Takeshi Miida

Kozo Masaki

Tadayoshi Machimura

Masamichi Kuramoto[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)

Director and Senior Managing Executive Officers

Outside Director

Nobutoshi Ohashi

Norio Takekawa

Nobuaki Tamaki

Hiroyuki Takenaka

Junji Yasui(Newly appointed in June of 2018)(Newly appointed in June of 2018)(Newly appointed in June of 2018)[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)[Record of Attendance]
Board of Directors’ Meetings:
100% (14 out of 14)○

Dialogues with Shareholders andInvestors
Basic Approach and IR System
When any shareholders wish a dialogue with the Company
that will contribute to medium to long-term improvement of theCompany’s corporate value, it is Meidensha’s policy that theCompany’s management conducts the dialogue to the extent
reasonably possible.
A system is in place where a representative director isplaced in charge of IR matters and an IR-specialist department
conducts activities to enhance constructive dialogue withshareholders, including institutional investors and strengthens
external communication.

Senior Corporate Auditors

Outside Corporate Auditors

Taketora Ito

Seiji Kato

Yoshiaki Shin

Mitsuru Nawata[Record of Attendance]
Board of Directors’ Meetings:
100% (11 out of 11)
Audit & Supervisory Board Meetings:
100% (11 out of 11)(Newly appointed in June of 2018)[Record of Attendance]
Board of Directors’ Meetings:
92.9% (13 out of 14)
Audit & Supervisory Board Meetings:
83% (5 out of 6)[Record of Attendance]
Board of Directors’ Meetings:
85.7% (12 out of 14)
Audit & Supervisory Board Meetings:
100% (6 out of 6)

Results Briefings
We hold results briefings twice a year in May and November.
We also hold business briefings in conjunction with theresults briefings, in order for participants to deepen theirunderstanding of the Company’s business. For each occasion,
we select one business and conduct a briefing on the outlineof that business, its future prospects, etc.
We will continue to work to ensure an even fuller disclosureof information through results briefings, individual IR sessions,conferences, the website, and this report, etc., and continue
to engage in dialogue with shareholders and investors.
Main IR Activities in Fiscal 2017Managing Executive Officers

Executive Officer

49

Kazumi Ikarashi

Satoru Kameyama

Kazuhiko Furukawa

Hiroshi Toke

Kuniake Yasukawa

45Michihiko Kato

Masayuki Iwao

Teruhisa Abo

Masahiko Suzuki

Norio Mizutani

94

Tomoyasu Hachiro

Tatsuki Mochizuki

Noritaka Matsushita

Minoru Kaneda

Hideki Miyazawa

Isamu Suto

Hisahiro Murashima

Akio Ikemori

Akio Inoue

Satoshi Momenya

Individual sessions

NumberJapanese investors
Foreign investors
Total

The materials for the results briefings and business briefings are available forviewing. Please visit “Fact Sheet for Account Settlement Briefing Session”
under “Investors” on the Corporate website.

http://www.meidensha.com/ir/ir_04/ir_04_03/index.html

41 MEIDENSHA REPORT 2018

MEIDENSHA REPORT 201842

Foundation for
価値創造の
基盤 Value
Creating

Corporate
GovernanceCompliance

Risk Management

Compliance managers

Anti-Corruption Policy
The Board of Directors has passed a resolution thatforbids providing unfair advantage and business activities
in contravention of the Anti-Monopoly Act as three strictly
prohibited matters. From now on, the Compliance Committee
will receive reports concerning the status of activities to ensurecompliance.

