DENKI KAGAKU KOGYO KABUSHIKI KAISHA CSR REPORT 2008

Published on November 2008
by Denki Kagaku Kogyo Kabushiki Kaisha

From the standpoint of environmental considerations, this report is printed on FSC-certified paper, paper
made from well-managed forests and other controlled sources.Also the report is printed with VOC-free soyinks and waterless planographic process printing method is used that does not output harmful waste water.
This report was printed on Forest Stewardship Council-certified paper, which was sourced from well managed
forests and other controlled sources. It was also printed with soy inks free from volatile organic compounds andwith a waterless planographic process that does not create harmful water discharges.

TOP MESSAGE

Ta b l e o f C o n t e n t s

Message from the President ……………… 3
DENKA CITY ………………………………… 4

CSR at DENKA
Corporate Philosophy and Guidelines…… 6
01. CSR at DENKA………………………… 7
02. Corporate Governance and Compliance…… 8
03. DENKA 100… ………………………… 11■

Serving Society
01. Products that Contribute to the Environment,

Safety, and Health… ……………………… 12
02. Maintaining Product Safety… ……… 15
03. Management Systems… …………… 15
04. Fostering Recycling…………………… 16

Social Contributions
01. Community and Social Activitie… … 18

Cultivating Our Employees
01. Employee Education… ……………… 22
02. Good Company Program Initiatives…… 23
03. Occupational Safety and Hygiene Initiatives…… 24

Tackling Environmental Issues■

Total environmental impact of all businesssites in ﬁscal 007…………………………… 25■ Medium-Term Environmental Plan…… 26■ Overview of RC Activities… ………… 26
01. Tackling Global Warming… ………… 28
02. Outputs………………………………… 31
03. Environmental Accounting…………… 33
04. Environmental Performance………… 34

Serving Shareholders and Investors
Investor Relations Activities in Fiscal 007… … 35
01. Consolidated Financial Highlights 36
02. Review of Operations in Fiscal 007……37
03. Group Research and Development Activities…… 39
04. Production and Marketing Bases…… 40
05. Major Afﬁliates… ……………………… 42
06. Our Consolidated Financial Statements 44■ Corporate Data… ……………………… 46■ Third-Party Audits… …………………… 47■ Editorial Afterword……………………… 47■

Editorial Policy
Regarding CSR (Corporate Social Responsibility),
DENKA set up its CSR Promoting Department in April

Pursuing Lasting Trust as
an Outstanding Manufacturer

2007 to coordinate Responsible Care* and otheractivities throughout the organization. The Company
published its first CSR Report in October 2007.
This second edition presents our businesses andactivities for customers, society, employees, andshareholders and investors, as well as environmental
initiatives to demonstrate our efforts to build trust
among all our stakeholders. We improved the legibility
and readability based on reader feedback and focusedmore on community initiatives.
In preparing the report, we referred to Reports on
Environmental Guidelines 2003 of Japan’s Ministry of
the Environment and Version 3 of the Sustainability
Reporting Guidelines of the Global Reporting
Initiative.

Scope of Report
CoverageThis report generally covers April 1, 2007, through

DENKA has come a long way since its establishment inthus a prime priority of "DENKA100". This company-wide

March 31, 2008, although it also includes perfor-

1915 to manufacture and sell calcium carbide and cal-initiative encompasses pursuing new challenges in CSR

mance statistics before that period.

cium cyanamide. We have built on our carbide chemicaland five other areas as we drive toward our centennial.

foundations to expand into cement and other inorganic

The DENKA Group Guidelines underscore our CSR commit-

materials and petrochemicals. Our lineup now includes

ment as a chemical products manufacturer in 10 key res-electronic materials and pharmaceuticals.

pects, including the environment, safety, employment,

We have always endeavored to enhance lifestyles andcompliance, and social contributions.

foster social progress by innovating quality products that

We would greatly appreciate your feedback on this report

incorporate outstanding technologies.

on our basic CSR activity policies and achievements, and

DENKA must keep benefiting society, shareholders,look forward to your ongoing support as we step up ourcustomers, employees, and the environment to continue

CSR endeavors.

Scope
Unless stated otherwise, the data in this report isbased on information on DENKA’s plants and research center. The plant and research center data
encompass major affiliates within those facilities.

For more information
CSR Promoting Department
DENKI KAGAKU KOGYO KABUSHIKI KAISHATEL. +81-3-5290-5511
FAX. +81-3-5290-5149
Nihonbashi-Mitsui Tower,
1-1, Nihonbashi-Muromachi 2-chome
Chuo-ku, Tokyo 103-8338, JAPANhttp://www.denka.co.jp

growing and building corporate value.

September 2008

Pursuing lasting trust as an outstanding manufac-turer is

Seiki Kawabata
President＊The definition from the Japan Responsible Care Council is: Activities undertaken by the chemical industry by which manufacturers and handlers of chemical substances, under the
principle of self-determination and individual responsibility, conduct self-management of environmental and safety issues surrounding aspects of chemical substances, fromdevelopment through disposal.

CSR at DENKA

Hydroelectric power plants

DENKA∑80N; high-strength concrete

Highlighting applications for DENKA’s products and technologies.

Quick-setting agents for sprayed concrete linings

Eel farms

DENKA NATMICElectric trains

DENKA AN PLATE and DENKA ALSINK
ceramic base plates for inverters

HISUI EEL

Bridge supporting materials

DENKA PRETASCON and DENKA HARDLOC II

Golf clubs

DENKA CITYHARDLOC; assembly adhesive

Cellular phones

MALECCA; heat-resistant ABS resin

Train exteriors

DENKA DX FILM

Wetsuits

Underground drainpipes

TOYO DRAIN

DENKA CHLOROPRENE

Concrete repairs

DENKA Rising Method and
DENKA HARDLOC II

Joint function improvers

Macromolecular sodium hyaluronate

Solar batteries

DENKA DX FILM; back sheet
MONOSILANE GAS; an ultrahigh-purity special gas
TEMPLOC; Temporary coupling agent

Automated multi-story car parks
DENKA POWER CSA

Advertising on bus exteriors
DENKA DX FILM

Flat panel display televisions

Wallpaper adhesives
DENKA EVA TEX

DENKA HITT PLATE;
insulated thermally conductive metal circuit board
TRANSPARENT POLYMER
DENKA THERMALLY CONDUCTIVE SHEET and SPACER

Rain gutters

TOYO GUTTERS

Air conditioners

Office buildings, condominiums, and other structures

DENKA CEMENT

DENKA HITT PLATE
Inverter circuit board

Game machines

TRANSPARENT POLYMER

Air Conditioners

Digital cameras

WALL DUCT;
piping protective
and decorative cover

HARDLOC OP; lens adhesive

Quake-resistant construction material

DENKA TASCON

DVD players

HARDLOC UVDENKA THERMALLY CONDUCTIVE SHEET and SPACER

Personal computer

FUSED SILICA; Semiconductor sealant filler
DENKA THERMALLY CONDUCTIVE SHEET and SPACER

Audio equipment

Holding material for combustion catalysts
in automotive exhausts

DENKA ALCEN; alumina short fibers

DENKA HITT PLATE;
insulated thermally conductive
metal circuit board
DENKA THERMALLYCONDUCTIVE SHEET and SPACER

Coolant

DENKA POVALElectromotive power steering controllers
DENKA HITT PLATEHigh thermal conductivity circuit boards

Automotive interiors, vehicle-mounted
audio equipment, and door mirrors

Vacuum cleaners

TRANSPARENT POLYMERSFood packaging materials

DENKA THERMOSHEET OPS

MALECCA; heat-resistant ABS resin

Wire harness tapes for bundling
VINI-TAPE

Hoses, belts, boots covers, and air suspensions

DENKA CHLOROPRENE and DENKA ER; synthetic rubbers

Synthetic wig fibers

Fertilizer

TOYOKALONCALCIUM CYANAMIDE and AZUMIN

Refrigerators

DENKA ABS resin
DENKA STYROL MW

PET bottle labeling film

CLEAREN; SBC resin01

At DENKA, we undertake ongoing internal and external efforts to identify ways
to implement CSR.

CSR at DENKA
At DENKA, we undertake ongoing internal and external efforts
to identify ways to implement CSR.

CSR Concepts

Our CSR Approach

CSR is one of six priorities in "DENKA100" (see page 11), a companywide

CSR at DENKA

CSR at DENKA

safety, employment, compliance, and social activities

Each employee is responsible for our CSR efforts in daily operations.

issues. Companies must be proactive and accountable indealing with these issues.
Mamoru Hoshi, Senior Executive Officer

SocietyIn April 2007, we launched "DENKA100" companywide toContribute tocommunities by
ensuring compliancemeet new challenges heading toward our centennial in2015.
Relationships with stakeholders are essential for us toprogress sustainably. It is indispensable for us to operate
in keeping with CSR requirements, which are pivotal toCorporate Philosophy and Guidelines
The DENKA Group philosophy is to become a corporation that creates value"DENKA100".
We are endeavoring to fulfill our CSR obligations as agood corporate citizen for the following stakeholders.

Pursuring Lasting Trustas an Outstanding Manufacturer
The environment
Care for the environment
Maintain safety

from resources by fully utilizing advanced technological capabilities. The
Group's 10 CSR guidelines are as follows.

Stakeholder

CSR issue

Customers

Develop and supply high-quality products that areeconomical and useful.

Society

Act as a good corporate citizen to ensure compliance andcommunicate better with communities.

Employees

Offer comfortable and rewarding workplaces.

The environment

DENKA Group Guidelines
1. We will promote sustainable social and business development out of aconviction that Corporate Social Responsibility is the essence of business.
2. We will contribute to sound social progress by developing and supplying
products and services that are safe and environmentally friendly.
3. We will operate fairly.
4. We will keep communicating well with society and disclose appropriate
information.
5. We will comply with laws and regulations and operate fairly according to

Stakeholders andinvestors

basic human rights.
7. We use, reuse, and recycle resources to help protect the environment.
8. We will maintain security and disaster prevention measures, participate inenvironmental protection activities, and communicate with society.
9. We will contribute to society as a good corporate citizen.
10. We will contribute to the social development as a good member of the
global community.



EconomyContribute to stakeholders
Increase customer satisfaction
Satisfy employees

Prevent global warming (reduce carbon dioxide emissions),
control chemical substances emissions, reduce waste, andinnovate technologies that conserve energy.
Stably improve business results and build trust byexchanging information.

CSR Promoting Department Activities

CSR Organization as of April 2008

The CSR Promoting Department oversees CSR issues
related to many areas of the Company. The department
collaborates with the DENKA 100 Promoting Department
and the Investor Relations and Corporate Communications

President

Department to promote CSR internally and externally.

Responsible Care (RC) Committee
Safety Measures Headquarters

Main Activities

social norms.
6. We will maintain safe, clean, and comfortable workplaces and respect all

CSR at DENKA

CSR encompasses tackling companywide environmental,

initiative that will help us meet new challenges in driving toward our centennial.

① Define basic CSR policies and comprehensive solutions for the
DENKA Group② Educate and enlighten on Group CSR activities

CSR Promoting Department

Product Liability (PL) Committee
Ethics Committee
Security Export Control Committee(collaborating with the DENKA 100 Promoting Department)③ Publicize CSR activities(Investor Relations and Corporate Communications Department)④ Internally and externally communicate CSR achievements⑤ Help improve our Application Management System(collaborating with the Internal Auditing Department)

Risk Management Committee
Internal Auditing Department
Investor Relations andCorporate Communications Department⑥ Secretariat for other CSR activitiesWe constantly endeavor to improve corporate governance to earn the trust of all
stakeholders.

Corporate governance enhancements in 2008
included the appointment of external directors.

Compliance
Compliance is essential for sustainable growth. We

We formulated our Risk Management Guideline tocomprehensively tackle incidents that greatly
affect corporate activities
Risk Management

Internal control systems are fundamental to meeting

accordingly adhere to internal rules and legislation refrain

It is important to understand the diverse and numerous

society’s expectations and gaining its respect. We willfrom acts that violate moral and ethical norms. In 2002, we

hazards of corporate activities through proper risk control.

continue to improve our systems in line with the policies ofcodified conduct standards in the DENKA Group Ethics

In general, each business unit is responsible for identifying

the Board of Directors. The following outlines specifics.

Policy.

and managing its specific risks. We maintain special sec-

We established the Ethics Committee, which the president

tions and permanent committees to handle environmental,

lders, customers, local community and employees, andother stakeholders. Corporate governance underpins social

1 Board of Directors and Executive Officers

chairs, to oversee compliance and enforce the policy. We

safety, product liability, and export control issues that affectrespect and support. We have thus taken steps to improve

Two of our 10 directors are external. We reformed this body

adopted compliance policies for the Legal, Environmental

the entire Company.

our board of directors and auditing system while stream-by eliminating ranks within the board while reinforcing its

and Safety, Intellectual Property, and other departments.

We formulated our Risk Management Guideline to com-lining our management organization and bolstering our

supervisory functions.

We educate employees on compliance through programs

prehensively tackle incidents that greatly affect corporate

compliance system.

The board appoints executive officers to run operations

that the Human Resource Development Center runs.

activities. We also set up the Crisis Measures Headquarter

under the leadership of the president.

Corporate Governance Structure

and the permanent Risk Management Committee.

We operate a compliance hotline to ensure
fairness and swift action.

We adopted a Corporate Auditor System as the basis of our

2 Internal Auditing System

Corporate Governance System. The Board of Auditors

The Internal Auditing Department conducts most of ourincludes two independent members, assessing our

in-house checks, with assistance from the Legal,

operations and management to ensure that our business

Environmental and Safety, and Quality Management

This system covers any shortfalls in our internal control andproperly serves stakeholders.

departments. It also works closely with our Product Liability,

compliance systems by enabling us to fix organizational

Shareholders appointed our two external directors at the

Responsible Care, and other committees. Each department

problems that may arise. We set up Compliance Hotline inannual general meeting on June 27, 2008, to reinforce

and committee collaborates to educate on legislation andkeeping with the DENKA Group Ethics Policy.

management oversight.

audit operations. The results go to the Board of Directors.

The hotline accepts calls on actions that may or do violate

The chart below shows our corporate governance structure

We inaugurated the Compliance Hotline System to supple-

that policy. The Ethics Committee quickly addresses

including the internal Audit System.

ment internal audits by swiftly identifying and addressing

reports.

violations (see page 9).

The hotline’s mandate is to remain fair and swift. It receives

Compliance Hotline System

reports from the Corporate Auditors’ Office and labor union,
which operate independently, as well from the Ethics

Overview of Risk Management

Chairman of the Board / President (CEO)In the case of
emergency,etc.

ReportReportSetup and
instructCommittee Administrative Office and general affairs

Corporate Governance System

sections within all offices. People can send reports to an

Specific risks(Organize Committee)

Election/Displacement

Executive Directors
Executive Officers
Various Business S e c t o r s
Affiliates
Internal Audit
Internal Auditing Department
Each Sector Conducting Internal Audit(Administrative Dept. Legal Dept.Environment and Safety Dept. Quality Management Dept. etc.)

