KURITA WATER INDUSTRIES LTD.

Integrated Report 2021
Fiscal year ended March 31, 2021

A Creator of Unique Value

Contents
Integrated Report 2021 

1

Kurita Group Overview 

2
2
4
5
6
8

History of Value Creation 
Philosophy System 
Business Fields 

We strive to put our corporate

Integrated Report 2021

philosophy into practice by

The COVID-19 pandemic that began in 2020 is causingmajor changes in the awareness of society and companies
with respect to risk and business continuity and forcing
structural changes in society as a whole. Concern forclimate change, human rights and other social issues isincreasing at an accelerating rate, and companies also arereexamining the importance of their own roles in realizing
a sustainable society.
Amid these changes, the Kurita Group has reaffirmed
the importance of our business in supporting society andindustry in the fields of water and the environment andour unshakeable values, which are encapsulated by our
corporate philosophy: “Study the properties of water,
master them, and we will create an environment in which
nature and man are in harmony.” The Group’s philosophy
expresses the commitment we have had since ourfounding to pursue the provision of new value andcontribute to society. A reexamination of our raison d’être
as a company, however, has led us to review our own
business from the standpoint of social issues.
As a result, the Kurita Group, through discussions by
our Board of Directors, has formulated “Kurita’s Value
Creation Story,” which provides a roadmap for generating
corporate value over the long term and for sustainably
growing together with society in order to put the corporate
philosophy into practice. Going forward, the Group will
extend its contacts beyond industry to all of society, andwill bring about positive change in society by providing
new value through solutions that utilize its “water
knowledge.”
It is our hope that this report will help explain the basic
stance of the Group and provide an opportunity forconstructive dialogue with all stakeholders.

constantly creating sharedvalue with society.

Kurita’s Value Creation Story 
Performance 
Kurita Group Business Strategy Interview with the President 
Financial Strategy Medium-Term Management Plan:
Maximize Value Proposition 2022 (MVP-22) 
CSR Initiatives 
The Kurita Group’s Businesses 
Opportunities and Risks in Business Flow 
Digital Strategy Division 
Solution Business Division 
Research and Development Division Japan Sales Business Division 
Global Business Division 
Engineering Division 
Main Business Models 
Review of Operations by Segment 
Water Treatment Chemicals 
Water Treatment Facilities 
The Platform for Value Creation 

16
18
24
24
24
25
26
28
29
30
32
34
34
36
38

Directors, Members of the Audit & Supervisory Board,and Executive Officers 
Corporate Governance 
Risk Management Compliance 
Human Resources Management Environmental Improvement Activities 
Financial Information 

July 2021

10
10
15

38
40
50
54
56
58
62

Detailed financial information can be found in the IR sectionof Kurita’s website.
Kurita Group IR: https://ir.kurita.co.jp/en/index.html

Corporate Information 

71Disclaimer

Michiya Kadota
President and Representative Director

This report contains forward-looking statements from Kurita Water
Industries Ltd. and its consolidated subsidiaries pertaining to plans andstrategies. These forward-looking statements are based on currently
available information, and actual results may vary significantly from theforward-looking statements contained in this report due to a range ofvariable factors.
* Trademarks (products, services, logos) used in this report belong to theCompany or to owners who have approved the Company’s use of the
trademarks.

Kurita Water Industries Ltd. Integrated Report 2021

1

Kurita Group Overview

2021

History of Value Creation

A water treatment chemicals company in the Middle East
becomes a subsidiary
Acquired a water treatment chemicals company in Canada

Kurita Group Overview

2020

Founded in 1949 to sell water treatment chemicals for boilers, the Kurita Group started out

Merged four U.S. subsidiaries, including acquired companies

providing value to customers by supporting the safe and efficient operation of their facilities. In

A tool cleaning company in the U.S. becomes a subsidiary

the years since then, the Group has steadfastly focused on providing this value to customers,
contributing to the development of industry and society by solving issues related to water and theenvironment. The Group will continue to build on this progress by providing stakeholders with

2018

2002

new value, aiming to realize its corporate philosophy, “Study the properties of water, master them,

Launched Medium-Term Management Plan
“Maximize Value Proposition 2022 (MVP-22)”

Launched ultrapure water supply business

and we will create an environment in which nature and man are in harmony.”

Reshaped the group philosophy system

Kurita Group Business Strategy

2003

Achieved 100% wastewater reclamation

1975

1962

1949

Established a water treatment facilities
operation and maintenance subsidiary

Listed stock on the First Sectionof the Tokyo Stock Exchange andthe Osaka Securities Exchange

Founded as a company in the Water
Treatment Chemicals business (boiler
water treatment chemicals) in Kobe

Established first overseas subsidiary in
the Water Treatment Chemicals
business

1986

Deployed tool cleaning services

1965

Expanded into process treatment
chemicals

1961

1978

Listed stock on the Second Sectionof the Tokyo Stock Exchange and the
Osaka Securities Exchange

1958

1973

Expanded into maintenanceservices

The Kurita Group’s Businesses

2015

Commenced the ultrapure water supply
business in South Korea

Entered the electronics industry

Acquired a water treatment chemicals
business in Europe

Established asubsidiary in Singapore
as the regional base inSoutheast Asia for the
Water Treatment
Chemicals and Water
Treatment Facilities
businesses

1991

The Platform for Value Creation

Launched soil remediation services

1951

Entered the Water Treatment
Facilities business

1989

1953
Net sales

1960

1970

2

Kurita’s founder developed an innovative business modelthat combined optimal treatment and effect verification
based on data with the experience-based treatment thatwas the mainstream approach to boiler water treatment inJapan at the time. The principle of “Providing the uniquevalue that only Kurita can create” became the driving force
for realizing the model, and it lives on today in the Kurita
Group’s DNA. Against the background of development inJapanese industry, the Company established the threefunctions of water treatment chemicals, water treatment
facilities, and maintenance services. By supporting the steel,pulp and paper, and petrochemical industries with water
treatment solutions, the Company achieved steady growth.

Kurita Water Industries Ltd. Integrated Report 2021

1980
Stable Growth Period(1973–1991)

Development as an
Environmental Company
and Establishing a
Position in the Field ofWater Treatment forElectronics Industry

1990

2000

2010

Information Society
Development Period (1991–1999)
As areas all over Japan experienced worsening pollution
issues accompanying economic growth, Kurita made its
mark as an environmental company by working to solve
pollution due to industrial and household wastewater. In
the 1980s, Kurita established a firm position as a providerof water treatment solutions for the electronics industry bymeeting the industry’s growing demand for advanced
water treatment with ultrapure water technology. In 1989,
marking its 40th anniversary, Kurita formulated the current
corporate philosophy. It shared its mission of creating
shared value with society in the fields of water andenvironment, and expanded its business to include soil
remediation.

2020

Period of AI and IoTAdvancement (1999–)

New Business
Model Deployment
and Global Business
Expansion

Financial Information/Corporate Information

Post-War Recovery Period (1949–1954) /High Economic Growth Period (1954–1973)

Kurita Establishes theSpirit and Businessthat Form its
Foundation

Acquired water treatment-relatedcompanies in the United States

Established thecorporatephilosophy

Expanded into
engineeringcleaning services

1950

2017
2019

In 2002, as the electronics industry continued todevelop even further with the advance of IT, Kurita
developed a new service contract-type businessmodel in the form of the ultrapure water supply
business. Subsequently, the Company continued tochange its business model, creating various newservices that identified customers’ issues from theperspectives of saving water, reducing CO2 emissions,and reducing waste, and provided solutions for them.
From 2015, the Company began full-fledged
expansion into overseas business through M&A, andis promoting global development of total solutions.

Kurita Water Industries Ltd. Integrated Report 2021

3

Kurita Group Overview

Kurita Group Overview

Philosophy System

Business Fieldsof thinking and values as the foothold for achieving them are stipulated as the Kurita Group Philosophy System.

Social and Industrial Issues and Water Treatment Solutions

Study the properties of water, master them, and we will create an environment in which
nature and man are in harmony

2. Kurita Group will generate new functions and value for water, through further exploration and exploitation of the fundamental
full use of its unique technologies, products and services.

Solutions

CO2 emission reduction
Factories in various industries
Water resource depletion
Industrial water
Tap water andsea water

Production process

Utilities

Yield increase

Labor andpersonnel saving

Energy saving

Facility preservation andextension of useful life

Water
treatment

properties of water.

3. Each individual of Kurita Group will adopt its customers’ point of view and solve their water and environmental issues, by making(extreme weather andnatural disasters)

Waste reduction
Wastewater
treatment

Business continuity
WatersavingGroundwater

Tight capacity oflandfill sites

Wastewater reclamation

Water pollution

Rivers, lakes,
and sea areas

Soil and groundwaterpollution* The corporate philosophy was set out in 1989 to mark the 40th founding anniversary of the Company.

Water purification

Soil and groundwater
remediation

Groundwater depletion,
ground subsidence

Kurita Group Business Strategy

creating shared value with society through water.

Social andindustrial issues

Climate change

CO2 (Greenhouse gas)

Corporate Philosophy

1. Kurita Group will contribute to facilitate the coexistence and shared prosperity of the natural environment and human society by

Kurita Group Overview

The missions that the Kurita Group will fulfill in society into the future, its medium- and long-term visions, and its ways

Corporate Vision

1. Kurita Group will seek to create shared value with society such as environmental preservation and the effective use of resources,

Water Treatment for Factories

Water treatment chemicals– Water Treatment for Factories - Support for All Processes

and “reduction of environmental impact.”

3. Kurita Group will evolve its “service business” and will provide customers, at speed, with comprehensive solutions making full use
of Kurita’s technologies, products and services in water treatment chemicals, water treatment facilities and maintenance services.

1. Kurita Group Code of Conduct
2. Corporate Governance Policies
3. Basic Policies for Constructing

4. CSR Policy
5. Kurita Group’s Policy
on BCM(Business Continuity
Management)

an Internal Control System

6. Kurita Group Human Rights Policy
7. Kurita Group Anti-Bribery Policy
8. Kurita Group Antitrust Policy

Manufacturing process

Wastewater
treatment chemicals

Power generation
systems

Air conditioning
systems

Cooling water treatment
chemicals

Refrigeration
systems

Pre-treatment
Wastewater treatment system
Wastewater treatment
chemicals

Boilers• Soft water production• Pure water production• Ultrapure waterproduction

Boiler water treatment chemicals

Wastewater reclamation system

Compatibility

Water Purity and Related Applications
Pure waterhttps://www.kurita.co.jp/english/philosophy_vision/index.html

Kurita Water Industries Ltd. Integrated Report 2021

Ultrapure waterIon exchange-treated water

Theoretically pure water

Applications* Diagram shows
example applications
only and are notnecessarily limited tothe shown level ofwater quality

Water for mixing
drinksMechanical parts
cleaning

Low purity

Electronic components
cleaning
Cosmetic raw
materials

Mechanical parts
cleaning
Water supply forhigh-pressure boilers
Humidification air
conditioning

Kurita Group Philosophy System

Discharge

Financial Information/Corporate Information

SafetyIndustrial waste

RO membrane
treatment chemicals

Core values

4

Cooling towers

Process treatment chemicals

Water treatment system

RO membrane-treated water

Integrity

Wastewater<Utilities><Manufacturing plants>

Tap water

Stipulates the basic values guiding judgments and actions to be shared by all officers and employees in conducting business activities.

Water treatment facilities
Steam

The Platform for Value Creation

The basic policy encompasses the management direction and aims of the Group and forms the foundation of the Kurita Group Philosophy
SystemTransparency

Chilled water

RO membrane
treatment chemicals

Basic Policy

Fairness

Cooling water

Raw water

and will realize its corporate philosophy, by continuing to innovate and through businesses contributing to the naturalenvironment, industry and people’s lives.

2. Kurita Group will, as an indispensable partner, create value for customers such as “pursuit of safety,” “productivity enhancement”

Water

The Kurita Group’s Businesses“A Creator of unique value to the solution of water and environment,” contributing to therealization of a sustainable society.

Water for pharmaceuticaland medical use
High purity

Kurita Water Industries Ltd. Integrated Report 2021

5

Kurita Group Overview

Kurita’s Value Creation Story
Corporate Philosophy

the water treatment sector. We intend to utilize our “water knowledge”—the accumulation of issues we have identified
and information we have acquired from our extensive experience in the field—to create solutions for social issues that

Corporate Vision

are aligned with the characteristics of individual industries and regions and thereby maximize value for customers

Study the properties of water, master them, and we will create an environment
in which nature and man are in harmony

Kurita Group Overview

The Kurita Group has acquired various contacts on the frontlines of industry and society during its long involvement in“A Creator of unique value to the solution of water and environment,”
contributing to the realization of a sustainable society.

while creating shared value with society.
Management Resources

Major Trends Facing the
Kurita Group

Changes in Work Styles andLifestyles

Financial Capital
Equity attributable to owners of parent

Interest-bearing debt

The Advance of Globalization
and Increasing WealthInequality
Fresh Water Scarcity andUneven Water Distribution

Human Capital
Number of employees

Heightened Safety
Awareness

7,465

Parent:Intellectual Capital¥5,317 million
Approx.180

R&D expenses
R&D personnel

2,597

Synergies generated through cross-Group projects

The Kurita Group’s
Materiality

activities

3. Respect human rights
4. Solve issues related towater resources

Assets that support the creation of products andservices
Property,
millionplant and equipment¥117,603

Group network

31companies
42companies

Japan
Overseas

7. Advance industrial

production technologies

6

DiverseSolutions

Information, data and experience
related to water treatment in industry
and society

Optimized for thecharacteristics of eachindustry and region as
well as social issues ​Water intake
Energy consumption

2.43 million m
652TJ

Inclusion in ESG Indexes
Corporate citizenship initiatives
A supply chain to support society on a global scale

Kurita Water Industries Ltd. Integrated Report 2021

3*

Realizing sustainable energy use(CO2 emission reduction)

Reduced operating costs at
customers

10,000 t*(Raw material costs, utility costs,
etc. + decision-making costs,
capital costs, etc.)

Reducing Waste 450,000 t*

Operation ofWide-Ranging
Businesses
Integrating water
treatment chemicals, water
treatment facilities,
maintenance services andrelated businesses* Amount of the reduction inenvironmental impact of customers - theamount of the Kurita Group’s own
environmental impact
Please see pages 20-21 for more details.

Diverse Business
ModelsBased on accurate
prediction of value
provision

Winning the Trust of Customers and Society
and Building a Sustainable Society
Help achieve the SDGs

Customer
IntimacyDX

3

Social and Relationship CapitalISO certification

240 million m

Increase in shared value
with customers and society

Natural Capitalenergy use

6. Reduce waste

Water knowledge

Solving issues related to water
resources (water-saving)

Highly accurate predictionsof and commitment to value
provision

Diverse Points of Contact
with Sites

Long-term initiatives

Financial Information/Corporate Information

5. Realize sustainable

Manufactured Capital

10% or more

The Platform for Value Creation

2. Conduct fair businessBusiness profit margin 15%
Return on equity (ROE)

Maximizing Customer
Value

Japan, Germany, Singapore, etc.

Number of patents held

services and products

Net sales organic growth rate

3% or moreThanks to personnel
who address social
issues in a sincere
manner ​1,561

Expansion of training opportunities

R&D bases

1. Provide highly safe

(Fiscal year ending March 31, 2023)

The Kurita Group’s Businesses

Advances in Digital
Technology and Innovation
Acceleration

Consolidated:

Addressing waterrelated issues faced bydiverse industries andsociety in an agile
mannerMVP-22 Management Targets

Identifying True
IssuesJapan: 3,843 Overseas: 3,622

Changing Energy Policies
Industrialization and
Urbanization of Developing
Countries¥253,089 million¥52,123 million

Technology
Development
Capability

Kurita Group Business Strategy

Damage to Social
Infrastructure Caused by
Climate ChangeHigh Profitability andSustainable Growth(Fiscal year ended March 31, 2021)

Number of people that can benefit from improvement in water resources

700 million people (Fiscal year ending March 2031)
Reduction in Scope 1 and 2 emissions

27.5% (Fiscal year ending March 2031) 100.0% (Fiscal year ending March 2051)
Reduction in Scope 3 emissions 27.5% (Fiscal year ending March 2031)
Please see pages 20-21 for more details.

Kurita Water Industries Ltd. Integrated Report 2021

7

Kurita Group Overview

Performance (Fiscal years ended March 31)

Human Capital

Orders

Sales
Japan

(Millions of Yen)

258,439

Kurita Group Overview

Financial Capital

Number of Employees by Region
Asia

North America

EMEA

Other regions

Japan

Asia

North America(Millions of Yen)

259,545

262,341

257,331

264,807267,749

5,654

6,011

EMEA

Other regions

6,737

6,613

Ratio of Female Directors and Employees
Ratio of female directors
Ratio of female employees
Ratio of women in management positions

7,465

(%)

23.1

22.6

23.7

24.5

18.2

22.2

8.5

7.6

8.3

2018

2019

Kurita Group Business Strategy

10.0

8.6

24.1

11.5

9.6

0.0
2019

2020

2021

Demand for some products in the Water Treatment Chemicals business and forsome domestic maintenance services was affected by the COVID-19 pandemic,but orders rose year on year, supported by firm demand from the electronics
industry and the consolidation of Pentagon Technologies Group, Inc.

Business Profit (Millions of Yen)

25,66729,4702021

Return on Assets (ROA) and
Return on Equity (ROE)Business Profit Margin (%)

26,654

2020

ROA

ROE

(%)

7.6

2017

2018

2019

2020

2021

2017

Intellectual CapitalSocial and Relationship Capital

Number of Patents Pending

Number of Certified Companies

Japan
Registered patents
Filed patents
Overseas
Registered patents
Patents transferred to other countries

ISO 9001

ISO 14001
25

7.7
1,644

1,505

1,523

1,555

980

1,042

194

146

118
2020

116
2021

25

20
17

5.1
4.9
10.0

2020

11.0

2019

2020

Profit attributable to owners of parent reached a record-high, driven by sales
growth and margin improvement. However, ROA declined slightly due to anincrease in total assets resulting from active investment in promising businesses.
Also, there was only modest improvement in ROE due to higher retained
earnings.

Business profit = Net sales - Cost of sales - Selling, general and administrative expenses

ROA = Profit attributable to owners of parent ÷ Total assets (Average) × 100
ROE = Profit attributable to owners of parent ÷ Equity attributable to owners of parent (Average) × 100

54.00

Natural Capital
The Kurita Group aims to support environmental impact reduction*1 in the operations of its customers offset and even exceed the environmental impacts
of its own business. To this end, we have set numerical targets for the “amount of the reduction in environmental impact of customers - the amount of
the Kurita Group’s own environmental impact,” with regard to water, CO2, and waste.

Kurita Group KPI: Customer Impact Reduction – Kurita Group Impact
0.71

0.66

Water savings at customers – Amountof water intake used in our businessactivities (million m3)

2021

Kurita’s policy is to continuously increase dividends where possible. In line withthat policy, the dividend was increased for the 17th consecutive year. However,there was only a slight increase in the dividend payout ratio due to an increase inearnings per share.

8

Kurita Water Industries Ltd. Integrated Report 2021

CO2 emissions reduction at customers –CO2 emissions from our business activities(1,000 t)*2

43

97

38.8

41
2020

2019 2020 2021

(Times)

50.3

2019

2019 2020 2021

*1 The Kurita Group has defined products, technologies, or business models that contribute significantly to water-saving, CO2 emissions reduction, and waste reduction compared
to previous levels as the “CSV business.” The reduction of environmental impact from customers’ operations is calculated based on results of applying the CSV business. Further
information about the CSV business can be found on pages 19 and 59.

0.74

38.1

2019

2019

2020

Waste reduction at customers – Waste
generated from our business activities(1,000 t)

45
215
152

52
89

2021

Total assets turnover declined, reflecting an increase in property, plant andequipment due to capital investment in the ultrapure water supply business andthe booking of goodwill related to the consolidation of Pentagon Technologies
Group, Inc., versus only a modest increase in sales.

Financial Information/Corporate Information

66.00

181
167

Total Assets Turnover

Dividend payout ratio (%)

62.00

193
114
2018

2021

Business profit increased despite a negative impact on sales from the pandemic.
Profit growth was supported by tighter control of SG&A expenses through cost
reduction, increased efficiency in materials procurement and an overhaul of
product and service lineups at overseas subsidiaries, leading to an improvementin the cost of sales ratio.

Dividends per share (Yen)

821

18

3.5

2021

Dividends per Share and Dividend Payout Ratio

791

18

The Platform for Value Creation

2019

10.1

4.7

2021

2020

The Kurita Group’s Businesses

Business Profit and Business Profit Margin

2019

The COVID-19 pandemic weighed on sales of some products in the Water
Treatment Chemicals business and in the Water Treatment Facilities business inJapan, but sales increased year on year due to progress with major facilities
projects for the electronics industry in East Asia and the consolidation ofPentagon Technologies Group, Inc.

-36
2019

2020

2021

2019

2020

2021

2019

2020

2021

*2 “CO2 emissions from our business activities” include emissions generated from the ultrapure water supply business, which comes under Category 13 of Scope 3, as well as
emissions in Scope 1 and 2 stipulated in GHG (Greenhouse Gas) protocol.

Kurita Water Industries Ltd. Integrated Report 2021

9

Kurita Group Business Strategy

Interview with the President
Kurita Group Overview

Factors Affecting Business Profit (YoY)(Billions of Yen)New
consolidations

30.0

26.7

+1.4

Decline in net
sales

-4.4

Fiscal year
ended March
31, 2020

achieve the goals of MVP-22

10.0

29.5

Impact of lower sales in Water
Treatment Chemicals businessoutweighed boost from higher sales
in Water Treatment Facilities business

COVID-19 factors
and efforts to
reduce overheads

Fiscal year
ended March
31, 2021

Kurita Group Business Strategy

Kurita’s transformation to

+4.4

+1.4

Accelerating
20.0

Decline in SG&A
expenses

Improvement
in cost of
sales ratio

Additional costs incurred related to facilities inelectric power sector and soil remediation services
Efficiency gains in global procurement andproduction
Adjustments to product mix in Water Treatment
Chemicals business0* Business profit is an internal earnings indicator, which is calculated based on net sales after deducting cost of sales and selling, general andadministrative expenses to give a more consistent picture of earnings.
Business profit is not defined under International Financial Reporting Standards (IFRS), but the Company voluntarily discloses the indicator for
reference purposes.

10

Kurita Water Industries Ltd. Integrated Report 2021

tool cleaning business Pentagon Technologies Group, Inc., but ourbusiness was affected by weaker demand for water treatment
chemicals due to lower capacity utilization rates at customer
plants and by delays to maintenance and soil remediation plans at
customers in general industrial sectors in Japan.
Business profit* increased 10.6% year on year, reflecting an
improvement in the cost of sales ratio and a decline in selling,
general and administrative expenses. Despite additional costs
booked by some domestic businesses, we reduced the cost of sales
ratio by making global procurement activities more efficient and by
overhauling product and service lineups at overseas subsidiaries.
Selling, general and administrative expenses declined due to efforts
to reduce overheads, complemented by a drop in expenses related
to restrictions on business travel and an increase in working fromhome. In addition, under other income, we booked a liquidation
gain on contract termination settlements with a customer in theultrapure water supply business and gains on the sale of idle assets.
As a result, operating profit increased year on year and profit
attributable to owners of parent reached a record high.

of an AI-based solution that optimizes the operation of water
treatment facilities, reducing electricity consumption and operationand management costs. We also continued to implement
Groupwide procurement, production and logistics activities under
our Global Supply Team project. The project, which brings together
the top supply chain managers from each Group company, has
three main aims: leverage the Group’s networks to optimize
procurement and production, share expertise to reduce costs,
and reinforce the Group’s business continuity systems in logistics
and other areas. In the fiscal year ended March 31, 2021, these
efforts led to a larger decrease in the cost of sales than in theprevious fiscal year, raising prospects for a sustained improvementin profitability going forward.

