ISEKI Report 2020

ISEKI Report

2020

Achieving Harmony between Human Beings and the EarthContact about this ISEKI report

ISEKI & CO., LTD

Public & Investor Relations Section, ISEKI & CO., LTD.
5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPANTEL: +81(0)3 5604-7602 FAX: +81(0)3 5604-7701
E-mail: isk-info@iseki.co.jp
Issued in June 2020

As a promotional partner, ISEKI
Group passes down the significanceof food production throughdelivering agricultural machinery.

ISEKI Group supports the nationwide action“COOL CHOICE” for global warming
countermeasures.

We strive to contribute to thecreation of a prosperous andsustainable society.

Our Founding Principle

Management Philosophy<Spirit of ISEKI – Passion of founder –>“I want to free farmers from exhausting labor”

Seven promises of Iseki group
1. Our Founding Principle
Inheriting our company’s founding philosophy, we always carefully
consider agriculture and move forward with farmers.

2. Frontrunner
As a front-runner, we produce innovative agricultural machinery.

3. Quality
We will always be making premium quality products with passion.

Agriculture was hard work, done byhand and with the help of animal power.
To change this, Kunisaburo Iseki, thefounder, realized laborsaving throughmechanization and endeavored to further
develop agriculture.
“We produce good machinery that
customers highly praise,” Kunisaburo used
to say. He devoted himself to provide
products that made customers happy. The
founder’s passion has been inherited in an
unbroken line until today as “Iseki’s spirit.”

contents
Value creation of ISEKI Group
Track record of value creation ...........................3
ISEKI Group ......................................................5
Value creation of ISEKI Group ...........................7
Priority issues (materiality).................................9
Message from our President ........................... 11

Business development at ISEKI Group
Domestic business ..........................................15
Overseas business ...........................................17
Development and production .........................19

Initiatives that support value creation
Three strengths...............................................21
GovernanceCorporate governance ....................................29

4. Solutions
We constantly take action for solutions to customer issues.

5. Innovation
We create innovations with cutting edge technologies and provide
new value for farms.

6. Global
With a global perspective, we work toward solutions to the world’s
social issues.

7. The Future of Farming
Paving the way for tomorrow, and changing the future of farming.

<Company Motto>
Our management philosophy is to provide:

1. Products that satisfy
customers;
2. A stable workplace to theemployees;
3. Appropriate dividend to theshareholders;
and thereby we will fulfil our social mission.

Risk management ...........................................33
Compliance.....................................................34
Society —Social—
Promotion of sustainability .............................36
Human resource development and utilization ....37
Creation of employee-friendly workplaces......39
Product quality assurance ...............................40
Fair and equitable trade ..................................41
Stakeholder engagement ................................42
Constructive dialogue with shareholders
and investors ...............................................43
Social contribution ..........................................44
Environment
ISEKI Group environmental management .......45

Editing policy
Editing policy
This report presents both financial and non-financial
information to introduce initiatives for improvement of thecorporate value of ISEKI Group to a wide range of stakeholders
including shareholders and investors in an easy-to-understandmanner.

Covered period
From January 2019 through December 2019. The report also
includes some information from and after January 2020.

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ISEKI Report 2020

Scope

Information included in this report

As a general rule, this report covers the activities of ISEKI &Co., Ltd. and ISEKI Group’s associated companies in Japan andoverseas. Notes will be added in this report when the range ofactivities and/or data is limited in certain part hereof.

Information presented on the company website
Various information that cannot be included in this report is presented in the “About
ISEKI” section of the company’s website.

Referenced guidelines
International Integrated Reporting Council (IIRC): “TheInternational Integrated Reporting Framework”
GRI*: “Sustainability Reporting Guidelines 4th Edition”
Ministry of the Environment, “Environmental Reporting
Handbook –Environmental Reporting Guidelines 2018”* GRI is an international organization established with the objective of the creationand dissemination of international guidelines regarding sustainability reporting bycorporations.

“About ISEKI”
Information covered …https://www.iseki.co.jp/about/ *only available in JapaneseCompany Information : Company outline, main locations, R&D activities
Investor Information : Shareholder information, financial results, IR briefing
materials
CSR & Environment : Environmental site reports, environmental, social andgovernance (ESG) data
Note on forward-looking statements
Forward-looking statements contained in this report were prepared based on
information available at the time of the preparation and involve potential risks anduncertainties. Actual results may differ from those expressed by the statements due tochanges in economic conditions and market trends.
Amounts and numbers of shares in this report are rounded down to the unit.

Environmental management ...........................46
Mid- to long-term environmental targets
and results ...................................................47
Initiatives for environmentally-friendly
design ..........................................................49
Preservation of biodiversity .............................50

Financial data
Financial and non-financial highlights .............51
Consolidated Balance Sheets ..........................53
Consolidated Statements of Income ...............55
Consolidated Statement of Cash Flows ...........56

Company information ............................57

ISEKI Report 2020

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Front runner

Value creation of ISEKI Group

Company history

1961
    
1969
1971
1972

1977
1926
1936

Iseki Farm Implement Trading Co.
was established.
ISEKI & CO., LTD. was established.

1946
1949

1926

Matsuyama Factory
was established.
Kumamoto Factory
was established.

Main social issues and needs

ISEKI Group’s solutions

Start of the high economic growth
periodDevelopment and spread of
agricultural machinery, which
supports food production increase

    
2001

2003

1945 to 1950s
Post-war food production increase

2012
2013
    
2014

1960 to 1970s

Separated the Production Section from thecompany and established ISEKI-Matsuyama
MFG, Co., Ltd. and ISEKI-Kumamoto MFG,
Co., Ltd.
Established Iseki-Changzhou Mfg. Co., Ltd.
in Jiangsu Province, China.

1980 to 1990s

High economic growth period, decline
in agricultural work force due toconcentration of population in urban areas
Modernization of farming

Progress of globalization

Increase in size and diversificationof agricultural machinery
Establishment of integrated system
for automating rice farming

Development of machinery
contributing to labor saving inand lowering cost of farming
Mechanization of vegetable
farming

Decline in agricultural workers,
advancement of aging society

2015
2016
2017

2000s

2010s

Increasing interests in security
and safety of food
Improvement in food selfsufficiency rate
Continued development in agriculture

Increase in size of farm business
Decline in agricultural workers, aging
population
Adding high value to farm produce

Strengthening of farm businessproposals and support

Realization of smart agriculture utilizing
latest technology and data

Product history

1966

1971

1988

2014

2016

Development of world’s first autothreshing combine harvesters

Birth of Naueru System for themechanization of vegetable farming

Center collect-type riding mower(lawn mower) for Europe

Development of industry’s firstvariable fertilizing rice transplanter

1926

Enabled the process from reaping to threshing
to finish 16 times faster. Popularity wasachieved due to its high efficiency, small-sizeand light weight, and reasonable price, withproduction unable to satisfy the high demand.

Development of two-wheel ricetransplanters equipped withbackward-tilting seedling tanks

Developed our original “Naueru Pot
Seedling” vegetable seedling thatmainly used paper pots and nurserysoil and the “Naueru PV101” fullyautomated vegetable transplanterfor planting the seedlings.

A high horse power, Japan’s first centercollect-type front mower SF4 series withsuperior flexible maneuvering. ISEKI
Group’s flagship series of landscaping
machinery for Europe that can respondto the needs of professional users.

Groundbreaking rice transplanter that adjuststo the appropriate amount of fertilizer while
rice planting. Contributes
to lower fertilizer costs and第7回
ロボット大賞
reduced plant lodging.
優秀賞

Established with fully-automated rice hullers

Financial data

“Iseki Farm Implement Trading Co.” wasestablished and a fully-automated ricehuller was produced as the first product.

After much trial and error, succeeded indeveloping two-wheel rice transplanters
equipped with backward-tilting seedling tanks
that used a plastic float.
Birth of Sanae, asynonym for ricetransplanters.

ISEKI Group

Track record of value creation

Began establishing sales subsidiaries. Subsequently,
sales subsidiaries established around Japan.
Niigata Factory was established.
Listed its shares on the Tokyo Stock Exchange.
Renamed Tokyo Branch as Tokyo Headquarters.
Established N.V. ISEKI Europe S.A. in Brussels.
Expanded Matsuyama Factory,
relocated Head Office toMatsuyama.
Established Central Training
Center in Ibaraki Prefecture.

Value creation of ISEKI Group1958

Established Dongfeng Iseki Agricultural Machinery (Hubei) Co.,
Ltd. in Hubei Province, China.
Established PT. ISEKI INDONESIA.
Established ISEKI Technical Training Center (ITTC).
Established ISEKI SALES (THAILAND) CO., Ltd.
Integrated the businesses of Iseki-Changzhou Mfg. Co., Ltd.
and Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd.
and established Dongfeng Iseki Agricultural Machinery Co., Ltd.
Acquired French agents Yvan Beal S.A.S. and YB Holding
S.A.S. (current ISEKI France Holding S.A.S.) and made themsubsidiaries.
Established Dream Agricultural Research Institute.
Established ISEKI (THAILAND) Co., Ltd.
Established Iseki Basic Engineering Training Center (IETC).
Established ISEKI Global Training Center (IGTC).

Initiatives that support value creation

2011

1965
Tractor suitable forJapanese wet paddies
Developed TB20, a Japanese tractor
with exceptional performance thateven climbed Mt. Fuji.

1988

2009

Sales of tillers to Europe

ISEKI’s first riding mower(lawn mower)

Development of the industry’s fastest
auto-threshing combine harvesters

A full-spec riding mower installedwith a diesel engine. It established
ISEKI brand in the landscaping marketof Europe.

Developed the industry’s fastest
combine harvester capable of six-row
reaping with a maximum working speedof 2.0m/s. Also developed the industry’s
first combine harvester
capable of seven-row reaping.

Began export and sale of tillers, thestart of ISEKI’s European business.
Deployment of technology fostered inJapan to overseas.

Development of industry’s firstplant growth diagnosis device
Measures the photosynthetic abilities of plants and visualizes
the conditions of plants invisible to the human eye.
Contributes to optimal control and growing by preventing
disease.

2018
Development of manned
monitoring-based robot tractors
Realized significant labor saving in farming.
This type of agricultural machinery was thefirst big step toward the future of agriculture.

mannedCompany information

2015
1967

Unmanned*T he seven-row reaping combine harvester (2009) and the plant growth diagnosis device (2015) won the award for excellence in the R&D / New Technology Sectionof the Food Action Nippon Award, which is part of the initiatives to expand consumption of domestic farm produce to improve Japan’s food self-sufficiency rate.

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ISEKI Report 2020

ISEKI Report 2020

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ISEKI Group

Value creation of ISEKI Group

ISEKI Group
ISEKI Group engages in business activities centered around the development, production, sales andservices of agricultural machinery for cultivation of rice, vegetables etc. as well as landscaping machinery.

Offices, number of employees

Other agriculture-related business

Cultivating and mowing machinery

25.0 billion yen

50.6 billion yen

Net sales

Net sales

33.8%

16.7%

Main offices

Associated companies

ISEKI Hokkaido Co., Ltd.

Head Office(Matsuyama Office)

ISEKI-Matsuyama MFG. Co., Ltd.

ISEKI Tohoku Co., Ltd.
ISEKI Kanto Koshinetsu Co., Ltd.
Gunma ISEKI Sales Co., Ltd.

Major products

Agricultural facility construction,
Agricultural material, Coin rice millingbusiness・Rice cooking business, etc.

Sales subsidiaries

Tractors, tillers, high-clearance
multipurpose vehicles andmowersIshikawa Shokai Co., Ltd.（※1）
ISEKI Hokuriku Co., Ltd.
ISEKI Kansai Chubu Co., Ltd.
Mie ISEKI Sales Co., Ltd.
Nara Iseki Sales Co., Ltd.（※1）

Tokyo Headquarters
Tobe Office
Kumamoto OfficeNiigata Office
Tsukubamirai Office
Ibaraki Center
Kansai Office (IMPL)

Value creation of ISEKI GroupNet sales composition ratio by product (Fiscal year ended December 31, 2019)

ISEKI-Kumamoto MFG. Co., Ltd.
ISEKI-Niigata MFG. Co., Ltd.
ISEKI-Shigenobu MFG. Co., Ltd.
ISEKI Matsuyama Factory K.K.
ISEKI AGRI Co., Ltd.
ISEKI Logistics Co., Ltd.
ISEKI TLS Co., Ltd.
Kita-Nihon Shodo K.K.

Initiatives that support value creation

Nishioka Shokai Co., Ltd.（※1）
ISEKI Shikoku Co., Ltd.
ISEKI Kyushu Co., Ltd.

Net sales
Tractors

Overseas sales 32.1 billion yen
Overseas sales ratio 21.5%

North America...12.6 billion yen
Europe............10.2 billion yen

1,177 Billion yen
Domestic sales ratio 78.5%

Domestic sales

Overseas sales by region

29.1%

6.8%

number of
employees(consolidated)

13.6%

China................ 0.1 billion yen

5,563 evelopment andD
manufacturing department 1,798
Sales department
3,376
Other division389

Our products areused for agriculture andlandscape maintenance in(As of December 31, 2019)

ASEAN.............. 1.6 billion yen
Other areas........ 3.4 billion yen
Parts and others... 3.9 billion yen

Implements, spareparts and repair fees

Net sales

43.6 billion yen

Harvesting and processing machinery

Net sales

20.2

billion yen

Planting machinery

Net sales

10.2

Major products

Major products

Combine harvesters, binders,
harvesters, rice hullers, dryers, ricegraders and vegetable harvestingand processing machinery

Rice transplanters andvegetable transplanters

more than100
countries

Financial data

149.8 billion yen

and regions aroundthe world.

Dongfeng ISEKI Agricultural
Machinery Co., Ltd. (China) (*1,2)(Xiangyang, Hubei Province andChangzhou, Jiangsu Province)

AGCO Group (*3)(Atlanta and Heston, U.S.)

billion yen

Company information

Coin rice milling machine

PT. ISEKI INDONESIA (*2)
(Indonesia)

N.V. ISEKI EUROPE S.A. (Belgium) (*1)
ISEKI France S.A.S. (France)
Iseki-Maschinen GmbH Deutschland (Germany) (*1)
PREMIUM TURF-CARE LTD. (U.K.) (*1)

IST Farm Machinery(Thailand) (*1,2)
ISEKI (THAILAND) CO., LTD.
(Thailand)

Rice transplanters*1: Non-consolidated subsidiaries *2: Joint ventures *3: OEM
Combine harvesters

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ISEKI Report 2020

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Value creation story

The ISEKI Group has been engaging in business activities that are founded on its corporate philosophy andgovernance and that leverage the capital supporting the Group such as human resources and intellectual
properties as well as its unique strengths. In doing so, we have been providing customers with products
and services that meet a variety of needs, thereby creating social and economic value. By continuing thiscycle of value creation, we strive to contribute to solving social issues in agriculture and other areas, whileachieving sustainable growth and enhancing corporate value, and ultimately contributing to the creationof a prosperous and sustainable society.

Structural changes in Japan’s agriculture

Changes in global population (population growth)

Environmental issues such as climate change● Labor shortage due to a decline in and● Stable food supply● Labor shortage due to reduced agricultural● Climate change● Reduction of● Laborsaving and improved productivity through● Needs for machinery to be used in environmental

Products and services
in response to diverse needs

Business activities of ISEKI Group

Social value(Value for stakeholders)

Domestic business, overseas business,development, and manufacturing■ Provision of agricultural machinery contributing tosolving social issues● Realization of laborsaving and highly-profitable agriculture● Promotion of success of new farmers and female farmers● Agricultural mechanization and productivity improvement indeveloping nations

Intellectual property■ Creation of diverse human resources and provision of
P. 22−24

rewarding workplaces

Development■ Mutual sustainable growth and improvement ofcorporate value with suppliers

A high level of technologicalcapabilities and intellectual
properties backed by patents held

Manufacturing base P. 19−20
Production sites in Japan and overseas■ Contribution to the development of a recycling-oriented society■ Revitalization and development of local communities

Production

Sales andservices

Base for supporting to offer
farm business proposals P. 25−26
Dream Agricultural Research InstituteEconomic value(Value for ISEKI Group)

P. 15−20■ Improvement of corporate value through sustainable growth■ Enhancement and development of trusting

Corporate philosophy and governancerelationships with stakeholders■ Improvement of corporate brandNetworkP. 27−28

Collaboration with partners,
research institutions,and universities in Japanand overseas

Mid-term “To establish a firm position both in
Visiondomestic and world market”

Three strengths (source of its competitive edge)

Mid-term Management Plan
Numerical targets

Technologicalcapabilities

Support capabilities
to offer farmbusiness
proposals

Innovation
based oncollaboration
P. 21−28

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ISEKI Report 2020

Long-term
vision190.0 billion yen
Operating income .............................. 9.0 billion yen
ROE ..................................................... 8.0%
Consolidated net sales ................

Financial capital P. 51−56
Source of business activities
and growth investments

Initiatives that support value creation

Diverse human resources thatenable ISEKI Group growthExperts specializing in the fields ofdevelopment, production, and sales
and services

and landscaping improvements

Financial data

Human resources P. 37−38

agricultural mechanization

environmental burden

Company information

Capital that supports ISEKI Group

workforce resulting from economic development● Global warming● Biodiversity

Contributing to the creation of aprosperous and sustainable society

aging of the agricultural workforce● Introduction of large-scale farming andcrop conversion● Dissemination of smart agriculture

The world’s social issues
represented by Sustainable
Development Goals (SDGs)

Value creation of ISEKI Group

Value creation by ISEKI Group by utilizing our unique strengths

Social issues
and needs

ISEKI Group

Future of agriculture

Value creation of ISEKI Group

ISEKI Report 20208

Priority issues (materiality)

ISEKI Group

Value creation of ISEKI Group

Process for making decisions on priority issues
To respond to the diverse needs and demands that are obtained through communication with its
stakeholders, ISEKI Group identified social issues to be addressed by itself in reference toISO26000, international standards related to corporate social responsibility, the United Nations
Sustainable Development Goals (SDGs), etc.

Identification of social issues to beaddressed by ISEKI Group

ISEKI Group evaluated the “degree of interest of
stakeholders” and the “materiality for ISEKI Group” of theidentified social issues to determine the priority issues foreach stakeholder in association with the Group’s
management strategies.

STEP2

Identification of priority issues (materiality)

Evaluation of materiality
Identification of priority issues

ISEKI Group has identified eight priority issues from the perspectives of “solutions to social issues through business”
and “factors that support value creation and growth of ISEKI Group” by identifying and evaluating social issues theGroup should address. Further, it believes that addressing these priority issues would lead to contributions toward
SDGs, though the degree of association might vary.

S T E P3

The identified eight priority issues are determined as the“priority issues to be addressed by ISEKI Group” throughdeliberation by the Board of Directors.

Determination of priority issues

Priority issues (materiality)

Value creation of ISEKI GroupS T E P1

degree of interest of
stakeholders

Under its management philosophy, ISEKI Group identifies priority issues (materiality) for creating socialand economic value through its business activities. We will endeavor to fulfill our social responsibilities
through initiatives embodying the essence of ISEKI.

materiality for ISEKI Group

8 priority issues and key initiatives
Key initiatives
Japandevelopment of highly
competitive products
proposals and support reflecting
tailored to the markets
the scale of management and cropand needs● Establishment of● Community-based development
research, development,
through collaboration withproduction structures
strategic partners
that support● Enhancement of localized
manufacturingservices and support● Strengthening of intellectual property activities● Strengthening of farm business proposals and support● Acceleration of innovation in collaboration with partners
Development of specialized human resources for development,
manufacturing, sales, and service
Thorough design review at each step for improving quality

Solutions to social issues through business(source of value creation and competitive edge)

Overseas

Provision of products and services
tailored to the markets and needs
Provision of products and services that satisfy customers

Demonstration of strengths

E(environment)

Factors that support value
creation and growth of ISEKI
Group

S(society)

Creation of worker-friendly workplace and utilizationof diverse human resources
Establishment of sustainable supply chainG(governance)

Ratio of eco-products: 50% or more (2030)

Utilization of diverse human resources

Initiatives to promote female advancement

Creation of worker-friendly workplace
Promotion of responsible supply chain management

Thorough implementation of occupational health and safety management
Promotion of CSR procurement

Strengthening of risk management
Prevention of misconduct and scandals byentrenching compliance throughout the GroupThorough implementation of compliance

21–28

Development and offering of environmentally-friendly products

Reduction of environmental load in production activities

Enhancement of governanceImprovement of corporate governance

15–20

Provision of environmentally-friendly
products and services

Promotion of environmental
management

Contribution to and participation in local
community

Coexistence with local community

Introduction of new products tailored to the markets andneeds
Promotion and expansion of sales promotional activities
Strengthening of intellectual property foundation (thenumber of patents and utility model rights, etc.)