Compliance Hotline

Appointment/Dismissal

ReportExecuting Sector

Representative Director

Audit Corporate Auditor(Board of Auditors)

Appointment/Dismissal

Supervise

ReportReportDirectors (Board of Directors)

Appointment/Dismissal

Appointment/Dismissal

Assistant

Risk Management Committee

auditors.

Proxy organizations according to case

The DENKA Group Ethics Policy specifically safeguards

Ethics Committee
Safety Measures HQ

whistleblowers from discrimination and mistreatment.

Major cases ofcrisisBoard of Directors

Crisis Measurs
Headquarter

Reportexternal law firm. They can also email reports to internal
General Stockholder's Meeting

Other Risks

RC Committee
PL Committee
Security Export Control Committee

ReportMonitoring/
Instruction Report

Monitoring/
Instruction

Corporate Auditor's Office

Audit

Conduct Audit/
Auditing Staff
Financial Auditor (Auditing Firm)

Sector In-charge of Case
Business Sector(Sales Div. Manufacturing Div. etc.)
Management Sector
Internal Auditing Dept.
Environment and Safety Dept.
Legal Dept.
Accounting & Finance Dept. etc.

(

)



Corporate Governance and ComplianceCorporate GovernanceWe must meet the expectations and respect of shareho

Internal Controls

We set up the Ethics Committee to enforce the
DENKA Group Ethics Policy.

CSR at DENKA

02

Corporate Governance and ComplianceInformation Management and Personal Information
We responded to the full enforcement of the Personal
Information Protection Law in April 2005 by establishing a
Personal Privacy Policy to prevent data leaks andimproper usage. We also formulated the DENKA GroupWe allocate tasks as follows in line with enforcement
standards.
1. Companywide internal controls
2. Internal control for operational process
3. Internal controls for settlements and financial reporting
4. Controls over general information and technology

03

DENKA 100
We are pursuing new challenges companywide toprepare for our centennial.

We launched DENKA100 in April 2007 prepare for ourcentennial in 2015.
What is DENKA100?

thinking.

Personal Information to conduct requirements for directors

In addition, we set up the Internal Auditing Department

We launched this companywide initiative to double

and employees. Our website includes a page describing

oversee tasks groupwide and swiftly address any prob-

operating income between fiscal 2006 and 2015 to 50

3 Cultivate Human Resources
We will better motivate employees by enabling them toour privacy policy.

lems.

billion yen on a nonconsolidated basis and 60 billion yen inthink, learn, and act independently, assisting theirconsolidated terms. DENKA100 comprises the following

activities through education from the Human Resource

six key policies.

Development Center.

URL: www.denka.co.jp/privacy.html

Companywide internal controls

Privacy Policy

Overall information technology controls
Internal controls over operational processes

We undertake a range of internal control initiatives.

(regular operations)Internal Auditing (J-SOX)

Results of business activities

The Internal Control Reporting System is a JapaneseInternal controls over settlements andfinancial reporting processes

version of the Sarbanes-Oxley Act that aims to ensure thecredibility of financial statements. It is crucial to clearly
define and implement work practices within the organization

Financial statements and internal control reports

CSR Milestones
1985

The Canadian Chemical Producers' Association proclaims the Responsible Care(RC) ethos of
independently controlling and managing chemical substances.

1990

International Council of Chemical Association(ICCA) established.

1995

Japan Responsible Care Council(JRCC) established; we become a member.

4 Enhancement of Productivity
1 Business Development "DS09"
This policy is the first stage of DENKA100, covering fiscal

We will strengthen the technological and other capabilities

2007 through 2009. During that period, we aim to increase

and raw materials, improving equipment and facility

consolidated operating income from 30 billion yen in fiscal

capacities, and creating high-value-added products.

2006, to 43 billion yen. On the nonconsolidated basis, the5 Promotion of Research & Development

goal is to boost operating income to 35 billion yen, from 25

The Research and Development Department is leading

billion yen in fiscal 2006.

efforts to accelerate R&D, strengthen existing product

2 GCP2.0 Initiative to Raise Employee Awareness andlines, and create new environmentally friendly offerings.

Improve Operation

6 CSR

We are building on our Good Company Program to

We are endeavoring to fulfill our CSR requirements,

enhance employee awareness and pursue operational

focusing particularly on the environment, securereforms, thus revitalize the Company through new

employment, compliance, and social initiatives.

of production sites by more effectively using resources

Create our Responsible Care policy and organize our Responsible Care(RC) Committee.
1997	

Start Responsible Care audits.
Create a basic manual to promote product liability measures and organize the Product Liability(PL) Committee.

1998

Organize the Energy Saving Subcommittee.

1999

The Chiba Plant acquires ISO 14001 certification (all plants were certified by 2004)

2000

Publish our first Environmental Report.

Targets of DENKA100

A new set of challenges leading up to our centennial in 2015
To become a corporation that creates “value” from “resources” fully utilizing high technological power.

Discover acetylene and dioxin emissions at our alumina fiber plant and file a report with the relevant

2009Integrate with TOYO KAGAKU Co., Ltd.
Start our first medium-term environmental plan
2004

Inaugurate our Good Company Program(GCP).

2005

Launch our second medium-term environmental plan.

2006

Conduct Japan Responsible Care Conference third-party audits at the Omuta Plant.
Omi Plant begins accepting sewage sludge for its recycling system.

2007

Commence the companywide DENKA100 initiative.
Publish our first CSR Report.

103-year2007

Sections

Sections

Sections +Human Resource
Development Center

Sections +Productivity
Enhancement Center/
Production Process
Department

Corporate social
responsibility

CSR

Create Negative List (a database on environmental chemical substances).

Promotion of research &development

R&D

Launch biomass boiler power generation operations at the Omi Plant.

Enhancement of
productivity

Productivity

2003

Development of
human resource

Motivation

Start presenting information on affiliates in our Environmental Report

GCP2.0The Omi Mine wins the Gold Kanban Award for mining Excellence.

Employee awareness &operational reforms

GCP Version-up

2002

Business
Deployment

DS09

Inaugurate natural gas cogeneration facilities at the Chiba Plant.

DENKA 100 Promoting Deparment

2001

2015

Future plansgovernment agency (becoming a designated facility under the Dioxin Special Measures Act in 2002).

Double operating income between fiscal 2006 and 2015 to 50 billion yen on a nonconsolidated basis
and 60 billion yen in consolidated terms

Sections +R&D
Department

Sections +CSR Promoting
Department

DENKA100 Department (Administration)
DENKA100
Guideline

Become a trustworthy organization
Identify new business opportunities
Operate honorably and foster individual talent

11

Corporate Governance and Compliance/CSR Milestones/DENKA100

Ethics Policy and added the Safe Management of

to reduce the potential for mistakes.

CSR at DENKA

We created rules to protect personal information.

Serving Society

Energy-Saving Thermal Solutions (Electronic Materials Business Unit)

Chemicals manufacturers can play key roles in creating sustainable societies. We benefit
our customers and society at large in numerous ways by developing products that
contribute to the environment, health, and safety. Good examples are light packaging
materials that lower recycling costs and fire-resistant rubber products.

Products that Contribute to theEnvironment, Safety, and Healthcompact, lighter, and energy-saving electronic equipment

organic technologies, and include ceramics, metalthat lowers greenhouse gas emissions. Our offerings

substrates for circuit boards, heat sinks, and thermally

include thermally conductive materials for the electronic

conductive materials and adhesives.

circuits of personal computers, air conditioner inverter

We are developing thermal solutions to capitalize on acircuits (which are power exchange controllers), LED

growing market for energy-saving products. Particular

lights, LED backlights for liquid crystal display televisions,focuses are inverter circuit parts and thermally conductive

electrical automotive components, inverter circuits forapplications for light-emitting diodes (LEDs).

industrial machinery parts and electric railcars, and wind

We create and supply an array of energy-saving solutions

power generator units.

for diverse markets. We help manufacturers create more
Products and Technologies

Safeguarding the Environment with Multifunctional Fertilizers and Agricultural Chemicals

Description
Highly thermally conductive substrate

Including air conditioner inverter circuits
and automobile power steering systems

Fertility Improvement Law.

DENKA AN PLATE

Highly thermally conductive ceramic substrate

Inverter circuits for industrial machineryand electric railcars

CALCIUM CYANAMIDE. This nitrogen fertilizer is as

There are also TORETARO, a new high-performance soil

DENKA ALSINK

Metal matrix composite

Heat sinks for industrial and railways
power controllers parts

effective as agricultural chemicals, and has helped raise

treatment fertilizer, and HIT ALPHA, a liquid agricultural

the productivity and quality of Japanese farm products. We

chemical that we extract from calcium cyanamide and

THERMALLY CONDUCTIVE SHEETS
and SPACERS / ELETHERMAL

Thermally conductive silicon and acrylic sheets

Thermal solutions for densely mounted
electronic parts

make YORIN, a phosphate fertilizer that comprehensively

stabilize.

improves soil in rice paddies, orchards, and fields. AnotherWe will continue to enhance agriculture and productivity

Thermally conductive adhesives
OR Series

Twin liquid acrylic thermally conductive adhesives

Including for setting heat sinks

product is AZUMIN, a magnesium humate fertilizer thatwith multifunctional products that minimally effect thecontains around 50% humic acid in keeping with the Soilenvironment.

Spherical Fused Silica that Reduces the Use of Halogen and Lead (Functional Caramics Dept.)
One key use for our fused silica is as a filler for epoxy

Special Cement Additives to Improve Performance and Safetymolding compounds in semiconductor packages.

(Special Cement Additives Dept., DENKA RENOTEC Co., Ltd.)We commercialized DENKA CSA in 1968 as our firstand reduce maintenance requirements, constraining costs

speciality cement additive. We have since created new

to society while lowering environmental impact andvalue as a top manufacturer of products that improve

boosting safety.

cement and concrete.

We responded to a shift away from scrapping and build-

Our products help shorten projects, a particular benefit

ings by establishing DENKA RENOTEC Co., Ltd., whichwith emergency work, and cut costs. They also provide

provides maintenance and repair services.

greater strength to lighten structures, conserve resources,
Technologies and Products

Features

It is increasingly important to lower environmental impact
by shifting away from halogen-based flame-retardants andlead traditionally added to epoxy molding compounds. We
resolved this issue by harnessing proprietary technologies
to develop spherical fused silica with high flow characteristics. This offering has enabled customers to create
molding compounds that reduce their environmental
footprints.

Advantages

Electron microscope photo of fused silica

Environmentally Friendly TEMPLOC Temporary Bonding Adhesive (Tapes & Adhesives Dept.)

DENKA CSA expansive additive

Reduces the incidence of cracks

Lowers maintenance and costs

DENKA NATMIC quick-setting agent

For spraying concrete

Shortens construction and cuts costs

Manufacturers extensively use thermoplastic paraffin wax

enabling repeated reuse of the water. TEMPLOC cures

For high-strength concrete

Helps lighten concrete structures andconserve resources while reducing
production costs

to temporarily bond glass, quartz, ceramics, silicon, andrapidly under ultraviolet light to shorten adhesion and other

other electronic materials for sawing, slicing, and polishing.

processes.

Shortens construction and cuts costs,
improves reliability, and aids withemergency construction

Large volumes of inorganic and other solvents are crucial

Demand is growing for this innovative product because it

to remove the wax after completing these processes,

cuts costs and safeguards the environment in diverse

generating a lot of contaminated solvents and waste water

applications. They include making glass substrates for

DENKA Σ 1000
high-strength additive
DENKA TASCON
non-shrink grout additive

Fills gaps, provides high strength, andeliminates shrinkage

SUQCEM superhigh-strength
fiber-reinforced concrete

Eliminates the need for reinforcing
bars, enabling the use of light and thinmaterials

Lightens structures and conserves
resourcesthat are expensive to treat. Work areas also suffer.

magnetic disks and cell phones, processing low-pass filter

We resolved these issues by developing TEMPLOC. This

quartz and glass lenses, producing ceramics, andRepair and reinforcement technology(DENKA RENOTEC Co.,Ltd. )Repairs and reinforces cracked,
deteriorating, corroded, and expanded
concrete

Enables more efficient resources usages,
constrains maintenance costs, andassists with disaster recovery

temporary bonding adhesive eliminates the need forprocessing silicon for solar batteries

12

environmentally harmful organic solvents because it isquickly peeled off in hot water. Contamination is minimal,

13

Products that Contribute to the Environment, Safety, and Health

DENKA HITT PLATE(Fertilizer Dept.)

We were established in 1915 to manufacture and sell

Applications

Serving Society

01

Field using CALCIUM CYANAMIDE

Our thermal solutions products combine our inorganic andHARDLOC Assembly Adhesive Helps Reduce Carbon Dioxide Emissions (Tapes & Adhesives Dept.)
welds.

It has been the de facto standard in structural adhesives

This product has won accolades for its performance andfor metals for more than 30 years.

reliability. Its numerous uses have include metal panels on

Welding is the most common way of joining metals, but theelevators, exterior panels on buildings, railcars, control

process requires a lot of thermal energy. But HARDLOC

boxes, radio relay equipment, and outdoor products.

hardens at room temperature, overlapping joints to achieve

HARDLOC has long helped to reduce carbon dioxide

match or exceed the bonding performance of arc and spot

emissions.

02

We ensure safety through our supply chain in everything from raw materials
procurement to research, production, logistics, consumption, and disposal.

Materials Safety and Management Flowchart
ISO 14001, ISO 9001, and Good Manufacturing Practices
Environmental and quality management support for affiliates

1. Rawmaterials

Green procurement (Negative List)

OPS Packagings Are Industry’s Lightest and Cut Waste (DENKA Polymer Co., Ltd.)

3. Production

Materials safety
data sheets (MSDS)

Product safety records

6. Products

2. Outsourced
materials production

4. Outsourced processing
and production

Manufacturing vendor audits

Manufacturing vendor audits

5. Disposal

7. Logistics

8. Customers

Yellow cards
Container labels

Waste contractor audits

The wholly owned DENKA Polymer Co., Ltd., developed

Recycling Law, which the Japanese government revised in

and is expanding sales of lightweight packagings made ofApril 2007, presented new business opportunities. Our

Managing Supply Chain Safety Complying

manifests and confirm collection. We regularly evaluate the operations andfinancial positions of these vendors and visit their sites.

biaxially oriented polystyrene sheet (OPS). If entered thispackagings have reduced the regulatory and social costs

1. Green Procurement We produced a Negative List that defines all

6. Product Safety Records We record all occurrences of impurities orfield after concluding that the Containers and Packaging

of recycling while helping cut greenhouse gas emissions.

hazardous substances in our products as part of our commitment to quality andsafety and minimizing our environmental impact.