Global Supply Team Initiatives
Water treatment
chemicals
procurement

Water treatment
chemicals
manufacturing

Joint purchasing
Switch to lower-cost
raw materials
Select same raw
materials / suppliers
for the whole Group

Improve work
efficiency throughbehavioral analysis
Optimize packaging
and promote 3Rs(reduce, reuse,recycle)Increase efficiency bysharing Groupwide
manufacturingexpertise

Financial Information/Corporate Information

Our operating environment was obviously impacted by the COVID19 pandemic, which led to lockdowns, restrictions on movement
and other measures worldwide to prevent the spread of infection,
dealing a major blow to economic activity everywhere. In Japan,
production activity in the manufacturing sector declined andcapital investment plans were postponed due to a slump indemand in both Japan and overseas. In China, economic activity
started to normalize, but Europe, North America and the wider
Asia region continued to face challenging economic conditions.
Despite these conditions, the electronics sector – the Group’s coremarket – saw continued growth in demand for semiconductors,
electronic components and other products, driven by wider uptakeof AI and 5G technologies, as well as the increase in working fromhome. These trends supported strong capital investment and highcapacity utilization rates in the electronics sector in Japan andoverseas.
The Group’s orders and net sales increased only slightly due tothe impact of the pandemic, but profits continued to rise year on
year. Orders and net sales were lifted by the consolidation of U.S.

We are working to create shared value with society under the
MVP-22 medium-term management plan, which puts CSR at thecore of our management. Our aim is to provide new value tocustomers while also achieving high levels of profitability by
dramatically increasing the quality and speed of businessprocesses. In the fiscal year ended March 31, 2021, the plan’s thirdyear, we faced the challenge of the global pandemic, but we
continued to actively execute the plan’s priority measures to drivea transformation in our business that dismantles preconceived
ideas.
First, in order to provide total solutions, we continued to focus
on creating solution models that incorporate products,
technologies, services and contracts that can be deployedhorizontally. We completed six new models, including a service
that helps manufacturing plants reduce water usage by optimizing
the operation of RO membrane treatment facilities. Including
models already developed, we now have a lineup of 13 solution
models. While the deployment of these models is slightly behindschedule due to restrictions on movement at customer sites anddelays to verification testing amid the pandemic, we haveestablished a solid platform to drive growth in the fourth year of
the plan and beyond.
Second, we continued to put the highest priority on driving
forward the Group’s digital transformation (DX) in order to change
business processes and transform business models. In April 2020
we established a new Digital Strategy Division to lead the Group’s
DX strategy. As part of that strategy, we launched a joint initiative
called the Meta-Aqua Project with subsidiary Fracta, a U.S.-based
AI startup, to promote DX in water treatment and create related AI
and IoT products. The project has already led to the development

The Platform for Value Creation

Q

What is your take on Kurita’s operating environment and resultsin the fiscal year ended March 31, 2021?

The Kurita Group’s Businesses

Q

What progress did Kurita make with initiatives in the third yearof the Maximize Value Proposition 2022 (MVP-22) plan?

Water treatment
facilities
Select same partsand materials forthe whole Group
Consolidatepurchasing of partsand materials
Use internal Group
resources effectively

Kurita Water Industries Ltd. Integrated Report 2021

11

Interview with the President

us more contact points with potential customers in the expanding
electronics sector.
In terms of non-financial performance, we began work on
tackling climate change after setting new long-term targets for
reducing CO2 emissions in line with the recommendations of the
TCFD*1. In addition, we joined the Water Resilience Coalition as a
co-founder. The coalition is an initiative established under the UN
Global Compact (UNGC)* 2 to address issues related to water
resources. Through the coalition, we started work on developing
an integrated platform for water resources and establishingmedium- and long-term targets and activity benchmarks forsecuring water resources in the world’s water-stressed areas. We
also set up a dedicated organization to accelerate the Group’s
diversity & inclusion efforts and formulated a vision and related
measures.

Stepping Up Business Expansion Tailored to Local Market Characteristics

Targeted resources on
strategic business areas
Expanding the CSV
business

Middle East

12Merged subsidiaries in water
treatment chemicals and water
treatment facilities in Taiwan in
April 2021
Accelerated pivot to services androllout of solutions in Water
Treatment Facilities business

ASEAN
Targeted business resources oncompetitive technologies
Leveraging synergies across the entire
ASEAN region

Kurita Water Industries Ltd. Integrated Report 2021

North America
CanadaAcquired water
treatment chemicals
company in April 2021
Expanded the businessbase in North America

U.S.
Reassessing target
markets for water
treatment chemicals
Overhauled engineering
processes for water
treatment facilities

Pentagon Technologies Group, Inc.
Strengthened competitiveness in electronics sector
marketFinancial Information/Corporate Information

Water treatment chemicals
company in the Middle East
becomes a subsidiary in April 2021
Expanded business and accelerated
deployment of solutions

East Asia

The Platform for Value Creation

Europetreatment chemicals and cleaning services, creating a corebusiness in the public and industrial infrastructure market. In
engineering processes, we aim to reinforce engineering chains
and supply chains by using alliances with startup companies tofree up our engineers for deployment in core businesses.
Moreover, to foster a culture of innovation based on diverse
perspectives and backgrounds, we will continue to upgrade
programs and systems that support diversity in our workforce anddifferent ways of working.
Reinforcing the Group’s overseas business base will be a key
challenge in the year ahead. In North America, we will push ahead
with our Kurita America, Inc. PMI plan, which was delayed by the
COVID-19 pandemic, to establish a more efficient production andsales structure. In April 2021 we acquired Keytech Water
Management, a Canadian water treatment chemicals company,
giving the Group a business base in Eastern Canada, where muchof the country’s industry is located. We aim to generate synergies
with other North American subsidiaries by deploying solutions
across the region in their shared general industrial market. Also in
April 2021, we converted Kurita AquaChemie Ltd., a joint venturewith AquaChemie DMCC, into a consolidated subsidiary in order toreinforce our business in the Middle East region. The subsidiary
has local manufacturing sites, which will be key to businessexpansion. In Asia, we aim to further improve profitability in the
ASEAN region by channeling business resources into new businessmodels, such as remote facility monitoring and services thatrealize significant reductions in CO2 emissions. In Taiwan, where
we have combined our water treatment chemicals and water
treatment facilities subsidiaries, we aim to accelerate thedeployment of total solutions that draw on their combined
capabilities.

The Kurita Group’s Businesses*1 Task Force on Climate-related Financial Disclosures: Established by the Financial
Stability Board (FSB) to promote the disclosure of climate change-related
information by companies and to explore ways for financial institutions to address
climate change.
*2 A non-binding initiative to encourage companies and groups worldwide to act as
good corporate citizens and help realize sustainable growth by exerting
responsible, creative leadership.

The current fiscal year will be a critical period for the ultimate
success of MVP-22. We are aiming for further improvements in
profitability by creating shared value and by rapidly providing value
to customers, supported by an accurate understanding of theissues faced by society today.
First, we will continue to implement DX to drive change inbusiness processes and transform business models. Using digital
tools, AI and IoT, we will accumulate information and data fromdiverse points of contact with sites and utilize this “water
knowledge” across the entire value chain – such as development,
sales, engineering, and facility operation and management – toestablish and implement ways of creating value for customers. We
will also work with partners across the Kurita Group to develop
data-driven solutions that underpin new business models. We alsoplan to step up activities under our Meta-Aqua Project, launchedin the previous fiscal year, which aims to optimize and improve theefficiency of water treatment facilities and introduce more
automation into design processes.
Additionally, we will build a framework to deliver solutions that
help increase corporate value for customers by balancing
improvements in economic value with CSR implementation, suchas reducing high-level environmental impact. Leveraging our deep
understanding of customers’ manufacturing processes, we aim to
expand our range of highly effective total solutions and our CSV(Creating Shared Value) business. Also, to increase contact points
with customers through new business model development, we will
utilize web-based platforms to build a framework for providing
diverse water treatment solutions.
In order to optimally utilize the Group’s business resources, weabsorbed wholly owned subsidiary Kurita Engineering Co., Ltd.
through a merger in April 2021. Our goal is to increase profitability
by integrating the company’s engineering cleaning business withrelated operations in the Group to establish a framework fordelivering total solutions covering water treatment facilities, water

Kurita Group Business Strategy

Overseas, we worked to improve profitability from both a global
and local perspective, backed by our operating framework inJapan, Asia, EMEA and the Americas, which has been built up
through M&A activity in recent years. In terms of global initiatives,
we are now into the second year of Project Acorn, which brings
together all the Group’s products, technologies and other businessresources related to RO membrane chemicals. In addition tocreating a common global lineup of products, the project is alsosteadily delivering results in other areas, such as an optimized
Groupwide production system and a human resources training
program that will give our people the skills to drive the next phaseof business expansion. In terms of local initiatives, we retargeted
all our marketing resources in the ASEAN region on high-valueadded products, technologies and services, and in Europe weoverhauled our product lineup to put greater focus on highmargin products. These initiatives lifted profitability in both theASEAN and Europe regions, contributing to the improvement in
the Group’s profit margin. In the U.S., post-merger integration(PMI) efforts at Kurita America, Inc., a new subsidiary created by
combining several local subsidiaries, fell short of expectations due
to a major hit from the COVID-19 pandemic. However, Pentagon
Technologies Group, Inc. became a consolidated subsidiary, giving

Kurita Group Overview

Q

What measures are you planning for the fiscal year ending
March 31, 2022, the fourth year of MVP-22?

Avista Technologies, Inc.
Launching RO membrane chemicals and services
worldwide

Kurita Water Industries Ltd. Integrated Report 2021

13

Kurita Group Business Strategy

Financial Strategy

Interview with the President

What is your long-term vision for Kurita?

The COVID-19 pandemic provided us with an opportunity toreconfirm the key role the Kurita Group plays in ensuring business
continuity at many customers that support society and industry.
We need to consider two things: how can we contribute to thecreation of a sustainable society, and what value can we provide tosupport the continuity of customers’ businesses. To achieve that,

Shuji Shirode
Director
Executive General Manager
of Corporate Control and
Administration Divisionresearch and development base, scheduled to open in April 2022.
Additionally, funds were used to realign and upgrade
manufacturing sites to reinforce the water treatment facility
manufacturing system. The Group also acquired intangible assets,
including software to build a proprietary IT platform. Overseas, we
acquired additional shares in Pentagon Technologies Group, Inc., atool cleaning business in the U.S., making it a consolidated
subsidiary. Capital investments overseas included the constructionof a new head office for Kurita America, Inc. following the
integration of the Group’s local subsidiaries in the U.S., andinvestment in the Group’s research and development base inEurope.

Kurita Group Business Strategy

Improving Capital Efficiency and Generating Funds

Sources and Uses of Funds
The Kurita Group has targeted funds on asset-owning businesses,
such as the ultrapure water supply business, while also investingin growth fields with prospects for high profit margins. Since 2015,
we have also actively used funds for overseas M&A deals, such as
the acquisition of a water treatment chemicals business in Europe.
To meet these very large funding demands, we use the Group’s
own capital resources, as well as external sources of funding. In
the fiscal year ended March 31, 2020, we raised capital byborrowing from banks, and in the fiscal year under review, weissued unsecured bonds. Going forward, we will continue to use
debt financing where necessary, while balancing that with soundfinances and capital efficiency. Cash and cash equivalents at theend of the fiscal year under review were at an appropriate level,
given the characteristics of the Group’s businesses and from theperspective of business continuity.

Shareholder Returns
In the fiscal year ended March 31, 2021, we increased dividends
paid from capital surplus for the 17th consecutive year, in line with
our policy of increasing dividends as much as possible, based on adividend payout ratio target of 30-50% over five years. We willcontinue to prioritize internal reserves – funds entrusted to us byshareholders – for investments in growth businesses, but we will
also consider buying back shares if surplus cash increases, while
also taking into account the share price level.

The Platform for Value Creation

Key Investments

We plan to continue investing heavily in growth businesses while
also reducing assets to improve capital efficiency and generate
funds. Specifically, we are winding down our shareholdings inother listed companies. In the fiscal year ended March 31, 2021,
we sold all the Group’s shares in two companies and reduced
holdings in two other companies. For the remaining 24 stocks in
the Group’s portfolio, we will continue to reduce holdings while
taking into account the feasibility and timing of further sales.
Additionally, we aim to shorten the cash conversion cycle and build
a cash management system.

The Kurita Group’s Businesses

the whole Group has to accelerate its transformation based on aredefined view of water treatment’s value to society. In the three
years since the start of the MVP-22 plan in April 2018, we havetaken steps to change our business processes and transform ourbusiness models, putting greater emphasis on customer issues. In
the next two years, we need to focus closely on customer value,and beyond that, social value. Every manager and employee in theGroup will need to work even harder to dismantle preconceived
ideas and maximize value across the Group’s entire value chain,including customers and business partners, based on issues facedby society.
In 2020, the Board of Directors discussed the Group’s value
creation story – what Kurita needs to do to sustainably create
value with society. The resulting value creation story sets out how
the Group’s core competences dovetail with the Group’s purposeof “Winning the trust of customers and society and building asustainable society.” Kurita has points of contact with diverse
customers in many industries. Our “water knowledge” derived
from information and insights into various water-related issues
faced by those customers, is Kurita’s competence and will
underpin the Group’s long-term growth. By changing how we dobusiness to focus more on social issues and by providing solutions
that leverage our “water knowledge”, we can provide new value tosociety. In this way, we can drive positive change in society andindustry, which is the Group’s ultimate purpose. We have only
defined the broad outline of the value creation story at this stage,
but we will develop it further into a more robust, structural reform
process by establishing a comprehensive framework of individual
strategies, KPIs and evaluation systems.

Kurita Group Overview

Q

In the fiscal year ended March 31, 2021, we made a number of key
investments. In Japan, we used funds for capital investments in thetool cleaning business and in asset-owning businesses such as theultrapure water supply business. We also invested in our new

Q

What is your closing message for stakeholders?
remaining two years, we will accelerate strategy execution in order
to transform Kurita into a highly profitable, global corporate groupthat creates shared value with society. I hope we can count on
your continued support as we continue to transform the Kurita
Group to generate sustained growth.

Dividends per Share and Dividend Payout Ratio(Fiscal year ended March 31, 2021) (Millions of Yen)

(Fiscal years ended March 31)

72,417

Dividends per Share (Yen)72,417

Increase in cash andcash equivalents
Purchase of property, plantand equipment (net)

Bond issuance

M&A
Sale of shares inother listed companies

62.00

Michiya Kadota

66.00

54.00
50.3

Debt repayment

July 2021

Dividend Payout Ratio (%)

Financial Information/Corporate Information

To achieve the numerical targets in the MVP-22 plan – a businessprofit margin of 15% and ROE of 10% or more – we have
implemented a range of priority measures in the face of the global
pandemic. These measures are starting to bear fruit, supporting a
steady improvement in the quality of earnings. In the plan’s

Actively Investing in Growth and Diversifying Funding

38.1

38.8

2020

2021

Operating cash flow
Dividends paid

President and Representative Director

Other

Sources of funds Uses of cash

14

Kurita Water Industries Ltd. Integrated Report 2021

2019

Kurita Water Industries Ltd. Integrated Report 2021

15

Kurita Group Business Strategy

Medium-Term Management Plan:
Maximize Value Proposition 2022 (MVP-22)(April 1, 2018 – March 31, 2023)

Maximize customer intimacy by dismantling preconceived ideas
and dramatically raising the quality and speed of our work.

Management Targets and Third-Year Results

Initiatives by Priority Measure

Net salesorganic growth rate

15%

Fiscal year ended March 31, 2021

11.0%

Return on equity (ROE)
Target10%

or moreFiscal year ended March 31, 2021
Result:Increased CSV business orders and expanded business lineup

Build systems to ascertain profitability of CSV businessand underpin new management KPIs

 stablished systems to ascertain profitability and added profitability ofE
the CSV business to management KPIs

3
4

Improved capitalefficiency in eachbusiness segment

Kurita Water Industries Ltd. Integrated Report 2021

5
6Enhancement of total solutions
Rapidly develop total solutions for customers thatmake full use of Kurita’s technologies, products andservices in water treatment chemicals, water
treatment facilities and maintenance.

C reate solutions models that provide new value tocustomers

Completed another six solutions models, taking total to 13 models

S tep up market development using sales promotion
activities in global and domestic markets

Stepped up rollout of digital marketing

Rebuilding of manufacturing system
for water treatment facilities
Rebuild the manufacturing system and processes todramatically increase quality and speed.

Creation of new business andthe promotion of innovation
Expand and enhance existing business fields while
creating new business fields that will become major
new sources of earnings.

Establish UX GroupUse AI to automate design process and build digital twin
simulator (DTS)Use HR tech* to optimize deployment of personnel and teams* The application of big data analysis, AI, cloud computing and otheradvanced IT-related technologies for a wide range of human resource
operations, including hiring, development, and assignment.

Work with Fracta to digitalize businesses based on AI
technologies

Built regional marketing system covering five global areas

 eveloped wide-ranging business alliances, including with startup
D
companies, and pushed ahead with DX in supply chain
 utomated design processes to reduce personnel costs and improve costA
accuracy and built basic DTS system tarted operation of backbone system with functionality to determineS
status of human resources, and used the system to realign and manageorganizations

 eveloped algorithm to underpin data-driven business supportDfunctions for engineering work in Engineering Division
 eveloped algorithm to underpin data-driven energy efficiency
D
improvements and cost reduction for RO membrane operation in largescale ultrapure water production systems

Strengthening the foundation andpromotion of research and development

Enhancemathematical models for water treatment
phenomena to support use of AI and IoT, and develop
advanced water treatment systems based on those models

 eveloped compact, energy-efficient waste water treatment facilities usingDmathematical model based on water and microorganism flow analysis inwaste water treatment facilities

Build a strong foundation as a technology-oriented
company and promote advanced research anddevelopment.


Expandand reinforce RO solutions by combining RO
membrane treatment technologies from across the Group,
including Avista Technologies

Enhanced water treatment simulator functions to improve design efficiency

Establishment of the Group
governance system
Improve the effectiveness of internal controls
in Group companies.

Embed Management Monitoring System
Implement initiatives to improve effectiveness of rules inline with characteristics and situation at each Group
companyImplement measures to improve effectiveness of Board of
Directors at Group companies in Japan

Financial Information/Corporate Information

16

2

7.7%

Adoption of business segment
management using return on
invested capital (ROIC)
TargetContinuously review CSV business

The Platform for Value Creation

Result:Expand earnings with highly unique technologies,
products, or services that contribute to the naturalenvironment, industry and people’s lives.

Achievements of the Fiscal Year Ended March 31, 2021

or moreBusiness profit margin
Target1

Development of CSV BusinessInitiatives for the Fiscal Year Ended March 31, 2021

The Kurita Group’s Businesses

3%

Priority Measures

Kurita Group Business Strategy

Place emphasis on profitability
and capital efficiency

TargetKurita Group Overview

Basic
Policy xpanded lineup of global products, centered on RO membrane antifoulingEagents and cleaning agents, and built global technical support network orked with subsidiaries and used monitoring guidelines to strengthenWgovernance at indirectly owned subsidiaries
 eviewed and improved the Kurita Group’s Basic Policy and Management
R
Monitoring System in line with laws and business customs of each country
 ormulated shared Group measures and established mechanism for each
F
Group company’s Board of Directors to self-evaluate progress withinitiatives to address issues within their operations

Kurita Water Industries Ltd. Integrated Report 2021

17

Kurita Group Business Strategy

CSR Initiatives
Kurita Group Overview

The Kurita Group has positioned CSR at the core of its management strategy in order to realize its corporate
philosophy while achieving sustained growth and is strengthening its CSR initiatives accordingly.

E&S Committee

Kurita Group’s CSR Framework
Under its MVP-22 medium-term management plan, the Kurita
Group is reorganizing the CSR initiatives it has conducted to date,
while also strengthening initiatives with CSR at the core ofmanagement. The Group has determined that contributing to

global efforts like the UN’s Sustainable Development Goals (SDGs)
and ESG (Environment, Social and Governance) investment is
indispensable to creating business opportunities and enhancing
risk response capabilities.

The E&S Committee oversees the Kurita Group’s CSR initiatives andworks to increase the Group’s competitive advantage by further
enhancing business competition capabilities and risk response
capabilities.
Specifically, the committee sets the activity targets and key

performance indicators for each of the themes in the CSR Policy as the
CSR medium-term plan, then confirms progress on the targets while
identifying issues and making improvements. At the same time, thecommittee confirms stakeholders’ expectations of the Kurita Groupand their issues, and verifies the Group’s CSR initiatives.

Kurita Group Business Strategy

Promotion of CSV Business

Reaffirmation of Corporate Philosophy
CSR Definition and Initiative Objectives

The Kurita Group has defined products, technologies, or businessmodels that contribute significantly to increased water-savings,
CO 2 emissions reduction, and waste reduction compared toprevious levels as the “CSV business.” Through their creation andprovision to customers, we will promote the creation of sharedvalue with society. Furthermore, “Development of CSV Business” isConsideration of Priority Themes (Materiality)

CSR Policy
Provide solutions to issues related to water and the environment,
and fulfill responsibility for the future

one of the priority measures of the MVP-22 plan, and we haveestablished key performance indicators for this, engaging ininitiatives linked with the plan. Various measures are conducted topromote the CSV business, including development from thestandpoint of social issues and establishment of an awards
program.

Priority themes
Themes for growth opportunities
4. Solve issues related to water resources
5. Realize sustainable energy use
6. Reduce waste
7. Advance industrial production technologies

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

Individual activities

Activities organization

CSV Business at the Core of CSR Promotion

The Kurita Group’s Businesses

Basic themes

Corporate philosophy ⇒ Creating social value in “water and the environment”
Integration of business and environmental improvement activities
Start of operation of CSV businessBusiness policy

Establishing a competitive advantage in water saving, CO2 reduction, and waste reduction

Results

Stakeholder
engagement

Disclosure

Verification andimprovement

CSV Business Selection Standards

Promotion System

1) Significantly more effective than previous or competing technologies.
3) Contribute to action plans aimed at achieving the SDGs.

The Kurita Group positions the themes stipulated in its CSR Policy
as material issues and engages on a Group-wide basis in individual
activities in the areas of 1) corporate governance, 2) product andservice liability, 3) fair operating practices, 4) respect for humanrights, 5) appropriate labor practices, 6) environmental

improvement, and 7) corporate citizenship. The chairperson of theEnvironmental & Social (E&S) Committee, who is the Company’s
Managing Director, is responsible for integrating and promoting
these activities, and directors and executive officers are assigned
as managers for individual activities.