Preservation of biodiversity and awareness-raising activities within the Group

Provision of high-quality, safe products and services

Enhancement of environmental management structure
Environmental preservation that allows for the creationof a sustainable society (realization of low-carbon
society, formation of recycling-oriented society)

Pages

Number of employees who participated in specialized
training courses
Implementation of design review: 100%
Environmental management system (EMS) certificationacquisition rate: 100%
Reduction of CO2 emissions: reduction of 26% (2030)
compared with 2013
Implementation of environmental education: twice a year

Development of experts
Provision of safe products and services that earn the trust of customersof sales and service structures● Strengthening of farm business

Targets● Research andFostering the next generation through food and agriculture education
Implementation of activities to communicate with community
Responses based on the evaluation of the effectiveness of the Board of Directors
Enhancement of constructive dialogues
Operation of the Risk Management Control Committee and risk evaluation by officers
Continued implementation of training and awareness-raising activities

Initiatives that support value creation● Improvement and enhancement

Ratio of female employees among management candidates:
15% or higher (2022), etc.
Occupational accident statistics severity rate: 0%
Raising the level of CSR throughout the supply chain
Establishment of relationship of trust through active
interaction with local communities

37
40

45–50

38
39
41

Financial data

Activity themes

Development and manufacturing

8 priority issues

44

Further improvement in functions of the Board of Directors
Implementation of active dialogue in IR activities, etc.
Prevention of risks and minimization of losses
Implementation of various training courses and issuance ofCompliance News: four times a year

29–32
42–43
33
34–35

Priority issues and SDGs (SDGs closely related to business activities are shown with thick borders.)

Provision of products and services that satisfy customers

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Provision of safe products and services that earn the trust of customers

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Environmental preservation that allows for the creation of a sustainable society●

Creation of worker-friendly workplace and utilization of diverse human resources●

Establishment of sustainable supply chain
Coexistence with local community

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Improvement of corporate governanceThorough implementation of compliance●

Company information

Priority issues / SDGs

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ISEKI Report 202010

ISEKI Group

Value creation of ISEKI Group

Message from our President

Basic strategy 1
 trengthen responsiveness to drastic changes inSagriculture in Japan

Carry forward the aspirationsof ISEKI Group’s foundationand contribute to agriculturearound the worldSince its establishment in 1926, with thepassion of our founder Kunisaburo Iseki,“free farmers from exhausting labor” as
the cornerstone, ISEKI Group has been
striving to contribute to the modernizationof Japan’s agricultural industry as anintegrated manufacturer specializing in
agricultural machinery. Over this period,
we have consistently pursued efficiency
and laborsaving advancements inagriculture and have continued to provide
products to the market by pioneering thedevelopment of revolutionary agricultural
machinery and facilities.
In light of the increase in the global
population, food issues, food selfsufficiency, land conservation, and global
environmental issues, the role agriculture
plays is significant, and consequently
we believe that the social mission of an
agricultural machinery manufacturer isbecoming increasingly important.
To contribute to agriculture both inJapan and throughout the world, ISEKI
will continue its business activities underthe basic business philosophy to “provide
products that satisfy customers.”

Shirou Tomiyasu
Representative Director, President & Executive Officer
ISEKI & CO., LTD.

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ISEKI Report 2020

Japanese agriculture is increasingly facing structuralchanges such as increase in size given the aging of farmers
and labor shortages and crop conversion from staple foodrice to field crops and vegetable farming. In light of thesechanges, ISEKI Group will further increase the speed andstrengthen its responses in terms of both software andhardware.
In terms of hardware, we are strengthening thedevelopment of products tailored to market needs such as
low-priced simple machinery, advanced technology, andvegetable farming machinery by leveraging our hightechnological prowess. In particular, as the government
has listed the realization of smart agriculture, in whichmost of farmers utilize data by 2025, as one of its policy
goals, and amid increased introduction and demonstrationof advanced technologies, ISEKI launched the tractor andcombine harvester under the All Japan Series, which arelarge machinery equipped with ICT. ISEKI Group is
improving the products’ competitiveness further by linking
them with the farm business support software agri-note.
From the software aspect, ISEKI Group develops humanresources who can respond to the market needs, mainly
through the Dream Agricultural Research Institute and
ISEKI Global Training Center, which engage in research andverification of advanced agricultural management
technology as well as provide support for dissemination tofarmers, and is further raising the level of its service,proposals, and support capabilities.
The ISEKI Group has spread its sales network, made up
primarily of wide-area direct dealers, widely throughout
the country to support agriculture, which is a businessrooted in local communities. We believe that the group’s
sales network is a strength for advancing its domestic
business and will build on this strength and accelerate our
responses to the market where scale of farming is
becoming larger. Specifically, ISEKI is developing sales
bases and redistributing personnel with large-scale
maintenance centers at the core. At the same time, it has
also reorganized 10 wide-area dealers into seven over the
past two years, as part of efforts to promote efficiency byshifting towards a structure suitable for covering wider
areas and larger scales in response to the changes in themarket.

Basic strategy 2
Value creation of ISEKI Group

Expand overseas businesses

Overseas, ISEKI Group identifies Europe, North America,
China, and ASEAN as its four core markets and is working
on expansion of business domains in each market together
with local strategic partners.
In the North American market, ISEKI Group aims tofurther expand sales by enhancing the product lineup to
meet local customer needs through stronger collaboration
with its OEM partner. The small-sized tractors introduced
in 2018 have been performing particularly well andcontributing to sales expansion. We aim to expand ourmarket share in the North American market leveraging
such products.
In the European market, we position ISEKI France S.A.S.
as the core of business expansion and mainly selllandscaping machinery such as lawn mowers and smallsized tractors. This spring, we began in-housemanufacturing of engines compliant with EU Stage V, astrict environmental regulation, and introduced new
products installed with those engines. We will further
establish the ISEKI brand in Europe by leveraging these new
products, strengthen our service and support structure, andfocus on expansion of sales and market share.
In the Chinese and ASEAN business, which ISEKI Grouppositions as its growth engine, it is expanding business
operations by further strengthening collaboration with its
joint venture partner.
In the Chinese market, amid intensifying sales competition
involving the maturation of the agricultural machinery
market and local manufacturers, ISEKI’s strategic partner
Dongfeng Motor Group made additional investment in
Dongfeng Iseki Agricultural Machinery Co., Ltd. (hereinafterreferred to as “Dongfeng ISEKI”) to further develop businessin China and localize business operations. Following thismove, ISEKI Group’s stake in the joint venture changed to
25% from 50%. Nevertheless, the importance of theChinese business for the Group does not change given thepotential of the market. We will continue to export products
and parts to Dongfeng ISEKI and support it in engineering
aspects such as licensing of technology including highperformance and advanced models.
In Thailand, which is the main battlefield in the ASEAN
region, ISEKI Group has been building the ISEKI brandthrough sales at IST Farm Machinery Co., Ltd. since 2013.
Further, in 2016 we established ISEKI (THAILAND) Co., Ltd.
to boost sales and service capabilities not only in the Thai
market but also throughout the ASEAN region. We willfurther strengthen the collaboration with the joint venture
partner to establish the business in Thailand and expand
sales channels in countries neighboring Thailand.
In India, the world’s largest tractor market, ISEKI signed
a technical and business tie-up agreement with TAFE, thecountry’s second-largest agricultural machinery
manufacturer, at the end of 2018. TAFE will sell ISEKI
products and manufacture medium-sized tractors. In thisand other ways, we will expand the business in the Indian
market.
We will expand the overseas market by strengthening
product development, production, sales, and service
structures leveraging local characteristics while working on
nurturing and reinforcement of human resources who will
support the structures.

ISEKI Report 2020

Initiatives that support value creation

enhancing our corporate value.

Mid-term Vision to establish a firm position as anintegrated manufacturer specializing in agricultural
machinery both in Japan and the global market when wemark the anniversary. Under the current Mid-termManagement Plan, we formulated and are implementing
five basic strategies with Henkaku (Change) as the
keyword. ISEKI is committed to developing and proposing
products that can compete in the global market bydemonstrating the strengths it has cultivated till now. In
doing so, it aims to strengthen its responses to structuralchange in the domestic agricultural industry, expand its
overseas businesses, and reinforce its organization andgovernance in concerted group-wide efforts. The markets
in Japan and elsewhere are changing significantly. We will
steadily implement Henkaku (Change) at a speed thatexceeds that of the changes in the markets and strive torealize continuous growth in corporate value.

Financial data

We aim to solve social issues
through our business while

ISEKI will celebrate its 100th anniversary in 2025. It is our

In addition to the initiatives from both hardware andsoftware aspects, ISEKI will strengthen its response to thedrastically changing Japanese agriculture throughreinforcement of its sales structure to support therealization of a farming industry full of dreams.

Company information

Implementing Henkaku (Change) at a speed
exceeding the market

12

ISEKI Group

Value creation of ISEKI Group

Basic strategy 4Make active capital investment for growth

To respond to the drastically changing market, ISEKI Grouphas been increasing the size of and enhancing its
maintenance centers and improving sales bases, and willcontinue to work on further enhancement.
In the expanding overseas market, ISEKI Group has been
making investments to enhance production capacity of PT.
ISEKI INDONESIA, which is also a production base forNorth America, Europe, and ASEAN region.
We will also be laying the foundations for further
improvement in product competitiveness throughexpansion of production lines for shifting to in-housemanufacturing of exhaust restriction compliant engines. At
the same time, we will make proactive capital investment
for internal and external growth such as reinforcement of
production facilities for achieving enhanced efficiency
through technological innovation.
Basic strategy 5
 nhance corporate value by reinforcing personnel &E
corporate governanceIn addition to securing and nurturing human resources
who will support the business activities at thedevelopment, production and sales sections to enhance
the responses to the drastically changing Japanese
agriculture and to expand overseas business, response towork style reform has become an issue.
ISEKI Group has established specialized training centers
and is striving to enhance the development of humanresources such as young designers engaged indevelopment, personnel who play active roles inmanufacturing sites, and highly specialized employees insales and servicing within and outside Japan. In terms ofwork style reform, we are promoting the development of aworkplace that realizes improved productivity and diverse
ways of working through improvement of work efficiency
by thoroughly eliminating unreasonableness, inconsistency,
and waste on individual levels, promotion of crossorganizational efficiency improvement themes, and review
of operations.

13

ISEKI Report 2020

Envision a story with the essence of ISEKI for
its 100th anniversary
To realize the Mid-term Vision “To establish a firm position
both in domestic and world market” as an integrated
manufacturer specializing in agricultural machinery for 2025,
the 100th anniversary of its foundation, ISEKI Group in 2016
formulated the Mid-term Management Plan as it positioned thefirst five years as an important step and implemented activities
centered on the five basic strategies. In 2019, there were majorchanges in the business environment from what it had initiallyenvisioned both in Japan and abroad, which resulted inunsatisfactory performance that declined from a year earlier.
Nevertheless, we believe that the five basic strategies are still
highly valid and will continue to implement these initiatives in a
steady manner.
The environment surrounding ISEKI Group is changing
drastically. In addition to the various social issues including
environmental issues such as climate change and SDGs,
diversifying needs, and utilization of new digital technology,
the risks that might affect business performance, such as
demand trend reflecting economic climate and agriculturalenvironment and increasing natural disasters and infectious
diseases, are becoming more complex and diverse.
ISEKI plans to discuss measures to mitigate these risks andcreate opportunities and formulate a new mid-term
management plan for its 100th anniversary that would enable
the group to continue growing in uncertain times. We will set
forth the direction toward which ISEKI should advance andonce again recognize its strengths and weaknesses to draw avalue creation story with the essence of ISEKI.
While the impact of the current global pandemic of the novel
coronavirus (COVID-19) infection is not small, ISEKI Group willcontinue its business activities and contribute to the society byimplementing measures to prevent the infection and by
minimizing its impact as a company that supports producers
who are playing the main role in food and farming.

Value creation of ISEKI Group ontribute to realization of SDGs by creating valueCthrough business activities
The total world population in 2050 is expected to reach 9.7
billion people, and it is necessary to significantly increase foodproductivity.
However, when you look at it on a global scale, many
developing countries in Africa and Asia are lagging in
introduction of machinery in farming and irrigation facilities,
and it is necessary for these countries to have efficient foodproduction through improved productivity and labor savingwith agricultural machinery. In the meantime, farm population
has been declining, and aging and the scale of farming has
become large in countries such as Japan, South Korea, Taiwan,
and other countries and regions. These countries and regions
not only require further labor savings and improvements inefficiency through development of larger agricultural machineryand utilization of advanced technology but also seeks highvalue addition and consideration to the environment. ISEKI
Group will contribute to the “promotion of sustainableagriculture and practice of resilient farming” throughdevelopment and offering of products that respond to issues
that differ from region to region and diversifying needs as wellas through farm business proposals and support.
ISEKI’s riding mowers and compact tractors, which it offers
mainly in the European and U.S. markets, are utilized inlandscape improvement such as development of parks andgreen space, road cleaning, and clearing snow. They arecontributing to “urban development through landscape
improvement” and supporting lives of people in thecommunity.
ISEKI Group aims “to contribute to the creation of aprosperous and sustainable society” through simultaneous
creation of social and economic value through businessactivities. We believe that the Group’s business activities lead tocontributions to the Sustainable Development Goals (SDGs) for
2030 adopted by the United Nations Summit. ISEKI Group has
identified priority issues that link the social issues to beaddressed and management strategies. The Group willcontribute to the realization of Goal 2. Zero Hunger and Goal 1.
No Poverty through “promotion of sustainable agriculture andpractice of resilient farming” and realization of Goal 11.
Sustainable Cities and Communities in “urban development
through landscape improvement.”

Human resource development
ISEKI Group believes that what contributes to the solution ofvarious issues is people and recognize that human resource
development is essential for the Group. ISEKI Group has beenpromoting improvement and handing down of skills andtechniques indispensable at development and production sites
as well as development of human resources capable of offering
comprehensive farm business proposals to our customers or
working actively in global fields. We also promote diversity inthe utilization of a wide range of human resources.
ISEKI is also actively engaged in activities aimed at promoting
active roles of women in society and the development ofchildren. The group will also continue to offer opportunities forlearning such as workshops for female farmers and food andagricultural events and craft workshops for children.
We continue to aim “to contribute to the creation of aprosperous and sustainable society” and strive to solve various
issues together with our stakeholders.

For the 100th year and beyond – becoming an
indispensable company
Initiatives that support value creation

ISEKI Group is driving forward cost structure reform
primarily at the development and manufacturing sections
in order to introduce competitive products in the domestic
and overseas markets, where sales competition isintensifying. We have been continuously strengthening ourefforts to improve productivity through thoroughimprovement of efficiency such as by standardizing andunifying design, speeding up development, lowering cost,
reducing man-hours at manufacturing sites, and improving
indirect operations, while enhancing our capability torespond to fluctuations in production load. The production
volume of PT. ISEKI INDONESIA, the Group’s production
base in the ASEAN market, has been increasing with eachpassing year, and it will strive to expand the business by
reinforcing its efforts to expand profit by streamlining
suppliers and improving the manufacturing site as well as
enhancing production capacity. The Global Strategic
Products Project Management Department continues tomanage the efforts to improve the profitability of overseas
products, and the ISEKI Group is making concerted efforts
on cost structure reform and improvement of profitability.

Strive to contribute to the creation of aprosperous and sustainable society

For the past 95 years, ISEKI has stayed by the side of farmers
and contributed to development of agriculture together with
farmers. With the slogan of “ISEKI, the supporter for thefarming industry full of dreams,” we will contribute todevelopment of agriculture on a global basis.
To this end, we will once again return to our starting point
and work on Henkaku (Change) on issues such as the change inthe domestic agricultural structure and food shortage caused
by global population increase with the pride of the frontrunnerin agricultural machinery.
The novel coronavirus (COVID-19) pandemic completelychanged people’s lifestyles and work styles around the world.
Even if it subsides, things will not go back to how they used to
be but instead we are required to adapt to new norms. We, at
ISEKI Group, will make even more concerted efforts to drive
forward Henkaku (Change).
Agriculture is the basis that supports food and is an
important industry. We expect that the awareness towards
food to change in the future and the importance of agriculture
will further increase with food self-sufficiency rate becoming
more important. ISEKI has to continue to be an “indispensable
company” that supports agriculture. ISEKI Group will further
advance Henkaku (Change) so as to continue demonstrating its
presence in its 100th anniversary in 2025 and beyond andincrease its corporate value.

Financial data trengthen profitability by optimizing development
Sand production

As part of corporate social responsibility, ISEKI Group is
working on strengthening of internal control andcompliance. We will ensure awareness activities andin-house training to enable each and every person at ISEKI
to act responsibly with high ethical standards and goodsocial conscience in addition to compliance with relatedlaws, regulations, and rules.
To strengthen governance, ISEKI Group in 2018
established the Nomination Advisory Committee with
Independent Outside Directors as its main members tomake the appointment process of Director candidates
transparent. Proposals of agenda regarding appointment
and dismissal of Directors for general shareholders’meeting as well as selection and removal of Representative
Directors will be determined based on deliberations of andreports from the committee. The Nomination Advisory
Committee was reorganized into the Nomination andCompensation Committee in March 2020 to include afunction to deliberate and report on Directors’
remuneration.

 nvironmental preservation that allows for the creationEof a sustainable society
Environmental issues such as response to global warming andother climate changes have become common challenges forthe world.
ISEKI Group considers environmental preservation that allows
for the creation of a sustainable society, as one of its priority
issues and has introduced environmental management systemthroughout the Group. We will carry out environmental
preservation activities that reflect various business activities andregional characteristics.
We have also established concrete environmental targets anda structure for their promotion and management from theinitial stage of product development in an effort to develop
and spread products that reduces environmental burden(eco-products).

Company information

Basic strategy 3

ISEKI Report 202014

Solutions

Business development at ISEKI Group

ISEKI Group

Domestic businessMessage from the General Division Manager of the Business Division

Social issuesR eforms across the agriculture, forestry, andfisheries industry and KPIs for realization ofsmart agriculture, forestry, and fisheries
2025

Almost every farmer practices
agriculture by using data

2023

80% of the entire agriculturalland area is utilized by farmers (asof the end of FY2013: 48.7%)2023

40% reduction in rice production
cost for farmers compared with 2011
(production in FY2011: ¥16,001/60kg)

ISEKI’s efforts towards smart agriculture
ISEKI’s smart agricultural machinery

Reduction of required
labor power

Automation technology

Unit crop
improvement

Sensing technology

Reduction ofmanagement cost

Visualization ofmachine information

P.27

To cope with the increase in large-scale farming, ISEKI Grouphas developed block-based sales structures centered aroundlarge-scale maintenance centers, and is swiftly and efficiently
transforming the various sales and service activities for covering
wider areas.
We have been pursuing structural reforms, in which we
expand sales and profit primarily of agricultural machinery suchas implements, parts, used machinery, and repair fees, so as tobuild a stable revenue base, and have ensured a stable basethat is less likely to be affected by market trends whilestrengthening our earnings structure. Net sales of implements,
parts, and repair fees were 40.8 billion yen in FY2019 and they
are increasing every year.
Sales trends of implements, parts, and repair fees (billion yen)
40.6
38.5

35

0
2015

15

Value offeredthrough businessRealization of sustainable agriculture
Laborsaving and cost reduction
Productivity improvement
Introduction of smart control in farming
Promotion of active participation by farmers

ISEKI Report 2020

2016

2017

2018

2019

Product development in response to wide-ranging needs
Agricultural machinery tailored to large-scale farming
In response to the increasing large-scale farming in Japanese
agriculture, ISEKI Group has a product lineup covering from highly
efficient, highly durable, and high performance models to simple,
low-price models suitable for respective crop cultivation methods
and farm business scale.
In recent years, needs for smart controlled agricultural machines
installed with automatic steering function are growing, andmodels installed with straight-travel assisting function account for
about 40% of the smart eight-row rice transplanters. Moreover, inJune 2020, we launched a new smart controlled rice transplanter
Sanae JapanPRJ series, in which the steering assistant function
performs turning and row adjustment in addition to straight-travelassisting function, ahead of the world.