7. Displaying Yellow Cards and Container Labels Accidents while

2 & 4. Manufacturing Vendor Audits We outsource some raw materials

We structurally analyzed trays to optimize their shape and ensure lightness without

production and semiconductor processes. We regularly audit manufacturing
vendors based on our standards for quality, logistics, environmental
management, and product safety.

transporting some products could cause significant environmental damage. We
thus require drivers to carry yellow cards that explain post-accident procedures.
We also label containers to ensure swift and proper remediation. We regularly
inform drivers of our requirements and conduct emergency drills.

compromising strength, resulting in excellent packaging wrap performance. Out packagings

3. Environmental and Quality Management Support for Affiliates We

8. Materials Safety Data Sheets We produce MSDS for all products to

OPC-R Range of Transparent OPS Food Trays

are 20% to 30% lighter than conventional counterparts. They are the industry’s lightest

share information with the consolidated affiliates presented on pages 42 and 43of this report to ensure that they meet our quality, environmental, and safety
management standards.

transparent trays for fresh fish, minced meat, dinners, and dried fish.

5. Waste Contractor Audits We commission waste contractors in keepingwith the Waste Management and Public Cleansing Law, requiring them to issue

SOFLIGHT Special OPS Sheet
Our SOFLIGHT special OPS sheet is a next-generation material that is light and transparent.

Collaborating in Chemical Industry Initiatives

It offers improved resistance to cracks and balances rigidity and flexibility. Packagings madewith this material are thinner than A-PET equivalents and are 40% to 50% lighter.

High Production Volume Program

Superlight QX-R Polystyrene Food Trays

ensure proper handling according to physical and chemical hazards and healthand environmental risks. The sheets inform customers and help educate
employees. We regularly revise the sheets on keeping with regulatory trends anddistribute full information to customers. We are revising our sheets in line with theUnited Nations’ Globally Harmonized System of Classification and Labeling ofChemicals (GHS).

Economy, Trade and Industry, and the Ministry of theEnvironment to collect, disseminate, and assess safety
information on around 700 chemical substances. We are

We and other companies collaborate under the auspices

participating in areas of the program that relate the

We produced materials and designs to create these trays, which are 10% to 30% lighterof the International Council of Chemical Associations

substances that we use.

than previous versions. Unlike those of our rivals, our offerings feature side tapering and(ICCA) to evaluate the safety of around 1,000 substanceslarge footprints to improve storage. The trays are also stronger and are shaped for(From top) OPC-R, SOFLIGHT,
and QX-R trays

outstanding packaging wrap performance.

Environmentally Friendly Rubber Construction Materials (CRK Corporation)
Anti-Exposure Fire-Resistant Rubber Products

Waterproof Rubber Productsthat the Organisation for Economic Co-operation and

The Japan Chemical Industry Association, the American

Development (OECD) has designated. These substances

Chemistry Council, and the European Chemical Industry

are used heavily worldwide.

Council oversee this program, in which we are collaborating.

Japan Challenge Program

It entails long-term basic research into carcinogenity andUnder this program, manufacturers are working with theendocrine hypersensitivity from exposure to chemical
substances.

The cables, ducts, and piping of office and residential buildings

We offer butyl adhesive tapes and water-expanding rubber

Ministry of Health, Labour and Welfare, the Ministry ofmust be fire-resistant. Moist, fire-resistant putty normally fills the

products to waterproof U-shaped gutters, sewers, andgaps. Subsidiary CRK Corporation developed an anti-exposure

tunnels and prevent pollution.

03

rubber that works as a heat layer, employing graphite to expand

NEW HOLE TIGHT; A Quake-proof Manhole Joint

4 to 10-fold when exposed to more than 200°C. The rubber

We designed this expansion rubber joint to waterproof

blocks heat and smoke to prevent fires from spreading. The

manholes and sewage pipe joints. It prevents sewage

rubber is dry, unlike putty, making construction easier. High-from entering water and prevents earthquake damage to

profile applications for this product include skyscrapers, fire-sewers.

Management Systems
We are pursuing ongoing improvements based on our quality a n d e n v i r o n m e n t a lmanagement systems.

ISO 14001

cable halls, fireproof packing forwater pipe joints, and Taiwan’s
bullet trains. The product earned
the Gunma Prefecture-sponsored Takeo Nakagawa Tech-

14

Application for fireproof rubber

Earthquake-proof manhole joint

Example of construction

ISO 9001

Date certified

Registration number

Date certified

Registration number

Omi Plant

October 16, 1999

187071/A(BV)

August 19, 1994

275156(BV)

Omuta Plant

October 28, 2000

284330(BV)

November 7, 1998

439189(BV)

Chiba Plant

May 31, 1999

180943(BV)

March 22, 1995

155885(BV)

Shibukawa Plant

May 21, 2001

363444(BV)

October 23, 1996

484541(BV)

prevention materials in Nippon Telegraph and Telephone (NTT)nical Prize in 2006.

Long-Range Research Initiative

Ofuna Plant

November 9, 2001

JQA-EM1895(JQA)

October 25, 1996

JQA-1429(JQA)

Isesaki Plant

September 30, 2003

C2006-02333(PJR)

February 28, 2008

428794(BV)

Central Research Laboratory

July 5, 2004

352185(BV)

-

-

15

Products that Contribute to the Environment, Safety, and Health / Maintaining Product Safety / Management Systems

substances subject to Japanese and international environment management andhazardous materials regulations. Our raw materials and manufacturing processes
are increasingly complying with list requirements.

Serving Society

HARDLOC was the world’s first two-part acrylic adhesive.

Maintaining Product Safety

Using All Sewage Sludge and Waste Plastic in Cement

We created the DENKA Cement Recycling System as part of efforts
to improve our operations and thereby contribute more to society.

Overview of the DENKA Cement Recycling System

Collects andgrinds natural
raw materials
and recycledmaterials to
make cement
materials.

In-house
byproducts
247,000
tons

Limestone

Slag
150,000
tons

Ironmaterial

Materials treated at hightemperatures become clinker
that we further pulverize into
cement powder.

wastes and byproducts and 714,000 tons from external sources afuel inputs into cement. Each ton of cement contains

total of 961,000 tons. It aims to handle more of these resources inaround 400 kilograms of recycled materials.

the years ahead.

The plant has earned top marks for contributing to thecommunity through its operations. It uses byproducts fromits operations and accepts coal ash from the thermal
power stations of electric power companies, slag fromsludge, plastic garbage, and waste tires from local

3

980

1000
800

990

880
735

961

780

745
645

600
400
200

steelmakers, sand from foundries. It receives sewage

1

0

government bodies. The plant also contributes to waste
reductions by getting supplies of carbide from treated2000 2001 2002 2003 2004 2005 2006 2007
(Fiscal years)
External sources

In-house sources

garbage and construction waste from Itoigawa City.

Dryer andraw materials
grinder

Finishing millRotary kiln

Coal ash
272,000
tons

Sewagesludge8,000
tons

it is so efficient at transforming all recycled resource and

Employing Wastes Effectively Extends theLives of Final Disposal Facilities

Raw materials
SilicaIn fiscal 2007, the Omi Plant accepted 247,000 tons of in-house

Fostering Recycling

Clay

Foundrysand
53,000tons

The prime benefit of the DENKA Recycling System is that

Corporate Governance andCompliance

Wastes andbyproducts

Wastes and Byproducts Accepted

Amount treated (1,000 tons)

04

Fostering Recycling

Biomass boiler
for in-house power
generation

4

Uses for the cement include
dams and highways.

2

Waste and Byproduct ConstituentsA Recycling System that Enables
Sustainable Operations

The material recycling process reuses the sludge, fly ash, andThe plant charges steelmakers, power companies, andslag which account for more than 90% of waste and byproducts.

municipalities for treating their waste. The payments help

The thermal recycling process recycles material and fuelmake our cement recycling sustainable and allow our core

wastes and byproducts, and represents around 5% of the total.

operations to continue contributing to the community.

We will continue to treat sewage and fly ash according to

Another factor in recycling scrap wood, plastic, and othergovernment requests.

alternative wastes is that we aim to alleviate global
OthersThe boiler generates power forinternal consumption. All of thefuel is from scrap wood, plastic,
and other recycled resources. We
began operating the boiler in2003 with funding from the NEDO
(see note 2)—New Energy andIndustrial Technology Development Organization.

The kiln roasts the raw materials
at more than 1,400°C.

warming by helping the consumption of fossil fuels.

Working Toward a Recycling-Oriented
Society

Others 18%
Waste oil and plastic
and woodchips, etc. 5%

Accepted
Amount961,000tons

In fiscal 2006, the Omi Plant received an award from thechairman of the Reduce, Reuse, Recycle Promotion
Council. The plant aims to keep refining its waste and

The DENKA Cement Recycling System

Sludge 26%

Slag 21%

byproduct conversion technologies to keep contributing to

Fly ash 30%

a better society.

The First Recycling Plant
Using Numerous Recycled Resources to
Produce Cement
The main constituents of cement are limestone, clay,
silica, and iron material. Few may know, however,that c ement of ten c ont ains an array of recyc led
m ate r i a l s . We b e g a n m a k i n g c e m e n t w i t h s u c hresources in 1954, well before recycling became ahousehold word.

The O mi Plant along the Japan Sea c oast in Niigata
Prefecture is our largest production facility. Nearby is Mt.
Ku r o h i m e, w h i c h h a s a n e s t i m a t e d 5 b i l l i o n t o n s o flimestone, enough for the plant to continue operating forSince beginning operations, the cement facility at the Omi Plant has used byproducts and1,500 years at the current rate. The facility has a power

wastes from in-house and external sources in cement and fuels.

generating capacity of 170,000 kilowatts, and engages in

The DENKA Cement Recycling System is ideal because it harnesses all inputs andproprietary acetylene chemistry. It started making cement

eliminates secondary wastes.

to harness limestone that c annot be used in making

We will keep employing wastes and byproducts optimally to contribute to a better society.

carbide and slaked lime that is a byproduct of acetylene

manufacturing.
Notes:
1. Units of measurement ; The units of measurement used in this report, and their respective abbreviations found in the body of text, are as follows:
Metric ton: ton
Carbon Dioxide: CO2
2. NEDO is Japan's largest public R&D management organization for promoting the development of advanced industrial, environmental, new energy and energy conservation technologies.
16

Makoto Takada

General Manager Cement
Department at the Omi Plant

17

Social Contributions

The Ofuna Festival
Every year, the Ofuna Plant makes its grounds available
to the Fujimicho Town Association on the day of theSummer Festival. In fiscal 2008, food and beverage and

DENKA has a nationwide network of operations. Our six main plants engage in dialogue withchildren’s game booths were erected at dusk to entertain

local communities through various activities, spearheading efforts in fiscal 2007 to share more

numerous people into the evening. A brass band from a

information and experiences with these stakeholders. We will continue striving to be valuable for
local communities and society at large.

Children bear mini shrine at Shiogama Shrine

local primary school students proved popular, performing
many encores. Members of the plant’s popular music clubdebuted with songs from the Beatles and other bands. The

Shibukawa
Plant

01

event cemented the plant’s friendship with the community.

Community and Social Activities

On the following day, local children carried the Shiogama

We are expanding our activities in keeping witha commitment to communicating with local communities.

along the route.

Shrine’s mini-shrine around the town, visiting the plant

Chiba Rinkai Festival
The Chiba Plant participates in the Goi Rinkai Festival
every year in Ichihara City, Chiba Prefecture. The executive committee for the festival comprises local resident,
government, and business representatives. Ties between
local groups are thus ver y close even though a large
petrochemicals complex dominates the area.
Good weather blessed the festival in its 34th year in 2008.

—By Kenji Yamanaka, Ofuna Plant

The festival included performances from local residents

Brass band performance fromprimary school students

and entertainers, as well as a show by actors dressed as
popular characters. These events and booths that local

We planted 8,000 hydrangeas along the median strip of National Highway 17 in
November 1999. We undertook this effort with the Ministry of Land, Infrastructure and

Ofuna
Plant

Transport and Shibukawa City. Nakamura Council manages the flowers. The
Shibukawa Plant readily accepted an assistance request from the early stages of the

Chiba
Plant

companies ran attracted morethan 10,000 visitors. DENKA
participated in the festival byprogram. From April through November, the plant’s employees

selling beverages in PET bo-

work with council members to remove weeds and prune thettles packaged in CLEAREN

hydrangeas.
—By Akinori Kimata, Shibukawa Plant—By Kiyoshi Asami, Chiba Plant

Omuta Daijyayama Festival
Nakamura Council members and Shibukawa Plant employees

This popular time-honored
festival was on July 19 throughNeighborhood Cleanup Program

27, 2008. It started with a fire

Each plant maintains a neighborhood cleanup program

works display. Other attractions

as part of its community contributions.
In fiscal 2008, the Isesaki Plant expanded its monthly
beautification day efforts beyond its premises to encompass

Omi
Plant

neighboring areas. Plant employees worked undercoordinators from each department to weed and collectShibukawa
Plant

Omuta
Plant

included the Minato Festival,
the Gion Rokuzan Jyunko float
parade, a mining song contest,

Primary students on a massive dump truck
during a visit to the Omi Plant

Brave members ofa bellybutton dance troupe

and a procession of children bearing a mini-shrine.

empty beverage cans and other waste from the streets.

Hosting plant visits from local primar y andjunior high school students

The municipal government of Shibukawa produced thewhich 72 employees of the Omuta Plant joined 10,000

The plant aims to broaden its endeavors to contribute more to

The Omi Plant holds facility tours for local primary and juniorslogan, Green Shibukawa—The Center of Japan, in line

people in escor ting a majestic fire-breathing serpent

communities in the Isesaki and Ota areas.

high school students. In fiscal 2007, more than 150 students andwith its desire to energize the city.

through crowds of local residents and tourists.

—By Mamoru Ura, Isesaki Plant

their parents from five local primary and junior high schools

The city has held its summer Belly Button Festival since—By Keiichi Hama, Omuta Plant

visited the plant.

1984. A highlight of several events at the carnival is a

One effor ts to make the events as interesting as possible

parade in which costumed participants dance showing

included allowing the students to climb on a dump truck from thefaces painted on their navels. Around 70,000 people enjoy

Omi Mine. The vehicle is Japan’s biggest, at 218 tons. The plantthe festival every year. At the 24th festival on July 27 andalso enabled students to catch eels. Other attractions were28, 2007, a troupe comprising the General Manager andsimple experiments to familiarize the students with chemistry.

44 other fun-loving employees of the Shibukawa Plant,

The plant intends to keep offering such tours to foster education

demon-strated the results of extensive practice by joining

and contribute to the community.

in the dancing, some wearing Japanese Kimonos or ani-

—By Akinori Adachi, Omi Plant

mal costumes.

Isesaki
Plant

Cleanup around the Isesaki Plant

18

The Belly Button Festival—By Akinori Kimata, Shibukawa Plant

A highlight was a Japanese dance parade on July 26, inDaijyayama
Festival parade

19

Community and Social Activities

The flowers bloom every June for the enjoyment of passers-by.

shrink film labels.