External
evaluations andhelping solve
issuesChairperson: Managing Director

Committees and Responsible
Departments

Integrating and promoting individual activities

Secretariat▶

18

Information disclosure

Kurita Water Industries Ltd. Integrated Report 2021

Each Division of
Kurita Group
Companies

External
Organization

Waste

▶

Individual Activities
Quality management
Compliance consultation
Human rights awareness
Diversity promotion
Work-life balance, health management
Occupational accident prevention,
safety awareness
Environmental improvement activities
CSR requirements for business partners
Corporate citizenship activities
WRC promotion activities

SocialIssuesNew Products

SelectCSVBusiness

AlliancesEnvironmental Improvement
at Customers

Sharedvalue

Financial Information/Corporate Information

Directors and executive officers

CO2

Total Solutions

ReportingManagers of Individual Activities

Legal Department in Corporate Planning and Management
Office and CSR and Investor Relations Department in
Corporate Control and Administration DivisionInternal Environmental
Impact Reduction

The Kurita GroupWater

E&S Committee▶

2) New technologies or applications of existing technologies in new markets.
4) Contribute to reduction of Scope 3 emissions in the Kurita Group.

System for Promotion of CSV Business

Kurita’s Board of Directors
Reporting

The Platform for Value Creation

Products, technologies or business models that meet some or all of the following standards with regard to water-savings, CO2 emissions reduction, andwaste reduction:

Achievements

Higher Earnings

Internal/
External Awards

1) Significantly more effective than previous or competing
technologies.
2) New technologies or applications of existing technologies
in new markets.
3) Contribute to action plans aimed at achieving the SDGs.
4) Contribute to reduction of Scope 3 emissions in the
Kurita Group.

KPI
Management

AwardsE&S Committee

Executive
Committee

Kurita Water Industries Ltd. Integrated Report 2021

19

CSR Initiatives

Kurita Group KPI: Customer impact reduction – Kurita Group impact
Directors. Materiality was identified by specifying a total of 30
sustainability-related themes, making reference to the GRI
Standard, the OECD Guidelines for Multinational Enterprises, the10 Principles of the United Nations Global Compact (UNGC), andthe SDGs, among others, based on two aspects: 1) stakeholders'
expectations of the Kurita Group and 2) the Kurita Group's impact
on society.

The Kurita Group collects and discloses data on the environmental
impact of its business activities in line with two international
standards – the Greenhouse Gas (GHG) Protocol and the GRI
Standards. Based on that data, the Group sets reduction targets
and works to reduce its environmental impact. Due to the lack ofinternational standards that can measure reduction inenvironmental impact at customers through our businessactivities, which is one of the features of the Kurita Group, we havedevised a proprietary KPI to show the Group’s value creation:
Customer impact reduction – Kurita Group impact, and we arecompiling data for actual reduction and impact.

Kurita Group KPI: https://www.kurita.co.jp/english/csr/csr_activity_growth/environmental_policy/index.html

Kurita Group Business Strategy

The CSR Policy comprises two types of themes: “Basic themes,”
which prevent damage to the Group’s value, and “Themes for
growth opportunities,” which promote creation of shared value
with society at large. We have set forth our “Initiatives toward2030” for each theme.
This policy was formulated upon deliberations on materiality by
the E&S Committee and subsequent confirmation by the Board ofKurita Group Overview

CSR Policy and Achievement Status

Provide Solutions for Issues Related to Water and the Environment, and Fulfill Responsibility for the Future
Priority themes

Initiatives toward 2030

Maintain social trust by developing and providing services
and products reflecting considerations for safety, health,and the environment.

Basic themes

Maintain fair and transparent trade based on freecompetition. Maintain sound relationships with politics andadministration.

3. Respect human rights

Support and respect international norms related to humanrights and promote human rights initiatives by following
the Guiding Principles on Business and Human Rights
established by the United Nations.

100%

Evaluation*1

Result100%

100%

Achieved

100%

100%

Achieved

100%

100%

Achieved

100%

100%

Achieved

100%

100%

Achieved

66 million m3

97 million m3

Likely to beachieved

FY2023

2) Rate of front-line employee participation in regularsafety training directly related to products andservices

100%

Rate of participation in compliance-related training
among officers and employees

100%1) Rate of training conducted in relation tohuman rights among officers and employees

100%

FY2023

FY2023
2) Rate of participation in safety training
related to site operations
Water savings at customers – Amount of water intake
used in our business activities

100%

240 million m3

FY2023700 million
peopleFY2031

10,000 t

FY202327.5%

FY2031―100%

FY2051―

Scope 3 emissions reduction(rate of reduction since fiscal year ended March 31,2020)*427.5%

FY2031―

Number of people that can benefit from
improvement in water resources*2

Scope 1 and 2 emissions reduction(rate of reduction since fiscal year ended March 31,2020)*4―

52,000 t

45,000 t

Likely to beachieved

6. Reduce waste

Introduce technologies for using waste as resources andtechnologies for controlling the amount of waste in orderto achieve zero waste.

Waste reduction at customers – Waste generated
from our business activities

450,000 t

FY2023173,000 t

215,000 t

Likely to beachieved

7. Advance industrial production technologies

Make full use of big data on water to contribute toinnovations in production efficiency and product quality inindustries.

Proportion of themes falling into “Contribution to
improvement of production process” to productdevelopment themes

35%

FY2023

42%

39%

Achieved

Kurita Water Industries Ltd. Integrated Report 2021

Financial Information/Corporate Information

Themes for growth opportunities

Optimize energy use in living and in industries, andintroduce technologies for creating energy throughout
society.

*1 Evaluations of themes 1, 2 and 3 are based on annual goals and results.
Evaluations of themes 4, 5 and 6 are based on annual results relative to medium- and long-term targets.
Medium-term target for theme 7 is set based on levels necessary for the Kurita Group to continue providing products, technologies or business models to society that drive
improvements in industrial production technology.
Consequently, evaluation of theme 7 is based on medium-term target and result for the fiscal year under review.

20

Targets for the fiscal year ended
March 31, 2021

The Platform for Value Creation

Supply water at the optimum quality and quantity bysecuring as much water as necessary for the life of all
people and the development of industry by applying
technologies for saving, purifying, and reusing water.

1) Rate of product safety evaluations for newly
developed products

CO 2 emissions reduction at customers – CO 2
emissions from our business activities*3

5. Realize sustainable energy use

Medium- to long-term targets forthe fiscal year ending March 31
Target year

2. Conduct fair business activities

4. Solve issues related to water resources

Metrics

The Kurita Group’s Businesses

1. Provide highly safe services and products

Contribution to theSDGs*2 Number of people that can benefit from improvement in water availability, water quality, and water accessibility in highly-stressed basins. This target was added from the fiscal
year ending March 31, 2022, so no information has been provided for target, result and evaluation for the fiscal year ended March 31, 2021.
*3 “CO2 emissions from our business activities” include emissions generated from the ultrapure water supply business, which comes under Category 13 of Scope 3, as well as
emissions in Scope 1 and 2 stipulated in the GHG Protocol.
*4 These targets were added from October 2020, so no information has been provided for targets, results and evaluation for the fiscal year ended March 31, 2021.

Kurita Water Industries Ltd. Integrated Report 2021

21

CSR Initiatives

Kurita Group Overview

Initiatives to Address Climate Change

Solving Water Resource Issues Through Initiatives by the Water Resilience Coalition
measures to achieve sustainable growth. Furthermore, the Group
has set long-term targets aligned with the SBTi*2 goal of limiting
global warming to well below 2°C and established a Promotion
System supervised by the Board of Directors.
*1 Task Force on Climate-related Financial Disclosures*2 Science Based Targets initiative

Kurita is a Leadership Committee member of the Water Resilience
Coalition (WRC), established in 2020 to lead industry efforts toachieve global water resilience. As an initiative under the UNGC,
WRC is implementing a range of initiatives to attain medium- andlong-term quantitative targets related to water resources. The

Kurita Group will leverage technological strengths cultivatedthrough its global water treatment operations to help achieve thetargets, while also launching activities in water-stressed basins
where it currently has no experience in order to gain new “water
knowledge” to support the Group’s sustained growth.

Kurita Group Business Strategy

The Kurita Group views climate change as an urgent issue thatneeds to be addressed globally, and based on the TCFD* 1
Recommendations, the Kurita Group will continuously reduce GHG
generated by our business activities and contribute to reducing
GHG emissions for our customers through our business activities.
To promote these initiatives, the E&S Committee evaluates risks
and opportunities for the Kurita Group and considers targets andFor more details, click on the link below. ​Water Resilience Coalition

Initiatives to Address Climate Change https://www.kurita.co.jp/english/csr/csr_activity_growth/climate_change/pdf/issues_E.pdf

Risks & Opportunities: Evaluation and Measures
Type
Policy and Legal

MarketPhysical Risks

Resource
Efficiency
Energy Sources

Resilience

●
●
●

●
●

●
●

●
●

●
●

●●

Details of risks & opportunities

Kurita Group measures

Introduction or increase of carbon tax
Regulations for products and services with high GHG emissions​
Dissemination of supportive policy incentives to the conversion to energy with low GHG emissions

 ow-carbon products and services
Lby utilizing digital technology andreviewing designs, etc. ​Substitution of existing products and services with lower emissions options
Decreasing demand from fossil fuel-related sectors ​Increasing demand in electronics industry due to the acceleration of DX
Soaring costs of raw materials and energy
Increasing factory shutdowns and construction delays due to extreme weather events such as
cyclones and floods ​Increasing operating rate of cooling equipment
Dissemination of efficient production and distribution processes ​Reduction of water usage

 eduction of Scope 1 and 2
Remissions by switching to alternative
fuels and renewable energies ​ evelopment and expansion ofD
renewable energy-related businesses
such as biomass power generation
 ontinuous strengthening ofCbusiness continuity in preparation
for natural disasters such as flood
control

Our Pledge

Improve water availability,
quality and accessibility inbasins facing serious water
resource problems

Raise the global ambition ofwater resilience through publicand corporate outreach

Leadership Committee members (11 companies)
Anheuser-Busch InBev
DiageoPVH
Gap
Microsoft
Cargill
Dow

EcolabSTARBUCKS
3M
KuritaIncreasing demand for products and services with low GHG emissions ​Increasing diverse technical needs for reducing GHG emissions

Implement measures to resolve
water resource problems
across the entire value chain

Members (13 companies)

Participating
Companies

The Coca-Cola Company
Woolworths
Cummins
Levi Strauss & Co.
IHG Hotels & Resorts
DanoneColgate tilization of digital technology andUdevelopment of low-power
technology ​Dissemination of energy with low GHG emissions ​Conversion to distributed energy resources ​HEINEKEN
gsk
PhosAgro
DUPONTMARS
Reckitt Benckiser(as of July 2021)

 evelopment and expansion ofD
renewable energy-related businesses
such as biomass power generation

Substitution and diversification of fuel and water resources

External Evaluation (as of July 2021)

Schedule for Achieving the Targets
Scope 1, 2

Reduce by 27.5%

Ratio of total CO2
emissions(by fiscal year ending
March 31, 2031)(fiscal year ended
March 31, 2020)

Scope1​Scope
1​Creating a world in which water can be consistently supplied to the required place, in the required quantity, and at the required quality

The Platform for Value Creation

Products &Services●●● Opportunities

Global water resilience

The Kurita Group’s Businesses

Technology●●●● Risks

VisionScope 1, 2

Reduce by 100%

Evaluation by ESG Rating
Organization

Inclusion in ESG Indexes(by fiscal year ending
March 31, 2051)

2021
Gradual replacement of gasoline-powered vehicles with electric vehicles and the like

0.3%​

Sompo Sustainability Index

Replacement of fuel with renewable energy

0.8%​

Use of renewable energy for power used at business locations

Scope
3
Scope3​

98.9%

Reduction of Scope 3 through promotion of CSV business / Transformation of products and services provided and businesses ​FTSE4Good Index Series

FTSE Blossom Japan Index

Sompo Sustainability Index

MSCI ACWI ESG Leaders Index
MSCI World ESG Leaders Index

MSCI JapanESG Select Leaders Index

The MSCI Japan Empowering
Women Index (WIN)Measures to reduce Scope 2 not derived from power

Change in external environment (customers’ shift to renewable energy)

Financial Information/Corporate Information

Scope2​Scope
2​

ISS-ESG

Evaluation by Supplier
Evaluation Organization

EcoVadisScope 3

Reduce by 27.5%(by fiscal year ending
March 31, 2031)

22

Kurita Water Industries Ltd. Integrated Report 2021

* The inclusion of Kurita Water Industries Ltd. in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship,endorsement or promotion of Kurita Water Industries Ltd. by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

Kurita Water Industries Ltd. Integrated Report 2021

23

The Kurita Group’s Businesses

Opportunities and Risks in Business Flow
Marketing

R&D

Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Masaya Kawai

Executive General Manager of Digital Strategy Division

Executive General Manager of Solution Business Division

R&D

Sales and Orders
Manufacturingand Engineering

Maintenance

Solution Business Division

Toshitaka Kodama

Procurement andQuality Control

Opportunities and Risks
Opportunities
Growing demand for solutions that help increase non-financial value inbusiness activities
More diverse and faster ways of approaching customers driven by shift todigital technologies
Increase in Kurita’s non-financial corporate value through provision of solutions
that address customers’ social issues

Risks
Failure to remain competitive due to delays with internal DX that set backbusiness reform
Legal damages or business disruption due to cyberattacks or data leakscaused by weak information security

Risks
Loss of business opportunities and decline in corporate value due to inability
to adapt to changes in society and industry

Building IT platforms to
support business transformation

Developing solutions through diverse points ofcontact with customer sites

The way we do business is set to change dramatically. The COVID19 pandemic is accelerating the shift from physical to virtual
business processes. For a company like Kurita, with its strong
physical links with customers, there is a risk we could be forcedout of the water treatment market by competitors from othersectors with strong IT capabilities if the Group fails to rapidlychange the way it does business. In the Digital Strategy Division,
we are doing our part to support Kurita’s business transformation
by building new IT platforms and harnessing digital transformation(DX) to create new business models.
To develop new business models, we started by bringing
together all the vast but separate data resources of the Group’s
different divisions to create a fully integrated big data resourcethat can be used in project proposals. One example is how we
worked with Fracta Leap Inc. to collect and analyze water
treatment data. The results have led to significant changes in our
existing approach based on years of experience in facility
operation. With our new approach, we have created an integrated
base of explicit knowledge accumulated by our highly skilled
engineers and various technology information. This iscomplemented by data gathered from multiple five-sense sensors,
as well as AI analytics and other technologies, supporting thecreation of data-driven business models.
With these new business models, we can predict changes andabnormalities in water quality using data from numerous customer
sites, allowing us to optimize consumables replacement,
maintenance schedules and water treatment chemical dosing,supporting a predictive maintenance approach. Looking ahead, we

Kurita has typically developed and provided solutions that improve
plant productivity and reduce environmental impact by analyzing
issues faced by customers in their business operations. However,in recent years, investors and other stakeholders have been
focusing more on companies’ non-financial value, as well as theireconomic value. As a result, more of our customers are looking totackle and solve social issues as a way of improving corporate
value. In response to that change, we plan to use three
approaches to address a wide range of needs.
First, for customers that want to play a key role in solving social
issues, Kurita’s sales, technology and marketing divisions will work
together to build a relationship with the customer across all areasof their business, from frontline operations to the managementlevel, and even encompassing business strategy. The aim is to be
their reliable, long-term partner. This type of relationship will allow
us to uncover underlying needs that the customer may not havenoticed within their efforts to address social issues. Using that
information, we will provide optimized, advanced solutions that
increase the customer’s corporate value and also contribute tosociety.
Second, for customers that need water treatment solutions that
boost productivity and reduce environmental impact at thebusiness frontline, we will use digital tools to create a platform that
rapidly provides standardized business models and services totackle diverse issues. Here, the aim is to provide value in the formof reliability and safety through our strong ongoing relationships
with customers across many industries.

AI-optimized facility operation reduces electricity
consumption
AI solution developed by Fracta Leap
AI-optimized
operation

Electricity consumption
Before verification

Verification period

Customer
contact point

Approach

Frontline –management level

Provide advanced solutions for social issues
being addressed by the customer

Diverse business sites
in different sectors

Use digital tools to rapidly provide solutions
for multiple customer issues

New markets

Create new businesses arising from social
issues

Kurita Water Industries Ltd. Integrated Report 2021

Financial Information/Corporate Information

In conventional operation,
fouling of the RO membranecauses electricity consumption
to steadily rise

Third, we plan to create new businesses in fields where theGroup currently does not have exposure. Looking at the Kurita
Group’s business from a longer-term perspective, there is a risk
we could lose out on business opportunities if we continue to only
operate in existing markets and fail to adapt to changes in society
and industry. To respond to future market developments, we needto develop new businesses that address multiple social issues,
mitigating the risk of opportunity losses and helping the Group
capture new business.

The Platform for Value Creation

plan to leverage the Group’s ability to handle the needs of manydifferent industries to solve issues faced by customers at multiple
plants and by entire regions.
Constructing IT platforms will be key to that approach. We aim
to build flexible, highly efficient platforms and train personnel sothey have the high level of IT literacy needed to operate thesystems. We will also look into working with partners in othersectors to create platforms that harness the Group’s competitive
advantages in water treatment.

The Kurita Group’s Businesses

Opportunities
Pandemic spurring shift to outsourced facility operation and management,
maintenance, remote monitoring and predictive maintenance
Customer solution needs expanding into areas that increase social value, suchas reducing CO2 emissions, water usage and waste
Advances in digital technology enabling virtual consulting activities acrossbroader fields and with more diverse customers

Kurita Water Industries Ltd. Integrated Report 2021

Technology and
DesignKurita Group Business Strategy

Opportunities and Risks

24

Marketing

Kurita Group Overview

MaintenanceDigital Strategy Division

Sales and Orders25

Opportunities and Risks in Business Flow
Marketing

R&D

Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Tatsushi Kuramae
Executive General Manager of Research and Development Division

Opportunities
Rising demand for products and services that help increase non-financial value
across all business activities
Competitive advantages from developing technology for the shift to alternative
energyR&D staff

are developing water treatment facilities, systems and chemicals
designed to be used with these new optimized control systems.
To accelerate development of these pioneering technologies,
we will open a new R&D base in Europe in the fiscal year ending
March 31, 2022, and a new fundamental R&D center with an
integrated technology training facility in Japan in the fiscal year
ending March 31, 2023. To complement this cutting-edge R&D
environment, we will focus on levelling up the skills of all theGroup’s researchers and engineers.

Approx. 180¥5.3 billion (2.0% of net sales)

Research Theme

Main Results

Product
development

Chemical products that are highly effective in controlling microorganism buildup and removing organic matter, contributing to the stableand energy-efficient operation of facilities with water treatment membranes, and environmentally friendly, phosphorus-free coolingwater treatment technology, which is in high demand overseas
Technology that improves the operational stability and profitability of biogas power generation facilities by increasing the generation of
methane from waste that is hard to decompose, and a related navigation system that optimizes the input of waste raw materials
Water flow control technology that supports energy-efficient operation of ultrapure water production systems by tracking water volume
usage in customer manufacturing processes

Advanced technology
development

An in-house designed, high-performance polymer that is highly effective in preventing scale buildup for a wide range of water quality
levels, aimed at air-conditioning cooling water systems in in-land factory and building sites
Ultra-microscopic material dissolution technology and dissolution control technology using high-grade water for use in the processing
and cleaning of new memory materials and wiring materials for next-generation semiconductors

Advanced digitaltechnology
development

AI-powered diagnostic imaging system for early detection of problems inside water tanks, supporting stable operation and labor-saving
in monitoring of ultrapure water supply and wastewater treatment facilities
Simulator to support the design of optimal water treatment processes for ultrapure water production systems that meet contractual
requirements and the needs of customers

Reinforcing theGroup’s technologicalfoundation

Acquisition of expertise related to (i) control of microorganism buildup with highly safe, proprietary cooling water treatment chemicals
that use a non-disinfectant approach, and (ii) water treatment membrane contamination mechanisms caused by macromolecularmatter in biological treatment of wastewater
Research into dissolution behavior of metals and fine particles from pipes in ultrapure water production systems, and development ofmethods to prevent contamination by metals and fine particles when ion-exchange resin is replaced
Development of simulation models for (i) microorganism behavior in biological wastewater treatment, and (ii) mixture conditions inwater treatment chemical reaction tanks

Utilizing Intellectual Property

TOPIC

common Group rules for protecting the Group’s IP rights and forpreventing infringement of rights held by other companies invarious countries and regions where the Group operates. In thefiscal year ending March 31, 2022, we plan to continue these
initiatives, as well as reinforce our IP rights management structureby establishing reporting lines and a centrally managed IP
information system to promote sharing of IP information across theGroup.

Financial Information/Corporate Information

The Kurita Group is working to increase its competitiveness bybuilding a patent network that covers both element technologies
and business models. For solution models, which are vital to thedevelopment of our total solutions approach, we clearly identify thesource of each solution's competitiveness from the model
development stage. In the fiscal year ended March 31, 2021, weadded a further seven solution models to our portfolio of protected
intellectual property (IP) assets and started efforts to establish

Simulation analysis of fluid flow processes

R&D expenses

The Platform for Value Creation

Kurita Water Industries Ltd. Integrated Report 2021

Industries and overseas Group companies and introducing more
joint development themes to bolster our lineup of globallycompatible products and technologies. At the same time, our sites
in Japan, Germany, Singapore and North America are expanding
their range of products tailored to the needs of local markets. We
are also encouraging exchanges of research staff between thesites to drive the development of products and services that meeta wide range of industrial and social needs.

The Kurita Group’s Businesses

Stepping up R&D that meets the needs of industry
and society

26

The Group is prioritizing the development of new products andtechnologies to support the provision of innovative solutions that
increase customers’ corporate value and competitiveness and that
help to address issues faced by society.
Also, as a Group with a business platform that now extends
from Japan and Asia to Europe and the Americas, our technology
development activities are becoming increasingly global. We are
stepping up joint development projects between Kurita Water

Achievements in the Fiscal Year Ended March 31, 2021

Risks
Loss of competitiveness due to delays in developing technology compatible
with 5G

Increasing non-financial value in business activities is becoming
more important for companies. In response, Kurita is working todevelop new technologies that help customers tackle social issues
highlighted by the SDGs, such as problems with water resources
and climate change. To address the paradigm shift todecarbonization driven by the transition from fossil fuels toalternative energy, the Kurita Group is upgrading existing
technology that produces biogas from wastewater and generalwaste, and utilizing open innovation to develop next-generationenergy technologies such as microbial fuel cells that generate
electricity directly from wastewater, as well as water treatment
technology needed for the production and use of ammonia andhydrogen, two promising next-generation fuels.
Meanwhile, the uptake of high-bandwidth, high-speed 5G
communication infrastructure is likely to accelerate the shift to
fully optimized, fully automated management of water treatment
and utility processes, which until now has been limited to certain
water treatment units due to constraints on communication
capacity, analytical processing speed and sensor installation. This
creates opportunities for Kurita to offer new services, but there
are also risks if we fail to keep up with the shift to these services in
our industry. Amid that trend, we are working to maintain our
technological lead by leveraging the Group’s many years ofexpertise in water treatment and engineering theory to formulatemathematical models for complex water treatment phenomena.
These models are being embedded into AI and IoT technologies tounderpin proprietary analysis and control systems. In parallel, we

R&D Activities

Kurita Group Business Strategy

Opportunities and Risks

Kurita Group Overview

MaintenanceResearch and Development Division

Sales and Orders

Kurita Ranked Top for Patent Assets in Japan's Engineering Sector

According to a ranking from Patent Result Co., Ltd., publishedin March 2021, Kurita is the leading company in theengineering sector for patent assets. The ranking is based on
an analysis of patents filed by engineering companies
between April 1, 2019 and March 31, 2020 and assesses

both the quality and quantity of patent assets registeredduring that period. Kurita received a high ranking due tonotable patents for water treatment methods and facilities
that use RO membranes and other technologies.