Realization of smart agriculture ffering of agricultural machinery tailored to regionalOcharacteristics and needs, farm business proposals, support

Strengthening of service and support

36.9

Source: “Future Investment Strategy 2018”

Efforts by ISEKI
Group

40.8

39.7

40

New smart controlled
rice transplanter
Sanae JapanPRJ8The vegetable farming market has been witnessing increased
introduction of machinery required for development of new
production areas and low cost production, and ISEKI Group has
been focusing on the development and promotion of an
integrated system for mechanization in vegetable farming. In
particular, we will enhance the production lineup variety ofvegetable transplanter Naueru, which is ISEKI’s strength, bygrasping the crop-system unique to a particular region andlocal needs. In addition to the fully-automated vegetabletransplanter PVZ1 series, which has been popular for its highefficiency, the walking-type PVH series, which is a versatilesemi-automated vegetabletransplanter, and the ridingtype PVHR series, ISEKI
remodeled the walking-type
PVH series, which islightweight, compact, and easy
to operate, and has been
responding to the requirementsof the vegetable farming
Walking-type one-row vegetable
market with its enhanced lineup. transplanter PVH100

Value creation of ISEKI Groupwider areas

Agricultural machinery for vegetable farming market

Initiatives that support value creation

Establishment of sales and service systems for

The most important thing necessary to systematically carry out
work in agricultural management is provision of accurate andswift services and support. We are making farm businessproposals reflecting the various needs of our customers andcarrying out activities to ensure our customers are using
agricultural machinery safely and securely.
<Key initiatives>
Participation in the Japan Farm Work Safety Confirmation
Campaign
	Holding farm work safety workshops utilizing various events(seminars for female farmers)
Implementation of farm work safety campaigns(single-sided braking alarm installation campaign, etc.)
Thorough implementation of pre-delivery testing
Encouragement of inspection and maintenance before andafter the use

Financial data

Director & Managing Corporate Officer,
General Division Manager of the Business
Division

Collaboration withother companies

Yukio Nawata

Japanese agriculture is increasingly witnessing structural changes such as
introduction of large-scale farming caused by consolidation of farmland andcrop conversion from staple food rice to field crops and vegetable farming.
Meanwhile, the needs for agricultural machinery such as high performance,labor-saving machinery for solving serious manpower shortage due to aging of
farmers and lack of successors, smart control agricultural machinery employing
latest technology including robotics and ICT, and mechanization of vegetable
farming, which continues to heavily rely on manpower are growing more andmore.
ISEKI Group sets forth “Strengthen responsiveness to drastic changes inagriculture in Japan” as one of its basic strategy and is working on changes inmarket needs from both software and hardware aspects. In response to thescale of farming becoming large, we have been enhancing our sales and service
structure by developing and increasing sales bases with large-scale maintenancecenters at the core throughout Japan and redistributing personnel. Throughthese initiatives, we will implement swift and efficient sales activities and fully
support our customers.
With respect to the hardware aspects, ISEKI Group has been strengthening
supply of products with focus on market trends in each region centered on smart
controlled agricultural machinery aimed at reducing requirement of labor power,
improvement of unit crop and reduction of management cost represented by
low-priced simple machinery and vegetable farming machinery. In particular, torealize smart agriculture, in which most of farmers utilize data by 2025, among
the government’s policy goals, we will promote introduction and demonstrationof advanced technology with our strategic partners through collaboration withsmart controlled agricultural machinery and farm business support software.
In terms of software aspects, the group will develop human resources who
can respond to market needs mainly at Dream Agricultural Research Instituteand ISEKI Global Training Center, where it supports promoting research anddemonstration of advanced agricultural management technology and cultivation
technique as well as provide support for dissemination to farmers, and works onfurther enhancement of support capabilities for making farm business proposals
and technology service capability for farming in the new age.
The group will continue to contribute to sustainable development of Japanese
agriculture and improvement of food self-sufficiency rate through assistance tofarmers to attain agriculture full of dreams (profitable agriculture).

Priority initiatives

Human resource development
ISEKI Group is strengthening human resources through various
initiatives aimed at growing their support capability to offer
farm business proposals and improving technical service
capability.
<Key initiatives>
Implementation of various specialized training sessions(ISEKI Global Training Center)
Promotion of acquiring qualifications as agricultural
machinery mechanic(The number of employees with the qualification in FY2019:
2,322 people)
Nation-wide Service Skills Contest
Holding an advanced farmbusiness technologies support
workshop “Team-TJ”

Company information

We will support new-age agriculture to attain a farming
industry full of dreams (i.e., profitable agriculture).

Service Skills Contest where service
persons from around the country
match-up their techniques

ISEKI Report 202016

Solutions

Business development at ISEKI Group

Global

ISEKI Group

Overseas businessMessage from the General Division Manager, Overseas Business Division

Director & Corporate Officer
General Division Manager,
Overseas Business Division

Social issues

F orecast for global population andfood supply and demand
Population in developing countries
Population in developed countries
Grain production volume

W orld rice production
Produces about 80% of the total in Asia

2,956 million tons

2,569 million tons
China
30.4%

Philippines 2.4%
Myanmar 2.6%
Thailand 3.8%

1,945 million tons

7.44 billion people

8.38 billion people

Myanmar 2.6%

6.36 billion people

Thailand 3.8%
70.9

Vietnam 5.7%
India
22.4%

Bangladesh 7.0%
Indonesia 7.0%

51.7

Vietnam 5.7%

61.9

Bangladesh 7.0%
11.9

12.5

12.8

2003-05

2015-17

2028

Value offeredthrough business

17

ISEKI Report 2020

India
22.4%

Indonesia 7.0%

Source: “World Food Supply and Demand Trends and Projections in
the Medium- and Long-Term” published by the Policy ResearchInstitute, Ministry of Agriculture, Forestry and Fisheries

Efforts by ISEKI
Group

China
30.4%

Philippines 2.4%

2016/2018 average
Source: USDA PS&D Online Data (2019.1)

O ffering of agricultural machinery and landscaping
machinery that address regional needs

Mechanization and laborsaving of farming

Development of comfortable cities

Advancement of developing countries

L andscape conservation

Improvement of productivity

In promoting overseas expansion, we are growing the businessthrough collaboration with strategic partners as well as theexisting network with the ISEKI Group in Europe at core.
In North America, ISEKI Group has been mutually supplying
products with global major AGCO over many years, and mostrecently we have been shipping our products to Latin America
and South Asia. In Europe, the Group sets ISEKI France at thecenter of business expansion and has been focusing on
expansion of sales and market share. In the ASEAN region andrest of Asia, we have been strengthening collaboration withIndonesian major agricultural machinery manufacturer RUTAN,IST Farm Machinery, which is a joint sales company with
Mitsubishi Corporation, targeting Thailand and neighboring
countries, and large Indian agricultural machinery manufacturer
TAFE and accelerating business expansion in those countries. In
China, we established Dongfeng Iseki Agricultural MachineryCo., Ltd. with Dongfeng Motor Group in 2011 and are
endeavoring to expand the business in the Chinese market,
which has great potential.
ISEKI Group will continue to expand overseas business as itbuilds strong relationships of trust with its strategic partners.

Development and introduction of products thatsuit each market

China, which has the world’s largest population, is facing thechallenge of expanding food production by means of improving
efficiency and expanding scale of farming. ISEKI has been
supplying rice transplanters with cutting-edge technology inaddition to large-scale agricultural machinery in response to theneeds of the country, where large-scale farming is increasing.
In ASEAN, where the requirement for mechanization ofagriculture is high, ISEKI Group introduced a new tractor model
NT542 in 2019 with better durability and workability in
Thailand. In India, which neighbors the ASEAN region, theGroup began test marketing a rice transplanter in cooperation
with its strategic partner TAFE. In South Korea, where thelarge-scale farming is expanding like Japan, we have introduced
our large-scale, highly efficient mainstay products to establish
the ISEKI brand in the country.

Value creation of ISEKI Group

collaboration with strategic partners

Initiatives that support value creation

Kazuya Tani

Business expansion through reinforcement of

Strengthening of service and support
ISEKI Group provides community-based service and support. To
offer swift support to customers, we established the Parts
Depot Center in Europe and local subsidiary ISEKI (THAILAND)
Co., Ltd., in addition to a parts center in Thailand to cover theentire ASEAN region in 2016 to strengthen the parts andafter-sales service business. We also directly ask our customers
their opinions and requests by asking the condition of products
and through operation inspection so as to develop superior
products.

Human resource development
ISEKI Group is developing and offering products thatincorporate the characteristics of each country and region.
We place emphasis on human resource development to enable
In Europe, it offers landscaping machinery (tractors andus to offer the high-quality products and services developed inridingcountries
mowers) for mowing lawns in parks, road cleaning, andPopulation in developing
Japan to customers overseas. We offer farm business technicalPopulation in developed
snowcountries
clearing and ISEKI products are playing a role in theguidance to overseas agents through local service workshops
2,956 million tons
Grain production volume
preservation of the beautiful landscape in Europe. In 2019, theand technical workshops to strengthen their technical and
2,569 million tons
Group introduced TH5 series tractors and SF5 series ridingservice capabilities.
billion people withmowers that are8.38
compliant
1,945 million tons
billionpeople
7.44
EU Stage V standards, said to be
Main market
Main users
Target models
6.36 billion people
the strictest emission
regulations
70.9
Farmers
Tractorsin the 61.9
world.
51.7
Hobby farmers
UtilityNorth
In North America, ISEKI
L andscape developers,
America
Compact (premium, economy)
supplies AGCO with compact
light civil engineering
12.8
12.5
11.9
Sub-compact
companies
tractors of PTO horsepower less2003-05
2015-172028
than 40 and utility tractors ofTractors
Small-sized farmers
horsepower less than 100 underCompact (premium, economy)
Hobby farmers
European OEM contract and theseSub-compact
Landscape developers
products are being used by a
Riding mowers, etc.
wide range of users. In
particular, sales volume of theTractors
Versatile combine harvesters
ASEAN
compact tractors has been
Rice transplanters, etc.
strong and increasing every year.
Farmers
Moreover, we began supplying
Asia
Contractors
Tractorsa new tractor model since May
Versatile, auto-threshing combine harvesters
2020 in an effort to further
China
Rice transplanters
expand the market share.

Financial data

Currently the world is seeking solutions to social issues such as population
increase, development of a stable food production system to address that,climate change and other environmental problems. Under such circumstances,
ISEKI’s overseas business is supporting sustainable food production aroundthe world through provision of agricultural machinery. At the same time, it isalso supporting people’s daily lives through offering of landscaping machineryfor development of cities that are comfortable to live.
“Expanding overseas business” is the key item of our mid-term strategies.
Subsequent to the expansion of its overseas business, ISEKI products havebeen rated highly in the European and U.S. markets, and we are expecting tocontinue expanding the market share and grow the business. In the meantime,
most of ISEKI’s rice crop machinery, which have become better over the years
in the Japanese market, are being earnestly sought especially by business
partners in various Asian countries, and quick business expansion in the Asianmarket is considered to be our obligation also from the perspective of
increasing food production around the world. We will not only focus onprovision of products that are meticulously tailored to the needs of eachmarket but also further strengthen the structure of after sales service of partsand develop human resources that support these activities.
In addition to the existing local network, we will reinforce the collaborations
with strategic partners having worldwide presence in order to further speed
up the business expansion, and steadily grow ISEKI Group. We will firmly
establish ISEKI brand in the global market and contribute to solving of social
issues around the world.

Priority initiatives

Company information

We will further accelerate the development of business on a
global scale to solve various issues facing the global market.

High-clearance multipurpose vehicles

ISEKI Report 202018

Quality

Business development at ISEKI Group

Innovation

ISEKI Group

Development and production
Message from the General Division Manager, Development & Production Division

ISEKI will expand the models of products installed withadvanced technology such as automation and sensing
technologies in response to the increasing demand forsmart agriculture including manned monitoring-based
robot agricultural machinery and strengthen productappeal by introducing low-priced machinery and vegetable
farming machinery. We will continue to introduce newmodels of compact tractors in the North American market
and launch products that respond to the needs of largescale high-performance products in China and South
Korea.
We will install our proprietary low-environmental load
engines such as the non-road diesel engine compliant with
EU Stage V in our products one by one and introduce
them in the markets. Further, we will optimize the design
and reduce costs through in-house development andmanufacturing of engines.

Number of new products introduced:

40 models in 23 items

Spirit as
theengineer

To market ideas

The four manufacturing bases in Japan have respective
production systems that reflect each factory’s characteristics.
ISEKI-Matsuyama MFG. Co., Ltd., which is the mainstay factory,
produces various parts from gear shaft parts to diesel engines
in diverse work categories of casting, machining, press welding,and painting. It also assembles tractors, high-clearance
multipurpose vehicles, and dryers, performing manufacturing
in an integrated manner. This integrated production systemenables us to demonstrate high manufacturing capacity andcost competitiveness while ensuring manufacturing quality thatsatisfies customers. We are also actively implementing QC
activities and aim to further improve our productivity.
Work type and production system
Diversity of work type and integrated production
system for each productEngine assemblyCasting

MachiningGear cutting

Refining

Pressing

Welding

Transmission
assembly

Machining facility production system

ISEKI Report 2020

Value creation of ISEKI Group

9,700
8,400
7,300

3,900

2015

2016

2017

2018

2019

Improving profitability through optimization ofdevelopment and production
To introduce more competitive products in the markets in Japanand elsewhere, ISEKI Group has been promoting cost structurereform primarily in development and production departments.
It has been continuously strengthening initiatives to raise
productivity through thorough improvement of efficiency suchas accelerating the speed of development by standardizing andunifying design, reducing costs, and reducing man-hour andimproving indirect operations at manufacturing sites.
In addition, the Global Strategic Products ProjectManagement Department was established directly under the
General Division Manager of Development & Production
Division and it is centrally managing initiatives to improve
productivity of overseas products to reform earnings structurein group-wide efforts.

Development of high-quality and low-cost products

Always being one step ahead of the competitors
Machining center (FMS line)* FMS (flexible manufacturing system) denotes system suitable forsmall lot production of variety of products

19

Initiatives that support value creation

12,600To exert all technical potential

To be totally dedicated to product philosophy

Production volume at PT. ISEKI INDONESIA (units)

Domestic production system in Japan

Research and development policy
We pursue research and development with a
mission to “contribute to society throughagricultural machinery” in accordance withthe four items of the “spirit as the engineer.”

ISEKI Group seeks to build a global production system in order
to offer products in a timely manner to each market. PT. ISEKI
INDONESIA is a production base for strategic machinery for
North America, Europe, and the ASEAN region, and produces
tractors that meet the high quality, low price needs bycapitalizing on expertise it has acquired locally over many years.
The company is working to further expand its business
operations by increasing production capability while steppingup efforts to improve profitability, such as optimizing suppliers
and improving site operations. Dongfeng Iseki Agricultural
Machinery Co., Ltd. (Xiangyang and Changzhou) produces ricetransplanters, high-horsepower tractors, and combine
harvesters and supplies them to the local market in China andexports them to the ASEAN region.

Financial data

ISEKI Group introduced sub compact tractor TXGS24 in theprofessional landscaping market in Europe to cater todiverse needs such as mowing lawns, cleaning roads, andclearing snow and commercialized the HJ series, the mostprominent auto-threshing combine harvester in Japan, forSouth Korea in response to strong requirements ofprofessional Korean famers who seek high performance,high quality high efficiency Japanese agricultural
machinery. Further, as part of the measures to reinforce its
manufacturing structure, ISEKI newly established an engine
cylinder head processing line at ISEKI-Matsuyama MFG.
Co., Ltd. leveraging latest IT and robot technology with theaim of streamlining and laborsaving.

ISEKI Group has a research and development system where
each product field has its own engineering department thatenables each employee to be passionate about the field they
are in charge of as an expert. Moreover, ISEKI Group as a wholedisplays collective power in development, production, andmarketing departments. It determines the direction for the
product strategy and research and development based on theneeds and market trends in each region, drafts plans, anddrives forward research and development with the five key
strategic fields of (i) advanced technologies, (ii) products forlarge business, (iii) integrated system of vegetable farming, (iv)
support for low-cost agriculture, and (v) global response. ISEKI
also collaborates with research institutions and universities andjointly carries out research and development to improve speed
and efficiency of technology development.

Company information

Key initiatives in 2020

Global production system

Shipment

Key results in 2019

Research and development system

Inspection

Director & Managing Corporate Officer,
General Division Manager,
Development & Production Division

To provide “products that satisfy customers,” ISEKI Group has been enhancing its competitive edges such as
performance, quality, and cost of the products in development, production, and sales and created various innovative
products and value that contribute to improvement in efficiency and productivity of agriculture.

Assembly

Hajime Odagiri

ISEKI Group has positioned the structural changes occurring in Japanese
agriculture such as the introduction of large-scale farming and crop conversion
to field crops and vegetable farming, laborsaving and cost reduction using
advanced technology, and the response to diverse needs in the global market
as key strategic fields and is engaged in strategic research and development inthose fields.
Upholding the “spirit as the engineer,” striving “to market ideas,” “to exert
all technical potential,” “always being one step ahead of the competitors,”and “to be totally dedicated to product philosophy,” we are carrying out
creative research and development leveraging high technological advantages.
In production activities, ISEKI Group makes the most of the highmanufacturing quality and expertise in productivity improvement that it has
cultivated over the years in Japan and is adopting them on a global scale.
Human resource development is important for further reinforcement anddevelopment of the integrated manufacturing system from development toproduction, which is one of ISEKI Group’s strengths. Towards that end, theGroup is promoting improvement and early nurturing of design skills in young
employees engaged in development along with fostering human resources
who would become leaders of production sites in Japan and abroad.
To create “excellent products,” which is the starting point of ISEKI, we willcontribute to sustainable development of agriculture around the world byintegrating the collective technical strengths we have accumulated so far andoffering products that satisfy customers.

Research and development and production system that support manufacturing

Painting

Combine all collective technical strengths and strategically
respond to market needs in Japan and abroad

ISEKI works to produce high-quality and low-cost products
based on manufacturing technologies cultivated over many
years.
A system for proposing improvements targeting quality
improvement, cost reduction and man-hour reduction has been
put in place under which active improvement activities are
conducted including 52,534 proposals made in FY2018. Value
engineering (VE) activities that allow for cost cutting throughimprovements in products designing and manufacturingmethods, parts procurement methods, etc., are also conducted
to manufacture products at a lower cost.

ISEKI Report 202020

Front runner[ Initiatives that support value creation ]Three strengths

ISEKI GroupFeatureStrength ❶ — Technological capabilities

Value creation of ISEKI Group

With the philosophy of our founder, “free farmers from exhausting labor,” ISEKI
Group has consistently pursued efficiency and laborsaving advances in agriculture
and have developed a significant amount of revolutionary agricultural machineryand facilities with ISEKI’s unique technologies that meet the changes and needs ofagriculture and social issues.The high technological capability that it developed inJapan serves as a major strength in ISEKI Group’s global expansion.

Three strengths of ISEKI Group are “technological capabilities,” “support capabilities to offer
farm business proposals,” and “innovation based on collaboration.” ISEKI Group will continue
to generate economic and social value through business activities that leverage thesestrengths cultivated over the years as the source of its competitive edge.

Proof of ISEKI Group’s technological capabilities
Front runner

Our proactive efforts to develop, launch and commercialize new technologies are exemplified by the high number of patent application
registrations in Japan per specialty field, awards received in recognition of the inventions, and high patent allowance rates. ISEKI endeavors
to differentiate its products from those of competitors by taking advantage of its “strengths” underpinned by intellectual property.

Strength ❶ — Technological capabilities

Number of patent application registrations in Japan per specialty fieldYear

2000-2006

Category
Specialty fieldto agriculture and society. ISEKI’s high technologicalcapabilities are backed by patents it holds.

2007-20142016-2017

Number of laid-open patent applications per specialty field
Agriculture and fishery

Other special machinery

Rank

2018

Number of patent application registrations per specialty field
Other special machinery

No. 2

No. 1

Initiatives that support value creation

Since its foundation in 1926, ISEKI Group has beendeveloping groundbreaking agricultural machinery as
the front runner and has brought about innovation

The Patent Administration Annual Report has previously published the number of laid-open patent applications in Japan per specialty field (the results for theyear before the previous one); however, starting from the 2017 edition, the results of the number of patent application registrations in Japan per specialty field
for the previous year (2016) are being published.

capabilities to offer
Strength ❷ — Support
farm business proposals
ISEKI Group offers comprehensive farm businessproposals and support from both hard (agricultural
machinery) and soft (production management andadvanced farm business technologies) aspects andsolves issues faced by customers. In addition, theGroup is making group-wide efforts to nurture
experts to further strengthen its support capabilities
to offer farm business proposals.

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Patent allowance rate (%) 84.6

Year

83.7

90.4

89.3

85.8

88.5

91.8

91.8

94.7

97.0

99.2

97.5

100

98.1

96.4

Rank

No. 1

No. 1

No. 2

No. 2

Invention awards
Number of invention awards received (cumulative) 223 (as of December 2019)
National Awards for Inventions 18
SpecialAwardsPresident’s Award of the Japan
Institute of Invention and Innovation
The Asahi Shimbun Award

Excellent Awards
Invention Awards

Regional Awards for Inventions 205
1
1

2
14

Encouragement Award of the Minister of Education, Culture, Sports, Science and Technology(Encouragement Award of the Director-General of the Science and Technology Agency)
Encouragement Award of the Commissioner of the Japan Patent OfficeSpecial Award of the Director-General of the Regional Bureaus of Economy, Trade and Industry (Award
Awards of the Director-General of the Regional Bureaus of International Trade and Industry)Encouragement Award of the President of the Japan Institute of Invention and Innovation
Encouragement Award of the President of the Japan Patent Attorneys Association
Awards of the President of the Ehime Institute of Invention and Innovation (District Head Award)
Outstanding Invention Awards, etc.
Invention Encouragement Awards
Invention Encouragement and Merit Award

10
6

Financial data

Solutions

Creating social and economic value

Patent allowance rate

9
7
4
16
37
115
1

Innovation

We work together with partners in each field andeach region in Japan and overseas to create newvalue such as development and provision ofgroundbreaking products and services and theiroffering in new markets.

Award of the Minister of Education, Culture, Sports, Science and Technology at the 2019 Shikoku Regional Invention Award
ISEKI’s “heat recycling control of grain drying machine” received the Award of the Minister of
Education, Culture, Sports, Science and Technology at the 2019 Shikoku Regional Invention
Award hosted by the Japan Institute of Invention and Innovation.
Originally, exhaust wind that dries the grains used to be released outside the dryer as it
contains a large amount of dust and moisture. Monitoring of the absolute moisture in theexhaust wind made it possible to recycle the wind for drying, enabling ISEKI to establish aheat recycling drying technology that realizes both improvement in energy efficiency (amaximum of 13% decline in kerosene consumption compared with its hot air dryer) and highspeed drying (a maximum drying speed of 1.2% per hour). The company has certified thisdryer series as a super eco-product, which reduces environmental burden.