43 MEIDENSHA REPORT 2018

Overseas affiliate disaster
response offices

Compliance managers

Area disaster response offices

Compliance Office

Company-Wide Disaster
Response OfficeCompliance Office

RMC Office, General Affairs

Works with each committee to address new problems and issues affecting
more than one committee

New Influenza Strains
Emergency Response OfficeCompliance Committee

Company-Wide RMC

Company-wide and area safety
and health committees

Compliance Committee

President
Chief Risk Officer (CRO)

Product and Technology
Deliberation Committee

Meiden Group Compliance System

The Company-Wide RMC

Company-wide Quality
Assurance Council

Meidensha Compliance System

The Compliance Committee conducts compliance training
at our business locations throughout Japan, in order tomaintain and improve awareness of compliance and internal
control systems while collecting opinions from workplaces.
Compliance training aimed at employees, including ComplianceManagers at each company in the Meiden Group, provides
updated information and education on compliance activities,
and an opportunity to exchange opinions with the Compliance
Committee. In fiscal 2017, we conducted compliance training
at locations around Japan, with 1,342 participants. The
Committee made reports concerning the status of complianceactivities at the company as a whole, and the Legal Affairs
Department gave further training using case-studies aiming
at sales and manufacturing activities in compliance with theAnti-Monopoly Act, and the Subcontracting Act. In addition,in fiscal 2017, the Sales Department conducted education
concerning compliance with the Construction Business Act
and the HR Department conducted education concerning
harassment, and we are working to increase awareness of abroad range of compliance issues. Also, we are conducting
group-work education for executive officers and managers inorder to enhance internal control at the divisional levels. During
such educational sessions, the Committee received opinions,requests, and many questions from participants concerning
the state of their workplaces, which we will reflect on during
the Committee’s activities in this fiscal year to make further
improvements to our compliance activities.

Strengthening Information Security
Management

Product Liability Committee

Meiden Group Compliance System

Compliance Education

The Meiden Group has a system in place to control risk
management. The Chief Risk Officer (CRO) and CompanyWide Risk Management Committee (RMC) are appointed torespond to major cross-organizational crises. The RMC works
with each working group committee (WGC) and meets, asa rule, at least twice a year to maintain countermeasures tocritical risks threatening the business continuity. They perform
risk surveys to discover new risks and study measures againstthem.
1. Establishing basic policies on major and cross organizationalrisks
2. Encouraging measures to prevent crises before they happen
3. Deciding company policies on the crises that are actually
happening

Meiden Group Environmental
Committee

Meidensha has a whistleblower system on compliance. This is
to prevent illegal actions or misconduct and to solve problems
as early as possible if such illegal action or misconduct occurs.
For this whistleblower system, there are two routes: an internal
hotline system for compliance violations (Internal Hotline
System) and a whistleblower hotline for public interests (Public
Whistleblower System). The Internal Hotline System is aninternal measure to receive anonymous whistleblower reports
from employees, through a dedicated phone line, letters, oremails to a dedicated address. The Public Whistleblower
System handles external communications at a law firm as wellas internal communications, and may be used by employeesof the Meiden Group (including retirees), temporary staff andsubcontractors, and suppliers.
The Compliance Committee studies information thatis brought to the above points of contact, and, if necessary,consults with a lawyer before resolving issues. We are working
to increase the dependability of management of information,such as the names of whistleblowers, of and the whistleblower
system as a whole, in accordance with national guidelines, toensure that whistleblowers are not disadvantaged by using thesystem. In fiscal 2017, the Meiden Group received 66 reports
and consultations, of which we thoroughly confirmed whichcases required a response and dealt with them accordingly.
The system undergoes internal audits by the Auditing Unit.
Furthermore, in fiscal 2017, a local whistleblower hotline
was established in China by an external party as overseas
compliance was in the process of being tightened.

as wind, flood, snow, or fire damage, distributing disaster cards,
etc., and conducting education through e-learning, etc.