Kurita Water Industries Ltd. Integrated Report 2021

27

Opportunities and Risks in Business Flow
Marketing

R&D

Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Yasuo Suzuki

Executive General Manager of Japan Sales Business Division

Executive General Manager of Global Business Division

R&D

Maintenance

Global Business Division

Yoshio Yamada

Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Opportunities and Risks

Opportunities
Acceleration in CSV business driven by ESG and climate change initiatives atcustomers
New business proposal opportunities for business continuity needs
Demand for remote monitoring and automated operation spurred by laborsaving needs at customer business sites

Opportunities
M&A that accelerates business transformation by introducing new corporate
cultureGrowth in market share by building a stronger presence in local markets
Risks
Global pandemic
Disruption to global supply chains caused by geopolitical instability
Construction of global internal control system not keeping up with rapidbusiness expansion

Creating new value for customers with a focus on
information sharing

Using M&A to help change the GroupOver the last year, customers have shown growing awareness of ESG
and climate change issues. That change in stance is also evident in
the targets of recently released medium-term management plans.
We see this trend as a major opportunity to accelerate thedevelopment of the Group’s CSV business by providing solutions
that reduce energy and water usage, cut waste and help customers
transition to decarbonized business models. Kurita’s absorption ofsubsidiary Kurita Engineering in April 2021 should also support
expansion in the CSV business, which will now be able to develop
new proposals that include engineering cleaning. Our approach ofalways asking, “how can we maximize value for customers?” is also
leading to changes in the mindsets of all our sales personnel.
Meanwhile, the COVID-19 pandemic has spurred a clear change
in customer needs towards business continuity and work stylereforms. Amid a shortage of frontline site managers and personnel
with the skills to succeed them, we are seeing a transition toautomated and unmanned operations through the use of sensorbased remote monitoring systems that manage water quality,
chemical dosing and inventories. The pandemic has also restricted
our own sales activities, so we have introduced online tools andother innovative approaches to change the way we run our sales
activities. Specifically, we have secured business contacts withcustomers using either remote or physical interactions andoverhauled frontline testing regimes and data collection methods,
which has accelerated business processes, including solution model
contracts.
While this will open up more opportunities to develop our CSV
business and deploy total solutions, we will also need to improve

Kurita has set ambitious targets under its MVP-22 plan. In the past,
the Group has been able to steadily grow earnings, led by its
domestic businesses. However, we are unlikely to reach ourtargets if we continue to follow that approach, so the main thrustof the plan is to dismantle preconceived ideas and approaches.
US and European companies that joined the Group throughM&A deals can support that process by bringing in a new mindset
to drive change in the Kurita Group. I hope the Group can take on
board the more open and dynamic approach of US and European
companies to help change the way we do business, while
recognizing and retaining our existing strengths built up in Japanand the Asia region. Under Project Acorn, which is headed up by
the CEO of Kurita subsidiary Avista Technologies, Inc., we aretargeting growth by combining all the Group’s RO membranerelated water treatment chemicals and services into an integrated
business portfolio. Also, under our One ASEAN Project, we have

Customer issues
Reduce waste

Save water

Decarbonization

Business
continuity

Save personnel

Kurita-GK Chemical Co., Ltd.

Contact point

RemotePhysical
CSV business

KuritaKurita-GK Vietnam Co., Ltd.

VirtualKurita Water (Malaysia) Sdn. Bhd.
Kurita (Singapore) Pte. Ltd.

Financial Information/Corporate Information

Save energy

improved profitability in the ASEAN region by treating the businessactivities of multiple Group companies in Southeast Asia as asingle company. By adopting proposals and approaches developed
outside Japan, our overseas operations are increasingly making acontribution to the Group, which is boosting local staff motivationand feeding into a positive cycle of business reform.
Along with these global projects, we are also targeting growth atindividual local companies. We still see considerable room for
growth in share in each market. To build optimal operating
structures for each area, we will draw on technological,
engineering and financial support from Japan while also training
up local personnel, including at the management level.
The COVID-19 pandemic dealt a major blow to post-merger
integration (PMI) efforts at our newly integrated subsidiary inNorth America. Projected efficiency gains and rationalization
measures were disrupted, but we are now preparing to restart the
PMI process. However, the pandemic has opened up theopportunity for new business initiatives, including remotemonitoring and analysis of customer facilities. Along with the
pandemic, recent geopolitical instability has cast a shadow on
global supply chains. Until now, Kurita has pursued cost
optimization in supply chains based on uniform global standards,
but we are now looking at building a more flexible system tomitigate supply chain risk.

The Platform for Value Creation

information sharing between divisions and Group companies andtrain personnel. As a company with strengths derived from diverse
points of contact with customer sites, delays in sharing information
within the Group could see us fall behind our competitors inbusiness proposals. To mitigate that risk, we are accelerating efforts
in this area by introducing ICT to support information sharing andbuilding systems to manage project progress. Personnel
development is another area we need to tackle to create proposals
that offer new value. That will mean training and securing staff who
have the expertise to optimize water and energy usage across allareas of customer plants. Kurita is now putting more emphasis on
helping younger employees acquire those skills, including staff at
Group companies, and stepping up their deployment across theGroup.

The Kurita Group’s Businesses

Risks
Mistimed business proposals due to slow sharing of customer information
Loss of business opportunities from delays in DX (ICT/AI) and business
differentiation
Loss of customer trust due to poor progress in personnel training, including at
Group companies

Kurita Water Industries Ltd. Integrated Report 2021

Sales and Orders

Kurita Group Business Strategy

Opportunities and Risks

28

Marketing

Kurita Group Overview

MaintenanceJapan Sales Business Division

Sales and Orders

P.T. Kurita Indonesia

The One ASEAN Project has improved profitability in the region

Kurita Water Industries Ltd. Integrated Report 2021

29

Opportunities and Risks in Business Flow
Marketing

Maintenance

Sales and Orders
Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Hirohiko Ejiri
Executive General Manager of Engineering Division

Opportunities
Accelerated conversion of Group’s accumulated expertise to explicit knowledge
through use of digital technology
Growing needs for innovative and stable engineering systems that contributeto customer business continuity

Turning risks into opportunities bytransforming engineering

Kurita Water Industries Ltd. Integrated Report 2021

Key initiatives in the fiscal year ended March 31, 2021

Minimizing Cost Overruns
Information about production issues, such as non-compliant
products and services before supply to customers and complaints
from users after supply, are recorded and shared via an internal
database. This data is used in our new SSM, which aggregates thedata and builds a knowledge base of all non-compliant
information. This allows us to identify and accumulate knowledge
about the structural mechanisms behind the issues, preventing
further cost overruns. In the fiscal year ended March 31, 2021, westarted using SSM in the project order approval process, as well as
in design and construction processes, helping to reduce cost
overruns as a ratio of sales. We plan to extend the use of SSM toGroup companies in Japan and overseas to strengthen quality
management across the Group.

Cost Overrun Prevention Cycle Using SSM
Structured, explicit knowledge of mechanisms
behind the issues
Database of reusable technicalknowledge

Database of non-compliant
production and construction,complaint data
Accumulate information about
issuesUse technical knowledge

Determine design
specification

Confirm suitability

Engineering processes

Cultivating Safety Culture
In the fiscal year ended March 31, 2021, the number of workrelated accidents declined year on year, but there were someincidents in the water treatment chemical manufacturing process
and during the operation of water treatment facilities. Kurita has
been working to cultivate safety culture for some time, but in thefiscal year under review, we implemented safety culture checks ineach division. With the checks, we identified the level of safety
culture based on criteria such as hazard perception, work process

management and materials management, and the balance of eachcriteria within the organization. Data from the checks was used to
improve areas of weakness. We plan to extend this initiative toGroup companies in the future. Also, after improvements achieved
with SSM in design and quality control, we decided to start using
SSM in safety management. This allowed us to create a base of
explicit knowledge about past accidents and near misses, reducing
workplace risk.

Understanding Groupwide Quality and Safety Information
In the fiscal year ended March 31, 2021, we asked an external
party to carry out a quality survey of seven domestic Group
companies with engineering functions in order to ascertain quality
levels at Group companies. Issues identified in the survey wereincorporated into quality improvement targets at each company
for the following fiscal year and were used to develop
improvement measures. These measures are now being
implemented with support from Kurita. We also standardized thereporting procedure in Japan and overseas for workplace
accidents and products that are not compliant with quality criteria,
in order to establish a system which centrally manages andcommunicates the information across the Group.

Quality and Safety Reporting System

Financial Information/Corporate Information

30

launched a new program of Groupwide quality and safety
management initiatives in April 2020 to further raise awareness ofthe policies and increase their effectiveness. We will also ascertain
quality levels and the safety situation at manufacturing andengineering sites operated by Group companies, build a system torespond rapidly to any issues, and create a framework to support
standalone improvement activities by each Group company.

The Platform for Value Creation

To address opportunities and risks posed by changes in theconsiderations, work to appropriately source and secure key
operating environment, we believe awareness of the need forcomponents such as membranes, filters and ion exchange resinstransformation and action to bring about transformation are more
for water treatment facilities. We will also step up cooperation with
important than maintaining the status quo. In the Engineering
existing partner companies and reinforce engineering partnerships,
Division, we are working to transform the Group’s engineering
including alliances with startup companies.
activities in three ways.
Third, we are training human resources to drive the
The first is engineering process digital transformation (DX).
transformation of engineering activities. We are already seeing
Utilizing various engineering-related information from across thesome progress with our human resources (HR) tech, which isGroup, we automated design processes and introduced a Stresshelping us train and deploy personnel to positions that match their
Strength Model (SSM) in quality assurance in the fiscal year ended
attributes and skills. In the fiscal year ending March 31, 2022, we will
March 31, 2021, helping to improve efficiency by controllingroll out personnel initiatives tailored to the individual situations ofadditional project costs and reducing the time needed for theeach employee in order to maximize output. And we aim to increase
design phase. We also continued to work on the development of
the effectiveness of HR tech by upgrading training programs,
digital twin simulators (DTS). In the fiscal year ending March 31,
including courses to bolster the digital skills of employees.
2022, we are extending SSM to safety management and speedingup the entire engineering process by working closely
Transforming engineeringwith design and production partners to introduce
concurrent engineering into tasks and processes inengineering chains that tend to be serialized.
Second, we are building supply chains that take
Human resources
Engineering process digital
Supply chain
management
into account geopolitical risk, as well as costs. Existingtransformation (DX)transformationtransformation
initiatives to optimize the procurement of raw
Design automation
Global procurement
Optimum personnel
materials for water treatment chemicals using the(Global Supply Team)deployment and	Introduce SSM into quality
monitoring using HR tech
assuranceandsafetyReinforce
functionsofGroup network will be expanded to include parts
management
engineering bases
Upgraded training
procurement for water treatment facilities. In the
programs
Build DTS
Key component
management	Concurrent engineering
fiscal year ending March 31, 2022, we plan toReinforce engineeringstrengthen the functions of engineering bases in East
partnerships
Asia and Japan, and based on geopolitical risk

Initiatives to improve quality and ensure safety at manufacturing
and construction sites not only help Kurita retain the trust ofcustomers and society, they also underpin all the Group’s
engineering processes. Kurita has formulated the Kurita Group
Product Quality Policy and the Kurita Group Occupational Healthand Safety Policy and worked to embed them across the Group.
However, amid growth in the number of Group companies andthe reorganization of our operating sites and businesses, we

The Kurita Group’s Businesses

Risks
New entrants into water treatment market from other industries, making fulluse of AI and digital technologies
Bottlenecks in raw material and parts procurement due to the pandemic andgeopolitical risk
Delays to technological innovation due to slow progress with training anddeploying engineers based on diversity

Quality and Safety Management Initiatives

Kurita Group Business Strategy

Opportunities and Risks

Kurita Group Overview

Engineering Division

R&D

President and Representative
Director
Executive General Manager,
Engineering Division

ReportExecutive officer in charge of quality and safety

Aggregate and manage information
Coordinate
Headquarters Healthand Safety Committee/ Quality Management
Committee

ReportReportReportKurita’s
departments
responsible for
quality and safety

Domestic Group
companies

Overseas Group
companies

Kurita Water Industries Ltd. Integrated Report 2021

31

The Kurita Group’s Businesses

Main Business Models
KuritaOwned
assetsOperation &management

MaintenanceFee

Water treatment target areas
Chemicaltreatment

Issues facedby society

Sensor equipment
Remote monitoring
Automated control

Facility operation
improvement
proposal

Water treatment example:
electronics factories
Raw water
Facility onsite
inspection

Pre-treatment
systemWastewater
reclamation system
Reclaimed water

Performance
analysis

MaintenanceDeionized waterproduction system

Water treatment
outcome report
Water treatment
improvement proposal

Water
treatmentchemicals

Dilutedwastewater

Select and propose
appropriate
chemicals
Lab testing

Concentrated
wastewater

Identify
issuesWastewater
treatment
systemUltrapure waterproduction system

Order

Pilot testing

Recovery ofmarketable
substances

Discharge

Specification
documents
Estimate

Planning & design
Specification
documents

Detailed designs

Construction &engineering

Parts procurement

Test operation

Work scope
finalized
Equipment
acceptanceinspection andhandover

Order

Estimate

Engineeringcleaning

Review
construction andtechnologies

Order

Cleaning method
proposal

Order

Estimate

Installation of
temporary equipment

Temporaryequipment
dismantled andremoved
Cleaning process

The Platform for Value Creation

Identify
issuesPlanning &design

The Kurita Group’s Businesses

Semiconductor, FPD
manufacturing
processes

Performance
analysisWatertreatment
facilities

Kurita Group Business Strategy

Issues faced bycustomers

Water quality
analysis

Customermanufacturing
process

Kurita Group Overview

Ultrapurewater supply

Water
supplyPersonnel
deployment
Results report

Pipe engineering work

Parts procurement

Wastewater
treatment
Replacement ofconsumables
Customerplant

Discuss andpropose cleaning
methodReceive tools and
jigs

Order

Cleaning

Packaging

Modification work

DeliveryFinancial Information/Corporate Information

Tool cleaning

Customer
plant

Kurita cleaning facility

Start up
Performance
testing

Soilremediation

32

Kurita Water Industries Ltd. Integrated Report 2021

Geographical andhistorical groundsurveyOrder forsurveyGeneral surveyCountermeasures

Detailed survey

Plan formulated

Order forremediation
work

Remediation
measures
implemented

Acceptanceinspection
Monitoring

Kurita Water Industries Ltd. Integrated Report 2021

33

The Kurita Group’s Businesses

Review of Operations by Segment

Results in the Fiscal Year Ended March 31, 2021

OrdersYear-on-Year Change－ 9.0%

million¥103,231

Year-on-Year Change

million－ 9.2%

Principal Products and Services

Business
ProfitOperating
Profit¥12,287

Year-on-Year Change

million¥11,816＋ 5.3%

Year-on-Year Change

million＋ 16.7%

OrdersNet Sales

Business Profit

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

113,777
102,939

103,579

113,632
102,126

11,667103,231

12,287

2021

2019

2020

2021

Boilers are widely used for production processes
in plants and air conditioning in office buildings.
Boiler water treatment chemicals are used toprevent faults that may arise in boilers andensure stable, efficient operation. They also help
to save energy by preventing loss of heatefficiency in the boiler.

Cooling water treatment chemicals are used totreat cooling water used in plants and officebuildings. By preventing problems in pipes andheat exchangers and inhibiting the growth ofharmful Legionella bacteria in cooling towers,
these chemicals help to save resources andenergy and contribute to safer workplaces.

Wastewater treatment chemicals are used totreat the many forms of industrial wastewater
discharged by plants and domestic sewage toprevent any negative impact on the local
environment. Proper treatment of wastewater
contributes to the reduction of environmental
impact.

Process Treatment
Chemicals

Reverse Osmosis (RO)Membrane Treatment Chemicals

Treatment Chemicals for
Automobile Painting Booths

Process treatment chemicals are used in
manufacturing processes in the oil refining,
petrochemical, steel, and pulp and paperindustries, where they help to maintain andimprove production efficiency and productquality.

RO membrane treatment chemicals remove
deposits that can reduce the filtering
performance of RO membranes used inwastewater reclamation and seawater
desalination facilities. By preventing clogging of
the membranes, the chemicals contribute tostable, efficient operation of the facilities.

Water treatment chemicals that separate
residual paint contained in water in automobile
painting booths ensure that circulating water isof appropriate quality, helping to improve
productivity and reduce environmental impact.

Treatment Chemicals for
Incinerators

Treatment Chemicals for Civil
Engineering

Chemical Dosing and Injection
Equipment

Treatment chemicals for incinerators enableconsistent treatment of hazardous substances,such as heavy metals contained in fly ash, andcontrol emissions of acidic gas, thereby helping
to reduce environmental impact.

In civil engineering projects, the Group uses
chemicals to develop greenspaces, treats
construction sludge appropriately and reduces
sprayed concrete dust, among other applications.

The Kurita Group provides water treatment-related
equipment for a wide range of applications, suchas automatic water quality management systems
that use chemical dosing and injection equipment
and sensing technologies. By enabling stable
operation of customers’ facilities, this equipment
contributes to labor saving and reduced
environmental impact.

11,816

9,791

2019

Wastewater Treatment
Chemicals

2020

2021

2019

2020

2021

Fiscal years ended March 31

The Kurita Group’s Businesses

2020

Cooling Water Treatment
Chemicals

10,127

4,258

2019

Boiler Water Treatment
Chemicals

Kurita Group Business Strategy

Net
Sales

¥103,579

Kurita Group Overview

Water Treatment Chemicals

In Japan, amid a slowdown in economic activity due to the COVID19 pandemic, orders and net sales declined year on year, reflecting
a drop in capacity utilization at facilities operated by mostcustomers, except in the electronics industry. Orders and net sales
also fell overseas. All regions were affected by the pandemic andthe yen strengthened against some currencies, weighing on
earnings at overseas consolidated subsidiaries on a yen basis.
Despite a negative impact from the drop in net sales, businessprofit rose year on year due to an improvement in the cost of sales

ratio and measures to reduce expenses. Operating profit also
increased, mainly reflecting a decline in extraordinary items. Other
expenses such as impairment losses booked in the fiscal year
under review were lower than losses on the sale of fixed assets
recorded in the previous fiscal year.

34

Kurita Water Industries Ltd. Integrated Report 2021

The business pushed ahead with a Groupwide project to bring
together all the Group’s products and technologies related to RO
membrane chemicals.
Costs were reduced through the global procurement of raw
materials.
The introduction of remote working in sales activities and wider
adoption of remote monitoring led to lower expenses.

Kurita Water Industries Ltd. Integrated Report 2021

Financial Information/Corporate Information

Main Initiatives
Service contract-based business expanded in Japan, driven by
wastewater treatment stabilization services using coagulation
sensors and services that improve facility heat transfer efficiency
with dropwise condensation technology.
Overseas, the lineup of low-margin products and services was
reduced and replaced with products and services with high profit
margins.
Profitability improved overseas through closer cooperation
between Group companies in each region and optimization ofbusiness functions.

The Platform for Value Creation

Overview of the Fiscal Year Ended March 31, 2021

35

Review of Operations by Segment

Results in the Fiscal Year Ended March 31, 2021

OrdersYear-on-Year Change

million¥164,518＋ 8.9%

Year-on-Year Change

million＋ 8.8%

Principal Products and Services

Business
ProfitOperating
Profit¥17,129

Year-on-Year Change

million¥19,634＋ 13.7%Year-on-Year Change

million＋ 12.9%OrdersNet Sales

Business Profit

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

155,500

2020

2021

155,204 151,174

2019

2020

164,5182021

15,8782019

Wastewater Reclamation
Systems

Ultrapure water production systems remove ions,microscopic particles and bacteria from water toproduce water that is as close as possible totheoretically pure H2O—an essential ingredient in
the production of semiconductors and FPDs.

Wastewater treatment systems detoxify the
many forms of wastewater discharged by plants
to ensure that it does not negatively impact thesurrounding environment.

Kurita provides systems for reclaiming andrecycling wastewater. Moreover, by reclaiming
valuable substances included in the wastewater,
the systems help to conserve resources andreduce costs.

Methane Fermentation System
for Biogas Power Generation

Maintenance Services andSystems Management

Ultrapure Water Supply
Business

The system recovers biogas by generating
methane from the fermentation of industrial
waste, food leftovers and other waste collectedfrom the local area, helping to reduce waste
emissions.

Kurita provides maintenance services to prevent
deterioration in performance and problems
arising in water treatment facilities and to meetcustomer needs for lower environmental impact
and greater productivity. Kurita also manages
systems and facilities for customers.

Kurita installs and owns proprietary water
treatment systems at customers’ plants, handles
the operation and maintenance of thosesystems, and charges customers for the supplyof ultrapure water. This service reduces the levelof investment required and the burden ofsystem operation management for customers.

19,634

17,39017,12915,51815,061

2020

Wastewater Treatment
Systems

2021

2019

2020

2021

Fiscal years ended March 31

The Kurita Group’s Businesses

2019

145,768

158,762

Ultrapure Water Production
Systems

Kurita Group Business Strategy

Net
Sales

¥158,762

Kurita Group Overview

Water Treatment Facilities

Overview of the Fiscal Year Ended March 31, 2021
Overseas, orders and net sales increased due to theconsolidation of Pentagon Technologies Group, Inc. In theelectronics industry in East Asia, progress with large-scale projects
in Taiwan and South Korea supported growth in net sales.
Despite the booking of additional costs by some businesses,
business profit increased year on year due to the consolidation ofPentagon Technologies Group, Inc. and measures to reduce
expenses. Operating profit also increased, reflecting growth inbusiness profit and a liquidation gain on contract termination
settlements in the ultrapure water supply business.

In Japan, the business focused on expanding its lineup of totalsolutions by creating a market-specific organizational framework
incorporating water treatment chemicals.
Kurita acquired additional shares in U.S.-based Pentagon
Technologies Group, Inc., making it a consolidated subsidiary.
Automation of water treatment facility design processes reduced
costs.

36

Kurita Water Industries Ltd. Integrated Report 2021

Tool Cleaning

Soil Remediation

Engineering Cleaning

Using Group facilities, Kurita cleans and removes
any deposits that adhere to tools and jigs usedby customers in the manufacture ofsemiconductors and FPDs. The provision of toolcleaning services helps customers to maintainand improve productivity.

Kurita conducts pollution assessments andremediation of soil and groundwater polluted byharmful substances. Using various
decontamination methods, Kurita helps
customers to hedge against the risk of soil
pollution. Other services include support for theeffective use or sale of restored land.

Kurita provides engineering cleaning services
using chemicals, high-pressure water and othermethods to clean accumulated deposits fromboilers, heat exchangers and pipes, ensuringthat large-scale plants such as industrial
complexes and electric power plants continue tooperate safely and efficiently.

Financial Information/Corporate Information

Main Initiatives

The Platform for Value Creation

In Japan, orders for water treatment facilities supplied to theelectronics industry increased year on year, but net sales declined.
Orders for maintenance services supplied to the same industry
were flat, but net sales increased. In general industry, orders andnet sales from maintenance services declined as customers
pushed back the timing of maintenance projects. Orders for water
treatment facilities from the electric power industry declined, but
net sales increased on progress with construction in existingorders. Net sales in the ultrapure water supply business rose,
supported by supply contracts initiated in the previous fiscal year.
Soil remediation orders and net sales declined year on year,
reflecting a pullback in large-scale projects and delays to some
remediation plans.