Company information

Strength ❸ — Innovation based on collaboration

GML series drying machine adopting heat recycling control (type H)

21

ISEKI Report 2020

ISEKI Report 202022

[ Initiatives that support value creation ]ISEKI’s innovative technology in the 50-year history of rice transplanterIntellectual property strategies that support innovation

ISEKI has been supporting Japan’s post war food production increase and high economic growth by realizing
improved efficiency and laborsaving through mechanization of farming. In the current farming structure characterized
by declining farm hands and introduction of large-scale farming, we are contributing to significant laborsaving offarming and realization of highly profitable agriculture by leveraging our technology.
It has been 50 years since ISEKI developed a representative of rice transplanter Sanae. Here we introduce ISEKI’s
technology hidden in the history.

ISEKI strategically acquires rights for inventions and creations, which are intellectual outcomes of the activities tocreate core technologies of agricultural machinery and related products, and engages in business activities thatemphasizes on intellectual properties that lead to value creation.

Rice transplanter Sanae
Japan installed withstraight travel andturning assisting system
Operesta + TURN

(PRJ and PR series)

2017
Rice transplanter
installed with
automated straighttravel system Operesta

ISEKI’s smart rice transplanters installed with variable
fertilizing and straight-travel assisting functions areplaying active roles in agriculture in China and South
Korea, where large-scale farming is gaining ground andneeds for large-sized agricultural machinery are rising.

(NP series)

2016 evelopment of variable fertilizingDrice transplanterFirst in the industry!
Variable fertilizing ricetransplanter installedwith soil sensor (NP series)

This innovative rice transplanter measures soil
fertility and depth using two types of sensors
and automatically controls the amount of
fertilizer to be added to the soil where theseedlings are being planted. Addition of
optimum amount of fertilizer helps in reducing
lodging of rice plants and uniform growththus facilitating systematic harvesting. It also
realizes low-cost farming such as quality
stabilization and prevention of excessive
fertilizing.

2007
Rice transplanter installed with Z
Turn, turning assisting system

Advanced technologies

Patent Gazette
Cooperation withpatent offices ineach country
Company productinformation

Value creation of ISEKI Group

2020

Setting of innovation proposal themes

Analysis of promising technology, market trends, and needs

Clarification● R&D direction

Consensus

Products for large business● Identification of our coretechnologies

Integrated system of vegetable farming● Strategy towards othercompanies andsuperiority

Support for low-cost agriculture

Market needs
Global response

Initiatives that support value creation

Taking ISEKI’s technology to the world

Invention creation and patent strategy
ISEKI Group is driving forward invention
proposal activities based on invention
themes considering promisingtechnologies and market trends andneeds. We also bring together
engineers in charge of various products
and carry out invention creation activity
by systematically grasping agriculture
as a whole to improve the quality andquantity of inventions throughhorizontal deployment of technology.
We acquire rights to inventions withhigh effectiveness by reviewing the
proposed inventions taking into
account future social environment,
technology trends, and feasibility of thebusiness to protect ISEKI’s proprietary
technology and boost the superiorityof product development.

 esign/Trade mark strategy and Building of overseas network of intelDlectual properties
We accumulate attractive designs and easy-to-remember product marketing names as
design rights and trademark rights to differentiate our products from those of othercompanies, strengthening product design protection and improving our brand value.
We facilitate prevention of copying of our products in respective areas including
emerging countries by improving analytical accuracy of market trends/ status of intellectual
properties in respective country and by striving to acquire and accumulate effective rights.

Education on intellectual property and transfer of creation techniques
ISEKI Group proactively undertakes education on intellectual property and creativity so as
to invigorate creativity on a group-wide basis and demonstrate its technological capabilities to the fullest extent. ISEKI Group offers intellectual property training corresponding to
the years of experience of employees, including for new employees, to improve the level of
their knowledge. Particularly, we encourage handing down of expertise in innovation andcreation from experienced engineers to young engineers, thus promoting improvements increative ability of young engineers.

Financial data

ISEKI’s Innovation

ISEKI Group

Three strengths

Feature(PZ series)Mutual study within the Group evelopment of PA series installedDwith rotary-type planting equipment
1987
Rice transplanter installed withrotary-type transplanting rod(PA series)

1971

23

ISEKI Report 2020

Development of walking-type rice transplanter
equipped with backward-tilting seedling tanks
Sanae (PF20)

When the PA series installed with rotary-type
planting rod was being developed, ricetransplanters typically adopted a conventional
crank-type (one transplanting rod per row), which
limited the number of seedlings that can beplanted per rod to 350 seedlings per minute. ISEKI
developed the rotary system that uses twotransplanting rods per row, which meant 700
seedlings per minute, enabling significant
improvement in efficiency.

Holding of technology research presentations
With the objective of developing products that contribute to the changing market
environment in Japan and overseas, ISEKI holds “technology research presentations”
annually as an opportunity to share and discuss the outcomes of research anddevelopment and invention information. The event celebrated its 30th anniversary in 2020.
We conducted repeated discussions including the company’s executives with the aim ofraising the level of such matters on a group-wide basis. In addition, ISEKI Group invites
external experts to present lectures on relevant themes in the pursuit of technologicalstudies and knowledge improvement.

Company information

1999

37 seedlings sparse planting
rice transplanter (PA3 series)Intellectual Property Reports introduce details of ISEKI’s technology and intellectual properties.
Intellectual Property Reports can be found on our website.

https://www.iseki.co.jp/english/company/intellectual/

ISEKI Report 202024

[ Initiatives that support value creation ]To realize agriculture full of dream (i.e. profitable agriculture) for producers, it isimportant to carry out agricultural management in a comprehensive mannerfrom the aspect of agricultural machinery, which improves laborsaving andproductivity (hardware aspect) and from the aspect of production management
and advanced farm business technology (software aspect). With the Dream
Agricultural Research Institute as the base, ISEKI will strengthen farm businessproposals and support for producers and offer new value of agriculture.

Dream Agricultural Research Institute
In 2015, ISEKI established the Dream Agricultural Research Institute in
Tsukubamirai, Ibaraki Prefecture. It is engaged in research,demonstration, and promotion of smart agriculture that utilizes
advanced technologies and advanced farm business technologies bystrengthening collaboration with the government, municipalities,
research institutions, universities, private businesses, and Japan
Agricultural Cooperatives (JA). The institute also strongly promotes
development of the Group’s human resources, dissemination of
information, and farm business proposals.

Community-based farm business proposals and support
ISEKI has been distributing Group human resources who have acquired knowledge and technique at its sales companies throughout Japan
to offer community-based farm business proposals and support. ISEKI has been contributing to regional agriculture through communitybased research and demonstration, farm business proposals, and promotion activities from the perspective of customers’ agricultural
management in collaboration with the government, municipalities, research institutions, universities, private businesses, and JA.

 ollaboration for development of community-basedCfarming in hilly and mountainous areas
ISEKI and ISEKI Chushikoku Co., Ltd., in collaboration with Tottori
Prefecture, Tottori University, and private businesses, have been
implementing research and demonstration on utilization of smart
agricultural machinery in rice paddy cultivation management. The
project is aimed at improving work efficiency and quality in hilly andmountainous areas by utilizing smart fertilizing system, etc. using variable
fertilizing rice transplanters and high-clearance multipurpose vehicles.

Value creation of ISEKI GroupStrength ❷ — Support capabilities to offer farm business proposals

ISEKI Group

SolutionsThree strengths

Initiative to establish large-scale flower production system

ISEKI and ISEKI Tohoku Co., Ltd. in collaboration with Akita Prefecture,
JA, and private businesses are demonstrating large-scale outdoor
production system for small chrysanthemum. The project aims tobuild a mechanized system to expand the scale of flower farming by
utilizing auto-steering equipment and semi-automated transplanter inflower production system.

Demonstration of smart high-clearance multipurpose vehicles

Initiatives that support value creation

FeatureHolding seminars on how to handle agricultural machinery as part of the NOGYOJOSHI (female farmer) Projectof the Ministry of Agriculture, Forestry and Fisheries (MAFF).

Dream Agricultural Research Institute supports producers’ farm management through a wide variety of research, verification, andpromotion activities.

<Main initiatives>F ostering the dissemination of smart agricultureUtilization of rice paddies (conversion into soybean,barley or vegetable farming)
Support aimed for obtaining GAP certification
Proposing cultivation technologies to entrants fromother industries and new entrants

 upport for cultivating regions’ traditional crops
SSupport for restoring deserted farmland and regional
revitalization in collaboration with local governments, etc.
Working on a project to support female farmers in Japan(“YUMEARU NOGYOJOSHI OEN” project)

Strengthening support capabilities to offer farm business proposals

Development of professional human resources

Dream Agricultural Research Institute accepts tours from anumber of agriculture-related groups led by producers, andoffers proposals corresponding to the requirements of customers
and holds seminars at the exhibition hall and demonstration
field. We will provide farm management proposals and support
that only ISEKI can offer by leveraging the knowledge andexperiences we have accumulated over the years as an integrated
manufacturer specializing in agricultural machinery.

ISEKI offers proposals and support tailored to solving issues
faced by producers by increasing professional human resources
at its sales companies throughout Japan. The Group, in
fFY2019, upgraded the contents of its training programs byenhancing training on smart agricultural management so as torespond to the drastically changing agricultural environment.

Number of visitors for tour

About 40% of agricultural workers are women and they play
important roles in farming and community activities. To offer more
support to female farmers, ISEKI Group took part in the NOGYOJOSHI
Project by MAFF and has been holding seminars on how to operate
agricultural machinery as its project. It has also prepared the Simple
Manual of Agricultural Machinery and developed agricultural
machinery that is easy for everyone to operate.
Number of seminars on how to operate agricultural machinery (total)

30

Number of participants in ISEKI’s project (total)

630 or more

Comments from the participants

Seminars on how to operate agricultural machinery

Financial data

A wide variety of research, verification, and promotion activities“I was not very comfortable with the machines but I was able to overcome it. I want to utilize it in farm work.”“I had no one to whom I can ask how to use or maintain the machinery I usually use. I was able to learn how to use them effectively.”“It gave us local female farmers an opportunity to connect.”

About 11,000 in total (as of March 2020)

Farm business proposals and support overseas

Exhibition hallCompany information

ISEKI Group spreads farm business and cultivation technologies andknowhow that it has accumulated in Japan to promote synergies
with mechanization of agriculture and improve laborsaving andproductivity. In India, it teaches cultivation technologies to local
partner agents.

Smart agricultural machinery training
Cultivation technology training in India

25

ISEKI Report 2020

ISEKI Report 202026

[ Initiatives that support value creation ]To respond swiftly to the ever-changing business environment, ISEKI Group
improves technological capabilities and develops and offers innovative products
and services through industry-academia-government cooperation. The Group is not
too particular about self-sufficiency and collaborates with a wide range of partners.
In addition, the group is accelerating its global expansion by exploring new markets
through collaboration with prominent strategic partners in each region.

Collaboration with strategic partners
In the overseas business, ISEKI Group ensures the market-in approach and business expansion in each market through collaborations
with prominent strategic partners as well as existing networks in each region.
In an effort to develop products that reflect local characteristics, the Group carries out tests and test marketing with the partners andstrives to grasp the needs. In India, it began test marketing of riding rice transplanters and advancing the business in collaboration with
TAFE while enhancing the software aspect including training for raising seedlings. In addition, the Group utilizes the sales network of
AGCO and is carrying out test marketing also in new markets of Latin America and Asia.
We will introduce new products to expand overseas business and work on development of new markets.

Value creation of ISEKI GroupStrength ❸ — Innovation based on collaboration

ISEKI Group

Innovation

Three strengths

FeatureCollaboration with the national and local governments
ISEKI Group carries out demonstration experiments in actual fields utilizing smart technology in collaboration with the government andmunicipalities to develop and promote technologies for cost reduction and laborsaving.

TAFE

AGCO

TONGYANG MOOLSAN GROUP

Test marketing of rice transplanter in India

Test marketing in new markets of Latin America and Asia

Marketing of high-performance agricultural machinery in South Korea

 ollaboration with Tsukubamirai City on promotion of farmingCutilizing advanced technology

Initiatives that support value creation

In March 2020, ISEKI and ISEKI Kanto Koshinetsu Co., Ltd. signed the Partnership
Agreement Regarding Promotion of Agriculture Utilizing Advanced Technology
with Tsukubamirai City, Ibaraki Prefecture, and began practical application andverification of smart agriculture. The agreement is aimed at improvement of rice
crop production technology, cost reduction, and establishment of cultivation
methods for high quality farm produce ultimately to realize sustainable agriculture
by utilizing smart technologies such as paddy field sensors, sensing technology
using satellites, yield combine harvesters, and variable fertilizing rice transplanters.
Signing ceremony with Tsukubamirai City

Collaboration with private-sector companies

Joint development with research institutions and universities

ISEKI Group is creating new technologies in agriculture through open innovation combining innovative technologies possessed by eachcompany and ISEKI’s smart agricultural machinery. Combining ISEKI’s smart agricultural machine and information obtained using member
companies’ remote sensing technology (drones and satellites), we will realize laborsaving, cost reduction, and improvement in quality.

ISEKI Group engages in joint research and development of agricultural machinery with testing research institutions and universities
to accelerate and improve efficiency of technology development. It creates new value in agriculture and contributes to sustainable
development of agriculture through development of innovative agricultural machinery.

Collaboration for realization of farming utilizing data
ISEKI and ISEKI Kanto Koshinetsu Co., Ltd. are participating in the Smart
Agriculture Inter-business Cooperation Demonstration Consortium and carryingout demonstration for establishing smart agricultural system based on central
management of farming data. The consortium started as the Smart Agriculture
Inter-business Cooperation Demonstration Project by Niigata City in May 2018
and was adopted by the Project for Accelerating Installation of Smart Agriculture
by MAFF from FY2019.
Start of the Smart Agriculture Inter-business Cooperation
Demonstration Project by Niigata City

ISEKI’s smart agricultural machinery is combined with advanced technologies of private businesses including startup companies to form
an integrated system for smart agriculture in rice paddy cultivation machinery. The work information of ISEKI products is linked to farmbusiness management tool agri-note through Agri Support, which can be used free of cost, allowing to reduce troublesome data entry
work and visualize management cost. Since FY2019, ISEKI began offering cloud-based low-priced water management system “farmo”
and is pursuing smart agriculture further through reduction and visualization of work hours.

Testing research institutions

20 themes

Universities

3 themes

Financial data

Collaboration for building integrated system of smart agriculture

Joint research projects in FY2019

Product resulting from joint development
Plant growth diagnosis device
A plant growth diagnosis device jointly researched and developedby ISEKI and Ehime University. The CCD (charge coupled device)
camera installed in the body measures and digitize (visualize) thephotosynthesis function of the plant without contact. Utilization

Work

Tilling rice paddies
Soil puddling, fertilizing
Rice transplanting

May

June

AugustWater management, topdressing, weeding, pest control

September

October

Reaping, drying/hullingof data enables laborsaving in verification process, while the quick
response to changes in cultivation environment and growth enables
early detection and prevention of crop damage due to disease,P

Smart agriculture ISEKI smart agricultural machinery
P

Farm business management tools

July

Company information

April

Drone leaf color assessment service IROHA,
UP-a-ray, visualization of growth status using satellites

Water level/temperature sensor Paddy Watch,
MIMAWARI-KUN, automatic multifunction watering machine

ISEKI smart agricultural machinery

resulting in stable production of the crop.

Remote water level/

P watering management

Suiden farmo

ISEKI Agri Support, P agri-note* P : collaboration with private-sector companies

27

ISEKI Report 2020

ISEKI Report 202028

Initiatives that support value creation

GovernanceFundamental concept

Representative Director,
Chairman & Executive Officer

Nomination andcompensation of Directors

FY2018FY2019Establishment of the Nomination Advisory Committee

Improvement ofeffectiveness of theBoard of Directors

Establishment ofinternal control system

FY2017

1 out of 10

Management Supervisory Committee, audit by Internal Control & Audit Department
Appointment of an officer dedicated to integrated management of internal control and complianceTraining sessions for officers and executives
The Board of Directors meetings utilizing paperless meeting system

Other initiatives

Appointment/
Dismissal

ISEKI Report 2020

Value creation of ISEKI Group

Appointment/
Dismissal

Board of Auditors

Board ofDirectors

Audit

Corporate Auditors

Directors
11 directors(Incl. 2 outside directors)
5 corporate auditors

5 auditors(incl. 4 outside auditors)

Audit
Advice/Reporting

Nomination Advisory Committee
5 members(2 representative directors,
2 outside directors,
1 outside auditor)

Appointment/
Dismissal/Monitor

Independent Public
Accounting firm

Audit

Audit

President
Directors’ Operation Committee(Directors & appointed
Corporate Officers,
General Managers)

Management Supervisory Committee

Internal Control &Audit Department

Corporate Officers
Internal Audit

Associated companies, divisions & sections

Prior briefings on the Board of Directors meeting agenda for Outside Directors
Review of criteria for submitting proposals to
the Board of Directors meeting

29

Initiatives that support value creation

General shareholders’ meeting
Appointment/
Dismissal

Reorganization into the Nomination
and Compensation Committee

2 out of 11

We hold the Management Supervisory Committee once amonth with the chairman of the Board of Directors as the head,
all the directors as members and all the auditors as observers tocheck if compliance is penetrated thoroughly into the Group, as
well as to check the measures and their status to establish andmaintain internal control system.

Corporate governance system

FY2020

Implementation of effectiveness evaluation (by an external organization)

Management Supervisory Committee

Board of Directors/ Directors’ Operation Committee
Meetings are held once or more per month to make decisions
on basic matters in relation to management as well as mattersset forth in laws, regulations and the articles of association.
Regarding the business execution, the corporate officers fulfill
their duties smoothly as the persons responsible for the various
operations. In addition, to manage businesses in a soundmanner, Directors’ Operation Committee meetings are held atleast twice a month in order to share the latest information anddiscuss and report on how the business should be operated,the existence of risks, and how to prevent and avoid them.

(Business execution system)

FY2016

Corporate Auditors attend key meetings such as the Board of
Directors, Management Supervisory Committee, and Directors’
Operation Committee meetings. They independently formulate
audit policy and audit the operations and assets of our offices
and subsidiaries in cooperation with the Internal Audit
Department and accounting auditors. Moreover, they strictly
check the important agenda at the Directors’ Operation
Committee meetings and the status of operation execution by
Directors to monitor management status and ensure theeffectiveness of our corporate governance.

Organizational format
Company with a Board of Auditors
Number of Directors
11
Chairperson of the Board of Directors
Chairman
Number of Outside Directors
2
Term of office of Directors
1 yearNumber of Corporate Auditors
5
Number of Outside Corporate Auditors
4
Number of Independent Directors and Auditors
3

Transition in measures to strengthen governance
FY2015

Board of Auditors

Governance system: Key points (as of March 31, 2020)

Financial data

Akio Kikuchi

value over the medium and long term. To further improvestandards of corporate governance, we have launched various
initiatives based on our Corporate Governance Code compiledin 2015.
One such exemplary initiative is the appointment of Outside
Directors. This measure was taken to further deepen the“visualization” of management from an external perspective. In
2016, we decided to switch to a system with two Outside
Directors, who bring an objective perspective to management
through their participation and are tasked with strengthening
the management supervisory functions and ensuringtransparency.
Another example is the implementation of the evaluation of
the effectiveness of the Board of Directors to further improve
its functions. ISEKI has been carrying it out since 2017 by
appointing a third-party organization for evaluation. The
company takes into account the result of the effectivenessevaluation while carrying out various measures to address theissues shared by the Board of Directors. We will continue to
implement the PDCA cycle so as to further improve thefunctions of the board.
Still another is ensuring greater transparency in the processof selection of candidates for Directors. In 2018, we establisheda Nomination Advisory Committee, chiefly comprising
Independent Outside Directors. As a consultative body to theBoard of Directors, it discusses Directors’ appointment anddismissal proposals that go before the general shareholders’meeting. Other core tasks include the discussion of
appointment and dismissal of Representative Directors andreporting the results to the Board of Directors. The Ordinary
General Meeting of Shareholders and the subsequent Board of
Directors meeting in March 2020 passed a resolution regarding
the appointment of new Directors and Representative Directors
through this process. The committee was reorganized into theNomination and Compensation Committee in March 2020 toinclude a function to deliberate and report on Directors’
remuneration.
Going forward, we plan to take further steps to develop our
corporate governance system to ensure sustainable growth,
including the consolidation and improvement of a system ofinternal controls.

Company information

As an integrated manufacturer specializing in agricultural
machinery, ISEKI Group has contributed to the modernizationof farming in Japan for more than 90 years since its founding.
Looking ahead, the group considers it as its social mission tocontribute to agriculture in Japan and overseas. As a company
with a high level of lasting public trust, we need to continue
our sustainable and sound growth to realize this mission.
Having designated establishment of internal group controls
as a priority management policy, the company has compiled abasic internal control policy and is establishing an internal
control system, with modifications made as and whennecessary. Under the leadership of the officer in charge, we
ensure continuous training centered on a cross-organizational
compliance team, while remaining committed to preventing
misconduct and scandals from occurring by promoting
awareness of compliance among our employees.
At the same time, we believe it is important to maintain
good relations with stakeholders including shareholders,customers, suppliers, local communities and employees, torespond to severe change in the recent business environment
and ensure sustainable growth and improvement in corporate

The main purpose of our management system is to respond swiftly and accurately to changes in the management
environment and to maintain fair management. In addition, achieving stable growth and improvement in corporate
value over the medium and long term is our top priority of management. To maintain positive relations with our
stakeholders, including shareholders, customers, suppliers, local communities, and employees, we are endeavoring to
expand and improve our corporate governance. We acknowledge the importance of establishing an internal control
system that provides stakeholders with important information in a timely and appropriate manner and of reinforcing
corporate governance on a group-wide basis. Based on that recognition, we plan to establish administrative rules forgroup companies and a reporting structure to maintain fair business practices and share information.