The Ofuna Plant ’s General Manager andother members of the popular music clubplaying at the festival

Social Contributions

Enabling 8,000 Hydrangeas to Bloom Every Year

Planting hydrangeas

Mr. Fukushima (right), head of the
Kawagishi district resident’s association in Ichihara City poses with a
Chiba Plant employee

Omi
Plant

Donating Money for Disaster Relief (Headquarter)

Ministerial Commendation for Safe Mining

The Noto Hanto-oki Earthquake of 2007

On October 18, 2007, the Minister of Economy, Trade, and Industry
awarded the Omi Mine of the Omi Plant’s Resource Department a Gold

The Noto Hanto-oki Earthquake off the Noto Peninsula on March 25, 2007,

Award for Mining Excellence. This was in recognition of outstanding contributions toseverely affected Ishikawa Prefecture.

mine safety and pollution preventing.

DENKA officials visited the Ishikawa Prefectural Office on April 27 to donate

Similarly, the Mining Safety and Health Association of Japan gave the mine its chairman’sfunds for disaster restoration.

The Niigata Chuetsu-oki Earthquake of 2007

award for mine safety excellence. At the commendation ceremony, the association handed
over a gilt-lettered signboard and a medal. Both awards renewed our determination tocontinue improving mining safety and maintaining our zero-accident record.

The Niigata Chuetsu-oki Earthquake on July 16, 2007, caused extensive
Shimauchi,General Manager of the Resource
Department with gilt-lettered signboard

damage around Niigata and Nagano prefectures. Officials from DENKA visited
the Niigata Prefectural Office on August 9 and the Itoigawa Municipal Office on
August 30 to offer donations for recovery efforts. The officials also expressedGold Mark Certificate for Fire-Fighting Excellence

Mr. Hiroshi Izumida (right), Governor of Niigata
Prefecture, and President Kawabata

sympathy for victims and prayed for swift reconstruction.

On January 28, 2008, the Fire and Disaster Management

On March 4, 2008, Mr. Hiroshi Izumida, the Governor of Niigata Prefecture, handed

Agency of the Ministry of Internal Affairs and Communications

a letter of appreciation to President Kawabata.

Tokyo. The Omi Plant received a Gold Mark for its campaign toseek cooperation from private companies to solicit collaborationfrom other companies to stem a decline in the number of firefighters.
The certificate is for outstanding corporate contributions tomaintaining and assisting firefighter organizations. DENKA was
one of only four companies nationwide to receive a certificate infiscal 2007.
On January 28, 2008, the Omi Plant received a Gold Mark certificate for
its fire prevention support team from Mr. Kenji Araki, Commissioner of
the Fire and Disaster Management Agency

as part of which 96 employees serve on firefighting teams.

Mitsui Public Relations Committee held a Friendship Concert programin Omuta, Fukuoka Prefecture, on May 29 to 31, 2008. DENKA is amember of that organization.
The three renowned performers, known as the Fureai Trio, were violinist
and leader Kyoko Yoshida, pianist Mitsutaka Shiraishi, and cellist
Kazumasa Hayashi. The they have performed for 60,000 children around
Japan through such concerts. The Omuta event marked 244 series
concerts over five years, thanks to the enthusiasm of musicians, theMitsui Public Relations Committee, the Foundation Japan Culture Centerfor Youths and Children, and Japan Arts Corporation, a music promoter.
Also contributing to the success of the Omuta concer ts were

A Moving Friendship Concert Program at Meiji Primary School
The people of the Mitsui Public Relations Committee
made possible a Friendship Concert at our school. It
moved me to see the trio played in front of the children in
our music room and talk about their craft.
They set aside time for students to try the violin andparticipate in a body percussion performance for all theattendees. The children thoroughly
enjoyed the exposure to classicalmusic. I thank the people of the
Mitsui Public Relations Committee
for providing the students with sucha wonderful experience. I wish thecommittee the very best in its local
contribution activities.
—Ms. Naoko Baba, Deputy Headmaster of Meiji Primary School

employees from Mitsui Group companies and their families, as well as

Omuta
Plant

workers from our Omuta Plant. DENKA received a letter of appreciation

Holding Job Guidance Lecture for
People with Disabilities

from Ms. Naoko Baba, deputy headmaster of the Meiji Primary School,
which was one of the concert venues.

Medical institutions and employers participate
in a job guidance initiative of the Omuta Public Employment
Security Office for people with disabilities.
Responding to a request for collaboration in this initiative, in2007 the Manager of the Omuta Plant’s General Affairs Sectiondelivered a lecture on the attributes of good workers, after
which participants toured the facility.
This initiative aims to assist people who seek work but needmore preparations or who are finding it hard to secure a job. It provides

The job guidance lecture

Mr.Michio Koga (front center), Mayor of
Omuta, Mr. Tadao Miyata (front left),
Superintendent of the Board of Education,and the Fureai Triopractical advice so these people can improve their chances of getting jobs.
In the lecture, the Manager described the employment challenges that people
with disabilities face, the meaning of work, and the professional attitudes andself-motivation required of plant employees.
We hope that the lecture broadened participants’ employment opportunities, andwill continue to foster the cause of work for people with disabilities.

20

The Fureai Trio visited the Meiji, Suwa, and Kawajiri
primary schools in Omuta.

21

Community and Social Activities

Omi Plant’s certificate was for assisting with local fire prevention,

Friendship Concert in Omuta
Sponsored by Mitsui Public Relations Committee

Social Contributions

held a grand certification ceremony at Nissho Hall in Minato-Ku,

Cultivating Our Employees

02

Human resources development is one of six key "DENKA100" priorities, as ourpeople are central to our growth. We maintain a range of programs to enhance

We instituted the Good Company Program (GCP) to raise employee
awareness and reform operations under "DENKA100".

All employees participate in GCP Group Activities. Departmental and sectional groups pursue improvements. They include

the skills of employees, including those of the Human Resource Development
Center.

Good Company Program Initiatives

creating accident- and disaster-free work sites and raising reform awareness.
In-house training course

Specific activities include maintaining and enhancing safety and hygiene, protecting the environment, reviewing production
technologies, operational Kaizen initiatives, human resources development, and other priorities for department.

01

Employee Education）

We continued our employee awareness reform
efforts through semiannual group presentations.

The programs of our Human Resource Development Center
help employees develop their career paths.

DENKA100 Presentations

In-House Education and Training
Personnel Requisite

Anticipated Fruits of Training(1) Strive constantly to better yourself through businessand social activities(2) Always respect others and remain humble and positive(3) Always be selfless(4) Drive change through teamwork(5) Gain broad insights, superior problem-solving skills,
and the ability to transform potential into reality(6) Be cost-conscious(1) Personal Growth: Harness greater skills, knowledge,
techniques, and performance to boost profits(2) Organizational Growth: Improve better teamperformance from collaboration within and between
business units(3) Corporate Growth: Enhance DENKA’ s profitability,
brand, and reputation

Issuing DENKA100 NewsWe held two DENKA100 Presentations (formerly GCP

GCP News became DENKA100 News in August 2007. We

Presentations) in June and December 2007, with 18

use this newsletter as a toolgroups participating in the first event. The following

to publicize various topics,

highlights some of their presentations:

including reports on orien-• Maintaining and improving security and safety andtations, presentations, andpromoting energy saving efforts (Chiba Plant)

business results.

• Challenges in operational Kaizen and efficiency

We issued the 26th throughinitiatives (Central Research Center)48th editions of this news-• Progress report and the results of internal activities toletter in fiscal 2007.

corporate social responsibility, and purchasing courses.

reduce breakdowns (Omi Plant)

1 Mandatory Job Level-Based Training

3 Educational Support• Initiatives to enhance training and reduce breakdowns

Under these programs, employees acquire the knowledge

We assist employees taking language classes and corres-(Ofuna Plant)

they need to fulfill their duties. We train new managers,

pondence courses. We also support those acquiring cer-

• Technologies to support research and infrastructural

young employees in their fifth year with DENKA, and othertain formal qualifications.

improvement (Central Research Center)

employees. The main focuses are such business funda-

4 Business Unit Training• Safety activities (DENKA Azumin)mentals as compliance and other legal areas, as well as

Each business unit identifies areas needing improvement

Departments promoting on the six main priorities of "DEN-

safety initiatives. We trained more than 200 employees inand formulates and implements its own programs. Then

KA100" participated in the second presentation, sharing

fiscal 2007.

effort is constantly focused on establishing, planning andtheir plans and reporting on progress.

2 Specialist Courses

executing original educational/training programs according

In fiscal 2007, nearly 700 employees took accounting,to each operation to help improve the knowledge and skills

business, information technology, trade, investor relations,of each individual employee.

General manager program

Managers

Manager program

Assistantmanagers

Assistant manager program

New management
programChief program

Follow-up program
New employee program

22

Assistant chief program
Technical worker program
General staffer program

We published this document to summarize progress since we launched the
We distributed the reportin-house in June 2007.
GCP Progress Report

Promoting "DENKA100"
We displayed the "DENKA100" poster and distributed
promotional goods to promote this initiative companywide.
"GCP Grand Award"
winning group

Specialist Courses

Business Unit
Training(including patents, quality control, and analysis)

Technical

Omi Plant

Management

Omuta Plant

Sales

Chiba Plant

Sales and Production Management Project

Shibukawa Plant

We undertook stage two of this project to share information

Ofuna Plant

between sales and manufacturing units so they could improve(including legal issues, accounting, and CSR)
(including logistics, trade, and purchasing)

Educational Support
Personal
advancement
driving results

Regularemployees

Five-year program

Company’s growth
contributing to social
progress

Generalmanagers

GCP Progress Reportprogram in October 2004.

Overview of Training and Educational Programs
Mandatory Job Level-Based Training

English version of DENKA100 News

Cultivating Our Employees

Key Programs

We produce various printed materials to report on
progress in GCP activities and presentation results.

Language courses
Correspondence courses
Subsidies for acquiring formal qualifications

Isesaki Plant
Central ResearchCenterAttendees at DENKA100 Presentation

Screen cleaner

their productivity and enhance customer satisfaction. The maintasks to sort out production plan issues and properly deploy
and use software.

Employee Education Good Company Program Initiatives

There were around 120 GCP groups as of July 2008, including those of affiliates. Departmental heads are group leaders.

"DENKA100" poster

23

03

Occupational Safety and Hygiene Initiatives
We endeavor to maintain safe and comfortable workplaces
and prevent disasters for social peace of mind

We undertake safety activities through our Workplace
Safety Exchange Program and other initiatives.

Each business site needs to care for the mental health of
employees. We strive to prevent and swiftly detect
disorders through educational programs (covering

Occupational Safety and Hygiene Management Systemmanager responsiveness and self-care) that meet the

In February 2007, the Chiba Plant acquired OHSAS18001

requirements of each operation. We also offer individual

certification for satisfying occupational health and safety

consultations through company doctors.

standards. The Omi Plant is building its OSHMS (Occupational
Safety and Health Management System).

Occupational Safety Activities
We focus on preliminary risk assessments on facilities,

We prevent a disaster and improve security through experiential
programs that enhance employees’ risk and safety awareness.

Tackling
Environmental Issues
Cement recycling (see pages 16 and 17) exemplifies ourenvironmental efforts. We make cement out of wastematerials that would otherwise become landfill. We havecreated a sustainable system that conserves resources
and reduces waste without compromising profitability.
The table below shows the total environmental impact of
all our business sites in fiscal 2007. It demonstrates that
we are making steady progress in ecological efforts aspart of our Responsible Care initiatives.

Safety Education

chemical substances, and operations.

Each workplace decides its standards for the qualifications,

We regularly hold presentations on each plant’s prime

skills, and knowledge needed to engage in operations, andsafe t y a c t i v i t i e s and have site operators exc h a n g e

conducts planned training programs to improve employee

information through the Workplace Safety Exchange

capabilities. We educate on safety skills through plans to

Program. This is an excellent opportunity for operators, as

increase effectiveness, particularly among supervisors.

they normally seldom see each other. The program fosters

We have reduced employee accident risks and exposure tocollaboration between plant managers and employees

danger by installing foolproof and fail-safe equipment while

alike and helps raise safety awareness.

increasing machine and device automation.

Although accident rates declined in fiscal 2007 because of

At the same time, we recognize that employees can becomesuch initiatives, the accident severity rate deteriorated because

insensitive about the underlying risks of chemical plants. We

one employee of a subcontractor was electrocuted. We willthus hold accident simulations with models of devices andredouble our efforts in the years ahead.

dangerous objects similar to what they find in the workplace.

Total environmental impact of all business sites in fiscal 2007
Inputs

Outputs

Business Activities

Products

Fuels

549,000

Air emissions

kiloliters

CO2 (from energy sources)・・・・・・・・・

Electricity

CO2 (from nonenergy sources)・・・・・・

1.53

SOx ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

billion kWh

NOx ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

Occupational Safety ResultsFrequency rate

2.5

Source: Japan Industrial Safety and Health Association
DENKA
Chemical industry average(calendar year)
Subcontractor
Manufacturer average(calendar year)

2.0
1.5

We conduct preliminary safety evaluations, holdsafety management conference, and fire drills.
Security and Disaster-Prevention Activities
Previous accident cases have taught us to expect the

1.0

unexpected following changes in raw materials, facilities, or

0.5

operating conditions.

0.0

Safety units in our manufacturing, engineering and environ90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Fiscal year

Number of deaths and injuries
Disaster frequency rate =x 1 million
Total number of working hours

Water

83.2

million tons

Soot and dust ・・・・・・・・・・・・・・・・・・・・・・・

Plantsof
DENKA

PRTR Substances ・・・・・・・・・・・・・・・・・・

External waste

Water discharges

714,000

COD ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

tons

mental protection operations collaborate in activities toeradicate facilities accidents, manage changes, andWaste generatedRawmaterials

We implement and oversee

92,000 tons

maintain safety and security.

voluntary standards thatAmount recycled
externally

Waste reductions from water
removal and incineration

Final disposal(as landfill)・・・・・・・・・・・・・・・・・・・・・・・・・

9,620 tons

7,450 tons
2,930 tons

Each section of the Omi

exceed those of the Labor

Plant has held such ga-

Safety and Hygiene Act,

Explanation of Inputs

therings to date. The Chi-

and assess workplaces andFuels are the sum of all fuels used at each businesssite, converted into heavy oil equivalents on a calorie
basis. They include fuels for our in-house power plants.
Electricity is total hydroelectric and purchased power.

ba Plant began holding

individual exposure levels.

such conferences in fiscal
Mental health seminar

24

Amount recycled
in-housethus regularly organize safety management conferences to*Units of measurement ;The units of measurement
used in this report, andtheir respective
abbreviations found in the
body of text, are as
follows:Metric ton: ton
Carbon Dioxide: CO2

112,000 tons

・・・・・・・・・・・・・・・・

Safety is the top priority at plants at risk of fire or explosion
or operating high-temperature equipment. In-house expert

Maintaining Hygiene

1,630 tons
52 tons

PRTR substances ・・・・・・・・・・・・・・・・・・・

improve and spread preliminary evaluation measures.

We tackle mental health issues.