Service contract-based business increased, driven by pure watersupply services and reclaimed water supply services, which use
remote monitoring to manage facility operation and maintenance.
Working with subsidiary Fracta, a U.S.-based startup venture, thebusiness made progress with optimizing water treatment facility
operation as part of broader efforts to utilize AI and IoT.

Kurita Water Industries Ltd. Integrated Report 2021

37

The Platform for Value Creation

Directors, Members of the Audit & Supervisory Board,and Executive Officers (As of June 29, 2021)
Kurita Group Overview

Directors

External Directors

External Director

External Director

2018 Head and Representative Director ofGifu Shimbun Co., Ltd. (to present)2017 External Director of Kurita Water
Industries Ltd. (to present)2015 External Director of UACJ Corporation(to present)2010 External Director and Audit andSupervisory Committee Member of
LECIP Holdings Corporation (to present)
Professor at the Faculty of Social andEnvironmental Studies of Fuji Tokoha
University (current Tokoha University)
2007 Director of Sugiyama & Kurihara
Environmental Consultants, Inc.
(to present)
1996 Established Sugiyama & Kurihara
Environmental Consultants, Inc.,
Representative Director

2019 External Director of Kurita Water
Industries Ltd. (to present)2018 Vice President of Nissan Financial
Services Co., Ltd. (to present)2014 Ambassador Extraordinary andPlenipotentiary of Japan to Uruguay
2013 Acted as Vice President of JATCO Ltd.
1984 Joined NISSAN MOTOR CO., LTD.

2021 External Director of Kurita Water
Industries Ltd. (to present)
2019 Executive Advisor of ADVICS CO., LTD.
2015 Director and Executive Vice President of
ADVICS CO., LTD.
2014 Executive Senior Managing Director of
ADVICS CO., LTD.
2012 Managing Executive Officer of DENSOCORPORATION in charge of Development
Division
2009 Executive Senior Managing Director of
SOKEN, INC.
1978 Joined NIPPONDENSO CO., LTD.
(current DENSO CORPORATION)

Ryoko Sugiyama
President and Representative Director

Michiya Kadota

2016 President and Representative Director(to present)2014 Director
2013 Executive Officer
1983 Joined Kurita Water Industries Ltd.

Executive Senior Managing Director andRepresentative Director

Hirohiko Ejiri

Kenichiro Kamai

The Kurita Group’s Businesses

2021 Executive Senior Managing Director andRepresentative Director (to present)
2020 Executive General Manager ofEngineering Division and Chief Business
Officer for Facilities Business (to present)
2019 Managing Director
2016 Director
2014 Executive Officer
1985 Joined Kurita Water Industries Ltd.

Keiko Tanaka

Kurita Group Business Strategy

External Director

Members of the Audit & Supervisory Board

Yoshio Yamada
2019 Executive General Manager of Japan
Sales Business Division and Chief
Business Officer for Chemicals
Business (to present)2018 Managing Director (to present)2014 Director
2011 Executive Officer
1982 Joined Kurita Water Industries Ltd.

Managing Director

Director

Yasuo Suzuki

Shuji Shirode2020 Managing Director (to present)
Executive General Manager of Global
Business Division and Chief Business
Officer for Global Business (to present)2018 Director
2014 Executive Officer
1997 Joined Kurita Water Industries Ltd.

2021 Director (to present)
Executive General Manager ofCorporate Control and Administration
Division (to present)2018 Executive Officer
2016 Joined Kurita Water Industries Ltd.

Member of the Audit & Supervisory Board

External Member of the Audit &Supervisory Board

Yukihiko Mutou

Kenjiro Kobayashi

2019 Member of the Audit & Supervisory
Board (to present)2018 Director
2016 Executive Officer
1991 Joined Kurita Water Industries Ltd.

External Member of the Audit &Supervisory Board (Part time)

Toshiaki Tada

2020 External Member of the Audit &Supervisory Board of Kurita Water
Industries Ltd. (part time) (to present)2012 Audit & Supervisory Board Member,
ITOCHU Techno-Solutions Corporation(to present)
2005 Partner, HIBIYA SOGO LAW OFFICES(to present)
1996 Joined HIBIYA SOGO LAW OFFICES
1996 Registered as an attorney

Financial Information/Corporate Information

2016 External Member of the Audit &Supervisory Board of Kurita Water
Industries Ltd. (to present)2010 Representative Director andExecutive Vice President of Japan
Industrial Solutions Co., Ltd.
1977 Joined Japan Development Bank
(current Development Bank of JapanInc.)

The Platform for Value Creation

Managing Director

Executive Officers

38

Koichi Iioka

Toshitaka Kodama

Hisashi Tanabe

Tatsushi Kuramae

Seiji Ueda

Kunihiro Kuse

Masaya Kawai

Takehiro Nozue

Shingo Yamaga

Hiroaki Mori

Jiro Tanaka

Katsuya Amano

Senior Executive Officer

Senior Executive Officer
Executive General Manager
of Digital Strategy Division

Executive General Manager
of Corporate Planning andManagement Office

Executive General Manager
of Research andDevelopment Division

Deputy Executive General
Manager of Engineering
Division

Senior General Manager ofEngineering Group,Engineering Division

Executive General Manager
of Solution Business Division

Senior General Manager ofMarketing Group, Solution
Business Division

Senior General Manager of
EMEA and Americas
Operation Group, Global
Business Division

Senior General Manager of
Administration Group,Japan Sales Business
Division

Senior General Manager ofIndustrial InfrastructureGroup, Japan Sales
Business Division

Senior General Manager ofElectronics Industries
Group, Japan Sales
Business Division

Kurita Water Industries Ltd. Integrated Report 2021

Kurita Water Industries Ltd. Integrated Report 2021

39

The Platform for Value Creation

Corporate Governance
Kurita Group Overview

Basic Concept
General Meeting of Shareholders
Election &Dismissal

Audit & Supervisory
Board
Members of the Audit& Supervisory Board

Cooperation

Consultation

8 (Of which, external
directors: 3)
Term of office: 1 year

Advisory

Nomination &Remuneration
Advisory Council

ReportSuccessor Planning
Committee

Audit

3 (Of which, external
members: 2)

Cooperation

Resolution
Election & Supervision

Discussion &Report

Audit
ReportInternal Audit

President

E&S Committee❶ Executive Committee

Various Committees

Instruction

Discussion &Report❷ Executive Officers
Accounting Audit & Internal Control Audit

Other

Appointed an independent external director
Reduced the term of office for directors fromtwo years to one

Established liability limitation contract
provisions for external directors and external
members of the Audit & Supervisory Board

2016

Established Nomination & Remuneration
Advisory Council
Started evaluating the effectiveness of theBoard of Directors

Formulated Corporate Governance Policies

2019

Established the Successor Planning Committee

Kurita Water Industries Ltd. Integrated Report 2021

Revised the remuneration system for executive
officers

To enhance and strengthen the screening of investments andfinancing of the Kurita Group, the Company established theInvestment Committee in April 2017. The role of the Investment
Committee is to pre-screen investment and financing projects tobe discussed by the Board of Directors or the Executive
Committee and report the pre-screening results and major
discussion points to the Board of Directors and the Executive
Committee. The Investment Committee has helped enhance thequality of discussions and the speed of investment decisionmaking by the Board of Directors and the Executive Committeeby organizing major discussion points prior to meetings.
In accordance with the policy of striving to maintain return on
equity (ROE) at levels above the cost of shareholders’ equity,when making an investment decision, the Kurita Group sets a
hurdle rate in consideration of risks for each investment projectagainst the cost of capital.

Roles

Pre-screening of investment projects to be discussed by the Board of Directors or the Executive Committee
Report the pre-screening results and major discussion points to the Board of Directors or the Executive Committee

Constituent members

Chairperson: Deputy executive general manager of the Corporate Planning and Control Division
Members: General manager of the Corporate Planning Department, general manager of the Risk Management
Department, general manager of the Finance and Accounting Department, general manager of the International FinanceControl Department, and general managers of business management departments in charge of sales and production
Number ofmeetings held

Results in the fiscal year
ended March 31, 2021

(Reference)
Investment Standard

Number of
projects prescreened

Financial Information/Corporate Information

2014

2018

❸ Investment
Committee❸ Investment Committee

Roles and Results of the Investment Committee (The fiscal year ended March 31, 2021)

Abolished the retirement benefit system fordirectors

Increased the proportion of remuneration
linked to consolidated results performanceand introduced a performance-linked stockcompensation program

ReportOperating Divisions

Formulated Basic Policies forConstructing an Internal Control System

Appointed a female external director
Established the Investment Committee

Business Execution

The Company introduced an executive officer system in June
2005 to strengthen business execution capabilities. As of June29, 2021, there were 10 executive officers, including two senior
executive officers. Executive officers are employed based on
appointment contracts.

The Platform for Value Creation

Remuneration system

2007

2017

Report❷ Executive Officers

The Kurita Group’s Businesses

Internal Auditing
Department

Introduced the executive officer system

2009

Activities of eachorganization
⇒P.43

Audit

Timeline of Corporate Governance Improvements (fiscal years ended March 31)

40

Board of Directors

The Executive Committee reviews matters to be resolved at
Board of Directors meetings when necessary to expedite andfacilitate the decision-making process. The Executive
Committee consists of the president and representative
director, directors at the level of managing director and above,and directors and executive officers designated by thepresident.

Kurita Group Business Strategy

Accounting Auditor
Grant Thornton Taiyo LLC

As a company with an Audit & Supervisory Board, Kurita’s Board of
Directors is responsible for decision-making and supervision ofbusiness execution. The Board sets the Group’s strategic direction
and supervises management in general to support sustained
growth. It also makes decisions on business execution related toimportant investment and financing projects, the transfer ofbusiness, and other key matters. For other matters, businessexecution is decided by the Executive Committee, which iscomposed of management executives, or by management
executives who have been given authority under the Internal
Decision Approval and Review Rules.

2006❶ Executive Committee

Election &Dismissal

Advisory Bodies

Corporate Governance Structure

Corporate governance structure

Business Execution Structure

Election &Dismissal

Cooperation

The Kurita Group aims to contribute broadly to society throughcorporate activities in the fields of water and the environment inaccordance with the Kurita corporate philosophy, “Study theproperties of water, master them, and we will create anenvironment in which nature and man are in harmony.” The Kurita
Group will work to promote sustainable growth and enhance its
corporate value in the medium and long term, deferring to therights and position of various stakeholders such as customers,
business partners, employees, shareholders, and local
communities while striving to meet their expectations. To this end,
the Kurita Group is striving to establish corporate governance,with the aim of realizing transparent, fair, prompt, and decisivedecision-making measures and highly effective management
supervision.

21

Equity investment and M&A projects: 6
Capital investment projects: 7

Total:

Financing and fund procurement projects: 6

24

Company establishments, relocations, reorganizations: 5

Hurdle rate calculated as “cost of capital + risk premium for each project”

Kurita Water Industries Ltd. Integrated Report 2021

41

Corporate Governance

Advisory Councils for the Board of Directors
In the fiscal year ended March 31, 2021, digital transformation(DX) was added to the list of expected areas of expertise andexperience for external directors when determining thecomposition of the Board of Directors. Amid the rapid shift todigital technology in society, business process DX has also becomea pressing issue for the Kurita Group. The Company therefore
needs to appoint directors with knowledge and experience in the
DX field to conduct oversight. On June 29, 2021, the Company
appointed Kenichiro Kamai as an external director. Mr. Kamai has
experience in the DX and development field.

Nomination & Remuneration Advisory Council
The Company has in place a Nomination & Remuneration Advisory
Council, a voluntary committee to increase transparency in thedecision-making process regarding remuneration for directors andnomination of directors and members of the Audit & Supervisory
Board. In the fiscal year ended March 31, 2021, the Council met
three times to discuss nominations (directors) and one time to
discuss remuneration. The Council is chaired by an external
director, with the main members being the external directors andProfile of Nomination & Remuneration Advisory Council (Fiscal year ended March 31, 2021)

Distribution of Knowledge and Experience in the Board of Directors
Finance and

Name
Japan

Overseas

Management accounting
Legal affairs
planning
Human
resources

R&D
Production
Technology

Knowledge and experience expected of external directors

―

―

―

Hirohiko Ejiri

―

―

―

―

Yoshio Yamada

―

―

―

―

Yasuo Suzuki

―

―

―

―

Shuji Shirode

―

―

―

―

―

―

―

―

―

―

―

―

―

Kenichiro Kamai

―

―

―

―

―

(external director)(external director)

Note: This table is created based on the brief personal histories, positions and assignments in the Company, and reasons for deciding to make the person a candidate for director
provided in Proposal No. 2 of the Notice of Convocation of the 85th Ordinary General Meeting of Shareholders.

Results in the fiscal year ended
March 31, 2021

Candidates for directors
Candidates for representative directors
Candidates for executive directors

Three external directors
President
One full-time external member of the Audit & Supervisory Board

Determining the appropriateness of
all candidates for director

Candidates for members of the Audit &Supervisory Board

One full-time external member of the Audit & Supervisory Board
President
One full-time member of the Audit & Supervisory Board
Executive general manager of the Corporate Planning and Control Division―

Three external directors
President
One full-time external member of the Audit & Supervisory Board

Performance evaluation of directors
and executive officers
Discussion of the appropriateness of
incentive remuneration
Discussion of the appropriateness of
fixed remuneration

Remuneration

Successor Planning Committee
The Company has in place the Successor Planning Committee,
mainly comprising external officers, as an organization for selecting
successor candidates for the president, directors, and executive
officers and deciding on measures for their development. The
committee references objective information such as externalorganization assessment results for the successor candidates andselects successor candidates for the president, directors, and theexecutive officers, as well as setting the development measures forthe successor candidate for president and directors, and reports
these to the Board of Directors.

Selection of successor candidate
Assessment

Composition of the Board of Directors (fiscal years ended/ending March 31)
External directors

Internal directors

Female directors

11

Directors

10
9
18%

2
2015

2
2016

2
2017

1

2018

2

1

2019

3

2

2020

Select points forstrengthening

Set
measures

Confirmation

Board ofDirectors

3

Externalorganization

President

President

Successor
Planning
Committee

Executive senior
managing
director or above

Executive senior
managing
director or above

Board ofDirectors

Feedback to candidate, assignment, appointment, etc.

5

Successor Planning Committee members

10%

1
2014

6

8

Interview

Director successors
8

20%

18%

Successor
Planning
Committee

9

10

17%

11%

1

8

Review result

Interview
assessment

2

2021

3

Financial Information/Corporate Information

27%

9
9

President
Externalorganization

33%

11

10
9

Confirmation

Successor for president
38%

8

Selection

Successor candidate development

Percentage of external directors (%)

1211

Candidaterecommendation

The Platform for Value Creation―

Keiko Tanaka(external director)

Constituent members

The Kurita Group’s Businesses―

Ryoko Sugiyama

Nomination

Corporate
DX andmanagement Environment International development

Michiya Kadota

the external members of the Audit & Supervisory Board.
The chairperson of the Board of Directors consults with theNomination & Remuneration Advisory Council beforehand when
proposals are made to the Board of Directors regarding
candidates for director or member of the Audit & Supervisory
Board or remuneration for directors. The Council reports on thesuitability or unsuitability of the candidates to the Board of
Directors, which makes decisions based on the reports.

Kurita Group Business Strategy

The Board of Directors shall be organized in a way thatcomplements the necessary knowledge, experience and diversity
over the entire Board for appropriate management decision
making and supervision of business execution. The Company will
ensure that the Board will consist of personnel with a high degreeof expertise in various business fields, management planning,finance and accounting, legal affairs, and technologies, etc., taking
into consideration gender, international experience, etc. External
directors in particular shall have a background in corporate
management, as well as expertise and skills that are important forcorporate management but also difficult to obtain internally.

Sales

Kurita Group Overview

Composition of the Board of Directors

2

2022

Matter for discussion

Members

Selection of president’s successor candidate

Three external directors
One full-time external member of the Audit &Supervisory Board

Selection of directors’ successor candidates
Selection of executive officers’ successor candidates
Setting of development measures for successor
candidates, etc.

In addition to the above four, the president andexecutive senior managing directors(Fiscal year ended March 31, 2021)

42

Kurita Water Industries Ltd. Integrated Report 2021

Kurita Water Industries Ltd. Integrated Report 2021

43

Corporate GovernanceEvaluation of the Effectiveness of the Board of Directors

In the fiscal year ended March 31, 2021, the Audit & Supervisory
Board held 11 meetings, which were attended by all members of
the board (Mr. Toshiaki Tada attended all nine meetings of the
Audit & Supervisory Board held since his appointment on June 29,
2020 at the 84th Ordinary General Meeting of Shareholders). Key
matters considered and discussed by Audit & Supervisory Board
members included the formulation of audit policies and plans, thepreparation of audit reports, selection of the Accounting Auditor,
remuneration for the Accounting Auditor and details of proposals
to be presented to the Annual General Meeting of Shareholders.
The Board developed and implemented audit plans targeting
priority areas, such as the internal control system (includinginternal control over financial reporting), the development andimplementation of the risk management system and audits ofprogress regarding priority measures in business plans.

The Board of Directors analyzes and evaluates its effectivenessevery year in order to fulfill its expected roles and functions more
effectively.

Evaluation
MethodSelf-Evaluation
This evaluation was conducted via a written survey,
with each of the respondents identified. Following a
discussion using the aggregated results, the Board of
Directors evaluated its effectiveness, clarified issues
and adopted measures for the future.

Evaluation
items

The following six themes were evaluated
1) Roles and responsibilities of the Board of Directors
2) Collaboration with members of the Audit &Supervisory Board and external directors
3) Composition of the Board of Directors4) Operation of the Board of Directors5) Contributions of individual directors and membersof the Audit & Supervisory Board
6) Dialogue with shareholders

Evaluation
periodJanuary to December 2020

Measures
The Board of Directors will gain a better understanding of theactivities of the DX Committee, which oversees the Group’s DX,
and the Digital Strategy Division, which is tasked with implementing
Groupwide DX activities. The Board will also discuss and provide
direction regarding the prioritization of short-term and mediumto long-term initiatives and the allocation of management
resources.

Status of Initiatives to Tackle Issues Raised in Previous
Evaluation Results
To address the issue from the previous survey – Identify anddeepen discussion on specific themes in order to support thecreation of long-term corporate value – we formed an integrated
business management working group comprising directors,
executive officers, and managers at the senior general manager
grade and higher to comprehensively discuss the Group’s value
creation story and the best ways of using management resources
to realize the story. The discussions led to the formulation of aclearly defined value creation story to fulfill the Group’s purpose of“Winning the trust of customers and society and building asustainable society.” After further discussion by the Board of
Directors, the value creation story was approved. The value
creation story will also be used in stakeholder engagement.

The Platform for Value Creation

Full-time members of the Audit & Supervisory Board attend
meetings of the Board of Directors, Executive Committee, the E&S
Committee and other important meetings, and audit businessexecution by the directors and oversight duties of the Board of
Directors. In addition, they conduct audits of key management
departments and carry out field audits of business sites andGroup companies to verify the asset position of the entire Kurita
Group and the development and operation of the internal control
system by directors at Group companies. Full-time members of
the Audit & Supervisory Board share information from meetings ofthe Executive Committee and other key meetings and the details
and results of audits and field audits with the part-time member ofthe Board on a timely basis. In addition, the part-time member ofthe Audit & Supervisory Board proactively provides opinions
during meetings of the Board of Directors and during regularmeetings with the president, drawing on their legal expertise andbackground.
Onsite audits of overseas affiliated companies scheduled forthe start of the fiscal year were cancelled due to the COVID-19
pandemic. However, as an alternative, appropriate audits of thesites were conducted through online meetings and other methods.
Business reports, financial documents and other materials werealso appropriately audited through wider use of online meetingsand electronic files.

The evaluation is carried out via a written survey with each of the
respondents identified. Following a discussion using theaggregated results, the Board of Directors evaluates its
effectiveness, identifies problems, designates issues to beaddressed and establishes measures. These matters are thenadopted by a resolution of the Board. The survey is revised eachfiscal year based on the results of the previous year’s survey. In the2020 survey, after the Ministry of Economy, Trade and Industry’s
Digital Governance Code came into force, new items were added
to the survey to confirm the level of oversight related to theimplementation and building of the DX promotion framework.

To accelerate business model transformation and businessprocess reforms using DX, the Board of Directors needs toincrease its involvement.

The Kurita Group’s Businesses

In regular meetings between the president and all members of the
Audit & Supervisory Board, the president provides details about
the Company’s management policy, growth strategies, businessissues and other topics, while members of the Audit & Supervisory
Board provide recommendations based on audit activities. The
members of the Audit & Supervisory Board also hold regularmeetings with the Accounting Auditor to confirm theindependence of the Accounting Auditor, verify the performanceof their duties and discuss and exchange opinions aboutaccounting audits. From the fiscal year under review, key audit
matters were also thoroughly discussed. Regular meetings arealso held with external directors to exchange opinions about theCompany’s business management in general.
The Audit & Supervisory Board discusses internal audit plans
with the Internal Auditing Department in charge of internal auditsof the Company and exchanges opinions with them about audit
results and evaluations of internal control over financial reporting,Participation in Key Meetings and Inspections ofGroup Companies

Evaluation Method

Issue

Kurita Group Business Strategy

Cooperation with the Accounting Auditor, the Internal
Auditing Department and External Directors

risk management, etc. The Internal Auditing Department conducts
internal audits of the Company and Group companies to identify
any issues related to business execution or other problems andsubmits reports to the president about areas that require
improvement.

Kurita Group Overview

Fulfilling the Function of the Audit & Supervisory Board Members

Evaluation Results

Experience, Capability, and Knowledge of the Audit & Supervisory Board Members

NameExternal member ofthe Audit &Supervisory Board
Independent officer

Yukihiko
Mutou

Toshiaki
Tada

44

External member ofthe Audit &Supervisory Board
Independent officer

Mr. Kenjiro Kobayashi has been active in different fields to those of
the Kurita Group’s businesses and has high expertise in the areasof finance, management planning, new business development,
M&As, etc., along with a wealth of international experience.

Board of Directors’
meetings

16

11
16

Mr. Yukihiko Mutou has held important positions in the
Administrative Division. He possesses a wealth of knowledge andexperience in the areas of finance, accounting, and management.

15

Mr. Toshiaki Tada has special knowledge as well as a wealth ofexperience and deep insight into corporate legal affairs as an
attorney who has worked in Japan and overseas.

13

Kurita Water Industries Ltd. Integrated Report 2021

Audit & Supervisory
Board meetings

11
11

16

Financial Information/Corporate Information

KenjiroKobayashi

Experience, Capability, and Knowledge

Attendance(Fiscal year ended March 31, 2021)

According to the evaluation results for January to December 2020,
the average self-evaluation of all directors and members of the
Audit & Supervisory Board was generally good in all six areas,indicating that the Board of Directors is operating effectively.
“Operation of the Board of Directors” was the most highly
evaluated category, as internal directors, external directors andmembers of the Audit & Supervisory Board all raised theirevaluation ratings. However, in the “roles and responsibilities of
the Board of Directors” category, items related to the building andmonitoring of the DX promotion structure, which were added as
items to the survey for the fiscal year under review, received
relatively low valuations compared with other items.