(Cooperation)

Governance for sustainable and sound growth

Number of Outside
Directors

ISEKI Group

Corporate governance

Review of criteria for submitting proposals to
the Board of Directors meeting

ISEKI Report 202030

List of officers

Appointment and dismissal of Directors and Corporate Auditors

 stablishment of Nomination and Compensation
E
Committee
ISEKI has established the Nomination and Compensation
Committee comprised mainly of Independent Outside Directors
as a consultative body of the Board of Directors regarding
nominations such as proposal of a general shareholders’meeting agenda item regarding appointment and dismissal of
Directors, selection and removal of Representative Directors,
and compensation of Directors. In 2019, the committee held
five meetings, discussed matters such as appointment anddismissal criteria of Directors, selection and removal criteria ofRepresentative Directors, Independence Judgment Criteria for
Outside Directors and Outside Corporate Auditors, nominationof Director candidates, and selection of Representative
Directors, and presented reports on them to the Board of
Directors.

31

ISEKI Report 2020

(As of the end of the general shareholders’ meeting held on March 27, 2020)

Directors

Nomination and Compensation Committee
Established

December 1, 2018

Members

Two Representative Directors, two Independent Outside
Directors, one Independent Outside Corporate Auditor

Chairperson

Independent Outside Director

Roles(1) Appointment and dismissal of Directors (generalshareholders’ meeting proposal)(2) Selection and removal of Representative Directors(3) Representative Director successor plan(4) Amount of compensation for Directors

Akio Kikuchi

Shirou Tomiyasu

Representative Director,
Chairman & Executive Officer

Representative Director,
President & Executive Officer

Value creation of ISEKI Group(the Nomination Advisory Committee was reorganized into the Nomination
and Compensation Committee as of March 25, 2020)

In charge of Corporate Planning Department,
Investor Relations Section, Financial Department(5) Composition and decision process of Directors’compensation(6) Establishment and change of basic policy and criteria
for deliberation of the above.

Initiatives that support value creation(7) Other matters recognized by the Board of Directors asnecessary in association with each of the above items.

Evaluation of the effectiveness of the Board of Directors
To further facilitate the roles of the Board of Directors, thecompany launched a self-appraisal and analysis programfor individual senior officers in 2017. The evaluation was
done through a third-party organization using methods
for canvassing personalized opinions, such as individualquestionnaires and individual interviews for all Directors andCorporate Auditors.
Number of the Board of
Directors meetings held

Attendance

18

Internal Directors: Time of the Board of Directors
meetings

Outside Directors: Shinji Arata

Takafumi Kanayama

Yukio Nawata

Masayuki Fukami

Hajime Odagiri

Director & Managing
Corporate Officer

Director & Managing
Corporate Officer

Director & Managing
Corporate Officer

Director & Managing
Corporate Officer
In charge of Personnel Department, deputy
in charge of Corporate Planning Department,
Investor Relations Section, and ComplianceDirector & Managing
Corporate Officer

In charge of Internal Control & Audit
Department and Compliance

General Division Manager, Business Division,
In charge of Business Division, Dream Agricultural
Research Institute, and Tsukubamirai Office

Shuichi Jinno

Kazuya Tani

Atsushi Iwasaki

Shoji Tanaka

Director & Corporate
Officer

Director & Corporate
Officer

Outside Independent

Outside Independent

In charge of IT Planning
Department, deputy in charge ofFinancial Department

General Division Manager,
Overseas Business Division

Director

Director[Significant concurrent positions]Certified public accountant,
Outside Director, NH Foods Ltd.,and Outside Director, OLYMPUS
CORPORATION[Significant concurrent positions]
Attorney

Deputy Division Manager, Business
Division (in charge of systems).
In charge of General Affairs Department
and General Affairs Departments atregional offices

General Division Manager, Development & Production Division
In charge of Global Strategic Products Project Management
Department and Purchasing Department, deputy in charge of
Matsuyama General Affairs Department

99.3%
100%

2 hours 22 minutes on average
Members and operation of Board of Directors meetings
Support system for Directors and Corporate Auditors
Training
Dialogue with shareholders
Own efforts

Evaluation results
As a result of evaluation, we were able to confirm the overall
effectiveness of the Board of Directors.
<Items with high score>
Incorporating Outside Directors’ opinions and supervising
function
Appropriate supervision of Director candidates throughthe Nomination and Compensation Committee<Issues>
Devising ways to have more strategic discussions at Boardof Directors meetings
Improving objectivity and transparency of Directors’compensation system and process

Financial data

Main content of the questionnaire survey

Corporate Auditors

Seigo Kimoto

Yoshiki Kawano

Masato Machida

Yasuhide Motokawa

OutsideOutsideOutsideOutside Independent

Full-time Corporate
AuditorFull-time Corporate
AuditorFull-time Corporate
AuditorFull-time Corporate
AuditorCorporate Auditor

Company information

Policies and procedures
Directors’ appointment and dismissal proposals and selection
and removal of Representative Directors are resolved by the
Board of Directors meeting based on the report from theNomination and Compensation Committee in accordance withthe criteria below.
① Criteria for appointment of Directors
Has appropriate personalities as Director
Has outstanding leadership
Has abundant capability, knowledge, and experience inthe specialized fieldAppointment is considered in a comprehensive manner
taking into account the company’s situation andgovernance structure at that time.
② Criteria for selection of Representative Directors
Fulfills the appointment criteria for Directors
Has a company-wide perspective as well as abundantcapability, knowledge, and experience in corporate
management
Experience in the overseas business is considered
Appointment is considered in a comprehensive manner
taking into account the company’s situation andgovernance structure at that time.
③ Criteria for dismissal of Directors and those for removalof Representative Directors
Upon committing an act that violates laws, regulations,and the Articles of Incorporation
When acknowledged that it is difficult to perform duties
due to deteriorating health
When acknowledged to have significantly damaged ISEKI’s
corporate value
When acknowledged to have lost the capabilities andquality stipulated by the appointment or selection criteria
For the nomination of candidates for Corporate Auditors, weundertake an overall review in terms of their knowledge andexperience in finance, accounting, and their specialized fields aswell as whether or not they have an understanding of the fullrange of the company’s business and it is resolved by the Boardof Directors meeting.
In cases where it is deemed necessary to dismiss a Corporate
Auditor for having inflicted significant damage to corporate
value, submission of a proposal to dismiss the Corporate
Auditor to the general shareholders’ meeting is resolved by the
Board of Directors.
Nomination of candidates for Outside Directors and Outside
Corporate Auditors is subject to comprehensive review in termsof conditions of independence laid down in the Companies
Act and whether or not the candidate is able to strengthen
the monitoring function of the management team throughhis or her wealth of knowledge and experience in his or her
specialized field.
To nominate a person as an Independent Director or Auditor,
he or she must satisfy ISEKI’s Independence Judgment Criteria
for Outside Directors and Outside Corporate Auditors as wellas meet the independence criteria set forth by the Tokyo Stock
Exchange. Upon appointment, emphasis is given on highdegree of specialization and ample experience that would
enable the person to provide appropriate advices on andsupervise ISEKI’s business management.

ISEKI Group

Initiatives that support value creation

Mami Taira[Significant concurrent positions]Certified public accountant,Certified tax accountant, andOutside Director & Audit andSupervisory Committee Member,
Suzuden Corporation
ISEKI Report 2020

32

Risk management

ComplianceFundamental concept

Fundamental concept

ISEKI Group is committed to putting in place management standards, regulations and monitoring and response
mechanisms to pre-empt risk facing group operations and to minimize losses when a risk event materializes. The
Group risk management regulations define factors potentially leading to physical, economic and reputational losses
and disadvantages as risks. The aim of the Group’s risk management is to prevent risk from materializing andminimize losses when it does so as to ensure smooth business operations, soundness of assets and maintenance ofcorporate credit.

In order to raise compliance-focused management to a higher level, ISEKI Group works to make the importance ofcompliance thoroughly understood and enforced by each and every employee with the aim of raising complianceawareness.

Risk management system

To prevent misconduct and scandals from occurring bypromoting the penetration of knowledge and the awarenessof compliance among each of the Group members, thecompliance team established as an intragroup organization
promotes compliance initiatives under the leadership of the
Director in charge of compliance.
The Personnel Department handles overall managementof compliance activities across the whole ISEKI Group, andSystem for promoting compliance (Compliance team)

Risks that could affect ISEKI Group’s business

ComplianceDirector in charge anddeputy director in charge

Latent risks and uncertainties which could affect ISEKI Group’s future financial performance are exemplified as below. We recognize thepossibility of the occurrence of such risks and uncertainties, and will strive to avoid their occurrence and take proper measures should
they occur.

As ISEKI Group procures raw materials and parts from numerous
suppliers, situations such as sudden unexpected increase in prices
or a prolonged tightening of supplies may harm its businessperformance.
In addition, a fall in production activities due to disruptions in the
supply chain may adversely impact the Group’s business performanceand financial position.
❹ Dependency on specific customers or suppliers
Any change of business policy, business depression or bankruptcyof the Group’s specific customers or suppliers may harm its financial
performance.
❺ Competition with other companies
ISEKI Group is involved in fierce competition with other companies
in the market, and unless overall product competitiveness, including
relevant services, is maintained, there is the possibility of a decline inits performance.
❻ Serous defects in products and services
Occurrence of serious defects in the ISEKI Group’s products orservices may harm its financial performance.
❼ Stock market fluctuation
As ISEKI Group holds securities, stock price declines may adversely
impact its business performance and financial position.
❽ Government regulations on environmental issues, etc.,

and occurrence of related difficulties

Substantial costs may be incurred related to our products or businessactivities due to necessitated responses to public regulation ofenvironmental issues, etc., corrective measures undertaken upon theoccurrence of troubles, lawsuits and other situations which could
lead to a deterioration of its financial performance.
❾ Risks derived from international business
As ISEKI Group promotes overseas business development,
unexpected changes in tax and legal systems, trade policies, or
political unrest in any particular country may harm its financial
performance when it engages in international business activities.
The Group is focusing on expanding its business in the Asian
region, but the difficulties in securing human resources, immaturelevel of technologies and unstable labor-management relationships
in the region may primarily hinder its business development.

33

ISEKI Report 2020

infectious disease, etc.

Natural disasters such as earthquakes, typhoons, floods or
unexpected accidents may occur, which may harm ISEKI Group’s
financial performance.
In addition, a fall in production due to constraints on businessactivities accompanying the spread of infectious disease or
disruptions in the supply chain may adversely impact the Group’sbusiness performance.

Secretariat(Personnel Department)

Business Division
Sales Planning &Administrative Department

Business Division
Agri-plant
Department

Sales companies

Development &Production Division
Administrative Department

Overseas Business DivisionCorporate BusinessControl Department

Manufacturing bases

Overseas offices,
sales companies⓬ Business alliances, joint ventures and strategic investment

Other
Personnel Department andother departmentswith other companies

ISEKI Group forms business alliances and joint ventures and carries
our strategic investment with other companies as necessary. It
believes that these measures are an effective means for the effective
utilization of the management resources of both parties and for thetimely development, production and sales of products.
However, should a conflict of interest occur between the parties
concerned in business alliances or joint ventures due to financial
position or other reasons, the Group would not be able to maintainthe alliances. With regard to strategic investment including
acquisitions, the expected results and / or effects may not be
obtained in the integration of business, technologies, products andhuman resources, or more-than-expected time and expenses may berequired. Accordingly, the success or failure of these measures may
materially impact ISEKI Group’s business and may adversely impact
its business performance and financial position.
⓭ Debt
ISEKI has outstanding syndicated loan and commitment line contracts
with financial institutions. Should any of covenants of these contracts
be triggered, the Group could face obligation to pay back some or
all of these loans early, which could adversely impact the financial
position of ISEKI Group.
There is a possibility that a hike in interest rate may harm its
financial performance.
The forecasts of future results and target figures produced by
ISEKI & CO., LTD. are based on information available as of the time of
publication of this report, and assumptions made as of the same day
regarding a number of latent risks and uncertainties that could affectfuture financial performance. Actual results may differ considerably
depending on economic conditions, market trends, and future
conditions for business operations hereafter.

Financial dataand confusion in the supply chain❿ Risk of legal violation
ISEKI Group is making group-wide efforts to ensure legal complianceand code of conduct and ethics by establishing the ISEKI Group Codeof Ethical Behavior that is based on legal compliance and ethics andpreparing an internal control system. In spite of such efforts, if any of
its executives or employees should conduct any acts that violate laws
and regulations, the business activities of the Group may be impeded
and the business performance may deteriorate.
⓫ Risk of natural disasters, unexpected accidents, spread ofInternal Control &Audit Department

Activity content
To carry out compliance-related training and educational activities systematically<Activities for penetration and education on compliance>• Distribution of the pamphlet “ISEKI Group Code of
Ethical Behavior”
The company has distributed the “ISEKI Group Code of EthicalBehavior” to all employees of the Group and works to ensure athorough understanding of this pamphlet, so as to ensure thatbusiness activities meet corporate ethical requirements.
• Issuance of “Compliance News”
As a means to provide information regarding compliance, thecompany issues the quarterly “Compliance News” bulletin toraise compliance awareness among employees. With a focus onpriority compliance initiatives, it contains information such as
messages from the management team and examples ofpractical measures undertaken by employees.

<Training activities>
The company carries out a wide range of education and training
programs concerning compliance themes in the day-to-day
conduct of business affairs, especially on points warranting
special attention.
• Incorporation into company-wide events andeducational training programs• Sales subsidiary president meetings• manager meetings• executive training• newly-appointed manager training• newly-hired employee training

Company information❶ Changes in economic conditions and the environment of agriculture
Sluggishness of domestic and / or overseas economic conditions
and any change in the agricultural policy may harm our financial
performance through reduced demand for agricultural machinery.
❷ Exchange rate fluctuations
There is a possibility that fluctuation of foreign exchange may
adversely impact our financial performance.
❸ A price hike of raw materials, difficulty in procurement,

organizes companywide events, training sessions based on the
educational system, and awareness activities. Managementof compliance training and awareness activities at individual
departments of group companies is carried out by thesupervising unit of the departments.
The internal control & audit department conducts compliancestatus checks and works to raise employees’ complianceawareness.

Value creation of ISEKI Group

Identification of risks,
evaluation of
responses to risks

System for promoting compliance

Initiatives that support value creation

Information sharing,
discussion ofcountermeasures

Divisions & sections

Secretariat (Corporate Planning Department)

ReportRisk Management Control Committee

Supervision

Directors’ Operation
Committee

Board of Directors

The Risk Management Control Committee under the Directors’
Operation Committee periodically identifies and evaluates risks
in accordance with the risk management regulations to minimize
the risk of causing damage or disadvantage to ISEKI Group under
the supervision of Corporate Planning Department. It re-evaluates
the extent of possible damage and frequency of occurrence of
the identified risks in individual business processes, and discusses
countermeasures, whose contents are then reported to the Board of
Directors.

Risk management system diagram

ISEKI Group

Initiatives that support value creation• Individual training programs• Sales subsidiary employee meetings of sales departments• facility personnel training of facility departments• specialized employee training of development departments

ISEKI Report 2020

34

Initiatives that support value creation

Promotion of sustainability
ISEKI Group

Society

Fundamental concept

ISEKI Group is implementing various group-wide initiatives to ensure compliance.
Legal compliance training
Legal training is held for departments and employees in charge at Development & Production Division using video conference
system. In September 2019, we held compliance training on explanation of non-disclosure agreement. After the training, theattendees went back to their respective departments and shared the information they gained in an effort to improve awarenessof employees.

Compliance training and initiative for penetration
ISEKI Group holds compliance training twice a year for employees of the sales companies. Also, it has developed an environment
where employees can view the compliance education materials on the intranet to raise compliance awareness of individual
employees.

Channels for reporting
ChannelMethod ofconsultation

Personnel
Department
channelPersonnel Department

Telephone, e-mail,regular mailExternal
channel(External)
Law office of thecompany’s consultant
lawyerRegular mail(cases)

ISEKI Group promotes sustainability activities with the Corporate Social Responsibility Committee put in placefor discussing CSR-related matters. The committee is chaired by the director in charge of the Corporate Planning
Department, which promotes CSR activities, and is comprised of the members of the Directors’ Operation Committee
for deliberation and the department heads of CSR-promotion departments for promotion, and the committee meets
twice a year.
The Corporate Social Responsibility Committee deliberates matters including the vision and strategy regarding
sustainable management, review of priority issues addressed by ISEKI Group, and initiatives to promote CSR andmanages the progress of these matters, while practicing management activities based on the PDCA cycle. Upon
deliberation, the committee submits important matters to the Directors’ Operation Committee and the Board of
Directors for their decision. Departments in charge manage implementation and progress of CSR activities, reportthem to the management at relevant meetings, and evaluate them.

Initiatives that support value creation

17

Major related meeting bodies

8

7

8

5

2015

2016

Corporate Social
Responsibility
Committee
2017

2018

2019

Initiatives for fair trade
In facility construction, ISEKI works to prevent the recurrence ofany event that would result in a cease and desist order underthe Anti-Monopoly Act by steadily implementing measures thathave been formulated in response to the receipt of such orders
in the past.

Initiatives for protecting personal information
The Personal Information Handling Regulations is formulated
and internal systems concerning the management of personal
information are maintained. ISEKI Group works to appropriately
protect personal information by carrying out activities for evenfurther awareness and education on such protection for
employees.

Activities in general

Public Relations Liaison Committee

Customers (products)

Product Planning Committee
Advanced Technology Strategic Committee
Quality Improvement Committee

Employees

Human Resources Committee

Environment

Environmental Planning Group Meeting

ComplianceManagement Supervisory Committee

To spread sustainability
Case 1.
ISEKI held SDGs study sessions for the employees todeepen their understanding of how the businesses of
ISEKI Group and SDGs are connected. The participantslearned about the situations around the world and social
issues through SDG-themed games and reviews andengaged in group work on how ISEKI Group cancontribute to improve the situation.

Case 2.
ISEKI has been offering its employees educational
opportunities to learn about CSR of ISEKI Group and sharing
the importance of CSR and the concept of solving social
issues in approaches unique to ISEKI through businessactivities. An education program was held at a purchasing
department for its members with focus on the importance of
supply chain management.

Company information

Staff workplace

Consultation and reporting to a line manager
within specific staff hierarchies

Number of whistle-blowing cases

System for promoting sustainability

Financial data

Establishment of whistle-blower system (Ethical Hotline)
ISEKI Group has set up a group-wide whistle-blower system(Ethical Hotline) for the use of all employees, retirees andsuppliers. The aim is to establish an open corporate culture andenable pre-emptive detection of problems within the company.
In the system, telephones, e-mail, and other communication
methods may be used in the event of detection of conduct inviolation of laws and regulations, the company Code of EthicalBehavior or the company regulations on employment, or otherrules. To protect the human rights of whistle-blowers and keepthem anonymous, the system makes available three convenientchannels of communication: the staff workplace organization,
the Personnel Department and an external channel involving an
outside law office.
In FY2019, the system handled eight cases of consultation
and whistle-blower reports.

ISEKI Group believes that, in order to achieve sustained growth and improve corporate value over the medium to longterm, solving social issues through business activities unique to ISEKI and making its presence felt would result indevelopment of the relationships of trust with its stakeholders and lead to mitigation and prevention of risks.
The Group identifies and promotes priority issues so as to respond to requests and expectations of the society andfulfill its corporate social responsibility (CSR) to contribute to development of sustainable society (see p. 9 for detailsof the priority issues).

Value creation of ISEKI Group

Concrete initiatives

35

ISEKI Report 2020

ISEKI Report 2020

36

Initiatives that support value creation

ISEKI Group

Human resource development and utilization
Diversity –utilization of diverse human resources

Human resource development at ISEKI Group

trainings based on their skills and occupation, foreign
language courses, trade skill tests, correspondence
courses, and opportunities to study abroad. It has also
introduced the Meister system for smoothly passing on
accumulated skills and experiences.

ISEKI Group offers a wide variety of training programs
ranging from the Agri-Heroes Support Project Training
to strengthen farm business proposals for customers
and the Team TJ Training specially designed for
proposals utilizing large-sized tractors. It also offers

ISEKI Group works on promotion of active participation by womenas part of utilization of diverse human resources. In the action planfor development of workplace environment that facilitates greater
participation by women, ISEKI aims to achieve the ratio of womenamong the hires to 20% or more. In addition, the Group continues
its efforts toward increasing the ratio of female employees in the
superintendent class, who are manager candidates.

Action plan (target for 2022)
Achieve 20% or more in the ratio of newly hired
female employees and actively recruit women withengineering background.
Achieve 15% or more in the ratio of female
employees in the superintendent class, who aremanager candidates, to raise the ratio of women in
management.