Information Security Committee

Meiden Group Code of Conduct (COC) defines that weshall strive to ensure compliance with applicable laws andregulations of our business-related matters, other applicablelaws and regulations at home and abroad, social and ethicalnorms, and its underlying spirit, and we shall conduct ourbusinesses with strong corporate ethics and good social
common sense.
Under this policy, the Meiden Group aims to sincerely
engage in activities to live up to the trust of customers andsociety. Directors, executive officers, and general managers
of Meidensha and each Group company, play a central rolein promoting compliance in each of their workplaces, inaccordance with the Meiden Group Compliance Promotion
Rules.
Besides such workplace schemes, we also have aCompliance Committee set up in place, which lays down
policies concerning compliance activities, organizes
compliance training, handles whistleblowers, and expresses
opinions and provides solutions to problems relating to arange of compliance issues that may arise.
Furthermore, in order to enhance the communication andreporting system, we appointed a Compliance Manager ineach workplace to serve as a link between the Compliance
Committee and the workplace by reporting to the Committee
issues discussed and problems found in the workplace.
Thus, we are engaged in activities that promote compliance,
while ensuring communication among the Meiden Group
companies.
In fiscal 2017, we created a system in accordance withthe revisions to the Consumer Affairs Agency’s Guidelines
for Whistleblower Systems, drafted and revised regulations
and manuals, and conducted awareness activities using theGroup’s internal media as group-wide compliance initiatives.
Also, in order to enhance overseas compliance, we arecontinuing to promote the implementation of internal control
systems at overseas group companies through the leadershipof our controlling companies in China and the ASEAN region.

Operation of the Company-Wide Risk
Management Committee

Safety and Trade Control Committee

Whistleblower System on Compliance

Compliance Committee

Compliance Policy and System

Consider response to individual major risks

Priority Initiatives in Fiscal 2018
1. Formulation of Business Continuity Plans (BCPs) for
All Group Companies:
We aim to complete BCPs for all Group companies underMedium-term Management Plan 2020, based on theformulation and analysis of the BCP for a model business, which
was conducted as part of the Group-wide Risk Management
Committee’s activities, and our knowhow for considerationof social infrastructure BCPs. In developing BCPs, we arefocusing on ensuring effectiveness, conducting training for
implementation, and incorporating mechanisms for evaluationand improvement.
As the main activity for fiscal 2018, we will establish theBCM committee as a body to promote BCPs, and we aim toestablish specific systems for emergencies.

2. Increasing Effectiveness of BCPs:
We are working to improve the effectiveness of measures tobe taken in the event of disasters with the aim of increasing theresilience of all Group employees.
In fiscal 2018, we will work to ensure that we are able
to respond to disasters as they occur by rewriting internal
regulations and manuals relating to response to disasters such

The Meiden Group understands that ensuring the security of
the information we handle is a most critical issue. We therefore
protect information assets from disasters, accidents, criminal
acts, errors, and other threats. We also maintain and enhance
information management to prevent leaks, tampering, or theft.
In fiscal 2018, we are continuing to implement initiatives toreinforce information security for the entire Meiden Group.

1 Analysis of Incidents and Countermeasures for EachCause
We conducted analyses and implemented measures to coverboth aspects of hardware/software and human factors: theformer includes data protection from unauthorized logins, virus
infections from suspicious emails, targeted email attacks, etc.
as well as and the latter theft, loss, or mishandling of information
devices.

2 Sustainable Information Security Measures
We had previously conducted initiatives based on “defense,”
but we are now working to implement sustainable security
measures in the areas of “prediction,” “defense,” “detection,”and “response.”
With regard to “detection,” in fiscal 2017, we introduced
the SOC (Security Operation Center), and instituted a system toconstantly monitor networks and devices 24 hours a day, 365
days a year and detect and analyze cyber-attacks.
Furthermore, we are continuing to strengthen hardware
and software measures, such as computer encryption, limiting
USB device connections, thin client implementation, IT resource
management, and continuing to conduct human measures,such as information security education and suspicious email
drills. We are rolling out both proactive and reactive measures
on a group-wide basis for information security.

Group Corporate Code of Conduct
Aimed at Globalization
The Meiden Group has the “Meiden Group Corporate Code of
Conduct” in place and is working to ensure compliance withlaws and other social norms. In addition, in fiscal 2016, wecompiled the corporate philosophy system and guidance into abooklet in three languages in preparation for globalization.
Furthermore, we have released the Bribery Prevention
Policy and Fair Competition Policy in three languages, as
guidelines to supplement the aforementioned code of conduct,in order to observe laws and regulations relating to bribery
prevention and competition.
These standards and policies can be viewed on theGroup’s portal.