11
9

13

9

Kurita Water Industries Ltd. Integrated Report 2021

45

Corporate Governance

The Company’s remuneration system for directors excluding external
directors is composed of fixed remuneration as base remuneration,and incentive remuneration linked to business results. External
directors and members of the Audit & Supervisory Board, who
perform oversight functions, receive only fixed remuneration.
Amounts of fixed remuneration are decided for each job title inthe case of directors and for each work arrangement in the case of
members of the Audit & Supervisory Board. A portion of the
remuneration is appropriated for the directors’ and Audit &Supervisory Board members’ Shareholding Scheme to purchase theCompany’s shares so that directors and members of the Audit &Supervisory Board share the risk of stock price fluctuation withshareholders.
To provide an incentive to directors (excluding external directors)
to continuously increase corporate value, the Company provides
short-term and long-term incentive remuneration. Short-term
incentive remuneration consists of remuneration linked toconsolidated performance, remuneration linked to the results ofoperations overseen by each director, and remuneration related toother contributions. The amount of short-term incentive
remuneration is calculated by multiplying an amount equivalent to
1/12 of fixed remuneration by a predetermined coefficient thatfluctuates depending on the level of achievement of performanceindicators for each type of remuneration. The performance indicatorfor remuneration linked to consolidated performance uses four levels
based on 10% increments in the level of attainment of theconsolidated operating profit target, above and below a level of

The Company’s external directors are appointed for a term of one
year and may concurrently hold positions at up to three listedcompanies including the Company. The external directors use
their knowledge and specialist insight accumulated throughmanagement experience to evaluate business management andprovide opinions from the perspectives of the Kurita Group’s
sustainable growth and increasing corporate value over the
medium to long term, helping to enhance the rationality andtransparency of decision-making by the Board of Directors.
The activities of the independent external directors include
making proactive statements and proposals in Board of Director
meetings, as well as attending as observers in internal committees
such as the E&S Committee, the Solutions Business Committee,

Status of External Directors (As of June 29, 2021)
Post

Directors

Name

Ms. Ryoko Sugiyama is an expert on the environment and waste and has held important positions such as anexternal director of listed companies. The Company judged that she is capable of providing opinions from an
outside perspective, different from those within the Company, and increasing its rationality and transparency. In
addition, Ms. Sugiyama was judged to be capable of supervising the execution of duties by directors, based onher high expertise and wealth of experience in the environment field.

Keiko
TanakaBoard ofDirectors’ meetings:
16/16

Ms. Keiko Tanaka has experience in business fields that differ from those of the Kurita Group and a great deal ofknowledge about public relations and marketing, as well as international experience. The Company judged that
she is capable of using these skills to express opinions from an outside perspective to increase the rationality
and transparency of the Company’s management, and to supervise the execution of duties by directors.

―

Mr. Kenichiro Kamai has a wealth of experience, including overseas, in business fields that differ from those of
the Kurita Group, and he has considerable insight in DX and development. The Company judged that he iscapable of expressing opinions from an outside perspective to increase the rationality and transparency of theCompany’s management and to supervise the execution of duties by Directors, based on his experience ofmanagement at multiple companies and his expertise in the fields of DX and development.

Short-term incentive
remuneration

Long-term incentive
remuneration

Total

10%-20%0%-30%

10%-20%100%

50%-90%

Dialogue with Shareholders and Investors

Remuneration for Directors and Members of the Audit & Supervisory Board

Total amount of remuneration, etc., for each officer classification, total amount by type of remuneration, etc.,
and number of eligible officers (Fiscal year ended March 31, 2021)

Officer classification

46

Base remuneration

Performance-linked
remuneration

Amount of nonNumber of eligible
monetary
payees for baseremuneration, etc., inremuneration
performance-linked
remuneration

Directors(excluding external directors)

438

242

195

49

7

Members of the Audit & Supervisory
Board (excluding external
members)

34

34

―

―

1

External officers

89

Kurita Water Industries Ltd. Integrated Report 2021

89

―

―

6

The Kurita Group respects the interests of shareholders inmanagement and strives to listen to its shareholders and investors
and promote constructive dialogue with them in order tocontribute to increasing medium- to long-term corporate value. In
communicating information, the Company emphasizes fairness
and transparency. The materials and summary of the Q&A
sessions of the Company’s presentation meetings are posted on
Kurita’s investor relations website to ensure fair information
disclosure.

ended March 31, 2021, the Kurita Group held its first-ever ESG
Briefing. Amid the pandemic, the Company was able to conduct
dialogue with investors by switching from face-to-face meetings tophone and online meetings. However, the Company cancelledoverseas IR roadshows and briefings for shareholders held after
the Ordinary General Meeting of Shareholders.

IR Activities in the Fiscal Year Ended March 31, 2021
Dialogue events

IR Activities
The Group strives to secure opportunities for dialogue withinstitutional investors in Japan and overseas and individual
investors in Japan through various presentations, conferences, andindividual meetings. The president is the main speaker at thefinancial results briefings. The executive general manager of the
Corporate Control and Administration Division is responsible forroutine dialogue, except during silent periods, and works withpersonnel responsible for IR and CSR activities. In the fiscal year

Financial results briefings

Institutional
investors(including
shareholders)
Individual investors(including
shareholders)

Financial Information/Corporate Information

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

The Platform for Value Creation

Performance-linked remuneration

Of which, payment toshareholding scheme

Reasons for election as a director(Fiscal year ended March
31, 2021)

Board ofDirectors’ meetings:
15/16

Payment Ratio of Base Remuneration and Incentive Remuneration (Average)
Base remuneration

Number of meetingsof the Board of
Directors attended

Ryoko
Sugiyama

Kenichiro
Kamai

Remuneration System for Directors and Members of the Audit & Supervisory Boardand the Health and Safety Committee. They also make onsite visits
to gain a deeper understanding of operations for evaluating
management. In the fiscal year ended March 31, 2021, external
directors were unable to visit business sites due to the COVID-19
pandemic. Instead, they conducted dialogue with relevant
departments to gather information on topics likely to be of use.
As members of the Nomination & Remuneration Advisory
Council and the Successor Planning Committee, external directors
also help to enhance the suitability and transparency of
discussions in both bodies and work to ensure appropriate
evaluations of executive candidates through individual interviews
with candidates.

The Kurita Group’s Businesses

attainment of 100%. For remuneration linked to the results ofoperations overseen by each director, the applied performanceindicators are the differences between actual results and plan targets
for consolidated return on equity (ROE) and for consolidated businessprofit margin. For remuneration related to other contributions, theapplied performance indicators include the implementation of large
investment projects and other developments not reflected inperformance for the relevant fiscal year, such as enhancing thequality of the corporate structure and M&A deals. For the long-term
incentive remuneration, the Company has introduced a performancelinked stock compensation program under which points are awarded
according to business performance and job title during the term ofoffice, and shares of the Company are granted at the time ofretirement in an amount corresponding to the number ofaccumulated points. Profit attributable to owners of parent is used as
the performance indicator for long-term incentive remuneration.
The system and level of remuneration and the performance
evaluation of directors are adopted by resolution of the Board of
Directors after consulting in advance with the Nomination &Remuneration Advisory Council. Based on reports provided by the
Nomination & Remuneration Advisory Council, the Board of Directors
decides the allocation of remuneration of the directors within the
total amount determined by the Annual General Meeting of
Shareholders. The allocation of remuneration for each member ofthe Audit & Supervisory Board is adopted by resolution of the Audit &Supervisory Board.

Kurita Group Business Strategy

Independent External Directors

Kurita Group Overview

Remuneration for Directors and Members of the Audit & Supervisory Board

Number of
events4 times

Small group meeting

1 timeIndividual meeting

Total approx.
250 times

ESG briefing

1 timeBriefing for individual investors

1 timeLetter to Shareholders

1 timeKurita Water Industries Ltd. Integrated Report 2021

47

Messages from External Directors

Corporate GovernanceInitiatives to Continuously Improve Convenience for
Exercising Voting Rights
Initiative

Starting time

Adoption of full-color convocation notices

June 2018

Increase in English translation scope ofthe convocation notice

June 2018

Preparation of English version of the corporate
governance report

October 2016

Early disclosure prior to distribution of
convocation notice

June 2016

Preparation of English-language convocation
notice (reference documents)

June 2013

Dialogue with shareholders

November 2011

Adopted electronic voting for exercise of voting

June 2006

Joined Electronic Voting Platform forexercise of voting rights

June 2006

Using specialist knowledge to monitor
management
Kurita has made good progress with its
corporate governance system. There arethree external directors on the board, andthat number feels right. My emphasis is on
monitoring management using my expertisein the environmental field. Briefings on
agenda items ahead of Board of Director
meetings are a valuable opportunity to help
external directors function effectively. Better
understanding of agenda items leads to more
efficient board discussions. Opportunities tovisit business sites and talk to employees at
the frontline of Kurita’s business also giveexternal directors valuable information to

Once a year or as necessaryStandard

Total of operating profit and dividends received is less than expected return for fiveconsecutive years
An improper incident occurs, etc.

48

Fiscal year ended
March 31, 201913 of 37 stocks (includes partial sales of 4 stocks)

Fiscal year ended
March 31, 2020

2 of 28 stocks

Fiscal year ended
March 31, 2021

4 of 26 stocks (includes partial sales of 2 stocks)

Kurita Water Industries Ltd. Integrated Report 2021

External Director

I also agree with Ms. Sugiyama. Briefings
on agenda items before board meetings andopportunities to visit frontline business sites
are very useful in helping us fulfill our roles.
In the succession planning process, meeting
candidates face-to-face is a valuable
opportunity to gain a deeper understandingof their career background and character.
Kurita’s business is set to play anincreasingly important role in society. I will do
my part to help Kurita spread its technologies
and expertise developed in Japan to theglobal market.

Promoting the "Sampo-yoshi"
business philosophy
I was appointed as an external director in June
2021. In my business career, I have tried to live
up to the principles of the "Sampo-yoshi" (goodfor everyone) business philosophy: good forbuyers, good for sellers, good for society. That
will also be my fundamental approach in myrole as external director. In board discussions
on agenda items, I will approach the debatefrom the standpoint of external stakeholders toensure the interests of shareholders,customers and society in general are taken into

account. I’ve already heard that discussions canbe lively in the Nomination & Remuneration
Advisory Council and the Successor Planning
Committee. I want to help further elevate
discussions and play an effective role incorporate governance. I also hope to contributeto development activities that help Kurita
become an outstanding “seller.”In everything I do as an external director, I
believe my role is to put forward ideas andopinions from a new perspective.

Financial Information/Corporate Information

Frequency

Keiko Tanaka

Looking back over the past year, I think thebiggest change has been Kurita’s growing
acceptance of the need to implement
diversity initiatives, resulting in the creation ofa dedicated diversity promotion department.
However, diversity still needs to be improvedat the management level, as there are no
non-Japanese directors on the board. As an
external director, I see my role as preventing
groupthink from taking hold in the board. To
introduce more diverse perspectives andviews into management, I think Kurita needs
to cultivate and deploy personnel with a
global mindset.

The Platform for Value Creation

Record ofsales

our transaction histories with them. Based on the results of thisexamination, the Board of Directors reviews the appropriateness ofholdings periodically and at other times as necessary, and reduces thenumber of shares held. Funds gained from the sale of the shares areallocated to capital investment and M&As.

In some cases, the Company holds shares of other listed companies to strengthen business relationships, etc.
When holding such shares, the Company makes efforts to minimize the risk of holding the shares. The rationale for holding
each stock is reviewed on a regular or timely basis by the Board of Directors. Based on the results of the examination, theCompany works to reduce the holding of shares of other listed companies.
The Company exercises voting rights for each proposal based on whether it will contribute to an increase in shareholder
value.
If a shareholder indicates its intention to sell the Company’s shares, the Company will not prevent the shareholder frommaking such sale, etc.

Review ofshareholdings

External Director

The Kurita Group’s Businesses

PolicyRyoko Sugiyama

Diverse perspectives are needed to achieve
new heights

Shareholdings of Other Listed Companies
The Company holds shares of other listed companies to strengthenbusiness relationships. We verify the economic rationale for mutualshareholdings by comparing expected gains based on capital cost andgains from holding the shares. We also examine the relationships withcompanies whose shares the Company holds by carefully examining

participate in discussions.
Also, I have observed discussions about
formulating Kurita’s value creation story,
which has given me a clearer understandingof reports submitted to the board. In theenvironmental field, Kurita’s long-term
strategy to achieve its targets for 2030 and
2050 are increasingly important. By clearlylaying out our long-term strategy, we canpresent a vision that goes beyond our
medium-term management plan, whichshould help to further increase themotivation of our employees.

Kurita Group Business Strategy

The Company is working to increase opportunities for dialogue
with institutional investors responsible for exercising voting rights
to listen to their opinions and use them to improve management.
In the fiscal year ended March 31, 2021, the Company expanded
its dialogue with major shareholders overseas. Personnel
responsible for investor and shareholder relations had online
meetings with major investors in Japan and overseas 17 times tohear the voting policies of institutional investors and to exchange
opinions on improving the Group’s management and corporate
governance. The opinions and requests of institutional investors
were swiftly relayed back to management.

Kurita Group Overview

Communication with People Responsible for Exercising Voting Rights

Kenichiro Kamai
External Director

Kurita Water Industries Ltd. Integrated Report 2021

49

The Platform for Value Creation

Risk Management

Identifying Risks and Formulating Response Measures

The Kurita Group defines risk as any event that makes its
sustainable growth and enhancement of the Group’s corporate
value uncertain. Because the Group’s decision-making tends
toward risk avoidance, we are working to prevent missed

opportunities for business growth by clarifying risks that should betaken for the sake of sustainable growth and enhancing corporate
value while implementing appropriate measures to reduce losses.

the Headquarters Health and Safety Committee is responsible formaterial risks related to health, safety and disasters. The executive
general manager of each division is responsible for responding torisks directly associated with day-to-day business operations, andeach division identifies and evaluates risks related to the operationsand Group companies it is in charge of. Also, responding tocommonly seen risks relating to quality, the environment, information
security, export controls, and so on are handled by the respective
departments responsible. The executive general manager of the
Corporate Planning and Management Office, the chairperson of eachcommittee and the executive general manager of each division reportperiodically to the Board of Directors on the status of risk
management implementation, and report as necessary to the Boardof Directors on the occurrence and impact of material risks.
Furthermore, the Internal Auditing Department monitors theexecution status and improvement status of risk management
measures.

Risk Management System

Approval

ReportE&S Committee,
Group E&S Committees

Headquarters Health and
Safety Committee

ReportDivisions

Cooperate

Cooperate

Health and Safety Committees
of business sites and divisions

Business sites and Group
companies

Health, safety and disasters

Risks directly related to daily
business activities

Monitoring implementation status and improvement status
Internal Auditing Department

Operatingenvironment risk

Contraction in existing markets due to customers reducing factory operating rates and reining in
capital investment
Decline in prices for products and services due to intensifying competition
Spikes in prices for raw materials and other inputs
Decline in yen translation amounts due to changes in exchange rates and other factors

Interview with the
President
Opportunities and Risks

Country risk

Changes in regulatory frameworks and abrupt political and economic changes in Kurita’s markets

Opportunities and Risks

P24-31

Disaster risk

Human and business losses caused by pandemics or natural disasters

BCM Policy

P52

Strategic risk

Failure to attain goals in medium-term management plan due to delays with organizational reforms,
business restructuring
Slow pace of business expansion caused by delays with launching new businesses, executing
growth strategy
Delays with developing businesses matched to customer needs and characteristics of each country/
regionFailure to remain competitive in water treatment market due to delays with introducing IT andbuilding digital businesses

Interview with the
President
Medium-Term
Management Plan
Opportunities and Risks

Business risk

Failure to provide competitive products, services or solution models in a timely manner
Claims for damages and additional costs due to defects or deficiencies in products or services
Loss of competitiveness due to outflow of technical expertise
Slowdown or lack of progress with improving the profitability of overseas businesses driving theGroup’s growth
Accidents/injuries or work stoppages at customer plants caused by the Company

Opportunities and Risks

P24-31

Financial risk

Financial Strategy
	Medium-Term
Management Plan
Basic Policies forConstructing an Internal
Control System

P15

Loss of public trust caused by inadequate internal controls related to financial reporting
Deterioration in profitability or cash flow due to poor management of Group companies
Write-down of goodwill caused by weak earnings at acquired companies

Health issues caused by long working hours
	Decline in ability to adapt diversity and other changes in operating environment

Human Resources
Management

Loss of public trust due to legal or compliance violations and information breaches
	Infringement of intellectual property rights

	ComplianceUtilization of Intellectual
Property

Labor risk
Legal andcompliance risk

P10-14
P24-31

P10-14
P16-17
P24-31

P16-17—

P56-57
P54-55
P27• The above table is not an exhaustive list of the Kurita Group’s risks.
• Please click on the link below for more details about risk factors related to the Group’s business conditions, financial accounts and other items in the Annual Securities Report that
could have a material impact on investor decisions.

Business Risks and Other Risk Factors

Kurita Water Industries Ltd. Integrated Report 2021

Report section/information related
to response measures

Main risks

Departments in charge
Routine risks related to quality, theenvironment, information security,
export controls, etc.

Check
Monitor risk response efforts
Identify deteriorating or emerging risks

Financial Information/Corporate Information

Compliance andclimate change risks

Instruct

Monitor progress with risk response
measures in organizational goals
and business plans
Rapidly identify and respond to
emerging risks

Risk category

Executive general manager of the Corporate Planning andManagement Office (officer in charge of risk management)
ReportDo

Act

Review Group-wide risk map
Determine Group-wide material
risks for the next fiscal year

Groupwide Risk Map

Board of Directors

Proposes person
responsible and system

Plan

Prioritize risks and formulate response
measures
Incorporate into organizational goals
and business plans

The Platform for Value Creation

President and Representative Director

Risk Management PDCA Cycle

The Kurita Group’s Businesses

The executive general manager of the Corporate Planning andManagement Office is responsible for monitoring risks andimplementing risk management in the Kurita Group. The executive
general manager regularly analyzes and evaluates the Group’s risks
and conducts ongoing monitoring based on the Group-wide risk map,
as well as takes steps to prevent risks from occurring.
In the event of a risk that could have a serious impact on Kurita’sbusiness, the executive general manager formulates systems withthose responsible for responding to the risk, obtains approval fromthe president and the representative director, and immediately issues
instructions. Those responsible for responding to the risk promptly
take action and report to the president and the representative
director and the executive general manager of the Corporate
Planning and Management Office regarding the impact of the risk,
progress with mitigation and measures to prevent reoccurrence.
The E&S Committee is responsible for tackling material risks
related to compliance and climate change, while the chairperson of

The Kurita Group uses a Group-wide risk map to identify potential
risks in its business activities and assess risks against monitoring
benchmarks. The Kurita Group also determines material risks for
the Group based on the expected impact of those risks and thelikelihood of them occurring.
Material risks are mapped for each division, and divisions devise
response measures, incorporate them into business plans andmanage progress, including at Group companies. Progress isregularly reported to the Board of Directors, which discusses andformulates material risk and response measures for the next fiscal
year, including responses to emerging risks caused by changes in
the operating environment.
In the fiscal year ending March 2022, among high-impact risks
with a strong chance of materializing, country risk—including theimpact of U.S.-China trade friction—and strategic risk related tointegrating IT and developing digital businesses are being classified
as risks requiring close monitoring, and we are planning tostrengthen our response to them.

Kurita Group Business Strategy

Risk Management System

50

Kurita Group Overview

Basic Concept

https://ir.kurita.co.jp/en/corporate_governance/risk_factors/index.html

Kurita Water Industries Ltd. Integrated Report 2021

51

Risk Management

Kurita Group Overview

Business Continuity Management (BCM) Policy

1. Highest Priority on Ensuring the Preservationof Human LifeThe Kurita Group will place highest priority on ensuring the peaceof mind and safety and security of officers and employees andtheir family members.

2. Early Restoration of Business Operations

3. Community Support
The Kurita Group will support reconstruction of the local
community while working to prevent secondary disasters at its
own sites.

The increase in major typhoons and torrential rainfall inJapan in recent years is raising the risk of both humanlosses and lost business opportunities, so in the fiscal year
ended March 2021 we assessed the risk of flood damage atdomestic sites in the Kurita Group. A risk of flood levels of
0.5 meters or higher was found at 66 sites, so measures
were taken to ensure the safety of employees and maintainbusiness continuity.
In terms of initiatives to ensure the safety of employees,
we relocated sites with particularly high flood risk, and forexisting facilities, we surveyed local characteristics andweather factors to create guidelines for returning home orevacuations that provide flood safety sites and evacuationroutes, and also conducted awareness-raising and drills at
each site. We also drew the attention of employees to theimportance of addressing flood risk while working at home,and for residents of dormitories and company housing withhigh flood risk, we promoted moves to safer locations.
Regarding initiatives for business continuity, we
confirmed the efficacy of current facilities and measures atmanufacturing, production and analysis sites in Japan andestablished emergency procedures for transferring work
processes to alternative sites and contracting out
manufacturing. At sales branches and business offices, we
worked to digitize important documents.
Going forward, we will continue raising awareness ofthese guidelines and conducting related drills, and we plan
to strengthen measures when relocating sites or
establishing new ones, including prior surveys of flood
damage risk for sites and facilities.

digitizing meeting materials and making application procedures
paperless. As a result, remote work at Kurita Water Industries forthe fiscal year ended March 2021 was over 70%.
In December 2020, we reviewed our conventional work formats
and compiled information on achievements and problems, andthen based on this, we established a basic policy on new working
styles that combine remote work and work at the office or in thefield based on the premise of the pandemic continuing.
Regulations were also created for working at home. Going forward,
we will continue striving to maintain an environment that allows
employees to work safely and maximize their performance.

The Group has built backup systems for the case in which an
executive involved in business execution or a manager responsible
for a business division contracts COVID-19, and we have alsoestablished reporting channels for Group companies throughwhich we work to quickly gather accurate information. In addition,
we have defined work processes in each organization that ensure

52

Kurita Water Industries Ltd. Integrated Report 2021

Advice,instructions
Local
engineers

Engineers

Paperlessprocedures

Accelerating remotecommunication

Infrastructure
reinforcements

Digitized contract
documents
Digitized internal
applications
Faxes saved digitally
Digital seals

Company events
held online
Communication
tools utilized
Internal training on
digital tools

Augmented/backup
internet lines
Mobile devices
distributed
Security measures

Remote work rate of over 70%(Fiscal year ended March 2021) (Parent company)

Through water treatment, the Kurita Group helps maintain
operations at plants and facilities of customers that support the
infrastructure of industry and society. To ensure customer sites
remain up and running, we conduct efficient procurement in theGroup overall and implement anti-infection measures that include
partner companies, and we are also working to reform businessmodels and processes based on remote operations.
At ultrapure water supply sites for the electronics industry, we
continue to utilize labor-saving tools such as remote monitoring
systems to maintain stable water quality and quantity, and these
also minimize onsite work as an anti-infection measure. We also
launched the DX diagnostic service as a new business model. The
service remotely detects trouble and issues with water treatment
at plants based on images taken with wearable cameras andproposes solutions, which are possible even when admission tocustomer plants is restricted. This enables engineers to
immediately respond on a remote basis. The service is mainly
being rolled out in the ASEAN region.