Ratio of newly hired female employees
Ratio of newly hired female employees
Target (20%)

Ratio of female employees by rank
38%

Initiatives for developing global human resources undertaken at enhanced and specialized training facilities —three pillars for human resource development—

ISEKI Group has put in place a system for developing
human resources specialized in the three fields ofdevelopment, production, and sales and services. IETC
nurtures young designers in the development field,
ITTC develops human resources for production sites inJapan and abroad, and IGTC trains employees in sales
and services in Japan and abroad. ISEKI holds contests
for the employees to compete on their skills to improve

Development

Sales and services

Target:15% ormore

24%

their levels throughout the Group. It focuses on
strengthening of human resource development torealize manufacturing that is trusted by customers aswell as provision of innovative products and services.
ISEKI is also actively conducting training for employees
working outside Japan and leveraging manufacturing
skills accumulated in Japan in other countries.

Production

21%

ITTC

IGTC

ISEKI Basic Engineering
Training Center

ISEKI TechnicalTraining Center

ISEKI Global
Training Center

Nurturing leaders of production

Nurturing sales and services

sites in Japan and overseas

representatives in Japan and overseas

Nurturing young designers

13%

16%

8%

2%

2015

2016

2017

2018

Managers

2019

voice
Kanako Kamota
Tractor Technology Department,
ISEKI & CO., LTD.

Employment of people with disabilities

Rate of employees with disabilities
Statutory employment rate

Number of trainees:
819 in 2019

Main training contents

Main training contents

Main training contents

Young engineer
development training
Training on integrated
system of ricecultivation
Training on laws andregulations

37

ISEKI Report 2020

Manufacturing leader
development course
New employee training
courseTrade skill test andqualification acquisition
preparatory courses
Special education

Product fundamental
Product technology
training
Professional mechanic
training
Sales training
Training for acquiring
qualifications

Employment of foreign nationals
ISEKI Group works on continuous employment of foreign
nationals, which is indispensable for its global business expansion.
Employees from various nationalities are working in a wide rangeof fields including development, production, and sales.

Employment of senior citizens

Rate of employees with disabilities

Number of trainees:
164 in 2019

Superintendent
AssistantJunior to seniorclass
superintendentclass

I am in charge of engine auxiliary and exterior design of economy tractors forNorth America and Europe. I am engaged in a wide range of operations such as
negotiations and adjustment with business partners and factories outside Japan
as well as drawing, assembly and test of prototypes, and I find it rewarding. I had
taken maternity leave and am currently working full time. While my work volume
is adjusted because I have a child who is yet to start school, my responsibility
regarding the operations I can handle has not changed from earlier.
To increase participation by women, I believe that it becomes even more
important to have a support system and workplace environment that takes thesituation of each employee, both men and women, into account.

Irrespective of having or not having disabilities, ISEKI aims tocreate a workplace where different kinds of people can fulfill theirpotential. The ratio of employees with disabilities in FY2019 was
lower than the statutory employment rate. We are determined towork towards creation of job opportunities for them.

Number of trainees:
566 in 2019

27%
23%

20%

Successful female employee

IETC

Value creation of ISEKI Group

Human resource development

Initiatives for promotion of active participation by womenInitiatives that support value creation

ISEKI Group promotes diversity as one of its management strategies by employing diverse human resources. It
supports career development of employees through proper treatment of highly motivated employees with various
abilities and offering them opportunities to play active roles to secure outstanding talents. ISEKI Group respects basic
human rights and shall not discriminate on the ground of nationality, race, belief, gender, or disabilities.

Financial data

Fundamental concept

2.19%

2.2%

2.2%

2.0%

2.10%

2.12%

ISEKI actively promotes participation by senior citizens. It has
introduced a reemployment system for all employees as a rule
who wish to continue working after their retirement age of 60 till
65 years old in anticipation that it would enable handing over of
their experiences, skills, and knowledge.

2.08%
2.0%
2.0%
1.92%

2015

2016

2017

2018

2019

 rohibition of discriminatory treatment andP
respect for human rights

Company information

Society

ISEKI Group Code of Ethical Behavior stipulates that its employees
are required to “respect basic human rights and not engage in any
act of discrimination or harassment on the grounds of nationality,
race, creed, gender and disabilities,” and the Group distributes thecode to all employees.
It has established the Harassment Prevention Regulations
and conducts power harassment training to ensure prohibitionof harassment including sexual harassment and maternity
harassment.

ISEKI Report 202038

Quality

Initiatives that support value creation

Fundamental concept

Fundamental concept

One of the principles set forth in the Company Motto of ISEKI Group is to provide “a stable workplace to theemployees,” and one of the basic rules of ISEKI Group is to “aim for creating a healthy and safe working environment
where employees can feel that their work is rewarding.” The Group also positions the provision of a secure and safe
working environment to employees as one of priority issues.

ISEKI Group works to provide consistent product quality assurance from product planning to sales and after-sales
service while reflecting the opinions from the market in product development and improvement so as to offer
products developed from the customers’ perspective in a timely manner. Further, the basic rule of ISEKI Group is totake all possible measures for quality control and make prompt responses in good faith should any quality related
issues arise.

Utilization of paid leaves
Along with promoting improvement in operation efficiency,
ISEKI Group is encouraging employees to utilize annual paid
leave. The level of utilization is not yet high, but the number ofdays of such leaves taken by the employees has been on an
increasing trend in recent years.
Number of annual paid leave days per employee(average for union members) Non-consolidated

12.2 days
10.7 days
9.6 days

FY2017

Ryo Kazahaya
Europe Sales & Marketing Department,
Overseas Business Division, ISEKI & CO., LTD.

I am primarily engaged in sales
management, product shipment, andamendment of contracts of European
agents at the Overseas Business Division.
When my child was born, I took a total of seven months in childcare
leave – one and a half months and five and a half months for a
total of seven months. I was worried about certain things such as
its impact on operation and work environment after returning towork, but my superior and colleagues shared my assignments andsupported me and I was able to take the leave comfortably.
In actual child rearing, I not only experienced the difficulties andtroubles but also witnessed how my child grew by the day andconversations with my family increased. I also began studying
bookkeeping and accounting using the time during the leave, and I
would like to work on new assignments in addition to my current
operations. I would like to enhance my work-life balance even afterI return to work by utilizing flextime and other systems andcooperating with my wife.

ISEKI Group carries out consistent quality assurance activities
across the Group by reviewing the design in every step fromproduct planning and development design to manufacturing,sales, and services with the aim of providing products that
respond to the trust placed by the customers. In productdevelopment, ISEKI Group grasps the requirement details basedon customer opinions and utilizes that in “planning quality”
and elaborates on functions in “design quality,” ultimatelyreflecting that in “product quality.” In each step, the Group
carries out evaluation and verification of quality optimization.
ISEKI Group also gathers customer opinions through service
activities such as providing instructions on test operations upondelivery and inquiring on the conditions of the delivered
products and has built a mechanism that feeds back those
opinions for development and improvement, reflecting those indeveloping safe, high-quality product.

Flow of how voices of customers are reflected in product development

Feedback of voices of customers (opinions, requests, and emerging needs)

Product planning

Development design

Manufacturing

Sales and services

Examples of internal systems
Flextime system
No overtime day
Systems for childcare leave andshortened work hours for child rearing(promotion of male employees’ taking paternity leave)
Systems for leave and shortenedChild care support company
certification mark Kurumin
work hours for nursing care

Grasping the required quality
Incorporating into planning quality
Design quality and development of functions
Sales preparation evaluation
Verification and evaluation of product quality

Act on Advancement of Measures to Support Raising Next-Generation Children (2021 goals)

FY2018FY2019Setting up “a healthy and safe workplace” as the code of
conduct and having formulated the Policies Concerning Safety,
ISEKI Group manages occupational safety and health in agroup-wide effort. It carries out safety and health activities
reflecting the actual situations of each company and office andimplements safety checks at the sites of manufacturingsubsidiaries and thereby strives to reduce accident risks toachieve “zero industrial accidents.”
Policies Concerning Safety“Safety takes precedence over everything”—promoting initiatives to achieve “zero” industrial accidents—
Implementation of risk assessment based on risk-prediction activities
Identifying risks and hazards in operations, taking risk reduction
measures and thereby preventing accidents from occurring.

Provision of safety education
Thoroughly entrenching awareness of safety once again
through education provided at the safety training hall so as
to build a framework that prevents any industrial accidents.

Safe andhigh-quality
product

Development and optimization of quality at each step

Creation and maintenance of a working environment
where work-child care balance can be achieved
Promotion of active participation by female
employees caring for children
Reexamination of work styles
Carrying out of activities to support child rearing
in local communities

Thorough management of occupational safety and health

ISEKI Report 2020

Offering safe products that respond to the customers’ trust

The Group has established safety training hall as a place forexperiencing near-accidents and offers employees to havesimulated experience of actual occupational accidents toimprove safety awareness. Further, ISEKI Group also carries out
safety audit at all workplaces and the entire Group works
together to ensure occupational safety.

Evaluation of customer satisfaction
Quality assurance verification and evaluation (design review)

Handling of recalls
When an issue occurs in products requiring improvement
measures, ISEKI promptly performs inspections and repairs of
the products giving the utmost priority to customers’ safety.
When we launch a recall, we notify and report to theconcerned authorities*¹ and disclose the information on thewebsite of ISEKI & CO., LTD. to draw attention of customers
and provide them information.

Customer inquiries concerning the products
Statistics of industrial accidents: severity rate (%)
2015

2016

2017

2018

2019

0.008

0.000

1.760

0.001

0.371

*Severity rate: Number of work days lost per 1,000 working hours*Scope: ISEKI & CO., LTD. and its three factories in Japan*Period: The figure for 2015 is for the nine months from April to December due toa change in the fiscal year end. They are for twelve months from January
to December for 2016 onward.

Value creation of ISEKI Group

Voice of a male employee who took childcare leave

Initiatives that support value creation

The Act on the Arrangement of Related Acts to Promote Work
Style Reform was enacted prompting everyone to review how
people work. Against this background, ISEKI Group is striving
to develop a workplace that is more employee-friendly. In
particular, it is working on promoting enhancement of
employees’ work-life balance so that they can spend fulfillingdays not only at work but also in their private lives. As part ofthe effort, the Group is strengthening the systems for balancing
work and child rearing and promoting utilization of annual paid
leaves through a planned leave system. In order to encourage
male employees to take child care leave, ISEKI attaches adocument encouraging the employee to take child care leave
when it gives congratulatory money upon child birth. In 2019,
five male employees took child care leave.

voice

Customers

Creation of employee-friendly workplaces

39

Product quality assurance
ISEKI Group

SocietyInquiries concerning the products are accepted by phone, on
the website, etc. and the department in charge carefully andpromptly (target of within one day) provides in-depth answers.
For matters that receive a large number of inquiries, ISEKI
Group posts them on its website and works to provide
sufficient explanation so that customers can solve the issues on
their own.
Further, the valuable opinions from customers are fed backto the company’s executives and concerned department andare actively used in its product development, sales, and service
activities.

Financial data

Creation of employee-friendly workplaces

Number of recalls by fiscal year*²

Number ofrecalls

2015

2016

2017

2018

2019

3

5

6

0

2

*1. Ministry of Land, Infrastructure, Transport and Tourism, Ministry of Agriculture,
Forestry and Fisheries, Ministry of Economy, Trade and Industry, etc.
*2. Number of recalls filed with the Ministry of Land, Infrastructure, Transport andTourismContents of inquiries regarding products from customers (FY2019)(Total number of inquiries that came through the website: 370)

Company information

Society

Other: 12%
Opinion and request: 1%
Document request: 11%
Product andparts-related: 50%
Technical details: 26%

ISEKI Report 2020

40

Initiatives that support value creation

Stakeholder engagement

Fundamental concept

Fundamental concept

The relationship with suppliers who support ISEKI Group’s business is important for it to remain as an indispensable company in theworld and the basic policy of the Group is that “the relationship with suppliers should be fair and equitable and it will not abuse its
privileged position in the trade to give unfair and disadvantageous treatment to suppliers.” ISEKI Group believes that the building of asustainable supply chain and developing human resources inside and outside is indispensable to achieve sustainable growth to fulfill issocial responsibilities in the rapidly changing business environment. Towards this end, the Group will pursue initiatives that would
lead to mutual cooperation and business development as well as building relationships of trust and improving corporate value.

ISEKI Group strives to build strong relationships of trust with stakeholders by engaging in responsible dialogue withthem including direct interaction by company’s executives.
In terms of information disclosure, the basic policy of the Group is to “disclose information properly to fulfill social
accountability” (fundamental principle) and “promptly disclose accurate information required from inside or outsideof the Group in recognition of the importance of social accountability and thereby endeavor to become a company
with transparency” (code of ethical behavior), as described in ISEKI Group Code of Ethical Behavior
To win fair evaluation from all our stakeholders, including shareholders, investors, customers, suppliers, local
communities, and employees, and to ensure management transparency, we strive for fair, equitable, timely, andappropriate disclosure of management-related information keeping with the purpose and meaning of fair disclosure rules.
Also, the opinions and requests received through the various dialogues are compiled by the respective departmentsin charge and reported to the company’s executives at the Public Relations Liaison Committee meetings held every
month and are appropriately reflected in the business activities.

the guidelines, carries
out periodic surveys tograsp the status of CSR
initiatives at suppliers.
The Group continuously
seeks the understandingof those suppliers who
do not respond to thesurveys.

Major engagements with stakeholders
No response
25%

Stakeholder
Response75%

ISEKI Group CSR Procurement Guidelines (excerpts)

Customers[1] ISEKI Group’s CSR

ISEKI President making a presentation at an IR information
meeting for vendors(Fundamental concept)
Contribute to the creation of a prosperous andsustainable society
Resolve social issues through business and improve
corporate value[2] CSR procurement policyInitiatives for complying with the Act against
Delay in Payment of Subcontract Proceeds, etc. to
Subcontractors
Checks and supervision have been established in each groupcompany, including checks and balances based on systems
such as periodic reporting to the Management Supervisory
Committee and monitoring through audits. The Group also
carries out continuous training concerning the Act against Delayin Payment of Subcontract Proceeds, etc. to Subcontractors.

 upport for human resource development andS
activities to educate each otherIn order to support human resource development at suppliers,
ISEKI Group provides them with opportunities for training
and study sessions at ISEKI’s human resource development
facilities with the aim of improving their skills, knowledge,
and capabilities of providing sales and technology services.
Various types of ability development programs are undertakenwith suppliers by making effective use of the human assetsof the Group. A training program for nurturing successors ofdealerships is being carried out as part of this training.
Further, ISEKI Group and suppliers work to educate eachother through methods such as raising the level of thecompany’s employees in the trainings on the characteristics andfunctionalities of products provided by supplier companies.

41

ISEKI Report 2020

(Fundamental concept)
Policy that the ISEKI Group complies with in procurement
activities and to promote CSR procurement

Shareholders andinvestors

Concept behind the engagement

Opportunities for dialogue

To provide high-quality and safe products and services
that satisfy our customers, ISEKI Group will extend farmbusiness proposals and support, including cultivation
techniques, as well as support for the application andsafe use of agricultural machinery. We will also strive tounderstand the true needs of customers through dialogue
and use this dialogue to improve product development.

 irect dialogue with sales andD
maintenance staff
User exchange meetings M
Visit M
Trainings, seminars
Exhibitions and demonstrations M
Proposal and support of farm businesstechnologies
Market research

We will bolster corporate governance in order to build
long-term trusting relationships with our shareholders andinvestors. We will engage in constructive dialogue basedon fair disclosure policy.

General shareholders’ meeting M
Quarterly briefing sessions M
Individual meetings M
Information meetings for individual
investors and shareholders M
Facility tours M

We will cooperate with our suppliers to create
opportunities for mutual improvement so that they canlead to mutual business development including fair andequitable trade towards building a sustainable supply
chain.

IR information meetings for vendors M
Dealer meetings M
Superior company tours M
Inspection and meeting with suppliers M
Business report meeting M
Annual general meeting of Ishokai M
Visits (Japan, overseas) M

We will work on providing a secure and safe workplace,share company information and support for careerdevelopment towards creating an employee-friendly
workplace and nurturing human resources.

Internal IR information meetings M
Labor management council M
Employee meetings M
Various training
Various commendation meets andcontests M
Former employees’ meeting M

We will engage in environmental conservation, activities
for community growth and development, and activities forthe nurturing of the next generation so as to enable coexistence with the local communities.

Tours of factories and exhibition halls M
CSR activities such as cleaning activities
Exchange of views with local governments,
etc. M
Participation in local events M

Initiatives that support value creation

IR information meetings are held every year for domestic
manufacturing vendors where the company’s executives explain
the management status and policy. ISEKI Group also conducts
superior company tours, through which suppliers observe goodpractices and the latest initiatives, and also carries out supplieraudits and business support so as to build relationships of trust
and to expand and develop business together.

Promotion of CSR procurement
ISEKI Group has drafted the ISEKI Group CSR Procurement
Guidelines which outline the Group’s CSR concept andprocurement policy in order to jointly promote, with its
suppliers, procurement activities that take social responsibility
into account. ISEKI Group,
CSR survey response rate
along with disseminating[3] CSR procurement guidelines (basic items)
1. Customer satisfaction and quality assurance
2. Compliance with laws and ethical business activities
3. Respect for human rights and creation of healthy andsafe workplace
4. Environmental preservation and green procurement
5. Coexistence with local communities and international
cooperation
6. Management transparency and accountability

Suppliers<Promotion of green procurement>
ISEKI Group has drafted the ISEKI Group Green Supply Guidelines
to take the environment into account in matters related to products
such as parts and materials procurement, and carries out activities
to gain the understanding andRatio of Certified Green Suppliers
cooperation of suppliers. Regular
reports regarding the status ofTarget value
85%
81% 82%
initiatives at suppliers are obtained
74% 76%through self-check questionnaires
and those suppliers superior
in environmental activities aredesignated as Certified Green
Suppliers. ISEKI Group continues
to propose improvement tothose suppliers yet to obtain the
2016
2017
2018
2019
2020
certification.

Employees

Local community

Financial dataInitiatives aimed at strengthening relationshipwith suppliers

ISEKI Group

Society

Value creation of ISEKI Group

Fair and equitable trade

Company information

Society

M denotes involvement of company executives

ISEKI Report 2020

42

Initiatives that support value creation

Social contribution

Fundamental concept

Fundamental concept

ISEKI Group believes that the understanding of shareholders and investors is indispensable for achieving sustained
growth and the improvement of corporate value over the medium to long term. The Group engages in constructive
dialogue and strives to build long-term relationships of trust with the shareholders and investors by explaining themanagement policy in an easy-to-understand manner.

The basic rule of ISEKI Group is “to actively contribute to local communities as a member responsible for society” and“to contribute to local society while affording respect for laws and regulations, practices and culture of the country
when doing business overseas.” ISEKI Group works on contributing to society by leveraging the strengths of its main
business aiming for the development of local communities in the medium- to long-term.

Constructive dialogue with shareholders and investors
The dialogue with shareholders and investors is supervised by
the officers in charge of the various business administration
departments (Investor Relations Section, Corporate Planning
Department, Financial Department, and General Affairs
Department) and the President, said officers and businessadministration departments strive to actively engage inconstructive dialogue utilizing various opportunities such as
earnings briefings. In order to improve the dialogue, the person
in charge of IR collaborates with the department in chargeof the specific theme and works on preparation of disclosurematerials, sharing of information, etc. on a company-wide
scale, in addition to collaborating and sharing information
with the various departments at the Public Relations Liaison
Committee held once every month. ISEKI Group has also set up
pages dedicated to shareholders and investors on its website
and provides disclosure information such as its management
policy and performance in an easy-to-understand manner.
The opinions, etc. obtained through the dialogue are fed
back to the Directors, management executives, and related
departments by way of reporting to meeting bodies, distributionof reports, etc. for the purpose of information sharing.

Field

 onducting shareholder- centered generalCshareholders’ meetings

ISEKI Group has built an environment where it is made easierfor shareholders to attend general shareholders’ meetings andconducts the meeting in a shareholder-focused manner.
The convocation notice for the general shareholders’meetings are sent by mail three weeks prior to the meeting
date and the details are posted on the website before theconvocation notices are sent. Moreover, in order to improve theconvenience for voting, electronic exercise of voting rights overthe Internet is made available in addition to voting by mail.
Further, the Group visualizes its business reports, posts
topics, and introduces its initiatives with the aim of deepening
the understanding of ISEKI as much as possible.