1.70million tons
1.41 million tons
1,740 tons
5,900 tons
150 tons
143 tons

2008.

Fire drill

Explanation of Outputs
CO2 emissions from energy sources are from fuel and electricity purchased.
COD is equivalent to BOD discharges in rivers.
External waste recycling covers materials converted externally into resources or fuel.
Final waste disposal refers to materials buried in in-house and external landfill sites.

This environmental impact data encompasses our key plants and major affiliates
within those facilities. DENKA absorbed Denka Kako Co., Ltd. as the Isesaki Plant in
October 2007, including that facility in the scope of this report.

Main affiliates

At Omi Plant: DENAL SILANE Denak, and Juzen Chemical
At Chiba Plant: Chiba Styrene Monomer, TOYO STYRENE, and Taiyo Vinyl

25

The third three years of the medium-term environmental plan (EM09)

We are pursuing the targets of our medium-term environmental plan.
Medium-Term Environmental Plan
We are pursuing environmental improvements as part of medium-term initiatives. In fiscal 2007, we began the third part of a
new three-year plan, EM09, which focuses on conserving energy, lowering Pollutant Release and Transfer Register emissions,and addressing wastes. We reached our waste final disposal objectives during the year, but were off-target in terms of energy
conservation and Pollutant Release and Transfer Register emissions. We are analyzing why, and will deploy solutions from next

Item

Fiscal 2006
ActualFiscal 2007
TargetActualFiscal 2008
TargetFiscal 2009
TargetEnergy conservation (with fiscal 1990 as base year)

90.5%

89.1%

89.9%

87.5%

87.1%

Emissions of PRTR Substances

221 tons

172 tons

195 tons

158 tons

117 tons

Final waste disposal

3,660 tons

3,920 tons

2,930 tons

2,390 tons

1,720 tons

fiscal year.

Fiscal 2007 Responsible Care Objectives and Achievements
We established the following specific environmental, safety, and hygiene benchmarks.

Key area
Conservation

Initiatives and final-year targets

Fiscal 2007
Goals

Achievements

Prevent global warming
and conserve energy

Lower energy consumption to below 90% of
fiscal 1990 levels by fiscal 2010

Lower energy consumption to We failed to reach our medium-term target of 89.9% owing to a decline in
89.1% that of fiscal 1990
hydropower generation. Total carbon dioxide emissions from energy consumption
are 1.7 million tons annually, and we aim to lower them by 2.5% per year and cut
them as a proportion of production volume

Prevent air
and water pollution

Implement EM09 environmental plan, covering fiscal 2007 through 2009

NOx: 5,600 tons
SOx: 2,080 tons
Soot and dust: 122 tons
COD (BOD): 1,530 tons

Reduce waste (zero emissions) Constrain and lower wastes

Relevant
Evaluation page△

P28

NOx: 5,900 tons
SOx: 1,740 tons
Soot and dust: 150 tons
COD (BOD): 1,630 tons
We failed to reach our goals because we operated at full capacity, as did our filtering equipment,
which was unable to cope with a decline in the quality of coal and other raw materials

×

P31

Emissions dropped owing to revisions in waste handling and processes○

In-house and external reusage: There was progress in reusing resources at our cement plant and through external
111,000 tons
recycling, but we were unable to reach our target of 99,500 tons.

×Cut final disposal to less than
1,200 tons by 2010

In-house and external landfill: The Omuta Plant lowered final disposal 20%, from 3,663 tons 2,930 tons, through
3,920 tons
increased recycling, enabling to reach our medium-term target.

○

By 2010, raise wastes and byproducts in cement to 400 kg per ton andcontribute to recycling

Increase wastes and byproducts in cement Increased wastes and byproducts in cement to 406 kg per ton.
to above fiscal 2006 level of 404 kg per ton We attained our target recycling and reusing industrial wastes.

○

P16

Take steps to manage chemical Comply with Globally Harmonized System (GHS) of Classification and Labelling of Chemicals in
keeping with the revised Industrial Safety and Health Law
substances

Address chemicals safety regulations, such as the European We educated about REACH, chose registered substances, and conducted a survey
Union’s Registration, Evaluation, Authorization, and on whether there was a need to register substances in our supply chain.
Restriction of Chemical Substances (REACH), and the GHS We are producing Materials Safty Data Sheets (MSDS) based on GHS requirements○

P15

Manage chemical substances Lower emissions of substances on the Pollutant Release and Transfer
Register (PRTR) to less than 117 tons by fiscal 2009and suppress emissions

Cut companywide emissions of We cut emissions 12%, from 221 tons to 195 tons, owing to planned improvements at
substances on PRTR to 172 tons each plant and enhanced removal equipment efficiencies.
Denka failed to reach medium-term objectives because of Omi Plant production rises.

△

P32

Ensure safe transportation

Fulfill responsibilities as owner of shipped goods•Target a zero accident rate for in-house logistics We attained a zero accident rate. We will continue to revise our yellow card system• Step up our Safe Transportation Code of and yellow cards for containers (labels).
Conduct as a Shipped Good Owner
We evaluated and analyzed transportation safety levels and instituted improvements.

○

P29

Reduce occupational accidents

Reduce occupational accidents using the Educational and Safety Control
SystemConduct risk assessments and All business sites conducted risk assessments of occupational accident prevention measures and madeidentify and eliminate unsafe work quantitative and qualitative improvements. The number of accidents thus declined from eight, to six,
practices
although the accident severity rate increased among affiliates from 0.038, to 1.30, because of a death.

△Manage employee healthCreate comfortable work environments and improve communications

Maintain normal concentration We regularly assessed operating environments and exposure to individuals. The
levelsresults were normal, satisfying our administrative requirements.

○

Disaster prevention Eliminate major accidents

Intensify preliminary safety assessments We made preliminary assessments and held safety meetings and disaster drills, and otherwise
Maintain safety standards
engaged in preventive efforts to meet safety standards. There were no major accidents as a result.

○

P24

Community relations Maintain community trust

Participate in local activities
Improve environmental reporting○

P18

Use resources effectively
Product safety

Comply with the European Union’s 2006 Reduction of Hazardous Substances (RoHS) mandate

Labor safety
and hygiene

26

Each plant hosted tours and participated voluntarily in social activities to engage
with local communities.

P32

P24

27

Tackling Environmental Issues

Recycle resources

Mediam-Term Environmental Plan / Overview of RC Activities

Assessment codes : ○= Reached target △= Partially missed target ×= Missed target

01

Tackling Global Warming

Our CO2 emissions from energy sources were 1.7
million tons in fiscal 2007.

We are striving to lower our carbon dioxide CO2 emissions in
keeping with our social responsibilities as a manufacturer.

Conserving energy to help reach our CO2
reduction targets.
CO2 Reduction Goals

CO2 Emissions

The Logistics Project Team is spearheading
ongoing improvement in transportation
efficiency.

In fiscal 2007, we lowered energy consumption units (seeThe government has designated each of our plants as

Cutting CO2 Emissions from Transportationnote 5) by 0.6 percentage point from fiscal 2006, to 89.8%

emitting more than 3,000 tons of greenhouse gases

The Logistics Project Team is leading a companywide

of our fiscal 1990 level. We achieved this by moreannually. We have accordingly taken the following steps toeffort to achieve sustainable transportation efficiencies,

efficiently using styrene monomer, vinyl chloride, andattain the targets of our medium-term environmental plan.

improve logistics quality, and save energy.

The initial pledge under the Kyoto Protocol (see note 1) ofacetate monomers.

We aim to improve energy consumption units at each

For example, we reviewed logistics within our plants fromFebruary 16, 2005, was to lower average greenhouse

In line with EM09, we plan to install highly efficient gas

plant while switching from crude oil to natural gas to fuela manufacturer’s perspective and deployed new cementgas (see note 2)emissions 6% between 2008 and 2012.

turbine cogeneration systems and improve our production

our thermal power plants. We also seek to boost hydroelectrictankers to streamline transportation of cement and fly ash.

The chemical industry took voluntary steps to conserve

processes.

generating efficiency and output, contributing further to

We upgraded our fly ash silos and took advantage ofenergy and reach its reduction targets.

We are pursuing the following energy conservation target

CO2 emission reductions.

deregulation to start operating triple-axle trailers. On top of

The Japanese government will implement the amended

while using clean energy to lower CO2 emissions.

Our CO2 emissions from energy sources were 1.7 million

that, we made modal shifts, using 20-metric-ton trailers for

Law Concerning the Rational Use of Energy (see note 3)

tons in fiscal 2007, or 2.5% less than a year earlier.

roll-on, roll-off vessels and cargo ships with Box-shapeand the Law Concerning the Promotion of the Measures to

Emissions from other sources were 1.41 million tons, orbadies. We used local ports to receive and transport

Cope with Global Warming (see note 4) in April 2009. The

5.2% lower.

container cargo.

new legislation will require greater efforts to cut energy

In fiscal 2007, our CO 2 emissions from logistics wereconsumption in offices and other structures, reversing

Energy Conservation Efforts

1.4

1.31

We have designated six plants as primary energy management facilities of the Law Concerning the Rationd Use ofEnergy. Energy conservation committees at each of thesefacilities drive efforts to reduce consumption.

1.18

1.17

1.2

1.04

1.31

1.36

1.20

0.98

0.97

1,700
1,550

1,500

1,690

1,510

1,490
1,410

1,300

1,000

1.09

1.00

1.0

1.37

1,780

TargetEnergy conservation committees at eachbusiness site undertake ongoing initiatives.

1,810
1,720

emitter t conserve energy.

Tackling Global Warming

Energy Consumption Units Since Fiscal 1990

2,000

TargetReduce energy consumption units to 87%
or lower of fiscal 1990 levels by fiscal 2010

shipped. We will keep endeavoring as a designatedTargetcompanywide initiative to reduce energy usage at its

Thousands of tons

Targetheadquarters, branches, sales offices, and other facilities.

47,500 tons from 797 million ton-kilometers of cargo■ CO2 Emissions

rises in recent years. From June 2008, DENKA launched a

0.96

0.92

0.94

0.91

0.90

0.90

0.88

500

Energy Conservation Structure
Energy Conservation
Subcommittee(Secretariat:
Electric Power
Department)

Plant energy
conservation committees

0.6

0Officers forconserving energy
in transportation(Logistics Project Team) (Transportation)
Note: Affiliates covered are DENKA Azumin and Kyushu Plastic Kogyo.

2006

2007

2008

From energy sources

From other sources (see note)

Note: Energy from sources other than energy is that generated in processing raw
materials during manufacturing or treating waste.

Our upgraded fly ash silo complex at Port
Himekawa

0.2

0.0

Carbon Dioxide (CO2)1990 2000 2001 2002 2003 2004 2005 2006 2007 2008
(ficcal year)

Production

Energy consumption units (with fiscal 1990 as a base of 1)

Notes:
1. The Kyoto Protocol was endorsed at the 3rd Conference of the Parties of the United Nations Framework on Climate Change in Kyoto in 1997. This protocol defines statistical goals,
deadlines, and methodologies for reducing greenhouse gases .
2. Greenhouse Gases: These include secondary CO2, methane, nitrous oxide, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) that stay in theatmosphere to create a greenhouse effect that keeps the heat from the sun in the earth's atmosphere. The name Greenhouse Gases is the general term used to call these gases thatwarm the earth's surface (greenhouse effect). Recent human activity has increased the concentration of greenhouse gases, thus, causing warming on a global scale.
3. The government implemented the Law Concerning the Rational Use of Energy to lower national energy consumption.
4. The government revised the Law Concerning the Promotion of the Measures to Cope with Global Warming in June 2002 to include a clause defining plans to reach Kyoto Protocol
targets.
5. In keeping with the Law Concerning the Rational Use of Energy, we calculate this measure by converting fuel, electricity, and other energy used into kiloliters of crude oil.

28

2005

(ficcal year)

0.4

Plant and research
center departments,
branches,
and affiliates(see note)

2004

I oversee the department that supplies plant

enabled us to lower unit energy consumptionenergy. DENKA notably generates a lot of its

to 90% of fiscal 1990 levels. We are focusing

energy in-house form clean energy sources. But

on switching to low-emissions natural gas to

I see our mission as increasing efficiencies fromfuel our in-house thermal power plants, an

the power we produce ourselves and theendeavor that I would like to make central toelectricity we buy. We have taken several steps

our battle against global warming.

to combat global warming that in fiscal 2007

Michiaki Takashima
General Manager of ElectricPower Department and head ofEnergy Conservation
Subcommittee Secretariat

29

Tackling Environmental Issues

Shin Omi Maru, a new
cement tanker

0.8

We are harnessing clean hydropower.
Hydroelectric Generation
We own and operate 10 hydroelectric power plants along
the Himekawa River area in Niigata Prefecture. We jointly

Hydropower, natural gas cogeneration
facilities, and exhaust heat-based power
account for 43% of our electricity usage.
Our Power Source Composition

02

Outputs
We are suppressing and properly treating substances andwastes result from our production activities.

We are pursuing voluntary reduction targets for substances from our plants.

own another five facilities in the area with the Hokuriku

We source electricity in-house from a hydroelectric power

Power Company. The total generating capacity of theseplant, three thermal power plants, one natural gas cogen-facilities is 110,000 kilowatts.

eration (see note 1) facility, and one exhaust heat-fueled

They together supply 30% of our electricity, equivalent to(see note 2) plant. We also buy electricity. We consumed

150,000 kiloliters of crude oil. Our clean hydropower

1.94 billion kilowatt-hours of electricity in fiscal 2007.

In fiscal 2007, these emissions rose around 230 tons, or

Although the production mix changed, emissions remained

operations significantly lower our greenhouse gas

Clean energy sources accounted for around 43% of that

4%, because of higher nitrogen concentrations in the coal

the same in fiscal 2007.

emissions.

total, notably hydropower, natural gas, and exhaust heat-

we used.

After replacing a water turbine at the Oami Power Plant,

based generation.

we also upgraded other equipment to dramatically

We plan to shift away from crude oil to natural gas for ourincrease the efficiency and output of that facility. We plan

thermal power plants, installing cogeneration facilities andcapacity increases at other power plants.

thereby raising our clean energy usage.