Maintaining Contact Points with Customers
Because the Group works to identify issues from contact points
with customers in diverse industries and provide value thatexceeds expectations, losing opportunities to communicate withcustomers is a major operational risk. The spread of COVID-19 put
restrictions on face-to-face sales activities and technical support,
which are our strengths, but the Group worked to maintaincontact with customers by holding seminars and technicalconsultations online. In the fiscal year ended March 2021, we held
26 online seminars in Japan and abroad related to our main
products and services, including S.sensing and reclaimed watersupply services, and around 2,300 people participated. In addition,
Kurita launched the Avista Membrane Treatment Solutions virtual
capabilities experience focused on our unique approach toevaluate, diagnose, and apply solutions for membrane systems.
The virtual experience simulates an actual exhibition booth usedby sales and technical staff to introduce Avista membranechemicals and services globally.

Financial Information/Corporate Information

Initiatives for Securing Business Operations andEnsuring the Safety of Employees

business continuity for customers and the Group, or that meetsocietal requirements, as operations essential for continuity andimplemented backup systems for the case in which employees of
the Group or partner companies involved in these processes
contract COVID-19. Moreover, we created COVID-19 Guidelines forall employees that contain transmission prevention measures andresponse flows if someone is feeling unwell and raised awarenessof them at all Group companies.
Since the end of February 2020, the Group has recommended
remote work—working from home primarily—for all processes
that do not need to be carried out onsite. To implement thisrecommendation and accelerate its appropriation by employees,
infrastructure has been reinforced by installing communication
tools and providing the means to network with internal systems,
and management has worked at home to raise awareness of theapproach among employees. In addition, we also worked to revise
administrative processes, such as holding meetings online,

Image and datatransmission

The Platform for Value Creation

The Kurita Group recognizes that risks have materialized as aresult of changes in the business environment—that include
people voluntarily staying at home and office attendance being
restricted—related to the spread of COVID-19. For example,
reduced operating efficiency, delays in business model
development, and stagnation in business activities (order
reception, manufacturing and supply), and the entire Group hastaken measures in response.

Customer plants

Promoting Work from Home

Contribution to Customers’ Business Continuity

Risk Management During the Pandemic

DX Diagnostic Service

The Kurita Group’s Businesses

The Kurita Group will endeavor to quickly restore operations at its
own facilities, completed projects and projects under construction.
In this way, it will make efforts to supply products and services in astable manner and to support recovery efforts at clients.

Measures to Address Flood Damage Risk

Kurita Group Business Strategy

The Kurita Group has formulated a Kurita Group’s Policy on BCM(Business Continuity Management) to set out the Kurita Group’s
principles for handling emergencies that pose a risk to thecontinuity of the Group’s businesses, such as severe earthquakes,
typhoon, storm and flood damage or pandemics. The policy
enables Kurita Group officers and employees to make judgements
and act appropriately by clarifying our basic approach as follows:

Avista Membrane Treatment Solutions virtual capabilities experience

Kurita Water Industries Ltd. Integrated Report 2021

53

The Platform for Value Creation

Compliance

Compliance areas

Society /globalenvironment

Human rights, the environment, social
contribution, repudiation of all links with
antisocial forces, etc.

Shareholders /investors

Appropriate record-keeping and information
disclosure, prevention of insider trading

Customers /business partners

Safe products and services, fair and appropriate
trading, prevention of corruption, etc.

Employees

Health and safety, rigorous management ofsensitive data and personal information,
prevention of conflicts of interest, etc.

Kurita Group Code of Conduct
https://www.kurita.co.jp/english/philosophy_vision/pdf/
philosophy_vision_01.pdf

CONTENTS
1. Introduction・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P1
2. Relationship with society
and the global environment・・・・・・・・・・ P2
3. Relationship with shareholders
and investors・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P3

Kurita Group Code of Conduct

4. Relationship with customers
and business partners・・・・・・・・・・・・・・・・・ P4
5. Relationship with employees・・・・・・・・ P5
6. Whistleblowing・・・・・・・・・・・・・・・・・・・・・・・・・・・ P6* Process of identifying material risk of human rights violations in the value chain,including forced labor, child labor and harassment, and measures to prevent or
mitigate risk

All-Employee Survey

Promotion System
Promotion
SystemThe Kurita Group conducts an annual Compliance Behavior Surveyof all Group employees and dispatch staff to evaluate theoutcomes of compliance activities and identify any potential
compliance risks. The results of the survey are used by theCompany divisions and Group companies to plan and improve
compliance activities. In the fiscal year ended March 31, 2021,
7,503 employees and temporary staff took the survey, equating toa response rate of 98.8%.

Board of Directors
President

Executive Committee

E&S Committee

Group E&S Committees

Subcommittees

Subcommittees

Main Initiatives
Promoting Fair Business Practices

54

Kurita Water Industries Ltd. Integrated Report 2021

Achievements in the Fiscal Year Ended March 31, 2021

Anti-bribery

Formulated the Group Guideline on Anti-Bribery
Provided e-learning program for all Kurita
Group officers and employees (100%participation rate)

Antitrustcompliance

Formulated the Group Guideline on Antitrust

The Kurita Group develops compliance improvement targets andmeasures to prevent issues with compliance before they occur.
Specifically, based on a Non-Compliance Risk Map, which is a list ofroughly 60 legal infringement risks, the Company divisions andGroup companies set priority measures tailored to their respective
characteristics, referencing the results of the Compliance Behavior
Survey conducted in the previous fiscal year. In the fiscal year
ended March 31, 2021, we focused on preventing inappropriate
accounting.

The Company and its domestic Group companies conduct annual
business transaction compliance surveys of small and mid-size
suppliers as part of efforts to promote equitable business
relationships. If necessary, Kurita instructs the relevant
department to investigate the situation or make improvements,
which are confirmed later through follow-up contact. The survey
was originally focused on the parent company’s business partners,
but in the fiscal year ended March 31, 2021, the scope of thesurvey was expanded to include business partners of the Kurita
Group in Japan to gain a better picture of the Group’s business
transactions.
Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Scope of survey

Business partners ofparent company

Business partners ofparent company anddomestic Group
companies

Survey method

Written responses

Written and electronic
responses

1,058

1,286

Number ofcompanies

Financial Information/Corporate Information

The Kurita Group has formulated the Kurita Group Anti-Bribery
Policy and the Kurita Group Antitrust Policy to ensure fair businesspractices are promoted throughout the entire Group, in
conjunction with the Kurita Group Code of Conduct. In the fiscal
year ended March 31, 2021, Kurita formulated the Group
Guideline on Anti-Bribery and the Group Guideline on Antitrust,which set out specific rules to prevent illegal behavior in
relationships with public officials and representatives ofcompetitor companies. In the fiscal year ending March 31, 2022,
these guidelines will be communicated to all officers andemployees in the Kurita Group. They will also form the basis ofregular training.

Preventive Compliance Measures

Promoting Equitable Relationships with Business
Partners

The Platform for Value Creation

The Kurita Group has established the E&S Committee and theGroup E&S Committee as organizations to oversee complianceactivities. Both committees are chaired by a managing director of
the Company, and the Group E&S Committee’s members are
representatives of Group companies. The committees are tasked
with deciding policies and key measures related to complianceactivities, which are conveyed to all employees throughsubcommittees in each Company division and Group company.

To ensure everybody who works in the Kurita Group feels
comfortable in the workplace, the Kurita Group has established aconsultation desk in the Group and at outside organizations toprovide advice about questions or concerns related to the Kurita
Group Code of Conduct and other internal regulations and tohandle reports about behavior that infringes the Code, laws andregulations or the Group’s internal rules. The consultation desk isalso available for Kurita Group business partners to receive advice
or report legal violations or misconduct by the Kurita Group.
Anybody using the consultation desk to receive advice or report a
violation is protected from unfavorable treatment. Kurita uses theconsultation desk to rapidly identify and rectify misconduct. In thefiscal year ended March 31, 2021, the consultation desk wasaccessed 21 times in Japan and two times overseas.

The Kurita Group’s Businesses

Stakeholder

across the Group. To improve the effectiveness of complianceactivities, each Company division and Group company formulates
and updates their own compliance guidelines to pinpoint specificareas of behavior in the Code of Conduct that are especiallyrelevant to their organization.

Whistle-Blowing and Consultation Desk

The Kurita Group’s businesses are dependent on relationships
with many stakeholders, making human rights an important factor
in business management. As a member of society, Kurita has
formulated the Kurita Group Human Rights Policy to fulfill its
responsibility to stakeholders on human rights and to contributeto the sustainable development of society. Within the Group, we
have formulated common guidelines that set out basic approaches
to human resources management, such as management
development, sincere employment, and respect for diversity.
These guidelines are integrated with the initiatives of each Group
company based on its individual circumstances, such as country,
region, culture, and corporate culture. Training is also conducted
on a regular basis to raise awareness of human rights among
officers and employees. To promote respect for human rights
across the entire supply chain, Kurita calls on suppliers to respect
basic human rights, such as prohibiting forced labor and childlabor and eliminating discrimination. We carry out regular surveys
of suppliers to monitor and verify compliance with basic humanrights. In the fiscal year ending March 31, 2022, we will start
human rights due diligence* investigations of employees, suppliers
and local communities to identify and prevent any negative
impacts.

Kurita Group Business Strategy

The Kurita Group conducts compliance activities that go beyond
simply adhering to legal regulations, aiming to be a corporategroup trusted by society and held in high esteem by all people
who work in the Group. The Kurita Group Code of Conduct
underpins all compliance activities. The code sets out how
everyone who works in the Group should conduct themselves andhas been translated into multiple languages to raise awarenessRespect for Human Rights

Kurita Group Overview

Basic Concept

Kurita Water Industries Ltd. Integrated Report 2021

55

The Platform for Value Creation

Human Resources Management

TOPIC

The Kurita Group sees human resources as the bedrock forsustainable growth. We work to attract and develop humanresources while passing on the “water knowledge” we haveaccumulated over many years and strive to maintain anenvironment where individual employees can hone their own

abilities and expertise and proactively put them to good use.
Moreover, we promote an organizational culture that empowers
diverse human resources whose various perspectives andbackgrounds give rise to innovation.

advancement, and began working to understand the current stateof the issue more accurately. We also formulated a vision of what
the Kurita Group hopes to achieve through the promotion ofdiversity and inclusion. Beginning in April 2021, we have endeavored
to instill this vision into the Group and foster a culture that makes
work meaningful for all employees and enables them todemonstrate their individual abilities while also introducing various
programs to make the company a more comfortable place to work.

Our Vision for Diversity & Inclusion

The corporate group that continues to create unique value through interaction among diverse
people who care about water and the environment and who accept each other’s differences.

Diversehuman
resources andexperience

Increase indifferences

Trust from
customerand society

Creation ofunique value

Virtuous cycle asa result of shared
value

Harmonization ofindividuality

Permeationof shared
values

Initiatives for Diversity at the Kurita Group

Employment of Personnel
with Disabilities

Securing employment opportunities for people with disabilities by expanding business sites operated by special subsidiary With
Kurita Ltd.

Gender Diversity
Developing Overseas Talent

56

Establishment of SOGIE* minority consultation desk

*SOGIE is an abbreviation combining sexual orientation, gender identity and gender expression.

Training is conducted for managers and executive candidates among locally hired employees in order to develop human resources
to handle core responsibilities at Group companies overseas.

Kurita Water Industries Ltd. Integrated Report 2021

Human Resources Development
The Kurita Group conducts various training programs to provide thenecessary knowledge and skills for the Group to achieve its ideals,
including training programs for employees in each class andposition run by the human resources department, the Greater
Adaptability to Globalization Course, which is designed to nurture
human resources capable of working at a global level, humanresources education courses, and specialist knowledge training on
Kurita Group products, technologies and services. In addition, theGroup provides opportunities for self-improvement throughoverseas study and scholarship schemes and correspondence
education programs.
To help employees achieve their potential, companies need to
conduct fair evaluations of each employee based on their roles andperformance and provide appropriate remuneration and educationin line with their performance. At Kurita Water Industries, employees
have interviews with supervisors to confirm their results and issues
as part of transparent and fair evaluations. We have also introduced
a Self-Reporting System through which supervisors gain feedback
from employees about their preferred transfers for future careerdevelopment, as well as their family circumstance. The system isused to assist personnel development and motivate teams.
In order to accumulate and utilize “water knowledge” to create
diverse solutions, it is necessary to secure and train personnel withhigh levels of expertise in water treatment technologies and digitaltransformation (DX). The Kurita Group established a Human
Resources Development Committee in April 2020 and is working toformulate policies and build systems for training engineers in Japanand internationally. To visualize the quality and quantity of engineers
in the Group, we first identified the technology areas that areneeded to propose solutions effectively and created a map of theGroup’s engineers that lists leaders and specialized personnel foreach technology. The map makes it possible to utilize the abilities,
knowledge and experience of each engineer throughout the Group,
and we also plan to use it to strengthen personnel over the medium
to long term and train successors. In order to train personnel topromote DX, we are acquiring and training digital specialists, largely
through the DX Committee, and also working to develop digital
literacy within the company by clarifying the knowledge andqualifications needed for DX and holding related seminars.

For more details, please visit the site below. ​Kurita’s Human Resources Development

https://www.kurita.co.jp/english/csr/csr_activity_human/index.html

Employee Engagement
To make work more rewarding for employees and increase overall
organizational vitality, the Kurita Group focuses on engagementwith employees and conducts surveys on a regular basis. In thefiscal year ended March 2021, we conducted a “happiness andwell-being survey” targeting the Company and Group companies
in Japan, which allowed us to identify issues related to raising job
satisfaction and develop measures for making improvements. The
findings of the survey are reported to the Board of Directors.
The Company has held around 40 Town Hall Meetings since2016, which are an opportunity for regular dialogue between thepresident and employees. For the president, they provide the

Financial Information/Corporate Information

Promotion of Women’sParticipation andAdvancement in the
WorkplaceIn the five-year plan for the period from April 2018 to March 2023, Kurita Water Industries has set the following targets.
At least 15 women in management positions by April 1, 2023
Achieve a ratio of 30% or more for women among new graduate recruits for career track positions
Initiatives to achieve these targets:(1) Career planning support for women in career track positions(2) Increase the ratio of female recruits(3) Expand the roles of female employees(4) Support career development through the self-reporting system

power source and is seen as a symbolof the prefecture’s recovery from theGreat East Japan Earthquake. The
award recognized her contribution toa project involved in the region’s
revitalization. The Kurita Group willcontinue working to foster a culturethat empowers women to further
demonstrate their abilities andexpertise.

The Platform for Value Creation

Virtuous cycle as aresult of increase indifferences

Sympathy
with our
corporatephilosophy

In March 2021, a female engineer at Kurita Meiki Ltd., a Kurita Group
company in Fukui Prefecture, received the 2020 award foroutstanding achievements in the workplace by a woman. The award
honors companies in Fukui Prefecture that actively hire, train andpromote women and that serve as a model for other companies in
the prefecture, and also individual women and groups in theprefecture for outstanding job-related achievements. Kumiko Hokari,
who received the award, was in charge of designing a water
treatment system that was supplied to a strawberry farm inFukushima Prefecture. The strawberry farm uses solar energy as its

The Kurita Group’s Businesses

The average length of service of female employees at the Company
is relatively long, but further promoting women’s participation andadvancement in the workplace, starting with promoting women to
managerial positions, remains a pressing issue. Our global network
has expanded through M&A activities, and we now haveapproximately 7,500 employees as of March 31, 2021.
In October 2020, we established a dedicated unit to accelerate
progress on diversity, particularly women’s participation andReceived 2020 Fukui Prefecture Award for Promoting Women’s Participation and Advancement

Kurita Group Business Strategy

Diversity and Inclusion Initiatives

Kurita Group Overview

Basic Concept

chance to directly communicate and publicize the Group’s
corporate vision and targets under the MVP-22 plan. For
employees, the meetings are a chance to let the president know
their thoughts on the Company and their jobs and convey
awareness of problems. The meetings are helping to spur
discussion and debate and make the Company more open andtransparent. In the fiscal year ended March 2021, online meetings
were held with employees in Japan and overseas on topics such aschanges in the Kurita Group caused by the pandemic and a global
project involving RO membrane chemicals and services (Project
Acorn).

Kurita Water Industries Ltd. Integrated Report 2021

57

The Platform for Value Creation

Environmental Improvement Activities

The Kurita Group’s Environmental Improvement Activities include
initiatives to reduce internal water and energy use and waste
emissions. They also include activities to reduce environmental

Environmental Improvement of Customers’ Operations (Promotion of CSV Business)
impact at customers who use products and services related towater and the environment that the Kurita Group has developed
over many years.

Please click on the link below for more information.

Kurita Group Environmental Policy https://www.kurita.co.jp/english/csr/management/policy/environment/index.html

Solve Issues Related to Water Resources https://www.kurita.co.jp/english/csr/csr_activity_growth/water_savings/water.html
Realize Sustainable Energy Use https://www.kurita.co.jp/english/csr/csr_activity_growth/climate_change/co2.html
Reduce Waste https://www.kurita.co.jp/english/csr/csr_activity_growth/waste_reduction/waste.html

The Kurita Group defines products, technologies or businessmodels that make significant contributions to water-savings, CO2
emissions reduction and waste reduction compared with previous
levels as “CSV businesses.” As one of the priority measures of the
MVP-22 plan, “Development of CSV business” is implemented inconjunction with the management plan. In addition, given that
Scope 3 emissions account for 99% of the Group’s total emissions
in the Scope 1-3 categories, “Contribute to reduction of Scope 3
emissions in the Kurita Group” was added to the evaluation items
for CSV businesses from the fiscal year ended March 31, 2021, inorder to increase the competitiveness of CSV businesses.

In the fiscal year ended March 31, 2021, we attained our target
for Scope 3 emissions ahead of plan. Emissions were reduced by
27.6% compared with the previous fiscal year, versus our goal of
27.5% by the fiscal year ending March 31, 2031. This was achieved
due to a decline in emissions in Category 11 (use of sold products).
Category 11 emissions fluctuate in line with trends in projectorders, so we intend to assess and analyze trends going forwardand determine whether targets for this category need to berevised.

Breakdown of Scope 1-3 Emissions

Scope 3 Emissions (Unit: 1,000 t- CO2)
3,042

CO2 emission (1,000 t)
Fiscal year ended
March 31, 2021

Scope 1

9

10

Definition of the Kurita Group’s Environmental
Improvement Activities ​Scope 2

26

23

Scope 3

3,042

2,204

Scope 1+2+3

3,077

2,237

Ratio of Total CO2 Emissions (%)
Scope 3
Scope 1+2

1Category 11 (use of sold products)
Categories 1, 4, 9 (purchased goods and services,transportation and distribution)
Category 13 (downstream leased assets)
Other categories

Fiscal year ended
March 31, 2021

Targets for fiscal
year ending March
31, 2031

Breakdown of Category
11 Emissions (%)
Pumps
MotorsBlowers
Other

3
18
8
60

99

Promotion System

Fiscal year
ended March
31, 2021

Fiscal year ended
March 31, 2021

59

15

Fiscal year ended
March 31, 2021

Kurita’s Board of Directors

Internal Environmental Improvement Activities

President
Executive Committee

E&S Committee

Group E&S Committee

Persons responsible
for promotion

Persons responsible
for promotion

The Kurita Group works to reduce water usage, energy usage andwaste, while adhering to the environmental laws and ordinancesof each country and region that apply to the Group’s businessactivities. These activities, including assessments related tocompliance with environmental rules and regulations, areimplemented to achieve targets related to CSR Policy, based on
the Kurita Group Environmental Policy.

Financial Information/Corporate Information

Kurita Water Industries Ltd. Integrated Report 2021

Scope 3 Emissions by Category (%)

25

Environmental Initiative Promotion System

58

Fiscal year
ended March
31, 2020

11*For more details about CSV business, see page 19 and page 59.

The Kurita Group has established the E&S Committee, which ischaired by a Managing Director of the Company, and the Group
E&S Committee, chaired by the same director and composed ofrepresentatives of Group companies. These committees oversee
Environmental Improvement Activities in the Kurita Group. The
E&S Committee formulates unified medium- to long-term targets
for the Kurita Group’s Environmental Improvement Activities andaction plans for each fiscal year. Personnel responsible forpromoting the initiatives (committee members or personnel
designated by representatives of each company) are tasked withdriving efforts to achieve Environmental Improvement Activities
targets at their assigned company or organization. They report thestatus and results of the activities to the E&S Committee.
The E&S Committee ascertains stakeholder expectations andconcerns and reports them to the Board of Directors along withoutcomes from the Kurita Group’s CSR activities once a year.

Down
27.6%

The Platform for Value Creation

1) Activities to comply with the environment-related laws
and regulations of each country and region that apply to
the Group’s business activities
2) Initiatives to solve international issues related to thesustainability of water and the environment throughbusiness activities
3) Disclosure of information related to 1) and 2), andengagement with customers, business partners,
employees, shareholders and investors and local
communities about the activities

2,204

The Kurita Group’s Businesses

Fiscal year ended
March 31, 2020

How Environmental Improvement Activities Are Embedded in Management Strategy

Kurita Group Business Strategy

Click on the links below for more information about Kurita’s Environmental Improvement Activities.

In recent years, initiatives to address environmental issues are
becoming an increasingly important factor in corporate
management amid growing calls from shareholders and investors
for ESG management. The Kurita Group promotes businessmodels that help reduce water usage and CO2 emissions. The
Group therefore sees these trends as an opportunity to grow its
business. By expanding our CSV business*, we aim both to create
value for society while also driving the Group’s growth. In parallel,
to fulfill our corporate responsibility, we will reduce theenvironmental impact of the Group’s business activities byaddressing the issue of climate change based on the TCFD
Recommendations, disclose environmental information in line withinternational standards, and conduct initiatives to achieve our
medium- to long-term targets.

Kurita Group Overview

Basic Concept

Evaluation of Water Risk at Internal Facilities
Kurita assesses and ascertains water risk for Group facilities using
the Aqueduct Water Risk Atlas and benchmarks for water intake
provided by the World Resources Institute, business characteristics
and other criteria. As of July 2021, our assessments had identified
nine facilities with particularly high risk. Based on that, we areprioritizing efforts to reduce water risk at those facilities.

Kurita Water Industries Ltd. Integrated Report 2021

59

Financial Information/Corporate Information

Environmental Improvement Activities

Kurita Group Overview

Reduction of Environmental Impact at Customers (Fiscal years ended March 31)
Water intake reduction (million m3)Japan

CO2 emissions reduction (1,000 t)

Overseas

Japan

Overseas

279

99

45

55

4

274

66

39

222
119

228

240
145

48
2021

2020

Overseas

2019

23

13

3

251

209

116
2021

2020

2019

Kurita Group Business Strategy

2019

Japan

294

41

9
46

41

187

51

Waste reduction (1,000 t)

2021

2020

Internal Promotion of Environmental Improvements (Fiscal years ended March 31)
Water intake amount (million m3)Japan

CO2 emissions (1,000 t)*

Overseas

Japan

223

4.00

0.65
2019

2.43
2.17

1.82

0.62

0.62

2020

14

Japan

236

11

249

70

12

236

224

209

Overseas

30

2

58

68

2

1

The Kurita Group’s Businesses

3.35

2.79

Waste amount (1,000 t)

Overseas

57

28

2021

2019

2020

2021

2019

2020

2021

Kurita Group KPI: Customer Impact Reduction – Kurita Group Impact (Fiscal years ended March 31)
Water savings at customers –Amount of water intake used in ourbusiness activities (million m3)

CO2 emissions reduction at customers –CO2 emissions from our businessactivities (1,000 t)*
45

215
152

52

41

The Platform for Value Creation

43

97

Waste reduction at customers –Waste generated from our businessactivities (1,000 t)

Contents

89
-36

2019

2020

2021

2019

2020

2021

2019

2020

2021

* “CO2 emissions from our business activities” include emissions generated from the ultrapure water supply business, which comes under Category 13 of Scope 3, as well as
emissions in Scope 1 and 2 stipulated in GHG (Greenhouse Gas) protocol.