Opportunities for dialogue with shareholders and investors<Key initiatives in FY2019>
Briefing sessions by officers held every quarter*
Individual meetings
Information meetings for individual investors and tours forindividual shareholders

Key initiatives in FY2019

Facility tours for institutional investors (ISEKI-Matsuyama
MFG. Co., Ltd., Dream Agricultural Research Institute)
Disclosure of related materials (posting of earnings-relatedmaterials with summary, disclosure of question and answers
during briefings, posting of English language materials)

Development of the next generation

Framework to promote dialogue

ISEKI Group

Society

Key initiatives

Food and agricultural
education

Food education project to grow rice in buckets (lectures at schools)
Awareness campaign through displays of agricultural machinery and holding
workshops at food and agricultural events
Cultivation of rice with children in the community as part of voluntary activities

Manufacturing education

Held manufacturing education for elementary school students to learn manufacturing
process
Awarded the Iseki Prize at the 78th Ehime Prefecture Children’s Exhibit of Invention
and Devices
Cosponsored the Youth Development Project of Ehime Institute of Invention andInnovation

Experience and activity
education

As a global corporation, conducted lectures for high school students as part of SGH*.
Accepted students for internships and hands-on experience

Culture, arts, and sports

Held the 24th Sanae National Children’s Drawing Contest
Cosponsored National Sports Festival Ikiiki Ibaraki Yume Kokutai and Ikiiki Ibaraki
Yume Competition 2019

Contribution to local community

Held factory tours and ISEKI Dream Gallery tour
Participated in the local traffic safety campaign

Contribution to environment

Carried out cleaning and environmental beautification activities
Held activity to turn off the lights at various offices

Assistance for disaster recovery

Assistance to agricultural areas affected by Typhoon Hagibis (donations, maintenanceof agricultural machinery)

Value creation of ISEKI Group

Constructive dialogue with shareholders and investors

Initiatives that support value creation

Society*SGH (Super Global High School): An educational program promoted by the Ministry of Education, Culture, Sports, Science and Technology aimed at nurturing global humanresources.

*From FY2020, ISEKI Group plans to hold briefing sessions for the first and third quarters via teleconferencing system.

In addition to disseminating information regarding
agriculture and agricultural machinery through tours of
the ISEKI Group factories in Matsuyama, Kumamoto,and Niigata and the ISEKI Dream Gallery, the Group
strives to strengthen its dialogue with all the
stakeholders led by customers and residents in the local
community. We also carry out questionnaire surveys
targeting the visitors and convey the valuable opinions
that we receive to the management.

ISEKI Group offers opportunities to deepen theunderstanding of food and agriculture by teaching
students the series of processes in the production ofrice from planting rice in spring, harvesting it inautumn, and then making and eating rice balls. In
FY2019, we held lectures for the students of Kuma
Kogen Choritsu Kuma Elementary School for half a
year.

Company information

ISEKI Group conducted a tour of ISEKI-Matsuyama MFG. Co., Ltd., its mother factory, for individual shareholders in November
2019. During the visit, the shareholders were briefed by the company President of ISEKI Group’s business profile andgrowth strategy, and they were also given a tour of the factory and ISEKI Dream Gallery. From the views exchanged withthe shareholders who participated and collected through the questionnaire survey we were able to obtain the following
observations: “I understood the stance of ISEKI towards manufacturing and its initiatives,” “Touring the manufacturing andengineer educations sites were meaningful,” and “The 5 S of Seiri, Seiton, Seizou, Seiketsu and Shitsuke (Sort, Set in order,
Shine, Standardize, and Sustain) were seen to be thoroughly implemented in the factory.” ISEKI Group will continue toengage in constructive dialogue through such tours and enhanced information dissemination and strive to build long-term
relationships of trust.

Educational project to grow rice

Financial data

Factory tours and ISEKI Dream Gallery

Tours for individual shareholders

Harvesting the rice grown in a bucket
Briefing by the President

43

ISEKI Report 2020

Factory tour

Number of visitors in FY2019:

8,977

ISEKI Report 2020

44

Initiatives that support value creation

Environmental management
Basic Environmental Policy

Message from the officer in charge of the environment

We strive to contribute to the realizationof a sustainable society.

Ruiji Horio
Corporate Officer
Deputy Chief Operation Officer,
Development & Production Division
Assigned to Environmental Control Section

Recent years have seen worsening environmental problems around theworld such as climate change caused by global warming, frequent
occurrences of disasters caused by abnormal weather, and exhaustionof resources, and the impact on food and agricultural fields is also
becoming severe.
ISEKI Group has designated environmental protection that would
enable the creation of a sustainable society as one of the businesspriorities, and practices environmental management by setting the
Basic Environmental Policy and Environmental Conduct Guidelines.
Along with introducing the environmental management system(EMS) across the Group and building a structure to promote it, ISEKI
Group has set specific environmental targets from the initial stages of
product development to production, distribution, sales, and service,
and works to reduce environmental burden and environmental risks ofthe entire business activities.
Further, in order to ensure reduction of environmental burden whenusing the product, ISEKI Group promotes environmentally-friendly
design and strives to expand the sales of environmentally-friendly
products through the eco-product certification system.
We will continue to optimize the use of resources and energy acrossour entire business activities led by manufacturing and further energize
the initiatives aimed at achieving the mid- to long-term environmental
preservation targets and contribute to the realization of a sustainable
society.

ISEKI Group

Environment

Environmental Conduct Guidelines

ISEKI Group is committed to contributing to therealization of a sustainable society through businessactivities that aim to achieve harmony among nature,society and corporations.

❶ Development activities considering the environment
Recycling and reduction of noise, vibration, fuel consumption,
emission gas, and environmental stress substances❷ Environment-friendly manufacturing activities

Prevention of (air, water, noise, and vibration) pollution, energysaving, resource-saving, and green procurement❶ Maintain environmental management system and its
functional applications❷ Reducing elements of our business activities andproducts which may be causing stress on theenvironment❸ Compliance with environmental laws, regulations,and standards❹ Environmental education and information disclosure❸ Office activities considering the environment
Energy-saving, resource-saving, and recycling❹ Distribution and logistics considering the environment

Value creation of ISEKI Group

ISEKI Group environmental management

Improvement of transportation (packing material, more efficienttransportation, modal shift), disposal❺ Development of biodiversity

Products/services, business activities, supply chain❻ Environmental education and information disclosure
Environmental education to be offered to employees,
participation in social activities and information disclosure

System for promoting environmental management
ISEKI Group works on environmental management centeredaround a Plan-Do-Check-Action (PDCA) cycle by establishingan intragroup system for promoting environmental
management.
The Directors’ Operation Committee chaired by the President
deliberates and decides upon action plans and targets for theenvironment based on the Basic Environmental Policy. The
Committee receives progress reports from the Environmental
Planning Group Meeting and gives advice on evaluation andimprovement measures. It reports on progress to the Directors’
Operation Committee, and upon receipt of the review resultsfrom the Committee, horizontally implements them at theoffices. Chief Managers and Environment Control Managers
who promote environmental control activities are put in place
Environmental Management Systemin each office to strengthen promotion activities forenvironmental management.
In 2017, ISEKI Group launched the Corporate Social
Responsibility Committee. It shares with Committee members
tasked with review and promotion activities alignment withbusiness plans and materiality evaluation with regard to results
and issues reported to the Environmental Planning Group
Meeting. In this way, ISEKI Group has put in place a mutually
supportive framework for resolution of issues.
In FY2019, the Environmental Planning Group Meeting held
four meetings, made reports/escalations to the Directors’
Operation Committee and the Public Relations Liaison
Committee four times, and made reports to the Corporate
Social Responsibility Committee twice.

Initiatives that support value creation

Environment

Directors’ Operation Committee

Environmental Control Section

Environmental Planning Group Meeting

ISEKI Group as a whole

2030:

37%
2030: 50% or more

26% reduction (compared to FY2013)

Actual reduction rate0

Eco-product ratio in domestic sales
2020:

Target reduction rate

Results

40

−30

2013

2019

2020

2030

ISEKI Group has acquired EMS certification (ISO14001 and EA21) at manufacturing bases in Japan and overseas and non-manufacturingbases, including sales subsidiaries, and carries out environmental preservation activities in line with their respective business activities
and regional characteristics.

36.6%

−20

37%

−26%
30

35%
2019

2020

2030

Acquisition of EMS certification at domestic
and overseas manufacturing bases<6 bases in Japan and 3 bases overseas>

9
Acquisition rate: 100%
Certified bases:

45

ISEKI Report 2020

N.V. ISEKI EUROPE S.A.
ISEKI France S.A.S.
ISEKI (THAILAND) CO., LTD.

Acquisition of environment-related certifications

−11%

−12%

Tokyo Headquarters
Tobe Office
Tsukubamirai Office
ISEKI AGRIISEKI TLS
ISEKI Logistics

50%

50

−9%

Gunma ISEKI Sales
Mie ISEKI Sales
ISEKI Chugoku
ISEKI Shikoku
ISEKI Kyushu

TargetStandard−10

ISEKI Hokkaido
ISEKI Tohoku
ISEKI Kanto Koshinetsu
ISEKI Hokuriku
ISEKI Kansai Chubu

Company information

Reduction in CO2 emission volumes in production
activities in Japanese manufacturing locations

ISEKI-Matsuyama MFG.
ISEKI-Kumamoto MFG.
ISEKI-Niigata MFG.
ISEKI-Shigenobu MFG.
Dongfeng ISEKI (Xiangyang Factory)
Dongfeng ISEKI (Changzhou Factory)
P.T. ISEKI INDONSIA
ISEKI Matsuyama Factory K.K.
ISEKI Matsuyama Factory K.K.

Non-manufacturing bases

Financial data

Manufacturing bases

Mid- and long-term targets

Acquisition of EMS certification
at non-manufacturing bases<Sales subsidiaries in Japan: 9>
Certified companies:
Acquisition rate:

9100%<Others: 9>9Acquisition rate: 100%
Certified bases:

ISEKI Report 2020

46

Initiatives that support value creation

Creation of a low-carbon society

Eco-product ratio in domestic sales
2020: 37% 2030: 50% or moreJapan

The emission reduction target was achieved. The
target was not achieved with respect to ratio tothe net sales due to increased usage of heating
facility and compressors. ISEKI Group continues withimprovement activities towards achieving the target.

Overseas

The CO2 emission volume increased due to the startof operation of a new painting line at Dongfeng Iseki
Agricultural Machinery Co., Ltd. (Xiangyang Factory).

Japan

While the reduction target was achieved in termsof volume of water, the target was not achieved interms of per-net sales ratio. ISEKI Group will further
promote reduction activities on-site such as studying
the volume of water used in the painting line.

Overseas

The volume of water used increased marginally due
to the start of operation of a new painting line at
Dongfeng Iseki Agricultural Machinery Co., Ltd.
(Xiangyang Factory) and per-production volume also
worsened due to decrease in production volume at
Xiangyang Factory and Changzhou Factory.

Major activity results in FY2019 in promoting environmental management
Major activity targets in FY2019

Major activity results in FY2019

Management using stricter voluntary standard values than stipulated bylaws and regulations for prevention of air and atmospheric pollution

Cleared the voluntary standards in four manufacturingbases in Japan
Implementation of environmental education (twice),and participation in environmental beautification andcleaning activities
Improved green procurement ratio through thepromotion of EMS certificate acquisition by suppliers andinformation provision

Improve environmental awareness of employees
Prohibition, reduction, and restraint of use of toxic chemical
substances included in procured parts

Added six certified eco-product models through thepromotion of environmentally-friendly design

Promotion of CSR procurement and its parallel implementation
across the Group

Explained ISEKI Group’s concept of CSR to suppliers
Distributed CSR Procurement Guidelines to suppliers andcarried out CSR questionnaire survey

Promotion of environmental burden reduction in production
activities

See below

Creation ofa low-carbon
society

Manufacturingresources

Developmentof recyclingoriented society

Toxic chemical
substances

Reduction of CO2 emission

Reduction of CO2 emission
during transportation

Reduction of total material input

Reduction of volume of water
used

Reduction of final volume ofwaste

Reduction of used volume ofchemical substances subject to
PRTR law

Reduction of 11% by 2020
Reduction of 1.57% per year
Reduction of 10.5% by 2020
Reduction of 1.5% per year
Reduction of 10.5% by 2020
Reduction of 1.5% per year

Reduction of 51% by 2020
Reduction of 7.3% per year

Reduction of 14% by 2020
Reduction of 2% per year

Reduction of 19.6% by 2020
Reduction of 2.8% per year

ISEKI Report 2020

Japan: emissions

Japan: per-net sales(t-CO2/billion yen)(ten thousand ton)

650,0005.0

5,030

29,6002013(Japanese standard)

7,210
3

2017

2018

9.1

13.7

2019 (year)

0

60

38.7

30

20

26,10025,800(t/billion yen)

57.0

47.6

28.2

28,800

0.9

Japan: per-net sales

1.2

2.5

2.2

Overseas: per-production volume

Japan: volume of water used
50.0

4.0
4,990

Overseas: volume of water used
40

5.2

5.1

4.7

0

18

0

2013
(Japanese standard)

2017

9.6

10.3

32.5

33.2

17

17

2018

2019 (year)30

0Note: In order to assess the trend of reduction in Japan since before,
the electricity emission factor 0.378 kg-CO2 /kWh is used forthe calculation

Management
item (unit)

FY2019TargetResultEvaluation

Per net sales unit
(t-CO2/100 million yen)

45

52

Average

Total emission(t-CO2)26,80026,100Good

Per transportation unit
(t-CO2/10,000 ton-km)

1.24

1.34

Average

Per net sales unit
(t/100 million yen)

88

81

Good

Total input volume(ton)

52,60040,600Good

Per net sales unit
(t/100 million yen)

281

332

Average

Total volume used
(10,000 ton)

17

17

Good

Per net sales unit
(t/100 million yen)

0.60

0.29

Good

362

Per net sales unit
(t/100 million yen)

0.23

Total volume used
(ton)

Reduction of CO2 emission during transportation
With the reduction in rail and sea cargo and increase in theirdemand, usage of those services became difficult and with theincrease in truck transportation, the modal shift rate declined
and the ISEKI Group failed to achieve the CO2 emission
reduction target by volume of cargo shipped. The Group works
to reduce CO2 emission volume and improve the modal shift
rate by further promoting the improvement of loading
efficiency.

Reduction of final volume of wasteJapan

The rate of final volume of waste declined in the past
few years with the increase in type of waste subject
to recycling.

Overseas

Reduction was achieved in terms of final volume
of waste. In FY2019, the paper and scrap metal tobe recycled at Changzhou Factory was stored as
the volume did not reach specified levels. This wastherefore not counted in total volume of waste andled to worsening of rate of final volume of waste.

2019
Fiscal YearCO2 emission
volume (t-CO2)

2013

2017

2018
TargetResult—3,240

Reduction of final volume of waste and rate of final volume of waste
4,340

3,200

3,160

(ton)

Total volume used
(ton)

*Scope: Three factories in Japan (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd., ISEKI-Niigata MFG. Co., Ltd)
*CO2 emission during transportation is energy-generated CO2 emission volume.
*Reduction targets for overseas manufacturing bases are not listed as the base year is different by base.

47

Overseas: per-production volume

25,000

Promotion of environmental burden reduction in production activities
Mid-term environmental targets
FY2013 standards(t-CO2)

Overseas: emissions

745

Development of environmentally-friendly products throughimplementation of the product assessment system and lifecycle assessment (LCA) evaluation

Volume of water used/per-net sales (per-production) volume (10,000-ton)Volume of energy-generated CO2 emissions and per- net sales (per-production volume)

138

143
0.20
100

Good
Good
Good

Ratio to cargotransportation volume(t-CO2 /10,000 ton-km)
Modal shift rate

Financial data	Reduction in CO2 emission volumes in production
activities in Japanese manufacturing locations
2030: 26% reduction (compared to FY2013)

Reduction of volume of water used

Value creation of ISEKI Group

Reduction of CO2 emissions

Mid-term environmental targets and activity results
Mid- to long-term environmental targets

Development of recycling-oriented society

Initiatives that support value creation

ISEKI Group works on environmental management by introducing an environmental management system (EMS) on agroup-wide basis. It has set mid- to long-term environmental targets for 2020 and 2030 for environmental burden
reduction. The results of its activities for FY2019 and the trends in recent years are as given below.

ISEKI Group

Mid- to long-term environmental targets and results

600

1.36

1.27

1.27

1.24

Overseas: final volume of waste

Overseas: rate of final volume of waste(%)

Japan: final volume of waste

Japan: rate of final volume of waste

60.0

1.34

47.9

Company information

Environment

5.5

47%

53%

54%

—

51%

32.9

411
300

30.0

60.4
269
16.7

Modal shift rate = (railway ton-km + sea freight ton-km) / total ton-km
Scope: Between bases in Japan and transportation to domestic port of export products

74.6

60.0
143

2019 (year)

4.0

2.6

119
1.3

2013
(Japanese standard, adjusted value)

2017

2018

0

2.4

1.6
0

Note: Rate of final volume of waste = Final volume of waste / Total
volume of waste*Scope: Factories in Japan (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd., ISEKI-Niigata MFG. Co., Ltd.), overseas factories (Dongfeng Iseki Agricultural MachineryCo., Ltd. [Xiangyang Factory, Changzhou Factory] and PT. ISEKI INDONESIA). The results of FY2013 for overseas manufacturing bases are for Xiangyang and Changzhou Factories.
*A s for final volume of waste in Japan, the base year of 2013 had a period with temporary abnormal values and therefore the average of the values before and after the said
period is used as the adjusted value.
ISEKI Report 2020

48

Initiatives that support value creation

Environment

ISEKI Group promotes environmentally-friendly design in the entire product development process with the aim of
reducing the environmental burden in each of the stages of development, manufacture, use by customers, anddisposal, and strives to offer environmentally-friendly products.

Preservation of biodiversity

ISEKI Group’s business activities as well as agriculture, which uses agriculture equipment and services, exist thanks tobenefits of ecosystem services.

Eco-product certification system[ISEKI Group’s Biodiversity Guidelines]● Realized outstanding environmental

Example of environmental label

performance through notablefunctions● Environmental burden reduction ofSuper-eco product10% or more in usage

Super-eco
product

XX environmental burden reduced by YY%(compared to ZZZ’s conventional model)

Product that has
cleared in-housestandard

Specific initiatives
1. ISEKI Group will strive to preserve biodiversity by considering the impact on biodiversity at all stages of its businessactivities, and by reducing the harmful load discharged into the environment from all offices.
2. ISEKI Group will strive to preserve biodiversity by offering biodiversity-friendly agricultural machinery and facilities thatare safe and easy-to-use, and by supporting sustainable agriculture and initiatives aimed at preserving rivers and othernatural resources.
3. ISEKI Group will strive to develop and popularize technologies that will contribute to preservation of biodiversity bypromoting technological development that learns from nature’s blessings and traditions.
4. ISEKI Group will strive to share the awareness regarding biodiversity by establishing communication with various
involved people including stakeholders and local communities and collaborate with them so as to make the initiatives forpreserving biodiversity more effective.
5. ISEKI Group will strive to improve awareness regarding nurturing of biodiversity preservation by the society as a wholeby implementing environmental education of its employees.

Eco-productEco-product certification trend
In addition to products featuring functions that contribute to energy andlaborsavings at customers, the certification of products installed withengines conforming to the strengthened emission regulations in Japanand abroad has been increasing each passing year. The number of suchproducts accounted for 36.6% of domestic sales in FY2019.

Number of certified eco-products and ratio
Number of certifications (equipment type)
Ratio of eco-products (Net sales in Japan)

36.6%

32.6%
28.7%

12.7%

17

ISEKI Group’s environmental and corporate risks
35

29

20.1%

ISEKI Group has been working on reducing risks and developing equipment by grasping the impact of its business activities on biodiversity.

21

Examples of risk reduction and equipment development

6
2015

2016

2017

Value creation of ISEKI Group

Fundamental concept
ISEKI Group acknowledges the fact that it benefits from the blessings of nature (ecosystem services) that biodiversity produces,
and therefore it has positioned preservation of biodiversity as a priority task of its environmental management. In cooperation
with local communities and various stakeholders, the ISEKI Group will contribute to the realization of a sustainable society thatcoexists with nature by promoting business activities and offering products and services that are biodiversity-friendly as well as
preservation of biodiversity and continued use of the blessings from biodiversity.

Initiatives that support value creation

Eco-product certification system is an
in-house system that certifies products withhigh environmental conformance that meet
ISEKI-original evaluation criteria. Certified
products are granted environmental labels,
which are conveyed to customers throughproduct catalogs and user manuals in aneasily noticeable format. Further, theenvironmental label conforms to Type II
stipulated under ISO14021 (self-declared
type that does not need third-party
certification).

ISEKI Group

Initiatives for environmentally-friendly design

2018

2019

● Environmentally-friendly design● New technologies and services

Eco-products
Variable fertilizing ricetransplanter, etc.

Plant growth diagnosis device
Plant factory● Biodiversity preservation● Conservation of rural villages

Examples of certified products
Operesta NP80D, variable fertilizing rice transplanters with soil sensor and straight-travel assisting function Energy saving, laborsaving Resource saving
The rice transplanter, certified as a super-eco product, is a variable fertilizing rice transplanterthat enables laborsaving and lower cost by reducing plant lodging and the amount of fertilizer
through its optimal application.
It is also installed with the automated straight-travel assisting function that allows anyone
to carry out easy and straight-line planting, which reduces fatigue of the operator and makes
the operation more efficient. It eliminates the necessity of adjusting the amount of water inpaddy even if the level of water is high and the marking is not visible, contributing to watersaving and maintaining water quality.

Local river preservation activities

and mountain forests

Support for regeneration ofabandoned paddy fields

Corporate
activities
Design development
Procurement
Production
Distribution
Sales

Products andservices
Usage and disposalof products
Pesticides,
chemical fertilizers

INPUT

Major risks to local
environment and biodiversity

Allocation of
resources● Destruction,● Raw materials● Energy● Water resources● Land usage

OUTPUT
Environmental
burden● CO2● Exhaust● Drainage● WasteMajor risks tocorporate activities● Increased costs, decrease

fragmentation or
elimination of plant andanimal habitat due toexcessive consumptionof resources, illegal
logging, etc.
● Deterioration of
ecosystem services
beyond repair of theeco-system● Deterioration or
extinction of plant andanimal habitat due toglobal warming or
atmosphere, water, andland pollution

in productivity or operation
stoppage due to shortageof raw materials or energy● Changes or reduction tocrop producing area due toclimate change or waterand soil pollution● Stoppage of operations or
damage to agriculture due
to direct impact ofdisasters caused byabnormal weather● Environmental
performance regulations
on products, etc.