Environmental Conservation
Soot and Dust (see note 3)

6,000
5,000

5,780
5,200

4,900

5,520

5,680

5,670

5,900

6,040

Omigawa Omi
River
Oyashirazu

UmikawaRiver
Himekawa
River

Hayakawa River

4,000

Power Sources in Fiscal 2007

Kubiki-ono

142❿Umigawa Power Plant No. 4 (900 kilowatts)❸Oami Power Plant (25,100 kilowatts)⓫Himekawa Power Plant No. 6 (jointly owned; 26,000 kilowatts)❹Otokorogawa Power Plant (8,400 kilowatts)⓬Takigami Power Plant (jointly owned; 15,000 kilowatts)❺Yokokawa Power Plant No. 1 (10,000 kilowatts)⓭Nagatsuga Power Plant (jointly owned; 5,000 kilowatts)❻Yokokawa Power Plant No. 2 (16,000 kilowatts)⓮Sasakura Power Plant No. 2 (jointly owned; 10,200 kilowatts)❼Umigawa Power Plant No. 1 (3,800 kilowatts)⓯Kita-otari Power Plant (jointly owned; 10,500 kilowatts)

Thermal power (crude oil) 9%

Hydropower
30% (clean)

01631990 2000 2001 2002 2003 2004 2005 2006 2007 2008
(ficcal year)

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008

COD(BOD) (see notes 4 and 5)(ficcal year)

Water discharges were only slightly lower in fiscal 2007
because production of polyvinyl alcohol and chloroprene

SOx (see note 2)
Thermal power(natural gas)
10% (clean)
Exhaust heat-based
power
3% (clean)remained high. Production will probably continue to rise in

We slashed SOx emissions by switching from crude oil tofiscal 2008, but we will take steps to ensure discharge

natural gas. We aim to maintain current emission levels in

reductions.

fiscal 2008.
5,000
4,300

4,000

3,000

❽Umigawa Power Plant No. 2 (4,400 kilowatts)

0

Emissions ( tons)❾Umigawa Power Plant No. 3 (2,600 kilowatts)❷Kotakigawa Power Plant (4,200 kilowatts)

150

2,000

3,060
2,600

2,860

3,040

3,040

2,870

2,080
1,740

4,000
3,570

3,000
2,250

2,000

1,850

2,060

1,910
1,460

1,480

1,670
1,350

1,630

1,130

1,000

1,000

0

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008
(ficcal year)

Oami Power Plant
Notes:
1. Cogeneration systems draw on heat from industrial furnaces and other machinery.
2. Exhaust heat-based power facilities employ heat from industrial furnaces and other machinery.

30

Tomi Natural Gas Turbine at Omi Plant

0

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008
(ficcal year)

Notes:
1. Nitrogen oxides (NOx) : These produce photochemical oxidants and cause acid rain.
2. Sulfur oxides (SOx) result from burning fossil fuels like petroleum and coal, as well as hydrosulfide minerals like pyrite and chalcopyrite. They also cause acid rain.
3. Soot and dust are solid particles.
4. Chemical oxygen demand (COD) indirectly measures organic compounds in water and indicates oxygen consumption when organic compounds decompose with oxidants. Chemical
oxygen demand benchmarks organic pollutants in oceans, lakes and rivers.
5. Biochemical oxygen demand (BOD) measures oxygen consumed in decomposition by microorganism and organics in water, and indicated water quality.

31

Tackling Environmental Issues❶Omigawa Power Plant (3,300 kilowatts)

147

100

TargetKitaotari

191

2,000

Emissions ( tons)

Hiraiwa

Total
consumption
Electricity
purchased 1.94 billion
kilowatt48%
hours

172

Tackling Global Warming / Outputs

Kotaki

200

3,800

1,000

Nechi

222

200

3,000

Total generated
in house
52%297

TargetKajiyashiki

300

233

4,180

Itoigawa

400

Target7,000

Emissions ( tons)

TargetEmissions (tons)

NOx (see note 1)

We will keep cutting waste toachieve zero emissions.

We are decisively lowering emissions of substancesin the Pollutant Release and Transfer Register (PRTR)

Final Disposal

PRTR Substances

Production levels remained unchanged in fiscal 2007, but

We have made significant progress in reducing emissions

we were able to reduce final disposal by properly recyclingof PRTR substances by analyzing the causes of suchsoot and dust from the Omuta plant.

emissions, exploring effective solutions, and modifying our

The companywide emissions rate in fiscal 2007 dropped

facilities.

0.4 percentage point, to 2.6%in comparison to the

In fiscal 2007, the Chiba Plant lowered its emissions ofprevious year.

substances on the register by upgrading its waste waterIn fiscal 2008, we will continue to improve energy unit

treatment facilities and switching to solvent-free tapeconsumption and boost internal recycling rates.

adhesive.
We will take advantage of changes in adhesive to reduce

Our definition of zero emissions

×100＜1■ PRTR Emission
Emissions (tons)

Total wastes generated

toluene and other emissions by 20% in fiscal 2008.

■ Final Waste Disposal

1,140

1,000

37.5

778

451

400

483
405

353
233

200
0

221

0

Target

6.8
5.0

4.6

4.9

3.7

2.9

2.4

1990 2000 2001 2002 2003 2004 2005 2006 2007 2008

Soot and dust recycling facility

Notes:
1. PRTR: The Pollutant Release and Transfer Register is a framework for statisticallyassessing, analyzing, and disclosing data on hazardous chemical substances
according to their origins, environmental discharges, and concentrations in wastetransported from plants and research laboratories.
2. Dioxins: Dioxin is a common name for organic chlorinated compounds classified aspolychlorinated dibenzodioxins. The word generally covers toxic substances thatclosely resemble dioxins generated from burning chlorinated substances.

32

Conservation costs (millions of yen)
Investments
Expenses
2,740
2,330
1,370
1,520
1,270
0
104
815
0
0
0
8
0
933
0
3
0
227
0
0
2,740

3,500

195

158

CO (from energy sources)
PRIR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD・BOD discharges
Waste
Final waste disposal
CO2 emissions from transportation

Units

Fiscal 2006 results

Fiscal 2007 results

Effects

tons
tons
tons
tons
tons
Cubic meters
tons
tons
tons
tons

3,200,000
221
5,680
2,080
147
87,100,000
1,670
121,000
3,660
51,0003,110,000
195
5,900
1,740
150
83,200,000
1,630
112,000
2,930
48,00090,000
26
▲220
340
▲3
3,900,000
40
9,000
730
3,000

PRTR substances

Emissions
Amount
Air Water Soil Landfill Total transferred

Zinc

0

0

0

0

0

Ethyl acrylate

1

0

0

0

1

0

Acrylonitrite

5

0

0

0

5

45

Adipic acid bis (2-ethyl hexyl)

0

0

0

0

0

1

Acetaldehyde

3

23

0

0

26

0

Aniline

0

0

0

0

0

3

Ethyl benzene

3

0

0

0

3

61

Ethylene glycol

0

13

0

0

13

3

Vinyl acetate

24

0

0

0

24

0

Dinitrotoluene

0

1

0

0

1

0

Dimethyl formamide

0

0

0

0

0

43

Styrene

35

0

0

0

35

256

Water soluble copper salt

0

3

0

0

3

65

Toluene

60

0

0

0

60

38

Secondary carbon sulfide

0

1

0

0

1

0

Hydroquinone

0

1

0

0

1

0

Butadiene

8

0

0

0

8

129

Phthalic acid bis (2-ethyl hexyl)

0

0

0

0

0

3

After DENKA began publishing its CSR Report in fiscal

They included allocations for local environmental

Hydrogen fluoride

1

1

0

0

2

20

2006, we began calculating environmental

efforts at the Omi Plant, particularly on equipment to

Boron and boron compounds

0

9

0

0

9

18

accounting data in keeping with the guidelines of the

reduce odors. We have yet to calculate conservation

Methacrylic acid 2-ethyl hexyl

0

0

0

0

0

2

Methyl methacrylate

3

0

0

0

3

25

Ministry of the Environment. I think that there is stilland economic effect data for those endeavors. Still,

Total

143

52

0

0

195

719

scope for improvements to satisfy all our stakeholders.

this is one illustration of how we are pursue environmental

Dioxins (mg-TEQ) (see note 2)

213

30

0

0

243

0

We greatly increased our investments in fiscal 2007.

improvements.

2

3. Economic Effects
We calculated proceeds from selling wastes, energy savings, reductions in waste treatment costs, and profit improvements.
Category

Item

Details

Profits

Proceeds from selling waste from core operations and income
from recycling wastes

Sales profits

596

Conserving energy

229

Using resources effectively

10

Lowering energy costs by conserving energy
Cost reductions Reducing waste treatment costs by using or recycling resources

Effects (millions of yen)

Improved yields

269

Total

1,100

Our Environmental Accounting Approach

Hiroshi Nishikawa
General Manager ofEnvironment and
Safety Department

Units: tons (excluding dioxins)

33

Tackling Environmental Issues(ficcal year)

Environmental impact reduction measures
Conserving energy
Using resources effectively
Changing raw materials
Environmental education
Conservation
Community relations

Environmental load

■ Substance Emissions and Transfers Exceeding One Ton

4.0

Details

1. Business site costs①Pollution prevention②Conservation③Recycling resources
2. Upstream and downstream costs
3. Administrative costs
4. R&D costs
5. Social activity costs
6. Environmental damage costs
7. Others2(ficcal year)

7.6

Category

We calculated the environmental load data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

20

10

We increased our investments more than three times in fiscal 2007, of which 50% was for initiatives to reduce
environmental impact and another 46% was to reduce energy consumption.

2. Conservation Effects

667

600

30

Coverage: Plants and Central Research Center
Period: April 1, 2007, to March 31, 2008

1. Conservation Costs

Total

862

800

In fiscal 2006, we began accounting for our investments, spending, and environmental
and economic effects to assess the impact of our conservation investments.

Outputs / Environmental Accounting

Amount disposed (thousands of tons)

40

1,200

TargetFinal waste disposal

03

Environmental Accounting

04

Serving Shareholders

Environmental Performanceand Investors

We disclose performance data for environmental
activities at six plants.

■ Environmental Performance Data
PlantsOmi Plant

Omuta Plant

Chiba Plant

Shibukawa
Plant

Ofuna Plant

Isesaki Plant

34

Item
Energy consumption rate
CO2 (from energy sources)
PRTR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD (BOD) discharges
Waste
Final waste disposal
Energy consumption rate
CO2 (from energy sources)
PRTR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD (BOD) discharges
Waste
Final waste disposal
Energy consumption rate
CO2 (from energy sources)
PRTR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD (BOD) discharges
Waste
Final waste disposal
Energy consumption rate
CO2 (from energy sources)
PRTR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD (BOD) discharges
Waste
Final waste disposal
Energy consumption rate
CO2 (from energy sources)
PRTR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD (BOD) discharges
Waste
Final waste disposal
Energy consumption rate
CO2 (from energy sources)
PRTR emissions
NOx emissions
SOx emissions
Soot and dust emissions
Water used
COD (BOD) discharges
Waste
Final waste disposal

Units
Compared with fiscal 1990
tons
tons
tons
tons
tons
tons
tons
tons
tons
Compared with fiscal 1990
tons
tons
tons
tons
tons
ton
tons
tons
tons
Compared with fiscal 1990
ton
tons
tons
tons
tons
tons
tons
tons
tons
Compared with fiscal 1990
tons
tons
tons
tons
tons
tons
tons
tons
tons
Compared with fiscal 2002
tons
tons
tons
tons
tons
tons
tons
tons
tons
Compared with fiscal 2005
tons
tons
tons
tons
tons
tons
tons
tons
tons

Fiscal 2005 Fiscal 2006 Fiscal 2007 Fiscal 2008 targets
0.92
1,040,000
45
3,890
2,470
124
73,000,000
1,290
92,0001,700
0.98
140,00061,220
1
51,230,000
1
7,390
2,970
0.89
610,000
174
540
364
12
9,810,000
45
23,500171
1.33
10,00052935
05,270,000
11
737
44
0.93
10,0002
5
02
63,000
0
299
31
-

0.92
1,070,000
36
4,030
1,730
128
71,710,000
1,590
89,6001,190
0.96
110,000
61,140
1
51,200,000
1
7,020
2,180
0.88
560,000
171
485
326
14
9,860,000
68
23,100206
1.18
10,00061027
13,920,000
9
474
19
0.84
10,0001
3
0
0
67,000
0
200
13
0.99
10,000
0
0
0
0
0
275
59

0.96
1,050,000
42.7
4,220
1,510
137
69,100,000
1,600
79,9001,470
0.92
120,00081,160
2
41,300,000
1
8,980
1,190
0.83
500,000
138
508
209
8
9,730,000
24
22,000211
1.01
10,0005925
12,700,000
3
552
13
0.79
10,0001
4
0
0
67,000
0
194
13
0.95
10,0000000320,000
0
211
28

0.91
1,040,000
19.3
4,120
1,630
148
1,100
87,5001,790
0.92
120,00081,400
141,300,000
1
10,100375
0.83
490,000
124
508
193
10
9,790,000
24
22,400203
0.99
10,00061328
12,700,000
3
458
4
0.76
10,000
2
3
0
0
0
187
12
0.95
10,0000000360,000
0200
7

In fiscal 2007, we achieved much in electronics andpharmaceuticals,a which are driving our growth. We also did well in
the chloroprene rubber business, a key earnings source.
We will pursue further progress through “DENKA100”.

For institutional investors
We held a full-year results orientations in May 2007
and an interim one in November analysts, fundmanagers, and other institutional investors. We
disclosed our environmental efforts and focuses andarranged small meetings and individual orientations
and distributed videos explaining our financial
results on our website.

Results orientation

For individual investors
We held many orientations around Japan, includingin Niigata, Sendai, and Nagoya, to present our
results performances and business sites and outline
each operation. Many attendees gave their views
their opinions and asked questions. These events
helped the public to better understand DENKA.
Company orientation

35

01

02

Consolidated Financial Highlights
Below are our key financial results for the past five years

Review of Operations in Fiscal 2007
Presenting results from our principal business segments.

(Millons of yen)
Fiscal 2003

Fiscal 2004

Fiscal 2005

Fiscal 2006

Fiscal 2007

251,116

280,033

307,923

329,262

363,996

Operating income

21,451

25,585

26,06929,877

29,912

Ordinary profit

17,61021,897

23,91326,006

24,918Net income

10,554

13,587

15,365

15,734

6,660

Total assets

315,742

328,248

349,689

365,301

375,364

Total net assets

114,964

130,715

146,148

164,643

161,870

Shareholders’ equity
ratio (%)

36.41

39.82

41.79

43.52

41.57

Net income pershare (yen)

21.70

27.70

31.08

32.03

13.57

Total net assets per
share (yen)238.13265.71

297.23323.81

317.91Net Sales

10.5%

3,000

2,511

2,800

3,292

3,079

50.3%

Operating Income

Up

4,000

Segment
Operating
Income(Hundred million of yen)(Hundred million of yen)

3,639

255
200

260

214

Up

¥40,660 million■ Inorganic materials¥49,033 million■ Functional materials and plastics■ Electronic materials¥7,812 million■ Organic materials¥13,343 million■ Inorganic materials¥2,862 million■ Others¥30,719 million■Others■ Functional materials and plastics¥60,533 million¥645 million¥5,300 million

Organic Materials
Including raw materials for synthetic resin, synthetic resin, acetic chemical products, and synthetic rubber

Sales of styrene monomer rose on a surge in exports andoffset a decrease in volume. Sales of PVA were up on aprice increases to reflect higher raw materials costs.

rise in exports and domestic and overseas price rises.