ISO 14001 Certified Sites
Kurita Water Industries Ltd.

OfficeShizuoka, Yamaguchi, Toyoura and Tsuruga
plants; Sakai sub-branches

Kurita Chemical Manufacturing Ltd.

Head Office, Ako plant

Kurita Buil-Tech Co., Ltd.

Head office

Kuritaz Co., Ltd.
Kuritec Service Co. Ltd.
Kurita-GK Chemical Co., Ltd.

Head office, West Japan branch office and nineother business sites
Head office, East Japan, Iga, Mie, Harima andOita plants
Head office and Rayong branch

Company

OfficeHansu Co., Ltd.

Head office and two other business sites

Kurita Europe GmbH

Head office and two other business sites

Kurita Turkey Kimya A.S.

Head office and one other business site

Kurita do Brasil LTDA.

Head office and three other business
sites

Hansu Technical Service Ltd.
Kurita (Singapore) Pte. Ltd.
Kurita Water (Malaysia) Sdn. Bhd.

Kurita (Taiwan) Co., Ltd.

P.T. Kurita Indonesia

Kurita Water Industries (Dalian) Co., Ltd.

Kurita America, Inc.

Management Indicators/Segment Information 

62Consolidated Statement of Financial Position 

64Consolidated Statement of Profit or Loss 

66

Consolidated Statement of Comprehensive Income 67Consolidated Statement of Changes in Equity 

68Consolidated Statement of Cash Flows 70Financial Information/Corporate Information

Company

Financial Information

Corporate Information
Stock Information 

71

Corporate Data 

72

Kurita Water Industries (Jiangyin) Co., Ltd.

60

Kurita Water Industries Ltd. Integrated Report 2021

Kurita Water Industries Ltd. Integrated Report 2021

61

Financial Information

Financial Information

Management Indicators

Segment Information

For the years ended March 31

2019

2021

2020

For the years ended March 31

2021

2020

Water treatment facilities

155,500

145,768

158,762

26,65429,470

Total

258,439

259,545

262,341

10.0

10.1

11.0

Water treatment chemicals

102,126

113,632

103,231

12,05018,287

19,088Water treatment facilities

155,204

151,174

164,518

4.7

6.9

7.1

Total

257,331

264,807267,749

359,500

387,749

424,928

Water treatment chemicals

9,791

11,667

12,287

0.74

0.71

0.66

Water treatment facilities

15,87815,061

17,129

(3)

(74)

52

237,282

242,442

253,089

Total

25,66726,65429,470Equity Ratio (%) Note 4

66.0

62.5

59.6

Water treatment chemicals

4,258

10,127

11,816Return on Assets (%) Note 5

3.5

4.9

4.7

Water treatment facilities

15,51817,39019,634Return on Equity (%) Note 6

5.1

7.6

7.7

Adjustment

83

(38)

78

Capital Expenditures Note 740,00431,72932,647

Total

19,86027,47931,529Depreciation Note 7

15,58815,804

17,900

Water treatment chemicals

115,017

119,960

123,476

R&D Expenses

5,490

5,693

5,317

Water treatment facilities

200,975

209,015

233,530

Adjustment

43,507

58,77467,921

Total

359,500

387,749

424,928

Water treatment chemicals

4,182

6,853

8,719

Water treatment facilities

37,071

26,42825,848

Total

41,25433,281

34,568Water treatment chemicals

4,502

5,496

4,986

Water treatment facilities

13,36913,20415,752

Total

17,872

18,70020,739Water treatment chemicals

1,899

2,002

1,722

Water treatment facilities

3,590

3,691

3,594

Total

5,490

5,693

5,317

257,331

264,807

Business Profit

25,667

Profit Attributable to Owners of Parent
Return on Sales (%) Note 1
Total Assets (At Fiscal Year-End)Total Assets Turnover (Times) Note 2
Equity Attributable to Owners of Parent(At Fiscal Year-End) Note 3

Net Sales

Business Profit

Adjustment

Operating Profit

Assets Employed(At Fiscal Year-End)(Yen)

107.33162.86169.94Equity per Share Note 92,113.32

2,158.96

2,252.86

Dividends per Share

54.00

62.00

66.00

Dividend Payout Ratio (%)

50.3

38.1

38.8

Number of Employees (At Fiscal Year-End)

6,613

6,737

7,465

Basic Earnings per Share Note 8Notes:
1. Return on sales = Profit attributable to owners of parent ÷ Net sales × 100
2. Total assets turnover = Net sales ÷ Total assets (Average)
3. Equity attributable to owners of parent = Total equity less Non-controlling interests
4. Equity ratio = Equity attributable to owners of parent ÷ Total assets × 100
5. Return on assets = Profit attributable to owners of parent ÷ Total assets (Average) × 100
6. Return on equity = Profit attributable to owners of parent ÷ Equity attributable to owners of parent (Average) × 100
7. Property, plant and equipment and right-of-use assets
8. Calculation of Basic earnings per share is based on average number of shares outstanding (excluding treasury stock).
9. Calculation of Equity per share is based on the number of shares at fiscal year-end (excluding treasury stock).

Kurita Water Industries Ltd. Integrated Report 2021

CapitalExpenditures

Depreciation andAmortization

R&D Expenses

Kurita Water Industries Ltd. Integrated Report 2021

Financial Information

267,749

Net Sales

OrdersThe Platform for Value Creation

103,579

262,341

The Kurita Group’s Businesses

113,777

259,545

Kurita Group Business Strategy

102,939

258,439

Business Profit Margin (%)

62

2019

Water treatment chemicals

Orders

Kurita Group Overview(Millions of Yen)

(Millions of Yen)

63

Financial Information

Consolidated Statement of Financial Position

As of March 31

2021

2020

(Millions of Yen)
As of March 31

Assets2021

2020

Liabilities and equity

Current assets

Liabilities

Cash and cash equivalents

50,21562,228Trade and other receivables

96,974

97,745Trade and other payables

35,68046,506

Other financial assets

2,562

2,817

Borrowings

35,371445

Inventories

9,247

9,911

Lease liabilities

4,234

4,373

Other current assets

3,847

3,780

Other financial liabilities

219―

Total current assets

162,847

176,482

Income taxes payable

1,998

8,135

Provisions

1,557

1,847

Current liabilities

106,358

117,603

Other current liabilities

15,345

13,644Right-of-use assets

17,784

19,405

Total current liabilities

94,40874,952

Goodwill

47,03355,596

Intangible assets

13,381

17,320Bonds and borrowings

1,305

31,207

Investments accounted for using equity method

7,469

1,578

Lease liabilities

13,701

15,327

Other financial assets

28,46533,563

Other financial liabilities

2,562

13,703

Deferred tax assets

4,295

3,199

Retirement benefit liability

16,91318,027

Other non-current assets

113

177

499

1,160

Total non-current assets

224,902248,445

Deferred tax liabilities

1,346

2,368

387,749

424,928

Other non-current liabilities

12,903

10,343

Total non-current liabilities

49,232

92,137

143,640

167,090

Share capital

13,45013,450Capital surplus

8,212(2,212)

Treasury shares(10,893)(10,787)

216

8,500

Retained earnings

231,456

244,138

Equity attributable to owners of parent

242,442

253,089

1,666

4,748

244,108

257,837

387,749

424,928

The Kurita Group’s Businesses

Property, plant and equipment

Kurita Group Business Strategy

Non-current assets

Non-current liabilities

Provisions

Total liabilities

The Platform for Value Creation

Total assets

Kurita Group Overview(Millions of Yen)

EquityNon-controlling interests
Total equity
Total liabilities and equity

64

Kurita Water Industries Ltd. Integrated Report 2021

Kurita Water Industries Ltd. Integrated Report 2021

Financial Information

Other components of equity

65Financial Information

Financial Information

Consolidated Statement of Profit or Loss

Consolidated Statement of Comprehensive Income

For the years ended March 31

2021

2020

(Millions of Yen)
For the years ended March 31

264,807267,749

Profit(172,092)(173,073)

Other comprehensive income

92,715

94,676(66,060)(65,206)

Other income

5,832

5,929

Other expenses(5,006)(3,870)27,47931,529Finance income

569

545

Finance costs(1,417)(1,923)60(999)

26,691

29,150(8,378)(9,326)

18,312

19,824

Net sales
Cost of sales
Gross profit

Operating profit

Share of profit (loss) of investments accounted for using equity method

Income tax expense
Profit18,312

19,824

(462)

5,202

62

(234)

(400)

4,968

(4,316)

4,851

Cash flow hedges

192

(594)

Share of other comprehensive income of investments accounted for using
equity method

(94)

24

(4,219)4,280(4,619)9,249

13,69329,073

13,71728,021

(24)

1,052

13,69329,073

Items that will not be reclassified to profit or loss
Net change in fair value of financial assets measured at fair value throughother comprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations

Total of items that may be reclassified to profit or loss
Total other comprehensive income
Comprehensive income

The Kurita Group’s Businesses

Profit before tax

2021

2020

Kurita Group Business Strategy

Selling, general and administrative expenses

Kurita Group Overview(Millions of Yen)

Profit attributable to
Owners of parent
Non-controlling interests

19,08825

735

18,312

19,824(Yen)

Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income

The Platform for Value Creation

Profit18,287

Earnings per share
Basic earnings per share
Diluted earnings per share

162.86169.94――

Financial Information

66

Kurita Water Industries Ltd. Integrated Report 2021

Kurita Water Industries Ltd. Integrated Report 2021

67

Financial Information

Consolidated Statement of Changes in Equity

For the year ended March 31, 2021

Equity attributable to owners of parent

Other components of equity

Other components of equity

Financial assets
measured at Remeasurements offair value
definedthrough otherbenefitcomprehensive
plansincomeTreasuryshares13,45010,265(10,932)(4,671)

310

9,199

Profit

―

―

―

―

―

Other
comprehensive
income―――(4,362)―――

Purchase oftreasury shares――

Dividends―

Share-based
remunerationtransactions

Treasuryshares13,4508,212(10,893)(9,033)

503

8,747

Profit

―

―

―

―

―

Other
comprehensive
income

―

―

―

4,560

―

―

―

Purchase oftreasury shares――

Dividends―

Share-based
remunerationtransactions(1,581)

―

―

52

―

(63)

―

Total

Noncontrollinginterests

Total

―

4,838

219,660

237,282

1,902

239,184

Balance as ofApril 1, 2020

―

―

―

18,28718,28725

18,312

192

(462)

63

(4,569)―(4,569)(49)(4,619)(4,362)

192

(462)

63

(4,569)18,287

13,717(24)

13,693

(3)

―

―

―

―

―

―

(3)

―

(3)

―

―

―

―

―

―

―

(6,521)(6,521)(24)(6,546)

―

103

42

―

―

―

―

―

―

145

8

154

Changes inownership interestin subsidiaries―(1,385)

―

0

―

―

―

0

―

(1,385)(196)

Increase (decrease)by businesscombination

―

―

―

―

―

―

―

―

―

―

Liabilities pertaining toforward contracts
concluded with noncontrolling shareholders

―

―

―

―

―

―

―

―

―

Transfer from othercomponents ofequity to retained
earnings

―

―

―

―

―

10

(63)

(52)

Other

―

(771)

―

―

―

―

―

―

(2,053)

38

0

―

10

13,4508,212(10,893)(9,033)

503

8,747

Total transactions
with owners
Balance as ofMarch 31, 2020

Kurita Water Industries Ltd. Integrated Report 2021

Total

Retainedearnings

Total

Noncontrollinginterests

Total

―

216

231,456

242,442

1,666

244,108―――

19,08819,088735

19,824

(594)

5,202

(235)

8,932

―

8,932

316

9,249

4,560

(594)

5,202

(235)

8,932

19,08828,021

1,052

29,073

(4)

―

―

―

―

―

―

(4)

―

(4)

―

―

―

―

―

―

―

(7,076)(7,076)(1,013)(8,090)

―

9

111

―

―

―

―

―

―

120

(9)

111

Changes inownership interestin subsidiaries

―

(991)

―

4

―

―

―

4

―

(986)

(208)

(1,194)―

Increase (decrease)by businesscombination

―

―

―

―

―

―

―

―

―

―

3,260

3,260

―

―

Liabilities pertaining toforward contracts
concluded with noncontrolling shareholders―(10,578)

―

―

―

―

―

―

―

(10,578)―(10,578)―――

Transfer from othercomponents ofequity to retained
earnings

―

―

―

―

―

(888)

235

(653)

653

―

―

―

(21)

(792)

―

(792)

Other

―

1,135

―

―

―

―

―

―

16

1,152

―

1,152

(52)

(6,490)(8,557)(211)(8,769)―(10,424)

106

4

―

(888)

235

(648)

(6,406)(17,373)

2,029(15,344)216

231,456

242,442

1,666

244,108

13,450(2,212)(10,787)(4,469)(91)

13,060―8,500

244,138

253,089

4,748

257,837

Comprehensive
incomeTotal transactions
with owners
Balance as ofMarch 31, 2021

Cash flow
hedges

Kurita Water Industries Ltd. Integrated Report 2021

Financial Information

CapitalsurplusRetainedearnings

The Platform for Value Creation

Sharecapital

Total

Cash flow
hedgesFinancial assets
measured at Remeasurements offair value
definedthrough otherbenefitcomprehensive
plansincomeThe Kurita Group’s Businesses

Capitalsurplus

Exchangedifferencesontranslationof foreign
operations

Kurita Group Business Strategy

SharecapitalComprehensive
income(Millions of Yen)

Equity attributable to owners of parent

Exchangedifferencesontranslationof foreign
operations

Balance as ofApril 1, 2019

68

(Millions of Yen)

Kurita Group Overview

For the year ended March 31, 202069

Financial Information

Corporate Information

Consolidated Statement of Cash Flows

Stock Information (As of March 31, 2021)

For the years ended March 31

2021

2020

Cash flows from operating activities

Tokyo Stock Exchange, First Section

Number of Authorized Shares:

531,000,000

Number of Shares Outstanding:

116,200,694 (Including 3,584,710 shares of treasury stock)

Number of Shares Per Lot:

100

Number of Shareholders:

20,633

Independent Accounting Auditor:

Grant Thornton Taiyo LLC

Profit before tax

26,691

29,150Depreciation and amortization

18,70020,739(60)

999

Loss (gain) on sale of fixed assets(2,471)(1,333)

Decrease (increase) in inventories

(169)

254

Decrease (increase) in trade and other receivables

4,527

746

Increase (decrease) in trade and other payables(1,893)(2,904)

Other

2,652

(3,410)Subtotal

47,97744,242

Interest received

141

153

Dividends received

410

360

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

8,616,500

7.41Interest paid

(305)

(213)

Custody Bank of Japan, Ltd. (Trust Account)

6,580,783

5.66(10,847)(4,541)

Securities Firms

37,37640,002Other Domestic Firms

Share of loss (profit) of investments accounted for using equity method

Cash flows from investing activities

Transfer Agent:

Sumitomo Mitsui Trust Bank, Ltd.
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Major Shareholders

Distribution of Shares by Shareholder Type
Shareholdings(Number ofshares)Percentage
of totalsharesissued (%)

Nippon Life Insurance Company

5,979,883

5.14

Kurita Water Industries Ltd.

3,584,710

3.08

STATE STREET BANK AND TRUST COMPANY 505025

2,363,708

2.03(1,951)(1,856)

Proceeds from withdrawal of time deposits

1,545

1,588

Purchase of property, plant and equipment(31,168)(14,055)

Proceeds from sale of property, plant and equipment

5,942

8,401

Purchase of intangible assets(1,534)(1,909)41

2,533

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC/
FIM/LUXEMBOURG FUNDS/UCITS ASSETS

1,695,400

1.45

Payments for acquisition of subsidiaries (after deduction of cash and cash
equivalents included in acquired assets)(8,501)(4,599)Tokio Marine & Nichido Fire Insurance Co., Ltd.

1,680,826

1.44

Purchase of investments in associates(5,915)―

Custody Bank of Japan, Ltd. (Trust Account 5)

1,658,000

1.42

Other

(2,140)(874)(43,683)(10,771)

35,001(35,001)―

29,882

(384)

(645)

Repayments of lease liabilities(4,514)(5,033)

Dividends paid

(6,539)(8,083)Purchase of investments in subsidiaries not resulting in change in scope of
consolidation(1,588)―7

29

21,981(18,852)

Effect of exchange rate changes on cash and cash equivalents(1,006)

1,634

Net increase (decrease) in cash and cash equivalents

14,667

12,013

Cash and cash equivalents at beginning of period

35,54750,215

Cash and cash equivalents at end of period

50,21562,228Proceeds from sale of investment securities

Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from issuance of bonds
Repayments of long-term borrowings

Net cash provided by (used in) financing activities

Kurita Water Industries Ltd. Integrated Report 2021

2,056,131

1.76

CACEIS BANK LUXEMBOURG BRANCH/
UCITS CLIENT

1,719,200

1.47

Foreigners

Shareholdings(Number of shares)

Distributionof Share(%)

Financial Institutions

38,913,563

33.5

Securities Firms

1,577,053

1.3

Other Domestic Firms

4,506,764

3.9

Foreigners

57,506,096

49.5

Individuals

10,112,508

8.7

Treasury Stock
Total

3,584,710

3.1

116,200,694

100.0

Stock Price Range and Trading Volume
Stock price

Trading volume

Stock price (Yen)

Trading volume (Thousands of shares)

6,000

60,0005,000

50,0004,000

40,0003,000

30,0002,000

20,0001,000

10,000

0

Financial Information/Corporate Information

Other

MUFG Bank, Ltd.

Financial Institutions

Individuals

The Platform for Value Creation

Payments into time deposits

Treasury Stock

The Kurita Group’s Businesses

Net cash provided by operating activities

Akasaka K-tower 22F, 1-2-7, Motoakasaka, Minato-ku, Tokyo 107-0051, Japan
Kurita Group Business Strategy

Income taxes paid

70

Stock Exchange Listing:

Kurita Group Overview(Millions of Yen)

0

Jan. ’19

Jan. ’20

Jan. ’21

Kurita Water Industries Ltd. Integrated Report 2021

71

Corporate Information

Corporate Data

Address

Kurita Global Technology Center:

Kurita Water Industries Ltd.
10-1, Nakano 4-chome, Nakano-ku,

Tochigi 329-0105, Japan
Tel: 81 (280) 54-1511

July 13, 1949

Paid-in Capital¥13,450,751,434

Number of Employees

7,465 (on a consolidated basis);8-7-2, Shimorenjaku, Mitaka-shi,
Tokyo 181-0013, Japan
Tel: 81 (422) 29-6200(As of March 31, 2021)

Shizuoka Plant, Tohoku Office, Nagoya Office,10-1, Nakano 4-chome, Nakano-ku,

Hiroshima Office, etc.

Tokyo 164-0001, Japan
Tel: 81 (3) 6743-5000
Osaka Office:2-22, Kitahama 2-chome, Chuo-ku,

Asia

Osaka-shi, Osaka 541-0041, Japan
Tel: 81 (6) 6228-4800

Paid-in capital(Millions)

Equityownership(%)

Kurita Water Industries (Dalian) Co., Ltd.

1995

¥550

90.1

Kuritec (Shanghai) Co., Ltd.

2001

¥30

100.0

Kurita Water Industries (Suzhou) Ltd.

2004

¥530

100.0

Kurita Water Industries (Jiangyin) Co., Ltd.

2015

US$16

100.0

Hansu Co., Ltd.

1974

W2,500100.0

Hansu Technical Service Ltd.

1988

W26,400

100.0

Kurita (Taiwan) Co., Ltd.

1987

NT$20

100.0

Kurita (Singapore) Pte. Ltd.

1978

S$11

100.0

Kurita Water (Malaysia) Sdn. Bhd.

1994

RM$0.6100.0

Kurita-GK Chemical Co., Ltd.

1989

BAHT204

85.0

Kurita-GK Vietnam Co., Ltd.

2016

US$0.50

85.0

P.T. Kurita Indonesia

1986

US$2

92.5

Kurita R&D Asia Pte. Ltd.

2017

S$3

100.0

Kuritec Service Co., Ltd.

Kurita BMS Co., Ltd.

San-ei Industries Co., Ltd.

Kurita Tokai Ltd.

Nippon Fine Co., Ltd.

Kurita Europe GmbH

1989

EUR50

100.0

Kurita Hokuriku Ltd.

Aoi Industries Co., Ltd.

Kurita Italia S.r.l.

2021

EUR1

100.0

Operation and maintenance of water treatment facilities

Kurita France S.A.S.

2015

EUR5

100.0

Kurita Iberica SL

2015

EUR1

100.0

Kurita Turkey Kimya A.S.

2015

TRY5.7100.0

Kurita Sverige AB

2015

SEK0.1

100.0

Kurita Polska SP.z.o.o.

2016

EUR3.27

100.0

Kurita AquaChemie Limited

2020

0.1AED

51.0

Kurita America, Inc.

1996

US$0.00001

100.0

Keytech Water Management

1981

2.1CAD

100.0

Pentagon Technologies Group, Inc.

1998

US$0.002

51.0

Avista Technologies, Inc.

1999

US$0.003719

100.0

Kurita Fracta Holdings, Inc.

2017

US$73

71.8

Kurita do Brasil LTDA.

1975

R$6.9

100.0

Kurita Sanyo Ltd.
Kurita Kyusyu Ltd.
Sale of water treatment chemicals and provision ofmaintenance services for water treatment facilities

Kuritaz Co., Ltd.
Engineering cleaning
Miyoshi Industries Co., Ltd.

Kurita Kitakantou Co., Ltd.

Manufacture and sale of water treatment equipment
and products for general households

Kurita Kanto Ltd.

Kurita Creation Co., Ltd.

Manufacture of water treatment

Soil and groundwater remediation

Kurita Chemical Manufacturing Ltd.

Land Solution Inc.

Kurita Hokkaido Ltd.

Water quality and environmental analysis
Kurita Analysis Service Co. Ltd.
Sale and maintenance of water treatment facilities
Kurita Meiki Ltd.

EMEALand Management Inc.
Other businesses
Kurita Sogo Service Co., Ltd.

North
AmericaWith Kurita Ltd.

Others

Kurita Water Industries Ltd. Integrated Report 2021

Water
Treatment
Facilities

Others

Kurita Water Industries Ltd. Integrated Report 2021

Corporate Information

Tool cleaning

Kurita Buil-Tech Co., Ltd.

Business segment
Water
Treatment
Chemicals

The Platform for Value Creation

Sale of water treatment chemicals

Kurita Kansai Ltd.

72

Year ofestablishment

The Kurita Group’s Businesses

Main Domestic Consolidated Group Companies (As of March 31, 2021)

Overseas consolidated subsidiaries and affiliatedcompanies

Kurita Group Business Strategy

Other Offices:

Head Office:

Offices

RegionEngineering Center:

1,561 (parent company)
Major Domestic

Main Overseas Group Companies (As of April 30, 2021)

1-1, Kawada, Nogi-machi, Shimotsuga-gun,Tokyo 164-0001, Japan
Date of Establishment

Kurita Group Overview

Company Name

73

Nakano Central Park East, 4-10-1 Nakano
Nakano-ku, Tokyo 164-0001, Japan
Tel: +81-3-6743-5000

https://www.kurita.co.jp/english/