MEIDENSHA REPORT 201844

Financial / Non-Financial Highlights

Meidensha Corporation and Consolidated Subsidiaries
Financial indicators

FY2013

FY2014FY2015FY2016FY2017

Non-financial indicators

Net sales (millions of yen)

216,176

230,299

237,404

220,141

241,832

Number of consolidated subsidiaries

FY2013

FY2014FY2015FY2016FY2017

42

39

39

38

37

Operating income (millions of yen)

9,546

9,997

10,517

8,849

11,381

Japan

25

21

19

18

19

Ordinary income (millions of yen)

7,790

10,502

10,595

8,209

9,992

Outside Japan

17

18

20

20

18

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

6,580

6,868

6,962

5,743

7,056

R&D costs (millions of yen)

9,090

10,261

9,970

9,462

9,402

Overseas net sales (millions of yen)

45,70455,86364,08258,73074,154

Capital expenditure (millions of yen)

9,249

8,887

8,314

7,355

7,584

21.1

24.3

27.0

26.7

30.7

Number of employees

8,047

8,173

8,408

8,474

8,995

248,379

255,519

255,024

247,646

264,457

Of which, local staff

1,096

1,147

1,499

1,354

1,316

2,090

2,078

2,083

2,016

2,002

-

2.05

2.47

2.7

3.3

Rate of lost-worktime injuries

0.14

0.59

0.44

0.96

0.29

CO2 emissions (Japan) (kt-CO2)

42

41

41

39

37

Reduction of CO2 emissions caused byproducts (kt-CO2)

360

587

870

800

733

CSR spending (millions of yen)

26

22

19

32

28

Overseas sales ratio (%)
Net assets (millions of yen)
Total assets (millions of yen)

60,60767,405

68,771

74,312

81,229Total actual annual working hours(hours/year/employee)

Net assets per share (yen)262.50291.35297.64322.80353.65

Net income per share (yen)

29.00

30.27

30.68

25.31

31.10

Percentage of female employees in
executive positions (%)

Return on equity (%)

24.0

25.9

26.5

29.6

30.3

Cash flows from operating activities(millions of yen)

18,239

11,165

22,597

11,84017,975

Cash flows from investing activities(millions of yen)

(11,316)(8,772)(10,530)(12,031)(7,582)

Cash flows from financing activities(millions of yen)

(3,873)(5,282)(5,847)(3,767)(11,230)

ROE (%)

11.3

10.9

10.4

8.2

9.2

Operating-income-based ROA (%)

4.0

4.0

4.1

3.5

4.4

Dividend payout ratio (%)

20.7

23.1

26.1

31.6

28.9

Notes: 1. Operating income for fiscal 2014 has been retroactively changed due to a change in how this number is calculated. (Starting in fiscal 2015, consolidated Group expenses
associated with employees on loan are included in as “operating expenses (sales costs and selling, general and administrative expenses)” instead of “non-operating expenses.”)
2. Starting in fiscal 2015, we show “net income attributable to owners of parent,” instead of “net income.”

Net sales (millions of yen)Overseas net sales (millions of yen)

216,176

230,299

237,404

220,141

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

241,832
9,546
6,580

45,70455,86364,08258,73074,154

2013

2014

2015

2016

2017 (FY)Net sales increased 9.9% year on year. The proportionof overseas net sales was 30.7% due to the firming ofoverseas electric markets such as Singapore, andlarge overseas rail projects, etc.

Net income per share (yen)

29.00

30.27

31.10

30.68
25.31

2013

9,997
6,868

2014

11,381

10,517
6,962

2015

5,９43

2016

7,056
24.0

2017 (FY)

2014

2015

2016

2017 (FY)45 MEIDENSHA REPORT 2018

264,457

2013

25.9

2014

26.5

2015

29.6

9,090

9,970

Capital expenditure (millions of yen)

9,462

9,402

9,249

8,887

2016

8,314

30.3

2017 (FY)Net Assets increased 6.8% year on year. Return on
equity rose 0.7 points due to improvements in free
cash flow.

10.4

9.2

2013

2014

2015

2016

2017 (FY)

R&D costs remained largely unchanged year on year.
Initiatives
focusedonenhancingproduct
competitiveness and the fundamental technology that
supports it.