Subsidiary Denka Singapore boosted polystyrene resin

Sales of chloroprene rubber improved because exports

sales after boosting production capacity. Exports helped

grew, mainly for automotive and adhesive applications,improved sales of AS resin and ABS resin.

and prices increased. Domestic and overseas volumes

Functional resin sales were up in Japan, mainly because

gained for acetylene black, particularly high-gradeof the greater use of specialty resin CLEAREN as shrink

versions, for higher sales.

film on PET bottles. Denka Singapore’s sales volumes of

As a result of these factors, segment sales advanced

transparent polymers and CLEAREN were less than

¥29,422 million, or 19.2%, to ¥183,049 million.

projected despite the launch of new facilities a year earlier.

299

298

300

■ Electronic materials

Sales of vinyl acetate increased because higher prices

0.1%

2,000

0

0
2003

2004

2005

2006

2003

2007

● The increase reflected higher prices in response to hikes in

raw materials costs.

2004

2005

2006

2007

● Boosted prices to offset higher raw materials costs.
● Fixed asset depreciation rose following a tax law revision.

(Hundred million of yen)(Hundred million of yen)

Ordinary Profit
Down

300

218

239

Net Income
Net Income per Share

4.2%
260

(Yen)

160

249

176

153

157

Down

135
120

105
27.7

80

31.0

40
0

30

Inorganic Materials
Fertilizer and inorganic chemical products, cement, and special cement additives

Sales of calcium cyanamide and AZUMIN magnesium

public sector investment and in large corporate projects.

humate fertilizer increased on volume gains. Higher

The operating climate was generally tough in special

volumes and prices boosted sales of alumina cement andcement additives, despite export growth, and sales of these

FIRELEN nitrogen compound and other refractories.

offerings declined.

66

10

At cement and ready-mix concrete manufacturing and sales

Segment sales slipped ¥603 million, or 1.2%, to ¥49,033

13.5

0

subsidiaries, volumes and sales were down amid drops inmillion.

0
2003

2004

2005

2006

2007

● The drop reflected foreign exchange losses stemming fromthe yen’s rapid appreciation.

36

40

20

32.0

21.7

100

57.7%

13.5%

2004

2005

2006

2007

2008

● The decline was because of expense allowance allocations

under the European Union’s Competition Law.

From left: Calcium Carbaide; a cement
plant that accepts and recycles wastes
and other materials; and a bridge
incorporating our non-shrink grout additive

37

Serving Shareholders and Investors

200

From left: Transparent polymer used inflat-panel television sets; CLEAREN film
for PET bottle labels; and chloroprenerubber used in windshield wipers andother automotive parts

100

1,000

Consolidated Financial Highlights • Fiscal 2007 Review of Operations in Fiscal 2007

Net sales¥183,049 million■ Organic materials

SegmentSales11.2%

03

Electronic Materials
Electronic products, electronic packaging materials, and functional ceramics

Research and Development Activities of DENKA GroupWe cultivate proprietary technologies to develop highly
specialized and functional products.

In electronic products, sales volumes of electronic circuit

In the functional ceramics category, demand for sphericalsubstrates and other thermally conductive products

fused filler for semiconductor sealants fell owing toincreased for information technology equipment, industrial

customer inventory adjustments in the fourth quarter of thepower supplies, and electric trains. Volumes were also up

year. Volumes were up, however, as a result of higher

for HARDLOC OP lens adhesive and HARDLOC UV, which

demand for high-performance offerings delivering minimalcures under ultraviolet light. These adhesives are for opticalenvironmental impact. Singaporean subsidiary Denka

lenses and other applications.

Advantech Pte., Ltd. boosted its sales of spherical fused

In electronic packaging materials, we boosted volumes andfiller. DENAL SILANE’s sales volumes of monosilane

We reinforce our existing offerings with proprietarytransporting electronic components and adhesive tapes forsales with cover-tape film for embossed carrier tapes used

GAS basically unchanged.

technologies while cultivating peripheral technologies toprotecting and fastening semiconductor wafers. In sphericalto transport electronic parts and semiconductors, as well as

Segment sales climbed ¥3,076 million, or 8.2%, to ¥40,660

develop highly functional products. A key priority is to rapidly

fused silica, and spherical alumina for semiconductor

embossed carrier sheets, and ELEGRIP TAPE for dicing

million.

meet market demands. In fiscal 2007, we allocated ¥9.7

sealants and thermal materials, we are boosting efforts inbillion to R&D operations, which employed 613 researchers.

nanofillers and other functional fine particles.

and grinding semiconductor wafers.

Our research and development structure
focuses on specific fields and links closelywith production sites so we can flexibly apply
our technologies and R&D results.
Research and Development Structure

cultivate products and markets for thermal substrates andother components. That is because we expect demand toincrease in the growing LED market and energy conservation
fields. We are working on functional adhesives that harness
our ultraviolet light-curing technology. We are meeting
market needs by stepping up development in tapes for

4 Functional Materials and Plastics
From left: Carrier and cover tape for transporting electronicparts; fused silica filler for semiconductor packaging;and DENKA THERMALLY CONDUCTIVE and SPACER, which
contributes to the heat resistance and compactness ofelectrical equipment

16.6%

Functional Materials and Plastic Products
Packaging, construction, and industrial materials, and medical and pharmaceutical products

In industrial materials, volumes and sales rose for TOYOKALON

owing to price rises we made in response to an increase insynthetic fiber for wigs, reflecting demand growth in North

raw materials costs. Nonetheless, the operating climate was

America and Africa.

difficult for packaging materials, owing to delays at DENKA

In pharmaceuticals, volumes grew steadily for SUVENYL, a

Polymer in transferring higher plastic product costs tohigh-molecular-weight hyaluronic acid preparation that

customers.

improves joint functions. DENKA SEIKEN posted record

Volumes declined in construction materials, partly because

sales following a surge in measles, which boosted demandof the impact of the amended Building Standards Law onfor diagnostic reagents, as well as a jump in demand for

demand for plastic rain gutters. Lackluster demand

influenza vaccines.

depressed volumes for corrugated pipes used in agriculture

Sales for this segment therefore advanced ¥3,847 million,

and engineering.

or 6.8%, to ¥60,533 million.

In polymer processing products for packaging, construction,

We evolve production technologies, improve quality, andand industrial materials, we aim to expand by taking advan-

create new styrene-based functional resins, including

tage of our technological prowess from film and sheet manu-transparent and thermal resins and shrink materials. In thefacturing, profile extrusion, and adhesive applications. A

promising chloroprene rubber field, we are developing newprime R&D priority in pharmaceutical products is fermented

processes based on facilities upgrade plans to enhance ourhigh molecular hyaluronic acid to improve joint function.

competitive edge.

Another is to create new applications that take advantage of

2 Inorganic Materials

the properties of hyaluronic acid. As well as developing safe

In special cement additives, we are focusing on new productand effective vaccines, Denka Seiken is working on bac-development. Examples include fiber-reinforced concrete forterial diagnostic reagents to detect infectious diseases, asa growing maintenance and repair market, and ultrahighwell as virus, clinical biochemistry, and immunity diagnostic

strength, high-durability concrete products. In alumina fiber,

reagents.

we are looking into new markets, particularly automotive

5 Other Businesses

applications.

Denka Engineering Co., Ltd. designs and installs industrial equip-

3 Electronic Materials

ment. Its R&D is focusing on more efficient pneumatic transfer

In electronic components, we are investing aggressively toequipment for powders and waste water treatment facilities.

■Research and Development Organization (as of October 2008).BUFSJBMT$IBSBDUFSJ[BUJPO$FOUFS

From left: OPS food containers; VINI-TAPE electrical insulating
tape; and SUVENYL preparation for improving joint functions■ Topic

sidiary on April 1, 2008, following a share swap.
That company specializes in making vaccines and diagnostic reagents. It is playing an increasingly important social role amid
growing concerns worldwide about the potential for pandemics from new or

38

CRP-Latex
inflammation marker

HDL and LDL
diagnostic reagents.BUFSJBMT3FTFBSDI$FOUFS#JPDIFNJDBM3FTFBSDI$FOUFS
0SHBOJD.BUFSJBMT3FTFBSDI$FOUFS*OPSHBOJD.BUFSJBMT3FTFBSDI$FOUFS.BOBHJOH&YFDVUJWF0GGJDFS
3FTFBSDI%FWFMPQNFOU.BDIJEB 5PLZP*UPJHBXB /JJHBUB$FSBNJDT3FTFBSDI$FOUFS

0NVUB 'VLVPLB

1PMZNFS3FTFBSDI$FOUFS*DIJIBSB $IJCB&MFDUSPOJD.BUFSJBMT3FTFBSDIBOE%FWFMPQNFOU*OTUJUVUF'VODUJPOBM&MFDUSPOJD.BUFSJBMT3FTFBSDI$FOUFS

0GVOB1MBOU

3FTFBSDI"OE%FWFMPQNFOU%FQBSUNFOU,BNBLVSB ,BOBHBXB*TFTBLJQMBOU

3FTFBSDI"OE%FWFMPQNFOU%FQBSUNFOU*TFTBLJ (VONB'JOF&MFDUSPOJD.BUFSJBMT3FTFBSDI$FOUFS

4IJCVLBXB (VONB

39

Serving Shareholders and Investors

Flu-Syringe (SEIKEN),
prefilled with an
influenza HA vaccine

We made DENKA SEIKEN Co., Ltd. a wholly owned sub-preventing metabolic and other illnesses.

$FOUSBM3FTFBSDI-BCPSBUPSZ$IJFG5FDIOPMPHZ0GGJDFS

DENKA SEIKEN Co., Ltd. became a wholly owned subsidiary

revived influenza strains, as well as greater public interest in Japan in

1SFTJEFOU

Review of Operations/Group Research and Development Activities

Sales grew for biaxially OPS sheet used in food packaging

1 Organic Materials

04

Production and Marketing Bases
Our six plants in Japan collaborate with production
and marketing bases around the globe.

1 DENKA Chemicals GmbH (Düsseldorf)

7 Denka Corporation (New York)We opened units in Hong Kong and Taiwan
to cater for the fast-growing Chinese market.
3 Denka Chemicals
Shanghai Co., Ltd.
Marketing Unit
Denka Advanced
Materials (Suzhou)Co., Ltd.
Plant
Denka Chemicals
Hong Kong Ltd.
Marketing Unit
Denki Kagaku Kogyo
Kabushiki Kaisha Taiwan
Representative OfficeMarketing Unit

European Marketing Unit

North American Marketing Unit

New Marketing units in Hong Kong and Taiwan

Domestic Operations
1. Omi Plant
This facility maintains unique lime andcalcium carbide businesses. It takes
advantage of ample resources that include
Mt. Kurohime, a mountain made entirelyof limestone. Reserves are an estimated
5 billion tons. The plant also operates a
170,000-kilowatt power plant.

Shanghai

2. Omuta Plant
This longest-serving DENKA plant harne­sses proprietary electrical furnace, hightemperature, and nitride technologies tocreate leading-edge ceramics. It is also
our prime site for inorganic chemistry
products, and has entered such new fields
as functional ceramics and electronics
materials.

Suzhou

●
❶
●
❹
●
❺

●
❼

●
❸

3. Chiba Plant
This is one of Japan’s biggest styrene monomer facilities. It is boosting its capabilities infunctional resins, including TRANSPARENTPOLYMERS and CLEAREN. It is also
focusing on petrochemicals, including ER
rubber, and spearheads styrene-based
resin operations, notably for polystyrene
and ABS resin.

●
❻

●
❷
2 DENKA Singapore Group

4. Shibukawa Plant

DENKA Singapore Pte., Ltd.
Seraya Plant

The plant manufacturers acetylene black, anamorphous carbon that is essential for dry cellbatteries and other products. In fiscal 2007, theplant undertook such CSR initiatives as
reducing paper bag losses, strictly complying with air and water quality requirements,
and preventing soil pollution, as well as having small teams focus on machinery
maintenance. The plant obtained an upgrade to the 2004 version of ISO14001.

In 2006, this plant built new styrene-based
resin facilities to create the world’s largest
facility of its type. In fiscal 2007, the plantc ollab orate d wit h ot her c om panies toconvert all waste oil into boiler fuel, conducted closed samplings to test
shipments, and reduced packaging materials by opting for bulk transportation.
The plant obtained an upgrade to the 2004 version of ISO14001.

DENK A Singapore Pte., Ltd.
DENKA Advantech Pte., Ltd.

This plant, together with the Omuta Plant,
have the top global market share in spheri­cal fused silica fillers. In fiscal 2007, theplant improved material-specific consum
ption, strictly complied with air and water quality requirements, managed
hazardous wastes, and increased recycling. The plant obtained an upgrade
to the 2004 version of ISO14001.

Hong Leong Office (Singapore)

●
①

●
④

Denka Seiken
DENKA Polymer
DENKA Polymer Goi,
Katori, and Sakura Plants

●
⑦

Goal

2005

2006

2007

Less than 0.5% of paper bag
losses

0.3

0.3

0.2

2007 activity
Machinery maintenance by small group
activities

Merbau Plant

Manage wastes

Seraya Plant

Effectively use
resources

360 liters per hour in 2008

80

260

260

Collaborated with other companies totransform all waste oil into fuelTuas Plant

Manage wastes

Less than 2% of loss rate

1.2

2.4

2.1

Improved material-specific consumption

Head Office

CRK Corporation

Denka Seiken
Niigata Plant and Kagamida Plant

5. Ofuna Plant
This facility develops and manufactures
synthetic fibers and packing tape, drawing
on ejection molding and adhesion coating
technologies. It recently augmented
its lineup with highly functional films tobecome a core operation for our resinprocessing business.

6. Isesaki Plant

●
⑥

●
②

This table highlights environmental initiatives at three plants.

40

DENKA Azumin

Hinode Kagaku
Kogyo

Activity Results
Activity

Bibai Sub-Plant,
Chiba Plant●③

This plant makes sheets and films fortransporting semiconductor and electronicparts. It also offers food packaging produc
ts. It is exploring new horizons for plastics
by combining its development expertise inresin materials and processing technolo
gies. The plant also maintains a facility in
Ota.

Serving Shareholders and Investors

DENKA Advantech Pte., Ltd.
Tuas Plant

After we launched this plant to manufa
cture general-purpose chemical products,
the facility began making fine chemicals.
It is our main production base for organicbased electronic materials, such as electr
onic circuit boards, Emitters, and structural
adhesives.

Production and Marketing Bases

DENKA Singapore Pte., Ltd.
Merbau Plant

7. Central Research Center●⑤

This facility is focusing on highly function
products that draw on core and peripheraltechnologies. It is the Group’s main R&D
facility, and is undertaking new initiatives
to attain the goals of "DENKA100".

41

05

Major Affiliates

CRK Corporation

We maintain a diverse group of companies that includes DENKA Polymer, which mainly manufactures foodtrays and packaging materials, and DENKA SEIKEN, which specializes in vaccines and diagnostic reagents.