Financial data

Environment

Initiatives aimed at biodiversity preservation

ISEKI-Matsuyama MFG. Co., Ltd
Measured item

Unit

ISEKI-Kumamoto MFG. Co., Ltd ISEKI-Niigata MFG. Co., Ltd

ISEKI-Shigenobu MFG. Co., Ltd

Regulation Voluntary Measured Regulation Voluntary Measured Regulation Voluntary Measured Regulation Voluntary Measured
standard value standard
value standard value standard
value standard value standard
value standard value standard
value

Suspended matter (SS)

600

500

26

200

40

2

90

45

3

200

120

4

Biochemical oxygen demand (BOD)

600

500

44

25

8

8

60

30

19

160

90

14

30

18

3

30

24

<0.5

30

4

2

-

-

-

Particulate matter

g/m²N

0.30

0.18

<0.01

0.30

0.08

<0.01

0.30

0.20

0.01

0.35

0.18

<0.01

Nitric Oxide (NOx)

ppm

260

91

41

250

200

37

180

100

79

250

125

5

Particulate matter (cast ironelectric furnace dissolution)

g/m²N

0.10

0.08

<0.01

-

-

-

-

-

-

-

-

-

mg/L

n-hexane extract (oil extracted
from plants and animals)

Company information

SF5 series, a front mower installed with Stage V compliant engine that meets the strict
emission regulation of Europe and with improved operational efficiency (5% increase in speed
compared to existing models) as well as reduced time for moving when not cutting grass, hasbeen certified as an eco-product.
The mower, having high horsepower and aimed at the professional landscaping market inEurope where environmental awareness is high, is installed with a clean engine equipped withdiesel particulate filter (DPF), a post-emission processing device, and diesel oxidation catalyst(DOC), which ensures reduced NOx and other emissions compared to conventional models.
The model, in addition to an eco-mode switch for low noise operation in urban areas, hasa high-low toggle switch for blower speed setting, and enables low-noise operationaccording to the surrounding environment.

Water quality

Reduction in environmentally hazardous substances

Atmospheric air

Large grass collector front mower SF5 series Energy saving, resource saving

ISEKI Group carries out business activities across its four manufacturing bases in Japan mindful of reducing the burden on plants andanimals in the locations as well as the local communities, and has stipulated stringent voluntary management standards corresponding
to the environment-related laws and regulations and associated reference values in order to reduce the environmental risks such asatmospheric and water pollution.
It has cleared the voluntary management reference standards for FY2019, and has promoted reduction in environmental pollution.

“-” denotes not applicable, or outside of regulation value.

49

ISEKI Report 2020

ISEKI Report 202050

Non-financial highlights

Net sales

Operating income / Operating margin

Net sales came to ¥149.8 billion, down ¥6.0 billion year on year. In
Japan, while spare parts and repair fees remained strong, overallsales fell as sales of agricultural machinery declined due to theimpact of the increase in consumption tax rate. Overseas sales also
declined due to weak performance in ASEAN and China despite
strong sales in North America.
Japan sales (100 million yen)

1,452
227
1,225

Operating income came to ¥2.7 billion, down ¥0.4 billion year on
year, despite the partial offsetting of revenue falls by improvement in
profitability and reduction of selling, general and administrative
expenses as part of the revenue-expenditure structure reform at thesales companies in Japan.
Operating income (100 million yen)

1,583

320

352

1,210

1,231

1,559
331
1,228

We are working to reduce CO2 emission volumes in our businessactivities as part of corporate activities to make possible a sustainable
society.

Operating margin

2.5%

Overseas sales (100 million yen)

1,530

Volume of energy-generated CO2 emissions in factories

1,498

Volume of CO2 emissions in factories in Japan (t-CO2)

Number of certified eco-products (models)Ratio of eco-products (sales ratio in Japan) (%)

32,50033,80030,800

1.8%

321

1.6%

39

48

1,177

The company is promoting the provision of environmentally-friendly
products through implementation of the “eco-product certification
system” based on independently developed evaluation standards. It
aims eco-products to account for 50% or more by 2030.

Sales in Japan (t-CO2/100 million yen)Overseas production volume (t-CO2/100 million yen)

31,100

2.0%

Number and ratio of certified eco-products

48

47

51

36.6
33,300

32.6
28.7
35

52
20.1

40

31

27

24

27

25

22

Value creation of ISEKI Group

Financial highlights

ISEKI Group

Financial and non-financial highlights

12.7

25

0.3%

17

29
21

6
4

Dec. 2018

Dec. 2019

Ordinary income / Profit attributable to owners of parent / ROE
Ordinary income came to ¥1.1 billion, down ¥1.5 billion year on year,
due to recording of loss of entities using equity method. Profit
attributable to owners of parent declined ¥0.3 billion year on year to¥0.7 billion due to decline in tax expenses in addition to
extraordinary income such as reversal of provision incurred frombusiness combination.

Dec. 2015*

Dec. 2016

Dec. 2017

Dec. 20182015

Dec. 2019

Total assets / Net assets / Equity ratio

2016

Total assets fell by ¥3.6 billion year on year to ¥197.5 billion due to adecrease of ¥3.6 billion in notes and accounts receivable – tradefollowing fall in net sales. Net assets, meanwhile, rose ¥0.2 billion
year on year to ¥69.2 billion following the increase inremeasurements of defined benefit plans even as foreign currencytranslation adjustment fell.

28
16

2,011

4.2%

42

8

2,033

33.0%

26
1.6%

1.1%

10

11

1.3%

9

Total assets (100 million yen)

7

32.2%

Net assets (100 million yen)

Equity ratio

2,013

1,975

2,011

34.4%

33.4%

34.2%

680

671

709

689

692

Dec. 2015*

Dec. 2016

Dec. 2017

Dec. 2018

Dec. 2019−2.2%
Dec. 2016

Dec. 2017

Dec. 2018

Dec. 2019

Capital investment / Income before taxes and depreciation
Capital investment was basically being carried out within the amountof income before taxes and depreciation, and rose ¥2.9 billion year
on year to ¥10.3 billion due to expansion of large maintenancecenters, necessary for growth strategy, and introduction of new lineof engines.
Capital investment (100 million yen)

Income before taxes and depreciation (100 million yen)

108

104

89

82
65

74

103

65

Interest-bearing debt / D/E ratio

The company has over approximately 2,800 patents, thanks to its
acquisition and accumulation of validated claims, and it also holds
more than approximately 500 design rights.

Japan

Loans (100 million yen)Dec. 2016

Dec. 2017

Dec. 2018

0.97
657
90

Dec. 2019

Lease obligations (100 million yen)

1.03

567

Dec. 2015*

ISEKI Report 2020

2016

2017

2018

2019

We actively submit applications using the intellectual property
regimes of various countries to ensure prevention of copying. The
number of patents held by ISEKI Group is increasing annually.

Total of design rights (cases)

Total of patents and utility model rights (cases)

Design rights (cases)

1,000

3,000

2,000

Dec. 2015*

1,000

0

Mar. 2016

Mar. 2017

Mar. 2018

Mar. 2019

1.00

697
63

693
84

634

608

Dec. 2018

Dec. 2019non-consolidated

As part of measures to create workplace environments easy tobalance work and childcare, we have established various work-lifebalance support mechanisms including childcare leave.
Return rate (%)

D/E ratio (times)

1.01

Mar. 2020

0Dec. 2015

Dec. 2016

Dec. 2017

Jun. 2019

Retention rate in three years from joining

Mar. 2020

non-consolidated

The retention rate of college graduates three years from joining is at
a high level of above approximately 90%.

Retention rate (%)

100

100

100

100

100
91.7

86

88.5

88.5

Joined in
2015

Joined in
2016

92.3

0.94
693
80

662
67

613

595

Dec. 2016

Dec. 2017*FY2015 is an unusual reporting period of only nine months (April to December 2015) due to the change in reporting period.

51

2015

Overseas*

Rates of return to work following childcare leave

Interest-bearing debt fell ¥0.4 billion year on year to ¥69.3 billion.
While loans payable reduced as repayments progressed, leaseobligations rose on the back of capital investment in a manufacturingsubsidiary and other factors. D/E ratio, which shows the soundness offinance, was more or less same as the previous term at 1.00 times.

81

74

2019

500

-14

Dec. 2015*2018

Patents, utility model rights and design rights held

Total of patents (cases)
Ordinary income (100 million yen)
Profit attributable to owners of parent (100 million yen)
ROE

2017

Initiatives that support value creation

Dec. 2017

Financial data

Dec. 2016

Company information

Dec. 2015*

2015

2016

2017

2018

2019

Joined in2013

Joined in2014

Joined in
2017*The tabulation period for some overseas patents, utility model rights, and design rights is different, and therefore the year and month of results vary.

ISEKI Report 202052

Financial data

(Millions of yen)

As of December 31, 2018

(Millions of yen)

As of December 31, 2019

Assets

As of December 31, 2018

As of December 31, 2019

Liabilities

Current assets

7,475

8,404

Notes and accounts payable – trade23,80322,142

Notes and accounts receivable – trade23,327

19,675

Electronically recorded obligations – operating

15,933

15,610

Merchandise and finished goods

46,49546,426

Short-term loans payable

31,47528,633Work in process

6,046

6,580

Current portion of long-term loans payable

11,401

10,717

Raw materials and supplies

1,177

1,171

Lease obligations

2,337

2,057

Other

7,320

4,952

Accrued consumption taxes

434

665

(51)

(52)

Income taxes payable

368

356

91,791

87,159

4,240

4,116

482

443

Other

5,117

4,990

Total current liabilities

95,59389,735

Accrued expenses
Provision for bonuses

Property, plant and equipment
Buildings and structures, net

25,37826,050Machinery, equipment and vehicles, net

9,257

9,236

Tools, furniture and fixtures, net

2,854

3,191

Long-term loans payable

20,571

21,525Land

50,87350,759Lease obligations

4,009

6,390

Leased assets, net

6,001

8,006

Deferred tax liabilities

26

55

Construction in progress

2,446

1,066

Deferred tax liabilities for land revaluation

5,780

5,759

29

34

Provision for directors’ retirement benefits

132

140

96,842

98,346

Net defined benefit liability

4,063

3,059

1,082

1,288

Asset retirement obligations

322

325

Other

1,696

1,267

Total non-current liabilities

36,60338,524132,197

128,259

Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets

Non-current liabilities

5,817

5,303

33

1,620

1,878

1,512

587

500

Shareholders’ equity

Other

3,270

1,908

Capital stock

23,344

23,344

Allowance for doubtful accounts

(146)

(128)

Capital surplus

13,452

13,452

Total investments and other assets

11,44010,717Retained earnings

16,932

17,025

109,365

110,352

Treasury shares

(983)

(982)

201,156

197,511

Total shareholders’ equity

52,746

52,840

418

380

(0)

(0)

12,67012,622Foreign currency translation adjustment

864

648

Remeasurements of defined benefit plans

501

989

14,454

14,64178

75

Non-controlling interests

1,681

1,694

Total net assets

68,95969,252

201,156

197,511

Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset

Total non-current assets
Total assets

Total liabilities

Initiatives that support value creation

Non-current assets

Net assets
Financial data

Total current assets

Value creation of ISEKI Group

Current liabilities

Cash and deposits

Allowance for doubtful accounts

ISEKI Group

Consolidated Balance Sheets

Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land

Total accumulated other comprehensive income
Subscription rights to shares

Total liabilities and net assets

53

ISEKI Report 2020

ISEKI Report 2020

Company information

Accumulated other comprehensive income

54Financial data

149,899
105,392
44,507908
3,437
17,650
2,801
765
333
31
2,072
14,76442,765
3,179

795
3,287
17,352
2,612
682
308
30
2,142
14,547
41,761
2,745

133
145
47
171
499
138
751
1,887

192
204
48
173
—
78
548
1,244

669
88
151
1,083
445
2,438
2,629

729
88
115
1,472
476
2,881
1,108

79
52
—
16
148

29
243
265
—
538

252
133
160
1
548
2,229
756
346
1,102
1,126
35
1,090

220
122
1
0
344
1,302
477
83
560
741
18
723

Selling, general and administrative expenses
Advertising expense
Packing and transportation expenses
Directors’ compensations, salaries and allowances
Bonuses
Retirement benefit expenses
Provision for bonuses
Provision for directors’ retirement benefits
Depreciation
Other
Total selling, general and administrative expenses
Operating income
Interest income
Dividend income
Subsidies received
Rent income
Technical support fee
Gain on sales of scraps
Other
Total non-operating income
Non-operating expenses
Interest expenses
Sales discounts
Foreign exchange losses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on reversal of specified account related to business combination
Gain on step acquisitions
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Other
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

55

ISEKI Report 2020

Cash flows from operating activities

2,229
6,727
133
2
752
(52)
(278)
669
41

1,302
6,852
122
2
(993)
(243)
(396)
729
(0)

Other, net

172
(16)
1,807
(297)
(1,028)(1,340)

190
—
3,528
(778)
(1,867)
2,851

Subtotal

9,521

11,299Interest and dividend income received

Income taxes paid

269
(665)
373
(427)
(1,455)

396
(733)
—
—
(452)

Net cash provided by (used in) operating activities

7,616

10,509Other, net(6,849)
438
(940)
77
(2,783)98
15(8,354)
556
(0)
638
(4)
53
7

Net cash provided by (used in) investing activities(9,944)(7,104)

4,313
8,122
(8,506)979(2,254)
(0)
(678)
(4)
0

(2,697)
12,176(11,902)
3,058(2,346)
(0)
(680)
(4)
—

1,970
(51)
(408)
7,795
7,387

(2,396)
(26)
981
7,387
8,369

Income before income taxes
Depreciation
Impairment loss

Non-operating income

Fiscal year ended
December 31, 2019

Loss on disaster
Increase (decrease) in net defined benefit liability
Loss (gain) on sales of investment securities
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment
and intangible assets
Penalty
Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable – trade

Interest expenses paid
Proceeds from subsidy income
Penalty paid

Value creation of ISEKI GroupGross profit

155,955
110,00945,945

Fiscal year ended
December 31, 2018

Initiatives that support value creation

Cost of sales

Fiscal year ended
December 31, 2019

(Millions of yen)

Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Decrease (increase) in loans receivable
Decrease (increase) in time deposits

Financial data

Net sales

Fiscal year ended
December 31, 2018

ISEKI Group

Consolidated Statement of Cash Flows(Millions of yen)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from sales and leasebacks
Repayments of lease obligations
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

ISEKI Report 2020

Company information

Consolidated Statements of Income

56Company profileAs of December 31, 2019

Company name:

ISEKI & CO., LTD.

Head office:700 Umaki-cho, Matsuyama-shi, Ehime-ken, 799-2692 JAPANTokyo headquarters:

5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPANFoundation:

August 1926

Paid-in capital:

23,344 million yen

Number of
employees:

Consolidated: 5,563 (Development and Production Section: 1,798; Sales Section: 3,376; and Other Sections: 389)
Non-Consolidated: 739(As of January 1, 2020)

ISEKI & CO., LTD.

As of December 31, 2019

Location

Head office

Matsuyama-shi, Ehime

Tokyo Headquarters

Arakawa-ku, Tokyo

Tobe Office

Iyo-gun, Ehime

Kumamoto OfficeKamimashiki-gun, Kumamoto

Niigata Office

Sanjo-shi, Niigata

Total number of authorized shares

69,000,000 shares

Shares issued and outstanding

22,590,428 shares (excluding treasury stock of 394,565 shares)

Tsukubamirai Office

Tsukubamirai-shi, Ibaraki

Number of shares per trading unit

100 shares

Number of shareholders

19,044

Iabaraki Center

Inashiki-gun, Ibaraki

Kansai Office (IMPL)

Omihachiman-shi, Shiga

Share price trends

1,070,800
974,500
899,300
868,785
800,000

4.74
4.31
3.98
3.84
3.54

702,2122,928

Subsidiaries

3,050

Company name2,160

Location

Capital (million yen)

ISEKI’s ownership ratio (%)

ISEKI Hokkaido Co., Ltd.

Iwamizawa-shi, Hokkaido

90

100.0

ISEKI Tohoku Co., Ltd.

Iwanuma-shi, Miyagi

90

100.0

3.10

ISEKI Kanto Koshinetsu Co., Ltd.

Inashiki-gun, Ibaraki

90

100.0

Gunma ISEKI Sales Co., Ltd.

Maebashi-shi, Gunma

45

46.7

ISEKI Hokuriku Co., Ltd.

Kanazawa-shi, Ishikawa

90

100.0

ISEKI Kansai Chubu Co., Ltd.

Anjo-shi, Aichi

81

100.0

Mie ISEKI Sales Co., Ltd.

Tsu-shi, Mie

40

49.0

ISEKI Chushikoku Co., Ltd.

Higashi Hiroshima-shi, Hiroshima

90

100.0

ISEKI Kyushu Co., Ltd.

Kamimashiki-gun, Kumamoto

90

100.0

ISEKI AGRI Co., Ltd.

Arakawa-ku, Tokyo

80

100.0

ISEKI FRANCE S.A.S.

Aubière, Puy-de-Dôme,France1,500
thousand euros

100.0

ISEKI (THAILAND) CO., LTD.

Chonburi, Thailand

113,000
thousand baht

100.0

ISEKI-Matsuyama MFG. Co., Ltd.

Matsuyama-shi, Ehime

90

100.0

ISEKI-Kumamoto MFG. Co., Ltd.

Kamimashiki-gun, Kumamoto

80

100.0

Evaluation by third parties

ISEKI-Niigata MFG. Co., Ltd.

Sanjo-shi, Niigata

90

100.0

DBJ Environmental Rating – highest rating 14 times in a row

PT. ISEKI INDONESIA

Lumbang, East Java, Indonesia

18,750thousand U.S. dollars

95.0

ISEKI Matsuyama Factory K.K.

Matsuyama-shi, Ehime

10

100.0

ISEKI-Shigenobu MFG. Co., Ltd.

Toon-shi, Ehime

80

0.0*¹

Kita-Nihon Shodo K.K.

Kamikawa-gun, Hokkaido

10

0.0*²

❷ ISEKI is contributing to laborsaving and production efficiency in agriculture

ISEKI Logistics Co., Ltd.

Matsuyama-shi, Ehime

20

100.0

❸ ISEKI is focusing on CSR management that broadens the range from environmentand has been delivering concrete results

ISEKI TLS Co., Ltd.

Arakawa-ku, Tokyo

80

100.0

580,042

2.56

507,500

2.24

434,500
404,400

1.92
1.79

1,772
1,401

1,330

1,287

High Low

High Low

High Low

High Low

2016

2017

2018

2019

Calculations are carried out taking into account the one-for-ten
share consolidation of the company’s common stock on July 1, 2017.

(Note) Shareholding ratios are calculated after the deduction of treasury stock (394,565 shares).

Number of shares held by type of shareholder
Shares issued and outstanding: 22,590,428 shares (excluding treasury
stock of 394,565 shares)
Breakdown

Number of shares held Shareholding ratio(shares)(%)

Individual shareholders and other

7,842,820

34.72

Financial institutions

8,410,012

37.23

Other Japanese companies

3,840,128

17.00

Foreign companies and individuals

2,299,597

10.18

197,871

0.87

Securities companies

Foreign companies
and individuals
10.18%
Other Japanesecompanies
17.00%

Securities
companies
0.87%

Shareholding
ratio

Financial
institutions
37.23%In April 2020, ISEKI received the highest rating as one of the “Companies doing environment-friendly
business activities progressively,” 14 times in a row, by the Development Bank of Japan Inc., inreceiving loans under the DBJ Environmentally Rated Loan Program.
Points that are highly evaluated in the rating for this year
❶ ISEKI is steadily striving to upgrade and spread environmental management

ISEKI Report 2020

Individual
shareholders
and other
34.72%

Initiatives that support value creation

Mizuho Bank, Ltd
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
The Norinchukin Bank
Sumitomo Mitsui Trust Bank, Limited
Iseki kabushiki hoyukai (Company’s
Stockholding Co-op.)
The Iyo Bank, Ltd.
Iseki eigyo-hansya group syain mochikabukai(Business-selling Group Holdings)
Sompo Japan Nipponkoa Insurance Inc.
Japan Trustee Services Bank, Ltd. (Trust Account 5)

2,760

Financial data(yen)

Number of shares Shareholding
held (shares)
ratio (%)

Name of major shareholder

Company information

Major shareholders (top 10)

Value creation of ISEKI Group

Name

Status of shares

57

Main locations

ISEKI Group

Corporate information

Note 1. ISEKI-Shigenobu MFG. Co., Ltd. is a wholly owned subsidiary of ISEKI-Matsuyama MFG. Co., Ltd. and is a consolidated subsidiary.
Note 2. Kita-Nihon Shodo K.K. is a wholly owned subsidiary of ISEKI Hokkaido Co., Ltd. and is a consolidated subsidiary.
ISEKI Report 202058