2013

2014

2015

Number of employees
Number of local staff

7,355

2016

8,047

8,173

1,096

1,147

2013

2014

8,408

8,474

8,995

1,499

1,354

1,316

2015

2016

2017 (FY)7,5842017 (FY)We have focused on investment in production facilities inorder to improve the competitiveness of our products.
We have conducted investment to achieve rationalizationof production, such as by increasing the transparency ofswitchboard production processes using the IoT.
CO2 emissions (Japan) (kt-CO2)

Rate of lost-worktime injuries

31.6
20.7

2013

255,024 247,646

10,261

The number of employees increased year on year;
however, the number of overseas local staff
decreased.

Reduction of CO2 emissions caused by products (kt-CO2)

870

8.2

Net income per share increased by 5.79 yen year on
year to 31.10 yen.

255,519

Dividend payout ratio (%)

ROE (%)
Operating-income-based ROA (%)

10.9

248,379

R&D costs (millions of yen)

8,849

Operating income increased 28.6% year on year andordinary income increased 21.7% year on year, with
net income attributable to owners of parent andorders received both at record highs.

11.3

Net assets (millions of yen)
Return on equity (%)

Notes: 3. Figures for employee numbers exclude those employees on temporary contracts.
4. Total actual annual working hours are the actual working hours calculated by subtracting leave hours from the sum of official working hours and overtime hours (averaged per
employee).
5. The percentage of female employees in executive positions refers to the percentage calculated by dividing the number of female employees in executive positions by the total
number of executive positions.
6. The CO2 emission coefficients suggested by the Electric Power Council for a Low-Carbon Society (ELCS) were used as the CO2 emission coefficient for electricity. The adjusted
factor for fiscal 2016 was used for fiscal 2017, while that for the respective fiscal year was used for those fiscal years up to fiscal 2016.
7. With the dissolution of the joint venture Japan AE Power Systems Corporation, the Japan AE Power Systems Corporation Numazu Works (AE Power Numazu) was incorporated
into the Meiden Group as Meiden T&D Corporation in April 2012.
8. Reduction of CO2 emissions caused by products is the expected reduction of such emissions caused by products sold.
9. CSR spending includes donations and sponsorship funding.

4.0

4.0

4.1

3.5

4.4

2013

2014

2015

2016

2017 (FY)ROE rose by 1 point year on year, and operating
income-based ROA rose by 0.9 points year on year.

23.1

26.1

28.9

0.59

2014

2015

2016

2017 (FY)We aim to achieve a 30% consolidated payout ratio in
the medium and long term, and paid an annual
dividend of 9 yen, including a commemorative
dividend of 1 yen as part of our year-end dividend.

2013

41

41

39

2014

2015

2016

2017 (FY)

733

360

0.29

There was a decline year on year as a result ofenhancing health and safety patrols by the Production
Engineering and Management Group, site-visit
education, and new admission education, etc.

800

587

37

0.44

0.14

2013

42

0.96

2013

2014

2015

2016

2017 (FY)

Promoting measures to increase the energy efficiencyof air conditioners and other measures to increaseenergy efficiency such as operation improvements forcompressors led to a decline year on year.

2013

2014

2015

2016

2017 (FY)

Reduction of CO2 emissions only amounted to 733
kilotons per year due to the effect of the failure toaccomplish shipment, etc., of solar PCS andhydroelectric generators, etc., as planned.

MEIDENSHA REPORT 201846

Outline of the Meiden Group

Corporate Data as of March 31, 2018
Area CodeCorporate Name MEIDENSHA CORPORATION

Capital ¥17,070 million

Established June 1, 1917 (Since December 22, 1897)

Consolidated Sales

Representative Director, President Takeshi Miida

Consolidated Number of Employees

Head Office ThinkPark Tower, 2-1-1, Osaki, Shinagawa-ku, Tokyo,
141-6029 Japan

Consolidated Subsidiaries

Japan
Japan

Japan

Company Name

Kofu Meidensha Electric Mfg.Co.,Ltd.*1
Meiden Plant Systems Corporation

Meiden Engineering Corporation

Capital¥400 million¥400 million¥400 million

CapitalBusiness Entity

S$35.0 million

Regional headquarter in ASEAN; formulation of businessstrategies for the ASEAN region; legal affairs; humanaffairs; IT; maintenance; technical engineering services;materials; R&D

MEIDEN SINGAPORE PTE. LTD.*1

S$25.0 million

Manufacture and sale of transformers, switchboards,
and circuit breakers, maintenance and after-sale serviceof electrical equipment, electrical engineering andimport/export operations, and overseas procurement

Thai

THAI MEIDENSHA CO., LTD.