DENKA Polymer Co., Ltd.
Address Head Office: 12-8 Kiba, 5-chome, Koto-ku, Tokyo
Plants: 3 in Chiba Prefecture (Sakura, Goi, Katori)
Employees 490
Major Products OPS products, PSP food trays, food containers, Soflight
products, packaging wrap, agricultural packs

Major Activities and Achievements■Environmental activities
We took steps to prevent source waste emissions by enhancing yields
and preventing defects. During the year, wastes increased only slightly
despite significantly higher new product sales, and yields improved.
■Safety and hygiene activities
We continually identified and eradicated hazards to ensure employee
safety and hygiene.

Major Activities and Achievements
We pursued weight reductions in all products so our containers can alleviate
environmental impact and conserve resources and energy.
For example, we drew on our Group strengths as an integrated manufacturer ofeverything from monomers to finished products to innovate Soflight.
Soflight is:
1. A next generation, lightweight, and transparent raw material that overcomes thevulnerability of OPS to cracks because it is both rigid yet supple.
2. Around 40% lighter than A-PET and saves resources.

4PGMJHIU

◆ Suppleness■We participated in community events in the industrial park.

Hinode Kagaku Kogyo◆ Heat-resistance＊A tensile modulus of MPa

4000
3500

5IFCPEZBOEDPWFSBSF
BCPVUMJHIUFSUIBO "1&5QSPEVDUT

3000
2500

Supple1000
500

1SPEVDU#
H

100
80

40
20
0

0

%TFU

＊Vicat Softening Temperature ˚C

120

60

2000
1500

1SPEVDU"
H

OPS

H

DENKA SEIKEN Co., Ltd.
Address Head Office: 4-2 Kayaba-cho, 3-chome, Nihonbashi, Chuo-ku, Tokyo
Plant: Gosen City, Niigata (Niigata Plant, Kagamida Plant)
Employees 500
Major Products Influenza vaccines, virological diagnostic reagents, bacteriologicaldiagnostic reagents, immunological diagnostic reagents, clinical chemistry
diagnostic reagents, and general biological diagnostic reagents■Every month, we cleaned and beautified within and outside thepremises, including the streets around the site.

Community Relations

Stiffness$PNQBSF
UIFMJHIUOFTT

A d d r e s s 306-banchi, Koyagi-cho, Takasaki City, Gunma
Employees 78
Major Products R u b b e r c o m p o u n d s , i n d u s t r i a l r u b b e r
products, fire-resistant rubber products, butyl
adhesive tape, water swelling leakage stop
rubber tape, quakeproof manhole joints

Soflight

A-PET

OPS

Soflight

A-PET

A d d r e s s 660 Aza Kuratani, Maizuru City, Kyoto
Employees 49
Major Products YORIN (fused magnesium phosphate) and
TORETARO (fused silicate phosphate fertilizer)
Major Activities■We complied with environmental legislation and prevented
accidents and disasters by boosting employee awarenessthrough education and training programs.
■We conserved energy and resources and reduced discharges.
■We participated in community environmental activities.

Achievements■We took part in cleanups.

Community Relations■The Society for Maizuru’s Waterways and Sea visited our site aspart of its patrols of businesses.

■We participated in the Maizuru Clean Campaign.

Others■The Maizuru City Hazardous Materials Safety Association gave us an award for business excellence.

Major Affiliates

DENKA Azumin Co., Ltd.

Major Activities
Strengthening communications with local residents and other external stakeholders

Achievements

A d d r e s s 118, 5 Chiwari, Nimai-bashi, Hanamaki City, Iwate
Employees 23
Major Products Azumin (magnesium humate fertilizer)
Major Activities■We continued efforts to eliminate accidents and disasters through the activities of three
sub-committees (the Safe-Operation Committee, the Safety Patrol Committee, and theEnvironment Committee). We also met with the Omi Plant to exchange safety information.
■We conducted a fire drill with the local fire department.
Achievements■We remained free of accidents and fires or other disasters in fiscal 2007.

Niigata Plant

42

Kagamida Plant

Community Relations■We permitted semiannual patrols by the Anti Pollution Measure
Council, a local citizen’s group, and exchanged information.

■Four local plants including us took part in an annual informationexchange meeting with a local pollution prevention council andthe City of Hanamaki’s Lifestyle and Environmental Department.
■ We met with four local companies (Iwate Kumiai Hiryo, Kitanihon
Kumiai Feed, and Asuplaza Yamabiko) to exchange disaster
information and confirm mutual emergency assistance arrangements.

43

Serving Shareholders and Investors■Each department basically reached energy-saving targets.
■The Kagamida Plant started to operate equipment to treat BOD waste water.
■R esponding to a complaint about noise from new building construction,weidentified the noise source and undertook work to address the problem.
■There were four complaints about noise and smell in fiscal 2007, or half the number of a year earlier.
■The Kagamida Plant implemented an earthquake drill.

06

Presenting Our Consolidated Financial Statements■ Consolidated Financial Statements
Financial Statements（Consolidated）■ Consolidated Financial Statements

Consolidated Statements of Income (Summary)Financial Statements（Consolidated）

AmountFiscal 2007

Fiscal 2006

363,996329,262

Cost of sales

283,833

250,001

Selling, general and administrative expenses

50,25049,383Operating income

29,912

29,877

Non-operating income

2,328

2,524

Account item
Net sales

Consolidated Balance Sheets (Summary)AmountAccount item

(Millions of Yen)

Cash and time deposits
Notes and accounts receivable

31, 2008

31, 2007

134,284
3,212
71,037

126,446
3,879
66,93744,555

Other current assets

12,67911,285

Allowance for doubtful accounts

△ 221

△ 211

241,080

238,854

185,683

184,456

Intangible ﬁxed assets

2,240

2,901

Investment securities

41,17546,394Other

12,152

5,355

Allowance for doubtful accounts

△ 171

△ 252

375,364

365,301

Total assets

31, 2008

31, 2007

161,319

150,914

Notes and accounts payable

53,55458,325

Short-term bank loans

48,63245,553

Commercial paper

5,000

2,000

Current portion of corporate bonds

10,00010,000

Other current liabilities

44,13235,035Long-term liabilities

52,17349,743

Corporate bonds

20,00020,000Long-term debt

8,696

12,585

Other long-term liabilities

23,477

17,157

213,493

200,657

Current liabilities

Total liabilities
Net Assets

7,321

6,395

Ordinary profit

24,91826,006Extraordinary gains

77―

Extraordinary losses

7,883

―

17,11226,006

7,669

9,705

2,360

205

423

361

6,660

15,734Non-operating expense

Income before income taxes
Current
Deferred
Minority interest in earningsof consolidated subsidiaries
Net income

Common stock

36,99836,998

Capital surplus

41,576

41,563Retained earnings

60,28660,855

Treasury stock, at cost

△ 684

△ 533

17,845

20,103

Dividends from retained earnings
Net income

Balance at March 31, 2007

Commonstock

CapitalsurplusRetainedearnings

36,99841,56360,855(Millions of Yen)

April 1, 2007 April 1, 2006
totoMarch 31, 2008 March 31, 2007
22,94425,064

Net cash used in investing activities△ 21,668△ 22,057

Net cash used in financing activities△ 1,815△ 4,877

Effect of exchange rate changes
on cash and cash equivalents

△ 139

19

Net increase (decrease) in cash
and cash equivalents△ 678△ 1,851

Cash and cash equivalents
at the beginning of the year

3,841

5,710

―

△ 17

3,162

3,841

Net cash provided by operating activities

Increase of cash and cash equivalents
resulting from inclusion and exclusionof subsidiaries from consolidation
Cash and cash equivalents
at the end of the year

(April 1, 2007, to March 31, 2008)(Millions of Yen)

Valuation and translation adjustments

Gains
Foreign
Total
Minority
Total
Treasury
Total
Unrealized(Losses)currency
valuationstock
shareholders’ gain on on deferred translation and translation interests net assets
at costequitysecurities
hedge
adjustments adjustments△ 533

138,885

11,4038,596

103

20,103

5,654

164,643

Changes of items during the term

Minority interests

5,848

5,654

Total net assets

161,870

164,643

Net increase in treasury stock

Total liabilities and net assets

375,364

365,301

Gain on sales of treasury stock△ 4,6636,660
12

Net changes of items other thanshareholders’ equity

Total changes of items during the term
Balance at March 31, 200844

Account item

Shareholders’ equity

138,885

Valuation and translation adjustments

AmountConsolidated Statements of Shareholder’ Equity FY2007

138,176

Shareholders’ equity

Consolidated Statements of Cash Flows (Summary)△ 4,663―△ 4,663

6,660

―

6,660

△ 241

△ 241

―

△ 241

90

102

―

102

△ 2,566△ 2,566△ 4,208

2,566

△ 615

△ 2,258193△ 4,630

―

12

△ 569

△ 151

△ 708

△ 4,208

2,566

△ 615

△ 2,258193△ 2,772

36,99841,57660,286△ 684

138,176

7,194

11,163△ 512

17,845

5,848

161,870

45

Our Consolidated Financial Statements Serving Shareholders and Investors

47,575

Property, plant and equipment

Account item

As of March As of March

Liabilities and Shareholders’ Equity

Inventories

Fixed assets

AmountAs of March As of March

AssetsCurrent assets(Millions of Yen)

(Millions of Yen)

Corporate Data (as of March 31, 2008)

Implementing Third-Party Audits

Sales Offices
Nagano, Takasaki, Shizuoka, Hiroshima Takamatsu, Akita, Ageo,

E s t a b l i s h e d : May 1, 1915
Paid-in capital:¥36,998,436,962
Number of employees:4,653 (consolidated) and 2,687 (non-consolidated)
Directory

and Taipei, Taiwan

Head Office:Research Center

Nihonbashi Mitsui Tower, 1-1, Nihonbashi Muromachi 2-chome, Chuo-ku, Tokyo 103-8338, JAPANCentral Research Center (Tokyo)

Tel: +81-3-5290-5055

Overseas Subsidiaries

Branches

New York, Dusseldorf, Singapore, Shanghai, Shuzhou,

Osaka, Nagoya, Fukuoka, Niigata, Hokuriku (Toyama), Sapporo, and Tohoku (Sendai)and Hong Kong

Board of Directors (as of June 27, 2008)

PlantsOmi (Niigata), Omuta (Fukuoka), Chiba, Shibukawa (Gunma),
Ofuna (Kanagawa), and Isesaki (Gunma)

Shareholder Information (as of April 1, 2008)

Directors, Corporate Auditors, and Executive officers

Presenting data subsequent to share exchange with DENKA SEIKEN Co., Ltd.

Seiki Kawabata

President and Representative Director,
Chief Executive Officer

Higashi Ito

Representative Director,
Executive Vice President, Chief Operating Officer

Koji Minai

Representative Director,
Senior Managing Executive Officer   Total number of authorized shares 1 , 5 8 4 , 0 7 0 , 0 0 0505,818,645
Shares of common stock issued
47,518
Number of shareholders		

Toshio Hiruma

Director, Senior Adviser

Takashi Toratani

Director, Managing Executive Officer

Shigetoshi Toyooka

Director, Managing Executive Officer

Tetsuro Maeda

Director, Managing Executive Officer

Shinsuke Yoshitaka

Director, Senior Executive Officer

Kozo Tanaka

Outside Director

Tadasu Horikoshi

Outside Director

Nobuyoshi Sakuma   Major Shareholders
Number ofshares held
(thousands)

Shareholders

Percentage ofshares held (%)(thousands)¸¸¸¸ %Japan Trustee Service Bank, Ltd. (Trust Account)

42,257

8.35

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

36,688

7.25

National Mutual Insurance Federation of Agricultural Cooperatives

21,965

4.34

Trust & Custody Services Bank, Ltd. as trustee
for Mizuho Bank Ltd. Retirement Benefit Trust Account re-entrusted
by Mizuho Trust and Banking Co., Ltd.

15,275

3.01

Mitsui Life Insurance, Co., Ltd.

11,908

2.35

The Sumitomo Trust & Banking Co., Ltd. (Trust Account B)

10,873

2.14

Senior Executive Officer

Trust & Custody Services Bank, Ltd. (Securities Investment trust Account)

7,260

1.43

Kuniaki Taketomi

Senior Executive Officer

Mitsui Sumitomo Insurance Co., Ltd.

6,916

1.36

Hitoshi Watanabe

Senior Executive Officer

Mellon Bank N.A. as Agent for Its Client Mellon Omnibus US Pension

6,365

1.25

Kenichi Ono

Senior Executive Officer

State Street Bank and Trust Company 505103

6,331

1.25

Mamoru Hoshi

Senior Executive Officer■ Shareholder Composition (Thousand shares)

Takashi Fukuda

Senior Executive Officer

Akira Kobayashi

Executive Officer

Haruo Kimura

Executive Officer

Hideo Oishi

Executive Officer

Tatsuhiro Aoyagi

Executive Officer

Mitsukuni Ayabe

Executive Officer

Daiichiro Uematsu

Executive Officer

Shotaro Fujii

Executive Officer

Shinji Sugiyama

Executive Officer

Shigeru Matsumoto

Executive Officer

Yukinori Totake

Standing Corporate Auditor

Takayasu Tanaka

Outside Standing Corporate Auditor

Kenichi Tsuchigame

Corporate Auditor

Toshiaki Tada

Outside Corporate Auditor

46

Securities Companies
12,696 (2.51%)

Foreign Corporations
and Individuals
162,242 (32.47%)

Financial Institutions
201,508 (39.83%)

Other Domestic Corporations
26,500 (5.23%)

Individuals and others
100,870 (19.94%)■ Shareholder Composition by Number of Shares Held (persons)
10,000 shares or more
2,312 (4.86%)
Less than 1,000 shares
14,295 (30.08%)

1,000 to 4,999 shares
2727,688 (58.26%)

5,000 to 9,999 shares
3,223 (6.78%)

Editorial Afterword
Thank you for reading the CSR Report 2008.
We published our first Environmental Report in fiscal 2000 to document ourenvironmental, safety, and hygiene efforts. We issued our first CSR Report in fiscal
2007 to expand on the Environmental Report.
The Hokkaido Toyako Summit in 2008 illustrated that it has become more
important for the global community to reduce carbon dioxide emissions andotherwise safeguard the environment. We are committed to stepping up ourenvironmental protection efforts to fulfill our responsibilities as a good corporate
citizen.
We would greatly appreciate your feedback on this report. We would like theopinions of as many stakeholders as possible, and aim to reflect those views in our
CSR activities. We hope that the report enhances understanding of DENKA’s
activities and efforts.
September 2008

Higashi Ito
Executive Vice President andChief Operating Officer

47

DENKI KAGAKU KOGYO KABUSHIKI KAISHA CSR REPORT 2008

Published on November 2008
by Denki Kagaku Kogyo Kabushiki Kaisha

From the standpoint of environmental considerations, this report is printed on FSC-certified paper, paper
made from well-managed forests and other controlled sources.Also the report is printed with VOC-free soyinks and waterless planographic process printing method is used that does not output harmful waste water.
This report was printed on Forest Stewardship Council-certified paper, which was sourced from well managed
forests and other controlled sources. It was also printed with soy inks free from volatile organic compounds andwith a waterless planographic process that does not create harmful water discharges.