TB30.0 million

Electrical engineering, technical consulting, after-saleservice, and import/export operations

U.S.A.

MEIDEN AMERICA, INC.*1

US$21.0 million

System engineering, sales, technical consulting, andafter-sale service of dynamo products

China

MEIDEN HANGZHOU DRIVE SYSTEMS
CO., LTD.*1

US$19.0 million

Manufacture of PM motors and other specialist electricaldevices, general purpose inverters, and assembly units
for automatic guided vehicles

TRIDELTA MEIDENSHA GmbH€78 thousand

Manufacture and sale of electric power / electric railroad
lightning arresters and lightning arrester accessories

PRIME MEIDEN LIMITED.*1

INR 1,161 million

Manufacture and sale of transformers, and engineering¥241,832 million
8,995

37 (19 in Japan, 18 overseas)

Singapore

Singapore

Consolidated Subsidiary Companies as of March 31, 2018
Area CodeCompany NameMEIDEN ASIA PTE. LTD.*1

Business Entity

Manufacturing and sales of motors

Construction services

Manufacture, sale, lease, installation, wiring andprovision of maintenance services (maintenance andinspection, modification, repair, etc.) for electricalequipment, machinery and devices

Germany

India

Japan

M WINDS Co., Ltd.

¥330 million

Development, design, manufacturing, and testing ofwind-turbine generator systems as well as related
consulting

Japan

MEIDEN SHOJI Co., Ltd.

¥300 million

Sales of electric components*1. Specified subsidiary

Another 20 companies

Share data as of March 31, 2018

Japan

MEIDEN KOHSAN CO., LTD.

¥100 million

Sales of products and materials, and agent services of
insurance

Stock Listing Tokyo Stock Exchange, Nagoya Stock Exchange
Total number of authorized shares 576,000,000

Distribution ofshares byshareholder

Total number of issued shares 227,637,704 (Including treasury shares of 766,790)
Number of shareholders 14,957

Japan

Meiden O&M Corporation¥100 million

Strategic proposal and comprehensive managementof manufacture, sale, lease, installation, wiring andprovision of maintenance services (maintenance andinspection, modification, repair, etc.) for electricalequipment, machinery and devices and provision ofrelated education

Japan

MEIDEN CHEMICAL CO., LTD.

¥95 million

Insulating varnish and molded instrument transformer

Japan

Meiden System Manufacturing
Corporation¥90 million

Manufacture and sale of switchboards, control panels,
and their components

Japan

Meiden System Solution Corporation¥50 million

Software development, design, production, sale, andrental, and maintenance and management of computer
systems and networks

Financial institutions

34.10%

Securities companies

1.77%

Business companies

21.45%

Overseas investors

21.76%

Individuals

20.58%

Other

0.34%

Major Shareholders
Number of Shares Held
(1,000 shares)

Shareholding Ratio (%)

Sumitomo Electric Industries, Ltd.

13,156

5.80

Japan Trustee Services Bank, Ltd. (account in trust)

12,1605.36

Sumitomo Mitsui Banking Corporation

11,209

4.94

NEC Corporation

8,730

3.85

Sumitomo Mitsui Trust Bank, Limited

7,500

3.31

The Master Trust Bank of Japan, Ltd. (account in trust)

6,024

2.66

Sumitomo Life Insurance Company

5,307

2.34

Meidensha Employees Stock Ownership Group

4,714

2.08

EVERGREEN

3,317

1.46

Japan Trustee Services Bank, Ltd. (account 9 in trust)

3,277

1.44

Names of Shareholders(Note) The shareholding ratio excludes treasury shares.

47 MEIDENSHA REPORT 2018

MEIDENSHA REPORT 201848

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